<PAGE> 1
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
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
SYBRON INTERNATIONAL 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] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
SYBRON INTERNATIONAL CORPORATION
411 EAST WISCONSIN AVENUE
24TH FLOOR
MILWAUKEE, WISCONSIN 53202
(414) 274-6600
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 30, 1998
---------------------
Notice is hereby given that the Annual Meeting of Shareholders of Sybron
International Corporation, a Wisconsin corporation (the "Company"), will be held
on Friday, January 30, 1998, at 10:00 a.m., Pacific Standard Time, at the
Ritz-Carlton Hotel, 68-900 Frank Sinatra Drive, Rancho Mirage, California, for
the following purposes:
1. To elect three directors to serve as Class III directors until the
2001 Annual Meeting of Shareholders and until their respective successors
are duly elected and qualified;
2. To consider and vote upon a proposal to amend the Sybron
International Corporation Amended and Restated 1993 Long-Term Incentive
Plan (a copy of the restated plan, as so amended, is attached as Exhibit A
to the accompanying Proxy Statement);
3. To consider and vote upon a proposal to amend the Company's
Articles of Incorporation to increase the number of authorized shares of
Common Stock; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on December 1, 1997,
as the record date for determining the shareholders entitled to notice of, and
to vote at, the meeting or any adjournment thereof. A list of such shareholders
will be maintained and available for inspection by shareholders of the Company
during ordinary business hours at the Company's offices, 411 East Wisconsin
Avenue, 24th Floor, Milwaukee, Wisconsin 53202, prior to the meeting and will
also be available for inspection by shareholders of the Company at the meeting.
We hope you will assure that your shares will be represented at the meeting
by signing and returning the enclosed proxy card in the accompanying envelope as
promptly as possible, whether or not you expect to be present in person. Your
vote is important and the Board of Directors appreciates the cooperation of
shareholders in directing proxies to vote at the meeting.
By Order of the Board of Directors,
harris sig
R. JEFFREY HARRIS
Secretary
Milwaukee, Wisconsin
December 23, 1997
<PAGE> 3
SYBRON INTERNATIONAL CORPORATION
411 EAST WISCONSIN AVENUE
24TH FLOOR
MILWAUKEE, WISCONSIN 53202
(414) 274-6600
---------------------
PROXY STATEMENT
DECEMBER 23, 1997
---------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 30, 1998
---------------------
GENERAL INFORMATION
This Proxy Statement is furnished by the Board of Directors (the "Board of
Directors") of Sybron International Corporation, a Wisconsin corporation (the
"Company"), to the shareholders of the Company in connection with a solicitation
of proxies for use at the Annual Meeting of Shareholders (the "Annual Meeting")
to be held at 10:00 a.m., Pacific Standard Time, on Friday, January 30, 1998, at
the Ritz-Carlton Hotel, 68-900 Frank Sinatra Drive, Rancho Mirage, California,
and at any and all adjournments thereof. This Proxy Statement and the enclosed
proxy card are first being mailed to shareholders on or about December 23, 1997.
A proxy delivered pursuant to this solicitation is revocable at the option
of the person giving the same at any time before it is exercised. A proxy may be
revoked, prior to its exercise, by executing and delivering a later dated proxy
card, delivering written notice of the revocation of the proxy to the Corporate
Secretary prior to the Annual Meeting, or attending and voting at the Annual
Meeting. Attendance at the Annual Meeting, in and of itself, will not constitute
a revocation of a proxy. Unless previously revoked, the shares represented by
the enclosed proxy will be voted in accordance with the shareholder's directions
if the proxy is duly executed and returned prior to the Annual Meeting. If no
directions are specified on a duly executed and returned proxy, the shares will
be voted, in accordance with the recommendations of the Board of Directors, FOR
the election of the directors nominated by the Board of Directors, FOR approval
of the amendments to the Sybron International Corporation Amended and Restated
1993 Long-Term Incentive Plan, FOR approval of the amendment to the Company's
Articles of Incorporation and in accordance with the discretion of the named
attorneys-in-fact and agents on any other matters properly brought before the
Annual Meeting.
The expense of preparing, printing and mailing this Proxy Statement and the
proxies solicited hereby will be borne by the Company. In addition to the use of
the mails, proxies may be solicited by officers, directors and regular employees
of the Company, without additional remuneration, in person, or by telephone,
telegraph or facsimile transmission. The Company will also request brokerage
firms, nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares of Common Stock as of the record date and will
provide reimbursement for the cost of forwarding the proxy materials in
accordance with customary practice. The Company has retained Corporate Investor
Communications, Inc. to aid in the solicitation of proxies, including the
soliciting of proxies from brokerage firms, banks, nominees, custodians
<PAGE> 4
and fiduciaries, for a fee not anticipated to exceed $6,000 plus expenses. Your
cooperation in promptly signing and returning the enclosed proxy will help to
avoid additional expense.
At December 1, 1997, the Company had outstanding 48,175,503 shares of
Common Stock, and there were no outstanding shares of any other class of stock.
Only shareholders of record at the close of business on December 1, 1997, will
be entitled to notice of, and to vote at, the Annual Meeting. Each share of
Common Stock outstanding on the record date entitles the holder thereof to one
vote on each matter to be voted upon by shareholders at the Annual Meeting.
A majority of the votes entitled to be cast by shares entitled to vote,
present in person or by proxy, shall constitute a quorum at the Annual Meeting.
Abstentions are counted as shares present for purposes of determining the
presence or absence of a quorum. Proxies relating to "street name" shares that
are voted by brokers on some matters will be treated as shares present for
purposes of determining the presence or absence of a quorum, but will not be
treated as shares entitled to vote at the Annual Meeting on those matters as to
which authority to vote is withheld from the broker ("broker non-votes") absent
voting instructions from the beneficial owner under the rules of the New York
Stock Exchange. The Inspector of Election appointed by the Board of Directors
shall determine the shares represented at the meeting and the validity of
proxies and ballots, and shall count all votes and ballots. The voting
requirements and procedures described below are based upon provisions of the
Wisconsin Business Corporation Law, the Company's charter documents and any
other requirements applicable to the matters to be voted upon.
Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a shareholders meeting at which a quorum is
present. "Plurality" means that the individuals who receive the largest number
of votes are elected as directors up to the maximum number of directors to be
chosen in the election. Therefore, any shares not voted, whether by withheld
authority, broker non-vote or otherwise, have no effect in the election of
directors except to the extent that the failure to vote for an individual
results in another individual receiving a larger number of votes.
If a quorum exists, the affirmative vote of a majority of the votes cast
thereon will be required for approval of the amendments to the Sybron
International Corporation Amended and Restated 1993 Long-Term Incentive Plan
provided the total vote cast on the amendments represents over 50% of the shares
entitled to vote on such proposal. Because abstentions and broker non-votes are
not considered votes cast, neither will have an effect on the vote so long as
enough votes are cast to satisfy the 50% requirement set forth above. Similarly,
if a quorum exists, the affirmative vote of a majority of the votes cast thereon
will be required for approval of the amendment to the Company's Articles of
Incorporation. Since abstentions and broker non-votes are not considered votes
cast, neither will have any effect on the voting for this proposal.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the outstanding shares of Common Stock as of December 1, 1997, by
persons known by the Company to beneficially own more than 5% of the outstanding
shares of Common Stock, by nominees for director and directors of the Company,
by the executive officers named in the Summary Compensation Table, and by all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------
NAME AND ADDRESS NUMBER OF PERCENT
OF OWNER(A) SHARES OWNED OF CLASS
---------------- ------------ --------
<S> <C> <C>
A I M Management Group Inc.(b)............................ 5,360,500 11.1%
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------
NAME AND ADDRESS NUMBER OF PERCENT
OF OWNER(A) SHARES OWNED OF CLASS
---------------- ------------ --------
<S> <C> <C>
Harris Associates L.P.(c)................................. 3,334,085 6.9%
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602-3790
Don H. Davis, Jr.(d)...................................... 28,040 *
Christopher L. Doerr...................................... 1,100 *
Robert B. Haas(d)......................................... 1,602,754 3.3%
Thomas O. Hicks(d)........................................ 1,420,080 2.9%
William U. Parfet......................................... 1,000 *
Joe L. Roby(d)............................................ 106,808 *
Richard W. Vieser(d)...................................... 75,442 *
Kenneth F. Yontz(e)....................................... 1,078,624 2.2%
Dennis Brown(f)........................................... 355,101 *
David T. Della Penta(g)................................... 274,410 *
R. Jeffrey Harris(h)...................................... 376,800 *
Frank H. Jellinek, Jr.(i)................................. 131,374 *
Floyd W. Pickrell, Jr.(j)................................. 220,076 *
All directors and executive officers as a group (14
persons)(k)............................................. 5,841,942 11.8%
</TABLE>
- ---------------
* Represents less than 1% of the class.
(a) Except as otherwise indicated, each person has the sole power to vote and
dispose of all shares listed opposite his or its name.
(b) A I M Management Group Inc., reporting on behalf of itself and its wholly
owned subsidiaries, A I M Advisors, Inc. and A I M Capital Management, Inc.,
has indicated shared voting power and shared investment power with respect
to all of the shares of Common Stock reported.
(c) Harris Associates L.P., reporting on behalf of itself and its general
partner, Harris Associates, Inc., has indicated shared voting power with
respect to all of the shares, shared investment power with respect to
1,582,900 of the shares and sole investment power with respect to 1,751,185
of the shares of Common Stock reported.
(d) Includes, for each of Messrs. Davis, Haas, Hicks, Roby and Vieser, 24,000
shares of Common Stock issuable upon the exercise of stock options granted
to each of them pursuant to the Company's Amended and Restated 1994 Outside
Directors' Stock Option Plan. With respect to Mr. Davis, includes 840 shares
as to which he shares voting and investment power. With respect to Mr.
Hicks, includes 54,848 shares as to which he shares voting and investment
power, beneficial ownership of which Mr. Hicks disclaims.
(e) Mr. Yontz has shared voting power with respect to 29,900 of the shares of
Common Stock reported and shared investment power with respect to 30,360 of
the shares of Common Stock reported. Includes 185,908 shares of Common Stock
issuable upon the exercise of outstanding employee stock options held by Mr.
Yontz.
(f) Mr. Brown has shared investment power with respect to 330 of the shares of
Common Stock reported. Includes 354,771 shares of Common Stock issuable upon
the exercise of outstanding employee stock options held by Mr. Brown.
(g) Mr. Della Penta has shared investment power with respect to 538 of the
shares of Common Stock reported. Includes 239,211 shares of Common Stock
issuable upon the exercise of outstanding employee stock options held by Mr.
Della Penta.
(h) Mr. Harris has shared investment power with respect to 507 of the shares of
Common Stock reported. Includes 162,599 shares of Common Stock issuable upon
the exercise of outstanding employee stock options held by Mr. Harris.
3
<PAGE> 6
(i) Mr. Jellinek has shared investment power with respect to 370 of the shares
of Common Stock reported. Includes 45,808 shares of Common Stock issuable
upon the exercise of outstanding employee stock options held by Mr.
Jellinek.
(j) Mr. Pickrell has shared investment power with respect to 530 of the shares
of Common Stock reported. Includes 59,544 shares of Common Stock issuable
upon the exercise of outstanding employee stock options held by Mr.
Pickrell.
(k) Includes (i) 1,270,125 shares of Common Stock issuable upon the exercise of
outstanding stock options held by the directors and executive officers as a
group, (ii) 153,088 shares as to which there is shared voting power, and
(iii) 156,272 shares as to which there is shared investment power.
The above beneficial ownership information is based on information
furnished by the specified persons and is determined in accordance with Rule
13d-3 under the Securities Exchange Act of 1934, as required for purposes of
this Proxy Statement; accordingly, it includes shares of Common Stock that are
issuable upon the exercise of stock options exercisable within 60 days of
December 1, 1997. Such information is not necessarily to be construed as an
admission of beneficial ownership for other purposes.
