<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
SIPEX CORPORATION
(Name of Registrant as Specified In Its Charter)
[NAME OF PERSON FILING]
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
SIPEX CORPORATION
22 LINNELL CIRCLE
BILLERICA, MASSACHUSETTS 01821
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 2000
------------------------
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of SIPEX
Corporation, a Massachusetts corporation (the "Company"), will be held at
BankBoston Conference and Training Center, 35th Floor, 100 Federal Street,
Boston, Massachusetts 02110, on May 19, 2000, at 10:00 a.m., local time, for the
purposes of considering and acting upon the following matters:
1. To elect one member to the Board of Directors to serve for a
three-year term as a Class I Director.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Information relating to the above matters is set forth in the attached
Proxy Statement. Only shareholders of record at the close of business on April
10, 2000 will be entitled to notice of and to vote at the meeting and any
adjournment thereof.
All shareholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
Frank R. DiPietro
Clerk
Billerica, Massachusetts
Date: April 13, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE READ THE ATTACHED PROXY
STATEMENT AND THEN COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO ENSURE REPRESENTATION OF YOUR
SHARES AT THE MEETING. NO POSTAGE NEED BE AFFIXED IF THE PROXY IS MAILED IN THE
UNITED STATES.
<PAGE> 3
SIPEX CORPORATION
22 LINNELL CIRCLE
BILLERICA, MASSACHUSETTS 01821
------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 19, 2000
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of SIPEX Corporation (the "Company") for use
at the Annual Meeting of Shareholders to be held at BankBoston Conference and
Training Center, 35th Floor, 100 Federal Street, Boston, Massachusetts, 02110 on
Friday, May 19, 2000, at 10:00 a.m. local time, and at any adjournments thereof.
Only shareholders of record as of the close of business on April 10, 2000,
the record date fixed by the Board of Directors, will be entitled to notice of,
and to vote at, the Annual Meeting and at any adjournments thereof. At the close
of business on April 10, 2000, there were an aggregate of 21,980,614 shares of
common stock, par value $.01 per share (the "Common Stock"), of the Company
issued, outstanding and entitled to vote. The holders of Common Stock are
entitled to one vote per share on any proposal presented at the Annual Meeting.
Shareholders may vote in person or by proxy. Execution of a proxy will not in
any way affect a shareholder's right to attend the meeting and vote in person.
Any proxy may be revoked by a shareholder at any time before it is exercised by
delivering a written revocation or a later dated proxy to the Clerk of the
Company or by attending the Annual Meeting and voting in person.
The Company's Annual Report on Form 10-K containing financial statements
for the fiscal year ended December 31, 1999 is being mailed together with this
Proxy Statement to all shareholders entitled to vote. It is anticipated that
this Proxy Statement and the accompanying proxy will be first mailed to
shareholders on or about April 13, 2000.
QUORUM AND VOTES REQUIRED
The representation, in person or by proxy, of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum for the transaction of business. Shares
represented by proxies pursuant to which votes have been withheld from any
nominee for director, or which contain one or more abstentions or broker
"non-votes," are counted as present or represented for purposes of determining
the presence or absence of a quorum for the Annual Meeting. A "non-vote" occurs
when a broker or other nominee holding shares for a beneficial owner votes on
one proposal, but does not vote on another proposal because, with respect to
such other proposal, the broker does not have discretionary voting power and has
not received instructions from the beneficial owner.
The election of the Class I Director is by a plurality of the votes cast by
stockholders entitled to vote at the Annual Meeting. For all other matters, if
any, that may be submitted to shareholders at the Annual Meeting, the
affirmative vote of the majority of shares present, in person or represented by
proxy, and voting on that matter is required for approval. The vote on each
matter submitted to shareholders is tabulated separately. Abstentions are
included in the number of shares present and represented and voting on each
matter. Broker "non-votes" are not considered voted for the particular matter
and have the practical effect of reducing the number of affirmative votes
required to achieve a majority for such matter by reducing the total number of
shares from which the majority is calculated.
<PAGE> 4
The persons named as attorneys in the proxies are officers of the Company.
All properly executed proxies returned in time to be counted at the Annual
Meeting will be voted. Any shareholder giving a proxy has the right to withhold
authority to vote for the nominee to the Board of Directors by writing the
nominee's name in the space provided on the proxy.
