<PAGE> 1
This filing is made pursuant
to Rule 424(b)(3) under the
Securities Act of 1933 in
connection with Registration
Statement 333-42095
PROSPECTUS
252,600 SHARES
[BetzDearborn Logo]
COMMON STOCK
The 252,600 shares of common stock, par value $.10 per share (the
"Common Stock"), to which this Prospectus relates (the "Shares") are being
offered on behalf and for the account of certain stockholders (the "Selling
Stockholders") of BetzDearborn Inc. (the "Company"). The Company anticipates
that the Shares will be offered for sale until the earlier of (i) the sale of
all of such Shares or (ii) the first anniversary of the issuance of the Shares.
The Company has agreed to pay all expenses of registration in connection with
this offering but will not receive any of the proceeds from the sale of the
Shares being offered hereby. All brokerage commissions and other similar
expenses incurred by the Selling Stockholders will be borne by such Selling
Stockholders. The aggregate proceeds to the Selling Stockholders from the sale
of the Shares will be the purchase price of the Shares sold, less the aggregate
brokerage commissions and underwriters' discounts, if any, and other expenses of
issuance and distribution not borne by the Company. See "Use of Proceeds," "Plan
of Distribution" and "Selling Stockholders."
The Common Stock is listed on the New York Stock Exchange (the "NYSE")
under the symbol "BTL". On March 6, 1998, the last reported sales price for the
Common Stock was $63.50 per share.
The offering is currently not being underwritten. However, the Selling
Stockholders, brokers, dealers or underwriters that participate with the Selling
Stockholders in the distribution of the Shares may be deemed "underwriters," as
that term is defined in the Securities Act of 1933, as amended (the "Securities
Act"), and any commissions received by broker-dealers, agents or underwriters
and any profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. It is
anticipated that all Shares being offered hereby, when sales thereof are made,
will be made in one or more transactions (which may involve one or more block
transactions) through customary brokerage channels, either through brokers
acting as brokers or agents for the sellers, or through dealers or underwriters
acting as principals who may resell the Shares through the NYSE or in privately
negotiated sales, or otherwise, or by a combination of such methods of offering.
Each sale may be made either at market prices prevailing at the time of the
sales or at negotiated prices.
To the extent required, the specific Shares to be sold, the names of
the Selling Stockholders, the purchase price, the public offering price, the
names of any such agents, dealers or underwriters and any applicable commission
or discount with respect to a particular offer will be set forth in an
accompanying Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
MARCH 6, 1998
<PAGE> 2
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following Regional Offices of the Commission: Chicago Regional Office, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and New York Regional
Office, 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
such material may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a website that contains reports, proxy and
information statements and other information regarding registrants which file
electronically with the Commission (http://www.sec.gov).
The Common Stock is listed on the NYSE, and reports and other
information concerning the Company may be inspected and copied at the offices of
the NYSE located at 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended ("Securities Act"), with
respect to the Shares of Common Stock offered hereby. This Prospectus omits
certain information contained in the Registration Statement. For further
information with respect to the Company and the Shares offered hereby, reference
is hereby made to the Registration Statement and to its exhibits and schedules.
The Registration Statement may be inspected without charge at the office of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies may be
obtained therefrom at prescribed rates. Statements contained herein concerning
provisions of documents are necessarily summaries of such documents, and each
statement is qualified in its entirety by reference to the copy of the
applicable documents filed with the Commission.
The logo for "BetzDearborn" appearing on the front and back cover pages
of this Prospectus is a trademark of BetzDearborn Inc.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under
the Exchange Act (File No. 0-2085) are hereby incorporated by reference in this
Prospectus: (1) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, (2) the Company's Definitive Proxy Statement dated
March 10, 1997, (3) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997, (4) the
Company's Current Report on Form 8-K filed on December 11, 1997, (5) the
Company's Current Report on Form 8-K filed on February 17, 1998, and (6) the
description of the Company's Common Stock contained in its Registration
Statement on Form 8-A dated November 23, 1992.
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All reports and other documents filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of the offering
of the Shares made hereby shall be deemed to be incorporated by reference herein
and to be a part hereof from the date of filing of such reports and documents.
Any statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus and the
Registration Statement of which it is a part to the extent that a statement
contained herein or in a subsequently filed document modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus or such
Registration Statement.
Upon written or oral request, the Company will provide without charge
to each person to whom a copy of this Prospectus is delivered a copy of any and
all of the documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to BetzDearborn Inc., 4636
Somerton Road, Trevose, Pennsylvania 19053, Attention: Investor Relations,
telephone 215-953-2355.
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- --------------------------------------------------------------------------------
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus or in the documents
incorporated by reference.
