<PAGE>
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 [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
VWR Corporation
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF VWR SCIENTIFIC PRODUCTS APPEARS HERE]
Dear Shareholder:
You are cordially invited to attend the VWR Scientific Products Corporation
Annual Meeting of Shareholders to be held at the Desmond Great Valley Hotel,
One Liberty Boulevard, Malvern, Pennsylvania, on April 16, 1996, at 11:00 a.m.
At the Meeting, we will report on the operations of the Corporation and
respond to any questions you may have.
Your Board of Directors recommends that you vote to re-elect three Directors
whose terms of office will expire this year and one new Director, approve the
1995 Stock Incentive Plan, and ratify the selection of Ernst & Young LLP as
our independent auditors. These matters are described more fully in the formal
notice of annual meeting and proxy statement which appear on the following
pages.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Meeting,
it is important that your shares be represented. Therefore, I urge you to
sign, date, and promptly return the enclosed proxy in the enclosed postage
paid envelope. If you attend the Meeting, you will, of course, have the
privilege of voting in person.
I look forward to greeting you personally; and on behalf of the Board of
Directors and management of the Corporation, I would like to express our
appreciation for your interest in VWR Scientific Products Corporation.
Sincerely,
/s/ Jerrold B. Harris
JERROLD B. HARRIS
President and Chief Executive
Officer
West Chester, Pennsylvania
March 15, 1996
<PAGE>
VWR SCIENTIFIC PRODUCTS CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of VWR Scientific Products Corporation
will be held at the Desmond Great Valley Hotel, One Liberty Boulevard,
Malvern, Pennsylvania, on April 16, 1996, at 11:00 a.m. for the following
purposes:
1. To elect four Directors.
2. To approve the 1995 Stock Incentive Plan, which was previously approved by
the Board of Directors.
3. To ratify the selection of Ernst & Young LLP as independent auditors for
the year ending December 31, 1996.
4. To transact such other business as may properly come before the Meeting.
Only shareholders of record at the close of business on February 19, 1996,
are entitled to notice of, and to vote at, this meeting.
BY ORDER OF THE BOARD OF
DIRECTORS
BY
/s/ David M. Bronson
DAVID M. BRONSON
Senior Vice President Finance
Corporate Secretary
West Chester, Pennsylvania
March 15, 1996
EACH SHAREHOLDER IS URGED TO SIGN AND RETURN PROMPTLY THE ACCOMPANYING PROXY
IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE
UNITED STATES.
<PAGE>
VWR SCIENTIFIC PRODUCTS CORPORATION
CORPORATE OFFICES
1310 GOSHEN PARKWAY
WEST CHESTER, PENNSYLVANIA 19380
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 1996
----------------
This proxy statement and accompanying proxy, which are being mailed to
shareholders on or about March 15, 1996, are furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of VWR Scientific
Products Corporation (the "Corporation," "Company" or "VWR") to be voted at
the Annual Meeting of Shareholders of the Corporation to be held at 11:00 a.m.
on April 16, 1996 at the Desmond Great Valley Hotel, One Liberty Boulevard,
Malvern, Pennsylvania, for the purposes set forth in the accompanying Notice
of Annual Meeting of Shareholders. Shareholders who execute proxies retain the
right to revoke them at any time before they are voted. A proxy may be revoked
by written notice to the Secretary of the Corporation at 1310 Goshen Parkway,
West Chester, Pennsylvania 19380; by submission of a proxy with a later date;
or by a request in person to return the executed proxy.
The Company has engaged Corporate Investor Communications, Inc. to assist in
the solicitation of proxies for a fee of approximately $5,000. The cost of
solicitation of proxies is to be borne by the Corporation.
Shareholders of record at the close of business on February 19, 1996, will
be entitled to vote at the meeting. On February 19, 1996, there were
21,070,381 common shares outstanding.
Each common share is entitled to one vote on all matters to come before the
Annual Meeting, except that, because of the existence of a "40% Shareholder"
(as defined in VWR's Articles of Incorporation) as discussed below in this
proxy statement, shareholders have the right to cumulate their votes in the
election of Directors. This means that shareholders may multiply the number of
votes to which they are entitled by the number of Directors to be elected, and
the whole number of such votes may be cast for one nominee or distributed
among any two or more nominees. If you wish to cumulate your votes in this
manner, you must clearly indicate on your proxy card your desire to cumulate
and the number of votes you wish to cast for each nominee.
In the election of Directors, assuming a quorum is present, the four
nominees receiving the highest number of votes cast at the Meeting will be
elected Directors. Approval of the 1995 Stock Incentive Plan requires the
affirmative vote of a majority of the common shares of the Corporation
present, or represented, and entitled to vote at the Annual Meeting.
Ratification of the selection of Ernst & Young LLP as independent auditors
requires the affirmative vote of a majority of the votes cast by all
shareholders entitled to vote thereon. If a proxy is marked as "withhold
authority" or "abstain" on any matter, or if specific instructions are given
that no vote be cast on any specific matter (a "specified non-vote"), the
shares represented by such proxy will not be voted on such matter.
Accordingly, abstentions and specified non-votes will have no effect on the
vote for election of Directors or ratification of Ernst & Young LLP as
independent auditors. Abstentions from voting on approval of the 1995 Stock
Incentive Plan will be included within the number of common shares present at
the meeting and entitled to vote for purposes of determining whether the 1995
Stock Incentive Plan has been approved, but specified non-votes will not be so
included and accordingly will not affect the outcome of the vote on this
matter.
1
<PAGE>
ELECTION OF DIRECTORS
Your Corporation has a classified Board of fourteen Directors. Directors are
elected for terms of three years in two classes of five and one class of four.
This year, Messrs. James W. Bernard, Richard E. Engebrecht, and Stephen J.
Kunst, all of whom are current Directors, have been nominated to be re-elected
for a term which expires in 1999. Mr. Dieter Janssen has been nominated for
election for a term which expires in 1999. Mr. Robert S. Rogers, who had been
a Director since 1986, retired from the Board late in 1995 having reached the
mandatory retirement age of 72.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF, AND UNLESS YOU
INDICATE OTHERWISE, YOUR SIGNED PROXY WILL BE VOTED FOR THE ELECTION OF THESE
NOMINEES (IN EQUAL AMOUNTS OR CUMULATIVELY AS THE PERSONS VOTING THE PROXIES
MAY DETERMINE). The Board of Directors expects that each of the nominees will
be available for election; but if any of them is not a candidate at the time
the election occurs, it is intended that such proxy will be voted for the
election of another nominee to be designated to fill any such vacancy by the
Board of Directors of the Corporation.
In April 1995, EM Laboratories, Incorporated ("EML"), an affiliate of Merck
KGaA, Darmstadt, Germany, purchased from the Company, for approximately
$20,000,000, 1,818,181 of its common shares and a warrant (the "Warrant") to
purchase an additional 967,015 shares (at a price per share of $11). In
connection with VWR's acquisition of the industrial distribution business of
Baxter Healthcare Corporation and certain of its affiliates, on September 15,
1995, EML purchased an additional 6,832,797 common shares at a price of $12.44
per share and exercised the Warrant, raising its beneficial ownership of the
Company to approximately 46%. EML also purchased a $135 million subordinated
debenture of the Company under which interest is payable in VWR common shares,
valued at $12.44 per share, until the beneficial ownership of EML and its
affiliates, in VWR, reaches 49.89%. EML assigned the subordinated debenture to
Merck KGaA. Affiliates of EML within the Merck group were the source of EML's
funds for these purchases of VWR securities.
EML and its parent, EM Industries, Incorporated ("EMI") are parties to a
Standstill Agreement with the Company, pursuant to which EML and EMI agreed
that they and their affiliates would not, subject to certain specified
exceptions, for a period of four years, increase their beneficial ownership of
the Company's common shares above 49.89% without the prior consent of the
Company. EML beneficially owned approximately 47.2% of the issued and
outstanding common shares as of January 31, 1996.
Pursuant to the Standstill Agreement VWR is required annually to cause
representatives of EML to be nominated for election to the Board so as to
provide EML with Board representation, rounded down to the next whole number,
which is commensurate with the proportion of common shares of VWR owned by EML
and its affiliates. EML is also entitled to be represented on any committee of
the Board.
Six members of VWR's current Board, which consists of fourteen Directors,
are representatives of EML. Two of the nominees for election at the Annual
Meeting, Stephen J. Kunst and Dieter Janssen, are designees of EML. Of the
Directors whose terms will continue after the Annual Meeting, Alfred Koch,
Wolfgang Honn, Walter W. Zywottek and Dr. Harald Schroeder are serving as
designees of EML. THE STANDSTILL AGREEMENT OBLIGATES EML TO VOTE ITS COMMON
SHARES FOR THE ELECTION OF ITS DESIGNATED NOMINEES AND FOR THE ELECTION OF
THOSE PERSONS NOMINATED BY VWR'S DIRECTORS WHO ARE NOT AFFILIATED WITH EML.
During 1995, in the ordinary course of VWR's business, VWR purchased $31.3
million of inventory from affiliates of Merck KGaA, of which $4.5 million was
payable at December 31, 1995. Merck KGaA and its affiliates manufacture and
distribute pharmaceutical, laboratory and chemical products.
2
<PAGE>
NOMINEES FOR ELECTION
- ---------------------
JAMES W. BERNARD--Mr. Bernard, 58, retired, was President and Chief
Executive Officer of Univar Corporation ("Univar"), a distributor of
industrial chemicals, from 1986 to October, 1995. Mr. Bernard is a Director of
Univar and U.S. Bancorp. Mr. Bernard has been a Director of the Corporation
since 1988.
RICHARD E. ENGEBRECHT--Mr. Engebrecht, 69, is Chairman of the Board of
PrimeSource Corporation ("PrimeSource"), a distributor of graphic arts
equipment and supplies. He was Chairman of the Board of Momentum Corporation,
a distributor of photographic and graphic arts equipment and supplies
("Momentum") from January 1, 1993 until it merged with PrimeSource on
September 1, 1994, and President and Chief Executive Officer of Momentum from
March 1, 1990 through December 31, 1992. He is a Director of PENWEST Ltd.
("PENWEST"), a manufacturer of specialty carbohydrate chemicals and flavor and
food additive products, and Univar. Mr. Engebrecht has been a Director of the
Corporation since 1986.
STEPHEN J. KUNST--Mr. Kunst, 47, is Vice President--Administrative Services
and General Counsel of EMI and a Director of EMI and EML. Mr. Kunst has been a
Director of the Corporation since 1995.
DIETER JANSSEN--Mr. Janssen, 53, is North American Group Vice President
Finance and Chief Financial Officer of EMI. Mr. Janssen has not previously
been a Director of the Corporation.
