<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 ss.240.14a-11(c) or ss.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 27, 1999
---------------------
Notice is hereby given that the Annual Meeting of Shareholders of Sybron
International Corporation, a Wisconsin corporation (the "Company"), will be held
on Wednesday, January 27, 1999, at 10:00 a.m., Eastern Standard Time, at the
Sheraton Portsmouth Hotel, 250 Market Street, Portsmouth, New Hampshire, for the
following purposes:
1. To elect three directors to serve as Class I directors until the
2002 Annual Meeting of Shareholders and until their respective successors
are duly elected and qualified;
2. To consider and vote upon a proposal to approve the Sybron
International Corporation 1999 Outside Directors' Stock Option Plan (a copy
of the plan is attached as Exhibit A to the accompanying Proxy Statement);
and
3. 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, 1998,
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,
/s/ R. JEFFREY HARRIS
------------------------------------
R. JEFFREY HARRIS
Secretary
Milwaukee, Wisconsin
December 22, 1998
<PAGE> 3
SYBRON INTERNATIONAL CORPORATION
411 EAST WISCONSIN AVENUE
24TH FLOOR
MILWAUKEE, WISCONSIN 53202
(414) 274-6600
---------------------
PROXY STATEMENT
DECEMBER 22, 1998
---------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 27, 1999
---------------------
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., Eastern Standard Time, on Wednesday, January 27, 1999,
at the Sheraton Portsmouth Hotel, 250 Market Street, Portsmouth, New Hampshire,
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 22, 1998.
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 Sybron International Corporation 1999 Outside Directors' Stock Option
Plan, 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 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, 1998, the Company had outstanding 103,142,635 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
<PAGE> 4
December 1, 1998, 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. On February 20, 1998, the Company effected a 2-for-1 stock
split in the form of a 100% stock dividend distributed to shareholders of record
on February 12, 1998. All pre-split share amounts and option prices included in
this Proxy Statement have been adjusted to reflect the effect of such stock
split.
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 the holders of a majority of
the shares present in person or represented by proxy at the meeting and entitled
to vote thereon will be required for approval of the Sybron International
Corporation 1999 Outside Directors' Stock Option Plan, provided that the total
vote cast on the proposal represents over 50% of the shares entitled to vote
thereon. Because abstentions represent shares entitled to vote, the effect of an
abstention will be the same as the effect of a vote cast against approval of the
proposal. A broker non-vote, on the other hand, does not represent a share
entitled to vote on the proposal and, accordingly, will have no effect on the
voting for such 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 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. Amounts are as of December 1, 1998
for nominees for director, directors, and executive officers.
2
<PAGE> 5
Amounts for 5% shareholders are as of the date such shareholders reported such
holdings in filings under the Securities Exchange Act of 1934 (the "Exchange
Act").
<TABLE>
<CAPTION>
COMMON STOCK
------------------------
NAME AND ADDRESS NUMBER OF PERCENT
OF OWNER(a) SHARES OWNED OF CLASS
---------------- ------------ --------
<S> <C> <C>
Harris Associates L.P.(b)................................... 6,671,880 6.47%
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602-3790
Putnam Investments, Inc. (c)................................ 10,949,338 10.62%
One Post Office Square
Boston, Massachusetts 02109
Don H. Davis, Jr. (d)....................................... 65,530 *
Christopher L. Doerr (e).................................... 14,200 *
Robert B. Haas (d).......................................... 2,667,508 2.58%
Thomas O. Hicks (d)......................................... 1,782,464 1.73%
William U. Parfet (e)....................................... 24,500 *
Joe L. Roby (d)............................................. 213,942 *
Richard W. Vieser (d)....................................... 157,884 *
Kenneth F. Yontz (f)........................................ 2,046,963 1.98%
Dennis Brown (g)............................................ 699,027 *
R. Jeffrey Harris (h)....................................... 858,970 *
Frank H. Jellinek, Jr. (i).................................. 295,767 *
Floyd W. Pickrell, Jr. (j).................................. 505,470 *
All directors and executive officers as a group (12 persons)
(k)....................................................... 9,332,225 8.86%
</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) Based on Amendment No. 4 to Schedule 13G under the Exchange Act dated
February 6, 1998. 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 3,164,600 of the shares, and sole investment power with respect
to 3,507,280 of the shares of Common Stock reported.
(c) Based on Schedule 13G under the Exchange Act, dated November 10, 1998.
Putnam Investments, Inc., reporting on behalf of itself and its parent
holding company, Marsh & McLennan Companies, Inc., and its investment
advisors and subsidiaries, Putnam Investment Management, Inc., Putnam
Advisory Company, Inc., and Putnam New Opportunities Fund, has indicated
shared voting power with respect to 164,317 of the shares, sole voting power
with respect to none of the shares, and shared investment power with respect
to all of the shares of Common Stock reported.
(d) Includes, for each of Messrs. Davis, Haas, Hicks, Roby and Vieser, 60,000
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 1,680
shares as to which he shares voting and investment power. With respect to
Mr. Haas, includes 1,905,000 shares as to which he shares voting and
investment power.
(e) Includes, for each of Messrs. Doerr and Parfet, 12,000 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.
3
<PAGE> 6
(f) Mr. Yontz has shared voting power with respect to 54,650 of the shares of
Common Stock reported and shared investment power with respect to 55,657 of
the shares of Common Stock reported. Includes 455,294 shares of Common Stock
issuable upon the exercise of outstanding employee stock options held by Mr.