ALL PROXIES WILL BE VOTED IN ACCORDANCE WITH THE SHAREHOLDERS'
INSTRUCTIONS, AND IF NO CHOICE IS SPECIFIED, THE ENCLOSED PROXY CARD (OR ANY
SIGNED AND DATED COPY THEREOF) WILL BE VOTED IN FAVOR OF THE MATTERS SET FORTH
IN THE ACCOMPANYING NOTICE OF MEETING.
The Board of Directors knows of no other matter to be presented at the
Annual Meeting. If any other matter upon which a vote may properly be taken
should be presented at the Annual Meeting, shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys in the proxies.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 10, 2000 information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person who is known to the Company to be the beneficial owner of more than five
percent of its Common Stock, (ii) each director, or nominee for director, of the
Company, (iii) each of the executive officers named in the Summary Compensation
Table under the caption "Executive Compensation Summary" below, and (iv) all
directors and executive officers of the Company as a group. Except as otherwise
indicated in the footnotes to the table, the beneficial owners listed have sole
voting and investment power (subject to community property laws where
applicable) as to all of the shares beneficially owned by them. As of April 10,
2000, there were 21,980,614 shares of common stock outstanding.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- --------------------------------------- ----------------------- ----------------
<S> <C> <C>
Manuel Del Arroz.......................................... 3,156,521 14.4%
Massachusetts Financial Services Company(2)............... 2,203,751 10.0%
500 Boylston Street
Boston, MA 02116
T. Rowe Price Associates, Inc.(3)......................... 2,101,300 9.6%
100 East Pratt Street
Baltimore, Maryland 21202
Brown Investment Advisory & Trust Co.(4).................. 1,754,327 8.0%
19 South Street
Baltimore, MD 21202
West Highland Partners(5)................................. 1,460,000 6.6%
300 Drake's Landing Road, Suite 290
Greenbrae, CA 94904
Putnam Family of Funds(6)................................. 1,163,300 5.3%
One Post Office Square Boston, MA 02109
James E. Donegan(7)....................................... 80,000 *
Frank R. DiPietro(8)...................................... 40,409 *
Raymond W.B. Chow(9)...................................... 91,325 *
Yener Gurler(10).......................................... 36,622 *
Manfred Loeb(11).......................................... 3,000 *
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- --------------------------------------- ----------------------- ----------------
<S> <C> <C>
Lionel H. Olmer(12)....................................... 23,001 *
John L. Sprague(13)....................................... 5,000 *
Willy M.C. Sansen(14)..................................... 5,000 *
Stephen E. Parks.......................................... -- *
All directors and executive officers as a group(15)....... 284,357 1.28%
</TABLE>
- ---------------
* Less than 1% of the outstanding Common Stock.
(1) Unless otherwise indicated, to the knowledge of the Company, each person
listed above maintains a mailing address at: c/o SIPEX Corporation, 22
Linnell Circle, Billerica, MA 01821.
(2) Based solely on information provided in a Schedule 13G/A filed with the
Securities and Exchange Commission, as of December 31, 1999, Massachusetts
Financial Services Company had sole dispositive power over 2,203,751 shares
and sole voting power over 1,696,941 shares.
(3) Based solely on information provided in a Schedule 13G filed with the
Securities and Exchange Commission, as of December 31, 1999, T. Rowe Price
Associates, Inc., a registered investment advisor, may be deemed to
beneficially own 2,101,300 shares, have sole dispositive power over
2,101,300 shares, and sole voting power over 443,000 shares. T. Rowe Price
New Horizons Fund, Inc. may be deemed to beneficially own, 1,200,000 shares
and have sole voting power over 1,200,000 shares.
(4) Based solely on information provided in a Schedule 13G filed with the
Securities and Exchange Commission, as of December 31, 1999, Brown
Investment Advisory & Trust Company and its wholly owned subsidiary Brown
Advisory Incorporated had sole dispositive power over 777,961 and 976,366
shares, respectively and sole voting power over 498,063 and 691,532 shares,
respectively.