CONTINUING DIRECTORS -- TERM EXPIRES IN 1997
- --------------------------------------------
CURTIS P. LINDLEY--Mr. Lindley, 71, retired, was Chairman of the Board of
Directors of PENWEST from 1987 to 1990. He is Chairman of the Board of
Directors of The Ostrom Company. Mr. Lindley is also a Director of Univar. Mr.
Lindley has been a Director of the Corporation since 1986.
EDWARD A. MCGRATH, JR.--Mr. McGrath, 65, retired, was President, Chief
Executive Officer and Chairman of Graybar Electric Company, Inc., an
electrical distributor, from 1989 to July 1995. Mr. McGrath has been a
Director of the Corporation since 1992.
N. STEWART ROGERS--Mr. Rogers, 66, has been Chairman of the Board of
Directors of PENWEST since February, 1990. He was Senior Vice President of
Univar from 1971 to 1991. He is a Director of Univar, Fluke Corporation, and
U.S. Bancorp. Mr. Rogers is the brother-in-law of James H. Wiborg, a Director,
Chairman, and Chief Strategist of the Corporation. Mr. Rogers has been a
Director of the Corporation since 1986.
ALFRED KOCH--Mr. Koch, 50, is Director and General Manager of the Laboratory
Supply Division of Merck KGaA, and is a member of the Board of Management of
two Merck--affiliated European laboratory supply companies--KEBO Lab and
Bender & Hobein GmbH. Mr. Koch has been a Director of the Corporation since
1995.
WOLFGANG HONN--Mr. Honn, 58, is a Partner and member of the Executive Board
of E. Merck and Merck KGaA. Mr. Honn has been a Director of the Corporation
since 1995.
CONTINUING DIRECTORS--TERM EXPIRES IN 1998
- ------------------------------------------
JERROLD B. HARRIS--Mr. Harris, 53, was elected President and Chief Executive
Officer of VWR effective March 1, 1990. Mr. Harris has been a Director of the
Corporation since 1988.
DONALD P. NIELSEN--Mr. Nielsen, 57, retired, was founder, President, Chief
Executive Officer, and Chairman of Hazleton Corporation, a biological and
chemical research and testing company, headquartered in Herndon, Virginia. Mr.
Nielsen is also Chairman of the Board of Bob Walsh Enterprises, Inc. and
DiaCom Technologies, Inc. Mr. Nielsen has been a Director of the Corporation
since 1988.
3
<PAGE>
JAMES H. WIBORG--Mr. Wiborg, 71, is Chairman of the Board and Chief
Strategist for the Corporation. He served as Vice Chairman of the Board and
Chief Strategist of Momentum from March 1, 1990 to September 1, 1994 when it
merged with PrimeSource. Since August, 1990, Mr. Wiborg has served as Chairman
of Univar. Mr. Wiborg is also a Director of PrimeSource, PACCAR, Inc., and
PENWEST. Mr. Wiborg is the brother-in-law of N. Stewart Rogers, a Director of
the Corporation. Mr. Wiborg has been a Director of the Corporation since 1986.
WALTER W. ZYWOTTEK--Mr. Zywottek, 48, is President and Chief Executive
Officer of EMI and EML. He also serves as North American Regional Manager of
Merck AG and is a Director of Dey Laboratories, Inc., both of which are
affliates of Merck KGaA. Mr. Zywottek has been a Director of the Corporation
since 1995.
DR. HARALD SCHROEDER--Mr. Schroeder, 57, is a member and Deputy Chairman of
the Executive Board of Merck KGaA. Mr. Schroeder has been a Director of the
Corporation since 1995.
OWNERSHIP OF VWR SCIENTIFIC PRODUCTS CORPORATION COMMON SHARES
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL
OWNERSHIP OF PERCENT OF
COMMON SHARES CLASS AS OF
DIRECTORS AS OF JANUARY 31, 1996(1) JANUARY 31, 1996
- --------- ------------------------- ----------------
<S> <C> <C>
NOMINEES FOR ELECTION
James W. Bernard 90,718(2) 0.42%
Richard E. Engebrecht 110,641 0.52%
Stephen J. Kunst -- (3) --
Dieter Janssen -- (4) --
CONTINUING DIRECTORS--TERM EXPIRES
IN 1998
Jerrold B. Harris 283,552(5) 1.32%
Donald P. Nielsen 27,278 0.13%
James H. Wiborg 454,249(6) 2.11%
Alfred Koch -- (7) --
Wolfgang Honn -- (8) --
CONTINUING DIRECTORS--TERMS EXPIRES
IN 1997
Curtis P. Lindley 221,058(9) 1.03%
Edward A. McGrath, Jr. 6,078 .03%
N. Stewart Rogers 336,031(10) 1.56%
Walter W. Zywottek -- (11) --
Dr. Harold Schroeder -- (12) --
CERTAIN EXECUTIVE OFFICERS
- --------------------------
Paul J. Nowak 14,700(13) 0.07%
Hal G. Nichter 11,167(14) 0.05%
Directors & Executive Officers as
a group
(19 persons) 1,557,570(15) 7.24%
CERTAIN BENEFICIAL OWNERS
- -------------------------
EM Laboratories, Incorporated 10,155,246(16) 47.19%
5 Skyline Drive
Hawthorne, New York 10532
</TABLE>
4
<PAGE>
- ---------------------
(1) Except as otherwise indicated, beneficial ownership represents sole
voting and sole investment power with respect to $1.00 par value common
shares, the Corporation's only outstanding class of stock.
(2) Mr. Bernard disclaims any beneficial interest in 40,500 shares (included
in the amounts shown in the above table) owned by his spouse.
(3) Mr. Kunst disclaims beneficial ownership of all common shares owned by
EML.
(4) Mr. Janssen disclaims beneficial ownership of all common shares owned by
EML.
(5) Includes 66,982 shares which Mr. Harris had the right to acquire within
60 days of January 31, 1996 through the exercise of options. Also
includes 19,479 shares held under the Company's benefit plans and 46,939
shares of restricted stock for which beneficial ownership is based upon
sole voting power.
(6) Mr. Wiborg disclaims any beneficial interest in 140,000 shares (included
in the amounts shown in the above table) owned by his spouse. Mr. Wiborg
is also a trustee of two trusts owning 62,685 shares (included in the
amounts shown in the above table). Mr. Wiborg disclaims beneficial
interest in the shares owned by these trusts.
(7) Mr. Koch disclaims beneficial ownership of all common shares owned by
EML.
(8) Mr. Honn disclaims beneficial ownership of all common shares owned by
EML.
(9) Mr. Lindley disclaims any beneficial interest in 4,372 shares (included
in the amounts shown in the above table) owned by his spouse.
(10) Mr. N. Stewart Rogers is a trustee of a trust for grandchildren which
holds 4,000 shares (included in the amounts shown in the above table).
(11) Mr. Zywottek disclaims beneficial ownership of all common shares owned by
EML.
(12) Mr. Schroeder disclaims beneficial ownership of all common shares owned
by EML.
(13) Includes 10,522 shares which Mr. Nowak had the right to acquire within 60
days of January 31, 1996 through the exercise of options. Also includes
3,293 shares held under the Company's benefit plans and 47 shares of
restricted stock for which beneficial ownership is based upon sole voting
power.
(14) Includes 3,000 shares which Mr. Nichter had the right to acquire within
60 days of January 31, 1996 through the exercise of options. Also
includes 6,437 shares held under the Company's benefit plans for which
beneficial ownership is based upon sole voting power.
(15) Includes 80,534 shares which certain executive officers had the right to
acquire within 60 days of January 31, 1996 through the exercise of
options. Members of the group shared voting and/or investment power with
other persons as to 66,685 of such shares or 0.31% of the common shares
outstanding.
(16) Ownership of common shares includes 537,253 shares held by Merck KGaA, an
affiliate of EM Laboratories, Incorporated, issued as interest payments
under the terms of the subordinated debenture held by Merck KGaA.
FEES TO DIRECTORS AND COMMITTEES OF THE BOARD
Each Non-employee Director receives for services an annual retainer of
$10,000 (payable in shares of restricted stock), fees of $1,000 for attendance
at each Board of Directors meeting ($2,500 if the meeting is held outside a
Director's state of residence), fees of $500 for attendance at each Board
Committee meeting, and reimbursement of travel expenses in connection with
meetings. Representatives of EML did not receive annual retainers in 1995.
Each member of the Executive Committee receives an annual retainer of $2,000
and the Chairman of each standing Committee of the Board receives an annual
retainer of $2,000.
Mr. Wiborg, as Chairman of the Board and Chief Strategist, had a Consulting
Services Agreement which provided for a retainer of $30,000 in 1995 (including
Directors' annual retainer).
5
<PAGE>
The Corporation's Board of Directors has standing Audit/Pension,
Compensation and Nominating Committees. The members of each Committee with
responsibility for the year ended December 31, 1995 and the functions
performed thereby are outlined below:
Messrs. Lindley, McGrath, Nielsen, Kunst, Max J. Walser (a Director whose
term expires at the Annual Meeting but who is not standing for re-election),
and Rogers, are members of the AUDIT/PENSION COMMITTEE of which Mr. Rogers is
Chairman. The Audit/Pension Committee has responsibility for recommending to
the Board of Directors the firm of independent auditors to be retained by the
Corporation; reviewing with the Corporation's auditors the scope of the audit;
reviewing and recommending corporate accounting policies to the Board of
Directors; reviewing reports of independent auditors as to the adequacy of the
Corporation's accounting system, controls, and other matters; and reviewing
areas of possible conflicts of interest and sensitive payments. The Committee
also has the responsibility of establishing investment policy and selecting
the trustee of the funds of the VWR Corporation Retirement Plan; reviewing and
making recommendations to the Board of Directors with respect to the
performance of any third parties responsible for the administration and for
the investment of funds; reviewing the annual reports for the VWR Corporation
Retirement Plan; and establishing and administering systems of periodic
reporting.
Messrs. Bernard, Honn, Nielsen, Zywottek, and McGrath are members of the
COMPENSATION COMMITTEE of which Mr. McGrath is Chairman. The Compensation
Committee has the responsibility for recommending compensation of executive
officers; establishing bonus criteria; reviewing annually the operation of all
compensation and benefit practices and salary administration procedures;
consulting with the Audit/Pension Committee regarding the pension cost effects
of trends in compensation; recommending benefit levels in the Corporation's
retirement program; and recommending Directors' fees.
Messrs. Bernard, Nielsen, Rogers, Koch, Schroeder, and Harris (Ex-Officio)
are members of the NOMINATING COMMITTEE of which Mr. Bernard is the Chairman.
The Nominating Committee has the responsibility of receiving, reviewing, and
maintaining files of individuals qualified to be recommended as nominees for
election as Directors; reviewing annually the capability of each incumbent
Director to continue to serve as Director; recommending a list of individuals
to the Board of Directors for nomination for election to the Board of
Directors; and recommending individuals for appointment to existing committees
or to new or replacement committees as required.