Yontz.
(g) Mr. Brown has shared investment power with respect to 749 of the shares of
Common Stock reported. Includes 698,278 shares of Common Stock issuable upon
the exercise of outstanding employee stock options held by Mr. Brown.
(h) Mr. Harris has shared voting power with respect to 83,138 of the shares of
Common Stock reported and shared investment power with respect to 84,240 of
the shares of Common Stock reported. Includes 431,080 shares of Common Stock
issuable upon the exercise of outstanding employee stock options held by Mr.
Harris.
(i) Mr. Jellinek has shared investment power with respect to 823 of the shares
of Common Stock reported. Includes 124,552 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 1,143 of the shares
of Common Stock reported. Includes 184,323 shares of Common Stock issuable
upon the exercise of outstanding employee stock options held by Mr.
Pickrell.
(k) Includes (i) 2,217,527 shares of Common Stock issuable upon the exercise of
outstanding stock options held by all directors and executive officers as a
group, (ii) 2,044,468 shares as to which there is shared voting power, and
(iii) 2,049,292 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, 1998. 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 I directors until the 2002 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.
4
<PAGE> 7
The following table sets forth the principal occupations (for at least the
last five years) and directorships of the three nominees in Class I 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 I Directors, whose terms will expire in 2002:
Don H. Davis, Jr. Chairman and Chief Executive Officer of Rockwell 59 1992
International Corporation (manufacturer of electronic
controls and communications) since February 1998;
President and Chief Operating Officer of Rockwell
International Corporation, January 1995 to February
1998; 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 71 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
Ceridian Corporation (formerly Control Data
Corporation), Global Industrial Technologies, Inc.
(formerly INDRESCO Inc.), Varian Associates, Inc.,
International Wire Group, Inc., and Viasystems Group,
Inc.
Christopher L. Doerr President and Co-Chief Executive Officer of LEESON 49 1997
Electric Corporation (manufacturer of custom and
standard industrial purpose electric motors). Director
of Kickhaefer Manufacturing Co., Inc.
Class II Directors, whose terms will expire in 2000:
Thomas O. Hicks Actively involved in private investments since 1970, 52 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 Capstar
Broadcasting Corporation, CCI Holdings, Chancellor
Media Corporation, CorpGroup Limited, DAC Vision,
Inc., Home Interiors & Gifts, Olympus Real Estate
Corporation, Regal Cinemas, Triton Energy Limited, and
Viasystems Group, Inc.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION COMPANY
NAME(1) AND DIRECTORSHIPS AGE SINCE
------- -------------------- --- -----------
<S> <C> <C> <C>
Robert B. Haas Actively involved in private investments since 1978, 51 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 Playtex Products,
Inc., Smarte Carte Corporation, Walls Holding Company,
Inc., Nebraska Book Company, Inc., NBC Acquisition
Corporation, Specialty Foods Corporation, and
Specialty Foods Acquisition Corporation.
Class III Directors, whose terms will expire in 2001:
Kenneth F. Yontz President and Chief Executive Officer of the Company 54 1987
since October 1987; Chairman of the Board since
December 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 1986 until September 1992;
director of the Acquired Company from February 1986 to
March 1988; previously Group Vice President and
Executive Vice President of the Allen-Bradley Company.
Director of Playtex Products, Inc., and Viasystems
Group, Inc.
Joe L. Roby President and Chief Executive Officer of Donaldson, 59 1989
Lufkin & Jenrette, Inc. ("DLJ") (an investment banking
firm) since February 1998; Chief Operating Officer of
DLJ from November 1995 until February 1998, and
President of DLJ since February 1996; Chairman of
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.(2) Director of DLJ and Advanced Micro Devices,
Inc.
William U. Parfet Co-Chairman of MPI Research (a pre-clinical toxicology 52 1997
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 Pharmacia & Upjohn,
Inc., CMS Energy Corporation, Flint Ink, Stryker
Corporation, and MPI Research.
</TABLE>
- ---------------
(1) See "Committees and Meetings of the Board of Directors" for memberships on
Board committees.
(2) The Company has engaged DLJSC to assist the Company in evaluating economic
alternatives regarding certain non-core businesses and product lines.
SHAREHOLDERS AGREEMENT
On May 14, 1992, the Company entered into a Shareholders Agreement with
Hicks & Haas Incorporated (an investment firm specializing in leveraged
acquisitions from 1984 to 1989, of which Messrs. Hicks and Haas were
co-chairmen), 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%
6
<PAGE> 9
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. DLJ Capital
Corporation effectively is no longer a party to this agreement because it has
sold all of the Common Stock of the Company held by it which was subject to the
agreement.
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, Doerr and Parfet currently serve as members of the
Audit Committee. Prior to Mr. Doerr's election as a member of the Audit
Committee during fiscal 1998, Mr. Haas served as a member of such committee.
During the fiscal year ended September 30, 1998, 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,
1998, this committee met five times. The Compensation/ 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, 1998, the Board of Directors met
five 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 Messrs. Roby and Hicks. Mr. Roby attended 57% of all
meetings and Mr. Hicks attended 70% of all meetings.