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of three
directors to serve as Class III directors until the 2001 annual meeting of
shareholders and until their respective successors are duly elected and
qualified. The election shall be determined by a plurality vote duly cast. It is
intended that the persons named in the proxy card will vote FOR the election of
the three nominees listed below, unless instructions to the contrary are given
therein. The three nominees have indicated that they are able and willing to
serve as directors. However, if some unexpected occurrence should require the
substitution of some other person or persons for any of the nominees, it is
intended that the proxies will vote FOR such substitute nominees as the Board of
Directors may designate.
The following table sets forth the principal occupations (for at least the
last five years) and directorships of the three nominees in Class III and of the
five directors whose terms of office will continue after the Annual Meeting.
<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION COMPANY
NAME(1) AND DIRECTORSHIPS AGE SINCE
------- -------------------- --- -----------
<S> <C> <C> <C>
Nominees for election as Class III Directors, whose terms will expire in 2001:
Kenneth F. Yontz President and Chief Executive Officer of the Company 53 1987
since October 14, 1987; Chairman of the Board since
December 3, 1987; President and Chief Executive
Officer of the company formerly known as Sybron
Corporation and acquired by the Company in 1987 (the
"Acquired Company") from February 27, 1986 until
September 30, 1992; director of the Acquired Company
from February 27, 1986 to March 31, 1988; previously
Group Vice President and Executive Vice President of
the Allen-Bradley Company. Director of Berg
Electronics, Inc., Playtex Products, Inc. and
Viasystems Group Inc.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION COMPANY
NAME(1) AND DIRECTORSHIPS AGE SINCE
------- -------------------- --- -----------
<S> <C> <C> <C>
Joe L. Roby Chief Operating Officer of Donaldson, Lufkin & Jenrette, 58 1989
Inc. ("DLJ") (an investment banking firm) since
November 1995, and President of DLJ since February
1996; Chairman of the Investment Banking Group of
Donaldson, Lufkin & Jenrette Securities Corporation
("DLJSC") (a subsidiary of DLJ) from 1989 to November
1995; Managing Director of DLJSC from 1984 to November
1995. Director of DLJ and Advanced Micro Devices, Inc.
William U. Parfet Co-Chairman of MPI Research (a pre-clinical toxicology 51 1997(2)
research laboratory) since October 1995; President and
Chief Executive Officer of Richard-Allan Medical
Industries, Inc. from October 1993 to January 1996;
Vice Chairman of the Board and President of The Upjohn
Company, 1991 to 1993. Director of The Upjohn Company,
CMS Energy Corporation, Pharmacia & Upjohn, Inc.,
Bissell, Inc., Flint Ink, Stryker Corporation and MPI
Research.
Class I Directors, whose terms will expire in 1999:
Don H. Davis, Jr. President and Chief Executive Officer of Rockwell 58 1992
International Corporation (developer of advanced
manufacturing technology and communications equipment)
since September 1997; President and Chief Operating
Officer of Rockwell International Corporation, January
1995 to September 1997; Executive Vice President and
Chief Operating Officer of Rockwell International
Corporation, 1994 to 1995; Senior Vice President and
President, Automation, Rockwell International
Corporation, 1993 to 1994; President of Allen-Bradley
Company (manufacturer of industrial automation control
and information systems and a wholly owned subsidiary
of Rockwell International Corporation) from 1989 to
1994. Director of Rockwell International Corporation
and INGRAM MICRO INC.
Richard W. Vieser Served as President and Chief Operating Officer of 70 1992
McGraw-Edison Company from April 1984 through June
1985; Chairman and Chief Executive Officer of FL
Industries, Inc. (a diversified manufacturing company)
from June 1985 to December 1989; Chairman and Chief
Executive Officer of FL Aerospace (also a diversified
manufacturing company; formerly known as Midland-Ross
Corporation) from September 1986 to December 1989; and
Chairman, President and Chief Executive Officer of
Lear Siegler, Inc. (a diversified manufacturing
company) from March 1987 to December 1989. Director of
Berg Electronics, Inc., Ceridian Corporation (formerly
Control Data Corporation), Dresser Industries, Inc.,
Global Industrial Technologies, Inc. (formerly
INDRESCO Inc.), Varian Associates, Inc. and
International Wire Group, Inc.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION COMPANY
NAME(1) AND DIRECTORSHIPS AGE SINCE
------- -------------------- --- -----------
<S> <C> <C> <C>
Christopher L. Doerr President and Co-Chief Executive Officer of LEESON 48 1997(2)
Electric Corporation (manufacturer of custom and
standard industrial purpose electric motors). Director
of KMC Manufacturing Co., Inc.
Class II Directors, whose terms will expire in 2000:
Thomas O. Hicks Actively involved in private investments since 1970, 51 1987
specializing in leveraged buyouts; currently serves as
Chairman of the Board and Chief Executive Officer of
Hick, Muse, Tate & Furst Incorporated (an investment
firm specializing in strategic investments and
leveraged acquisitions). Director of Chancellor Media
Corporation, Berg Electronics, Inc., DAC Vision, Inc.,
Olympus Real Estate Corporation, Capstar Broadcasting
Corporation, CCI Holdings, International Home Foods
and CorpGroup, Inc.
Robert B. Haas Actively involved in private investments since 1978, 50 1987
specializing in leveraged buyouts and venture capital
investments; currently serves as Chairman of the Board
and Chief Executive Officer of Haas Wheat & Partners
Incorporated (private investment firm specializing in
leveraged acquisitions). Director of Specialty Foods
Corporation, Playtex Products, Inc., Smarte Carte
Corporation and Walls Holding Company.
</TABLE>
- ---------------
(1) See "Committees and Meetings of the Board of Directors" for memberships on
Board committees.
(2) Mr. Parfet and Mr. Doerr were elected as directors by the Board of Directors
since the 1997 Annual Meeting to fill vacancies created by the increase of
the number of directors constituting the Board of Directors from six to
eight.
SHAREHOLDERS AGREEMENT
Effective on May 14, 1992, the Company entered into a Shareholders
Agreement with Hicks & Haas Incorporated, H&H/Sybron Partners, L.P. (the general
partner of which is Hicks & Haas Incorporated), DLJ Capital Corporation (an
affiliate of DLJSC and former beneficial owner of more than 5% of the
outstanding shares of Company Common Stock), Messrs. Hicks and Haas, and certain
of the executive officers of the Company (including the Presidents of certain
operating subsidiaries). The Shareholders Agreement grants certain demand and
piggyback registration rights to the shareholder parties thereto with respect to
certain shares of Common Stock owned by such parties.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company has the following standing committees of the Board of
Directors, whose present members are as identified below. There is no standing
nominating committee.
Messrs. Vieser, Roby, Haas and Parfet currently serve as members of the
Audit Committee. Prior to Mr. Parfet's election as a director and member of the
Audit Committee during fiscal 1997, Mr. Davis served as a member of such
committee. During the fiscal year ended September 30, 1997, this committee met
twice. The Audit Committee is responsible for supervising the work of the
Company's independent auditors and reporting to the Board of Directors thereon.
Messrs. Haas, Hicks, Davis and Vieser serve as members of the
Compensation/Stock Option Committee. During the fiscal year ended September 30,
1997, this committee met four times. The Compensa-
6
<PAGE> 9
tion/Stock Option Committee is responsible for making recommendations to the
Board of Directors concerning compensation of the Company's employees, officers
and directors, and is authorized to determine the compensation of executive
officers of the Company. The Compensation/Stock Option Committee is authorized
to administer the various incentive plans of the Company and has all of the
powers attendant thereto, including the power to grant employee stock options.
During the fiscal year ended September 30, 1997, the Board of Directors met
six times. No member of the Board of Directors attended fewer than 75% of the
total number of meetings held by the Board of Directors and the committees on
which he served except Mr. Davis.
SHAREHOLDER NOMINATION OF DIRECTOR CANDIDATES
The Bylaws of the Company provide that any shareholder of record who shall
be entitled to vote for the election of directors at a meeting called for such
purpose may nominate persons for election to the Board of Directors subject to
the following notice requirements.
A shareholder desiring to nominate a person or persons for election to the
Board of Directors must send a written notice to the Secretary of the Company
setting forth (a) the name and address of the shareholder who intends to make
the nomination(s) and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record or a beneficial holder
of stock of the Company entitled to vote at the meeting (including the number of
shares the shareholder owns and the length of time the shares have been held)
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all
relationships, arrangements and understandings between the shareholder and each
nominee and any other person or persons (naming such person or persons) pursuant
to which the nomination or nominations are to be made by the shareholder; (d)
such other information regarding each nominee proposed by such shareholder as
would have been required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission (whether or not such
rules are applicable) had each nominee been nominated, or intended to be
nominated, by the Board of Directors; and (e) the written consent of each
nominee to serve as a director of the Company if so elected, with such written
consent attached thereto. The Bylaws require similar notice with respect to
shareholder proposals for other actions to be taken at a meeting of
shareholders. See "Shareholder Proposals" below.
To be timely, such notice must be delivered to or mailed and received at
the principal executive offices of the Company (i) in the case of an annual
meeting, not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting (any time from November 1,
1998 to and including November 30, 1998, with respect to the 1999 annual
meeting) or (ii) in the event that the date of the annual meeting is changed by
more than 30 days from such anniversary date and in the case of a special
meeting, notice must be so received not later than the close of business on the
tenth day following the earlier of the day on which notice of the date of the
meeting was mailed or on which public disclosure of the meeting date was made.
DIRECTORS' COMPENSATION
Directors of the Company are entitled to reimbursement of their reasonable
out-of-pocket expenses in connection with their travel to and attendance at
meetings of the Board of Directors or committees thereof. In addition, during
fiscal 1998 each director of the Company who is not also an officer or employee
of the Company (an "Outside Director") will receive an annual retainer of
$18,000, and a fee of $1,000 for each meeting of the Board of Directors at which
such director is present. Each Outside Director who is a member of a committee
of the Board of Directors will also receive a fee of $750 for each meeting of
such committee at which such director is present. For fiscal 1997, those fees
were also $18,000, $1,000 and $750, respectively. In addition, each person
serving as an Outside Director is entitled to receive an option each year to
purchase 6,000 shares of Company Common Stock pursuant to the terms of the
Sybron International Corporation Amended and Restated 1994 Outside Directors'
Stock Option Plan at an exercise price equal to the fair market value of the
Common Stock on the date of grant. During fiscal 1997, two non-employee
directors,
7
<PAGE> 10
Messrs. Roby and Vieser, received $998 and $5,216, respectively, in compensation
in the form of personal use of the Company aircraft when their spouses
accompanied them on Company-related business trips.
On June 8, 1995, Richard-Allan Scientific Company, a subsidiary of the
Company ("RASC"), entered into a consulting agreement with William U. Parfet,
who became a director of the Company during fiscal 1997. The consulting
agreement, which relates to the identification of opportunities for RASC and
promotion of its products by Mr. Parfet, continues until June 7, 2000. During
the first six (6) months of the term, Mr. Parfet was obligated to devote at
least two (2) eight-hour days per month to performing his duties under the
consulting agreement. During the remainder of the term, he is required to spend
at least one (1) eight-hour day per month performing those duties. For his
services, Mr. Parfet is paid $8,333 per month. RASC may terminate the consulting
agreement prior to expiration of the term in the event Mr. Parfet breaches his
obligations thereunder.
SHAREHOLDER RETURN COMPARISON
The graph below sets forth the cumulative total shareholder return on
Company Common Stock during the preceding five fiscal years, as compared to the
returns of the Standard & Poor's 500 Stock Index and the Standard & Poor's
Health Care Composite Index. The graph assumes that $100 was invested on
September 30, 1992 in Company Common Stock and in each of the two Standard &
Poor's indices, and that, as to such indices, dividends were reinvested. The
Company has not, since its inception, paid any dividends on its Common Stock.
[1992-1997 GRAPH]
COMPARISON OF CUMULATIVE TOTAL RETURN
S&P HEALTH
PERIOD ENDING SYBRON S&P 500 CARE
9/92 100.00 100.00 100.00
3/93 122.97 109.63 94.09
9/93 150.68 113.01 91.21
3/94 172.97 111.25 86.09
9/94 186.49 117.18 105.61
3/95 194.60 128.57 118.56
9/95 217.57 152.04 142.30
3/96 264.87 169.85 164.19
9/96 313.51 182.96 189.45
3/97 300.00 203.53 207.52
9/97 464.19 256.97 257.51
8
<PAGE> 11
COMPENSATION/STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation/Stock Option Committee of the Board of Directors (the
"Committee") is responsible for analyzing and approving the Company's general
compensation policies and for making specific compensation decisions with
respect to the Company's executive officers. During fiscal 1997, the Committee
was comprised of the individuals listed at the end of this Report, each of whom
is an Outside Director.
