-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G5kUCF0Th1P9arkmKwznLHohBW3iUAiJMivePDgOmHUbfzY+M2bqD5TzJOSGVWid FB9eT+x+ZshFJMXOgxkopA== /in/edgar/work/20000908/0000893220-00-001060/0000893220-00-001060.txt : 20000922 0000893220-00-001060.hdr.sgml : 20000922 ACCESSION NUMBER: 0000893220-00-001060 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000908 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SYBRON CHEMICALS INC CENTRAL INDEX KEY: 0000832815 STANDARD INDUSTRIAL CLASSIFICATION: [2890 ] IRS NUMBER: 510301280 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 SEC ACT: SEC FILE NUMBER: 005-45069 FILM NUMBER: 719481 BUSINESS ADDRESS: STREET 1: BIRMINGHAM RD STREET 2: PO BOX 66 CITY: BIRMINGHAM STATE: NJ ZIP: 08011 BUSINESS PHONE: 6098931100 MAIL ADDRESS: STREET 1: P O BOX 66 BIRMINGHAM ROAD CITY: BIRMINGHAM STATE: NJ ZIP: 08011 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SYBRON CHEMICALS INC CENTRAL INDEX KEY: 0000832815 STANDARD INDUSTRIAL CLASSIFICATION: [2890 ] IRS NUMBER: 510301280 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 BUSINESS ADDRESS: STREET 1: BIRMINGHAM RD STREET 2: PO BOX 66 CITY: BIRMINGHAM STATE: NJ ZIP: 08011 BUSINESS PHONE: 6098931100 MAIL ADDRESS: STREET 1: P O BOX 66 BIRMINGHAM ROAD CITY: BIRMINGHAM STATE: NJ ZIP: 08011 SC 14D9 1 w40203sc14d9.txt SCHEDULE 14D-9 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-9 (RULE 14d-101) SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ SYBRON CHEMICALS INC. (NAME OF SUBJECT COMPANY) SYBRON CHEMICALS INC. (NAME OF PERSON(S) FILING STATEMENT) COMMON STOCK, PAR VALUE $.01 PER SHARE (TITLE OF CLASS OF SECURITIES) 870903 10 1 (CUSIP NUMBER OF CLASS OF SECURITIES) RICHARD M. KLEIN PRESIDENT AND CHIEF EXECUTIVE OFFICER BIRMINGHAM ROAD P.O. BOX 66 BIRMINGHAM, NEW JERSEY 08011 TELEPHONE: (609) 893-1100 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT) WITH A COPY TO: DAVID GITLIN, ESQUIRE WOLF, BLOCK, SCHORR AND SOLIS-COHEN LLP 1650 ARCH STREET 22ND FLOOR PHILADELPHIA, PA 19103-2097 TELEPHONE: 215-977-2000 FACSIMILE: 215-977-2740 [ ] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 ITEM 1. SUBJECT COMPANY INFORMATION. NAME AND ADDRESS. The name of the subject company is Sybron Chemicals Inc., a Delaware corporation (the "Company"), and the address and telephone number of its principal executive offices are Birmingham Road, P.O. Box 66, Birmingham, New Jersey 08011, (609) 893-1100. SECURITIES. This Schedule 14D-9 relates to the Company's Common Stock, par value $.01 per share (the "Common Shares"), including the associated rights to purchase preferred shares (the "Rights" and, together with the Common Shares, the "Shares") issued pursuant to the Rights Agreement, dated as of August 7, 1998, by and between the Company and Fleet National Bank (f/k/a BankBoston, N.A.), as Rights Agent (the "Rights Agreement"). As of August 30, 2000, 5,738,426 Shares were issued and outstanding. ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON. NAME AND ADDRESS. The name, business address and business telephone number of the Company, which is the person filing this statement, are set forth in Item 1 above. TENDER OFFER. This Schedule 14D-9 relates to a tender offer by Project Toledo Acquisition Corp., a Delaware corporation ("Purchaser"), which is a wholly owned subsidiary of Bayer Corporation, an Indiana corporation ("Parent"), disclosed in a Tender Offer Statement on Schedule TO, dated September 8, 2000 (the "Schedule TO") to purchase all the outstanding Shares, at a price of $35.00 per Share, net to the seller in cash, without interest (the "Offer Price") upon the terms and subject to the conditions set forth in the Offer to Purchase, dated September 8, 2000 (the "Offer to Purchase"), and the related Letter of Transmittal (which Letter of Transmittal, together with the Offer to Purchase, as they may be amended or supplemented from time to time constitute the "Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2) hereto, respectively, and are incorporated herein by reference in their entirety. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of August 30, 2000 (the "Merger Agreement"), among Parent, Purchaser and the Company, which, among other things, provides for: (i) the making of the Offer by Purchaser, subject to the conditions set forth in the Offer to Purchase and the conditions and terms of the Merger Agreement; (ii) the subsequent merger of Purchaser with and into the Company (the "Merger"); and (iii) the settlement of the Company's outstanding stock options for an amount equal to the product of (a) the excess, if any, of the Offer Price over the applicable exercise price and (b) the number of Shares subject to the applicable options. A copy of the Merger Agreement is filed as Exhibit (e)(1) hereto and is incorporated herein by reference in its entirety. Pursuant to the Merger, at the effective time of the Merger (the "Effective Time"), each Share outstanding (other than Shares held in the treasury of the Company or held by Purchaser or Parent or their subsidiaries, or Shares held by stockholders validly exercising appraisal rights pursuant to Section 262 of the Delaware General Corporation Law (the "DGCL")) will, by virtue of the Merger and without any action by the holder thereof, be converted into the right to receive, without interest, an amount in cash equal to the Offer Price. The Schedule TO states that the address of the principal executive offices of Purchaser and Parent is 100 Bayer Road, Pittsburgh, Pennsylvania 15205-9741 and the telephone number is (412) 777-2000. ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. CONFLICTS OF INTEREST. Certain contracts, agreements, arrangements and understandings between the Company and its executive officers, directors and affiliates are described in the Information Statement pursuant to Section 14(f) of the 2 3 Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1 thereunder (the "Information Statement") that is attached as Annex II to this Statement and is incorporated herein by reference. Except as set forth in this Item 3 or in Annex II, there exists on the date hereof no material agreement, arrangement or understanding and no actual or potential material conflict of interest between the Company or its affiliates and either (i) the Company, its executive officers, directors or affiliates or (ii) Parent, Purchaser or any of their respective executive officers, directors or affiliates. EMPLOYMENT AND RELATED AGREEMENTS. Executive Bonus Plan. Under the Company's Executive Bonus Plan, certain executives and executive officers are eligible to receive incentive compensation based on their performance and/or the financial performance of the Company. Bonus payments are made in cash, or, at the option of the recipient (or automatically with respect to executive officers), a portion of the bonus earned may be paid in the form of Shares. When a bonus payment is distributed in the form of Shares, the number of Shares is determined by a conversion of the cash value of the bonus payment using a predetermined value per Share. Any participant in the Executive Bonus Plan whose employment with the Company terminates at any time during the period starting three months before a change of control and ending on December 31 of the year in which the change of control occurs, other than as a result of a termination for cause or by reason of voluntarily terminating his or her employment with the Company, receives all the benefits that he or she would be entitled to if the termination occurred after December 31 of the year in which the termination occurred. However, the participant will receive only a fraction of the benefits relating to the bonus year in which the termination occurred, calculated by dividing the number of months the employee was employed with the Company in that year by twelve. In the event there is no public market either for the Shares or for shares of any successor of the Company as a result of a change of control, any award that would otherwise be made in Shares under the Executive Bonus Plan will be made by converting the applicable number of shares into cash, using for this conversion the fair market value of the Shares as of the date of the change of control. In the event that there is no public market for the Shares but there is a public market for shares of a successor of the Company as a result of a change of control, any awards that would otherwise be made in Shares under the plan will be made in common stock of the successor entity. The number of shares of common stock of the successor entity will be calculated based on the relative fair market value of the Shares and of the common stock of the successor entity as of the date of the change of control. The Executive Bonus Plan provides that after the date of a change of control, all awards with respect to the two bonus years immediately following the year in which the change of control occurred will be made in cash or in stock of the successor entity, by converting the applicable number of Shares that would otherwise have been payable under the Executive Bonus Plan into cash or stock of the successor entity as determined above. Thereafter, any provisions of the Executive Bonus Plan providing for awards to be made in the form of Shares shall be without effect. See also the information contained in this Item 1 under the caption "Employment and Related Agreements -- Effect of Merger Agreement on Company Stock Plans". For purposes of the Executive Bonus Plan, "change of control" is defined as a transaction or series of transactions in which (i) the Company is dissolved or liquidated or sells substantially all of its operating assets, (ii) the Company is party to a merger or consolidation in which the Company is not the surviving or acquiring entity, or (iii) the Company becomes an 80% or more owned subsidiary of another Company. Share Participation Plan. Pursuant to the Company's Share Participation Plan, participating employees are entitled to receive cash awards upon the happening of a triggering event, which is defined therein to be (i) the sale or disposal of substantially all of the assets of the Company, or (ii) the date any entity, person or group, other than the Company or Citigroup or any of their subsidiaries, any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, or any other person or group in which the present management of the Company shall have aggregate equity on a fully diluted basis, of no less than 15%, shall have become the beneficial owner of, or shall have obtained voting control over, more than fifty percent of the Shares, or the common stock of the Company resulting from the merger or consolidation of the Company with or into any other entity. Awards are based upon the number of participating shares held by the participant. The right to receive an award is forfeited by a participant if, prior to the six month anniversary of the triggering event, he or she ceases to be an employee of the Company or any successor thereof for any reason other than (i) death, (ii) disability, (iii) retirement in due course in accordance with the retirement policies of the Company or any successor thereof, or (iv) termination by the Company or any successor thereof for reasons other than cause. 3 4 Stock Options. Pursuant to the terms of the Merger Agreement, each option to purchase shares of common stock of the Company granted under the Company's stock plans, whether vested or unvested and whether or not presently exercisable, outstanding immediately prior to the acceptance for payment of the Shares pursuant to the Offer, will be canceled immediately prior to the acceptance for payment of Shares pursuant to the Offer, and in consideration therefor the holder thereof will be solely entitled to receive, and will receive a cash payment from the Company in an amount equal to the product of (i) the excess, if any, of $35.00 per Share in cash or any higher price as shall be paid in respect of the Shares in the Offer over the exercise price per Share of the option, and (ii) the number of Shares covered by the option (such payment, if any, to be net of applicable withholding and excise taxes). Such cash payment will be paid at or as soon as practicable following the Effective Time. See also the information contained in this Item 1 under the caption "Employment and Related Agreements -- Effects of Merger Agreement on Company Stock Plans." Effect of Merger Agreement on Company Stock Plans. As of the Effective Time, all plans and agreements pursuant to which options to purchase Shares were granted will terminate and all rights under any provision of any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any of its subsidiaries, other than the right to receive cash payments under the Executive Bonus Plan or Share Participation Plan, will be terminated, and no person will have any continuing rights thereunder. The Merger Agreement provides that the Company will take all action reasonable and necessary to effectuate the foregoing and to ensure that, after the Effective Time, no person shall have any right under any plan, program or arrangement with respect to equity securities of the Company or any subsidiary thereof, other than the right to receive cash payments under the Executive Bonus Plan and Share Participation Plan. INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER. In considering the recommendations of the Board of Directors of the Company (the "Board") with respect to the Offer, the Merger and the Merger Agreement and the fairness of the consideration to be received in the Offer and the Merger, stockholders should be aware that certain officers and directors of Parent, Purchaser and the Company have interests in the Offer and the Merger, which are described in the sections of the Offer to Purchase listed below, that may present them with potential conflicts of interest. In addition, stockholders should be aware that, simultaneously with the execution of the Merger Agreement, Parent and Purchaser entered into a Stockholder Agreement dated as of August 30, 2000 (the "Stockholder Agreement"), with 399 Venture Partners, Inc., Richard M. Klein and John H. Schroeder (each a "Principal Stockholder" and, collectively, the "Principal Stockholders"). The Principal Stockholders have represented in the Stockholder Agreement that, collectively, they have voting and dispositive control over 2,565,644 Shares, which represented approximately 45% of the outstanding Shares as of August 30, 2000. Pursuant to the Stockholder Agreement the Principal Stockholders have agreed, among other things, to tender all such Shares pursuant to the Offer and have agreed to vote such Shares in favor of the Merger and against any Alternative Acquisition, Alternate Acquisition Proposal (as such terms are defined in the Merger Agreement), merger and/or merger agreement (other than the Merger and the Merger Agreement). The information contained in the Offer to Purchase under the captions "The Tender Offer -- 11. Contacts and Transactions with the Company; Background of the Offer"; "The Tender Offer -- 12. Purpose of the Offer; the Merger Agreement; the Stockholder Agreement; Plans for the Company; Other Agreements -- The Merger Agreement -- Stock Options"; "The Tender Offer -- 12. Purpose of the Offer; the Merger Agreement; the Stockholder Agreement; Plans for the Company; Other Agreements -- The Merger Agreement -- Benefits Matters"; "The Tender Offer -- 12. Purpose of the Offer; the Merger Agreement; the Stockholder Agreement; Plans for the Company; Other Agreements -- The Merger Agreement -- Indemnification and Insurance"; and "The Tender Offer -- 12. Purpose of the Offer; the Merger Agreement; the Stockholder Agreement; Plans for the Company; Other Agreements -- The Stockholder Agreement" is incorporated herein by reference. The Board was aware of these actual and potential conflicts of interest and considered them along with the other matters described below in Item 4, "The Solicitation or Recommendation -- Recommendation of the Board of Directors -- Reasons for the Recommendation." 4 5 ITEM 4. THE SOLICITATION OR RECOMMENDATION. RECOMMENDATION OF THE BOARD OF DIRECTORS. At a meeting held on August 30, 2000, the Board unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to, and in the best interests of, holders of Shares, (ii) approved, adopted and declared advisable the Merger Agreement and (iii) resolved to recommend that holders of Shares accept the Offer and tender their Shares pursuant to the Offer and approve and adopt the Merger Agreement and the transactions contemplated thereby. Accordingly, the Board unanimously recommends that the stockholders of the Company tender their Shares pursuant to the Offer. Copies of a letter to the stockholders of the Company communicating the Board's recommendation and the Company's press release announcing the Merger Agreement and the transactions contemplated thereby are filed as Exhibits (a)(3) and (a)(4) hereto, respectively, and are incorporated herein by reference. Reasons for the Recommendation. In making the determinations and recommendations set forth above in this Item 4, the Board considered a number of factors, including without limitation, the following: (i) the amount and form of consideration to be received by the Company's stockholders in the Offer and the Merger and the Company's prospects after the Merger; (ii) information with regard to the financial condition, results of operations, business and prospects of the Company as well as current economic and market conditions (including current conditions in the industry in which the Company competes); (iii) the Company's prospects if it were to remain independent, including the risks and benefits inherent in remaining independent, including its financing requirements, its ability to increase revenues, and the nature of its competitive position in its markets; (iv) the terms of the Merger Agreement, including the parties' representations, warranties and covenants and the conditions to their respective obligations and the proposed structure of the Offer and Merger involving a cash tender offer for all outstanding Shares to be followed by a merger for the same consideration, thereby enabling all holders of the Shares to obtain cash for their Shares at the earliest practicable time; (v) the high likelihood that the proposed acquisition would be consummated, in light of the fact that the Offer and Merger are not subject to any financing contingencies; (vi) the historical and recent market prices for the Shares and the fact that the Offer and the Merger will enable the holders of Shares to realize a premium over the prices at which such Shares traded prior to the negotiation and execution of the Merger Agreement; (vii) the results of the auction conducted by the Company which failed to solicit a bid from any other person in excess of the consideration to be received by the Company's stockholders in the Offer and the Merger; and (viii) the written opinion of J.P. Morgan Securities Inc. ("J.P. Morgan"), dated August 30, 2000, to the effect that, as of such date, and based upon and subject to certain matters stated in such opinion, the consideration to be paid to holders of Shares (other than Parent and its affiliates) in the Offer and the Merger was fair, from a financial point of view, to such holders, and the presentation made by J.P. Morgan to the Board relating to the financial analysis performed by J.P. Morgan in connection with such opinion. The full text of J.P. Morgan's written opinion dated August 30, 2000, which sets forth the assumptions made, matters considered and limitations on the review undertaken by J.P. Morgan, is set forth in Annex I hereto and is filed as Exhibit (a)(7) hereto and is incorporated herein by reference. J.P. Morgan's opinion is limited to the fairness, from a financial point of view, of the cash consideration to be received in the Offer and the Merger by the holders of Shares (other than Parent and its affiliates) and does not constitute a recommendation as to whether any stockholder should tender Shares pursuant to the Offer or how such stockholder should vote with respect to the Merger. Holders of Shares are urged to read such opinion carefully in its entirety. 