Shareholder nominations to the Board of Directors must be made in accordance
with the procedures set forth in the Bylaws of the Corporation which require,
among other things, that nominations must be received not less than 120 days
prior to the date which corresponds to the date on which the Corporation
mailed its proxy statement for the previous year's Annual Meeting of
Shareholders. So long as the Corporation has a "40% Shareholders" (as defined
in the Articles of Incorporation), Article IX of the Articles of Incorporation
allows Disinterested Directors or persons beneficially owning shares of Voting
Stock having a Market Price of $250,000 or more to nominate one or more
candidates for election as a Director and to have information relating to such
nominees included in the Corporation's proxy statement, and provides that each
shareholder of VWR has cumulative voting rights in such election. No such
nomination was made in 1995.
The Audit/Pension Committee met two times, the Compensation Committee two
times, the Nominating Committee one time, and the entire Board of Directors
eleven times during 1995. In 1995, Mr. Koch attended 33% of the meetings
during the time he was a Director and Mr. Lindley attended 73% of the
meetings.
6
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE
The Corporation's executive compensation program is administered by the
Compensation Committee ("Committee"), which is composed of five independent,
non-employee directors. Following review and approval by the Committee, all
issues pertaining to executive compensation are submitted to the full Board of
Directors for ratification.
Since its spin off from Univar in 1986, the Corporation has maintained the
philosophy that compensation of its executive officers (including its Chief
Executive Officer) and management should be directly and materially linked to
value creation for shareholders. The objective is to make the annual incentive
bonus, which rewards executives for meeting financial targets based on the
relationship of the Corporation's return on capital to its cost of capital,
the largest component of an executive's compensation.
The Corporation's executive compensation program consists of four
components: base salary, annual incentive bonus, long-term equity-based
incentive compensation, and the Corporation's contributions to various savings
and stock ownership programs. The Committee has not yet deemed it necessary to
consider its policy with respect to the possible tax effect on the
Corporation, under the federal Revenue Reconciliation Act of 1993, of annual
compensation exceeding $1 million paid to any individual.
BASE SALARY
Base salary is designed to be competitive, although generally conservative
as compared to equivalent positions at comparable companies, such as those
that are included in the Wholesale Trade Distributors Index shown in the
Performance Graph on page 13. Since 1986, the Corporation's philosophy is to
place a relatively greater emphasis on the annual incentive components of
compensation.
ANNUAL INCENTIVE COMPENSATION PLAN
The Corporation's Executive Bonus Plan (the "Bonus Plan") provides annual
cash and incentive stock awards, which are based upon the relationship of the
Corporation's return on "invested capital" to its "cost of capital" (as both
terms are defined in the Bonus Plan). Each year the Committee approves bonus
targets by salary grade. The Corporation determines an individual's potential
bonus award by multiplying that person's target bonus by a factor which is
calculated using the percentage which the Corporation's return on invested
capital bears to its cost of capital. No bonuses are earned if the
Corporation's return on invested capital is less than 60% of its cost of
capital. The potential awards may then be adjusted (from zero to 1.5 times the
potential award) by an assessment of the executive's performance, which is
determined by the Chief Executive Officer based on subjective factors and is
subject to the Committee's approval. The Committee assesses the Chief
Executive Officer's performance.
For 1995, the Corporation's pre-tax cost of capital as calculated in
accordance with the Bonus Plan was 16.01%.
In accordance with the Bonus Plan, bonus awards are paid as follows: an
award of up to 150% of a participant's target bonus is paid in cash; any
portion of the award in excess of 150% but less than 200% of target is paid in
unrestricted stock, and in excess of 200% of target is paid in restricted
stock. The Bonus Plan does not take into consideration an executive officer's
current stock ownership and options. For 1995, all bonuses have been paid in
cash in accordance with the Bonus Plan.
7
<PAGE>
LONG-TERM INCENTIVE STOCK PLAN
Additional stock incentives (incentive stock options, non-qualified stock
options, and restricted stock grants) have been provided under the 1986 Long-
Term Incentive Stock Plan (1986 LTIP) and the 1995 Stock Incentive Plan (1995
SIP). Restricted stock grants under the 1986 LTIP generally vest over four
years. Stock options under the 1986 LTIP were awarded with an exercise price
equal to the fair market value at the date of grant and have not been
repriced. These options generally vest over a seven year period.
Stock options under the 1995 SIP are awarded at an exercise price not less
than the fair market value at the date of grant. Options awarded executive
officers to date vest at the earlier of nine years following issuance of the
grant or 50% when the closing price per common share is at least 150% of the
fair market value of the common shares on September 15, 1995 for twenty
consecutive days and the remaining 50% when the closing price per common share
is at least 175% of the fair market value of the common shares on September
15, 1995 for twenty consecutive days. Exercise cannot occur within twelve
months of the grant date.
Restricted stock grants and stock options are intended to align an
executive's interests with those of shareholders. The Corporation will
periodically grant additional stock awards under the 1995 SIP, for which
shareholder approval is being sought at the Annual Meeting, to provide
continuing incentives for future performance. Such awards are recommended by
the Chief Executive Officer and are subject to Committee approval. The size of
previous awards and the number of options held are considered by the
Committee, but are not determinative.
OTHER PLANS
The Corporation maintains a 401(k) savings plan and an Employee Stock
Ownership Plan (ESOP). Under the 401(k) Plan, the Corporation contributes, in
VWR stock only, up to 50% of the first 3% of each employee's earnings as a
matching contribution, which is invested entirely in VWR Common Stock. Under
the ESOP, the Corporation allocates VWR common stock evenly among all eligible
participants, irrespective of salary or position in the Corporation. The ESOP
shares vest equally over an employment period of five years, at which point
the employee is vested 100% in the plan.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee's objective is to correlate Mr. Harris' remuneration with the
performance of the Corporation. The Committee believes Mr. Harris' base salary
is average as compared with the salaries of chief executive officers of
comparable companies such as those included in the Wholesale Trade
Distributors Index referred to above. The Committee increased Mr. Harris' base
salary for 1995 from its 1994 level by 4%. Mr. Harris also participates in the
same Bonus Plan applicable to the other named executive officers.
The Compensation Committee
Edward A. McGrath, Jr., Chairman
James W. Bernard
Donald P. Nielsen
Wolfgang Honn
Walter W. Zywottek
8
<PAGE>
SUMMARY COMPENSATION TABLE
The Summary Compensation Table includes individual compensation information
on the Chief Executive Officer and the four other most highly-paid executive
officers, for services rendered in all capacities for the three fiscal years
ended December 31, 1995.
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
----------------------- -----------------------
RESTRICTED SHARES
NAME AND STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($)(1) OPTIONS COMPENSATION($)(2)
- ------------------ ---- --------- -------- ------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Jerrold B. Harris 1995 $286,020 $250,000 $510,792 80,000 $16,245
President and Chief 1994 275,004 19,895
Executive Officer 1993 275,004 138,922 14,771
Paul J. Nowak 1995 135,000 66,466 50,000 16,263
Senior Vice-President 1994 115,020 15,898
1993 115,020 36,460 10,000 13,541
Hal G. Nichter 1995 121,945 35,600 40,000 13,048
Senior Vice-President 1994 119,040 12,978
1993 116,115 25,982 15,000 29,451
Walter S. Sobon 1995 147,905 50,000 95,038
Treasurer and 1994 150,000 16,240
Chief Financial 1993 149,170 53,906 13,449
Officer*
Joseph A. Panozzo 1995 112,188 84,658
Senior Vice-President* 1994 140,040 18,982
1993 140,040 61,992 13,000 13,558
</TABLE>
- --------
* Resigned on September 15, 1995; options granted Mr. Sobon in 1995 expired
upon his resignation.
(1) The following named executive officers held restricted stock in the
indicated aggregate amounts and values as of December 31, 1995: Mr.
Harris, 46,939 shares, $627,809 value; Mr. Nowak, 47 shares, $629 value;
Mr. Sobon, 763 shares, $10,205 value; Mr. Panozzo, 146 shares, $1,953
value. Dividends are paid on restricted stock.
All restricted stock awards granted to the named executives by the
Corporation vest at a rate of 25% per annum from the date of grant, except
for Mr. Harris' 1995 grant which vests 15% per annum in the first four years
and 40% at the end of the fifth year from date of grant. The following named
executive officers were granted restricted stock awards in the indicated
year and amounts: Mr. Harris, 17,492 shares in 1992 and 42,566 in 1995; Mr.
Nowak, 186 shares in 1992; Mr. Sobon, 3,051 shares in 1992; Mr. Panozzo, 585
shares in 1992.
(2) Includes Company matching contributions to the Investor Tax Savings
Investment Plan and Company automobile allowance. The following named
executive officers received Company automobile benefits: Mr. Harris,
$13,313 in 1995, 1994 and 1993; Mr. Sobon, $11,094 in 1995, $13,313 in
1994 and 1993; Mr. Nichter, $12,968 in 1995, $12,853 in 1994 and 1993; Mr.
Panozzo, $11,094 in 1995 $13,313 in 1994, and $13,422 in 1993; Mr. Nowak,
$13,313 in 1995, 1994 and 1993. On September 15, 1995 Messrs. Sobon and
Panozzo exercised change of control agreements. Under the terms of the
agreements, Mr. Sobon will receive $555,767 and Mr. Panozzo will receive
$486,642 over a 24 month period. Included in 1995 compensation are
payments made under the change in control agreements to Mr. Sobon and Mr.
Panozzo of $81,049 and $70,969, respectively.
9
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options made during fiscal 1995 under the Company's 1995 SIP to the named
executive officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------------
% TO
TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED
GRANTED ANNUAL RATES OF
SHARES TO STOCK PRICE
UNDERLYING EMPLOYEES EXERCISE APPRECIATION FOR
OPTIONS IN PRICE OPTION TERM
GRANTED FISCAL ($/SHARE) EXPIRATION ---------------------
NAME (#)(1) YEAR (2) DATE 5% 10%
- ---- ---------- --------- --------- ------------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Jerrold B. Harris....... 80,000 7.84% $12.00 September 14, 2005 $1,563,739 $2,489,993
Paul J. Nowak........... 50,000 4.90% 12.00 September 14, 2005 977,337 1,556,245
Hal G. Nichter.......... 40,000 3.92% 12.00 September 14, 2005 781,869 1,244,996
Walter S. Sobon(3)...... 50,000 4.90% 12.00 September 14, 2005 -- --
</TABLE>
- --------
(1) Options have a ten-year term and vest at the earlier of nine years
following issuance of the grant or 50% when the closing price per common
share is at least 150% of the fair market value of the common shares on
September 15, 1995 for twenty consecutive days ($18) and the remaining 50%
when the closing price per common share is at least 175% at the fair
market value of the common shares on September 15, 1995 for twenty
consecutive days ($21).