THE COMPANY
BetzDearborn Inc. and its subsidiaries (the "Company") is engaged in
the engineered chemical treatment of water, wastewater and process systems
operating in a wide variety of industrial and commercial applications, with
particular emphasis on the chemical, petroleum refining, paper, automotive,
electric utility and steel industries. The Company produces and sells a wide
range of specialty chemical products, and provides the technical expertise
necessary to utilize these products effectively. Chemical treatment programs are
developed for use in boilers, cooling systems, heat exchangers, paper and
petroleum process streams and both influent and effluent systems. The Company
monitors changing water, process and plant operating conditions so as to
prescribe the appropriate treatment programs to solve problems such as
corrosion, scale, deposit formation and a variety of process problems.
The Company has twelve (12) production plants in the United States and
twenty (20) in countries outside the United States. Operations are conducted
primarily in the United States, Canada and Europe, and also in Asia-Pacific and
Latin America. The Company employs approximately 6,400 people worldwide.
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered by the Selling Stockholders....................... 252,600 shares
NYSE Symbol............................................................ BTL
Use of Proceeds........................................................ The Company will not receive any of the
proceeds from the sale of the Shares
being offered hereby.
</TABLE>
- --------------------------------------------------------------------------------
4
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THE COMPANY
BetzDearborn Inc. is a Pennsylvania corporation with its principal
executive offices located at 4636 Somerton Road, Trevose, Pennsylvania 19053
(telephone 215-355-3300). It also has facilities in 21 U.S. locations, including
12 production plants, and 28 locations outside the U.S., including 20 production
plants.
The Company employs approximately 6,400 people worldwide.
BetzDearborn Inc. and its subsidiaries (the "Company") are engaged in
the engineered chemical treatment of water, wastewater and process systems
operating in a wide variety of industrial and commercial applications, with
particular emphasis on the chemical, petroleum refining, paper, automotive,
electric utility and steel industries. The Company produces and sells a wide
range of specialty chemical products, and provides the technical expertise
necessary to utilize these products effectively. Chemical treatment programs are
developed for use in boilers, cooling systems, heat exchangers, paper and
petroleum process streams and both influent and effluent systems. The Company
monitors changing water, process and plant operating conditions so as to
prescribe the appropriate treatment programs to solve problems such as
corrosion, scale, deposit formation and a variety of process problems.
RECENT DEVELOPMENTS
YEAR 2000 AND RELATED ISSUES
The Year 2000 issue is the result of many computer programs using only
two digits to identify a year in the date field. These programs were designed
and developed without making provision for the impact of the upcoming change in
the century. If not corrected, many computer applications could fail or create
erroneous results by or at the year 2000.
The Company has initiated a global, enterprise-wide Year 2000 program
to identify and address the Year 2000 issue throughout its businesses. A Year
2000 program function has been created by the Company to coordinate and provide
policies, guidance and support on its Year 2000 initiatives. As part of its Year
2000 program, the Company is instituting procedures intended to reasonably
ensure that new systems implemented by the Company and current systems material
to the Company will be Year 2000 capable. In addition to evaluating the
Company's computer-related systems, the Company will be assessing how it could
be affected by the impact of the Year 2000 issue on its major customers, product
suppliers and other vendors and on its chemical feeding equipment installed at
customer locations. The anticipated timetables for addressing various aspects of
the Year 2000 initiative are being developed.
Until the internal assessment is completed, the Company will not be
able to estimate the impact of the Year 2000 issue on future operating results
or financial condition. Even without regard to the Company's state of
preparedness, additional uncertainty will undoubtedly remain relative to the
status of preparedness of those with whom the Company interacts and the external
environment in general, due to the complexity of various systems and the lack of
predictability of their respective interactions and capabilities.
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<PAGE> 6
Costs incurred to address the Year 2000 issue are charged to operating
expenses as incurred and are expected to be funded by available cash balances
and cash provided by operations.
ECONOMIC UNCERTAINTY IN ASIA-PACIFIC REGION
The Company's operations in the Asia-Pacific region currently account
for approximately six percent of consolidated net sales and consolidated total
assets. Over the past several years, this region has been one of the fastest
growing areas within the Company. It is possible that economic conditions in
Asia-Pacific could adversely affect the Company's regional sales. Also,
profitability in the region could be adversely affected by a number of factors,
including an increase in raw material costs for those materials imported into
the region unaccompanied by a corresponding increase in selling prices. The
Company is taking a number of steps to try to manage the risks present in this
region, including reduction of working capital levels and intercompany balances,
the pursuit of selling price increases and procurement of more raw materials
from within the region. The outcome of these efforts is uncertain at the present
time and the Company will continue to monitor this situation. While the economic
uncertainty in the region poses risks, the Company does not anticipate a
material impact on its consolidated results of operations or financial condition
as a result of this uncertainty. Asia-Pacific has been a profitable region for
the Company and, despite the current turmoil, the Company believes this region
continues to offer strategic long-term growth opportunities.