5 6 The Board also considered the actual and potential conflicts of interest described above in Item 3. The Board did not assign relative weights to the factors or determine that any factor was of particular importance. Rather, the Board viewed its position and recommendations as being based on the totality of the information presented to and considered by it. In addition, it is possible that different members of the Board assigned different weights to the various factors described above. Intent to Tender. To the best of the Company's knowledge after reasonable inquiry, to the extent permitted by applicable securities laws, rules or regulations, all executive officers, directors and affiliates of the Company currently intend to tender all Shares held of record or beneficially owned by them pursuant to the Offer. Messrs. Richard M. Klein and John H. Schroeder, and 399 Venture Partners, Inc. have entered into the Stockholder Agreement with Parent and Purchaser pursuant to which, among other things, such persons have agreed to tender their Shares in accordance with the Offer and to vote the Shares beneficially owned by them in favor of the Merger. Reference is made to Items 2 and 3 above. ITEM 5. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED. The Company has retained J.P. Morgan as its financial advisor in connection with the Offer and the Merger. Pursuant to the terms of J.P. Morgan's engagement, the Company has agreed to pay J.P. Morgan for its services an aggregate financial advisory fee equal to approximately $4.5 million, 25% of which was paid upon execution of the Merger Agreement and the remainder of which is payable upon consummation of the transaction. The Company also has agreed to indemnify J.P. Morgan and certain related parties against certain liabilities, including liabilities under the federal securities laws, arising out of J.P. Morgan's engagement. J.P. Morgan and its affiliates have, from time to time in the past, provided investment banking and commercial banking services to Parent for which services J.P. Morgan and its affiliates have received customary compensation. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities of the Company or Parent for their own account or for the accounts of their customers and, accordingly, may at any time hold long or short positions in such securities. Neither the Company nor anyone acting on its behalf has employed, retained or compensated, or currently intends to employ, retain or compensate, any person to make solicitations or recommendations to the stockholders of the Company on its behalf with respect to the Offer or the Merger. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. No transactions in Shares have been effected during the past 60 days by the Company or, to the knowledge of the Company, by any executive officer, director, affiliate or subsidiary of the Company, other than the following purchases through the Company's 401(k) plan:
NUMBER NAME OF SHARES ---- --------- Richard M. Klein............................................ 12.3 Stephen R. Adler............................................ 5.6 Steven F. Ladin............................................. 7.4 Robert M. Parlman........................................... 11.1 John H. Schroeder........................................... 9.8
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS. Except as set forth in this Schedule 14D-9, the Company is not engaged in any negotiation in response to the Offer which relates to or would result in (i) a tender offer or other acquisition of the Company's securities; (ii) an extraordinary transaction, such as a merger, reorganization or liquidation, involving the Company or any subsidiary of the Company; (iii) a purchase, sale or transfer of a material amount of assets of the Company or any subsidiary of 6 7 the Company; or (iv) any material change in the present dividend rate or policy, or indebtedness or capitalization of the Company. Except as set forth in this Schedule 14D-9, there are no transactions, Board resolutions, agreements in principle or signed contracts in response to the Offer that relate to or would result in one or more of the events referred to above in this Item 7. ITEM 8. ADDITIONAL INFORMATION. THE COMPANY RIGHTS AGREEMENT. Each Right issued pursuant to the Rights Agreement, when it becomes exercisable, entitles the registered holder to purchase from the Company one ten-thousandth (1/10000th) of a share of Preferred Stock at a price of $150 per one ten-thousandth (1/10000th) of a share, subject to adjustment in certain circumstances (the "Purchase Price"). The Rights are not exercisable until the Distribution Date. The "Distribution Date" is the earlier of (i) the close of business on the tenth day after the public announcement that a person or group (including any affiliate or associate of such person or group) has acquired, or has obtained the right to acquire, beneficial ownership of 20% or more of the outstanding Shares (such person or group being an "Acquiring Person"), unless provisions preventing accidental triggering of the distribution of the Rights apply, and (ii) the close of business on the tenth business day (or such later date as the Board shall determine) following the commencement of, or first public disclosure of an intent to commence, a tender or exchange offer for 20% or more of the outstanding Shares. At such time as there is an Acquiring Person, each holder of a Right (other than such Acquiring Person) is entitled to purchase, for the Purchase Price, that number of Shares which at the time of such event would have a market value of twice the Purchase Price. In the event the Company is acquired in a merger or other business combination by an Acquiring Person or an affiliate or associate of an Acquiring Person that is a publicly traded corporation or 50% or more of the Company's assets or assets representing 50% or more of the Company's earning power are sold, leased, exchanged or otherwise transferred (in one or more transactions) to an Acquiring Person or an affiliate or associate of an Acquiring Person, each Right entitles its holder (other than Rights beneficially owned by such Acquiring Person or its affiliates or associates) to purchase, for the Purchase Price, that number of common shares of such corporation (or, if such corporation is not a publicly traded corporation, that number of common shares of an affiliate of such corporation that has publicly traded shares) which at the time of the transaction would have a market value of twice the Purchase Price. On August 30, 2000, the Board unanimously approved the amendment of certain terms of the Rights Agreement. The Company then executed Amendment No. 2 dated as of August 30, 2000 to the Rights Agreement (the "Rights Agreement Amendment"). The Rights Agreement Amendment provides that, notwithstanding anything to the contrary contained in the Rights Agreement, neither Parent nor Purchaser will at any time come within the definition of an Acquiring Person as a result of the transactions contemplated by the Merger Agreement. The Rights Agreement Amendment also provides that, notwithstanding anything to the contrary contained in the Rights Agreement, no Distribution Date (as defined in the Rights Agreement) will occur as a result of any of the transactions contemplated by the Merger Agreement. Finally, the Rights Agreement Amendment provides that, notwithstanding anything to the contrary contained in the Rights Agreement, immediately prior to the acceptance for payment of Shares in the Offer, all Rights granted by the Rights Agreement will become null and void, the Rights Agreement will be terminated and all provisions of the Rights Agreement, collectively and separately, will be without effect (including, without limitation, all sections pertaining to redemption of the Rights). The Rights Agreement Amendment is filed as Exhibit (e)(18) and is incorporated herein by reference. The foregoing description of the Rights Agreement Amendment does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement Amendment. 7 8 SECTION 14(f) INFORMATION STATEMENT. The Information Statement attached hereto as Annex II, and incorporated herein by reference, is being furnished to the Company's stockholders in connection with the possible designation by Purchaser, pursuant to the Merger Agreement, of certain persons to be appointed to the Board other than at a meeting of the Company's stockholders. OFFER TO PURCHASE, LETTER OF TRANSMITTAL AND RELATED DOCUMENTS. Reference is hereby made to the Offer to Purchase and the related Letter of Transmittal, form of letter to brokers, dealers, commercial banks, trust companies and other nominees and form of letter to clients which are filed as Exhibits (a)(1), (a)(2), (a)(5) and (a)(6) hereto, respectively, and are incorporated herein by reference in their entirety. SECTION 203 OF THE DGCL. Section 203 of the DGCL ("Section 203") prevents an "interested stockholder" (including a person who has the right to acquire 15% or more of the corporation's outstanding voting stock) from engaging in a "business combination" (defined to include mergers and certain other actions) with a Delaware corporation for a period of three years following the date such person became an interested stockholder. For purposes of Section 203, the Board approved the Company entering into the Merger Agreement and the consummation of the transactions contemplated thereby, including the Stockholder Agreement, and has taken all appropriate action so that Section 203, with respect to the Company, will not be applicable to Parent and Purchaser by virtue of such actions. Other than as set forth above, the Company does not believe that the antitakeover laws and regulations of any state will by their terms apply to the Offer and the Merger, and neither Parent nor Purchaser has attempted to comply with any state antitakeover statute or regulation. Purchaser has reserved the right to challenge the applicability or validity of any state law purportedly applicable to the Offer. If it is asserted that any state antitakeover statute is applicable to the Offer and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer, Purchaser might be required to file certain information with, or to receive approvals from, the relevant state authorities, and Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer or may be delayed in consummating the Offer. In such case, Purchaser may not be obligated to accept for payment, or pay for, any Shares tendered pursuant to the Offer. See "Certain Conditions of the Offer," Section 14 of the Offer to Purchase, which is filed as Exhibit (a)(1) hereto. SECTION 253 OF THE DGCL. Section 253 of the DGCL provides that, if a corporation owns at least 90% of the outstanding shares of each class of another corporation, the corporation holding such stock may merge that corporation into itself or itself into such corporation, without any action or vote on the part of the board of directors or the stockholders of such other corporation (a "short-form merger"). In the event that Parent, Purchaser and any other subsidiaries of Parent acquire in the aggregate at least 90% of the outstanding Shares, pursuant to the Offer or otherwise, then, at the election of Parent, a short-form merger could be effected without further approval of the Board or stockholders of the Company, subject to compliance with the provisions of Section 253 of the DGCL. Even if Parent and Purchaser do not own 90% of the outstanding Shares following consummation of the Offer, Parent and Purchaser could seek to purchase additional Shares in the open market or otherwise in order to reach the 90% threshold and employ a short-form merger. The per Share consideration paid for any Shares so acquired may be greater or less than the Offer Price. Parent and Purchaser have advised the Company that they presently intend to effect a short-form merger if permitted to do so under the DGCL, pursuant to which Purchaser will be merged with and into the Company. SECTION 262 OF THE DGCL. Holders of the Shares do not have appraisal rights in connection with the Offer. However, if the Merger is consummated, holders of the Shares at the Effective Time will have certain rights pursuant to the provisions of Section 262 of the DGCL, including the right to dissent and demand appraisal of, and to receive payment in cash of 8 9 the fair value of, their Shares. Under Section 262 of the DGCL, dissenting stockholders of the Company who comply with the applicable statutory procedures will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and to receive payment of such fair value in cash, together with a fair rate of interest thereon, if any. Any such judicial determination of the fair value of the Shares could be based upon factors other than, or in addition to, the price per Share to be paid in the Merger or the market value of the Shares. The value so determined could be more or less than the price per Share to be paid in the Merger. ITEM 9. EXHIBITS. The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION - ----------- ----------- (a)(1) Offer to Purchase dated September 8, 2000 (incorporated by reference to Exhibit (a)(1)(A) to the Schedule TO filed by Parent and Purchaser on September 8, 2000). (a)(2) Form of Letter of Transmittal (incorporated by reference to Exhibit (a)(1)(B) to the Schedule TO filed by Parent and Purchaser on September 8, 2000). (a)(3) Letter from the President and Chief Executive Officer of the Company to the Company's stockholders dated September 8, 2000 (filed herewith). (a)(4) Joint Press Release issued by Parent and the Company on August 31, 2000 (incorporated by reference to the Schedule 14D-9 filed by the Company on August 31, 2000). (a)(5) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(1)(D) to the Schedule TO filed by Parent and Purchaser on September 8, 2000). (a)(6) Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(1)(E) to the Schedule TO filed by Parent and Purchaser on September 8, 2000). (a)(7) Opinion of J.P. Morgan Securities Inc. dated August 30, 2000 (included as Annex I to this Schedule 14D-9). (e)(1) Agreement and Plan of Merger, dated as of August 30, 2000, by and among Parent, Purchaser and the Company (incorporated by reference to Exhibit (d)(1) to the Schedule TO filed by Parent and Purchaser on September 8, 2000). (e)(2) Stockholder Agreement, dated as of August 30, 2000, by and among Parent,. Purchaser, 399 Venture Partners, Inc., Richard M. Klein and John H. Schroeder (incorporated by reference to Exhibit (d)(2) to the Schedule TO filed by Parent and Purchaser on September 8, 2000). (e)(3) Employment Agreement, dated June 2, 1995, between the Company and Richard M. Klein (incorporated by reference to Exhibit 10.11 to the Annual Report on Form 10-K of the Company for the year ended December 31, 1995). (e)(4) Amendment No. 1 to Employment Agreement, dated April 25, 2000, between the Company and Richard M. Klein (incorporated by reference to Exhibit 10.30 to the Amended Quarterly Report on Form 10-Q/A of the Company for the quarter ended June 30, 2000). (e)(5) Employment Agreement, dated November 4, 1998, between the Company and Robert M. Parlman (incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K of the Company for the year ended December 31, 1999). (e)(6) Supplement to Employment Agreement, dated April 28, 2000, between the Company and Robert M. Parlman (incorporated by reference to Exhibit 10.28 to the Amended Quarterly Report on Form 10-Q/A of the Company for the quarter ended June 30, 2000). (e)(7) Employment Agreement, dated October 4, 1999, between the Company and Douglas S. Brown (incorporated by reference to Exhibit 10.21 to the Annual Report on Form 10-K of the Company for the year ended December 31, 1999).
9 10
EXHIBIT NO. DESCRIPTION - ----------- ----------- (e)(8) Supplement to Employment Agreement, dated April 28, 2000, between the Company and Douglas S. Brown (incorporated by reference to Exhibit 10.25 to the Amended Quarterly Report on Form 10-Q/A of the Company for the quarter ended June 30, 2000). (e)(9) Employment Agreement, dated July 15, 1998, between the Company and Steven F. Ladin (incorporated by reference to Exhibit 10.22 to the Annual Report on Form 10-K of the Company for the year ended December 31, 1999). (e)(10) Supplement to Employment Agreement, dated April 28, 2000, between the Company and Steven F. Ladin (incorporated by reference to Exhibit 10.26 to the Amended Quarterly Report on Form 10-Q/A of the Company for the quarter ended June 30, 2000). (e)(11) Employment Agreement, dated July 26, 1984, between the Company and Stephen R. Adler, as supplemented by Supplement to Employment Agreement, dated February 13, 1998, between the Company and Stephen R. Adler, and Supplement to Employment Agreement, dated April 28, 2000, between the Company and Stephen R. Adler (filed herewith). (e)(12) Employment Agreement, dated July 5, 1995, between the Company and John H. Schroeder (incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K of the Company for the year ended December 31, 1995). (e)(13) Supplement to Employment Agreement, dated April 28, 2000, between the Company and John H. Schroeder (incorporated by reference to Exhibit 10.29 to the Amended Quarterly Report on Form 10-Q/A of the Company for the quarter ended June 30, 2000). (e)(14) Executive Bonus Plan (incorporated by reference to the Annual Report on Form 10-K of the Company for the year ended December 31, 1992). (e)(15) Amendment to the Executive Bonus Plan (incorporated by reference to Exhibit 10.32 to the Amended Quarterly Report on Form 10-Q/A of the Company for the quarter ended June 30, 2000). (e)(16) Share Participation Plan, dated June 11, 1990, as amended by Share Participation Plan Amendment No. 1 dated October 30, 1992, and Share Participation Plan Amendment No. 2 dated April 27, 2000 (filed herewith). (e)(17) Amended and Restated 1992 Stock Option Plan, dated April 19, 1996, as amended by First Amendment to Amended and Restated 1992 Stock Option Plan (filed herewith). (e)(18) Amendment No. 2, dated as of August 30, 2000, to the Rights Agreement between the Company and Fleet National Bank, as Rights Agent (incorporated by reference to Exhibit 4(a) to the Registration Statement on Form 8-A/A filed by the Company on September 1, 2000).