COMPENSATION PHILOSOPHY
The general philosophy of the Company's executive compensation program is
to offer its key executives competitive compensation based both on the Company's
performance and on the employee's individual contribution and performance. The
Company's executive compensation policies are intended to motivate and reward
highly qualified executives for long-term strategic management and the
enhancement of shareholder value, support a performance-oriented environment
that rewards achievement of internal Company goals which are designed to be
consistent with the interests of shareholders, and attract and retain executives
whose abilities are critical to the long-term success and competitiveness of the
Company.
The Company's executive compensation program consists of three main
components:
- Base Salary
- Annual Cash Bonus Incentives
- Stock Incentives
BASE SALARY
In September of each year, the Committee meets to consider and finalize
executive officer base salaries for the following calendar year. In setting such
salaries, the Committee considers competitive market data, the relevant impact
of each executive's performance on the future growth and success of the Company,
the complexity of the Company's businesses in which the executive is involved,
the overall economic environment and such other factors as the Committee may
deem relevant to the particular executive. With respect to the four executives
who are the presidents of, and directly responsible for managing, the Company's
principal operating subsidiaries, the Committee also considers the nature and
complexity of each executive's subsidiary's operations, each executive's
subsidiary's contribution to the Company in terms of sales volume and earnings,
the nature and number of foreign operations for which the executive is
responsible, and the relevant impact of the performance of the executive's
operating subsidiary on the future growth and success of the Company.
In light of the factors set forth above, when setting base salaries for
calendar 1997 the Committee used as its reference point salaries in the 75th and
95th percentiles for executives in companies with sales volumes comparable to
that of the Company or the relevant subsidiaries of the Company. The competitive
market data examined by the Committee consisted of a linear regression analysis
of survey data summarizing compensation information with respect to
approximately 319 United States corporations having sales volumes between $82
million and $72 billion. This group of companies differs from the S&P Health
Care Composite Index reflected in the Company's performance graph contained
elsewhere in this Proxy Statement. The market survey, prepared by a national
compensation consulting firm, synthesized information concerning a total of
17,587 executives in multiple industries. Because the consultant's industry
survey which focused on executives in the health care field contained what both
the Committee and the consultant believed to be a statistically insignificant
sample, the Committee chose to utilize the broader survey described above.
The Committee increased executive officers' base salaries for calendar year
1997 by an average of 8.9% (inclusive of grade level reclassifications for all
executive officers except Mr. Yontz). The average increase for 1997 reflected in
the survey data was 6.4%. The base salary paid to the Chief Executive Officer
for fiscal year 1997 was $630,000 (which incorporates portions of his calendar
year salaries for both 1996 and 1997),
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<PAGE> 12
representing a 6.8% increase over fiscal year 1996. In setting Mr. Yontz's
salary the Committee applied the same analysis as it did with respect to all
other executive officers, as described above.
ANNUAL CASH BONUS INCENTIVES
Annual cash bonuses for executive officers are intended to reflect the
Committee's belief that a significant portion of the annual compensation of each
executive officer should be contingent upon the financial performance of the
Company. In 1994, the Committee redesigned the Company's executive compensation
program to place a greater emphasis on performance based compensation and to
improve the alignment of internal financial goals, year-over-year earnings
growth, enhancement of shareholder value and executive incentives. The Senior
Executive Incentive Compensation Plan (the "Incentive Plan"), which was
initially approved by shareholders at the 1995 Annual Meeting, is a component of
the redesigned program. The Incentive Plan became effective for the Company's
1995 fiscal year, replacing the previous annual incentive plan under which
bonuses were dependent solely upon actual Company performance versus budgeted
performance. The Incentive Plan has a budget component which preserves the
benefits of the budget discipline, but also has an earnings growth component to
provide a tangible, direct link between management incentives and the
expectations of the investment community. There are minimum levels of financial
performance set by the Committee for bonuses to be triggered, and individual
awards depend upon salary grades and the extent to which the goals are exceeded.
With respect to the budget component, a participant can earn up to 100% of his
or her target award by attaining set working capital and operating income
targets. With respect to the earnings growth component, once a minimum hurdle
growth rate of 8% over the previous year's operating income is reached, a
participant can earn an additional bonus amount dependent solely upon the actual
rate of year-over-year earnings growth that is achieved. The Incentive Plan was
amended during fiscal 1996 and such amendments were approved by the Company's
shareholders at the 1997 Annual Meeting. The amendments, among other things,
incorporated an individual maximum award limitation as described later in this
report under the heading "Section 162(m)."
An award under the Incentive Plan is calculated by multiplying the
participant's target award by the applicable success factor. A participant's
target award depends upon a percentage of base salary associated with the
participant's salary grade. For those participants who work for one of the
Company's operating subsidiaries, the success factor depends upon the financial
performance of that subsidiary. For those participants who have overall
corporate responsibilities, the success factor is based upon a weighted average
of the financial performance of each subsidiary. Following is an explanation of
the calculation of both the target award and the applicable success factor,
along with an example of how an award under the Incentive Plan is calculated.
Notwithstanding any provision to the contrary in the Incentive Plan, in no event
shall an award to any participant exceed $2.8 million in any plan year.
Target Award Calculation
The target award for a participant in the Incentive Plan is a percentage of
the participant's annual base salary as of the end of the year for which the
award is payable, which percentage is based upon salary grade. The target awards
range from 16% of base salary for a participant at executive salary grade 3 to
55% of base salary for a participant at executive salary grade 21. For example,
an individual in executive salary grade 13, with a salary of $200,000, would
have a target award of 39% of the participant's base salary, or $78,000. This
amount would be multiplied by the applicable success factor to determine the
participant's award under the Incentive Plan.
Success Factor Calculation
The success factor is calculated by totaling the percentages by which the
actual performance with respect to certain financial measurement components
exceeds the goals set forth for such components. If certain threshold results
are not achieved, then the success factor will be 0% and no bonus will be paid.
Certain of the components are subject to caps regardless of the level of
performance.
10
<PAGE> 13
The financial measurement components of the success factor are as follows:
actual operating income compared to budget (the "Budgeted Operating Income
Component"), actual working capital ratio compared to budget (the "Budgeted
Working Capital Ratio Component"), and growth in operating income over the prior
year (the "Year-Over-Year Growth Component"). The performance threshold for both
the Budgeted Operating Income Component and the Budgeted Working Capital Ratio
Component is the achievement of at least 80% of the budgeted amount. Performance
between 80% and 100% of the budgeted amount results in a proportionate credit to
the success factor. No credit is given for performance over 100% of the budgeted
amounts for these components. This limitation, combined with the weighting of
the Budgeted Operating Income Component at 80% and the Budgeted Working Capital
Ratio Component at 20%, means that the portion of the success factor
attributable to these two components cannot exceed an aggregate of 100%.
The performance threshold for the Year-Over-Year Growth Component is an 8%
growth in operating income over the prior year. The credit to the success factor
is 0% until 8% growth is achieved, at which level the credit to the success
factor is 80%. At 10% growth, the credit to the success factor is 100%, and so
on with a proportionate, linear increase in the credit to the success factor for
growth beyond 10%. Earnings growth through acquisitions is encouraged by the
Year-Over-Year Growth Component because earnings from acquisitions are included
in operating income. However, operating income is adjusted to offset the imputed
cost of funding the acquisition and the amortization of intangibles associated
with the acquisition.
Calculation of Incentive Award -- Example
As stated above, an incentive award is calculated by multiplying a
participant's target award by the applicable success factor. As an example,
assume: (1) an executive officer participant who is an employee of a subsidiary
of the Company with a salary of $200,000, at salary grade 13 (which corresponds
to a target award of 39% of base salary); (2) for fiscal year 1997 the
subsidiary achieves operating income of 105% of the amount budgeted and 90% of
the budgeted working capital ratio; and (3) the subsidiary achieves operating
income growth of 10% over the prior year's operating income.
This participant's target award would be $78,000 (i.e., 39% of $200,000).
The applicable success factor would be calculated as follows:
<TABLE>
<S> <C> <C>
- Budgeted Operating Income Component (105% of budget, capped
at 100%, and weighted 80%)............................... 80%
- Budgeted Working Capital Ratio Component (90% of budget,
weighted 20%)............................................ 18%
- Year-Over-Year Growth Component (10% growth equals a 100%
credit to the success factor)............................ 100%
----
- Success factor (aggregate of all components)............... 198%
</TABLE>
The incentive award would be equal to $154,000, which is $78,000 (the
target award) multiplied by 198% (the success factor).
The Company's 1997 fiscal year was another excellent performance year. As a
result, the Chief Executive Officer earned a fiscal year 1997 incentive award
equal to 142% of his calendar year base salary calculated in accordance with the
bonus formula described above. Other executive officers eligible under the
Incentive Plan received fiscal 1997 awards ranging from 34% to 203% of their
base salaries depending on their specific grade levels and the success factor
applied to the individual subsidiary (or consolidated) financial performance
results.
In addition, during fiscal 1997 the Chief Executive Officer was paid the
portion of his fiscal 1996 bonus ($479,823) that had been deferred by the
Committee in fiscal 1996 because such portion was not eligible for deduction by
the Company for federal income tax purposes pursuant to Section 162(m) of the
Internal Revenue Code of 1986, as amended ("Section 162(m)"). The Company's
inability to deduct such amount resulted from the fact that a plan amendment
placing a limitation on awards under the Incentive Plan had not yet been
approved by the Company's shareholders. That approval was obtained at the 1997
Annual Meeting
11
<PAGE> 14
and, consequently, the Company believes that deductibility of the full amount of
awards made pursuant to the Incentive Plan has been preserved.
STOCK INCENTIVES
At their 1995 Annual Meeting, the Company's shareholders approved the
Sybron International Corporation Amended and Restated 1993 Long-Term Incentive
Plan (the "Stock Plan"), under which incentive stock options, non-qualified
stock options and restricted stock could be granted to executive officers and
other key employees of the Company. The Committee views stock-based compensation
as a critical component of the Company's overall executive compensation program.
The Stock Plan played a key role in the Committee's redesign of the
Company's executive compensation program in 1994 to improve the alignment of
internal financial goals, year-over-year earnings growth, enhancement of
shareholder value and executive compensation. Pursuant to this program, in
fiscal 1994 and 1995 the Committee granted nonqualified stock options to
purchase a total of 2,000,000 shares of Company Common Stock to executive
officers (after giving effect to the Company's 2-for-1 stock split on December
15, 1995), thus providing the executives an opportunity to realize significant
gains should earnings growth and enhanced shareholder value be realized. As a
corollary, the executive officers were rendered ineligible to receive option
grants under the Company's broader annual grant program for key executives. As a
result, other than one executive (not the CEO) who in fiscal 1996 received a
special grant because of an increase in responsibilities resulting from the
consolidation of certain businesses, no executive officers received stock option
grants in fiscal 1996 or 1997.
The Committee believes that the stock option grants to executive officers
under its redesigned compensation program have been a major factor in driving
shareholder value at the Company. Since the initial grants were made in 1994,
the Company's total market value has risen from approximately $760 million to
just over $2.0 billion at the end of fiscal 1997. During this period the Company
successfully executed its growth strategy by consistently developing new
products, expanding its world markets, and completing and integrating 39
acquisitions. Earnings have grown more than 20% per year, and the Company's
Common Stock has outperformed both the S&P 500 and the S&P 500 Health Care
indexes by wide margins.