(2) The exercise price is the market price of the Company's common shares on
the date the options were granted.
(3) Mr. Sobon's options expired upon his resignation on September 15, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following summary table details stock option exercises for the named
executive officers during 1995, including the aggregate value of gains on the
date of exercise. In addition, this table includes the number of shares
covered by both exercisable and unexercisable stock options as of December 31,
1995, and the values for "in-the-money" options, which represent the positive
spread between the exercise price of any such existing stock options and the
year-end price of common shares.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END ($)
------------------------- -------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerrold B. Harris....... -- -- 52,982 108,000 $296,918 $266,520
Paul J. Nowak........... -- -- 6,522 64,000 35,332 91,110
Hal G. Nichter.......... -- 55,000 -- 55,000
Walter S. Sobon*........ 20,000 $119,300 -- -- -- --
Joseph A. Panozzo*...... 900 2,526 23,000 -- 55,900 --
</TABLE>
- --------
*Resigned on September 15, 1995.
10
<PAGE>
DEFINED BENEFIT RETIREMENT PLAN
The table below shows the estimated annual benefits payable on retirement
under VWR's Retirement Plan ("Plan") to persons in specified remuneration and
years-of-service classifications. The table applies to benefits payable on or
after January 1, 1996. The retirement benefits shown are based upon retirement
at normal retirement age.
<TABLE>
<CAPTION>
HIGHEST AVERAGE ANNUAL
COMPENSATION DURING ANY YEARS OF SERVICE
CONSECUTIVE FIVE --------------------------------------------
YEARS OF EMPLOYMENT 15 20 25 30 35
----------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000 $ 23,899 $ 31,865 $ 39,831 $ 47,798 $ 52,577
150,000 37,024 49,365 61,706 74,048 81,452
200,000 50,149 66,865 83,581 100,298 110,327
250,000 63,274 84,365 105,456 126,548 139,202
300,000 76,399 101,865 127,331 152,798 168,077
350,000 89,524 119,365 149,206 179,048 196,952
400,000 102,649 136,865 171,081 205,298 225,827
450,000 115,774 154,365 192,956 231,548 254,702
500,000 128,899 171,865 214,831 257,798 283,577
550,000 142,024 189,365 236,706 284,048 312,452
600,000 155,149 206,865 258,581 310,298 341,327
</TABLE>
With certain exceptions, Section 415 of the Internal Revenue Code currently
limits pensions which may be paid under plans qualified under the Internal
Revenue Code to an annual benefit of $120,000. Additionally, Section 401 of
the Internal Revenue Code limits compensation which must be taken into account
in providing benefits under qualified plans to an annual limit of $150,000.
The Board of Directors, upon the recommendation of the Compensation Committee,
has authorized the establishment of supplemental benefits for executive
officers to whom the limits of Sections 415 and 401 applies, or will apply in
the future so that these executive officers will obtain retirement benefits
comparable to other retirement plan participants not impacted by the Sections
415 and 401 limits.
Under the terms of the agreement by which Momentum was spun off by the
Corporation (in 1990), the Corporation has agreed to pay two-thirds of all
supplemental benefits payable to Richard E. Engebrecht and PrimeSource
(successor to Momentum by merger) will pay the remaining one-third. The
Corporation has guaranteed payment of the one-third payable by PrimeSource and
PrimeSource has guaranteed payment of the two-thirds payable by the
Corporation.
Compensation of executive officers for purposes of the Plan includes
salaries and bonuses as reported in the "Summary Compensation" table on page
9, above. The following are the approximate years of credited service (rounded
to the nearest year) of the persons named in that table under the Plan: J.
Harris, 32; P. Nowak, 18; H. Nichter, 3.
Compensation of all non-executive officer employees for purposes of the Plan
includes salaries, commissions, and bonuses. All regular, full-time employees
not members of a collective bargaining unit (except for bargaining units
participating in all Corporation benefits), are eligible to participate in the
Plan.
AGREEMENTS WITH CERTAIN OFFICERS
On September 15, 1995, as a condition to the Common Share and Debenture
Purchase Agreement between VWR and EML, the Corporation entered into a five-
year employment agreement with Mr. Harris. This agreement replaced a previous
agreement which included change of control provisions. During the employment
period, Mr. Harris' base salary and bonus will be determined by the
Compensation
11
<PAGE>
Committee at its own discretion. In addition, the Corporation has issued and
granted to Mr. Harris 42,566 of the Corporation's common shares as a
restricted stock award. The restricted stock award will vest based upon the
following schedule: 15% will vest on the succeeding anniversary date of the
agreement through and including the fourth anniversary date of the employment
agreement and the remaining 40% will vest on the fifth anniversary date of the
employment agreement. If the Company were to terminate Mr. Harris without
cause (as defined), Mr. Harris would be paid beginning on the date of
termination and ending on the fifth anniversary of the date of the agreement,
at an annual rate equal to the greater of (i) the sum of Mr. Harris' most-
recent annual salary plus most-recent annual bonus or (ii) the average salary
and bonus earned by Mr. Harris during the term of the employment agreement. In
addition, effective upon any such termination, Mr. Harris would become fully
vested in the restricted stock award.
The estimated amount payable over the remaining term of the employment
agreement in the event the Company were to terminate Mr. Harris' employment
without cause would be approximately $2,412,000.
The Board of Directors has approved a change of control agreement (the
"Agreement") between the Corporation and one of its current executive
officers, Paul J. Nowak. The Agreement provides that Mr. Nowak will receive
compensation for up to 24 months if his employment is terminated (voluntarily
or involuntarily) for any reason other than gross misconduct, death,
disability, or reaching age 65, provided such termination occurs within 24
months after certain defined events which might lead to a change in control of
the Corporation. The compensation will be paid at a rate equal to Mr. Nowak's
then-current salary and target bonus. The compensation is subject to a minimum
annual rate of not less than Mr. Nowak's average compensation for the
preceding three calendar years, and is subject to reduction if the aggregate
present value of all payments would exceed three times Mr. Nowak's "annualized
includable compensation," as defined in Section 280G of the Internal Revenue
Code, for the Executive's most recent five taxable years. Mr. Nowak will also
continue to have "employee" status for the 24 month period and will be
entitled to retain most employee benefits and rights during this period.
The estimated aggregate amounts presently payable in the event the
Corporation's obligations under the Agreement were triggered (assuming Mr.
Nowak receives payments for the maximum 24 month period) would be $403,000.
The foregoing does not include the value of any employee benefits which might
be payable to Mr. Nowak during the 24 month period.
Although the Corporation believes that the compensation or other benefits
payable or vesting upon Mr. Nowak's termination should not constitute "golden
parachute payments" under the Internal Revenue Code, the Agreement does
provide for indemnification against excise taxes payable by Mr. Nowak in the
event of such a determination. The Corporation may cease payments in the event
Mr. Nowak breaches certain non-competition or confidentiality covenants. The
Corporation also has the right to terminate the Agreement upon a one-year
notice, except as to rights accruing as a result of an event which has
triggered the change of control provisions of the Agreement. The Board of
Directors believes that the terms and conditions of the Agreement are in the
best interest of the Corporation.
12
<PAGE>
[PERFORMANCE GRAPH APPEARS HERE]
The performance graph reflects the March, 1990 distribution by the
Corporation to its shareholders of all of the Common Stock of Momentum then
owned by the Corporation.
* The Media General Composite Index is a broad market index of 7,000 NASDAQ,
NYSE and AMEX issues.
** This index consists of Wholesale Trade Distributors: Durable Goods
(Standard Industry Code 50) and Non-Durable goods (Standard Industry Code
51), and has been prepared by and is available from Media General, P.O.
Box 85333, Richmond, VA, 23293.
13
<PAGE>
APPROVAL OF 1995 STOCK INCENTIVE PLAN
BACKGROUND
The Board believes that a stock incentive plan--under which stock options
and restricted stock may be granted to key employees--enhances the ability of
the Corporation to attract and retain capable key employees and provides them
with an incentive, through stock ownership in the Corporation, to promote the
best interests of the Corporation and its subsidiaries. As of March 1, 1996,
grants could no longer be made under the Corporation's 1986 Long-Term
Incentive Stock Plan, and the Corporation has no other stock-based incentive
plans for key employees. Accordingly, the Board proposes and recommends that
shareholders approve the 1995 Stock Incentive Plan (the "1995 Stock Plan"),
which the Board adopted on August 31, 1995.
DESCRIPTION OF THE 1995 STOCK PLAN
The text of the 1995 Stock Plan is attached as Appendix A to this proxy
statement. The following description of the 1995 Stock Plan is intended merely
as a summary of its principal features and is qualified in its entirety by
reference to the 1995 Stock Plan.
Stock Subject to the 1995 Stock Plan. Under the 1995 Stock Plan, 2,000,000
common shares (subject to adjustment to reflect stock dividends, stock splits,
recapitalizations, and similar changes in the capitalization of the
Corporation) are available for the granting of incentive stock options (within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended)
and non-qualified stock options. In lieu of option grants, up to 400,000
common shares available under the 1995 Stock Plan may be issued pursuant to
restricted stock awards. No individual may be granted options covering more
than 200,000 common shares under the 1995 Stock Plan. The closing price of the
Corporation's common shares as reported by NASDAQ was $14.25 per share at
March 5, 1996.
Administration. The 1995 Stock Plan is administered by the Compensation
Committee of the Board (the "Compensation Committee"), presently comprised of
Messrs. Bernard, Hohn, McGrath, Neilsen and Zywottek. The Compensation
Committee is authorized to grant options and restricted stock from time to
time, in its discretion, subject to terms and conditions set forth in the 1995
Stock Plan. The Compensation Committee may select grantees from approximately
100 key employees of the Corporation and its subsidiaries.
Terms and Conditions--Options. Options granted under the 1995 Stock Plan
must have an exercise price not less than the fair market value of the common
shares on the date of grant and may not extend for more than ten years, except
that incentive (but not non-qualified) stock options granted to a person who
owns more than 10% of the combined voting power of the stock of the
Corporation (or of a subsidiary or parent) must have an exercise price not
less than 110% of the fair market value of the common shares on the date of
grant and may not extend for more than five years. Options are exercisable in
such installments and upon satisfaction of such conditions as the Compensation
Committee may determine, but not earlier than one year from the date of grant,
although the Compensation Committee may accelerate the exercise date if it
deems acceleration desirable.