10 11 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. SYBRON CHEMICALS INC. By: /s/ Steven F. Ladin --------------------------------------- Name: Steven F. Ladin Title: Vice President, Finance and Chief Financial Officer Dated: September 8, 2000 11 12 ANNEX I JPMORGAN J.P. Morgan Securities Inc. 60 Wall Street New York NY 10260-0060 August 30, 2000 The Board of Directors Sybron Chemicals Inc. Birmingham Road, P.O. Box 66 Birmingham, New Jersey 08011 Attention: Mr. Richard M. Klein President & Chief Executive Officer Ladies and Gentlemen: You have requested our opinion as to the fairness, from a financial point of view, to the stockholders of Sybron Chemicals, Inc. (the "Company") of the consideration proposed to be paid to them in connection with the proposed cash tender offer for the outstanding shares of Common Stock, par value $0.01 (the "Common Stock"), of the Company (the "Offer") by a wholly owned subsidiary of Bayer Corporation (the "Buyer"), followed by a merger of the Company with such subsidiary of the Buyer (the "Merger" and together with the Offer, the "Transaction"). Pursuant to the Agreement and Plan of Merger, dated as of August 30, 2000 (the "Agreement"), among the Company, the Buyer and Project Toledo Acquisition Corp. (the "Merger Subsidiary"), the Merger Subsidiary will make the Offer, the Company will be merged with the Merger Subsidiary and become a wholly-owned subsidiary of the Buyer, and stockholders of the Company will receive for each share of Common Stock held by them consideration equal to $35.00 per share. In arriving at our opinion, we have reviewed (i) the Agreement; (ii) the Stockholder Agreement, dated as of August 30, 2000, among the Buyer, the Merger Subsidiary and certain shareholders of approximately 45% of the Common Stock, in the aggregate; (iii) certain publicly available information concerning the business of the Company and of certain other companies engaged in businesses comparable to those of the Company, and the reported market prices for certain other companies' securities deemed comparable; (iv) publicly available terms of certain transactions involving companies comparable to the Company and the consideration received for such companies; (v) current and historical market prices of the common stock of the Company; (vi) the audited financial statements of the Company for the fiscal year ended December 31, 1999, and the unaudited financial statements of the Company for the period ended June 30, 2000; (vii) certain agreements with respect to outstanding indebtedness or obligations of the Company; (viii) certain internal financial analyses and forecasts 13 JPMORGAN - 2 - prepared by the Company and its management; and (ix) the terms of other business combinations that we deemed relevant. In addition, we have held discussions with certain members of the management of the Company with respect to certain aspects of the Transaction, and the past and current business operations of the Company, the financial condition and future prospects and operations of the Company, the effects of the Transaction on the financial condition and future prospects of the Company, and certain other matters we believed necessary or appropriate to our inquiry. We have visited certain representative facilities of the Company, and reviewed such other financial studies and analyses and considered such other information as we deemed appropriate for the purposes of this opinion. In giving our opinion, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information that was publicly available or was furnished to us by the Company or otherwise reviewed by us, and we have not assumed any responsibility or liability therefor. We have not conducted any valuation or appraisal of any assets or liabilities, nor have any such valuations or appraisals been provided to us. In relying on financial analyses and forecasts provided to us, we have assumed that they have been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of the Company to which such analyses or forecasts relate. We have also assumed that the Offer and the Merger will each have the tax consequences described in discussions with, and materials furnished to us by, representatives of the Company, and that the other transactions contemplated by the Agreement will be consummated as described in the Agreement. We have relied as to all legal matters relevant to rendering our opinion upon the advice of counsel. Our opinion is necessarily based on economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. It should be understood that subsequent developments may affect this opinion and that we do not have any obligation to update, revise, or reaffirm this opinion. We have acted as financial advisor to the Company with respect to the proposed Merger and will receive a fee from the Company for our services. We will also receive an additional fee if the proposed Merger is consummated. J.P. Morgan and its affiliates have, from time to time in the past, provided investment banking and commercial banking services to the Buyer for which they have received customary compensation. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities of the Company or the Buyer for their own account or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities. On the basis of and subject to the foregoing, it is our opinion as of the date hereof that the consideration to be paid to the Company's stockholders in the proposed Transaction is fair, from a financial point of view, to such stockholders. 14 JPMORGAN - 3 - This letter is provided to the Board of Directors of the Company in connection with and for the purposes of its evaluation of the Transaction. This opinion does not constitute a recommendation to any stockholder of the Company as to whether such stockholder should tender its Common Stock in response to the Offer or how such stockholder should vote with respect to the Merger. This opinion may not be disclosed, referred to, or communicated (in whole or in part) to any third party for any purpose whatsoever except with our prior written consent in each instance. This opinion may be reproduced in full in any proxy or information statement mailed to stockholders of the Company but may not otherwise be disclosed publicly in any manner without our prior written approval and must be treated as confidential. Very truly yours, J.P. MORGAN SECURITIES INC. Signed: /s/ J.P. Morgan Securities ------------------------------------------------------------------ 15 ANNEX II SYBRON CHEMICALS INC. BIRMINGHAM ROAD P.O. BOX 66 BIRMINGHAM, NEW JERSEY 08011 INFORMATION STATEMENT PURSUANT TO SECTION 14(f) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND RULE 14f-1 THEREUNDER ------------------------ NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT. NO PROXIES ARE BEING SOLICITED AND YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY. ------------------------ This Information Statement is being mailed on or about September 8, 2000 as a part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") of Sybron Chemicals Inc. (the "Company") to the holders of record of shares of common stock, par value $0.01 per share, of the Company (the "Common Stock" or the "Shares"). You are receiving this Information Statement in connection with the possible election of persons designated by Project Toledo Acquisition Corp. ("Purchaser") to a majority of the seats on the Board of Directors of the Company (the "Board"). Capitalized terms used herein and not otherwise defined herein have the meaning set forth in the Schedule 14D-9. On August 30, 2000, the Company, Bayer Corporation ("Parent") and Purchaser entered into an Agreement and Plan of Merger (the "Merger Agreement") in accordance with the terms and subject to the conditions of which (i) Parent caused Purchaser to commence the Offer for all outstanding Shares at a price of $35.00 per Share, net to the seller in cash, without interest thereon, and (ii) Purchaser will be merged with and into the Company (the "Merger"). As a result of the Offer and the Merger, the Company would become a wholly owned subsidiary of Parent. The Offer is scheduled to expire at 12:00 Midnight, New York City time, on October 5, 2000, unless the Offer is extended in accordance with the Merger Agreement and applicable law. The Merger Agreement provides that, promptly upon the purchase of Shares pursuant to the Offer and from time to time thereafter, Purchaser will be entitled to designate up to such number of directors (the "Purchaser Designees") on the Board as will give Purchaser representation on the Board proportionate to its ownership interest. The Company has agreed that, promptly upon the request of Purchaser, the Company will either increase the size of the Board or secure the resignation of such number of directors as is necessary to enable the Purchaser Designees to be elected to the Board and to cause the Purchaser Designees to be so elected. In addition, the Company has agreed to use its reasonable efforts to cause the Purchaser Designees to constitute the same percentage as is on the Board of (i) each committee of the Board (other than any committee of the Board established to take action pursuant to the Merger Agreement), (ii) each board of directors of each subsidiary of the Company designated by Purchaser and (iii) each committee of each such board. This Information Statement is required by Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1 thereunder. You are urged to read this Information Statement carefully. You are not, however, required to take any action at this time. The information contained in this Information Statement (including the information incorporated by reference) concerning Parent, Purchaser and the Purchaser Designees has been furnished to the Company by Parent, and the Company assumes no responsibility for the accuracy or completeness of such information. GENERAL INFORMATION REGARDING THE COMPANY At the close of business on September 6, 2000, there were 5,738,426 shares of Common Stock outstanding. Each share of Common Stock is entitled to one vote. The Board currently consists of five members. 16 RIGHT TO DESIGNATE DIRECTORS; THE PURCHASER DESIGNEES The Merger Agreement provides that, subject to the requirements of applicable law, promptly upon the purchase by Purchaser of Shares pursuant to the Offer and from time to time thereafter, Purchaser shall be entitled to designate up to such number of directors, rounded up to the next whole number, on the Board as will give Purchaser representation on the Board equal to the product of the number of directors on the Board, after giving effect to such representation, and the percentage that such number of Shares so purchased (or subsequently acquired by Purchaser or any of its affiliates from time to time, in accordance with applicable law, in open market or privately negotiated transactions, at such price or prices as they may determine in their sole discretion) bears to the total number of issued and outstanding Shares, and promptly upon request by Purchaser, the Company shall either increase the size of the Board or secure the resignation of such number of directors as is necessary to enable Purchaser's designees to be so elected. At such times the Company will use its reasonable best efforts to cause individuals designated by Purchaser to constitute the same percentage as is on the Board of (i) each committee of the Board (other than any committee of the Board established to take action pursuant to the Merger Agreement), (ii) each board of directors of each subsidiary of the Company designated by Purchaser and (iii) each committee of each such board. Notwithstanding the foregoing, until the time Purchaser purchases Shares representing a majority of the Company's outstanding voting power on a fully diluted basis, the Company shall use its reasonable efforts to ensure that all of the members of the Board and such boards and committees as of the date hereof who are not employees of the Company and who are not otherwise affiliated with Purchaser shall remain members of the Board and such boards and committees until the Effective Time. Following the election or appointment of the Purchaser Designees and prior to the Effective Time, any amendment of the Merger Agreement or any provisions of the Restated Certificate of Incorporation or By-Laws of the Company which directly or indirectly affects the consummation of the Merger or the terms or the timing thereof, any extension by the Company of the time for the performance of any of the obligations or other acts of Parent or Purchaser or waiver of any of the Company's rights under the Merger Agreement, will require the concurrence of a majority of the directors of the Company then in office who are not designated by Purchaser or otherwise affiliated with Purchaser. Purchaser has informed the Company that it will choose the initial Purchaser Designees from the persons listed below. With respect to the Purchaser Designees, the following table, prepared from information furnished to the Company by Parent, sets forth the name, occupation and age of each such Purchaser Designee. Purchaser has informed the Company that each of the Purchaser Designees listed below has consented to act as a director, if so designated. If necessary, Purchaser may choose additional or other Purchaser Designees, subject to the requirements of Rule 14f-1. It is expected that the Purchaser Designees may assume office at any time following the purchase by Purchaser of a majority of the outstanding Shares pursuant to the Offer, which purchase cannot be earlier than Thursday, October 5, 2000, and that, upon assuming office, the Purchaser Designees will thereafter constitute at least a majority of the Board.
PRESENT PRINCIPAL NAME AGE CITIZENSHIP BUSINESS ADDRESS OCCUPATION/EMPLOYMENT 5 YEAR EMPLOYMENT HISTORY - ---- --- ----------- -------------------- -------------------------- -------------------------- Dr. Ulrich Koemm 49 Germany Bayer AG, 51368 Head of Business Group, Head of Business Group, Leverkusen, Business Group Coatings & April 1998-December 1998, Federal Republic of Colorants, Bayer AG Business Group Inorganics, Germany (April 1999 to Present) Bayer AG; Head of Production, January 1994- March 1998, Production Business Group Inorganic, Bayer AG. Joseph A. Akers 55 USA Bayer Corporation, Executive Vice President, Senior VP, Diagnostics, 100 Bayer Road, Chief Financial Officer, February 1992 to Present, Pittsburgh, PA 15205 Bayer Corporation Bayer Corporation. (April 1999 to Present)
2 17
PRESENT PRINCIPAL NAME AGE CITIZENSHIP BUSINESS ADDRESS OCCUPATION/EMPLOYMENT 5 YEAR EMPLOYMENT HISTORY - ---- --- ----------- -------------------- -------------------------- -------------------------- Dr. Richard Pott 47 Germany Bayer AG, Member of Board of Member of Board of 51368 Leverkusen, Directors of ELEMICA Directors of Bayer Japan Federal Republic of (since August 2000); Ltd. (from March 1997 to Germany Member of Board of April 1999); Member of Directors of Bayer Board of Directors of (Proprietary) Ltd. (since Bayer (China) Ltd. (from April 1999); Member of January 1998 to April Board of Directors of 1999); Member of Board of Chrome International South Directors of Rhein Chemie Africa (Pty) Ltd. (since Rheinau GmbH, Mannheim April 1999); Member of (from March 1997 to April Board of Directors of 1999). DyStar Texilfarben GmbH (since March 1997) Nicholas T. 57 USA Bayer Corporation Executive Vice President, President, Performance Cullen, Jr. 100 Bayer Road Bayer Corporation and Products Division, Bayer Pittsburgh, PA 15205 President, Plastics Corporation (1997 to Division 1998); Senior Vice President, Coatings Raw Materials, Bayer Corporation (1995 to 1996). John L. Williams 55 USA Bayer Corporation Executive Vice President, Senior Vice President, 100 Bayer Road Bayer Corporation, Bayer Corporation (1995 to Pittsburgh, PA 15205 President, Coatings and 1999). Colorants Division, Bayer Corporation (1999 to present) R.D. Fuchs 53 USA Bayer Corporation Executive Vice President, Sarnia Site Manager -- 100 Bayer Road Chief Technology Officer, Sarnia Ontario, Canada, Pittsburgh, PA 15205 Bayer Corporation (March Bayer Inc. (January 1994 1997 to present) to March 1999). E.L. Foote, Jr. 55 USA Bayer Corporation Executive Vice President, Senior Vice President 100 Bayer Road Industrial Chemicals Manufacturing & Pittsburgh, PA 15205 Division, Bayer Technology, Bayer Corporation (1997 to Corporation (1995 to present) 1997).
3 18 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT PRINCIPAL STOCKHOLDERS The following table sets forth certain information regarding the holdings of each stockholder who was known to the Company to be the beneficial owner, as defined in Rule 13d-3 under the Securities Exchange Act of 1934, of more than 5% of the Company's Common Stock at the close of business on September 6, 2000. Each of the persons named in the table below as beneficially owning the shares set forth therein has sole voting power and sole investment power with respect to such shares.
AMOUNT AND NATURE OF PERCENT OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK* - ---------------- -------------------- ------------- 399 Venture Partners, Inc................................... 2,025,000(1) 35.29 Citibank, N.A. Citicorp 399 Park Avenue New York, NY 10043 Mario Joseph Gabelli........................................ 1,139,100(2) 19.85 Gabelli Associates Fund Gabelli Performance Partnership One Corporate Center Rye, NY 10580-1434 Richard M. Klein............................................ 499,042(3) 8.7 P.O. Box 66 Birmingham, NJ 08011
- --------------- * Based on outstanding shares as of September 6, 2000. (1) Based on a Schedule 13G/A, filed with the Securities and Exchange Commission (the "Commission") as of February 14, 2000, which states that the address of each of 399 Venture Partners, Inc. ("399 Venture"), Citibank, N.A. ("Citibank") and Citicorp is 399 Park Avenue, New York, New York 10043; that 399 Venture is the record and beneficial owner of 2,025,000 shares of Common Stock and has sole ownership of and voting and dispositive powers over such shares; that 399 Venture is a wholly owned subsidiary of Citibank; that Citibank is a wholly owned subsidiary of Citicorp; and that Citibank and Citicorp own no shares of Common Stock directly. (2) Based on a Schedule 13D/A, filed with the Commission as of April 21, 1999 by Gamco Investors, Inc. ("GAMCO"), Gabelli Funds, LLC. ("GFL"), Gabelli Associates Fund ("Gabelli Associates"), Gabelli International Limited ("GIL"), Gabelli Performance Partnership L.P. ("GPP"), Gabelli Advisers, Inc. ("Gabelli Advisers"), Gabelli Foundation, Inc. ("Foundation"),Gabelli Funds, Inc. ("GFI"), Gabelli Asset Management, Inc. ("GAMI"), Marc J. Gabelli and Mario J. Gabelli, which states that each of the following entities or individuals has sole voting and dispositive power over the number of shares of the Company's Common Stock listed next to its or his name: GAMCO -- 793,100 shares (13.83% of Common Stock outstanding), GFL -- 263,000 shares (4.59% of Common Stock outstanding), Gabelli Associates -- 0 shares (0.0% of Common Stock outstanding), GIL -- 42,000 shares (0.73% of Common Stock outstanding), GPP -- 33,400 shares (0.58% of Common Stock outstanding), Gabelli Advisers -- 5,600 shares (0.1% of Common Stock outstanding), Foundation -- 2,000 shares (.03% of Common Stock outstanding), GFI -- 0 shares (0.0% of Common Stock outstanding), Marc J. Gabelli -- 0 shares (0.0% of Common Stock outstanding), GAMI -- 0 shares (0.0% of Common Stock outstanding), Mario J. Gabelli -- 0 shares (0.0% of Common Stock outstanding); that the address of GFI, GAMI, GAMCO, Gabelli Advisers and Gabelli Associates is One Corporate Center, Rye, New York, 10580-1434, the address of Foundation is 165 West Liberty Street, Reno, Nevada 89501, the address of GPP is 401 Theodore Fremd Ave., Rye, New York 10580, and the address of GIL is c/o MeesPicrson (Cayman) Limited, British American Centre, Dr. Roy's Drive -- Phase 3, George 4 19 Town, Grand Cayman, British West Indies; that the reporting persons do not admit that they constitute a group; that Mario J. Gabelli is deemed to have beneficial ownership of the shares owned beneficially by each of the reporting persons other than Marc J. Gabelli; and that GFI and GAMI are deemed to have beneficial ownership of the shares beneficially owned by each of the reporting persons other than Mario J. Gabelli, Marc J. Gabelli and the Foundation. (3) Shares issuable pursuant to options exercisable within 60 days of September 6, 2000 are deemed to be beneficially owned; accordingly, the amount beneficially owned by Richard M. Klein includes 22,500 shares of Common Stock underlying options held by him. MANAGEMENT OWNERSHIP The following table sets forth certain information regarding the Common Stock beneficially owned by the Company's Chief Executive Officer, by each director of the Company, by each of the Company's three other most highly compensated executive officers and by all directors and executive officers of the Company as a group, at the close of business on September 6, 2000. Each of the persons named in the table below as beneficially owning the shares set forth therein has sole voting power and sole investment power with respect to such shares, unless otherwise indicated.