SHAREHOLDER NOMINATION OF DIRECTOR CANDIDATES
The Bylaws of the Company provide that any shareholder 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 October 29,
1999 to and including
7
<PAGE> 10
November 27, 1999, with respect to the 2000 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 1999 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 1998, those fees
were also $18,000, $1,000 and $750, respectively. In addition, each person
serving as an Outside Director has been entitled to receive an option each year
to purchase 12,000 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. The Board of Directors has adopted, and the
shareholders are being asked to approve at the 1999 Annual Meeting, a new stock
option plan for Outside Directors. See "Proposal to Approve the Sybron
International Corporation 1999 Outside Directors' Stock Option Plan" included
elsewhere in this Proxy Statement. Under the new plan, each Outside Director
would continue to be entitled to receive a 12,000 share option grant each year.
During fiscal 1998, one non-employee director, Mr. Doerr, received $2,008 in
compensation in the form of personal use of the Company aircraft when his spouse
accompanied him on a Company-related business trip.
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.
8
<PAGE> 11
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, 1993 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.
COMPARISON OF CUMULATIVE TOTAL RETURN
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
9/93 3/94 9/94 3/95 9/95 3/96 9/96 3/97 9/97 3/98 9/98
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sybron $100.00 $114.8 $123.8 $129.1 $144.4 $175.8 $208.1 $199.1 $308.1 $374.9 $274.5
- --------------------------------------------------------------------------------------------------------------------------------
S&P 500 $100.00 $ 98.4 $103.7 $113.8 $134.6 $150.3 $161.9 $180.1 $227.4 $266.6 $248.0
- --------------------------------------------------------------------------------------------------------------------------------
S&P Health Care $100.00 $ 94.4 $115.8 $130.1 $156.0 $180.1 $207.7 $227.7 $282.5 $354.3 $389.0
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 1998, 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.
9
<PAGE> 12
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 executives who
are the presidents of, and directly responsible for managing, the Company's
principal operating subsidiaries (currently Sybron Laboratory Products
Corporation ("SLPC") and Sybron Dental Specialties, Inc.), 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. Using a similar analysis, the Committee will consider changes to an
executive officer's compensation at any time if a change in the scope of the
executive officer's responsibilities justifies such consideration. For example,
Frank H. Jellinek, Jr.'s responsibilities were greatly expanded when he was
appointed President of SLPC in May 1998 when the Company realigned its
laboratory subsidiaries under SLPC. Mr. Jellinek's compensation was reviewed at
that time.
In light of the factors set forth above, when initially setting base
salaries for calendar 1998 the Committee used as its reference point salaries in
the 95th percentile 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 329 United States corporations having sales volumes between $100
million and $160 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
16,096 executives in multiple industries. As an additional check on the
reasonableness of its compensation decisions, the Committee also considered the
results of a second national compensation consulting firm's survey report. The
database in this second survey includes more than 110 executive positions as
reported by 639 participating companies with sales volumes ranging from $50
million to $170 billion. The statistical results of this survey incorporate the
same linear regression analysis technique used in the primary survey noted
above. The Committee considered similar data when reviewing Mr. Jellinek's
compensation in connection with his appointment as President of SLPC.
When it initially set base salaries for calendar year 1998 with respect to
the individuals who were executive officers at the end of fiscal 1998, the
Committee increased base salaries by an average of 15.1% (inclusive of grade
level reclassifications). The average increase for 1998 reflected in the survey
data was 5.9%. The base salary paid to the Chief Executive Officer for fiscal
1998 was $685,000 (which incorporates portions of his calendar year salaries for
both 1997 and 1998), representing an 8.7% increase over fiscal 1997. 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
10
<PAGE> 13
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 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.
The financial measurement components of the success factor are actual
operating income compared to budget (the "Budgeted Operating Income Component")
and growth in operating income over the prior year (the "Year-Over-Year Growth
Component"). The performance threshold for the Budgeted Operating Income
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
amount for this component.
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
11
<PAGE> 14
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. Also, an incentive
to control working capital is provided through an adjustment to operating income
based upon changes in working capital from previous years.
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 1998 the subsidiary
achieved operating income of 105% of the amount budgeted; and (3) the subsidiary
achieved 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>
- - Budgeted Operating Income Component (105% of budget,
capped at 100%)........................................... 100%
- - Year-Over-Year Growth Component (10% growth equals a 100%
credit to the success factor)............................. 100%
----
- - Success factor (aggregate of both components)............. 200%
</TABLE>
The incentive award would be equal to $156,000, which is $78,000 (the
target award) multiplied by 200% (the success factor).
The Company's 1998 fiscal year was another excellent performance year. As a
result, the Chief Executive Officer earned a fiscal 1998 incentive award equal
to 118.8% 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 1998 awards ranging from 97.2% to 248.6% 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 the case of Mr. Jellinek, his incentive award was calculated based
on his base salary and grade level prior to his promotion to President of SLPC,
and the success factor associated with the subsidiary for which he was
responsible prior to that promotion.
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 4,000,000 shares of Company Common Stock to executive
officers (after giving effect to the Company's 2-for-1 stock splits on December
15, 1995 and February 20, 1998), 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 and no executive officers received stock option grants in fiscal 1996
or 1997 under that program.
12
<PAGE> 15
Executive officers have, however, remained eligible to receive special option
grants when warranted, such as in connection with a significant increase in
responsibilities.