(5) Based solely on information provided in a Schedule 13G filed with the
Securities and Exchange Commission, as of December 31, 1999, West Highland
Capital, Inc. had shared dispositive power over 1,460,000 shares and shared
voting power over 1,460,000 shares, Estero Partners, LLC had shared
dispositive power over 1,367,387 shares and shared voting power over
1,367,387 shares, Lang H. Gerhard had shared dispositive power over
1,460,000 shares and shared voting power over 1,460,000 shares and West
Highland Partners, L.P. had shared dispositive power over 1,105,760 shares
and shared voting power over 1,105,760 shares. West Highland Capital, Inc.,
Estero Partners, LLC and Lang H. Gerhard are the general partners of West
Highland Partners, L.P., which is an investment limited partnership. Lang
H. Gerhard is the sole shareholder of West Highland Capital, Inc. and
Manager of Estero Partners, LLC.
(6) Based solely on information provided in a Schedule 13G/A filed with the
Securities and Exchange Commission, as of December 31, 1999, Putnam
Investment Management, Inc., had shared dispositive power over 1,163,300
shares. The Putnam Advisory Company, Inc. had shared dispositive power over
1,163,300 shares and shared voting power over 308,100 shares. Putnam
Investments, Inc., which is a wholly-owned subsidiary of Marsh & McLennan
Company, Inc., had shared dispositive power over 1,163,300 shares, shared
voting power over 308,100 shares and wholly owns the following two
registered investment advisers: Putnam Investment Management, Inc., which
is the investment advisor to the Putnam family of mutual funds, and The
Putnam Advisory Company, Inc., which is the investment adviser to Putnam's
institutional clients.
(7) Represents 80,000 shares issuable pursuant to stock options which are
exercisable prior to June 9, 2000.
(8) Includes 40,000 shares issuable pursuant to stock options which are
exercisable prior to June 9, 2000. Includes 300 shares held by Mr.
DiPietro's child.
3
<PAGE> 6
(9) Includes 46,000 shares issuable pursuant to stock options which are
exercisable prior to June 9, 2000. Includes 2,000 shares held by Mr. Chow's
children.
(10) Includes 30,000 shares issuable pursuant to stock options which are
exercisable prior to June 9, 2000.
(11) Includes 1,000 shares issuable pursuant to stock options which are
exercisable prior to June 9, 2000.
(12) Includes 21,001 shares issuable pursuant to stock options which are
exercisable prior to June 9, 2000.
(13) Represents 5,000 shares issuable pursuant to stock options which are
exercisable prior to June 9, 2000.
(14) Represents 5,000 shares issuable pursuant to stock options which are
exercisable prior to June 9, 2000.
(15) Includes 228,001 shares issuable pursuant to stock options which are
exercisable prior to June 9, 2000.
PROPOSAL I
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. Each class serves a
three-year term. The Class III Director is serving a term ending at the Annual
Meeting of Shareholders to be held in 2002. Each Class II Director is serving a
term ending at the Annual Meeting of Shareholders to be held in 2001. Manfred
Loeb's (the Class I Director) term will expire at the Annual Meeting being held
May 19, 2000. All directors will hold office until their successors have been
duly elected and qualified.
In early April Dr. Steward S. Flaschen, one of our directors who would have
been subject to reelection, died. Dr. Flaschen made significant contributions to
the Company's success and we mourn his passing. Prior to the Annual Meeting, Dr.
Flaschen and Manfred Loeb were the Class I Directors; John L. Sprague, Lionel H.
Olmer and Willy M.C. Sansen were the Class II Directors; and James E. Donegan
was the Class III Director.
The Board of Directors has nominated and recommended that Mr. Manfred Loeb,
who is currently serving as a Class I Director of the Company, be elected the
Class I Director, to hold office until the Annual Meeting of Shareholders to be
held in 2003 or until his successor has been duly elected and qualified or until
his earlier resignation or removal. Mr. Loeb has indicated his willingness to
serve, if elected; however if he should be unable or unwilling to serve, the
proxies will be voted for the election of a substitute nominee designated by the
Board of Directors or for fixing the number of directors at a lesser number.
Shares represented by all proxies received by the Board of Directors and not so
marked as to withhold authority to vote for Mr. Loeb will be voted FOR the
election of Mr. Loeb.
4
<PAGE> 7
The following table sets forth for Mr. Loeb and for each director whose
term of office will extend beyond the Annual Meeting, the year each director was
first elected a director, his age, the positions currently held by each director
with the Company, the year each director's term will expire and the class of
director of each director.