Upon the termination of an optionee's employment (for a reason other than
death or disability), options held by the optionee generally may be exercised,
to the extent exercisable on the date of termination (or to a greater extent
if permitted by the Compensation Committee), until the earliest of the
scheduled expiration date of the option or twelve months after the date of
termination of employment (three months for incentive stock options). However,
if an employee is discharged for misconduct, willfully or wantonly harmful to
the Corporation, the options held by the employee may not be exercised after
such discharge. If an optionee dies or becomes disabled, options held by the
optionee may be exercised to the extent exercisable on the date of death or
the date employment is
14
<PAGE>
terminated due to disability (or to a greater extent if permitted by the
Compensation Committee) until one year thereafter or, if earlier, the
scheduled expiration date of the option.
The exercise price of options may be paid in cash or, in whole or in part,
by the delivery of other common shares owned by the optionee. Common shares
previously acquired by an optionee through the exercise of options or
restricted stock may not be used to pay the option exercise price, however,
prior to the expiration of the applicable holding period provided in the 1995
Stock Plan.
Unless an option agreement provides otherwise, options are not assignable or
transferable by an optionee other than by will or the laws of descent and
distribution.
Incentive stock options are also subject to certain additional terms and
conditions required by Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). To the extent that the fair market value (determined as
of the date of the option grant) with respect to which incentive stock options
are exercisable for the first time in any one year as to any optionee exceeds
$100,000, such option shall be treated as a non-qualified stock option for tax
purposes.
Terms and Conditions--Restricted Stock Awards. The Compensation Committee
may also grant restricted stock awards to key employees under the 1995 Stock
Plan. Restricted stock awards vest over a stated period, and may be forfeited
if specified conditions are not met by the end of the vesting period (such as
remaining in the employment of the Corporation and/or the attainment of
corporate or individual financial goals). The vesting periods and conditions
are determined by the Compensation Committee when the restricted stock award
is made. Restricted stock is held by the Corporation during the restriction
period and cannot be transferred by the grantee prior to the termination of
the restriction period. If the Compensation Committee so determines at the
time of the restricted stock award, the grantee will be entitled to vote the
restricted stock and receive any dividends of record during the restriction
period. At the time of the restricted stock award, the Compensation Committee
will determine the amount (if any) the grantee is required to pay for
restricted stock when the restriction period expires.
Duration and Amendment of 1995 Stock Plan. The 1995 Stock Plan became
effective (subject to shareholder approval) on August 31, 1995, and terminates
on August 30, 2005. The Board of Directors of the Corporation may amend,
suspend or terminate the 1995 Stock Plan, and the Compensation Committee may
amend any outstanding options or restricted stock awards, at any time.
Nevertheless, certain amendments, listed in Section 9 of the Plan, require the
approval of holders of a majority of the common shares present, or
represented, and entitled to vote at a duly held meeting of the shareholders
of the Corporation. Examples of amendments which do not require shareholder
approval include amendments that do not materially increase the benefits
accruing to directors and officers, and amendments that do not materially
increase the number of common shares authorized to be issued to directors and
officers under the 1995 Stock Plan. A grantee must approve the suspension,
discontinuance or amendment of the 1995 Stock Plan or the agreement evidencing
his grant, if such action would materially impair the rights of the grantee
under any option or restricted stock award previously granted to him or her.
FEDERAL INCOME TAX TREATMENT OF OPTIONS
Based on the advice of counsel, the Corporation believes that, under Federal
tax laws and regulations in effect on December 31, 1995, the Federal income
tax consequences to the Corporation and to the employees receiving incentive
stock options and non-qualified stock options pursuant to the 1995 Stock Plan
will be as described below.
Incentive Stock Options. If an option is treated as an incentive stock
option, the optionee will recognize no income upon grant or exercise of the
option, unless the alternative minimum tax rules
15
<PAGE>
apply. Upon an optionee's sale of the common shares (assuming that the sale
occurs no sooner than two years after grant of the option and one year after
exercise of the option), any gain will be taxed to the optionee as long-term
capital gain. If the optionee disposes of the common shares prior to the
expiration of the holding period described above, the optionee will recognize
ordinary income in an amount generally measured as the difference between the
exercise price and the lower of the fair market value of the common shares on
the date of exercise or the price at which the common shares are sold. Any
gain or loss recognized on such a disposition of the common shares in excess
of the amount treated as ordinary income will be characterized as capital gain
or loss if the common shares have been held as capital assets.
Non-qualified Stock Options. An optionee will not recognize any taxable
income at the time the optionee is granted a non-qualified stock option.
However, upon exercise of the option, the optionee will recognize ordinary
income for federal income tax purposes in an amount generally measured as the
excess of the then fair market value of the common shares over the exercise
price. Upon an optionee's sale of such shares, any difference between the sale
price and fair market value of such shares on the date of exercise will be
treated as capital gain or loss and will qualify for long-term capital gain or
loss treatment if the common shares have been held as capital assets.
The Corporation believes that it will be entitled to a tax deduction in the
amount and at the time that an optionee recognizes ordinary income with
respect to a non-qualified stock option. Because the 1995 Stock Plan is
intended to be a "performance-based" plan with respect to options, the
Corporation believes that the income recognized on exercise of a non-qualified
stock option will not be limited by the $1,000,000 limit on deductible
compensation with respect to certain employees under Section 162(m) of the
Code.
Different rules for measuring ordinary income may apply if the optionee is
subject to Section 16 of the Securities Exchange Act of 1934.
The foregoing does not purport to be a complete summary of the effect of
federal income taxation upon holders of options or upon the Corporation. It
also does not reflect provisions of the income tax laws of any municipality,
state or foreign country in which an optionee may reside.
APPROVAL OF SHAREHOLDERS
Shareholder approval of the 1995 Stock Plan will afford key employees who
are subject to Section 16 of the Securities Exchange Act of 1934 an exemption
from the provisions of that section with respect to options and restricted
stock awarded under the 1995 Stock Plan. Section 16(b) provides generally that
"profits" realized by such persons through the purchase and sale, or sale and
purchase, of common shares within any six-month period are recoverable by the
Corporation. Rule 16b-3, however, provides an exemption for the acquisition of
options and restricted stock granted under a plan which has been approved by
shareholders and meets certain other criteria which are met by the 1995 Stock
Plan.
Shareholder approval of the 1995 Stock Plan will also afford those key
employees who are granted incentive stock options the tax treatment described
above for incentive stock options, if certain holding period and other
requirements under Section 422 of the Code are met.
Shareholder approval is also required for the Corporation to be allowed a
deduction with respect to income recognized by certain executives on the
exercise of a non-qualified stock option if the executive's income exceeds
$1,000,000. If shareholder approval of the 1995 Stock Plan is not obtained,
the Corporation's otherwise allowable deduction of such amount will be subject
to the $1,000,000 limit on deductible compensation that applies to certain
executives' compensation under Section 162(m) of the Code.
16
<PAGE>
The affirmative vote of the holders of a majority of the common shares of
the Corporation present, or represented, and entitled to vote at the annual
meeting is necessary for approval of the 1995 Stock Plan. Abstentions on this
proposal will be included within the number of common shares present at the
meeting and entitled to vote for purposes of determining whether the 1995
Stock Plan has been approved, but broker and other specified non-votes will
not be so included. If the 1995 Stock Plan is not so approved, the 1995 Stock
Plan and the non-qualified stock options granted under it will be null and
void:
The following non-qualified stock options have been granted under the 1995
Stock Plan:
NEW PLAN BENEFITS
VWR SCIENTIFIC PRODUCTS CORPORATION 1995 STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION COMMON SHARES(1)
----------------- ----------------
<S> <C>
Jerrold B. Harris, President & CEO....................... 80,000
Paul J. Nowak, Senior Vice President--East............... 50,000
Hal Nichter, Senior Vice President--Fulfillment.......... 40,000
Walter S. Sobon, former Vice President Finance,
Treasurer,
CFO and Corporate Secretary............................. 50,000(2)
Joseph A. Panozzo, former Senior Vice President.......... 0
Executive Officers as a Group............................ 360,000(3)
Non-Executive--Officer Directors as a Group.............. 0
Non-Executive--Officer Employees as a Group.............. 855,000(4)
</TABLE>
- --------
(1) Number of common shares covered by options granted to date. Any additional
grants under the 1995 Stock Plan are not presently determinable.
(2) The option granted to Mr. Sobon under the 1995 Stock Plan is no longer
exercisable.
(3) Includes 50,000 shares covered by an option which is no longer
exercisable.
(4) Includes 30,000 shares covered by options which are no longer exercisable.
THE BOARD OF DIRECTORS BELIEVES THAT THE 1995 STOCK PLAN IS IN THE BEST
INTERESTS OF THE CORPORATION AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE FOR
APPROVAL OF THE 1995 STOCK PLAN. EML, WHICH HOLDS 9,915,608 SHARES,
CONSTITUTING 47.1% OF THE OUTSTANDING STOCK AS OF FEBRUARY 19, 1996, HAS
ADVISED THE CORPORATION THAT IT INTENDS TO VOTE FOR THE APPROVAL OF THE 1995
STOCK PLAN.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors requests that the shareholders ratify its selection
of Ernst & Young LLP as independent auditors for the Corporation for the year
ending December 31, 1996. If the shareholders do not ratify the selection of
Ernst & Young LLP, another firm of independent auditors will be selected as
independent auditors by the Board of Directors. Representatives of Ernst &
Young LLP will be present at the Annual Meeting and will be available to
respond to appropriate questions. They will also have the opportunity to make
a statement if they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ITS
SELECTION OF ERNST & YOUNG LLP.
17
<PAGE>
PROPOSALS OF SECURITY HOLDERS
Under Securities and Exchange Commission rules and the Corporation's Bylaws,
certain shareholder proposals may be included in the Corporation's proxy
statement. Any shareholder desiring to have such a proposal included in the
Corporation's proxy statement for the Annual Meeting to be held in 1997 must
cause a proposal in full compliance with Rule 14a-8 under the Securities
Exchange Act of 1934 to be received by the Corporation not later than November
16, 1996. The timing and procedure with respect to the submission by
shareholders of nominees for Directors are discussed in this Proxy Statement
under the caption "FEES TO DIRECTORS AND COMMITTEES OF THE BOARD."
OTHER BUSINESS
The Board of Directors has no knowledge of any other business to be acted
upon at this meeting. However, if any other business is presented at the
meeting, proxies will be voted in accordance with the judgment of the person
or persons voting such proxies.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ DAVID M. BRONSON
Senior Vice President Finance
Corporate Secretary
18
<PAGE>
EXHIBIT A
VWR CORPORATION
1995 STOCK INCENTIVE PLAN
SECTION 1
PURPOSE
This VWR CORPORATION 1995 STOCK INCENTIVE PLAN ("Plan") is intended to
provide a means whereby VWR CORPORATION ("Company") and any Subsidiary of the
Company (as hereinafter defined) may, through the grant of incentive stock
options and non-qualified stock options (collectively "Options") and stock
subject to restrictions ("Restricted Stock") to officers and other Key
Employees (as defined in Section 3), attract and retain such Key Employees and
motivate such Key Employees to exercise their best efforts on behalf of the
Company and of any Subsidiary.