The Company recognizes that the Asia-Pacific economic turmoil has the
potential to negatively impact other regions of the world economy. The Company
is unable to predict the potential impact of this on the Company's consolidated
results of operations or financial condition.
USE OF PROCEEDS
The Shares of Common Stock being offered hereby are for the account of the
Selling Stockholders. Accordingly, the Company will not receive any of the
proceeds from the sale of the Shares by the Selling Stockholders. See "Selling
Stockholders."
SELLING STOCKHOLDERS
The following table sets forth the name of each of the Selling
Stockholders and the number of Shares that may be offered by each. The number of
Shares that may be actually sold by each of the Selling Stockholders will be
determined by each such Selling Stockholder, and may depend upon a number of
factors, including, among other things, the market price of the Common Stock.
Because each of the Selling Stockholders may offer all, some or none of the
Shares that each holds, and because the offering contemplated by this Prospectus
is currently not being underwritten, no estimate can be given as to the number
of Shares that will be held by each of the Selling Stockholders upon or prior to
termination of this offering. It is anticipated, however, that the Selling
Stockholders will offer all of the Shares for sale. See "Plan of Distribution."
The table below sets forth information as of March 6, 1998, concerning the
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<PAGE> 7
beneficial ownership of the Shares of each of the Selling Stockholders. All
information as to beneficial ownership has been furnished by each of the Selling
Stockholders.
<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK SHARES OF COMMON STOCK
OWNED COMMON STOCK OWNED
BEFORE OFFERING OFFERED HEREBY AFTER OFFERING*
--------------- -------------- ---------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT NUMBER NUMBER
- --------------------------- ------ ------- ------ ------
<S> <C> <C> <C> <C>
Walker Revocable Trust
dated 01/25/88, Donald W. Walker and
Ann Lee Walker, Trustees
72,347 ** 72,347 0
Donald W. Walker and Ann L. Walker
Charitable Remainder Unitrust UAD
12/17/97, Donald W. Walker and Ann L
Walker, Trustees
4,500 ** 4,500 0
Dale Walker 52,145 ** 52,145 0
Slater/Battle Family Trust of 1994
U/T/D 05/31/94, Leonard S. Slater and
Anne Battle Slater, Trustees
41,168 ** 41,168 0
Szeles Family Trust,
dated 11/06/92, Joseph Szeles and
Mary Szeles, Trustees 37,145 ** 37,145 0
Szeles Family Charitable Remainder
Unitrust UAD 12/02/97, Joseph J
Szeles and Mary Szeles, Trustees
15,000 ** 15,000 0
Lee Durham 13,036 ** 13,036 0
Daniel Comstock 2,203 ** 2,203 0
Robert Hagen 629 ** 629 0
Lawrence Steneck 629 ** 629 0
Leigh-Anne Hunter 157 ** 157 0
</TABLE>
7
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<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK SHARES OF COMMON STOCK
OWNED COMMON STOCK OWNED
BEFORE OFFERING OFFERED HEREBY AFTER OFFERING*
--------------- -------------- ---------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT NUMBER NUMBER
- --------------------------- ------ ------- ------ ------
<S> <C> <C> <C> <C>
Thomas Martinson 472 ** 472 0
Mark Boardman 314 ** 314 0
Argo Scientific Employee Stock 12,384 ** 12,384 0
Ownership Plan,
Dale Walker, Trustee
</TABLE>
* Assumes all shares offered are sold.
** Represents less than 1% of the Company's outstanding common stock.
Effective November 25, 1997, the Company acquired all of the
outstanding stock of D.W. Walker & Associates, Inc., dba Argo Scientific ("Argo
Scientific"), for an aggregate of 252,606.7285 Shares, all of which were issued
to the Selling Stockholders. No fractional shares were issued. Of those Shares,
12,591 Shares (the "escrowed shares"), issued to the Walker Revocable Trust, the
Slater/Battle Family Trust of 1994, the Szeles Family Trust of 1992, and Dale
Walker, were deposited into an escrow account to satisfy certain indemnification
provisions. The Company granted registration rights to the persons receiving the
Shares (including the escrowed shares) and pursuant thereto has registered for
sale in the offering made hereby 252,600 shares of Common Stock. The costs of
this registration (other than brokerage commissions and other similar expenses)
will be paid by the Company. Argo Scientific is in the business of providing
specialty water treatment services. Argo Scientific had revenues of $9,133,230
and $6,053,665 for the year ended February 28, 1997 and the seven-month period
ended September 30, 1997, respectively. It has facilities in the United States
and Scotland which serve North America and Europe. In connection with the Argo
Scientific acquisition, the Company caused Argo Scientific to enter into a
five-year employment agreement with Dale Walker, former President of Argo
Scientific, to serve as Vice President and General Manager of Argo Scientific.
In addition, Lawrence Steneck will remain with Argo Scientific as its Chief
Financial Officer. Mr. Walker and Mr. Durham, as well as the other Selling
Stockholders who placed shares in escrow, have entered into three-year
noncompetition agreements with the Company.