AMOUNT PERCENT OF NAME BENEFICIALLY OWNED(1) COMMON STOCK - ---- --------------------- ------------ Richard M. Klein............................................ 499,042 8.7 Kirk P. Pond................................................ 4,400 * Fred P. Rullo, Jr. ......................................... 4,400 * Richard Mayberry............................................ 0 * John H. Schroeder........................................... 84,802 1.5 Steven F. Ladin............................................. 15,662 * Robert M. Parlman........................................... 8,764 * Douglas S. Brown............................................ 0 * All directors and executive officers a group (11 persons)... 658,919 11.3
- --------------- * Represents less than 1% of the Company's outstanding shares of Common Stock. (1) Shares issuable pursuant to options exercisable within 60 days of September 6, 2000 are deemed to be beneficially owned; accordingly, the amount beneficially owned includes the following number of Shares of Common Stock underlying options held by the following individuals: Richard M. Klein 22,500 shares, Kirk. P. Pond 4,400 shares, Fred P. Rullo 2,000 shares, John H. Schroeder 20,700 shares, Steven F. Ladin 10,000 shares, and Robert M. Parlman 5,000 shares; and all directors and executive officers as a group 92,775 shares. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act, and the regulations thereunder, require the Company's officers and directors and persons who own more than ten percent of a registered class of the Company's equity securities (collectively, the "reporting persons") to file reports of ownership and changes in ownership with the Commission and to furnish the Company with copies of these reports. Based on the Company's review of the copies of these reports received by it, and written representations received from reporting persons, the Company believes that all filings required to be made by the reporting persons during the 2000 fiscal year and the fiscal year ended December 31, 1999 were made on a timely basis. 5 20 DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY The executive officers and directors of the Company, their ages and their positions are set forth below.
NAME AGE POSITIONS WITH COMPANY - ---- --- ---------------------- Richard M. Klein..................... 62 President, Chief Executive Officer and Director Stephen R. Adler..................... 50 Vice President, Human Resources Doug Brown........................... 46 President, Ruco Polymer Intermediates Peter de Bruijn...................... 51 Executive Vice President, Textile Chemicals and Managing Director, Europe Steven F. Ladin...................... 53 Vice President, Finance and Chief Financial Officer Robert M. Parlman.................... 50 President, Textile Chemicals John H. Schroeder.................... 49 Executive Vice President Environmental Products and Services and Director Richard Mayberry..................... 47 Director Kirk P. Pond......................... 55 Director Fred P. Rullo, Jr.................... 59 Director
Dr. Klein has been a director of the Company and its President and Chief Executive Officer since its inception in 1987. Since 1969 and until July 1987, Dr. Klein served in various managerial positions with the Sybron Chemical Group, becoming its senior executive officer in 1978. He holds a Ph.D. in Chemistry from the University of Illinois. Dr. Klein currently serves as Chairman of the Board of Governors of the Synthetic Organic Chemicals Manufacturers Association (SOCMA), and is a director of Mannington Mills, Inc. He currently serves through appointment by Governor Christine Todd Whitman on the Board of the Commerce and Economic Growth Commission of New Jersey and as a member of the Prosperity New Jersey Commission and the New Jersey Economic Development Site Task Force. His term as director will expire in 2001. Mr. Adler has been the Vice President, Human Resources for the Company and the Sybron Chemical Group since 1984. Mr. Brown joined the Company in December 1999 as President, Ruco Polymer Intermediates. Prior to joining the Company, he was Vice President for the Structural Composites and Electronic Materials Business segment in Ciba Specialty Chemical's Polymer Division. Mr. Brown was employed with Ciba Specialty Chemicals from 1987 to December 1999. Prior to employment with Ciba Specialty Chemicals, Mr. Brown held positions with Montedison USA, C.H. Kline and Co. and the International Nickel Corp. Mr. de Bruijn has served in various managerial positions within the Company and the Sybron Chemical Group since January 1972. In January 1995, he was promoted to Managing Director Europe Division with managerial responsibility for the Company's textile chemical business in Europe and in 1998 he was appointed Executive Vice President, Textile Chemicals. Mr. Ladin joined the Company in August 1998 as Vice President, Finance and Chief Financial Officer. He also holds the positions of Treasurer and Corporate Secretary. Prior to joining the Company, he was Controller of The DuPont Merck Pharmaceutical Company, which he joined on it's creation in 1991 after 14 years with E.I. DuPont Company, Inc., a leading international chemical company. Dr. Parlman joined the Company in December 1998 as President, Textile Chemicals. Prior to joining the Company, he served as Vice President, General Manager for a Zeeland Chemicals Inc. subsidiary, and Vice President-Business Development of Cambrex Corporation. Prior to that, he was Vice President, Tretolite Division, Petrolite Corporation, with international responsibility for their oil field specialty chemicals business. Mr. Schroeder has served in various managerial positions within the Company since 1983 and has been a director of the Company since 1992. He was promoted to Executive Vice President Environmental Products and Services in March 1996 with responsibility for all business activities for the Company's Environmental Products and Services segment. His term as director will expire in 2002. 6 21 Mr. Mayberry has been a director of the Company since June, 2000. He is currently, and has been for the past five years, a Managing Director of Citicorp Capital Investors, Ltd. Mr. Mayberry serves on the board of directors of American Commercial Lines LLC, Brunner Mond Group Plc. and various private companies. His term as a Director will expire in 2001. Mr. Pond has been a director of the Company since May 1998 and has been Chairman, President and CEO of Fairchild Semiconductor Corporation of Portland, Maine and a member of the office of the President of National since 1994. He also served in various management positions for the combined National and Fairchild Logic businesses since 1984. Mr. Pond currently serves as Chairman of Fairchild's Board of Directors. His term as a director will expire at the 2000 Annual Meeting of Shareholders. Mr. Rullo has been a director of the Company since February 1999. He is currently Vice Chairman of Naxcor Biotech. He also was Chairman, President and CEO of Freedom Chemical Company. Prior to that he was President of ABB Combustion Systems and Services, Executive Vice President and Director of Lyondell Petrochemical Company, Senior Vice President of Arco Chemical Company and was a director of Rexene Corporation. Mr. Rullo is currently Chairman and CEO of Penn Specialty Chemicals, Inc. and is currently director of Pro Mach, Inc., Naxcor, Pecora Corporation and Carolina Best Friend Pet Care, LLC. His term as a director will expire at the 2000 Annual Meeting of Shareholders. BOARD OF DIRECTORS AND COMMITTEES The business of the Company is managed under the direction of its Board of Directors. The Board meets on a regularly scheduled basis during the Company's fiscal year to review significant developments affecting the Company and to act on matters requiring Board approval. During the year ended December 31, 1999, the Board of Directors met four times. During 1999, each of the directors was in attendance at no less than 75% of the aggregate number of meetings of the Board of Directors and the committees on which he served. The Company has the following standing committees of the Board of Directors whose present members are as identified below: - Audit and Compensation Committee. The Audit and Compensation Committee (the "Committee") reviews and recommends to the Board of Directors the independent auditors to be selected to audit the books of the Company and the proposed scope of the audit to be performed by such independent auditors and reviews such audit, including the opinion and any comments or recommendations of the independent auditors. The Committee also reviews with the independent auditors and with the financial management of the Company the adequacy and effectiveness of the internal controls of the Company and reviews the practices and procedures adopted by the Company to ensure compliance with the applicable laws and regulations. In addition, the Committee approves the compensation of the Executive Officers of the Company and serves as the Committee described in the Company's 1992 Stock Option Plan to operate and administer the Plan solely with respect to persons who are Principal Officers as defined therein. The Committee met two times during 1999. The current members of the Committee are Richard Mayberry (Chairman), Kirk P. Pond, and Fred P. Rullo, Jr. - Stock Option Plan Committee. The Stock Option Plan Committee serves as the Committee described in the Company's 1992 Stock Option Plan to operate and administer the Plan solely with respect to persons who are not Principal Officers as defined therein. The Stock Option Plan Committee met one time during 1999. Its members are Richard M. Klein (Chairman) and John H. Schroeder. - Executive Committee. The Executive Committee was established to perform such duties as the Board of Directors from time to time may direct. The Executive Committee did not meet during 1999. Its members are Richard M. Klein (Chairman), Richard Mayberry and John H. Schroeder. COMPENSATION OF DIRECTORS Each member of the Board of Directors who is not an employee of the Company is automatically granted options to acquire 4,000 shares of common stock on the first business day of each year at the current market price. In addition, during 1999 directors of the Company who were not employees or affiliates of Citicorp Investments Inc. were paid a standard fee of (a) $750 for each meeting of the Board of Directors that such director attends, and 7 22 (b) $500 for each meeting of a committee of the Board of Directors that such Director attends. Such Directors are also entitled to reimbursement of reasonable travel expenses incurred while attending meetings of the Board of Directors or any of its committees. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table summarizes certain information for each of the last three fiscal years concerning the cash compensation paid by the Company, as well as certain other compensation paid to or accrued for 1999, 1998 and 1997, to the Company's Chief Executive Officer and to each of the Company's other four most highly compensated executive officers:
ANNUAL COMPENSATION LONG TERM COMPENSATION --------------------------------- --------------------------------- OTHER RESTRICTED ANNUAL STOCK SECURITIES LTIP ALL OTHER COMPENSA- AWARD(S) UNDERLYING PAYOUTS COMPENSA- NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) TION($) ($) OPTIONS ($) TION($)(1) --------------------------- ---- --------- -------- --------- ---------- ---------- ------- ---------- Richard M. Klein................ 1999 291,900 133,107(2) -- -- -- -- 32,320 President and Chief 1998 286,039 96,391(3) -- -- -- -- 45,154 Executive Officer 1997 272,500 339,736(4) -- -- -- -- 36,416 Anthony F. Forgione............. 1999 202,462 64,777(2) -- -- -- -- 17,252 President, Polymer 1998 80,769 7,580(3) -- -- -- -- 17,198 Intermediates 1997 * * -- -- -- -- * Robert M. Parlman............... 1999 200,000 45,378(2) -- -- -- 14,335 President, Textile 1998 16,667 -- -- -- -- -- 713 Chemicals 1997 * -- -- -- -- -- * Steven F. Ladin................. 1999 177,190 56,169(2) -- -- -- -- 56,498 Vice President, Finance and 1998 76,282 7,051(3) -- -- -- -- 9,156 Chief Financial Officer 1997 * * -- -- -- -- * John H. Schroeder............... 1999 175,350 63,616(2) -- -- -- -- 18,608 Executive Vice President, 1998 175,449 41,877(3) -- -- -- -- 21,727 Environmental Products and 1997 166,055 141,256(4) -- -- -- -- 18,968 Services
- --------------- * Not employed by the Company. (1) Includes (with respect to amounts applicable to 1999) contributions by the Company to the named executives' pension and 401(k) plans ("PLANS"), as well as car allowances ("AUTO"), life insurance premiums ("LIFE"), supplemental executive retirement plan contributions "SERP"), relocation reimbursement ("MOVING") and income tax preparation ("TAX") paid by the Company for the benefit of the named executives: Richard M. Klein $13,365 (PLANS), $2,506 (AUTO), $16,449 SERP), $905 (TAX); John H. Schroeder $9,760 (PLANS), $5,879 (AUTO), $290 (LIFE), $2,679 (SERP); Anthony F. Forgione $7,200 (PLANS), $7,800 (AUTO), $2,252 (SERP); Steven F. Ladin $6,761 (PLANS), $7,336 (AUTO), $1,772 (SERP), $469 (LIFE), $40,160 (MOVING); and Robert M. Parlman $6,400 (PLANS), $5,045 (AUTO), $290 (LIFE), $2,600 (SERP). (2) Consists of bonuses earned during 1999 and paid in 2000 pursuant to the Company's Executive Bonus Plan (the "Executive Bonus Plan"). These bonuses were paid in the form of Common Stock and cash in the following amounts: Richard M. Klein 7,046 shares of Common Stock and $27,417 cash, Anthony F. Forgione 3,443 shares of Common Stock and $13,132 cash, Robert M. Parlman 3,025 shares of Common Stock and $3 cash, Steven F. Ladin 3,098 shares of Common Stock and $9,699 cash and John H. Schroeder 3,059 shares of Common Stock and $17,731 cash. The closing price of the Common Stock on the date the Executive Bonus Plan shares were issued was $15.00. For a description of the determination of the number of shares issued see: "Report of the Audit and Compensation Committee on Executive Compensation". 8 23 (3) Consists of bonuses earned during 1998 and paid in 1999 pursuant to the Executive Bonus Plan. These bonuses were paid in the form of Common Stock and cash in the following amounts: Richard M. Klein 7,711 shares of Common Stock and $3 cash, John H. Schroeder 3,350 shares of Common Stock and $2 cash, Steven F. Ladin 564 shares of Common Stock and $1 cash and Anthony F. Forgione 0 shares of Common Stock and $7,580 cash. The closing price of the Common Stock on the date the Executive Bonus Plan shares were issued was$12.50. For a description of the determination of the number of shares issued see: "Report of the Audit and Compensation Committee on Executive Compensation". (4) Consists of bonuses earned during 1997 and paid in 1998 pursuant to the Executive Bonus Plan. These bonuses were paid in the form of Common Stock and cash in the following amounts: Richard M. Klein 6,856 shares of Common Stock and $108,346 cash and John H. Schroeder 2,639 shares of Common Stock and $52,190 cash. The closing price of the Common Stock on the date the Executive Bonus Plan shares were issued was $33.75. For a description of the determination of the number of shares issued see: "Report of the Audit and Compensation Committee on Executive Compensation". STOCK OPTION GRANTS IN LAST FISCAL YEAR No stock options were granted to the Chief Executive Officer and the four most highly compensated other executive officers of the Company during 1999. The Company did not grant any stock appreciation rights ("SARs") during 1999. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES None of the Company's executive officers exercised any of their stock options during 1999. The Company does not have any outstanding SARs.