In last year's Report on Executive Compensation, the Committee explained
its plan to consider granting to executive officers options to purchase up to
4,000,000 shares of Company Common Stock, in order to sustain the forces driving
shareholder value and the vigor with which the executive officers pursue the
Company's growth strategies. To accommodate such grants in fiscal 1998, and to
accommodate continuance of the Company's practice of making annual incentive
grants to other key employees, a proposal to increase the number of shares
available for issuance under the Stock Plan by 4.8 million (after giving effect
to the Company's 2-for-1 stock split on February 20, 1998) was submitted to the
Company's shareholders at the 1998 Annual Meeting. The proposal was approved by
the shareholders, and on April 27, 1998, the Committee granted nonqualified
stock options to purchase a total of 3,478,000 shares of Company Common Stock to
executive officers, including options for a total of 3,328,000 shares granted to
the executive officers named in the Summary Compensation Table. See "Executive
Compensation -- Stock Options."
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 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.
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 other 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 Stock Plan. 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
13
<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 four most
highly compensated executive officers who were serving as executive officers at
the end of fiscal 1998 (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
SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($) ($) (#)(3) ($) ($)(4)
- --------------------------- ---- ------ ------ ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kenneth F. Yontz.......... 1998 685,000 831,600(5) 119,291(6) 0 1,000,000 0 4,536
Chairman of the Board, 1997 630,000 1,387,983 121,442(6) 0 0 0 4,750
President and Chief 1996 590,000 318,777(5) 87,559(6) 0 0 0 3,664
Executive Officer
Frank H. Jellinek, Jr. ... 1998 397,500 870,240 60,971(7) 0 750,000 0 4,286
President of the 1997 282,500 588,555 55,811(7) 0 0 0 4,071
Company's subsidiary, 1996 256,250 380,016 53,171(7) 0 0 0 3,664
Sybron Laboratory
Products Corporation
Floyd W. Pickrell, Jr. ... 1998 363,750 388,500 29,410(8) 0 578,000 0 4,286
President of the 1997 336,250 389,425 38,702(8) 0 0 0 4,071
Company's subsidiary, 1996 321,250 299,000 26,625(8) 0 0 0 3,575
Sybron Dental
Specialties, Inc.
R. Jeffrey Harris......... 1998 278,750 281,880 38,412(9) 0 500,000 0 4,539
Vice President -- General 1997 241,250 265,482 36,818(9) 0 0 0 4,770
Counsel and Secretary 1996 225,000 233,772 41,205(9) 0 0 0 3,964
Dennis Brown.............. 1998 278,750 281,880 49,853(10) 0 500,000 0 4,579
Vice President -- Finance 1997 241,250 265,482 46,834(10) 0 0 0 4,775
and Chief Financial 1996 225,000 233,772 45,281(10) 0 0 0 4,131
Officer
</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.
(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 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 1998, includes $27,447 for executive life insurance (including tax
gross-up payments), $33,005 for an executive car and related expenses
(including tax gross-up payments), $8,483 for club memberships,
14
<PAGE> 17
$10,000 for financial planning services and $40,356 for personal use of
Company aircraft. 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.
(7) For 1998, includes $22,768 for executive life insurance (including tax
gross-up payments), $30,351 for an executive car and related expenses
(including tax gross-up payments), $3,900 for club memberships, $1,285 for
financial planning services and $2,667 for personal use of Company
aircraft. 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.
(8) For 1998, includes $11,983 for executive life insurance (including tax
gross-up payments), $13,062 for an executive car and related expenses
(including tax gross-up payments), $3,780 for club memberships and $585 for
an executive physical. 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.
(9) For 1998, includes $6,374 for executive life insurance (including tax
gross-up payments), $20,670 for an executive car and related expenses
(including tax gross-up payments), $5,360 for club memberships, $4,000 for
financial planning services and $2,008 for personal use of Company
aircraft. 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.
(10) For 1998, includes $18,833 for executive life insurance (including tax
gross-up payments), $19,832 for an executive car and related expenses
(including tax gross-up payments), $7,972 for club memberships, $1,208 for
financial planning services and $2,008 for personal use of Company
aircraft. 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
$850 for financial planning services.
15
<PAGE> 18
STOCK OPTIONS
The following tables set forth certain information concerning (i)
individual grants of options to purchase Company Common Stock made to the named
executive officers during fiscal 1998 and (ii) individual exercises of stock
options by the named executive officers during fiscal 1998, as well as the
number and value of options outstanding at the end of fiscal 1998 for each of
the named executive officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(1)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL
NUMBER OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ------------ ------------ ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Kenneth F. Yontz........ 1,000,000 23.9 $24.50 4/27/08 15,407,918 39,046,690
Frank H. Jellinek,
Jr. .................. 750,000 17.9 $24.50 4/27/08 11,555,939 29,285,018
Floyd W. Pickrell,
Jr. .................. 578,000 13.8 $24.50 4/27/08 8,905,777 22,568,987
R. Jeffrey Harris....... 500,000 11.9 $24.50 4/27/08 7,703,959 19,523,345
Dennis Brown............ 500,000 11.9 $24.50 4/27/08 7,703,959 19,523,345
</TABLE>
- ---------------
(1) Consists entirely of nonqualified stock options granted pursuant to the
Sybron International Corporation Amended and Restated 1993 Long-Term
Incentive Plan (the "Stock Plan"). The Stock Plan is administered by the
Compensation/Stock Option Committee of the Board of Directors (the
"Committee") which, subject to the provisions of the Stock Plan, designates
the persons to be granted options, the type of option, the number of
underlying shares, the exercise price, the date of grant and the date
options are first exercisable. These options were granted on April 27, 1998
with exercise prices equal to 100% of the fair market value of Sybron Common
Stock on the date of grant. Each option becomes exercisable in cumulative
installments of one-fourth of the shares on each of the first four
anniversaries of the date of grant (i.e., 25% on April 27, 1999, 25% on
April 27, 2000, 25% on April 27, 2001 and 25% on April 27, 2002). Upon a
"change in control" of the Company, the options shall become immediately
exercisable. Unless earlier terminated, these options expire ten years from
the date of grant. In the discretion of the Committee, the exercise price
may be paid by delivery of already owned shares and tax withholding
obligations related to exercise may be satisfied by withholding shares
otherwise deliverable upon exercise, subject to certain conditions. The
Committee has the power, subject to the limitations of the Stock Plan, to
amend the terms and conditions of any outstanding stock option to the extent
such terms and conditions are within the discretion of the Committee as
provided in the Stock Plan.