In order to sustain the forces that are driving shareholder value, and the
vigor with which the executive officers pursue the Company's growth strategies,
the Committee will consider granting to executive officers additional options to
purchase up to an aggregate of 2,000,000 shares of Company Common Stock, in such
amounts and to such executive officers as may be determined by the Committee
from time to time. To accommodate these grants in fiscal 1998, and to
accommodate continuance of the Company's practice of making annual incentive
grants to other key employees, the Committee determined and recommended to the
Board of Directors that the number of shares available for issuance under the
Stock Plan should be increased by 2.4 million. The executive officers would
continue to be ineligible to participate in the annual grant program. A further
description of this proposal (and other amendments approved by the Board and
proposed for shareholder approval at the 1998 Annual Meeting, including an
amendment to take away the Committee's ability to issue restricted stock) is set
forth under "Proposal to Amend the Sybron International Corporation Amended and
Restated 1993 Long-Term Incentive Plan" included elsewhere in this Proxy
Statement. The full text of the Stock Plan, as so amended, is attached as
Exhibit A to this Proxy Statement.
Typically, options granted under the Stock Plan vest in equal annual
installments on each of the first four anniversaries following the grant date
(provided the optionee is still an employee of the Company at that time and
provided further that vesting is accelerated upon the optionee's death,
disability or retirement). Such options are generally granted with an exercise
price equal to the market value of the Company's Common Stock on the date of the
grant, thus serving to focus the optionees' attention on managing the Company
from the perspective of an owner with an equity stake in the business.
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<PAGE> 15
SECTION 162(M)
Section 162(m) limits, to $1 million, the deductibility by a publicly-held
corporation of compensation paid in a taxable year to an individual who, on the
last day of the taxable year, was (i) the Chief Executive Officer or (ii) among
the four highest compensated executive officers whose compensation is required
to be reported in the Summary Compensation Table. Qualified performance-based
compensation is not subject to the deduction limit if certain conditions are
met. The Committee has taken the steps necessary to satisfy those conditions in
order to preserve the deductibility of executive compensation to the fullest
extent possible consistent with its other compensation objectives and overall
compensation philosophy. One of the conditions is shareholder approval of the
Company's performance-based compensation plans. The Company's shareholders have
previously considered, voted upon and approved the Incentive Plan and the
current version of the Stock Plan, and additional amendments to the Stock Plan
have been proposed for shareholder approval at the 1998 Annual Meeting. Another
of the conditions is inclusion in each performance-based compensation plan of a
limitation on the maximum award available to each participant for each plan
year. The Incentive Plan and the Stock Plan each contain such a limitation.
COMPENSATION/STOCK OPTION COMMITTEE
Robert B. Haas, Chairman
Thomas O. Hicks
Don H. Davis, Jr.
Richard W. Vieser
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<PAGE> 16
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table summarizes certain information for each of the last
three fiscal years concerning the compensation awarded or paid to or earned by
the Company's Chief Executive Officer and each of the Company's other five most
highly compensated executive officers who were serving as executive officers at
the end of fiscal 1997 (collectively, the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
AWARDS PAYOUTS
----------------------- -------
ANNUAL COMPENSATION SECURITIES
----------------------------------- RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
POSITION YEAR ($)(1) ($)(2) ($) ($) (#)(3) ($) ($)(4)
------------------ ---- ------ ------ ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kenneth F. Yontz,............. 1997 630,000 1,387,983(5) 121,442(6) 0 0 0 4,750
Chairman of the Board, 1996 590,000 318,777(5) 87,559(6) 0 0 0 3,664
President and Chief 1995 551,250 554,400 73,996(6) 0 394,940 0 2,700
Executive Officer
David T. Della Penta.......... 1997 315,000 394,752 37,744(7) 0 0 0 5,129
President and Chief 1996 287,500 411,840 37,624(7) 0 60,000 0 4,258
Executive
Officer of the Company's 1995 239,000 99,750 36,328(7) 0 176,260 0 2,399
subsidiary, Nalge Nunc
International Corporation
Frank H. Jellinek, Jr......... 1997 282,500 588,555 55,811(8) 0 0 0 4,071
President of the Company's 1996 256,250 380,016 53,171(8) 0 0 0 3,664
subsidiary, Erie Scientific 1995 242,000 204,477 49,060(8) 0 172,760 0 2,405
Company
Floyd W. Pickrell, Jr......... 1997 336,250 389,425 38,702(9) 0 0 0 4,071
President of the Company's 1996 321,250 299,000 26,625(9) 0 0 0 3,575
subsidiary, Sybron Dental 1995 306,000 303,552 32,125(9) 0 218,680 0 2,376
Specialties, Inc.
R. Jeffrey Harris............. 1997 241,250 265,482 36,818(10) 0 0 0 4,770
Vice President -- General 1996 225,000 233,772 41,205(10) 0 0 0 3,964
Counsel and Secretary 1995 206,063 147,420 28,068(10) 0 148,120 0 2,769
Dennis Brown.................. 1997 241,250 265,482 46,834(11) 0 0 0 4,775
Vice President -- Finance 1996 225,000 233,772 45,281(11) 0 0 0 4,131
and Chief Financial Officer 1995 205,000 147,420 78,871(11) 0 148,120 0 3,049
</TABLE>
- ---------------
(1) The salary amounts set forth include amounts deferred at the named
executive officer's option through contributions to the Sybron
International Corporation Savings and Thrift Plan (the "Savings Plan").
(2) Consists of bonuses earned pursuant to the Sybron International Corporation
Senior Executive Incentive Compensation Plan, which amounts were either
paid as soon as practicable following the beginning of the next fiscal year
or deferred pursuant to the Sybron International Corporation Deferred
Compensation Plan.
(3) Consists entirely of stock options. The numbers of shares set forth herein
have been adjusted to reflect the Company's 2-for-1 stock split on December
15, 1995.
(4) Consists entirely of employer contributions to the Savings Plan allocated
to the account of the named executive officer.
(5) The total bonus earned by Mr. Yontz for fiscal 1996 was $798,600. A portion
of this bonus was deferred by the Compensation/Stock Option Committee to
the extent that the bonus exceeded the amount able
14
<PAGE> 17
to be deducted by the Company for federal income tax purposes in the 1996
taxable year. The amount deferred, which was paid during fiscal 1997, was
$479,823, which amount is excluded from the 1996 bonus amount and included
in the 1997 bonus amount in the table.
(6) For 1997, includes $27,447 for executive life insurance (including tax
gross-up payments), $31,912 for an executive car and related expenses
(including tax gross-up payments), $9,211 for club memberships, $10,000 for
financial planning services and $42,872 for personal use of Company
aircraft. For 1996, includes $27,447 for executive life insurance
(including tax gross-up payments), $25,223 for an executive car and related
expenses (including tax gross-up payments), $9,748 for club memberships,
$8,500 for financial planning services and $16,641 for personal use of
Company aircraft. For 1995, includes $27,447 for executive life insurance
(including tax gross-up payments), $24,130 for an executive car and related
expenses (including tax gross-up payments), $9,219 for club memberships and
$13,200 for financial planning services.
(7) For 1997, includes $11,435 for executive life insurance (including tax
gross-up payments), $22,845 for an executive car and related expenses
(including tax gross-up payments) and $3,464 for club memberships. For
1996, includes $11,436 for executive life insurance (including tax gross-up
payments), $22,268 for an executive car and related expenses (including tax
gross-up payments) and $3,920 for club memberships. For 1995, includes
$11,435 for executive life insurance (including tax gross-up payments),
$20,742 for an executive car and related expenses (including tax gross-up
payments), $3,901 for club memberships and $250 for financial planning
services.
(8) For 1997, includes $13,559 for executive life insurance (including tax
gross-up payments), $22,915 for an executive car and related expenses
(including tax gross-up payments), $13,250 for club memberships and $6,087
for personal use of Company aircraft. For 1996, includes $13,559 for
executive life insurance (including tax gross-up payments), $31,073 for an
executive car and related expenses (including tax gross-up payments),
$5,200 for financial planning services and $3,339 for personal use of
Company aircraft. For 1995, includes $13,559 for executive life insurance
(including tax gross-up payments), $30,748 for an executive car and related
expenses (including tax gross-up payments), $495 for an executive physical
and $4,258 for financial planning services.
(9) For 1997, includes $11,983 for executive life insurance (including tax
gross-up payments), $18,069 for an executive car and related expenses
(including tax gross-up payments), $3,780 for club memberships, $742 for an
executive physical and $4,128 for personal use of Company aircraft. For
1996, includes $11,983 for executive life insurance (including tax gross-up
payments), $12,539 for an executive car and related expenses (including tax
gross-up payments) and $2,103 for club memberships. For 1995, includes
$11,983 for executive life insurance (including tax gross-up payments),
$12,925 for an executive car and related expenses (including tax gross-up
payments), $6,769 for club memberships and $448 for an executive physical.
(10) For 1997, includes $6,374 for executive life insurance (including tax
gross-up payments), $19,578 for an executive car and related expenses
(including tax gross-up payments), $5,360 for club memberships, $4,000 for
financial planning services and $1,506 for personal use of Company
aircraft. For 1996, includes $6,374 for executive life insurance (including
tax gross-up payments), $19,778 for an executive car and related expenses
(including tax gross-up payments), $6,346 for club memberships, $7,429 for
financial planning services and $1,278 for personal use of Company
aircraft. For 1995, includes $6,374 for executive life insurance (including
tax gross-up payments), $17,756 for an executive car and related expenses
(including tax gross-up payments) and $3,938 for club memberships.
(11) For 1997, includes $18,833 for executive life insurance (including tax
gross-up payments), $18,784 for an executive car and related expenses
(including tax gross-up payments), $6,861 for club memberships, $850 for
financial planning services and $1,506 for personal use of Company
aircraft. For 1996, includes $18,833 for executive life insurance
(including tax gross-up payments), $18,085 for an executive car and related
expenses (including tax gross-up payments), $7,513 for club memberships and
$850 for financial planning services. For 1995, includes $18,833 for
executive life insurance (including tax gross-up
15
<PAGE> 18
payments), $16,163 for an executive car and related expenses (including tax
gross-up payments), and $43,875 for club memberships.
STOCK OPTIONS
The following table sets forth certain information concerning individual
exercises of stock options by the named executive officers during fiscal 1997,
including the number and value of options outstanding at the end of fiscal 1997
for each of the named executive officers. No option grants were made to the
named executive officers during fiscal 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END(#) FISCAL YEAR-END($)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth F. Yontz......... 250,000 6,119,975 123,588 246,374 2,989,119 6,212,288
David T. Della Penta..... 0 0 171,715 177,320 4,342,433 4,262,356
Frank H. Jellinek,
Jr. ................... 49,686 917,898 18,510 108,084 433,828 2,725,853
Floyd W. Pickrell,
Jr. ................... 110,078 2,469,325 25,000 136,727 759,375 3,448,077
R. Jeffrey Harris........ 0 0 139,255 92,155 3,622,107 2,323,257
Dennis Brown............. 25,000 735,155 291,475 131,759 7,910,568 3,412,601
</TABLE>
- ---------------
(1) Consists entirely of stock options.
EMPLOYMENT CONTRACTS
Mr. Yontz, Mr. Brown, Mr. Harris and certain officers of the Company's
operating subsidiaries (Messrs. Pickrell, Jellinek, Della Penta and Randy A.
Hoff) have entered into employment contracts (the "Employment Contracts") with
the Company. Each of the Employment Contracts, except for Mr. Hoff's, provided
for an initial term which expired on December 31, 1993. The initial term of Mr.
Hoff's employment contract expires on December 31, 1997. Each of the Employment
Contracts provides that at the close of the initial term, and at the close of
each two-year term thereafter, the contract is extended for a two-year period
unless written notice of an intention not to renew the Employment Contract is
given to the other party thereto by either the employee or the Company at least
ninety days prior to the date the automatic extension otherwise would occur.
Each of the Employment Contracts also provides that upon a Change in Control (as
defined in the Employment Contract) the term shall automatically be extended for
a two-year period ending on the second anniversary of the Change in Control.
Pursuant to each of their respective Employment Contracts, these executive
officers have agreed to serve in their respective executive officer capacities,
and each is to devote his full time to the performance of his duties thereunder.