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY SHARES OPTIONS AT FY-END (#) OPTIONS AT FY-END ($) ACQUIRED ON VALUE ---------------------------- ---------------------------- NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ---- ----------- -------- ----------- ------------- ----------- ------------- Richard M. Klein.......... 0 0 19,800 10,200 -- -- Robert M. Parlman......... 0 0 5,000 20,000 -- -- Steven F. Ladin........... 0 0 5,000 20,000 -- -- John Schroeder............ 0 0 18,000 9,000 -- --
REPORT OF THE AUDIT AND COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION The compensation policies adopted by the Audit and Compensation Committee (the "Committee") are designed to attract and retain executives capable of leading the Company to meet its business objectives, and to motivate the Company's executives to enhance long term shareholder value. The objectives of the Company's compensation program are to: - attract, retain and motivate key executive talent; and - provide rewards that are closely linked to Company performance; and - align the interests of the Company's key employees with those of its stockholders through potential stock ownership. The Committee applies these objectives to executive officers and key employees through the availability of performance based cash and stock incentive opportunities and stock option grants. Executive officer compensation programs have short-term and longer term components. Short-term components include base salary and annual bonus under the stockholder approved Executive Bonus Plan. The longer term component consists of stock option awards under the 1992 Stock Option Plan and the stock award feature of the annual bonus plan as described below. 9 24 Salaries. The Committee sets salaries for the Company's executive officers based upon the Committee's assessment of the performance of each officer and the Committee's understanding of executive compensation practices at similar specialty chemical companies. The Committee uses industry comparative compensation information as a general reference, however, rather than as a basis for setting specific salary amounts. Bonuses. Bonus awards for executive officers, which constitute a significant portion of an executive's overall compensation, are determined in accordance with the Company's Executive Bonus Plan. The Executive Bonus Plan provides for awards to executives based on meeting operating profit growth targets. Under the Executive Bonus Plan, the bonus payable to certain executive officers for any given year is based on the operating profit for that year versus targets related to growth over the preceding year's operating profit as well as overall growth of 12% per year in operating profit. The basic bonus formula in the Executive Bonus Plan provides for payments ranging from 0% to 78% of the executive's base salary, depending on the executive's salary grade level and on the level of operating profit attained in relation to the targets, subject to certain adjustments based on the Company's cash flow performance. In addition, executive officers may be entitled to a supplemental bonus if operating profit exceeds the maximum target level. Dr. Klein and Messrs. Adler, Ladin and Schroeder received 1999 bonuses based on the executive officer basic bonus provisions of the Executive Bonus Plan. Each received the same percentage payout relative to their grade level, in accordance with the formula. Dr. Parlman and Mr. de Bruijn received their 1999 bonuses under alternative bonus plans based primarily on the performance of their business areas as well as overall Company results, in accordance with the formula. Dr. Klein and Messrs. Adler, Ladin and Schroeder received 100% of their 1999 Projected Target bonus in Common Stock in accordance with the terms of the Executive Bonus Plan. Dr. Parlman and Mr. de Bruijn, respectively, received 73% and 88% of their Projected Target bonus, which was paid in Common Stock. The number of shares of Common Stock was based on each executive officer's 1999 Projected Target (as defined in the Executive Bonus Plan), at a pre-established historical price. This price was $16.00 for Dr. Klein and Messrs. Adler, de Bruijn and Schroeder, $14.875 for Dr. Parlman and $15.125 for Mr. Ladin. The actual amount of each executive officer's stock bonus for 1999 is based on the February 28, 2000 trading price of $15.00 per share, which was 1% higher than the $14.875 price noted above (Dr. Parlman), 1% lower than the $15.125 price noted above (Mr. Ladin) and 6% lower than the $16.00 price noted above (Dr. Klein, Mr. Adler, Mr. de Bruijn and Mr. Schroeder), and is used to calculate the number of shares payable under the Executive Bonus Plan. In 1999 Drs. Klein and Parlman and Messrs. Adler, Ladin, de Bruijn, and Schroeder all received merit increases in base salary on their salary review date. AUDIT AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS Richard Mayberry (Chairman) Kirk P. Pond Fred P. Rullo, Jr. EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS Dr. Klein (President and Chief Executive Officer) is employed pursuant to an Employment Agreement dated June 2, 1995 with the Company, as amended by Amendment No. 1 to Employment Agreement dated April 25, 2000 with the Company (collectively, the "Klein Agreement"). The Klein Agreement provides for an initial term of employment, which expired on December 31, 1996, and for successive one year renewal periods subject to termination as provided therein. The Klein Agreement calls for compensation, benefits and stock options to be paid to Dr. Klein as determined by the Audit and Compensation Committee of the Company's Board of Directors. The Klein Agreement also provides that, in the event of a failure of the Company to obtain the assumption of the obligation to perform the Klein Agreement by any successor upon a change in control (as defined in the Klein Agreement), or if within eighteen months after any change in control, Dr. Klein's employment under the Klein 10 25 Agreement terminates, Dr. Klein shall be entitled, within 30 days after his termination, to a severance payment equal to three times his annual base salary as then in effect, plus three times the average incentive compensation awarded to Dr. Klein during the preceding calendar years, plus one-half of Dr. Klein's base salary as then in effect in lieu of further benefits and perquisites being provided by the Company to Dr. Klein. The value of each incentive award shall be determined in accordance with the provisions of Section 7(g)(4) of the Company's Executive Bonus Plan. To the extent all or a portion of Dr. Klein's incentive compensation awarded during the preceding three years was paid in shares of common stock, the portion of the amount payable to Dr. Klein attributable to such stock awards shall be calculated by multiplying (a) the average number of shares awarded to him during such preceding three years, by (b) the fair market value of the Company's shares as of the change in control. In addition, Dr. Klein has the right to surrender to the Company for cancellation all or any part of his options to purchase Common Stock of the Company in exchange for an amount equal to the difference between the option prices for the shares surrendered and the higher of (a) the fair market value of the shares (determined to be the mean between the highest and lowest price for the shares traded on the American Stock Exchange on the last trading day preceding the day of surrender), or (b) the highest price per share offered to the Company's shareholders in any tender or exchange offer which led to the change in control. In the event any amounts payable under the Klein Agreement and under any other plan, agreement or arrangement by which Dr. Klein is to receive payments in the nature of compensation from the Company constitute "excess parachute payments" as that term is defined for purposes of Section 280G of the Internal Revenue Code of 1986, as amended, and Treasury Regulations promulgated pursuant thereto, Dr. Klein shall be entitled to receive additional cash payments such that, after payment of all federal excise taxes on the excess parachute payments and the additional cash payments, he will have a net amount equal to the amount he would have received under the terms of the Klein Agreement and under any other plan, agreement or arrangement pursuant to which he is to receive payments in the nature of compensation from the Company (but not including the additional cash payments) if no portion of such payments and/or benefits were treated as excess parachute payments for purposes of Internal Revenue Code Section 280G. The initial determination of whether an additional cash payment is required and the amount thereof shall be made by the Company's regularly engaged certified public accountants. The Klein Agreement subjects Dr. Klein to confidentiality obligations and certain restrictions on competing with and soliciting customers of the Company for a period of one year following termination of the Klein Agreement. Dr. Parlman (President, Textile Chemicals) is employed pursuant to an Employment Agreement dated November 4, 1998 with the Company, as supplemented by a Supplement to Employment Agreement dated April 28, 2000 with the Company (collectively, the "Parlman Agreement"). The Parlman Agreement provides for a base salary of $200,000 and makes Dr. Parlman eligible for an annual executive bonus based on his businesses' financial performance versus targets. Upon joining the Company, Dr. Parlman received options for 25,000 shares of Common Stock. He is also eligible to participate in the Company's medical, dental, group insurance and other executive benefit plans. Unless terminated for cause (as defined in the Parlman Agreement), Dr. Parlman is entitled to a minimum termination payment of 12 months' salary. As part of the Parlman Agreement, Dr. Parlman agreed not to disclose confidential information or trade secrets of the Company at any time, and he agreed to a non-interference covenant which expires eighteen months after the termination of his employment. The Parlman Agreement also provides that, in the event of a change in control, if Dr. Parlman's employment terminates without cause any time prior to the first anniversary of the date of the change in control, he shall be entitled to a lump sum payment, payable no later than 30 days after his employment with the Company so terminates, equal to the sum of the following: (a) two times his annual base salary in effect on the change in control date, plus (b) his target bonus (as defined in the Company's Executive Bonus Plan) for the year in which his termination occurs prorated for the number of months of service during that year prior to the termination, plus (c) his full target bonus for each of the two years following the year in which his termination occurs. If Dr. Parlman's employment terminates without cause on or after the first anniversary of the date of the change in control, he will be entitled to a lump sum payment, payable no later than 30 days after his employment with the Company so terminates, equal to the sum of the following: (x) one time his annual base salary in effect on the change in control date, plus (y) his target bonus for the year in which termination occurs, prorated for the number 11 26 of months of service during that year prior to the termination, plus (z) his full target bonus for the year following the year in which termination occurs. Mr. Ladin (Vice President, Finance and Chief Financial Officer) is employed pursuant to an employment agreement dated July 15, 1998 with the Company, as supplemented by a Supplement to Employment Agreement dated April 28, 2000 with the Company (collectively, the "Ladin Agreement"). The Ladin Agreement pays Mr. Ladin a base salary of $175,000 per year and makes him eligible for the Company's Executive Bonus Program. Upon joining the Company, Mr. Ladin received options for 25,000 shares of the Company's Common Stock. Under the Ladin Agreement, he is eligible for the Company's hospitalization, dental, group insurance, savings and thrift, pension, and other executive benefit plans. He also has use of a Company car, including gas, maintenance, and insurance at Company expense. Unless terminated for cause (as defined in the Ladin Agreement) his minimum termination payment is six months' salary. As part of the Ladin Agreement, Mr. Ladin agreed not to disclose confidential information or trade secrets of the Company at any time, and he is subject to a non-interference covenant which expires eighteen months after the termination of his employment. The Ladin Agreement contains change in control provisions identical to those found in the Parlman Agreement described above. Mr. Steven R. Adler (Vice President, Human Resources) is employed pursuant to an Employment Agreement dated July 26, 1984 with the Company as supplemented by a Supplement to Employment Agreement dated February 13, 1998 with the Company, and a Supplement to Employment Agreement dated April 28, 2000 with the Company (collectively, the "Adler Agreement"). Under the Adler Agreement, Mr. Adler is eligible for the Company's Executive Bonus Program. In addition he is eligible to participate in the Company's hospitalization, dental, group insurance, vacation and employee pension plans. The Adler Agreement contains change in control provisions identical to those found in the Parlman agreement described above. Mr. Douglas S. Brown (President, Ruco Polymer Intermediates) is employed pursuant to an Employment Agreement dated October 4, 1999 with the Company, as supplemented by a Supplement to Employment Agreement dated April 28, 2000 with the Company (collectively, the "Brown Agreement"). Under his agreement, Mr. Brown receives a base salary of $210,000 per year and is eligible for the Company's Executive Bonus Plan. Upon joining the Company, Mr. Brown received a sign-on payment of $10,000 and options for 25,000 shares of the Company's Common Stock. Pursuant to the Brown Agreement, Mr. Brown is eligible to participate in the Company's medical, dental, group insurance, savings and thrift, and other executive benefit plans. He also has use of a Company car, including gas, maintenance and insurance at Company expense. The Brown Agreement contains change in control provisions identical to those found in the Parlman agreement described above. Mr. John H. Schroeder (Executive Vice President, Environmental Products and Services) is employed pursuant to an Amended and Restated Employment Agreement dated July 5, 1995, as supplemented by a Supplement to Employment Agreement dated April 28, 2000 (collectively, the "Schroeder Agreement"). The Schroeder Agreement provides that in the event the Company disposes of substantially all of the assets of, spins off, or otherwise sells its Ion Exchange Business while Mr. Schroeder is the executive within the Company directly responsible for the Ion Exchange Business, or within three months after his employment with the Company terminates without cause (as defined in the Schroeder Agreement), and he is not offered comparable employment (as defined in the Schroeder Agreement) by the successor owner of the Ion Exchange Business he will be entitled to be employed by the Company for a period of two years after the divestiture with remuneration, benefits and responsibilities comparable to those earned prior to the divestiture, or, at the Company's option, he will be entitled to receive from the Company for a period of two years after the divestiture, payments equal to his base salary plus target bonus at the time of the divestiture. If he is offered comparable employment by the successor but his employment terminates prior to the second anniversary of the divestiture without cause he will be entitled to be employed by the Company for the balance of such two-year period on terms and conditions constituting comparable employment, or, at the Company's option, he will be entitled to receive from the Company for the balance of such two-year period payments equal to his base salary plus target bonus at the time of the divestiture. In the event of the sale or other disposition of the Company as a whole, the Schroeder Agreement contains change in control provisions identical to those contained in the Parlman Agreement described above. 12 27 STOCK PERFORMANCE GRAPH The following graph sets forth the cumulative total stockholder return on the Common Stock from December 31, 1994 through December 31, 1999, as compared to the returns of the Standard and Poor's Specialty Chemicals Stock Index and Standard and Poor's Small Cap 600 Index for the same period. The graph assumes $100 was invested on December 31, 1994 in the Company's Common Stock and in each of the Standard and Poor's indicies and assumes the reinvestment of dividends in each of the Standard and Poor's indices. COMPARISON OF CUMULATIVE TOTAL RETURNS [LINE GRAPH]
SYBRON CHEMICALS S&P SMALL CAP 600 S&P SPECIALTY CHEMICALS ---------------- ----------------- ----------------------- 12/94 100 100 100 12/95 69 129 129 12/96 100 155 138 12/97 216 192 169 12/98 87 188 135 12/99 76 210 165
13 EX-99.A.3 2 w40203ex99-a_3.txt LETTER FROM PRESIDENT AND CEO 1 Exhibit (a)(3) [SYBRON CHEMICALS INC. LOGO] September 8, 2000 Dear Stockholder: On behalf of the Board of Directors of Sybron Chemicals Inc., I am writing to inform you that, on August 30, 2000, Sybron Chemicals Inc. entered into an Agreement and Plan of Merger (the "Merger Agreement") with Bayer Corporation and its subsidiary Project Toledo Acquisition Corp. Pursuant to the Merger Agreement, Project Toledo Acquisition Corp. has today commenced a cash tender offer for all of the outstanding shares of Sybron Chemicals Inc. common stock, including the associated preferred share purchase rights, at a price of $35.00 per share, net to the seller in cash, subject to the terms and conditions of the Offer to Purchase accompanying this letter. The Merger Agreement provides that, following the tender offer, Project Toledo Acquisition Corp. will merge with Sybron Chemicals Inc. and any remaining shares of Sybron Chemicals Inc. common stock (other than those owned by Sybron Chemicals Inc., Bayer Corporation and its subsidiaries and stockholders of Sybron Chemicals Inc. who exercise appraisal rights under Delaware law) will be converted into the right to receive the same price paid in the tender offer. At a meeting on August 30, 2000, the Sybron Chemicals Inc. Board of Directors unanimously (i) determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the tender offer and the merger, are fair to, and in the best interests of, the Sybron Chemicals Inc. stockholders, (ii) approved, adopted and declared advisable the Merger Agreement and (iii) resolved to recommend that Sybron Chemicals Inc. stockholders accept the tender offer and tender their shares of Sybron Chemicals Inc. common stock pursuant to the tender offer and, if applicable, approve and adopt the Merger Agreement and the transactions contemplated thereby. In arriving at its recommendation, the Board gave careful consideration to the factors described in the enclosed tender offer materials and Sybron Chemicals Inc.'s Solicitation/Recommendation Statement on Schedule 14D-9. Among the factors considered by the Board in evaluating the tender offer and the merger was the opinion dated August 30, 2000 of J.P. Morgan Securities Inc., Sybron Chemicals Inc.'s financial advisor, to the effect that as of such date and based upon, and subject to certain matters stated in such opinion, the consideration to be paid to the Sybron Chemicals Inc. stockholders pursuant to the tender offer and the merger was fair to such stockholders (other than Bayer Corporation and its affiliates) from a financial point of view. The opinion contains a description of the procedures followed, matters considered and limitation on the review undertaken by J.P. Morgan in rendering its opinion. The written opinion of J.P. Morgan is attached as Annex I to the Schedule 14D-9. You should read the opinion carefully and in its entirety. Enclosed for your consideration are copies of the Offer to Purchase and other tender offer materials and Sybron Chemicals Inc.'s Solicitation/Recommendation Statement on Schedule 14D-9, which are being filed today with the Securities and Exchange Commission. You should read these documents carefully and in their entirety. Sincerely, /s/ Richard M. Klein Richard M. Klein President and Chief Executive Officer EX-99.E.11 3 w40203ex99-e_11.txt EMPLOYMENT AGREEMENT 1 Exhibit (e)(11) July 26, 1984 PRIVATE & CONFIDENTIAL Mr. Stephen R. Adler 601 Roberts Lane Marlton, N.J. 08053 Dear Steve: It is a pleasure to offer you the position of Vice President - Human Resources with the America Division of Sybron Chemicals Inc. Your salary is to be $50,000 per year. You will be eligible for our Executive Bonus Program starting January 1, 1985. That program at your entry grade level carries an annual target award of 18% of' your salary with the actual award ranging from 0 to 200% of target, depending on how you, the Division and the Chemical Company achieve the objectives. You will be reporting to the undersigned, and your employment with us will commence on September 4, 1984. The general conditions of your employment with Sybron Chemicals Inc. will be as follows: 1. Your responsibilities include but are not limited to those described in the attached Job Description. 