Other than as set forth in the previous paragraph, none of the parties
to the transactions described therein are affiliates of the Company at this
time.
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DESCRIPTION OF CAPITAL STOCK
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
Pursuant to the Restated Articles of Incorporation of the Company, the
authorized capital stock of the Company is 91,000,000 shares, consisting of:
(a) 1,000,000 shares of Preferred Stock, par value $.10 per share (the
"Preferred Stock"), 500,030 shares of which have been designated as Series A
ESOP Convertible Preferred Stock ("Series A Preferred Stock"); and
(b) 90,000,000 shares of Common Stock, par value $.10 per share (the
"Common Stock").
As of January 31, 1998, the Company had outstanding 29,456,225 shares
of Common Stock and 474,974 shares of Series A Preferred Stock. At January 31,
1998, there were a total of 8,036,878 shares of Common Stock reserved for
issuance pursuant to the Company's various option, incentive, stock purchase and
other benefit plans, as well as upon conversion of the Series A Preferred Stock.
The Company intends to seek shareholder approval at its 1998 annual meeting of
shareholders to increase the total number of shares of authorized Common Stock
to 250,000,000.
No holder of any class of the Company's capital stock is entitled to
preemptive rights.
In general, the classes of authorized capital stock are afforded
preferences with respect to dividends and liquidation rights in the order listed
above. The descriptions set forth below do not purport to be complete and are
qualified in their entirety by reference to (i) the Restated Articles of
Incorporation and, in the case of the Series A Preferred Stock, the Company's
Statement Affecting Class or Series of Shares (the "Statement Affecting Class"),
and (ii) the By-Laws of the Company as currently in effect (the "By-Laws").
PREFERRED STOCK
The Board of Directors of the Company is empowered, without approval of
the shareholders, to cause the Preferred Stock to be issued in one or more
series, with the numbers of shares of each series and the rights, preferences
and limitations of each series to be determined by it. The specific matters that
may be determined by the Board of Directors include the dividend rights,
redemption rights, liquidation preferences, if any, conversion and exchange
rights, retirement and sinking fund provisions and other rights, qualifications,
limitations and restrictions of any wholly unissued series of Preferred Stock
(or of the entire class of Preferred Stock if none of such shares have been
issued), the number of shares constituting such series and the terms and
conditions of the issue thereof. The rights, preferences and limitations of any
series of Preferred Stock that the Board of directors chooses to establish will
be set forth in an amendment to the Company's Restated Articles of
Incorporation.
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COMMON STOCK
Subject to the preferential rights of the Series A Preferred Stock and
any preferential rights of any other Preferred Stock created by the Board of
Directors, each outstanding share of Common Stock is entitled to such dividends
as the Board of Directors may declare from time to time out of funds legally
available therefor. Except as hereinafter described, holders of both Common
Stock and Preferred Stock (including the Series A Preferred Stock) are entitled
to one vote for each share of Common Stock or Preferred Stock (including the
Series A Preferred Stock), as applicable, but do not have any right to cumulate
votes in the election of directors. If, however, dividend arrearages on the
Preferred Stock accumulate in amounts specified in the Restated Articles of
Incorporation, holders of the Preferred Stock have the right to elect a
specified number of directors, voting as a class, to the extent specified in the
Restated Articles of Incorporation. In the event of liquidation, dissolution or
winding-up of the Company, holders of Common Stock will be entitled to receive
on a pro rata basis any assets remaining after provision for payment of
creditors and after payment of liquidation preferences to holders of the
Preferred Stock (including the Series A Preferred Stock). The Common Stock is
listed on the New York Stock Exchange, under the symbol "BTL".
Holders of shares of Common Stock own Rights pursuant to the Company's
Shareholder Rights Plan ("Rights Plan") to purchase that number of shares of
Common Stock equal to the number of shares held, upon the occurrence of certain
events designed to gain control of the Company without offering fair value to
the Company's shareholders. Ownership of Rights is evidenced by Common Share
certificates representing shares outstanding. The Company has adopted a new
Rights Plan similar in all material respects to the Company's existing Rights
Plan which will become effective upon the expiration of the existing Rights Plan
in September 1998.
The Common Stock Transfer Agent and Registrar is American Stock
Transfer and Trust Company, New York, New York.
SERIES A PREFERRED STOCK
Each outstanding share of the Series A Preferred Stock, is entitled to
cumulative, quarterly cash dividends when, as and if declared by the Board of
Directors, equal to $16 per share per annum, and no dividends may be paid on any
other class or series of stock that ranks on a parity with the Series A
Preferred Stock as to dividends unless dividends on the Series A Preferred Stock
are paid concurrently or prior thereto. The voting rights and liquidation
preference of the Series A Preferred Stock are as described above in "Common
Stock." Transfer of shares of Series A Preferred Stock may be made only to (i)
any successor to the trustee of the Company's Employee Stock Ownership Plan (the
"Plan") or (ii) any person, a transfer to whom would afford the Company a
federal income tax deduction under section 404(k) of the Internal Revenue Code
of 1986 ("Code") in the amount of the dividends paid to such person (each, a
"Permitted Transferee").