The Employment Contracts of Messrs. Yontz, Brown, Harris, Pickrell, Jellinek,
Della Penta and Hoff provide for 1997 base salaries of $640,000, $245,000,
$245,000, $345,000, $290,000, $320,000 and $200,000, respectively, which base
salaries are subject to annual merit increases at the discretion of the
Compensation/Stock Option Committee. In addition, these executives are entitled
to benefits customarily accorded executives of the Company and its subsidiaries,
including participation in the Company's Senior Executive Incentive Compensation
Plan. In the event of death or permanent disability, the executive, his
beneficiaries or estate, as the case may be, will be entitled to continue to
receive the executive's then current base salary for a period of twelve months
following the termination of employment as a result of such event. In addition,
each Employment Contract may be terminated at any time by the Board of Directors
for Cause (as defined in the Employment Contract). Each of the Employment
Contracts provides that if an event constituting a Change in Control shall have
occurred, the executive officer is entitled to receive a severance payment equal
to 2.99 times such officer's "Base Amount"
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<PAGE> 19
as such term is defined under section 280G(b)(3) of the Internal Revenue Code of
1986, as amended (the "Code"), upon the termination of his employment with the
Company or its subsidiaries unless such termination is (i) because of death or
retirement, (ii) by the Company or any of its subsidiaries for total disability
or Cause, or (iii) by such officer other than for Good Reason (as defined in the
Employment Contract). The Company must require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to assume the
Company's obligations pursuant to the Employment Contracts, and any failure to
obtain such assumption shall entitle the executives to the same benefits they
would receive if they terminated the Employment Contracts on the date of
succession for Good Reason following a Change in Control. The Employment
Contracts also subject the executives to confidentiality obligations and contain
restrictions on their competing with, and soliciting clients and employees of,
the Company for a period of one and three years, respectively, following
termination of the Employment Contract.
PENSION BENEFIT PLANS
Retirement Plan. The Company has a Retirement Security Plan (the
"Retirement Plan") for certain U.S. employees who are not covered by a
collective bargaining agreement, including its executive officers. The plan
combines several prior pension plans of the Acquired Company and is a "career
average" type plan. The benefit formula directly relates to annual salary,
length of service and Social Security covered compensation. To the extent that
pension benefits exceed the benefit limits and limits on covered compensation
imposed by the Employee Retirement Income Security Act of 1974, as amended, the
Company plans to make the appropriate payments under the unfunded pension plan
described below as they become due. The total compensation covered by the
Retirement Plan (including unfunded amounts) is the amount shown in the salary
and bonus columns of the Summary Compensation Table.
Annual pension benefits expected to be distributed upon retirement
(normally at age 65) to most executive officers of the Company, including the
named executive officers, are equal to the sum of past and future service
benefit formulas. Past service benefit (for service prior to January 1, 1987) is
an amount equal to the sum of (a) 0.0105 times the average annual pay for the
employee's final three years, up to the Social Security covered compensation for
1987, plus (b) 0.015 times the average annual pay for the employee's final three
years, in excess of the Social Security covered compensation in 1987, which sum
is multiplied by the total number of years of credited service before January 1,
1987. The amount so calculated is reduced by the amount of any benefit the
participant is eligible to receive from a prior pension plan or due to
participation in any prior profit sharing plan. Future service benefit (for
service since January 1, 1987) for credited service not in excess of 35 years is
an amount equal to the sum of all future year annual benefits calculated for
each year as 0.0105 times annual pay up to the Social Security covered
compensation for that year, plus 0.015 times annual pay in excess of the Social
Security covered compensation for that year. Future service benefit for credited
service in excess of 35 years is an amount equal to 0.014 times a participant's
annual salary for such year. The Company may from time to time move the past
service formula to a more current date which would have the effect of increasing
the amount of average compensation upon which benefits are calculated.
The following table illustrates the projected annual pension benefits
payable for life (without provision for survivor pension) from the Retirement
Plan and, where applicable, the Unfunded Plan described below upon retirement at
age 65 to executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
PROJECTED ASSUMED FULL YEARS OF
NAME OF ANNUAL RETIREMENT ADDITIONAL YEARS SERVICE AS OF
INDIVIDUAL BENEFIT AT AGE 65* OF SERVICE SEPT. 30, 1996
---------- ------------------ ---------------- --------------
<S> <C> <C> <C>
Kenneth F. Yontz........................... $417,282 12 11
David T. Della Penta....................... 226,662 16 27
Frank H. Jellinek, Jr...................... 280,044 13 30
Floyd W. Pickrell, Jr...................... 214,673 14 24
R. Jeffrey Harris.......................... 209,510 23 12
Dennis Brown............................... 135,762 16 4
</TABLE>
- ---------------
* Assumes no salary increases.
17
<PAGE> 20
As of December 31, 1985, the Acquired Company had purchased annuities to
cover past service benefits for all employees covered under the Salaried Pension
Plan of the Acquired Company through such date.
Unfunded Pension Plan. The Company currently maintains an unfunded,
non-qualified retirement plan providing benefits to employees of the Company in
excess of the limitations set forth under section 415 of the Code (the "Unfunded
Plan"). The individuals named in the Summary Compensation Table and executives
as a group are eligible to participate in the Unfunded Plan.
Under the Unfunded Plan, benefits are paid from general assets of the
Company. Participants are entitled to a monthly benefit upon their retirement
equal to the actuarial value of the benefit that would be payable to the
participant if the provisions of the Retirement Plan dealing with limits on
pensions pursuant to Code section 415 were inapplicable.
The compensation covered by the Unfunded Plan includes salary, bonus, and
deferred compensation payable to the participant for services rendered. The
compensation in the salary and bonus columns of the Summary Compensation Table,
above, includes each of these elements. For Mr. Yontz, the benefit was
calculated using his calendar year base salary of $640,000 and the bonus earned
for fiscal 1997 of $908,160 (which does not include the bonus payment of
$479,823 made in fiscal 1997 which was deferred from fiscal 1996). Benefits
under the Unfunded Plan are computed on a straight-life annuity basis, and are
subject to an offset of the actuarial value of benefits payable to participants
under the terms of the Retirement Plan.
PROPOSAL TO AMEND THE SYBRON INTERNATIONAL CORPORATION
AMENDED AND RESTATED 1993 LONG-TERM INCENTIVE PLAN
On September 8, 1992 the Company's Board of Directors adopted the 1993
Long-Term Incentive Plan (the "Stock Plan") in order to provide flexibility to
the Company in its efforts to attract, motivate and retain the services of
employees with outstanding ability, competence and potential, to promote the
success and enhance the value of the Company by linking the personal interests
of such employees with those of the Company's shareholders, and to provide such
employees with an incentive for outstanding performance. The Stock Plan was
subsequently approved by the Company's shareholders at the 1993 Annual Meeting.
In fiscal 1994, the Compensation/Stock Option Committee of the Company's Board
of Directors (the "Committee") redesigned the Company's executive compensation
program to place a greater emphasis on performance based compensation and to
improve the alignment of internal financial goals, year-over-year earnings
growth, enhancement of shareholder value and executive incentives. Among other
things, the Committee amended the Stock Plan (as so amended, the "Plan"), which
amendments were approved by the Company's shareholders at the 1995 Annual
Meeting. The main purpose of those amendments was to increase the number of
shares available for issuance pursuant to the Plan in order to create the
opportunity for significant option grants to senior executives, thereby
providing those senior executives with the ability to realize significant gains
in the future should earnings growth and stock price expectations be realized.
As of the December 1, 1997 record date, there were 5,000,000 shares authorized
for issuance pursuant to the Plan, of which 1,187,298 shares have been issued,
3,268,962 shares are subject to outstanding options and 543,740 shares were
available for additional grants. All pre-December 15, 1995 numbers set forth
herein have been adjusted to reflect the Company's 2-for-1 stock split which
occurred on that day. On December 1, 1997, the closing price of Company Common
Stock on the New York Stock Exchange was $44.8125.
As part of its continuing evaluation of the appropriateness and adequacy of
the Company's executive compensation program, the Committee determined in fiscal
1997 that the number of shares available for issuance under the Plan should be
increased in order to enhance the Committee's ability to use stock incentives to
motivate key Company employees, as described in greater detail in the
"Compensation/Stock Option Committee Report on Executive Compensation" included
elsewhere in this Proxy Statement. Accordingly, the Committee recommended and,
on December 12, 1997 the Board of Directors approved, amendments to the Plan
increasing the number of shares available for issuance by 2,400,000 and making
certain other changes, as described in detail under "Proposed Amendments" below,
to delete the Plan's provisions authorizing grants of restricted stock and to
reflect recent developments in tax and securities laws. These amendments are
subject to approval by the Company's shareholders at the 1998 Annual Meeting.
The Board of Directors unanimously recommends that shareholders vote FOR
approval of these amendments. The
18
<PAGE> 21
affirmative vote of a majority of the votes cast thereon is required for
approval of the amendments provided that the total vote cast on the amendments
represents over 50% of the shares entitled to vote on the proposal. A copy of
the full text of the Plan, as amended, is attached as Exhibit A to this proxy
statement. The principal features of the Plan, including the proposed
amendments, are summarized below. Such summary is qualified in its entirety by
reference to the terms of the Plan as set forth in Exhibit A.
PRINCIPAL TERMS OF THE PLAN
General. Under the current version of the Plan, Incentive Stock Options and
Nonqualified Stock Options (as such terms are defined below) as well as shares
of restricted stock may be granted to any full-time, non-union employee of the
Company or any of its subsidiaries, including any employee who is a member of
the Board of Directors, but excluding any director who is not an employee of the
Company or any of its subsidiaries (an "Employee"). There are currently
approximately 275 Employees eligible to participate in the Plan. In recognition
of concerns expressed generally by institutional investors relative to
restricted stock plans, and because the Company has never granted nor does it
have any present intention to grant restricted stock, one of the amendments
being proposed for shareholder approval would delete all of the Plan's
provisions relating to restricted stock so that the Plan will provide only for
the grant of stock options.
Currently, the total number of shares of Common Stock of the Company
("Shares") authorized for issuance under the Plan (an "Award") is 5,000,000;
however, a total of 4,456,260 Shares have been issued or are subject to
outstanding options, so only 543,740 of such Shares remain available for the
granting of additional Awards under the Plan. If the proposed amendments are
approved, an additional 2,400,000 Shares will be available for future Awards
(which number shall be subject to adjustment in the event of certain corporate
reorganizations, liquidation, stock dividends, stock splits, share combinations,
or other changes in the corporate structure of the Company affecting the
Shares).
Shares available for an Award under the Plan may be either authorized but
unissued or reacquired Shares. If any Award is canceled, terminates, expires or
lapses for any reason, any Shares subject to such Award shall again be available
under the Plan, subject to such rules and regulations as may be promulgated by
the Committee with respect thereto.
The Plan first became effective on October 1, 1992 (the "Effective Date"),
and will remain in effect, subject to the right of the Board of Directors to
terminate the Plan, until all Shares subject to the Plan have been purchased or
acquired. In no event, however, may a grant be made under the Plan on or after
the tenth anniversary of the Effective Date.
The Plan is administered by the Committee, the members of which must at all
times qualify as "outside directors" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). As currently drafted,
the Plan also requires the Committee members to qualify as "disinterested
administrators" pursuant to Rule 16b-3 ("Rule 16b-3") under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which requirement was
designed to ensure the availability of an exemption for Plan transactions from
the short-swing profit recovery provisions of Section 16(b) of the Exchange Act.
Rule 16b-3 was amended effective November 1997 to replace the concept of
"disinterested administrators" with one dependent on the "outside director"
status of the Committee members. Accordingly, one of the amendments proposed for
shareholder approval at the 1998 Annual Meeting is intended to conform the Plan
requirement to the new Rule 16b-3 formulation and to provide that the failure of
Committee members to qualify as a "non-employee director" or an "outside
director" will not affect the validity of Awards made or other actions taken by
the Committee in accordance with the provisions of the Plan.
The Committee presently is comprised of Messrs. Haas, Hicks, Davis and
Vieser. The Committee has authority to determine the size, the recipients and
the terms and conditions of Awards under the Plan, and to establish rules and
regulations for the Plan's administration. With the approval of the Board, the
Committee may, at any time, terminate, amend or modify the Plan; provided that
such amendment, modification or termination will require the approval of the
shareholders of the Company if such approval is required by any national
securities exchange or system on which the Shares are then listed or reported or
by a regulatory body having jurisdiction with respect thereto.