2. In the case of field trips on the business of the Company, your reasonable and necessary vouchered expenses will be paid by us in accordance with our expense policy. 3. You will be eligible to participate in our hospitalization, dental, group insurance, vacation and employee pension plans in accordance with our current company policy as it may change from time to time. 4. Our standard company policies will prevail with respect to termination of employment. 5. This offer is contingent on your undergoing and providing us with the results of a pre-employment general physical examination, including chest X-ray, which can be done by your own doctor, at our expense. We are enclosing an appropriate 2 medical form. I would also appreciate your completing the enclosed application form for our records. 6. This offer is contingent upon your signing our enclosed Trade Secret Agreement. We are enclosing a signed duplicate of this letter and, if the terms of our employment offer are satisfactory, please sign and return the duplicate to us by August 6, 1984, in the enclosed self-addressed envelope. Its receipt by us will constitute an agreement between us and will be binding upon and inure to the benefit of you, this Company, and any company succeeding to the general business and properties of this Company by merger, purchase or other wise. We look forward to your joining us. Very truly yours, SYBRON CHEMICALS INC. Subsidiary of Sybron Corporation Richard K. Klein President and Chief Executive Officer RMK/cmr Encls. The foregoing is hereby accepted this -------- day of -------------------- 1984. ----------------------------------- Stephen R. Adler 3 February 13, 1998 Mr. Stephen R. Adler 39 Broadacre Drive Mt. Laurel, NJ 08054 Dear Steve: Supplementing the terms of your Employment Agreement with Sybron Chemicals Inc. (the "Company"), this will confirm that, in the event there shall be a Change in Control (as hereinafter defined) and thereafter your employment with the Company terminates within 18 months Without Cause (as hereinafter defined), you shall be entitled, in lieu of any other severance pay, to a lump sum payment equal to your annual base salary then in effect plus your target bonus, payable no later than 30 days after your employment with the Company so terminates. Termination of your employment with the Company Without Cause shall mean (a) termination by the Company without Cause (as defined in your Employment Agreement with the Company), or (b) termination by you by reason of (i) the Company's failure to make any of the payments, or provide any of the material benefits (or their equivalent), under the terms of your Employment Agreement with the Company, or (ii) a material adverse change in your position or in the scope of your duties and responsibilities. A "Change of Control" shall be deemed to have occurred upon the earliest to occur of the following events: (i) sale or disposal of substantially all of the assets of the Company, or (ii) the date any entity, person or group, within the meaning the Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than the Company or Citicorp, or any of their subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, shall have become the beneficial owner of, or shall have obtained voting control over, more than fifty percent (50%) of the outstanding shares of (a) the Company's Common Stock, or (b) the Common Stock of the Company resulting from the merger or consolidation of the Company with or into any other entity. If the above correctly reflects our understanding, please so indicate by signing in the space provided below for such purpose. Sincerely, Richard M. Klein President and Chief Executive Officer Sybron Chemicals Inc. 4 RMK/me AGREED: - ------------------------------ Stephen R. Adler Date: ---------------------------- 5 April 28, 2000 Mr. Stephen R. Adler 39 Broadacre Drive Mt. Laurel, NJ 08054 Dear Steve: Supplementing the terms of your Employment Agreement with Sybron Chemicals Inc. (the "Company"), this will confirm that, in the event there shall be a Change in Control (as hereinafter defined) and thereafter your employment with the Company terminates Without Cause (as hereinafter defined), you shall be entitled to the following benefits: (a) If your employment terminates prior to the first anniversary of the date of the Change in Control, you shall be entitled, in lieu of any other severance pay, to a lump sum payment, payable within 30 days of the date your employment terminates, equal to the sum of the following: (i) two times your base salary in effect on the Change in Control date; and (ii) your Target Bonus (as defined in the Company's Executive Bonus Plan (the "Plan")) for the year in which your termination occurs, prorated for the number of months of service during that year prior to the termination; and (iii) your full Target Bonus for each of the two years following the year in which your termination occurs. (b) If your employment terminates on or after the first anniversary of the date of the Change in Control, you shall be entitled, in lieu of any other severance pay, to a lump sum payment, payable within 30 days of the date your employment terminates, equal to the sum of the following: (i) one time your base salary in effect on the Change in Control date; and (ii) your Target Bonus for the year in which your termination occurs, prorated for the number of months of service during that year prior to the termination; and (iii) your full Target Bonus for the year following the year in which your termination occurs. 6 The value of each Target Bonus payable hereunder shall be determined in accordance with the provisions of Section 7(g)(4) of the Plan, as amended. The number of shares of Company Common Stock awarded for partial years shall be determined by prorating the Closing Price (as defined in the Plan) based on the Closing Price of the Common Stock on December 31 immediately preceding, and on December 31 immediately following, a date which is three years prior to the date your employment terminates. Notwithstanding anything herein to the contrary, in the event the aggregate present value, determined in a manner consistent with applicable provisions of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") and Treasury Regulations promulgated pursuant thereto, of the benefits and/or payments provided to you under the terms hereof that are treated as Parachute Payments (as hereinafter defined), along with the aggregate present value (determined in the same manner) of all other payments and/or benefits provided to you by the Company that are also treated as Parachute Payments, exceeds three times your Base Amount (as hereinafter defined), the benefits and/or payments to which you are otherwise entitled under the terms hereof shall be reduced to the extent necessary so that the aggregate present value of all Parachute Payments to which you are entitled hereunder and any other agreement or arrangement with the Company shall not exceed three times your Base Amount. The reductions required under this paragraph, if any, shall be applied, to the extent possible, to all payments and/or benefits to which you are otherwise entitled under this Agreement in proportion to the Present Value of such payments and/or benefits, and otherwise in such manner as the Company deems appropriate at its discretion. In the event you receive Parachute Payments having an aggregate present value in excess of three times your Base Amount, you agree that you are not entitled to retain and shall immediately repay to the Company, in cash, the excess of the aggregate present value of all payments and/or benefits which constitute Parachute Payments over three times your Base Amount. For purposes of this paragraph the following terms shall have the meanings set forth below: "Parachute Payment" means any payment to you in the nature of compensation that constitutes a "parachute payment" as that term is defined in Code Section 280G(b)(2); and "Base Amount" means the amount which is determined to be your "base amount" as that term is defined in Code Section 280G(b)(3). Termination of your employment with the Company Without Cause shall mean (a) termination by the Company without Cause (as defined in your Employment Agreement with the Company), or (b) termination by you by reason of (i) the Company's failure to make any of the payments, or provide any of the material benefits (or their equivalent), under the terms of your Employment Agreement with the Company, or (ii) any material adverse change in your position, the location of your primary workplace, the scope of your duties and responsibilities, or your compensation and benefits. 7 A "Change of Control" shall be deemed to have occurred upon the earliest to occur of the following events: (a) the sale or disposal of substantially all of the assets of the Company, or (b) the date any entity, person or group, within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than the Company or Citigroup or any of their subsidiaries, any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, or any other person or group in which the present management of the Company shall have an aggregate equity interest, on a fully diluted basis, of no less than 15%, shall have become the beneficial owner of, or shall have obtained voting control over, more than fifty percent (50%) of the outstanding shares of (i) the Company's Common Stock, or (ii) the Common Stock of the Company resulting from the merger or consolidation of the Company with or into any other entity. This letter amends and supersedes the letter agreement dated February 13, 1998 covering the same subject matter covered by this letter. If the above correctly reflects our understanding, please so indicate by signing in the space provided below for such purpose. Sincerely, Richard M. Klein President and Chief Executive Officer AGREED: /s/ Stephen R. Adler - ------------------------------- Stephen R. Adler EX-99.E.16 4 w40203ex99-e_16.txt SHARE PARTICIPATION PLAN 1 Exhibit (e)(16) SYBRON CHEMICAL INDUSTRIES INC. SHARE PARTICIPATION PLAN THIS SHARE PARTICIPATION PLAN (the "Plan") is established as of this lst day of June, 1990, by SYBRON CHEMICAL INDUSTRIES INC., a Delaware corporation "SCI"), on behalf of itself and its direct and indirect subsidiaries, for the benefit of certain of its employees and certain employees of its direct and indirect subsidiaries (SCI and its direct and indirect subsidiaries are hereinafter collectively referred to as the "Company"; the employees of the Company are hereinafter collectively referred to as the "Employees" and individually as "Employee"). W I T N E S S E T H: WHEREAS, SCI desires to provide a means of rewarding Employees for their effort and service in contributing to an increase in the value of the Company and, further, provide an incentive for those Employees to continue in the employ of the Company or its successor following any possible change in ownership. NOW, THEREFORE, SCI establishes the following Plan: 1. Definitions. For purposes of this Plan: (a) "Share Participation Plan Award Pool" shall mean an amount equal to the difference, if any, between (i) a sum equal to 2.0% of the net amount of cash and the fair market value on the date of payment of any publicly traded securities paid in consideration of a Triggering Event to the Company (if the Triggering Event is as described in subparagraph (h)(i) below) or to the shareholders of SCI (if the Triggering Event is as described in subparagraphs (h)(ii) and (iii) below), at or within one year of the closing of such Triggering Event, and (ii) 2 2.0% of $2,593,000, which is the shareholder's equity of the Company as of December 31, 1988. At the sole discretion of the Committee, the percentages set forth in subparagraphs 1(a)(i) and 1(a)(ii) above may be increased in equivalent amounts by up to 25% for a total percentage not to exceed 2.5%. (b) "Award" shall mean the sum which an Awardee shall be entitled to receive upon the occurrence of a Triggering Event, based upon his or her Participation Percentage in the Share Participation Plan Award Pool. (c) "Awardee" shall mean a person entitled to receive an Award as a result of being a holder of Participation Shares at the time a Triggering Event occurs. (d) "Committee" shall mean a committee comprised of R. M. Klein, S. H. Cohen, J. M. Rodriguez and S. R. Adler, or such other persons as shall be appointed by the Board of Directors of SCI to serve in addition to, or in lieu of, the aforementioned appointees. (e) "Eligible Employees" shall mean those Employees who meet the following requirements: (i) have completed at least one full year of service with the Company or are at the Executive Grade level; and (ii) do not own or have options to purchase common stock or preferred stock of SCI. (f) "Participation Percentage" shall mean a fraction, the numerator of which is the number of Participation shares held by an Awardee and the denominator of which is the total number of Participation Shares held by all Awardees. -2- 3 (g) "Participation Shares" shall mean participation shares in the Share Participation Plan Award Pool as awarded pursuant to this Plan. (h) "Triggering Event" shall mean: (i) the sale of all or substantially all of the assets of the Company to an unaffiliated third party; (ii) the merger or consolidation of the Company with or into an unaffiliated third party if, as a result thereof, the shareholders of SCI prior to such merger or consolidation shall own less than 20% of all outstanding voting securities of the entity or entities surviving the merger or consolidation; or (iii) a change in the beneficial ownership of more than 80% of the voting securities of SCI within a 12-month period. 2. Establishment of the Plan. The Company hereby establishes for the benefit of its Eligible Employees this Plan pursuant to which Awardees shall be entitled to share in the Share Participation Plan Award Pool upon the happening of a Triggering Event, all in accordance with the terms and conditions hereinafter set forth. 3. Award of Participation Shares. (a) The Committee shall have the right, at any time and from time to time prior to the happening of a Triggering Event, to award Participation Shares to any Eligible Employee. The Committee shall have full discretion and authority to decide which Eligible Employees shall receive Participation Shares and how many additional Participation Shares shall be awarded to each such Eligible Employee. Without limiting the foregoing, Eligible Employees who have derived more than 50% of their gross annual compensation from -3- 4 commissions or variable incentive plans will be limited in the number of Participation Shares they will be entitled to receive, all as determined by the Committee from time to time. The award of Participation Shares by the Committee shall be final, conclusive and binding on the Company and the Employees. (b) The Committee shall maintain a registry of all Participation Shares awarded, which registry shall be final, conclusive and binding on the Company and the Employees. If any Participation shares are canceled in accordance with the provisions of subparagraph (c) below, the Committee shall note such cancellation in the registry. At the discretion of the Committee, Participation Shares may be evidenced by certificates. In no event, however, shall the delivery of certificates impair upon the conclusiveness of the registry as to the number of Participation Shares awarded and uncanceled. (c) Participation Shares shall be canceled if, prior to the happening of a Triggered Event, the holder thereof shall cease to be an Employee for any reason whatsoever, including, without limitation, death, disability (as shall be defined by the Committee), retirement or termination by the Company or the holder except that if less than six (6) months prior to the Triggering Event, an Employee retires in accordance with the retirement policies of the Company or any successor thereof or is terminated by the Company or any successor thereof for reasons other than cause (as hereinafter defined), such Employee's Participation Shares shall not be canceled. 4. Payment of Awards. (a) Upon the happening of a Triggering Event, all Awardees shall become entitled, subject to the provisions of subparagraph (b) below, to receive their respective Awards. -4- 5 Payment of the Award to each Awardee shall be made on the first anniversary of the Triggering Event, without interest, by the direct or indirect subsidiary of SCI, or any successor thereof, employing such Awardee at the time of a Triggering Event. Neither the amount of the Award nor the payment thereof shall be taken into consideration in determining any thrift or pension contributions or in connection with any other employee benefits, except as required by law or otherwise determined necessary by the Company. (b) The right to receive an Award shall be forfeited by an Awardee if, prior to the first anniversary of the Triggering Event, such Awardee shall cease to be an employee of the Company or any successor thereof for any reason other than (i) death, (ii) disability (as shall be defined by the Committee), (iii) retirement in due course in accordance with the retirement policies of the Company or any successor thereof, or (iv) termination by the Company or any successor thereof for reasons other than cause. For purposes of this Plan, cause shall mean (A) an act of dishonesty by the Awardee constituting a felony or other crime involving moral turpitude or resulting or intended to result directly or indirectly in the Awardee's personal enrichment at the Company's expense, (B) the willful engaging by the Awardee in misconduct which is injurious to the Company, (C) habitual drunkenness or drug addiction, (D) the refusal by the Awardee substantially to perform his duties, (E) the violation by the Awardee of any express direction or reasonable rule or regulation established by the Company from time to time regarding the conduct of the business, and (F) any violation by the Awardee of the terms and conditions of any employment or other agreement between the Awardee and the Company. (c) In the event of the death of an Awardee, the Award to which the deceased Awardee was entitled shall be payable to such beneficiary of the Awardee as the Awardee shall -5- 6 have designated in the Awardee's Group Life Insurance policy or related Company benefit. If the deceased Awardee did not designate a beneficiary as aforesaid, or if the designated beneficiary predeceases the Awardee, the Award shall be payable to the Awardee's estate. 5. Partial Sale of the Company. In the event of the sale of the stock or assets of a direct or indirect subsidiary or division of SCI which does not constitute a Triggering Event (a "Partial Sale"), all Eligible Employees of such subsidiary or other Eligible Employees who are designated to join the acquiring entity of such subsidiary or division shall be deemed Awardees upon the occurrence of a Partial Sale and shall be entitled to receive payment of their Award on the first anniversary of a Triggering Event, as set forth in subparagraph 4(a) above. Notwithstanding the foregoing, the right of any such Awardee to receive his or her Award shall be forfeited if, prior to the first anniversary of the Partial Sale, such Awardee shall cease to be an employee of such subsidiary or division, or any successor thereof, for any reason other than those set forth in subparagraphs 4(b)(i) through 4(b)(iv) (for purposes of this Paragraph, all references in subparagraphs 4(b)(i) through 4(b)(iv) to the Company shall be interpreted as referring to the subsidiary or division subject to the Partial Sale). 6. Transfers. Neither the Participation Shares nor any Award shall be transferable by any Employee. Any attempt at assignment, transfer, pledge or disposition of any Shares or Award contrary to the provisions hereof, or any levy of execution, attachment or similar process upon any Shares or Award shall result in cancellation of such Shares or the forfeiture of such Award. 7. No Continued Employment. Neither the grant of Participation Shares or Awards, nor anything herein contained, shall be construed to imply or constitute a limitation on the right -6- 7 of the Company or any successor thereof to terminate the employment, services, responsibilities, duties or authority of any Employee at any time and for any reason whatsoever. 8. No Shareholders' Rights. Neither the grant of Participation Shares, nor anything herein contained, shall be interpreted as the issuance of any equity or debt securities of the Company or any successor thereof or the grant of any rights to vote, receive dividends, participate in meetings, share in the Company's equity or any other right to which shareholders of a company may be entitled. 9. Withholding of Taxes. Whenever the company is required to make a payment, the Company shall withhold all amounts sufficient to satisfy any federal, state and/or local taxes or social contributions which the Company is obligated to withhold in connection with such payment. 10. Incapacity. If the Company determines that the Awardee or a beneficiary entitled to receive any payments hereunder is under a legal disability or is incapacitated in any way so as to be unable to manage his or her financial affairs, the Company may discharge its obligation to make such payments by making such payments to such person's personal representative. 