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<PAGE> 11
Holders of the Series A Preferred Stock may convert any or all of their
shares, at their option, into shares of Common Stock, but the Company has the
right to issue cash in lieu of fractional shares. Upon conversion, the Company
must issue, together with each share of Common Stock, one right to purchase
Common Stock pursuant to a Rights Agreement between the Company and American
Stock Transfer & Trust Company. See "Rights Agreement." Shares of Series A
Preferred Stock are subject to automatic conversion in the event of transfer to
any person other than a Permitted Transferee. The conversion price of the Series
A Preferred Stock is subject to adjustment in the event of (i) payment of a
dividend or other distribution on the Common Stock in shares of Common Stock,
(ii) an increase or decrease in the number of outstanding shares of Common
Stock, (iii) issuance of any right or warrant to purchase shares of Common Stock
to holders of Common Stock as a dividend or other distribution at a price below
fair market value, (iv) issuance, sale or exchange of shares of Common Stock for
a consideration below fair market value, (v) issuance, sale or exchange of any
right or warrant to purchase or acquire shares of Common Stock, other than any
such issuance to holders of Common Stock as a dividend or other distribution,
for consideration having a fair market value below the "Non-Dilutive Amount" as
defined in the Statement Affecting Class or (vi) an "Extraordinary Distribution"
as defined in the Statement Affecting Class.
The Series A Preferred Stock is redeemable, in whole or in part, at the
option of the Company for the amount payable upon liquidation. The Series A
Preferred Stock is also redeemable at the option of the holder when and to the
extent necessary for such holder to (i) provide for distributions required to be
made to participants under the Plan, (ii) make any payments of principal,
interest or premium due and payable under any indebtedness incurred by the
holder for the benefit of the Plan or (iii) meet the diversification
requirements of section 404(a)(28) of the Code. The Company may pay the
redemption price in cash or, except for a redemption pursuant to clause (iii),
in shares of Common Stock, or a combination thereof; when the Company pays in
shares, it must issue, with each such share, one right to purchase Common Stock
pursuant to the Rights Agreement.
In the event of a merger or similar business combination in which the
Company's Common Stock is exchanged solely for, or converted into, "qualified
employer securities" as defined in the Statement Affecting Class, the Series A
Preferred Stock will either (i) become preferred stock of the resulting entity
(with the same rights and preferences that it had before the transaction) or
(ii) be converted into or exchanged for the securities or cash receivable by a
holder of the number of shares of Common Stock into which the shares of Series A
Preferred Stock were convertible immediately prior to the transaction. A similar
provision for conversion applies to the Series A Preferred Stock in the event of
a merger or similar combination in which the Company's Common Stock is exchanged
for, or converted into, cash or securities that are not "qualified employer
securities." If the Company enters into an agreement providing for the latter
type of merger or combination, the holders of the Series A Preferred Stock may
elect to redeem their shares.
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<PAGE> 12
PROVISIONS OF RESTATED ARTICLES OF INCORPORATION AND BY-LAWS
Certain provisions of the Restated Articles of Incorporation and
By-Laws of the Company may delay or make more difficult unsolicited acquisitions
or changes of control of the Company. It is believed that such provisions will
enable the Company to develop its business in a manner that will foster its
long-term growth without disruption caused by the threat of a takeover not
deemed by its Board of Directors to be in the best interests of the Company and
its shareholders. Such provisions may also have the effect of making it more
difficult for third parties to cause the replacement of the current management
of the Company without the concurrence of the Board of Directors. These
provisions include, among others, (i) the availability of capital stock for
issuance from time to time at the discretion of the Board of Directors (see
"Authorized and Outstanding Capital Stock"), (ii) classified Board of Directors,
(iii) the ability of the Board of Directors to increase the size of the board
and to appoint directors to fill newly created directorships, (iv) supermajority
voting requirements and (v) business combinations with interested shareholders.
The descriptions set forth herein of such provisions do not purport to be
complete and are qualified in their entirety by reference to the Restated
Articles of Incorporation and the By-Laws.
Classified Board of Directors
The Company's By-Laws provide that the Board of Directors be divided
into three classes as nearly equal in number as possible, whose three-year terms
of office expire at different times in annual succession. A classified board
makes it more difficult for shareholders to change a majority of the directors.