19
<PAGE> 22
Stock Options. Stock options ("Options") may be granted to Employees at any
time as determined by the Committee. The Committee has discretion in determining
the number of Shares subject to any Options granted; provided, however, that the
number of Options that may be awarded to any Employee during any fiscal year is
limited to 1,000,000. Options granted under the Plan may be either "Incentive
Stock Options" under Section 422 of the Code, or options that are not intended
to qualify as Incentive Stock Options ("Non-Qualified Stock Options").
The exercise price of an Option granted under the Plan is determined by the
Committee; provided, that in the case of an Incentive Stock Option, the exercise
price may not be less than 100% of the Fair Market Value (as defined in the
Plan) of the underlying Common Stock on the date of grant; and provided further
that in the case of a Non-Qualified Stock Option, the Plan currently provides
that the exercise price may not be less than 85% of the Fair Market Value of the
underlying Common Stock on the date of grant. One of the amendments proposed for
shareholder approval at the 1998 Annual Meeting would require that Non-Qualified
Stock Options be granted with an exercise price not less than 100% of Fair
Market Value as well. Options granted under the Plan may be exercisable at such
times and subject to such restrictions and conditions as the Committee in each
instance approves, but no Option granted under the Plan may be exercisable prior
to six months following the date of its grant or later than the tenth
anniversary date of its grant. Options may be exercised by the delivery of
written notice of exercise to the Company, setting forth the number of Shares
with respect to which the Option is to be exercised, accompanied by payment in
full of the exercise price. The exercise price may be paid either (i) in cash,
(ii) with the Committee's consent, by tendering previously acquired Shares held
for at least six months and having a fair market value at the time of exercise
equal to the full exercise price, or (iii) in any combination of the foregoing.
The Committee may also allow cashless exercises as permitted under the Federal
Reserve Board's Regulation T, or by any other means the Committee determines to
be consistent with the Plan's purpose. Special provisions are contained in the
Plan covering termination of employment, death or disability of any Employee who
has outstanding an Option granted under the Plan (a "Participant"), as well as
the occurrence of a Change of Control (as defined) of the Company. All Options
are exercisable only by the Participant during the lifetime of such Participant
and Options granted under the Plan may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. However, the Committee has the discretion to
waive the transferability restriction described above.
PROPOSED AMENDMENTS
The Board of Directors of the Company has approved amendments to the Plan
to: (1) increase the number of Shares authorized for issuance pursuant to the
Plan by 2,400,000; (2) provide it is intended that the members of the Committee
charged with administering the Plan qualify as "non-employee directors" as
defined in Rule 16b-3 as well as "outside directors" for purposes of Code
Section 162(m); (3) revise the share withholding provisions relating to tax
withholding requirements to delete restrictions no longer required by Rule
16b-3; (4) require Non-Qualified Stock Options to be granted with an exercise
price not less than 100% of Fair Market Value at the time of grant; and (5)
delete all provisions of the Plan relating to restricted stock. Accordingly, the
Board of Directors has directed Company management to seek shareholder approval
of the following resolutions, which embody the amendments described above, at
the 1998 Annual Meeting of Shareholders.
RESOLVED, that the second paragraph of Section 3.1 of the Plan be deleted
and the following be inserted in its place:
It is intended that the Committee members shall, at all times, qualify as
"non-employee directors" pursuant to Rule 16b-3 under the Exchange Act and
as "outside directors" pursuant to the requirements of Section 162(m) of
the Code. However, the failure to so qualify shall not affect the validity
of any Awards made or other actions taken by the Committee in accordance
with the provisions of the Plan. If for any reason the Committee does not
qualify to administer the Plan, as contemplated by Rule 16b-3 under the
Exchange Act or Section 162(m) of the Code, the Board of Directors may
appoint a new Committee so as to comply with Rule 16b-3 and Section 162(m).
20
<PAGE> 23
FURTHER RESOLVED, that Section 4.1 of the Plan be deleted and the following
be inserted in its place:
Number of Shares. Subject to adjustment as provided in Section 4.3 herein,
the total number of Shares available for issuance under the Plan is
7,400,000 (as adjusted to reflect the 1995 two-for-one stock split and the
addition of 2,400,000 authorized shares in 1998). These Shares may be
either authorized but unissued or reacquired Shares. The maximum number of
Shares which may be covered by Awards issued to any Employee may not exceed
1,000,000 Shares during any fiscal year.
FURTHER RESOLVED, that Section 6.3 of the Plan be deleted and the following
be inserted in its place:
Option Price. The Option Price for each grant of an Option shall be
determined by the Committee; provided that the Option Price shall not be
less than 100% of the Fair Market Value of the Shares on the date the
Option is granted.
FURTHER RESOLVED, that Section 10.2 of the Plan be deleted and the
following be inserted in its place:
Share Withholding. With respect to tax withholding required upon the
exercise of Options, Participants may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value on the date
the tax is to be determined equal to the minimum marginal total tax which
could be imposed on the transaction. All elections should be irrevocable,
made in writing and signed by the Participant.
FURTHER RESOLVED, that Article 7 of the Plan, relating to Awards of
restricted stock, as well as all references in the Plan to such Article 7
or any of its provisions be deleted in their entirety, that the remaining
Articles 8 through 12 be renumbered as Articles 7 through 11, and that all
corresponding cross-references in the Plan be corrected.
FEDERAL TAX CONSEQUENCES OF THE STOCK OPTIONS
A Participant realizes no taxable income at the time an Option is granted
under the Plan. With regard to Incentive Stock Options, no income is recognized
by a Participant upon transfer to him of Shares pursuant to his exercise of an
Incentive Stock Option. In order to avail himself of this tax benefit, the
Participant must make no disposition of the Shares so received before he has
held such Shares for at least one year and at least two years have passed since
he was granted the Option. Assuming compliance with this and other applicable
tax provisions, a Participant will realize long-term capital gain or loss when
he disposes of his Shares, measured by the difference between the exercise price
and the amount received for the Shares at the time of disposition. If the
Participant disposes of Shares acquired by exercise of the Option before the
expiration of the above-noted periods, any amount realized from such
disqualifying disposition will be taxable as ordinary income in the year of
disposition to the extent that the lesser of (a) the fair market value of the
Shares on the date the Option was exercised, or (b) the amount realized upon
such disposition, exceeds the exercise price. Any amount realized in excess of
the fair market value on the date of exercise is treated as long- or short-term
capital gain, depending upon the holding period of the Shares. If the amount
realized upon such disposition is less than the exercise price, the loss will be
treated as long- or short-term capital loss, depending upon the holding period
of the Shares. For purposes of the alternative minimum tax, the Participant
shall recognize income upon the transfer of Shares to him pursuant to the
exercise of the Incentive Stock Option in an amount equal to the difference
between the fair market value of the Shares and the exercise price.
With regard to Non-Qualified Stock Options, ordinary income generally is
realized by the Participant at the time of his exercise of an Option, except
with respect to Shares that are not vested on the date of the exercise of the
Option ("Nonvested Shares"), if any. The amount of income is generally equal to
the difference between the exercise price and the fair market value of the
Shares on the date of exercise. Tax withholding is required on such income. When
a Participant disposes of Shares acquired upon the exercise of the Option, any
amount received in excess of the fair market value of the Shares on the date of
exercise will be treated as long- or short-term capital gain, depending upon the
holding period of the Shares, and if the amount
21
<PAGE> 24
received is less than the fair market value of the Shares on the date of
exercise, the loss will be treated as long-or short-term capital loss, depending
upon the holding period of the Shares.
If the Participant pays the exercise price of an Option by tendering other
Shares then owned by the Participant, the difference between the fair market
value and adjusted basis of the tendered Shares will not produce a taxable gain
or loss to the Participant; however, the Participant's tax basis for an equal
number of acquired Shares will be the same as the Participant's tax basis for
the tendered Shares. The remaining acquired Shares will have an original tax
basis equal to the sum of the amount paid in cash, if any, plus any amount that
the Optionee is required to recognize as income as a result of the exercise of
the Option.
Special rules may apply to the exercise of Options by Participants who are
subject to Section 16(b) of the Exchange Act. While the exercise of an Option
will not be a purchase of a security for purposes of Section 16(b) of the
Exchange Act provided such Option is in-the-money, a Participant may nonetheless
be subject to Section 16(b) of the Exchange Act with respect to the sale of
Shares acquired upon the exercise of such Option if the Participant has
purchased or purchases other Shares within six months before or after such sale.
In that case, if the exercised Option was a Non-Qualified Stock Option the
Shares received upon exercise of such Option may be treated as restricted
property subject to a substantial risk of forfeiture (i.e., Nonvested Shares)
for purposes of Section 83 of the Code until such Shares are no longer subject
to Section 16(b) of the Exchange Act for purposes of Section 83(b) of the Code.
Unless the Participant makes a Section 83(b) election, the Participant will be
required to recognize ordinary income as of the date such Shares are no longer
subject to Section 16(b) of the Exchange Act for purposes of Section 83(b) of
the Code (i.e., up to six months after the date on which the Shares are
acquired) in the amount by which the fair market value of the Common Stock at
such later date exceeds the option exercise price. Under Section 83(b), the
Participant may elect to recognize income as of the date the option is exercised
in an amount equal to the excess of the fair market value of the Shares acquired
on such date (determined without regard to Section 16(b) restrictions) over the
exercise price.
No deduction will be allowed to the Company for federal income tax purposes
at the time of the grant or exercise of any Incentive Stock Option. At the time
of a disqualifying disposition by a Participant, the Company will be entitled to
a deduction for the amount taxable to the Participant as ordinary income. The
Company will be entitled to a deduction for federal income tax purposes at the
same time and in the same amount as the Employee is considered to have realized
ordinary income in connection with the exercise of a Non-Qualified Stock Option,
assuming compliance with required federal tax withholding and the requirements
of Section 162 of the Code.
The foregoing discussion is based upon presently applicable provisions of
the federal income tax laws, and thus is subject to change if and when such laws
change.
NEW PLAN BENEFITS
The number of Awards to be made pursuant to the Plan as amended is subject
to the discretion of the Committee and therefore cannot be determined with
certainty at this time. However, the Company anticipates that the Committee will
continue its annual grant program in a manner consistent with past practice. If
so, Awards covering approximately 200,000 Shares would be made to non-executive
officer employees during fiscal 1998. Furthermore, the Committee has indicated
that it will consider granting Awards covering up to 2,000,000 Shares to
executive officers during fiscal 1998 for the reasons stated in the
"Compensation/Stock Option Committee Report on Executive Compensation" included
elsewhere in this Proxy Statement, provided the proposed Plan amendments are
approved by shareholders at the 1998 Annual Meeting. The number of Shares to be
covered by each such Award has not yet been determined. By the terms of the
Plan, no Awards may be made to non-executive officer directors of the Company.
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION OF
SYBRON INTERNATIONAL CORPORATION
On December 12, 1997, the Board of Directors of the Company determined that
it was necessary and in the best interests of the Company and its shareholders
to amend the Company's Articles of Incorporation to
22
<PAGE> 25
increase the authorized number of shares of Common Stock. Accordingly, the Board
of Directors has proposed an amendment to the Company's Articles of
Incorporation increasing the number of authorized shares of Common Stock from
110,000,000 to 250,000,000 for submission to the Company's shareholders at the
1998 Annual Meeting. Although the current authorization is sufficient to meet
all presently known requirements, the Board of Directors believes that it is
desirable for the Company to have the flexibility to issue a substantial number
of shares of Common Stock without further shareholder action (although in
certain situations the rules of the New York Stock Exchange would require
shareholder approval if the issuance involved a number of shares equal to or in
excess of 20% of the number of shares then outstanding). In particular, the
Board is considering the implementation of a 2-for-1 stock split which would use
up a significant portion of the current number of authorized but unissued
shares. The availability of additional shares would enhance the Company's
ability to engage in future acquisitions and to issue shares for other proper
corporate purposes, including possible capital-raising transactions and
issuances pursuant to the Company's stock plans.