11. Governance and Interpretation of the Plan. The Committee shall have the sole responsibility and authority for the governance, administration and interpretation of this Plan; all decisions of the Committee respecting governance, administration and interpretation of this Plan shall be binding, final and conclusive upon the Company and all Employees. 12. Plan Modifications and Termination. The Committee may modify this Plan from time to time as it deems necessary to facilitate fair implementation of the Plan and its objectives, subject to the approval of the Board of Directors of SCI or any successor thereof. This Plan may -7- 8 be terminated by the Committee at any time after five (5) years from the date hereof if a Triggering Event has not occurred, effective six (6) months after the termination resolution of the committee is approved by the Board of Directors of SCI or any successor thereof. IN WITNESS WHEREOF, SCI has established this Plan as of the day and year first above written. SYBRON CHEMICAL INDUSTRIES INC. By:_________________________________ Richard M. Klein, President _________________________________ WITNESS -8- 9 SYBRON CHEMICAL INDUSTRIES INC. SHARE PARTICIPATION PLAN AMENDMENT NO. 1 Sybron Chemical Industries Inc., a Delaware corporation (hereinafter called the "Company") established, effective June 1, 1990, the "Sybron Chemical Industries Inc. Share Participation Plan" (hereinafter called the "Plan"). WHEREAS, the Committee desires to amend the Plan to provide that awards of Participation Shares under the Plan may be reduced by a number or percentage of Non-qualified Stock Options exercised under the Company's Stock Option Plan; and WHEREAS, Paragraph 12 authorizes the Committee to the Plan to amend the Plan, subject to the approval of the Board of Directors of the Company; NOW, THEREFORE, the Plan is hereby amended as follows: 13. Paragraph 1, subparagraph (a) of the Plan is hereby amended by adding at the end thereof the following new sentence: "Notwithstanding anything contained in this subparagraph (a), the Share Participation Plan Award Pool shall be reduced by an amount equal to a fraction, the numerator of which is the number of Participation Shares cancelled prior to or coincident with a Triggering Event under Paragraph 3, subparagraph (d) of the Plan, and the denominator of which is the sum of (i) the total number of Participation Shares outstanding at the time of the Triggering 10 Event and (ii) the total number of Participation Shares cancelled pursuant to subparagraph 3(d) of the Plan." 14. Paragraph 1, subparagraph (e)(ii) of the Plan is hereby amended to read: "(ii) did not own or have options to purchase common stock or preferred stock of SCI on June 1, 1990." 15. Paragraph 3 of the Plan is hereby amended by adding the new subparagraph (d) to read: "(d) If an Awardee is an Optionee in the Sybron Chemical Industries Inc. 1992 Stock Option Plan (the "Stock Option Plan") as defined therein, the Stock Option Plan Committee may designate a number or percent of Participation Shares awarded to the Awardee which will be cancelled prior to a Triggering Event in conjunction with the exercise of a Nonqualified Stock Option which has been granted to the Awardee pursuant to the Stock Option Plan. The terms and conditions under which such Participation Shares will be cancelled shall be set forth in the Stock Option Grant Agreement (the "Agreement") made between the Awardee and the Company. The Agreement may apply to Participation Shares awarded to the Awardee before or after the date of the Agreement but prior to the exercise of all or a part of the Non-qualified Stock Option. Any such cancellation shall be duly noted in the registry." -2- 11 16. The Plan in all other respects is hereby ratified and confirmed. IN WITNESS WHEREOF, Sybron Chemical Industries Inc. has caused this amendment to the Plan to be signed, effective ____________, 1992 and its corporate seal to be hereunto affixed by its duly authorized officers this _______ day of ____________, 1992. Sybron Chemical Industries Inc. By:_________________________________ ATTEST: By:_________________________________ (Corporate Seal) -3- 12 ANNEX A SYBRON CHEMICALS INC. SHARE PARTICIPATION PLAN AMENDMENT NO. 2 Sybron Chemicals Inc., a Delaware corporation (hereinafter called the "Company") established, effective June 11, 1990, the "Sybron Chemical Industries Inc. Share Participation Plan", renamed the "Sybron Chemicals Inc. Share Participation Plan" (hereinafter the "Plan"). On ________, 1992, the Plan was first amended through the adoption of Amendment No. 1. The Committee desires to further amend the Plan as hereinafter set forth. NOW, THEREFORE, subject to the approval of the Board of Directors of the Company, the Plan is hereby amended as follows: 1. Paragraph 1, subparagraph (d) of the Plan is hereby amended to read in its entirety as follows: "(d) "Committee" shall mean a committee comprised of R.M. Klein, S.F. Ladin, J.H. Schroeder and S.R. Adler, or such other persons as shall be appointed by the Board of Directors of SCI to serve in addition to, or in lieu of, the aforementioned appointees." 2. Paragraph 1, subparagraph (e)(i) of the Plan is hereby amended to read in its entirety as follows: "(i) have completed at least one full year of service with the Company or are at the Executive Grade level; provided that, after April 1, 2000, the Committee shall have the discretion to waive such one-year requirement with respect to any Employee". 13 3. Paragraph 1, subparagraph (h) of the Plan is hereby amended to read in its entirety as follows: "(h) "Triggering Event" shall mean: (i) the sale or disposal of substantially all of the assets of the Company, or (ii) the date any entity, person or group, within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than the Company or Citigroup or any of their subsidiaries, any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, or any other person or group in which the present management of the Company shall have an aggregate equity interest, on a fully diluted basis, of no less than 15%, shall have become the beneficial owner of, or shall have obtained voting control over, more than fifty percent (50%) of the outstanding shares of (A) the Company's Common Stock, or (B) the Common Stock of the Company resulting from the merger or consolidation of the Company with or into any other entity." 4. Paragraph 3(d) of the Plan is hereby amended to read in its entirety as follows: "(d) If an Awardee is an Optionee in the Sybron Chemicals Inc. 1992 Stock Option Plan (the "Stock Option Plan") as defined therein, the Stock Option Plan Committee may designate a number or percent of Participation Shares awarded to the Awardee which will be canceled prior to a Triggering Event in conjunction with the exercise of a Stock Option which has been granted to the Awardee pursuant to the Stock Option Plan. The terms and conditions under which such Participation Shares will be canceled shall be set forth in the Stock Option Grant Agreement (the "Agreement") made between the Awardee and the Company. The Agreement may apply to Participation -2- 14 Shares awarded to the Awardee before or after the date of the Agreement but prior to the exercise of all or a part of the Stock Option. Any such cancellation shall be duly noted in the registry. Notwithstanding the foregoing, in no event shall Participation Shares awarded from and after April 1, 2000 be canceled as a result of the exercise of Stock Options granted pursuant to the Stock Option Plan." 5. Paragraphs 4(a), 4(b) and 5 of the Plan are hereby amended by replacing all references to the "first anniversary of the Triggering Event" with the "sixth monthly anniversary of the Triggering Event". 6. The Plan in all other respects is hereby ratified and confirmed. IN WITNESS WHEREOF, Sybron Chemicals Inc. has caused this amendment to the Plan to be signed, effective April 1, 2000 and its corporate seal to be hereunto affixed by its duly authorized officers this day of April, 2000. Sybron Chemicals Inc. By:_________________________________ ATTEST: By:_________________________________ (Corporate Seal) -3- EX-99.E.17 5 w40203ex99-e_17.txt AMENDED 1992 STOCK OPTION PLAN 1 Exhibit (e)(17) SYBRON CHEMICALS INC. 1992 STOCK OPTION PLAN (AMENDED AND RESTATED EFFECTIVE AS OF APRIL 19, 1996) 1. Purpose. SYBRON CHEMICALS INC. (the "Company") hereby amends and restates the SYBRON CHEMICAL INDUSTRIES INC. 1992 STOCK OPTION PLAN, redesignating it as the SYBRON CHEMICALS INC. 1992 STOCK OPTION PLAN (the "Plan"), as set forth herein, subject to the approval of the stockholders of the Company. The Plan is intended to recognize the contributions made to the Company by key employees of the Company or any Affiliate of the Company (as defined below), to provide such persons with additional incentive to devote themselves to the future success of the Company or an Affiliate of the Company, and to improve the ability of the Company or an Affiliate of the Company to attract, retain, and motivate individuals upon whom the Company's sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company through receipt of rights to acquire the Company's Common Stock, par value $.01 per share (the "Common Stock"). In addition, the Plan is intended as an additional incentive to Non-employee Directors (as hereinafter defined) to serve on the Board of Directors and to devote themselves to the future success of the Company by providing them with an opportunity to acquire or increase their proprietary interest in the Company through the receipt of rights to acquire Common Stock. 2. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the following meanings: "Affiliate" means a corporation which is a parent corporation or a subsidiary corporation within the meaning of section 424(e) or (f) of the Code. "Board of Directors" means the Board of Directors of the Company. "Change of Control" shall have the meaning as set forth in Section 10 of the Plan. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the non-employee members of the Board of Directors or a committee designated by the Board of Directors as described in Section 3 of the Plan. "Company" means Sybron Chemicals Inc., a Delaware corporation. "Director" means a member of the Board of Directors. "Disability" shall have the meaning set forth in section 22(e)(3) of the Code. 2 "Fair Market Value" shall have the meaning set forth in Subsection 8(b) of the Plan. "ISO" means an Option granted under the Plan which is intended to qualify as an "incentive stock option" within the meaning of section 422(b) of the Code. "Non-employee Director" means a member of the Board of Directors who is not an employee of the Company or an Affiliate of the Company. "Non-qualified Stock Option" means an Option granted under the Plan which is not intended to qualify, or otherwise does not qualify, as an "incentive stock option" within the meaning of section 422(b) of the Code. "Option" means either an ISO or a Non-qualified Stock Option granted under the Plan. "Optionee" means a person to whom an Option has been granted under the Plan, which Option has not been exercised and has not expired or terminated. "Option Document" means the document described in Section 8 or Section 9 of the Plan, as applicable, which sets forth the terms and conditions of each grant of Options. "Option Price" means the price at which Shares may be purchased upon exercise of an Option, as calculated pursuant to Subsection 8(b) or Subsection 9(a) of the Plan. "Shares" means the shares of Common Stock of the Company which are the subject of Options. 3. Administration of the Plan. The Plan shall be administered by a committee composed of two or more of the members of the Board of Directors; however, the Board of Directors may designate two committees to operate and administer the Plan in its stead, one of such committees composed of two or more of its Non-employee Directors to operate and administer the Plan with respect to each person who is a "Principal Officer" (as defined below), and the other such committee composed of two or more Directors (which may include Directors who are also employees of the Company) to operate and administer the Plan with respect to each person other than a "Principal Officer." Any of such committees designated by the Board of Directors is referred to as the "Committee." As used herein, the term "Principal Officer" means a person who is an "officer" of the Company, within the meaning of as Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended, or any successor regulation. In all events, to the extent any administrative action under the Plan is required with respect to options granted to Non-employee Directors under Section 9, the Plan will be administered by the Board of Directors. (a) Meetings. The Committee shall hold meetings at such times and places as it may determine. Acts approved at a meeting by a majority of the members of the Committee -2- 3 or acts approved in writing by the unanimous consent of the members of the Committee shall be the valid acts of the Committee. (b) Grants. The Committee shall from time to time at its discretion direct the Company to grant Options pursuant to the terms of the Plan. The Committee shall have plenary authority to (i) determine the Optionees to whom, the times at which, and the price at which Options shall be granted, (ii) determine the type of Option to be granted and the number of Shares subject thereto, and (iii) approve the form and terms and conditions of the Option Documents; all subject, however, to the express provisions of the Plan. In making such determinations, the Committee may take into account the nature of the Optionee's services and responsibilities, the Optionee's present and potential contribution to the Company's success and such other factors as it may deem relevant. The interpretation and construction by the Committee of any provisions of the Plan or of any Option granted under it shall be final, binding and conclusive. (c) Exculpation. No member of the Board of Directors shall be personally liable for monetary damages for any action taken or any failure to take any action in connection with the administration of the Plan or the granting of Options under the Plan, provided that this Subsection 3(c) shall not apply to (i) any breach of such member's duty of loyalty to the Company or its stockholders, (ii) acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law, (iii) acts or omissions that would result in liability under Section 174 of the General Corporation Law of the State of Delaware, as amended, and (iv) any transaction from which the member derived an improper personal benefit. (d) Indemnification. Service on the Committee shall constitute service as a member of the Board of Directors of the Company. Each member of the Committee shall be entitled, without further act on his part, to indemnity from the Company to the fullest extent provided by applicable law and the Company's Certificate of Incorporation and/or By-laws in connection with or arising out of any action, suit or proceeding with respect to the administration of the Plan or the granting of Options thereunder in which he or she may be involved by reason of his or her being or having been a member of the Committee, whether or not he or she continues to be such member of the Committee at the time of the action, suit or proceeding. 4. Grants under the Plan. Grants under the Plan may be in the form of a Non-qualified Stock Option, and/or an ISO or a combination thereof, at the discretion of the Committee. 5. Eligibility. All key employees and members of the Board of Directors shall be eligible to receive Options hereunder, provided, however, that Non-employee Directors may receive Options only pursuant to Section 9. The Committee, in its sole discretion, shall determine whether an individual qualifies as a key employee. -3- 4 6. Shares Subject to Plan. The aggregate number of Shares for which Options may be granted pursuant to the Plan, subject to adjustment as provided in Section 10 of the Plan, is five hundred sixty thousand (560,000) less the amount, if any, used to satisfy the requirements of the Sybron Chemicals Inc. Executive Bonus Plan. The Shares shall be issued from authorized and unissued Common Stock or Common Stock held in or hereafter acquired for the treasury of the Company. If an Option terminates or expires without having been fully exercised for any reason, the Shares for which the Option was not exercised may again be the subject of one or more Options granted pursuant to the Plan. 7. Term of the Plan. The Plan became effective as of May 1, 1992 and was approved by the stockholders of the Company. No Option may be granted under the Plan after January 31, 2002. If the Plan as amended and restated herein is not approved by the stockholders of the Company within twelve (12) months of the date of the adoption of this amended and restated Plan by the Board of Directors, the Plan, as in effect prior to its amendment and restatement shall remain in effect and this amended and restated Plan shall be null and void. 8. Option Documents and Terms. Each Option granted under the Plan shall be a Non-qualified Stock Option unless the Option shall be specifically designated at the time of grant to be an ISO for Federal income tax purposes. If any Option designated an ISO is determined for any reason not to qualify as an incentive stock option within the meaning of Section 422 of the Code, such Option shall be treated as a Non-qualified Stock Option for all purposes under the provisions of the Plan. Options granted pursuant to the Plan shall be evidenced by the Option Documents in such form as the Committee shall from time to time approve, which Option Documents shall comply with and be subject to the following terms and conditions and include such other terms and conditions as the Committee shall from time to time require which are not inconsistent with the terms of the Plan. However, the provisions of this Section 8 shall not be applicable to Options granted to Non-employee Directors except as otherwise provided in Subsection 9(c). (a) Number of Option Shares. Each Option Document shall state the number of Shares to which it pertains. An Optionee may receive more than one Option, which may include Options which are intended to be ISOs and Options which are not intended to be ISOs, but only on the terms and subject to the conditions and restrictions of the Plan. Notwithstanding anything to the contrary contained herein, no employee shall be granted Options to acquire more than seventy five thousand (75,000) Shares during any one calendar year. (b) Option Price. Each Option Document shall state the Option Price which (i) for each ISO, shall be at least 100% of the Fair Market Value of the Shares at the time the Option is granted as determined by the Committee in accordance with this Subsection 8(b); and (ii) for each Non-qualified Stock Option, shall be at the Option Price established by the Committee provided, however, that if an ISO is granted to an Optionee who then owns, directly or by attribution under section 424(d) of the Code, shares possessing more than 10% of the total -4- 5 combined voting power of all classes of stock of the Company or an Affiliate of the Company, then the Option Price shall be at least 110% of the Fair Market Value of the Shares at the time the Option is granted. If the Common Stock is traded in a public market, then the Fair Market Value per share shall be, if the Shares are listed on a national securities exchange or included in the NASDAQ National Market System, the last reported sale price thereof on the date of grant, or, if the Shares are not so listed or included, the mean between the last reported "bid" and "asked" prices thereof, as reported on NASDAQ or, if not so reported, as reported by the National Daily Quotation Bureau, Inc., or as reported in a customary financial reporting service, as applicable and as the Committee determines. (c) Exercise. No Option shall be deemed to have been exercised prior to the receipt by the Company of written notice of such exercise and of payment in full of the Option Price for the Shares to be purchased. Each such notice shall specify the number of Shares to be purchased and shall (unless the Shares are covered by a then current registration statement or a Notification under Regulation A under the Securities Act of 1933, as amended (the "Act")), contain the Optionee's acknowledgment in form and substance satisfactory to the Company that (a) such Shares are being purchased for investment and not for distribution or resale (other than a distribution or resale which, in the opinion of counsel satisfactory to the Company, may be made without violating the registration provisions of the Act), (b) the Optionee has been advised and understands that (i) the Shares have not been registered under the Act and are "restricted securities" within the meaning of Rule 144 under the Act and are subject to restrictions on transfer and (ii) the Company is under no obligation to register the Shares under the Act or to take any action which would make available to the Optionee any exemption from such registration, (c) such Shares may not be transferred without compliance with all applicable federal