Number of Directors; Filling of Vacancies; Removal of Directors
The By-Laws of the Company limit the total number of directors to 13
and provide that newly-created directorships resulting from any increase in the
authorized number of directors or any vacancy shall be filled by a vote of a
majority of directors then in office. Accordingly, the Board of Directors of the
Company may be able to prevent any shareholder from obtaining majority
representation on the Board of Directors by increasing the size of the board and
filling the newly created directorships with its own nominees. The entire Board
of Directors, any class thereof or any individual director may be removed by a
vote of shareholders only for cause, and new directors may be elected at the
same meeting. The Board of Directors may remove any director who (i) has been
judicially declared of unsound mind, (ii) has been convicted of an offense
punishable by imprisonment for more than one year or (iii) does not accept the
office within 60 days of notice of his or her selection.
Supermajority Voting Requirements
The Company's By-Laws require that any proposal to change the number,
classification or term of office of directors must receive the affirmative vote
of at least 75% of all shares outstanding as of the record date for the meeting
at which such proposal is to be voted on, as well as the affirmative vote of at
least 75% of all shares outstanding.
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<PAGE> 13
The Company's Restated Articles of Incorporation require, in regard to
the vote of the shareholders for approval of any plan of merger or
consolidation, for the sale of all or substantially all the Company's assets or
for the adoption of any amendment to the section of the Articles of
Incorporation setting forth this requirement, not only the approval of the
holders of a majority of the outstanding Common Stock and Preferred Stock
(voting together), but also the approval of at least two-thirds of the shares
(regardless of class) represented in person or by proxy at the particular
meeting.
Business Combinations with Interested Shareholders
The Company's Restated Articles of Incorporation generally prohibit
business combinations with interested shareholders unless certain terms and
conditions are satisfied, which terms and conditions are substantially similar
to those set forth in the "business combination" provisions of the Pennsylvania
Business Corporation Law described below. See "Description of Capital Stock -
Pennsylvania Business Corporation Law."
PENNSYLVANIA BUSINESS CORPORATION LAW
Certain provisions of the Pennsylvania Business Corporation Law of 1988
(the "PBCL") may have the effect of deterring, delaying or preventing an attempt
by a third party to acquire control of the Company.
The "control transactions" provisions in Sections 2541 through 2548 of
the PBCL require that any person or group that acquires at least 20% of the
voting power of a corporation (a "Controlling Person or Group") give notice of
such acquisition to the other shareholders of the corporation. The corporation's
shareholders are entitled to demand payment of the fair value of their shares
from the Controlling Person or Group. The definition of "Controlling Person or
Group" excludes from calculation of the 20% requirement, inter alia, (i) shares
held continuously since January 1983, (ii) shares acquired by gift, inheritance
or bequest from a person who had acquired the shares prior to January 1983,
(iii) shares acquired pursuant to a stock split, dividend, reclassification or
similar recapitalization, (iv) shares acquired by an underwriter pursuant to a
firm commitment underwriting registered under the Securities Act of 1933, as
amended, and (v) shares held by agents, brokers, nominees, trustees and other
similar record holders for beneficial owners either who do not possess 20% of
the voting power of the corporation or who otherwise satisfy one of the
foregoing exceptions.
The "business combination" provisions in Sections 2551 through 2556 of
the PBCL prohibit the Company from engaging in any business combination (which
is defined broadly to include mergers, consolidations, share exchanges,
divisions and sales or other dispositions of assets having a value in excess of
10% or more of the assets, market value or earning power or net income of the
corporation) with an "interested shareholder" or an affiliate thereof unless (A)
the business combination or the acquisition of shares in which a person becomes
an interested shareholder is approved by the Board of Directors before the
shareholder becomes an "interested shareholder," (B) the interested shareholder
owns 80% of the corporation's outstanding voting shares and the business
combination satisfies certain "fair price" criteria and is approved by the
holders of a majority of the remaining shares, (C) the business combination is
approved by all of
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<PAGE> 14
the holders of the Company's Common Stock, (D) the holders of a majority of the
voting shares (excluding those held by the interested shareholder) approve the
business combination at a meeting held no earlier than five years after the
interested shareholder's share acquisition date or (E) the business combination
is approved at a shareholders' meeting called for such purpose no earlier than
five years after the interested shareholder's share acquisition date that
satisfies certain "fair price" criteria. An "interested shareholder" is any
beneficial owner of 20% or more of the voting shares of a corporation, or an
affiliate of the corporation who was at any time within the five-year period
prior to the date in question a beneficial owner of 20% or more of the voting
shares of the corporation, but does not include shareholders who were interested
shareholders prior to the date of the adoption of these provisions by the
Company.