As of the December 1, 1997 record date, there were 48,175,503 shares of
Common Stock outstanding and 4,116,476 shares were reserved for issuance in
connection with various stock plans. If a 2-for-1 stock split had been declared
and all currently outstanding exercisable options had been exercised, there
would have been approximately 100,000,000 shares of Common Stock outstanding on
the record date, leaving only approximately 10,000,000 shares for the types of
actions cited above. Although the Company has no present plans or commitments to
issue additional shares of Common Stock in amounts that would exceed the
Company's current authorized share limit, an increase in authorization to
250,000,000 shares would accommodate the need for such issuances with respect to
possible acquisition transactions, stock offerings, additional future stock
splits and other corporate purposes. Holders of Common Stock do not have
preemptive rights to subscribe for or purchase any part of any such new or
additional Common Stock issuances. While the Company has no current intention of
issuing additional shares of Common Stock as an anti-takeover defense, an
issuance could be used to create impediments to or otherwise discourage persons
attempting to gain control of the Company (through dilutive offerings or
otherwise).
Assuming the increased authorization is approved by the shareholders at the
Annual Meeting, the Board of Directors anticipates declaring a 2-for-1 stock
split at its regular meeting following the Annual Meeting. Accordingly, the
Board of Directors has directed Company management to seek approval of the
following resolution, which embodies an amendment to the Company's Articles of
Incorporation effecting the increased authorization:
RESOLVED, that the first paragraph of Article IV of the Corporation's
Articles of Incorporation be amended to read it its entirety as follows:
"The total number of shares of all classes of capital stock which the
corporation shall have authority to issue is Two Hundred Seventy Million
(270,000,000) shares, consisting of Two Hundred Fifty Million (250,000,000)
shares of a class designated as 'Common Stock' having a par value of $0.01
per share and Twenty Million (20,000,000) shares of a class designated as
'Preferred Stock' having a par value of $0.01 per share."
The rest of Article IV, which sets forth certain rights of the Common Stock
and provides for the issuance of the Preferred Stock in series with rights,
preferences and terms determined by the Board of Directors, will remain
unchanged.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE PROPOSED AMENDMENT TO
THE COMPANY'S ARTICLES OF INCORPORATION AS BEING NECESSARY AND IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THIS PROPOSAL.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, the
Company's directors, its executive officers and any persons who beneficially own
more than 10% of the Company's Common Stock are required to report their initial
ownership of Company Common Stock and subsequent changes in that ownership to
the
23
<PAGE> 26
Securities and Exchange Commission and the New York Stock Exchange. Specific due
dates for those reports have been established and the Company is required to
disclose in this Proxy Statement any failure to file by those due dates during
fiscal 1997. Based upon a review of such reports furnished to the Company, or
written representations that no reports were required, the Company believes that
all of those filing requirements were satisfied with respect to fiscal 1997,
except that an initial form required to be filed within ten days of Mr. Parfet's
election as a director was inadvertently filed late.
INDEPENDENT PUBLIC ACCOUNTANTS
Acting on the recommendation of the Audit Committee, the Board of Directors
has selected the public accounting firm of KPMG Peat Marwick LLP as its
independent auditors for the current fiscal year. A representative of KPMG Peat
Marwick LLP is expected to be present at the Annual Meeting to respond to
appropriate questions and will be given an opportunity to make a statement on
behalf of KPMG Peat Marwick LLP if desired.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote in accordance with their judgment on such matters.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1999 Annual Meeting of Shareholders of the
Company must be received no later than August 25, 1998 at the Company's
principal executive offices, 411 East Wisconsin Avenue, 24th Floor, Milwaukee,
Wisconsin 53202, directed to the attention of the Secretary, in order to be
considered for inclusion in next year's annual meeting proxy material under the
Securities and Exchange Commission's proxy rules. Under the Company's Bylaws,
written notice of shareholder proposals for the 1999 Annual Meeting of
Shareholders of the Company which are not intended to be considered for
inclusion in next year's annual meeting proxy material must be received no later
than November 30, 1998 and no earlier than November 1, 1998 at such offices,
directed to the attention of the Secretary, and such notice must contain the
information specified in the Company's Bylaws.
The foregoing notice and Proxy Statement are sent by order of the Board of
Directors.
R. JEFFERY HARRIS
R. JEFFREY HARRIS
Secretary
December 23, 1997
A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES
AND EXCHANGE COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
1997 HAS BEEN PROVIDED WITH THIS PROXY STATEMENT. THE COMPANY WILL PROVIDE TO
ANY SHAREHOLDER, WITHOUT CHARGE, UPON WRITTEN REQUEST OF SUCH SHAREHOLDER, AN
ADDITIONAL COPY OF SUCH ANNUAL REPORT. SUCH REQUESTS SHOULD BE ADDRESSED TO
TRICIA MINTZLAFF, SYBRON INTERNATIONAL CORPORATION, 411 EAST WISCONSIN AVENUE,
24TH FLOOR, MILWAUKEE, WISCONSIN 53202.
24
<PAGE> 27
EXHIBIT A
SYBRON INTERNATIONAL CORPORATION
AMENDED AND RESTATED 1993 LONG-TERM INCENTIVE PLAN
(AS AMENDED AND RESTATED
THROUGH JANUARY 30, 1998)
<PAGE> 28
SYBRON INTERNATIONAL CORPORATION
AMENDED AND RESTATED 1993 LONG-TERM INCENTIVE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE SECTION PAGE
- ------- ------- ----
<C> <C> <S> <C>
1 ESTABLISHMENT, PURPOSE AND DURATION
1.1 Establishment of the Plan................................... A-1
1.2 Purpose of the Plan......................................... A-1
1.3 Duration of the Plan........................................ A-1
2 DEFINITIONS................................................. A-1
3 ADMINISTRATION
3.1 The Committee............................................... A-3
3.2 Authority of the Committee.................................. A-3
3.3 Decisions Binding........................................... A-3
4 SHARES SUBJECT TO THE PLAN
4.1 Number of Shares............................................ A-3
4.2 Lapsed Awards............................................... A-4
4.3 Adjustments in Authorized Shares............................ A-4
5 ELIGIBILITY AND PARTICIPATION
5.1 Eligibility................................................. A-4
5.2 Actual Participation........................................ A-4
6 STOCK OPTIONS
6.1 Grant of Options............................................ A-4
6.2 Award Agreement............................................. A-4
6.3 Option Price................................................ A-4
6.4 Duration of Options......................................... A-4
6.5 Exercise of Options......................................... A-4
6.6 Payment..................................................... A-4
6.7 Restrictions on Share Transferability....................... A-5
6.8 Termination of Employment................................... A-5
6.9 Termination for Cause....................................... A-5
6.10 Nontransferability of Options............................... A-5
7 CHANGE IN CONTROL........................................... A-5
8 AMENDMENT, MODIFICATION, & TERMINATION
8.1 Amendment, Modification, and Termination.................... A-6
8.2 Awards Previously Granted................................... A-6
9 WITHHOLDING
9.1 Tax Withholding............................................. A-6
9.2 Share Withholding........................................... A-6
10 BENEFICIARY DESIGNATION..................................... A-6
11 MISCELLANEOUS
11.1 Employment.................................................. A-6
11.2 Participation............................................... A-6
11.3 Indemnification............................................. A-6
11.4 Successors.................................................. A-7
11.5 Gender and Number........................................... A-7
11.6 Severability................................................ A-7
11.7 Requirements of Law......................................... A-7
11.8 Securities Law Compliance................................... A-7
11.9 Governing Law............................................... A-7
</TABLE>
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<PAGE> 29
SYBRON INTERNATIONAL CORPORATION
AMENDED AND RESTATED 1993 LONG-TERM INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT, PURPOSE AND DURATION
1.1 Establishment of the Plan. Sybron International Corporation, a
Wisconsin corporation and successor by merger to Sybron Corporation, a Delaware
corporation (the "Company"), hereby amends and restates its Amended and Restated
1993 Long-Term Incentive Plan, such amended and restated plan to be continued to
be known as the "Sybron International Corporation Amended and Restated 1993
Long-Term Incentive Plan" (the "Plan"). The Plan permits the granting of
Incentive Stock Options and Nonqualified Stock Options to Employees of the
Company.
The Plan first became effective as of October 1, 1992 (the "Effective
Date") and was amended at the 1995 Annual Meeting of Shareholders. Upon approval
by the Company's shareholders at the Company's 1998 Annual Meeting of
Shareholders, the amendments to the Plan described in the Company's 1998 Annual
Meeting Proxy Statement shall become effective and the Plan shall remain in
effect as provided in Section 1.3 herein.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
success, and enhance the value, of the Company by linking the personal interests
of Participants to those of Company shareholders, and by providing Participants
with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants upon whose
judgment, interest, and special effort the successful conduct of its operation
largely is dependent.
1.3 Duration of the Plan. The Plan commenced on the Effective Date, as
described in Section 1.1 herein, and shall remain in effect, subject to the
right of the Board of Directors to terminate the Plan at any time pursuant to
Article 8 herein, until all Shares subject to it shall have been purchased or
acquired according to the Plan's provisions. However, in no event may an Award
be granted under the Plan on or after the tenth (10th) anniversary of the Plan's
Effective Date.
ARTICLE 2
DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word is
capitalized:
(a) "Award" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options or Incentive Stock Options.
(b) "Award Agreement" means an agreement entered into by the Company
and each Participant, as described in Section 6.2 herein.
(c) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
(d) "Board" or "Board of Directors" means the Board of Directors of
the Company.
(e) "Cause" means fraud, dishonesty, competition with the Company,
unauthorized use of the Company's trade secrets or confidential
information, or continued gross neglect by the Employee of the duties
assigned to him or her by the Board (if such neglect continues for thirty
(30) days after notice by the Board to the Employee specifying the duties
being neglected by Employee).
(f) "Change in Control" of the Company shall be deemed to have
occurred if (A) other than as a result of a transaction described in (C)(x)
below, any Person, other than DLJ Capital Corporation
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<PAGE> 30
(which for this purpose includes any trustee of a voting trust for the
benefit of DLJ Capital Corporation with respect to the securities held by
such voting trustee for the benefit of DLJ Capital Corporation), Thomas O.
Hicks, Robert B. Haas or their respective affiliates (collectively, the
"Designated Holders"), shall become the Beneficial Owner, directly or
indirectly, of securities of the Company representing 25% or more the
combined voting power of the Company's then outstanding securities; (B)
during any period of two consecutive years (not including any period prior
to the execution of the Plan), individuals who at the beginning of such
period constituted the Board and any new Director whose election to the
Board or nomination for election to the Board by the Company's stockholders
was approved by a vote of at least two-thirds ( 2/3) of the Directors then
still in office who either were Directors at the beginning of the period or
whose election or nomination for election was previously so approved, shall
cease for any reason to constitute a majority of the Board; (C) the
stockholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than (x) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 66 2/3% of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (y) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person (other than a Designated Holder)
acquires more than 25% of the combined voting power of the voting
securities of the Company or the surviving entity outstanding immediately
after such merger or consolidation; or (D) the stockholders of the Company
approve a plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all of the
Company's assets.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the committee, as specified in Article 3,
appointed by the Board to administer the Plan.
(i) "Company" means Sybron International Corporation, a Wisconsin
corporation and successor by merger to Sybron Corporation, a Delaware
corporation, and, with respect to Participants or Employees, any and all
Subsidiaries, or any successor thereto as provided in Section 11.4 herein.
(j) "Director" means any individual who is a member of the Board of
Directors of the Company.
(k) "Disability" means a permanent and total disability, within the
meaning of Code Section 22(e)(3), as determined by the Committee in good
faith, upon receipt of sufficient competent medical advice from one or more
individuals, selected by the Committee, who are qualified to give
professional medical advice.
(l) "Employee" means any full-time, nonunion employee of the Company.
Directors who are not otherwise employed by the Company shall not be
considered Employees under this Plan.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means the average of the highest and lowest
quoted selling prices for Shares on the relevant date, or (if there were no
sales on such date) the weighted average of the means between the highest
and lowest quoted selling prices on the nearest day before and the nearest
day after the relevant date, as reported in The Wall Street Journal or a
similar publication selected by the Committee.