16
<PAGE> 19
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END(#) FISCAL YEAR-END($)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth F. Yontz......... 200,000 2,811,380 342,454 1,197,470 3,878,280 2,195,101
Frank H. Jellinek,
Jr. ................... 91,616 1,776,848 75,192 838,380 854,007 960,211
Floyd W. Pickrell,
Jr. ................... 50,000 890,170 121,843 689,340 1,364,469 1,215,427
R. Jeffrey Harris........ 0 0 388,760 574,060 4,529,140 823,260
Dennis Brown............. 70,000 1,223,554 655,958 574,060 7,864,829 823,260
</TABLE>
- ---------------
(1) Consists entirely of stock options.
EMPLOYMENT CONTRACTS
All of the named executive officers have entered into employment contracts
(the "Employment Contracts") with the Company. Each of the Employment Contracts
provided for an initial term which expired on December 31, 1993. 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, Jellinek, Pickrell,
Harris and Brown provide for calendar year 1998 base salaries of $700,000,
$500,000, $370,000, $290,000 and $290,000, 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" 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.
17
<PAGE> 20
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 company formerly known as Sybron
Corporation and acquired by the Company in 1987 (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 the 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, 1998
---------- ------------------ ---------------- --------------
<S> <C> <C> <C>
Kenneth F. Yontz............................ $415,414 11 12
Frank H. Jellinek, Jr....................... 363,013 12 31
Floyd W. Pickrell, Jr....................... 217,824 13 25
R. Jeffrey Harris........................... 229,916 22 13
Dennis Brown................................ 149,469 15 5
</TABLE>
- ---------------
* Assumes no salary increases.
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.
18
<PAGE> 21
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 1998 calendar year base salary of $700,000 and the bonus
earned for fiscal 1998 of $831,600. 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 APPROVE THE SYBRON INTERNATIONAL CORPORATION
1999 OUTSIDE DIRECTORS' STOCK OPTION PLAN
On December 11, 1998, the Board of Directors adopted the Sybron
International Corporation 1999 Outside Directors' Stock Option Plan (the
"Directors' Plan"), to become effective upon its approval by the shareholders at
the 1999 Annual Meeting. The terms of the Directors' Plan are similar to those
of the Amended and Restated 1994 Outside Directors' Stock Option Plan (the "1994
Plan"). The 1994 Plan expired (except as to options with respect to 324,000
shares of Company Common Stock then outstanding) on September 30, 1998.
Accordingly, it is deemed advisable to approve the Directors' Plan to enable
director option grants to continue. If the Directors' Plan is approved by the
shareholders, the first option grants thereunder will automatically be made at
the meeting of the Board of Directors immediately following the 1999 Annual
Meeting. The purpose of the Directors' Plan is to provide an incentive for
directors of the Company who are not active full-time employees of the Company
or a subsidiary ("Outside Directors") to improve corporate performance on a
long-term basis. Options granted under the Directors' Plan will be nonqualified
stock options ("NSOs") for income tax purposes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE DIRECTORS'
PLAN.
A copy of the Directors' Plan is annexed hereto as Exhibit A. The following
description of certain provisions of the Directors' Plan is qualified in its
entirety by reference to the complete text set forth in Exhibit A.
PRINCIPAL TERMS OF THE PLAN
The Directors' Plan will be administered by the Compensation/Stock Option
Committee of the Board of Directors (the "Committee") or any successor
committee.
A maximum of 480,000 shares of Company Common Stock may be issued pursuant
to the exercise of options granted under the Directors' Plan. Shares subject to
and not issued under an option which expires, terminates or is canceled for any
reason shall again become available for the granting of options. The exercise
price at which shares may be purchased under each option shall be 100% of the
Fair Market Value (as defined in the Directors' Plan) of Company Common Stock on
the date the option is granted. In the event of a stock dividend, stock split,
recapitalization or other similar change affecting Company Common Stock, the
aggregate number and kind of shares for which options may thereafter be granted
under the Directors' Plan and the number, kind and exercise price of shares
subject to outstanding options shall be appropriately adjusted.
On December 1, 1998, the closing price of Company Common Stock on the New
York Stock Exchange was $24.875 per share.