<TABLE>
<CAPTION>
NOMINEE OR DIRECTOR'S NAME AND
YEAR NOMINEE OR DIRECTOR FIRST YEAR TERM CLASS OF
BECAME A DIRECTOR AGE POSITION(S) HELD WILL EXPIRE DIRECTOR
- ------------------------------ --- ---------------------------- ----------- --------
<S> <C> <C> <C> <C>
NOMINEES:
Manfred Loeb (1982-1987; 1992)............ 72 Director 2000 I
CONTINUING DIRECTORS:
Lionel H. Olmer (1988).................... 65 Director 2001 II
John L. Sprague (1993).................... 70 Director 2001 II
Willy M. C. Sansen (1997)................. 57 Director 2001 II
James E. Donegan (1985)................... 54 Chairman of the Board and 2002 III
Chief Executive Officer
</TABLE>
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
Mr. Loeb has been a director of the Company from 1982 to 1987 and from 1992
to the present. From 1983 to December 1992, he served as the Executive Director
of Tractebel S.A. and Chief Executive Officer of the Electricity and Gas
International Division of Tractebel S.A. Since 1993, Mr. Loeb has served as an
Advisor Director of Tractebel S.A. and Chairman of Tractebel, Inc. (USA). In
addition to serving as a director of the Company, Mr. Loeb currently serves as a
director of Telfin S.A., an affiliate of Tractebel S.A.
DIRECTORS WHOSE TERMS EXTEND BEYOND THE MEETING
Mr. Olmer has been a director of the Company since 1988. From 1981 to 1985,
he served as Undersecretary of Commerce for International Trade in the Reagan
Administration. From 1985 until the present, he has been a partner in the law
firm of Paul, Weiss, Rifkind, Wharton & Garrison, concentrating on international
trade law.
Dr. Sansen has been a director of the Company since July, 1997. He has been
a full professor at the Katholieke University Leuven in Belgium since 1981. He
currently heads the Medical and Integrated Circuits and Sensors Division of the
Electrical Engineering Department. Dr. Sansen is the author of six electronics
books and more than three hundred papers and is currently a Fellow at the
Katholieke University Leuven Institute of Electrical and Electronics
Engineering, and past chairman of the Electrical Engineering Department of
Katholieke University Leuven.
Dr. Sprague has been a director of the Company since 1993. He has been the
president of John L. Sprague Associates, Inc., a consulting firm, since 1988. In
addition to serving as a director of the Company, Dr. Sprague currently serves
as a director of Aerovox, Inc., a manufacturer of electronic components,
Allmerica Financial Corporation, a financial services company, and California
Micro Devices, a manufacturer of electronic components. Dr. Sprague has also
been a partner of the CEO Perspective Group since December 1998.
Mr. Donegan joined the Company in April 1985. Mr. Donegan has been Chairman
of the Board and Chief Executive Officer of the Company since April 1985 and was
the President from April, 1985 until June, 1999. Before joining the Company, Mr.
Donegan held the position of Group Vice President of the Electronic Components
Group at Midland Ross Corporation. Prior to Midland Ross Corporation, Mr.
Donegan was Vice
5
<PAGE> 8
President and General Manager at Cameron & Barkley and Company. Prior to working
at Cameron & Barkley and Company, Mr. Donegan spent ten years with the General
Electric Company in various manufacturing positions. Mr. Donegan currently
serves as a Director of Genesis Microchip Inc., a manufacturer of video
semiconductors.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held thirteen (13) meetings during
the fiscal year ended December 31, 1999. During their tenure, each of the
directors attended at least 75% of the aggregate of all meetings of the Board of
Directors during fiscal 1999.
The Company has standing Compensation and Audit Committees. The
Compensation Committee, of which Mr. Loeb and Dr. Sprague are members (and which
Dr. Flaschen was a member prior to his death), reviews and evaluates the
compensation and benefits of all officers of the Company, reviews general policy
matters relating to compensation and benefits of employees of the Company and
makes recommendations concerning these matters to the Board of Directors. The
Compensation Committee administers the Company's 1993 Stock Option and Incentive
Plan ("1993 Stock Plan"), 1994 Stock Option and Incentive Plan ("1994 Stock
Plan"), 1996 Incentive Stock Option Plan ("1996 Stock Plan"), 1996 Non-Employee
Director Stock Option Plan ("1996 Director Stock Plan"), 1996 Employee Stock
Purchase Plan ("1996 Stock Purchase Plan"), 1997 Stock Option Plan ("1997 Stock
Plan") and the 1999 Stock Plan ("1999 Stock Plan"). Of these Plans, only the
1997 Stock Plan and the 1999 Stock Plan have shares remaining which are
available for grant. The Compensation Committee held one meeting during fiscal
1999 and Drs. Sprague and Flaschen attended this meeting.