As used in the Plan, the term "incentive stock options" ("ISOs") means
Options which qualify as incentive stock options within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended from time to time (the
"Code"), at the time they are granted and which are either designated as ISOs
in the Option Agreements (as hereinafter defined) covering such Options or
which are designated as ISOs by the Committee (as defined in Section 2 hereof)
at the time of grant. The term "non-qualified stock options" ("NQSOs") means
all other Options granted under the Plan. The term "Subsidiary" means any
corporation (whether or not in existence at the time the Plan is adopted)
which, at the time an Option is granted, is a subsidiary of the Company under
the definition of "subsidiary corporation" contained in Section 424(f) of the
Code or any similar provision hereafter enacted.
SECTION 2
ADMINISTRATION
The Plan shall be administered by the Company's Compensation Committee
("Committee"), which shall consist of not less than three (3) directors of the
Company who shall be appointed by, and shall serve at the pleasure of, the
Company's Board of Directors ("Board"). Each member of such Committee, while
serving as such, shall be deemed to be acting in his or her capacity as a
director of the Company. Except as otherwise permitted under Section 16(b) of
the Securities Exchange Act of 1934 (the "Exchange Act"), and the applicable
rules and regulations thereunder, no member of the Committee shall have been
granted Awards (as defined below) pursuant to the Plan or options or equity
securities (within the meaning of Rule 16a-1(d) under the Exchange Act)
pursuant to any other plan of the Company or of any of its affiliates, as
defined in or under the Exchange Act, at any time during the period commencing
with the date which is one year prior to the date the member's service on the
Committee began and ending on the date which is one day after the date on
which the member's service on the Committee ceased. The adoption of this Plan
shall not constitute an election to operate under new Rule 16b-3 under the
Securities Exchange Act of 1934 as contained in Release No. 34-28869 (1991)
(or any amendments or successors thereto) prior to the end of the phase-in
period provided for employee benefit plans by the Securities and Exchange
Commission.
Each member of the Committee shall also be an "outside director" within the
meaning of Prop. Treas. Reg. (S) 1.162-27(e)(3) or (S) 1.162-27(h)(2), or any
successors thereto.
The Committee shall have full and final authority in its absolute
discretion, subject to the terms of the Plan and upon consideration of
recommendations by the President of the Company, to select the persons to be
granted ISOs, NQSOs, and Restricted Stock (collectively "Awards") under the
Plan, to grant Awards on behalf of the Company, and to set the date of grant
and the other terms of such
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Awards. The Committee may correct any defect, supply any omission and
reconcile any inconsistency in the Plan and in any Award granted hereunder in
the manner and to the extent it shall deem desirable. The Committee also shall
have the authority to establish such rules and regulations, not inconsistent
with the provisions of the Plan, for the proper administration of the Plan,
and to amend, modify or rescind any such rules and regulations, and to make
such determinations and interpretations under, or in connection with, the
Plan, as it deems necessary or advisable. All such rules, regulations,
determinations and interpretations shall be binding and conclusive upon the
Company, its shareholders and all officers and employees and former officers
and employees, and upon their respective legal representatives, beneficiaries,
successors and assigns and upon all other persons claiming under or through
any of them.
A majority of the Committee shall constitute a quorum, and acts of a
majority of the members present at any meeting at which a quorum is present,
or acts approved in writing by a majority of the Committee, shall be deemed
the acts of the Committee.
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 Award granted
hereunder.
SECTION 3
ELIGIBILITY
The class of employees who shall be eligible to receive Awards under the
Plan shall be the Key Employees (including any directors who also are Key
Employees) of the Company and/or of a Subsidiary, provided that members of the
Committee, by virtue of their status as members, shall not be eligible to
receive Awards under the Plan. A Key Employee is an officer or employee who
occupies a responsible executive, professional or administrative position and
who the Committee believes has the capacity to contribute to the success of
the Company and its Subsidiaries. More than one Award may be granted to a Key
Employee under the Plan.
SECTION 4
STOCK
The number of common shares of the Company, par value $1.00 per share
("Common Shares"), that may be subject to Awards under the Plan shall be
2,000,000 (two million) shares, subject to adjustment as hereinafter provided;
provided, however, that no Key Employee shall receive Options for more than
200,000 (two hundred thousand) Common Shares over the life of the Plan; and
further provided, that no more than 400,000 (four hundred thousand) shares
shall be available for the granting of Restricted Stock Awards under the Plan.
Shares issuable under the Plan may be authorized but unissued shares or
reacquired shares, as the Company may determine from time to time.
Any Common Shares subject to an Option which expires or otherwise terminates
for any reason whatever (including, without limitation, the Key Employee's
surrender thereof) without having been exercised, and any shares of Restricted
Stock which are forfeited, shall continue to be available for the granting of
Awards under the Plan; provided, however, that if an Option is cancelled, the
Common Shares covered by the cancelled Option shall be counted against the
maximum number of shares specified in this Section 4 for which Options may be
granted to a single Key Employee.
SECTION 5
ANNUAL LIMIT
(a) ISOs. The aggregate Fair Market Value (determined as of the date the ISO
is granted) of the Common Shares with respect to which ISOs become exercisable
for the first time by a Key Employee
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during any calendar year (under this Plan and any other ISO plan of the
Company or any parent corporation (within the meaning of section 424(e) of the
Code ("Parent")) or Subsidiary) shall not exceed $100,000. The term "Fair
Market Value" shall mean the value of the Common Shares arrived at by a good
faith determination of the Committee and shall be the average, if any, of the
closing prices for the Common Stock as of 4:00 p.m. Eastern Time on the date
specified on the principal trading exchange or national automated stock
quotation system on which the Common Shares are traded or quoted.
(b) Options Over Annual Limit. If an Option intended as an ISO is granted to
a Key Employee and such Option may not be treated in whole or in part as an
ISO pursuant to the limitation in (a) above, such Option shall be treated as
an ISO to the extent it may be so treated under such limitation and as a NQSO
as to the remainder. For purposes of determining whether an ISO would cause
such limitation to be exceeded, ISOs shall be taken into account in the order
granted.
(c) NQSOs and Restricted Stock. The annual limit set forth above for ISOs
shall not apply to NQSOs and Restricted Stock.
SECTION 6
OPTIONS
(a) Granting of Options. From time to time until the expiration or earlier
suspension or discontinuance of the Plan, the Committee may, on behalf of the
Company, grant to Key Employees under the Plan such Options as it determines
are warranted, subject to the limitations of the Plan; provided, however, that
grants of ISOs and NQSOs shall be separate and not in tandem. The granting of
an Option under the Plan shall not be deemed either to entitle the Key
Employee to, or to disqualify the Key Employee from, any participation in any
other grant of Awards under the Plan. In making any determination as to
whether a Key Employee shall be granted an Option and as to the number of
shares to be covered by such Option, the Committee shall take into account
recommendations by the President of the Company, the duties of the Key
Employee, the Committee's views as to his or her present and potential
contributions to the success of the Company or a Subsidiary, and such other
factors as the Committee shall deem relevant in accomplishing the purposes of
the Plan. Moreover, the Committee may determine that the Option Agreement (as
defined below) shall provide that said Option may be exercised only if certain
conditions, as determined by the Committee, are fulfilled.
(b) Terms and Conditions of Options. The Options granted pursuant to the
Plan shall expressly specify whether they are ISOs or NQSOs; however, if the
Option is not designated in the Option Agreement as an ISO or NQSO, the Option
shall constitute an ISO if it complies with the terms of Section 422 of the
Code, and otherwise, it shall constitute an NQSO. In addition, the Options
granted pursuant to the Plan shall include expressly or by reference the
following terms and conditions, as well as such other provisions not
inconsistent with the provisions of this Plan as the Committee shall deem
desirable, and for ISOs granted under this Plan, the provisions of Section
422(b) of the Code:
(1) NUMBER OF SHARES. A statement of the number of Common Shares to which
the Option pertains.
(2) PRICE. A statement of the Option exercise price, which shall be
determined and fixed by the Committee in its discretion at the time of
grant, but shall not be less than 100% (110% in the case of an ISO granted
to a more than 10% shareholder as provided in (9) below) of the Fair Market
Value of the optioned Common Shares on the date the Option is granted. The
Option exercise price shall not be reduced after the date of grant.
(3) TERM.
(A) ISOs. Subject to earlier termination as provided in Subsections
(5), (6) and (7) below, the term of each ISO shall be not more than 10
years (5 years in the case of a more than 10% shareholder as provided
in (9) below) from the date of grant.
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(B) NQSOs. Subject to earlier termination as provided in Subsections
(5), (6) and (7) below, the term of each NQSO shall be not more than 10
years from the date of grant.
(4) EXERCISE.
(A) General. Options shall be exercisable in such installments, on
such dates and upon satisfaction of such conditions (if any) as the
Committee may specify, commencing not less than 12 months from the date
of grant, provided that:
(i) In the case of new Options granted to a Key Employee in
replacement for options (whether granted under the Plan or
otherwise) held by the Key Employee, the new Options may be made
exercisable, if so determined by the Committee, in its discretion,
at the earliest date the replaced options were exercisable; and
(ii) The Committee may accelerate the exercise date of any
outstanding Options in its discretion, if it deems such acceleration
to be desirable.
Any Common Shares the right to the purchase of which has accrued
under an Option may be purchased at any time up to the expiration or
termination of the Option. Exercisable Options may be exercised, in
whole or in part, from time to time by giving written notice of
exercise to the Company at its principal office, specifying the number
of Common Shares to be purchased and accompanied by payment in full of
the aggregate Option exercise price for such shares; provided, however,
that any purchase of less than the full amount of Shares subject to
exercisable Options held by the Key Employee shall be in multiples of
100 Shares. Such written notice shall be provided no later than ten
(10) days prior to the date of exercise; provided, however, that such
ten-day period shall be waived in the case of Options for which the
Committee has provided accelerated vesting pursuant to Section
6(b)(4)(A)(ii). Only full shares shall be issued under the Plan, and
any fractional share which might otherwise be issuable upon the
exercise of an Option granted hereunder shall be forfeited.
(B) Manner of Payment. The Option price shall be payable:
(i) In cash or its equivalent;
(ii) In Common Shares previously acquired by the Key Employee,
provided that if such shares were acquired through the exercise of
an ISO and are used to pay the Option exercise price of an ISO, such
shares have been held by the Key Employee for a period of not less
than the holding period described in Section 422(a)(1) of the Code
on the date of exercise, or if such Common Shares were acquired
through exercise of an ISO and are used to pay the Option exercise
price of an NQSO or through exercise of an NQSO or of an option
under a similar plan, or if such Common Shares were acquired through
the grant of Restricted Stock, such shares have been held by the Key
Employee for a period of more than six (6) months on the date of
exercise; or
(iii) In any combination of (i) and (ii) above.