The "control share" provisions in Sections 2561 through 2568 of the
PBCL deprive any of a corporation's "Control shares" of their voting rights
unless the holders of a majority of the voting power of the corporation vote to
restore such rights in two separate votes as follows: (i) all voting shares of
the corporation and (ii) all shares of the corporation other than those held by
the Company's executive officers or directors who are also officers, certain
employee stock plans and the person acquiring the Control shares. Control shares
are those voting shares the acquisition of voting power over which would confer
on the person acquiring them, when added to all voting power of the person over
other voting shares of the corporation, the ability to cast in an election of
directors, for the first time, a percentage of the voting power of the
corporation that falls within any of the following ranges: (i) at least 20% but
less than 33 1/3%; (ii) at least 33 1/3% but less than 50%; or (iii) at least
50%. In calculating such percentage, the following shares are excluded: (i)
voting shares beneficially owned continuously since January 1988~; (ii) voting
shares beneficially owned that were acquired by gift, inheritance or bequest
from a person who had beneficially owned the shares prior to January 1988; and
(iii) shares acquired pursuant to a stock split, dividend or other similar
distribution.
The "disgorgement" provisions in Sections 2571 through 2576 of the PBCL
permit a corporation to recover from "controlling persons" any profit realized
by such controlling persons from the disposition of any equity security of the
corporation if the equity securities (i) were sold within 18 months after such
persons became "controlling persons" and (ii) had been acquired by the
controlling persons within 24 months prior, or 18 months subsequent to, the date
on which the controlling persons became "controlling persons." A controlling
person is anyone who has, offers to acquire, or publicly discloses the intention
to acquire, 20% of the voting power of the corporation, or anyone who publicly
discloses the intention to acquire control of a corporation through any means.
The provisions provide a safe harbor for shareholders who would be deemed
"controlling persons" by reason of voting or giving a proxy or consent, under
certain circumstances evidencing the lack of any intention on the part of such
shareholders to change or influence control of the corporation.
In addition to the above, the PBCL expressly permits directors of a
corporation to consider the interests of constituencies other than shareholders,
such as employees, suppliers, customers and the community, in discharging their
duties, provides that they need not, in considering the best interests of the
corporation, consider any particular constituency's interests (including the
interests of shareholders) as the dominant or controlling interest, and provides
that
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<PAGE> 15
directors do not violate their fiduciary duty by relying on shareholders'
rights plans or other anti-takeover provisions of the PBCL.
RIGHTS AGREEMENT
The Company has a Shareholder Rights Plan ("Rights Plan") to protect
shareholder interests in the face of a threatened hostile acquisition. Under the
terms of the Rights Plan, each holder of shares of Common Stock owns rights to
purchase that number of shares of Common Stock equal to the number of such
shares held, upon the occurrence of certain events designed to gain control of
the Company without offering fair value to the Company's shareholders.
The Company has adopted a new Shareholder Rights Plan designed to
continue the Company's existing Rights Plan that expires September 19, 1998. The
new Rights Plan is similar in all material respects to the Company's existing
Rights Plan and will continue to protect shareholder interests against attempts
to acquire the Company by means of unfair or coercive take-over tactics. Under
the terms of the new Shareholder Rights Plan, all shareholders of record as of
September 19, 1998, will receive one Right for each share of Common Stock held
on that date. An additional Right will be issued with each share of Common Stock
that is subsequently issued or sold. All Rights will expire on September 19,
2008.
The Rights will be exercisable and trade separately only if a person or
group acquires, or commences an offer to acquire, beneficial ownership of 20% or
more of the Company's Common Stock. If such event occurs, other shareholders of
the Company will be able to buy shares of Common Stock having twice the value of
the exercise price of the Rights.
INDEMNIFICATION
Third Party Actions. The Company's By-Laws provide that the Company
shall indemnify any director or officer of the Company who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Company) by reason of the fact
that he or she is or was an authorized representative of the Company which means
a director, officer, employee or agent of the Company, or a person who is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Company, and, with respect to any criminal action or proceeding, has no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction , or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interest of the
Company, and, with
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<PAGE> 16
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
Derivative Actions. The Company's By-Laws also provide that the Company
shall indemnify any director or officer of the Company who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Company to procure a judgment in its favor by
reason of the fact that he or she is or was an authorized representative of the
Company, against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action or suit if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
Company and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his or her duty to the
Company unless and only to the extent that a court shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to such
expenses which the court shall deem proper.
Expense of Litigation. Expenses incurred by any director, officer,
employee or agent in defending a civil or criminal action, suit or proceeding
may be paid by the Company in advance of final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount if it shall ultimately be determined such person is not
entitled to be indemnified by the Company.
By-Law Provisions Not Exclusive. The provisions of the By-Laws are not
exclusive of any other rights to which a person seeing indemnification or
advancement of expenses may be entitled under any other provision of the
By-Laws, or any agreement, vote of shareholders, vote of directors or otherwise
both as to acts or failure to act of such person in his or her official capacity
and as to acts or failure to act in another capacity while holding office. The
Company shall have the fullest authority to indemnify any such director,
officer, employee or agent permitted under the laws of the Commonwealth of
Pennsylvania; provided, however, no indemnification shall be made in any case
where the act or failure to act giving rise to the claim for indemnification is
finally determined by a court to have constituted willful misconduct or
recklessness.