The Audit Committee, of which Mr. Olmer and Dr. Sprague are members,
reviews with the Company's independent auditors, the scope and timing of their
audit services and any other services they are asked to perform, the auditor's
report on the Company's consolidated financial statements following completion
of their audit and the Company's policies and procedures with respect to
internal accounting and financial controls. The Audit Committee held two
meetings during fiscal 1999 and Mr. Olmer and Dr. Sprague attended both
meetings.
The Board of Directors does not have a standing nominating committee or
committee performing similar functions.
6
<PAGE> 9
COMPENSATION AND OTHER
INFORMATION CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION SUMMARY
The following table sets forth certain information concerning the annual
and long-term compensation for services in all capacities to the Company for the
fiscal years ended December 31, 1997, 1998 and 1999, of those persons who were,
during this time (i) the chief executive officer and (ii) the other four most
highly compensated executive officers of the Company (such five officers
collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION(1)
------------------------ ---------------
SECURITIES ALL OTHER
FISCAL UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) OPTIONS(#) ($)(3)
- --------------------------- ------ --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
James E. Donegan............... 1999 $249,923 $200,000 150,000 $15,205
Chairman and Chief 1998 244,615 180,000 100,000 16,576
Executive Officer 1997 240,000 130,690 100,000 12,677
Stephen E. Parks (4)........... 1999 128,846 175,000 325,000 53,061(5)
President and Chief
Operating Officer
Frank R. DiPietro.............. 1999 199,135 200,000 100,000 9,741
Executive Vice President of 1998 176,442 100,000 50,000 6,152
Finance, Treasurer, Chief 1997 165,000 79,300 -- 6,065
Financial Officer and
Clerk
Raymond W.B. Chow.............. 1999 182,235 100,000 100,000 3,771
Senior Vice President and 1998 175,480 80,000 50,000 4,428
Chief Technology Officer 1997 160,000 74,200 -- 4,739
Yener Gurler................... 1999 156,202 125,000 100,000 3,771
Senior Vice President of 1998 136,115 65,000 50,000 4,325
Operations
</TABLE>
- ---------------
(1) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive payments during fiscal
years 1997, 1998 or 1999.
(2) Bonuses are reported in year earned even if actually paid in subsequent
year.
(3) Consists of contributions made by the Company on behalf of the Named
Executive Officers to the Company's Tax Deferred Savings Plan, and insurance
premiums paid by the Company.
(4) Salary for Mr. Parks for 1999 is for the period from his date of hire, June
22, 1999.
(5) Consists of contributions made by the Company to the Company's Tax Deferred
Savings Plan, insurance premiums paid by the Company and $51,041 for
relocation costs.
7
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth stock options granted during the year ended
December 31, 1999 to the Named Executive Officers. No stock appreciation rights
("SARs") were granted during the year ended December 31, 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERMS($)(3)
OPTIONS IN FISCAL BASE PRICE PER EXPIRATION -----------------------
NAME GRANTED(#) YEAR(%)(1) SHARE($)(2) DATE 5% 10%
- ---- ----------- ------------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James E. Donegan...... 75,000(4) 3.5% $15.5625 8/10/09 $ 734,038 $1,860,000
75,000(5) 3.5% $13.0625 12/1/09 $ 616,120 $1,561,370
Stephen E. Parks...... 325,000(6) 15.2% $15.5625 8/10/09 $3,180,831 $8,060,851
Frank R. DiPietro..... 50,000(4) 2.3% $15.5625 8/10/09 $ 489,359 $1,240,131
50,000(5) 2.3% $13.0625 12/1/09 $ 410,747 $1,040,913
Raymond W.B. Chow..... 50,000(4) 2.3% $15.5625 8/10/09 $ 489,359 $1,240,131
50,000(5) 2.3% $13.0625 12/1/09 $ 410,747 $1,040,913
Yener Gurler.......... 50,000(4) 2.3% $15.5625 8/10/09 $ 489,359 $1,240,131
50,000(5) 2.3% $13.0625 12/1/09 $ 410,747 $1,040,913
</TABLE>
- ---------------
(1) A total of 2,138,105 options were granted to employees (including the Named
Executive Officers) in fiscal year 1999.