In the event such Option exercise price is paid, in whole or in part,
with Common Shares, the portion of the Option exercise price so paid
shall equal the Fair Market Value on the date of exercise of the Option
of the Common Shares surrendered in payment of such Option exercise
price.
(5) TERMINATION OF EMPLOYMENT. If a Key Employee's employment by the
Company (and Subsidiaries) is terminated by either party prior to the
expiration date fixed for his or her Option for any reason other than death
or disability, such Option may be exercised, to the extent of the number of
shares with respect to which the Key Employee could have exercised it on
the date of such termination, or to any greater extent permitted by the
Committee, by the Key Employee at any time prior to the earliest of:
(A) The expiration date specified in such Option;
(B) Twelve (12) months after the date of such termination of
employment;
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(C) In the case of an ISO, three (3) months after the date of such
termination of employment; or
(D) In the case of the discharge of a Key Employee for misconduct,
willfully or wantonly harmful to the Company, the date of such
discharge.
(6) EXERCISE UPON DISABILITY OF KEY EMPLOYEE. If a Key Employee shall
become disabled (within the meaning of Section 22(e)(3) of the Code) during
his or her employment and, prior to the expiration date fixed for his or
her Option, his or her employment is terminated as a consequence of such
disability, such Option may be exercised, to the extent of the number of
shares with respect to which the Key Employee could have exercised it on
the date of such termination, or to any greater extent permitted by the
Committee, by the Key Employee at any time prior to the earlier of:
(A) The expiration date specified in such Option; or
(B) One year after the date of such termination of employment.
In the event of the Key Employee's legal disability, such Option may be
so exercised by the Key Employee's legal representative.
(7) EXERCISE UPON DEATH OF KEY EMPLOYEE. If a Key Employee shall die
during his or her employment and prior to the expiration date fixed for his
or her Option, or if a Key Employee whose employment is terminated for any
reason shall die following his or her termination of employment but prior
to the earliest of:
(A) The expiration date fixed for his or her Option;
(B) The expiration of the period determined under Subsections (5) and
(6) above; or
(C) In the case of an ISO, three months following termination of
employment,
such Option may be exercised, to the extent of the number of shares with
respect to which the Key Employee could have exercised it on the date of
his or her death, or to any greater extent permitted by the Committee, by
the Key Employee'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 Key Employee, at any time prior to the earlier
of:
(i) The expiration date specified in such Option; or
(ii) One year after the date of death.
(8) RIGHTS AS A SHAREHOLDER. A Key Employee shall have no rights as a
shareholder with respect to any shares covered by his or her Option until
the issuance of a stock certificate to him or her for such shares.
(9) TEN PERCENT SHAREHOLDER. If the Key Employee owns more than 10% of
the total combined voting power of all shares of stock of the Company or of
a Subsidiary or Parent at the time an ISO is granted to such Key Employee,
the Option exercise price for the ISO shall be not less than 110% of the
Fair Market Value of the optioned Common Shares on the date the ISO is
granted, and such ISO, by its terms, shall not be exercisable after the
expiration of five years after the date the ISO is granted. The conditions
set forth in this Subsection (9) shall not apply to NQSOs.
(10) GRANT OF REPLACEMENT OPTIONS. Effective as of the date of exercise
by a Key Employee of all or part of his or her Option using Common Shares
and provided such Shares were owned by the Key Employee for at least six
(6) months prior to their use to exercise the Option, the Committee may, in
its discretion, grant the Key Employee a replacement option at the then
Fair Market Value for a number of Shares not to exceed the number of Common
Shares used by the Key Employee in payment of the purchase price of the
Option plus the number of Shares, if any, withheld by the Company to pay
the Key Employee's withholding tax obligations as provided in Section
12(e). The replacement option may be exercised between the date of grant
and the date of expiration, which shall be the later of (1) the date of
expiration of the Option to which the
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replacement option is related, or (2) five years after the grant of the
replacement option. The replacement option shall be evidenced by an Option
Agreement containing such other terms and conditions and not inconsistent
with the Plan as the Committee shall approve.
(c) Option Agreements. Options granted under the Plan shall be evidenced by
written documents ("Option Agreements") in such form as the Committee shall,
from time to time, approve, which Option Agreements shall contain such
provisions, not inconsistent with the provisions of the Plan for NQSOs granted
pursuant to the Plan, and such conditions, not inconsistent with Section
422(b) of the Code and the provisions of the Plan, for ISOs granted pursuant
to the Plan, as the Committee shall deem advisable, and which Option
Agreements shall specify whether the Option is an ISO or NQSO; provided,
however, if the Option is not designated in the Option Agreement as an ISO or
NQSO, the Option shall constitute an ISO if it complies with the terms of
Section 422 of the Code, and otherwise, it shall constitute an NQSO. Each Key
Employee shall enter into, and be bound by, the terms of the Option Agreement.
SECTION 7
RESTRICTED STOCK AWARDS.
From time to time until the expiration or earlier termination of the Plan,
the Committee may, on behalf of the Company, make such Restricted Stock Awards
under the Plan to Key Employees ("Grantees") as it determines are warranted.
Restricted Stock Awards shall be subject to the following terms and
conditions, as well as such other terms and conditions as the Committee may
prescribe:
(a) Vesting Period; Conditions. At the time of granting a Restricted
Stock Award, the Committee may establish one or more vesting periods
("Vesting Periods") with respect to the Common Shares covered by the Award.
The length of any such Vesting Period(s) applicable to a Restricted Stock
Award shall be within the discretion of the Committee. At the time of
grant, the Committee may also establish such additional conditions to the
payment of a Restricted Stock Award ("Conditions") as it may deem advisable
in its sole discretion, such as the achievement of corporate or individual
goals. Subject to the provisions of this Section 7 and any other Conditions
prescribed by the Committee, shares subject to a Restricted Stock Award
shall vest in the Grantee upon the expiration of the Vesting Period and
satisfaction of any Conditions with respect to such shares. The Committee
may accelerate the vesting date of any unvested shares subject to a
Restricted Stock Award in its discretion, if it deems such acceleration to
be desirable.
(b) Issuance and Delivery of Certificates. Upon the granting of a
Restricted Stock Award, the Company may, if so determined by the Committee
at the time of the grant, issue certificates representing the shares
subject to the Restricted Stock Award in the name of the Grantee. Any such
shares shall bear a legend indicating that they are subject to the terms of
the Plan and the Restricted Stock Award Agreement (as hereinafter defined)
and that they may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms
of the Plan and the Restricted Stock Award Agreement. Upon issuance of such
certificates, the Grantee shall immediately execute a stock power or other
instrument of transfer, appropriately endorsed in blank, to be held with
the certificates by the Company pursuant to the terms of the Plan and the
Restricted Stock Award Agreement. Only full shares shall be issued, and any
fractional shares which might otherwise be issuable pursuant to a
Restricted Stock Award shall be forfeited.
(c) Rights as a Shareholder. If the Company issues certificates
representing the shares subject to a Restricted Stock Award prior to the
expiration of the Vesting Period for the shares subject to such Award and
prior to the satisfaction of the Conditions, if any, pertaining to such
Award, the Key Employee shall be entitled to receive dividends paid on such
shares, shall have the right to vote such shares, and shall have all other
shareholder's rights with respect to such shares,
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except that (1) the Key Employee will not be entitled to delivery of the
stock certificate, (2) the Company will retain custody of the Common
Shares, and (3) except as otherwise determined by the Committee pursuant to
Section 7(d), the Shares subject to the Restricted Stock Award will revert
to the Company to the extent all Vesting Periods and Conditions applicable
to such Award are not satisfied.
(d) Termination of Employment. At the time of granting a Restricted Stock
Award, the Committee shall specify in the Restricted Stock Award Agreement,
the manner of determining the number, if any, of unvested shares subject to
the Award which shall become vested in the Grantee, or in his or her
beneficiary or estate, if the Grantee's employment by the Company (and
Subsidiaries) is terminated prior to the later of the expiration of the
Vesting Period or the satisfaction of all of the Conditions with respect to
such shares. Any Restricted Stock Award Agreement may provide different
vesting provisions upon a Grantee's termination due to death or disability.
Any remaining shares covered by the Grantee's Restricted Stock Award not
vested pursuant to the terms of the Restricted Stock Award Agreement shall
immediately be forfeited upon termination of employment, except that the
Committee, if it determines that the circumstances warrant, may direct that
all or a portion of such remaining unvested shares also be vested in the
Grantee, or in his/her beneficiary or estate, subject to such further terms
and conditions, if any, as the Committee may determine.
(e) Payment for Restricted Stock. The Committee may, on behalf of the
Company, grant Restricted Stock Awards under which the Key Employee shall
not be required to make any payment for the Restricted Stock or, in the
alternative, under which the Key Employee, as a condition to the Restricted
Stock Award, shall pay all (or any lesser amount than all) of the Fair
Market Value of the Common Stock, determined as of the date the Restricted
Stock Award is made. If the latter, such purchase price shall be paid as
provided in the Restricted Stock Award Agreement.
(f) Restricted Stock Award Agreement. Restricted Stock Awards under the
Plan shall be evidenced by written documents ("Restricted Stock Award
Agreements") in such form as the Committee shall, from time to time,
approve, which Restricted Stock Award Agreements shall contain such
provisions, not inconsistent with the provisions of the Plan, as the
Committee shall deem advisable. Each Grantee shall enter into, and be bound
by the terms of, the Restricted Stock Award Agreement.
(g) Section 83(b) Election Not Permitted. Each Grantee shall agree in
writing at the time of any Award, and as a condition thereof, that the
Grantee shall not make an election under Section 83(b) of the Code, to
include in the Grantee's gross income as determined for federal income tax
purposes any part of the value of Shares issued or transferred to the
Grantee under the Award unless all restrictions pertaining to that portion
of the Restricted Stock Award with respect to which the Grantee desires to
make an election shall have lapsed. If a Grantee subsequently makes such an
election, all Shares covered by the Restricted Stock Award shall be
forfeited to the Company.
SECTION 8
CAPITAL ADJUSTMENTS
The number of shares which may be issued under the Plan, the maximum number
of shares with respect to which Options may be granted to any Key Employee
under the Plan, both as stated in Section 4 hereof, the number of shares
issuable upon exercise of outstanding Options under the Plan (as well as the
Option exercise price per share under such outstanding Options), and the
number of shares issuable upon the vesting of outstanding Restricted Stock
Awards (as well as the purchase price, if any, for such shares) shall, subject
to the provisions of Section 424(a) of the Code, be adjusted, as may be deemed
appropriate by the Committee, to reflect any stock dividend, stock split,
share combination, or similar change in the capitalization of the Company.