LIMITATION OF LIABILITY
Pursuant to the Company's By-Laws, no director, including a director
who is also an officer, of the Company shall be personally liable for monetary
damages for any action taken, or any failure to take any action in his or her
capacity as a director, including his or her duties as a member of any committee
of the Board of Directors upon which he or she may serve unless: (i) the
director has breached or failed to perform his or her duties as a director in
good faith, in a manner he or she reasonably believed to be in the best interest
of the Company and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances; and (ii) such breach or failure to perform his or her duties
constitutes self-dealing, willful misconduct or recklessness. Absent a breach by
a director of his
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<PAGE> 17
or her duty as a fiduciary to the Company, lack of good faith, or self-dealing,
the acts of or failure to act by a director in his or her capacity as a director
shall be presumed to be in the best interest of the Company.
PLAN OF DISTRIBUTION
The Company will receive no proceeds from the sale of the Shares by the
Selling Stockholders. The Shares may be sold from time to time to purchasers
directly by the Selling Stockholders. Alternatively, the Selling Stockholders
may sell the Shares in one or more transactions (which may involve one or more
block transactions) on the New York Stock Exchange, in privately negotiated
transactions or otherwise or in a combination of such transactions; each sale
may be made either at market prices prevailing at the time of such sale or at
negotiated prices; some or all of the Shares may be sold through broker-dealers
acting as brokers or agents on behalf of the Selling Stockholders or to
broker-dealers acting as principals for resale by such dealers; and in
connection with such sales, such broker-dealers may receive compensation in the
form of commissions, discounts or fees from the Selling Stockholders and/or the
purchasers of such shares for whom they may act as broker or agent. It is
anticipated that the Selling Stockholders will offer all of the Shares for sale.
All expenses of registration incurred in connection with this offering are being
borne by the Company, but all brokerage commissions and other similar expenses
incurred by the Selling Stockholders will be borne by the Selling Stockholders.
At the time a particular offer of Shares is made, to the extent
required, a supplement to this Prospectus (the "Prospectus Supplement") will be
distributed that will identify and set forth the aggregate amount of Shares
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriter for
Shares purchased from Selling Stockholders, any commissions, discounts or
concessions allowed or reallowed or paid to dealers, including the proposed
selling price to the public.
Each Selling Stockholder and any dealer acting in connection with the
offering of any of the Shares or any broker executing or selling orders on
behalf of any of the Selling Stockholders may be deemed to be an "underwriter"
within the meaning of the Securities Act, in which event any profit on the sale
of any or all of the Shares and any commissions, discounts or concessions
received by any such dealers or brokers may be deemed to be underwriting
commissions and discounts under the Securities Act. Any dealer or broker
participating in any distribution of the Shares may be required to deliver a
copy of this Prospectus, including a Prospectus Supplement, if any, to any
person who purchases any of the Shares from or through such dealer or broker.
Any person engaged in a distribution of the Shares, including brokers,
dealers and Selling Stockholders, must comply with the trading restrictions
imposed by Regulation M promulgated under the Exchange Act.
In order to comply with certain states' securities laws, if applicable,
the shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. The Shares will not be registered or qualified for
sale in any state in reliance of the exemption for securities listed on the NYSE
provided in Section 18 of the Securities Act.
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<PAGE> 18
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Linda R. Hansen, Esq., Vice President, Secretary and General
Counsel of the Company.
EXPERTS
The consolidated financial statements and schedule of BetzDearborn Inc.
incorporated by reference or included in the Company's Annual Report on Form
10-K for the year ended December 31, 1996, have been audited by Ernst & Young
LLP, Independent Auditors, as set forth in their reports thereon, incorporated
by reference or included therein and incorporated herein by reference. Such
consolidated financial statements and schedule are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
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No dealer, salesperson or other person is authorized to give any information or
to make any representation other than those contained in this Prospectus in
connection with the offer made by this Prospectus and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company, any of the Selling Stockholders or any other person. This
Prospectus does not constitute an offer to sell or the solicitation of an offer
to buy any security other than the Shares of Common Stock offered by this
Prospectus, nor does it constitute an offer to sell or a solicitation of any
offer to buy the Shares of Common Stock by anyone in any jurisdiction in which
such offer or solicitation is not authorized, or in which the person making such
offer or solicitation is not qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that information contained herein is correct as of any date
subsequent to the date hereof.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information.............................2
Incorporation of Certain Documents
by Reference....................................2
Prospectus Summary................................4
The Company.......................................5
Recent Developments...............................5
Use of Proceeds...................................6
Selling Stockholders..............................6
Description of Capital Stock......................9
Plan of Distribution.............................17
Legal Matters....................................18
Experts..........................................18
</TABLE>
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252,600 SHARES
[BETZDEARBORN LOGO]
COMMON STOCK
==========
PROSPECTUS
==========
MARCH 6, 1998
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