The granting of options is automatic under the Directors' Plan. If the
Directors' Plan is approved by the shareholders, upon the first meeting of the
Company's Board of Directors following the annual meeting of shareholders in
1999, 2000, 2001, 2002, and 2003 each person then serving the Company as an
Outside Director shall automatically be granted an option to purchase 12,000
shares (subject to adjustment for changes affecting the Common Stock as
described above). Accordingly, all of the present directors except Mr. Yontz
(who is an active full-time employee), including Messrs. Davis, Vieser, and
Doerr assuming they are re-elected, will receive an option for 12,000 shares
under the Directors' Plan at the meeting of the Board of
19
<PAGE> 22
Directors following the 1999 Annual Meeting, if the Directors' Plan is approved
by the shareholders. The following table summarizes such option grants:
NEW PLAN BENEFITS
1999 OUTSIDE DIRECTORS' STOCK OPTION PLAN
<TABLE>
<CAPTION>
NO. OF SHARES OF
COMPANY COMMON
STOCK SUBJECT TO
NAME AND POSITION 1999 OPTION GRANTS
----------------- ------------------
<S> <C>
Kenneth F. Yontz............................................ 0
Chairman of the Board, President and
Chief Executive Officer
Frank H. Jellinek, Jr....................................... 0
President, Sybron Laboratory
Products Corporation
Floyd W. Pickrell, Jr....................................... 0
President, Sybron Dental
Specialties, Inc.
R. Jeffrey Harris........................................... 0
Vice President -- General Counsel
and Secretary
Dennis Brown................................................ 0
Vice President -- Finance
and Chief Financial Officer
Executive Group............................................. 0
Non-Executive Officer Director Group........................ 84,000
Non-Executive Officer Employee Group........................ 0
</TABLE>
If at any time there are not sufficient available shares under the
Directors' Plan to grant each Outside Director an option to purchase the number
of shares specified, each Outside Director shall receive an option to purchase
an equal number of the remaining available shares, determined by dividing the
remaining available shares by the number of Outside Directors.
Each option granted under the Directors' Plan will be evidenced by a stock
option agreement between the Company and the grantee containing the terms and
conditions required by the Directors' Plan and such other terms and conditions,
not inconsistent therewith, as the Committee may deem appropriate. Each stock
option granted under the Directors' Plan will be exercisable immediately upon
grant. All rights to exercise an option will terminate upon the earlier of ten
years from the date of grant or two years from the date the grantee ceases to be
a director of the Company.
Each option may be exercised in whole or in part from time to time as
specified in the stock option agreement. The exercise price must be paid in full
at the time of exercise. Such payment may be made either in cash or by
delivering shares of Company Common Stock which the optionee or the optionee's
spouse or both have beneficially owned for a least six months prior to the time
of exercise ("Delivered Stock"), or a combination of cash and Delivered Stock.
Generally, an option granted under the Directors' Plan may not be
transferred except by will or the laws of descent and distribution. However, the
Committee has the discretion to grant stock options that are transferable to
family members of the grantee or to trusts or partnerships for such family
members, and may amend outstanding options to provide for such transferability.
Each grantee may designate a beneficiary from time to time who shall be entitled
to exercise any options held by the grantee upon death. If no such
20
<PAGE> 23
designation has been made, the personal representative of the grantee's estate
or the person(s) to whom the option is transferred by will or the laws of
descent and distribution may exercise the option.
Options may be granted under the Directors' Plan until September 30, 2003.
On that date, the Directors' Plan will expire except as to options then
outstanding, which shall remain in effect until they have been exercised or have
expired. The Directors' Plan may be terminated at any time by the Board of
Directors except with respect to any options then outstanding.
With the approval of the Board of Directors, the Committee may, at any
time, terminate, amend or modify the Directors' Plan; provided that such
amendment, modification, or termination will require the approval of the
shareholders of the Company if such approval is required by the Code, by the
insider trading rules of Section 16 of the Securities Exchange Act of 1934, by
any national securities exchange or system on which Company Common Stock is then
listed or reported, or by a regulatory body having jurisdiction with respect
thereto.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the Company's understanding of the
principal federal income tax consequences of grants made under the Directors'
Plan based upon the applicable provisions of the Code in effect on the date
hereof.
An optionee will not recognize taxable income at the time an NSO is
granted. Upon exercise of an NSO, an optionee will recognize compensation income
in an amount equal to the difference between the exercise price and the fair
market value of the shares at the date of exercise. The amount of such
difference will be a deductible expense to the Company for tax purposes. On a
subsequent sale or exchange of shares acquired pursuant to the exercise of an
NSO, the optionee will recognize a taxable gain or loss, measured by the
difference between the amount realized on the disposition and the tax basis of
such shares. The tax basis will, in general, be the amount paid for the shares
plus the amount treated as compensation income at the time the shares were
acquired pursuant to the exercise of the option.
When the NSO exercise price is paid in Delivered Stock, the exercise is
treated as: (a) a tax free exchange of the shares of Delivered Stock (without
recognizing any taxable gain with respect thereto) for a like number of new
shares (with such new shares having the same basis and holding period as the
old); and (b) an issuance of a number of additional shares having a fair market
value equal to the "spread" between the exercise price and the fair market value
of the shares for which the NSO is exercised. The optionee's basis in the
additional shares will equal the amount of compensation income recognized upon
exercise of the NSO and the holding period of such shares will begin on the day
the optionee acquires them. This mode of payment does not affect the ordinary
income tax liability incurred upon exercise of the NSO described above.