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In the event of a corporate transaction (as that term is described in
Section 424(a) of the Code and the Treasury Regulations issued thereunder as,
for example, a merger, consolidation, acquisition of property or stock,
separation, reorganization, or liquidation), each outstanding Award shall be
assumed by the surviving or successor corporation; provided, however, that, in
the event of a proposed corporate transaction, the Committee may terminate all
or a portion of the outstanding Options if it determines that such termination
is in the best interests of the Company. If the Committee decides to terminate
outstanding Options, the Committee shall give each Key Employee holding an
Option to be terminated not less than seven days' notice prior to any such
termination by reason of such a corporate transaction, and any such Option
which is to be so terminated may be exercised (if and only to the extent that
it is then exercisable) up to, and including the date immediately preceding
such termination. Further, as provided in Section 6(b)(4)(A)(ii) hereof, the
Committee, in its discretion, may accelerate, in whole or in part, the date on
which any or all Options become exercisable.
The Committee also may, in its discretion, change the terms of any
outstanding Award to reflect any such corporate transaction, provided that, in
the case of ISOs, such change is excluded from the definition of a
"modification" under Section 424(h) of the Code.
SECTION 9
AMENDMENT OR DISCONTINUANCE OF THE PLAN
At any time and from time to time, the Board may suspend or terminate the
Plan or amend it, and the Committee may amend any outstanding Awards, in any
respect whatsoever, except that the following amendments shall require the
approval by the affirmative votes of holders of at least a majority of the
shares present, or represented, and entitled to vote at a duly held meeting of
shareholders of the Company:
(a) Any amendment which would:
(1) Materially increase the benefits accruing to directors and
officers, within the meaning of Rule 16a-1(f) under the Exchange Act
(hereinafter referred to as "Officers"), under the Plan;
(2) Materially increase the number of Common Shares which may be
issued to directors and Officers under the Plan; or
(3) Materially modify the requirements as to eligibility for
directors and Officers to participate in the Plan;
(b) With respect to ISOs, any amendment which would:
(1) Change the class of employees eligible to participate in the
Plan;
(2) Except as permitted under Section 8 hereof, increase the maximum
number of Common Shares with respect to which ISOs may be granted under
the Plan; or
(3) Extend the duration of the Plan under Section 10 hereof with
respect to any ISOs granted hereunder; and
(c) Any amendment which would require shareholder approval pursuant to
Prop. Treas. Reg. (S) 1.162-27(e)(4)(vi), or any successor thereto.
Notwithstanding the foregoing, no such suspension, discontinuance or
amendment shall materially impair the rights of any holder of an outstanding
Award without the consent of such holder.
SECTION 10
TERMINATION OF PLAN
Unless earlier terminated as provided in the Plan, the Plan and all
authority granted hereunder shall terminate absolutely at 12:00 midnight on
August 30, 2005, which date is within 10 years after the date
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the Plan was adopted by the Board, and no Awards hereunder shall be granted
thereafter. Nothing contained in this Section 10, however, shall terminate or
affect the continued existence of rights created under Awards issued hereunder
and outstanding on August 30, 2005 which by their terms extend beyond such
date.
SECTION 11
SHAREHOLDER APPROVAL
This Plan shall become effective on August 31, 1995 (the date the Plan was
adopted by the Board); provided, however, that if the Plan is not approved by
the affirmative vote of the holders of at least a majority of the shares
present, or represented, and entitled to vote at a duly held meeting of the
shareholders of the Company, within 12 months after said date, the Plan and
all Awards granted hereunder shall be null and void and no additional Awards
shall be granted hereunder. Any Awards granted prior to such shareholder
approval shall be conditioned upon subsequent shareholder approval.
SECTION 12
MISCELLANEOUS
(a) Governing Law. The Plan, and the Option Agreements and Restricted Stock
Award Agreements (collectively the "Award Agreements") entered into, and the
Awards granted thereunder, shall be governed by the applicable Code provisions
to the maximum extent possible. Otherwise, the operation of, and the rights of
Key Employees under, the Plan, the Award Agreements, and the Awards shall be
governed by applicable federal law and otherwise by the laws of the
Commonwealth of Pennsylvania.
(b) Rights. 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 Award, or any other right hereunder, unless and until the Committee shall
have granted such individual an Award, and then his or her rights shall be
only such as are provided by the Plan and the Award Agreement.
Any Option under the Plan shall not entitle the holder thereof to any rights
as a shareholder of the Company prior to the exercise of such Option and the
issuance of the shares pursuant thereto. Further, notwithstanding any
provisions of the Plan or any Award Agreement with a Key Employee, the Company
shall have the right, in its discretion, to retire a Key Employee at any time
pursuant to its retirement rules or otherwise to terminate his or her
employment at any time for any reason whatsoever.
(c) No Obligation to Exercise Option. The granting of an Option shall impose
no obligation upon a Key Employee to exercise such Option.
(d) Non-Transferability. Unless an Option Agreement provides otherwise, no
Award shall be assignable or transferable by the Key Employee otherwise than
by will or by the laws of descent and distribution, and during the lifetime of
the Key Employee, any Options shall be exercisable only by him or her or by
his or her guardian or legal representative. If a Key Employee is married at
the time of exercise of an Option and if the Key Employee so requests at the
time of exercise, the certificate or certificates issued shall be registered
in the name of the Key Employee and the Key Employee's spouse, jointly, with
right of survivorship.
(e) Withholding and Use of Shares to Satisfy Tax Obligations. The obligation
of the Company to deliver Common Shares pursuant to any Award under the Plan
shall be subject to applicable federal, state and local tax withholding
requirements.
A-9
<PAGE>
In connection with an Award in the form of Common Shares subject to the
withholding requirements of applicable federal tax laws, the Key Employee
subject to such withholding rules ("Withholding Rules") as shall be adopted by
the Committee, may elect to satisfy the minimum required federal, state and
local withholding tax, in whole or in part, by having the Company withhold
Common Shares, which shares shall be valued, for this purpose, at their Fair
Market Value. For this purpose, Fair Market Value shall be determined, in the
case of Options, on the date of exercise, and in the case of Restricted Stock,
on the date the Vesting Period has expired and all Conditions have been
satisfied (or if later, the date on which the Key Employee recognizes ordinary
income with respect to such exercise) (the "Determination Date"). An election
to use Common Shares to satisfy tax withholding requirements must be made in
compliance with and subject to the Withholding Rules. The Company may not
withhold shares in excess of the number necessary to satisfy the minimum
required federal, state and local income tax withholding requirements. In the
event Common Shares acquired under the exercise of an ISO are used to satisfy
such withholding requirement, such Common Shares must have been held by the
Key Employee for a period of not less than the holding period described in
Section 422(a)(1) of the Code on the Determination Date, or if such Common
Shares were acquired through exercise of an NQSO or of an option under a
similar plan, such option must have been granted to the Key Employee at least
six months prior to the Determination Date.
(f) Listing and Registration of Shares. Each Award shall be subject to the
requirement that, if at any time the Committee shall determine, in its
discretion, that the listing, registration or qualification of the shares
covered thereby upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting
of such Award or the purchase or vesting of shares thereunder, or that action
by the Company or by the Key Employee should be taken in order to obtain an
exemption from any such requirement, no such Option may be exercised, in whole
or in part, and no shares shall be delivered pursuant to a Restricted Stock
Award, unless and until such listing, registration, qualification, consent,
approval, or action shall have been effected, obtained, or taken under
conditions acceptable to the Committee. Without limiting the generality of the
foregoing, each Key Employee or his or her legal representative or beneficiary
may also be required to give satisfactory assurance that shares purchased upon
exercise of an Option or received pursuant to a Restricted Stock Award are
being purchased for investment and not with a view to distribution, and
certificates representing such shares may be legended accordingly.
(g) Proceeds from Sale of Stock. Proceeds of the purchase of optioned Common
Shares, as well as the purchase price, if any, upon expiration of the Vesting
Period and satisfaction of the Conditions with respect to Restricted Stock,
shall be for the general business purposes of the Company.
IN WITNESS WHEREOF, VWR CORPORATION has caused these presents to be duly
executed, under seal, this 31 day of August, 1995.
ATTEST: VWR CORPORATION
[SEAL]
/s/ Walter S. Sobon /s/ Jerrold B. Harris
_____________________________________ By: .________________________________
Walter S. Sobon, Secretary Jerrold B. Harris,
Chief Executive Officer
and President
A-10
<PAGE>
P R O X Y
[LOGO OF VWR SCIENTIFIC PRODUCTS APPEARS HERE]
1310 GOSHEN PARKWAY
WEST CHESTER, PA 19380
The undersigned hereby appoints Jerrold B. Harris, and David M. Bronson, or
either of them, each with full power of substitution and revocation, as
Proxies to vote, as designated below, all Common Shares of VWR Scientific
Products Corporation which the undersigned would be entitled to vote if
personally present at the Annual Meeting of the Corporation to be held at the
Desmond Great Valley Hotel, Oak Liberty Boulevard, Malvern, Pennsylvania, on
April 16, 1996 and at any adjournments thereof.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholders. If no direction is made, this Proxy
will be voted FOR the nominees listed in item 1 on the reverse side hereof (in
equal amounts or cumulatively as the proxies may determine) or, if any such
nominee(s) should be unable to serve, for such person(s) as may be recommended
by the Board of Directors; FOR the proposal set forth in item 2; FOR the
proposal set forth in item 3; and, in the Proxies' discretion, upon such other
business as may properly come before the Annual Meeting and any adjournments
thereof. The undersigned hereby revokes any proxy or proxies heretofore given
to vote at said Annual Meeting and any adjournments thereof.
(Continued and to be signed on reverse side)
<PAGE>
Please mark
your votes
like this in [X]
black or blue
ink
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR ALL NOMINEES" IN ITEM 1.
1. Election of Directors: For all Withheld for all
Nominees* Nominees
James W. Bernard, Richard E. Engebrecht, [_] [_]
Stephen J. Kunst, Dieter Janssen
*INSTRUCTIONS: To withhold authority to vote for any individual nominee, or to
cumulate your votes for any such nominee(s), so indicate in the space provided
below.
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
2. PROPOSAL: Approval of the Corporation's 1995 Stock Incentive Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. PROPOSAL: Ratification of the selection of Ernst & Young LLP as independent
auditors for the year ending December 31, 1996.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. To vote in their discretion upon such other business as may properly come
before the meeting and any adjournments thereof.
+++++++++
+
+
+
+
--------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
--------------------------------------------
Signature(s) ____________________________ Date ________________________, 1996
NOTE: Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give your full title as such. If a corporation,
please sign in full corporate name by President or other authorized officer.
If a partnership, please sign in partnership name by authorized person.