and state securities laws, and (d) an appropriate legend referring to the foregoing restrictions on transfer and any other restrictions imposed under the Option Documents may be endorsed on the certificates. Notwithstanding the foregoing, if the Company determines that issuance of Shares should be delayed pending (A) registration under federal or state securities laws, (B) the receipt of an opinion that an appropriate exemption from such registration is available, (C) the listing or inclusion of the Shares on any securities exchange or an automated quotation system or (D) the consent or approval of any governmental regulatory body whose consent or approval is necessary in connection with the issuance of such Shares, the Company may defer exercise of any Option granted hereunder until any of the events described in this Subsection 8(c) has occurred. (d) Medium of Payment. An Optionee shall pay for Shares (i) in cash, (ii) by certified check payable to the order of the Company, or (iii) by such other mode of payment as the Committee may approve, including payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board. Furthermore, the Committee may provide in an Option Document that payment may be made in whole or in part in shares of the Company's Common Stock held by the Optionee for at least six months. If payment is made in whole or in part in shares of the Company's Common Stock, then the Optionee shall deliver to the Company certificates registered in the name of such Optionee representing the shares owned -5- 6 by such Optionee, free of all liens, claims and encumbrances of every kind and having an aggregate Fair Market Value on the date of delivery that is at least as great as the Option Price of the Shares (or relevant portion thereof) with respect to which such Option is to be exercised by the payment in shares of Common Stock, accompanied by stock powers duly endorsed in blank by the Optionee. In the event that certificates for shares of the Company's Common Stock delivered to the Company represent a number of shares in excess of the number of shares required to make payment for the Option Price of the Shares (or relevant portion thereof) with respect to which such Option is to be exercised by payment in shares of Common Stock, the stock certificate issued to the Optionee shall represent (i) the Shares in respect of which payment is made, and (ii) such excess number of shares. Notwithstanding the foregoing, the Committee may impose from time to time such limitations and prohibitions on the use of shares of the Common Stock to exercise an Option as it deems appropriate. (e) Termination of Options. (i) No Option shall be exercisable after the first to occur of the following: (A) Expiration of the Option term specified in the Option Document, which shall not exceed (1) ten years from the date of grant, or (2) five years from the date of grant of an ISO if the Optionee on the date of grant owns, directly or by attribution under section 424(d) of the Code, shares possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of an Affiliate of the Company; (B) Expiration of ninety (90) days from the date the Optionee's employment or service with the Company or its Affiliates terminates for any reason other than Disability or death or as otherwise specified in Subsection 8(e)(i)(D) or Section 9 below; (C) Expiration of one year from the date the Optionee's employment or service with the Company or its Affiliates terminates due to the Optionee's Disability or death; (D) A finding by the Committee, after full consideration of the facts presented on behalf of both the Company and the Optionee, that the Optionee has breached his employment or service contract with the Company or an Affiliate of the Company, or has been engaged in any sort of disloyalty to the Company or an Affiliate of the Company, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his employment or service, or has disclosed trade secrets or confidential information of the Company or an Affiliate of the Company. In such event, in addition to immediate termination of the Option, the Optionee shall automatically forfeit all Shares for which the Company has not yet delivered the share certificates upon refund by the Company of the Option Price. Notwithstanding anything herein to the contrary, the Company may withhold delivery of share certificates pending the resolution of any inquiry that could lead to a finding resulting in a forfeiture. -6- 7 (E) The date, if any, set by the Board of Directors as an accelerated expiration date pursuant to Section 10 hereof. (ii) Notwithstanding the foregoing, the Committee may extend the period during which an Option may be exercised to a date no later than the date of the expiration of the Option term specified in the Option Documents, provided that any change pursuant to this Subsection 8(e)(ii) that would cause an ISO to become a Non-qualified Stock Option may be made only with the consent of the Optionee. (f) Transfers. No Option granted under the Plan may be transferred, except by will or by the laws of descent and distribution. During the lifetime of the person to whom an Option is granted, such Option may be exercised only by him. Notwithstanding the foregoing, a Non-qualified Stock Option may be transferred pursuant to the terms of a "qualified domestic relations order," within the meaning of sections 401(a)(13) and 414(p) of the Code or within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended. (g) Holding Period. No Option granted under the Plan may be exercised unless one year, or such greater period of time as may be specified in the Option Documents, has elapsed from the date of grant. (h) Limitation on ISO Grants. In no event shall the aggregate fair market value of the shares (determined at the time the ISO is granted) with respect to which incentive stock options are, under all incentive stock option plans of the Company or its Affiliates, exercisable for the first time by the Optionee during any calendar year exceed $100,000. (i) Other Provisions. The Option Documents shall contain such other provisions including, without limitation, provisions authorizing the Committee to accelerate the exercisability of all or any portion of an Option granted pursuant to the Plan, additional restrictions upon the exercise of the Option or additional limitations upon the term of the Option, as the Committee shall deem advisable. (j) Amendment. The Committee shall have the right to amend Option Documents issued to an Optionee, subject to the Optionee's consent if such amendment is not favorable to the Optionee, except that the consent of the Optionee shall not be required for any amendment made under Section 10 of the Plan. 9. Special Provisions Relating to Grants of Options to Directors. Options granted pursuant to the Plan to Non-employee Directors shall be granted, without any further action by the Committee, in accordance with the terms and conditions set forth in this Section 9. Options granted pursuant to this Section 9 shall be evidenced by Option Documents in such form as the Committee shall from time to time approve, which Option Documents shall comply with and be -7- 8 subject to the following terms and conditions and such other terms and conditions as the Committee shall from time to time require which are not inconsistent with the terms of the Plan. (a) Timing of Grants; Number of Shares Subject of Options; Exercisability of Options; Option Price. Each Non-employee Director shall be granted annually, on the first business day of each calendar year, commencing with the year 1996, an Option to purchase four thousand (4,000) Shares (or such smaller number of shares as may be determined under the formula described in the last sentence of this Section 9(a) with respect to a Non-employee Director who did not serve as a member of the Board of Directors for the entire preceding calendar year). Grants under this Section 9 shall be made only to those Non-employee Directors who are members of the Board of Directors as of the grant date. Each Non-employee Director who is entitled to the grant of an Option under this Section 9(a), but who was not a member of the Board of Directors for the entire calendar year preceding the date of grant of the Option, shall receive an option for a number of shares equal to 4,000 multiplied by a fraction, the numerator of which is the number of days during the preceding calendar that the Non-employee Director was a member of the Board of Directors, and the denominator of which is the number of days in the preceding calendar year. (i) Each Option granted under this Section 9 shall be a Non-qualified Stock Option. (ii) Options granted under this Section 9 shall vest and become exercisable to the extent of fifty percent (50%) of the Option on the last business day of the calendar year following the calendar year in which the Option was granted, and shall become fully exercisable on the last business day of the second calendar year following the calendar year in which the Option was granted. Notwithstanding anything to the contrary contained herein, in the event an Optionee terminates his or her service as a member of the Board of Directors, such Optionee's Options granted under this Section 9 shall be exercisable only to the extent they were exercisable as of the date of such termination of service. (iii) The Option Price shall be equal to the Fair Market Value of the Shares on the last business day of the calendar year preceding the date on which the Option is granted. (b) Termination of Options Granted Pursuant to Section 9. All Options granted pursuant to this Section 9 shall be exercisable until the first to occur of the following: (i) Expiration of ten (10) years from the date of grant; or (ii) Expiration of ninety (90) days from the date the Optionee's service as a Director terminates for any reason; provided, however, that options that are not exercisable as of the date the Optionee's service as a Director terminates shall not become exercisable thereafter, and shall terminate as of the date such Optionee's service as a Director terminates. -8- 9 (c) Applicability of Provisions of Section 8 to Options Granted Pursuant to Section 9. Except as may be otherwise specifically required under this Section 9, the following provisions of Section 8 shall be applicable to Options granted pursuant to this Section 9: Subsection 8(a); the last sentence of Subsection 8(b); Subsection 8(c); Subsection 8(d) (provided that Option Documents relating to Options granted pursuant to this Section 9 shall provide that payment may be made in whole or in part in Shares of Company Common Stock that have been held by the Optionee for six (6) months or longer); Subsection 8(f); and Subsection 8(i). 10. Change of Control. In the event of a Change of Control, Options granted pursuant to the Plan and held by Optionees who are employees or members of the Board of Directors at the time of a Change of Control shall become immediately exercisable in full. In addition, in the event of a Change of Control, the Committee may take whatever action it deems necessary or desirable with respect to the Options outstanding (other than Options granted pursuant to Section 9), including, without limitation, accelerating the expiration or termination date in the respective Option Documents to a date no earlier than thirty (30) days after notice of such acceleration is given to the Optionees. A "Change of Control" shall be deemed to have occurred upon the earliest to occur of the following events: (i) the date the stockholders of the Company (or the Board of Directors, if stockholder action is not required) approve a plan or other arrangement pursuant to which the Company will be dissolved or liquidated, or (ii) the date the stockholders of the Company (or the Board of Directors, if stockholder action is not required) approve a definitive agreement to sell or otherwise dispose of substantially all of the assets of the Company, or (iii) the date the stockholders of the Company (or the Board of Directors, if stockholder action is not required) and the stockholders of the other constituent corporation (or its board of directors if stockholder action is not required) have approved a definitive agreement to merge or consolidate the Company with or into such other corporation, other than, in either case, a merger or consolidation of the Company in which holders of shares of the Company's Common Stock immediately prior to the merger or consolidation will hold at least a majority of the ownership of common stock of the surviving corporation (and, if one class of common stock is not the only class of voting securities entitled to vote on the election of directors of the surviving corporation, a majority of the voting power of the surviving corporation's voting securities) immediately after the merger or consolidation, which common stock (and if applicable voting securities) is to be held in the same proportion as such holders' ownership of Common Stock of the Company immediately before the merger or consolidation, or (iv) the date any entity, person or group within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (other than (A) the Company or any of its subsidiaries or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, or (B) any person who, on the date the Plan is effective, shall have been the beneficial owner of or have voting control over shares of Common Stock of the Company, possessing more than twenty-five percent (25%) of the aggregate voting power of the Company's Common Stock) sponsored or maintained by the Company or any of its subsidiaries, shall have become the -9- 10 beneficial owner of, or shall have obtained voting control over, more than twenty-five percent (25%) of the outstanding shares of the Company's Common Stock, or (v) the first day after the date this Plan is effective when Directors are elected such that a majority of the Board of Directors shall have been members of the Board of Directors for less than two (2) years, unless the nomination for election of each new Director who was not a Director at the beginning of such two (2) year period was approved by a vote of at least two-thirds of the Directors then still in office who were Directors at the beginning of such period. 11. Adjustments on Changes in Capitalization. The aggregate number of Shares and class of shares as to which Options may be granted hereunder, the number and class or classes of shares covered by each outstanding Option and the Option Price, shall be appropriately adjusted in the event of a stock dividend, stock split, recapitalization or other change in the number or class of issued and outstanding equity securities of the Company resulting from a subdivision or consolidation of the Common Stock and/or, if appropriate, other outstanding equity securities or a recapitalization or other capital adjustment (not including the issuance of Common Stock on the conversion of other securities of the Company which are convertible into Common Stock) affecting the Common Stock which is effected without receipt of consideration by the Company. The Committee shall have authority to determine the adjustments to be made under this Section, and any such determination by the Committee shall be final, binding and conclusive; provided, however, that no adjustment shall be made which will cause an ISO to lose its status as such without the consent of the Optionee, except for adjustments made pursuant to Section 10 hereof. 12. Amendment of the Plan. The Board of Directors of the Company may amend the Plan from time to time in such manner as it may deem advisable. Nevertheless, the Board of Directors of the Company may not: (i) change the class of individuals eligible to receive an ISO, (ii) increase the maximum number of shares as to which Options may be granted, or (iii) make any other change or amendment as to which stockholder approval is required in order to satisfy the conditions set forth in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, without obtaining approval, within twelve months before or after such action, by vote of a majority of the votes cast at a duly called meeting of the stockholders at which a quorum representing a majority of all outstanding voting stock of the Company is, either in person or by proxy, present and voting on the matter. In addition, no amendment to the Plan shall adversely affect any outstanding Option without the consent of the Optionee 13. No Commitment to Retain. The grant of an Option pursuant to the Plan shall not be construed to imply or to constitute evidence of any agreement, express or implied, on the part of the Company or any Affiliate of the Company to retain the Optionee in the employ of the Company or an Affiliate of the Company and/or as a member of the Company's Board of Directors or in any other capacity. 14. Withholding of Taxes. Whenever the Company proposes or is required to deliver or transfer Shares in connection with the exercise of an Option, the Company shall have the right to (a) require the recipient to remit or otherwise make available to the Company an amount -10- 11 sufficient to satisfy any federal, state and/or local withholding tax requirements prior to the delivery or transfer of any certificate or certificates for such Shares or (b) take whatever other action it deems necessary to protect its interests with respect to tax liabilities. The Company's obligation to make any delivery or transfer of Shares shall be conditioned on the Optionee's compliance, to the Company's satisfaction, with any withholding requirement. 15. Interpretation. The Plan is intended to enable transactions under the Plan with respect to Directors and officers (within the meaning of Section 16(a) under the Securities Exchange Act of 1934, as amended) to satisfy the conditions of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended; any provision of the Plan which would cause a conflict with such conditions shall be deemed null and void to the extent permitted by applicable law and in the discretion of the Board of Directors. -11- 12 FIRST AMENDMENT TO SYBRON CHEMICALS INC 1992 STOCK OPTION PLAN (AMENDED AND RESTATED EFFECTIVE AS OF APRIL 19, 1996) This First Amendment to the Sybron Chemicals Inc. 1992 Stock Option Plan (Amended and Restated Effective as of April 19, 1996) (the "Plan") is for the purpose set forth below. Terms used herein which are defined in the Plan and not defined herein have the same meaning as set forth in the Plan. WHEREAS, the Company desires to amend the Plan in order to attract and retain highly qualified Directors; NOW, THEREFORE, the Plan is amended as follows: 1. Effective as of January 1, 1998, Section 9(a) is amended to read as follows: (a) Timing of Grants; Number of Shares Subject of Options; Exercisability of Options; Option Price. Each Non-employee Director shall be granted annually an Option to purchase four thousand (4,000) Shares (or such smaller number of shares as may be determined under the formula described in the last sentence of this Section 9(a) with respect to a Non-employee Director who becomes a member of the Board of Directors after the first business day of a given calendar year). The initial grant of Shares shall be made on the date that the Non-employee Director becomes a member of the Board of Directors, and each subsequent grant shall be made on the first business day of each calendar year. Grants under this Section 9 shall be made only to those Non-employee Directors who are members of the Board of Directors as of the grant date. Each Non-employee Director who became a member of the Board of Directors after the first business day of a calendar year and who is entitled to the grant of an Option under this Section 9(a), shall receive an option for the number of shares equal to 4,000 multiplied by a fraction, the numerator of which is the number of days during such calendar year that the Non-employee Director was a member of the Board of Directors, and the denominator of which is the number of days in such calendar year. (i) Each Option granted under this Section 9 shall be a Non-qualified Stock Option. (ii) Options granted under this Section 9 shall vest and become exercisable to the extent of fifty percent (50%) of the Option on the first anniversary of the date on which such Options were granted, and shall become fully exercisable on the second anniversary of the date on which such Options were granted; provided, however, with respect to any Non-employee Director who terminates his or her service as a member of the Board of 13 Directors after 1997, this provision shall be in effect as if it had been incorporated into the Plan effective January 1, 1996. Notwithstanding anything to the contrary contained herein, in the event an Optionee terminates his or her service as a member of the Board of Directors, such Optionee's Options granted under this Section 9 shall be exercisable only to the extent they were exercisable as of the date of such termination of service. (iii) The Option Price shall be equal to the Fair Market Value of the Shares on the date on which the Option is granted. This First Amendment, executed this _______ day of ___________________, 1998, is being effectuated in accordance with Section 12 of the Plan. Attest: SYBRON CHEMICALS INC. ____________________________ BY:____________________________ -2- -----END PRIVACY-ENHANCED MESSAGE-----