ACCOUNTING TREATMENT OF OPTIONS
Under existing accounting rules, the Company incurs no compensation expense
upon the grant of a stock option with an exercise price at least equal to the
fair market value of Company Common Stock on the date of grant. However, in the
footnotes to the Company's annual financial statements, the Company sets forth
pro forma net income and earnings per share amounts which are calculated as if
the Company had elected to recognize compensation expense equal to the fair
value of the option on the grant date based on the Black-Scholes option pricing
model.
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 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 1998. Based upon a review of such reports furnished to the Company, or
written
21
<PAGE> 24
representations that no reports were required, the Company believes that all of
those filing requirements were satisfied with respect to fiscal 1998.
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 the
Company's 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 2000 Annual Meeting of Shareholders of the
Company must be received no later than August 24, 1999 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 2000 Annual Meeting of
Shareholders of the Company which are not intended to be considered for
inclusion in next year's annual meeting proxy material (shareholder proposals
submitted outside the processes of Rule 14a-8) must be received no later than
November 27, 1999 and no earlier than October 29, 1999 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.
/s/ R. JEFFERY HARRIS
-----------------------------------
R. JEFFREY HARRIS
Secretary
December 22, 1998
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,
1998 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.
22
<PAGE> 25
EXHIBIT A
SYBRON INTERNATIONAL CORPORATION
1999 OUTSIDE DIRECTORS' STOCK OPTION PLAN
I. INTRODUCTION
1.01 Purpose. This plan shall be known as the Sybron International
Corporation 1999 Outside Directors' Stock Option Plan (the "Plan"). The purpose
of the Plan is to provide an incentive for Outside Directors of Sybron
International Corporation to improve corporate performance on a long-term basis.
It is intended that the Plan and its operation comply with the provisions of
Rule 16b-3 under the Securities Exchange Act of 1934 (or any successor rule). If
any provision of the Plan or any grant hereunder would disqualify the Plan or
such grant under, or would not comply with, Rule 16b-3 (or any successor rule),
such provision or grant shall be construed or deemed amended to conform to Rule
16b-3.
1.02 Effective Date. The Plan shall be effective upon its approval by the
Company's shareholders at the Company's 1999 annual meeting. If the Plan is
approved by the shareholders, the first option grants will automatically be made
at the Board meeting immediately following the 1999 annual meeting.
II. PLAN DEFINITIONS
2.01 Definitions. For Plan purposes, except where the context clearly
indicates otherwise, the following terms shall have the meanings set forth
below:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall have the meaning ascribed to such term in
Section 4.01 hereof.
(c) "Company" shall mean Sybron International Corporation, a Wisconsin
corporation, or any successor thereto as provided in Section 6.07 hereof.
(d) "Company Stock" shall mean the Company's Common Stock, par value
$0.01 per share, and such other stock and securities as may be substituted
therefor pursuant to Section 3.02 hereof.
(e) "Director" shall mean any individual who is a member of the Board.
(f) "Fair Market Value" means the average of the highest and lowest
quoted selling prices for the Company Stock on the relevant date, or (if
there were no sales on such date) the 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.
(g) "Grantee" shall mean any person who has been granted an option
under the Plan.
(h) "Outside Director" shall mean a Director who is not also an active
full-time employee of the Company or a corporation in which the Company
owns, directly or indirectly, a voting stock interest of more than fifty
percent (50%).
III. SHARES SUBJECT TO OPTION
3.01 Available Shares. The total number of shares of Company Stock that
may be issued under the Plan shall not exceed Four Hundred Eighty Thousand
(480,000) shares. Shares subject to and not issued under an option which
expires, terminates, or is canceled for any reason under the Plan shall again
become available for granting of options.
3.02 Changes in Common Stock. If any stock dividend is declared upon the
Company Stock, or if there is any stock split, stock distribution, or other
recapitalization of the Company with respect to the Company Stock, resulting in
a split or combination or exchange of shares, the aggregate number and kind of
shares which may thereafter be granted under the Plan shall be proportionately
and appropriately adjusted and the number and kind of shares then subject to
options under the Plan and the per share option price therefor shall be
proportionately and appropriately adjusted, without any change in the aggregate
purchase prices to be paid therefor.
A-1
<PAGE> 26
IV. ADMINISTRATION
4.01 Administration by the Committee. The Plan shall be administered by
the Compensation/Stock Option Committee (the "Committee") of the Board (or any
successor committee) which shall have the power, subject to and within the
limits of the express provisions of the Plan, to exercise such powers and to
perform such acts as are deemed necessary or expedient to promote the best
interests of the Company with respect to the Plan.
V. STOCK OPTIONS
5.01 Option Agreements. Each option granted under the Plan shall be
evidenced by a stock option agreement between the Company and the Grantee which
shall contain the terms and conditions required by this Article V, and such
other terms and conditions, not inconsistent herewith, as the Committee may deem
appropriate in each case. The holder of an option shall not have any rights as a
shareholder with respect to the shares covered by an option until such shares
have been delivered to him or her.
5.02 Option Grant Size and Grant Date.
(a) Automatic Grants. Upon the first meeting of the Board following
the Company's 1999, 2000, 2001, 2002 and 2003 annual meetings of
shareholders, each person then serving the Company as an Outside Director
shall automatically be granted a nonqualified stock option to purchase
Twelve Thousand (12,000) shares, subject to adjustment under Section 3.02
hereof.
(b) Special Rule. If at any time there are not sufficient available
shares under the Plan to grant each Outside Director an option to purchase
the number of shares provided above, each Outside Director shall receive an
option to purchase an equal number of the remaining available shares,
determined by dividing the remaining available shares by the number of
Outside Directors.