(o) "Incentive Stock Option" or "ISO" means an option to purchase
Shares, granted under Article 6 herein, which is designated as an Incentive
Stock Option and is intended to meet the requirements of Section 422 of the
Code.
(p) "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares, granted under Article 6 herein, which is not intended to be an
Incentive Stock Option.
(q) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
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<PAGE> 31
(r) "Option Price" means the price at which a Share may be purchased
by a Participant pursuant to an Option, as determined by the Committee.
(s) "Participant" means an Employee of the Company who has outstanding
an Option granted under the Plan.
(t) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Section 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d).
(u) "Retirement" shall have the meaning ascribed to such term in the
tax-qualified retirement plan of the Company.
(v) "Shares" means the shares of common stock of the Company.
(w) "Subsidiary" means any corporation in which the Company owns
directly, or indirectly through subsidiaries, at least 50 percent of the
total combined voting power of all classes of stock, or any other entity
(including, but not limited to, partnerships and joint ventures) in which
the Company owns at least 50 percent of the combined equity thereof.
ARTICLE 3
ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the
Compensation/Stock Option Committee of the Board, or by any other Committee
appointed by the Board consisting of not less than two (2) Directors who are not
Employees. The members of the Committee shall be appointed from time to time by,
and shall serve at the discretion of, the Board of Directors.
It is intended that the Committee members shall, at all times, qualify as
"non-employee directors" pursuant to Rule 16b-3 under the Exchange Act and as
"outside directors" pursuant to the requirements of Section 162(m) of the Code.
However, the failure to so qualify shall not affect the validity of any Awards
made or other actions taken by the Committee in accordance with the provisions
of the Plan. If for any reason the Committee does not qualify to administer the
Plan, as contemplated by Rule 16b-3 under the Exchange Act or Section 162(m) of
the Code, the Board of Directors may appoint a new Committee so as to comply
with Rule 16b-3 and Section 162(m).
3.2 Authority of the Committee. The Committee shall have full power,
except as limited by law or by the Articles of Incorporation or Bylaws of the
Company, and subject to the provisions herein, to determine the size of grants
of Awards; to determine the terms and conditions of such Award grants in a
manner consistent with the Plan; to construe and interpret the Plan and any
agreement or instrument entered into under the Plan; to establish, amend, or
waive rules and regulations for the Plan's administration; and (subject to the
provisions of Article 8 herein) to amend the terms and conditions of any
outstanding Award to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan. Further, the Committee
shall make all other determinations which may be necessary or advisable for the
administration of the Plan. As permitted by law, the Committee may delegate its
authorities as identified hereunder.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan, and all related orders and
resolutions of the Board of Directors, shall be final, conclusive, and binding
on all persons, including the Company, its stockholders, Employees,
Participants, and their estates and beneficiaries.
ARTICLE 4
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3
herein, the total number of Shares available for issuance under the Plan is
7,400,000 (as adjusted to reflect the 1995 two-for-one stock split and the
addition of 2,400,000 authorized shares in 1998). These Shares may be either
authorized but
A-3
<PAGE> 32
unissued or reacquired Shares. The maximum number of Shares which may be covered
by Awards issued to any Employee may not exceed 1,000,000 Shares during any
fiscal year.
4.2 Lapsed Awards. If any Award granted under the Plan is canceled,
terminates, expires, or lapses for any reason, then, subject to such rules and
regulations as may be promulgated by the Committee with respect thereto, any
Shares subject to such Award may again be available for the grant of any Award
under the Plan.
4.3 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, share combination, or other change in the corporate
structure of the Company affecting the Shares, such adjustment shall be made in
the number and class of Shares which may be delivered under the Plan, and in the
number and class of and/or price of Shares subject to outstanding Awards under
the Plan, as may be determined to be appropriate and equitable by the Committee,
in its sole discretion, to prevent dilution or enlargement of rights; and
provided that the number of Shares subject to any Award granted shall always be
a whole number.
ARTICLE 5
ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. Persons eligible to participate in the Plan include all
Employees of the Company, as determined by the Committee, including Employees
who are members of the Board, but excluding Directors who are not Employees.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees, those to
whom Awards shall be granted, and shall determine the nature and amount of each
Award grant.
ARTICLE 6
STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Employees at any time and from time to time, as shall
be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each Participant.
The Committee may grant ISOs, NQSOs, or a combination thereof.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Section 422 of the Code,
or an NQSO whose grant is intended not to fall under the Code provisions of
Section 422.
6.3 Option Price. The Option Price for each grant of an Option shall be
determined by the Committee; provided that the Option Price shall not be less
than 100 percent of the Fair Market Value of the Shares on the date the Option
is granted.
6.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant.
6.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant. However, in no event may any Option granted
under this Plan become exercisable prior to six (6) months following the date of
its grant.
6.6 Payment. Options shall be exercised by the delivery of a written
notice of exercise to the Secretary of the Company, setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by
payment in full of the Option Price.
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<PAGE> 33
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) with the
Committee's consent, by tendering previously acquired Shares having a Fair
Market Value at the time of exercise equal to the total Option Price (provided
that the Shares which are tendered must have been held by the Participant for at
least six (6) months prior to their tender to satisfy the Option Price), or (c)
with the Committee's consent, by a combination of (a) and (b).
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law. The proceeds from such a payment shall be
added to the general funds of the Company and shall be used for general
corporate purposes.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
6.7 Restrictions on Share Transferability. The Committee shall impose such
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including, without limitation, restrictions
under applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded, and
under any blue sky or state securities laws applicable to such Shares.
6.8 Termination of Employment. If the employment of a Participant shall
terminate for any reason other than Cause, all Options held by the Participant
which are not vested as of the effective date of employment termination
immediately shall be forfeited to the Company (and shall once again become
available for grant under the Plan). However, the Committee, in its sole
discretion, shall have the right to immediately vest all or any portion of such
Options, subject to such terms as the Committee, in its sole discretion, deems
appropriate; and provided that the maximum exercise period which may be
permitted following employment termination is the shorter of: (i) one (1) year;
or (ii) the scheduled expiration date of the Option.
Options which are vested as of the effective date of employment termination
may be exercised by the Participant within the period beginning on the effective
date of employment termination, and ending (a) one (1) year following such date
in the case of termination by reason of Death, Disability, or Retirement; an (b)
three (3) months following such date in the case of termination for any other
reason (and other than for Cause).
6.9 Termination for Cause. If the employment of a Participant shall
terminate for Cause, all outstanding Options held by the Participant immediately
shall be forfeited to the Company, and no additional exercise period shall be
allowed, regardless of the vested status of the Options.
6.10 Nontransferability of Options. No Option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution; provided,
however, that the Committee shall have discretion to waive this restriction, in
whole or in part, so long as any such waiver is permitted in a plan exempt from
short-swing profit liability pursuant to Rule 16b-3 under the Exchange Act.
ARTICLE 7
CHANGE IN CONTROL
Upon the occurrence of a Change in Control, unless otherwise specifically
prohibited by the terms of Section 11.7 herein, any and all Options granted
hereunder shall become immediately exercisable, and shall remain as such for the
duration of their term. In addition, subject to Article 8 herein, the Committee
shall have the authority to make any modifications to Awards as determined by
the Committee to be appropriate before the effective date of the Change in
Control.
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<PAGE> 34
ARTICLE 8
AMENDMENT, MODIFICATION, AND TERMINATION
8.1 Amendment, Modification and Termination. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend, or
modify the Plan. However, no such amendment, modification, or termination of the
Plan may be made without the approval of the stockholders of the Company, if
such approval is required by the Code, by the insider trading rules of Section
16 of the Exchange Act, by any national securities exchange or system on which
the Shares are then listed or reported, or by a regulatory body having
jurisdiction with respect thereto.
8.2 Awards Previously Granted. No termination, amendment, or modification
of the Plan shall in any material manner adversely affect any Award previously
granted under the Plan, without the written consent of the Participant holding
such Award.
ARTICLE 9
WITHHOLDING
9.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any grant, exercise, lapsing of restrictions, or payment made under or as a
result of the Plan.
9.2 Share Withholding. With respect to tax withholding required upon the
exercise of Options, Participants may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value on the date the
tax is to be determined equal to the minimum marginal total tax which could be
imposed on the transaction. All elections shall be irrevocable, made in writing
and signed by the Participant.
ARTICLE 10
BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) who
shall be entitled to exercise his or her vested Options in the event of his or
her death before he or she exercises all vested Options. Each such designation
shall revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Human Resource Department of the Company during
the Participant's lifetime. In the absence of any such designation, vested
Options which have not been exercised prior to the Participant's death may be
exercised by the administrator of the Participant's estate.
ARTICLE 11
MISCELLANEOUS
11.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.
For purposes of the Plan, transfer of employment of a Participant between
the Company and any one of its Subsidiaries (or between Subsidiaries) shall not
be deemed a termination of employment.
11.2 Participation. No Employee shall have the right to be selected to
receive an Award under the Plan, or, having been so selected, to be selected to
receive a future Award.
11.3 Indemnification. Each person who is or shall have been a member of
the Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or
A-6
<PAGE> 35
expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action taken or failure to act under the Plan and against and from any
and all amounts paid by him or her in settlement thereof, with the Company's
approval, or paid by him or her in satisfaction of any judgment in any such
action, suit, or proceeding against him or her, provided he or she shall give
the Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power that the Company may have to indemnify them or hold them harmless.
11.4 Successors. All obligations of the Company under the Plan shall be
binding on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business and/or assets of the
Company.
11.5 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
11.6 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
11.7 Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
11.8 Securities Law Compliance. Transactions under the Plan are intended
to comply with all applicable conditions of Rule 16b-3 or its successors under
the 1934 Act. To the extent any provision of the Plan or action by the Committee
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee.
11.9 Governing Law. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the Company's state of incorporation.
A-7
<PAGE> 36
SYBRON INTERNATIONAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Kenneth F. Yontz, Dennis Brown and R. Jeffrey Harris, or any of them,
with power of substitution to each, are hereby authorized to represent the
undersigned at the Annual Meeting of Shareholders of Sybron International
Corporation to be held in Rancho Mirage, California, on Friday, January 30,
1998, at 10:00 a.m., Pacific Standard Time, and to vote the number of shares
which the undersigned would be entitled to vote if personally present on the
matters listed on the reverse side hereof and in their discretion upon such
other business as may properly come before the Annual Meeting and any and
all adjournments thereof, all as set out in the Notice and Proxy Statement
relating to the meeting, receipt of which is hereby acknowledged.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS,
SIGN AND DATE THIS CARD IN THE SPACES ON THE REVERSE SIDE; NO BOXES NEED TO
BE CHECKED.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
<PAGE> 37
[X] Please mark
votes as in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" (1) ELECTION OF DIRECTORS,
(2) AMENDMENT OF THE SYBRON INTERNATIONAL CORPORATION AMENDED AND RESTATED
1993 LONG-TERM INCENTIVE PLAN, AND (3) AMENDMENT OF THE SYBRON INTERNATIONAL
CORPORATION ARTICLES OF INCORPORATION. THIS PROXY WILL BE VOTED AS YOU
DIRECT; IN THE ABSENCE OF SUCH DIRECTION, IT WILL BE VOTED "FOR" EACH OF
THESE MATTERS.
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS: 2. To amend the Sybron International Corporation
Amended and Restated 1993 Long-Term Incentive Plan.
Nominees: Kenneth F. Yontz, Joe L. Roby
and William U. Parfet
For Against Abstain
[ ] FOR ALL [ ] WITHHELD [ ] [ ] [ ]
NOMINEES FROM ALL
NOMINEES 3. To amend the Sybron International Corporation
[ ] __________________________________________ Articles of Incorporation.
For all nominees except as noted above
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
MARK HERE FOR [ ]
ADDRESS CHANGE AND
NOTE AT LEFT
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Please sign your name as it appears hereon. Joint
owners should each sign. Executors, administrators,
trustees, etc., should give full title as such. If the
signer is a corporation, please sign full corporate
name by duly authorized officer.
Signature:______________________ Date:_____________ Signature:______________________ Date:_____________
</TABLE>