5.03 Exercise Price. The price at which each share of Company Stock
covered by an option may be purchased shall be one hundred percent (100%) of the
Fair Market Value of the Company Stock on the date the option is granted.
5.04 Period for Exercise of Options. Each stock option granted under this
Plan shall be exercisable immediately upon grant. All rights to exercise an
option shall terminate upon the earlier of (a) ten (10) years from the date the
option is granted, or (b) two (2) years from the date the Grantee ceases to be a
Director.
5.05 Method of Exercise. Subject to Section 5.04, each option may be
exercised in whole or in part from time to time as specified in the stock option
agreement. Each Grantee may exercise an option by giving written notice of the
exercise to the Company, specifying the number of shares to be purchased,
accompanied by payment in full of the exercise price therefor. The exercise
price may be paid in cash, by check, or by delivering shares of Company Stock
which have been beneficially owned by the Grantee, the Grantee's spouse, or both
of them for a period of at least six months prior to the time of exercise
("Delivered Stock") or a combination of cash and Delivered Stock. Delivered
Stock shall be valued at its Fair Market Value determined as of the date of
exercise of the option. No Grantee shall be under any obligation to exercise any
option hereunder.
VI. GENERAL
6.01 Nontransferability. No option granted under the Plan shall be
transferable or assignable except by last will and testament or the laws of
descent and distribution; provided, however, that the Committee may, in its
discretion, grant stock options that are transferable to family members of the
Grantee or to trusts or partnerships for such family members. The Committee may
also amend outstanding stock options to provide for such transferability. In the
event of the Grantee's death, the Grantee's beneficiary designated pursuant to
Section 6.08 hereof or, in the absence of any such designation, the personal
representative of the Grantee's estate or the person or persons to whom the
option is transferred by will or the laws of descent and distribution may
exercise the option in accordance with its terms.
A-2
<PAGE> 27
6.02 General Restriction. Each option shall be subject to the requirement
that if at any time the Board shall determine, in its discretion, that the
listing, registration, or qualification of securities upon any securities
exchange or under any state or federal law, or the consent or approval of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such option or the issue or purchase of
securities thereunder, such option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Board.
6.03 Expiration and Termination of the Plan. Options may be granted under
the Plan at any time and from time to time, prior to September 30, 2003, the
date on which the Plan will expire, except as to options then outstanding under
the Plan, which shall remain in effect until they have been exercised or have
expired. The Plan may be abandoned or terminated at any time by the Board except
with respect to any options then outstanding under the Plan.
6.04 Amendment, Modification and Termination. With 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 shareholders of the Company, if such
approval is required by the Internal Revenue Code of 1986, as amended, by the
insider trading rules of Section 16 of the Securities Exchange Act of 1934, by
any national securities exchange or system on which the Company Stock is then
listed or reported, or by a regulatory body having jurisdiction with respect
thereto. No termination, amendment, or modification of the Plan shall in any
material manner adversely affect any option previously granted under the Plan,
without the written consent of the Grantee holding such option.
6.05 Withholding Taxes. The Company shall have the power and the right to
deduct or withhold, or require a Grantee to remit to the Company, an amount
sufficient to satisfy any federal, state and local taxes required by law to be
withheld with respect to any grant, exercise, or payment made under or as a
result of the Plan. With respect to tax withholding which may be required upon
the exercise of options, Grantees may elect, subject to the approval of the
Committee, to satisfy such withholding requirement, in whole or in part, by
having the Company withhold shares of Company Stock 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 Grantee.
6.06 Construction. Except as otherwise required by applicable federal
laws, the Plan shall be governed by, and construed in accordance with, the laws
of the state of the Company's incorporation.
6.07 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.
6.08 Beneficiary Designation. Each Grantee 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 options in accordance with their
terms in the event of his or her death before he or she exercises all of his or
her outstanding options. Each such designation shall revoke all prior
designations by the same Grantee, shall be in a form prescribed by the Company,
and will be effective only when filed by the Grantee in writing with the Human
Resource Department of the Company during the Grantee's lifetime.
A-3
<PAGE> 28
697-PS-99
<PAGE> 29
PROXY
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 Portsmouth, New Hampshire, on Wednesday, January 27, 1999, at 10:00
a.m., Eastern 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.
----------- -----------
|SEE REVERSE| |SEE REVERSE|
| SIDE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SIDE |
----------- -----------
<PAGE> 30
<TABLE>
<S><C>
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" (1) ELECTION OF DIRECTORS AND (2) APPROVAL OF THE SYBRON
INTERNATIONAL CORPORATION 1999 OUTSIDE DIRECTORS' STOCK OPTION PLAN. THIS PROXY WILL BE VOTED AS YOU
DIRECT; IN THE ABSENCE OF SUCH DIRECTION, IT WILL BE VOTED "FOR" EACH OF THESE MATTERS.
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS: 2. To approve the Sybron International [ ] [ ] [ ]
NOMINEES: Don H. Davis, Jr., Richard W. Vieser, and Corporation 1999 Outside Directors'
Christopher L. Doerr Stock Option Plan.
FOR [ ] [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ]
--------------------------------------
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
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 in full corporate name by duly
authorized officer.
Signature: Date: Signature: Date:
------------------------- ----------------------- -------------------- -----------
</TABLE>