(2) All options were granted at fair market value on the date of the grant.
(3) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compound rates of appreciation (5% and 10%) on
the market value of the Company's Common Stock on the date of option grant
over the term of the options. These numbers are calculated based on rules
promulgated by the Securities and Exchange Commission and do not reflect the
Company's estimate of future stock price growth. Actual gains, if any, on
stock option exercises and Common Stock holdings are dependent on the timing
of such exercise and the future performance of the Company's Common Stock.
There can be no assurance that the rates of appreciation assumed in this
table can be achieved or that the amounts reflected will be received by the
individuals.
(4) These options will vest in equal annual increments over five years beginning
8/10/00.
(5) These options will vest in equal annual increments over five years beginning
12/1/00.
(6) These options will vest as to 30,000 options, on June 22, 2000, as to 65,000
options on each of June 22, 2001, June 22, 2002, June 22, 2003 and June 22,
2004, and as to 35,000 options on June 22, 2005.
8
<PAGE> 11
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to options to
purchase the Company's Common Stock to the Named Executive Officers, including
(i) the number of shares of Common Stock purchased upon exercise of options in
the fiscal year ended December 31, 1999; (ii) the net value realized upon such
exercise; (iii) the number of unexercised options outstanding at December 31,
1999; and (iv) the value of such unexercised options at December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT YEAR-END AT YEAR-END(2)($)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James E. Donegan........... -- -- 92,490 302,000 $1,243,183 $2,675,820
Stephen Parks.............. -- -- -- 325,000 -- 2,925,000
Frank R. DiPietro.......... -- -- 76,000 172,000 1,322,698 1,553,370
Raymond W.B. Chow.......... 53,000 $711,838 36,000 172,000 322,885 1,452,120
Yener Gurler............... -- -- 22,000 162,000 245,815 1,484,595
</TABLE>
- ---------------
(1) Amounts disclosed in this column do not reflect amounts actually received by
the Named Executive Officers but are calculated based on the difference
between the fair market value of the Company's Common Stock on the date of
exercise and the exercise price of the options. The Named Executive Officers
will receive cash only if and when they sell the Common Stock issued upon
exercise of the options, and the amount of cash received by such individuals
is dependent on the price of the Company's Common Stock at the time of such
sale.
(2) Value is based on the difference between the option exercise price and the
fair market value of the Company's Common Stock on December 31, 1999,
multiplied by the number of shares underlying the options.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company has entered into the following employment agreements with the
Named Executive Officers:
Mr. Donegan and the Company entered into an employment agreement on May 14,
1999. The employment agreement provides that Mr. Donegan will serve as President
and Chief Executive Officer of the Company. Mr. Donegan may voluntarily
terminate this employment after giving the Company written notice of intent to
terminate at least thirty (30) days prior to the effective date of such
termination. The Company may terminate his employment at any time with or
without cause. If the Company terminates Mr. Donegan's employment without cause
or if Mr. Donegan terminates his employment for good reason (as defined in the
employment agreement), he will be entitled to receive a lump sum payment equal
to twenty-four months' base salary plus his highest annual bonus amount from the
three most recent years. In addition, upon a termination by the Company without
cause or a termination by Mr. Donegan for good reason, all outstanding stock
options of Mr. Donegan will become vested. Pursuant to the employment agreement,
Mr. Donegan's salary is established annually by the Board of Directors, but may
not be less than $252,000 per year. The amount of his annual bonus is at the
sole discretion of the Board of Directors. Furthermore, Mr. Donegan has agreed
that he will not directly or indirectly compete with the Company during the
course of his employment and for an additional one-year period thereafter.
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Mr. DiPietro and the Company entered into an employment agreement on May
14, 1999. The employment agreement provides that Mr. DiPietro will serve as
Executive Vice President of Finance and Chief Financial Officer of the Company.
Mr. DiPietro may voluntarily terminate this employment after giving the Company
written notice of intent to terminate at least thirty (30) days prior to the
effective date of such termination. The Company may terminate his employment at
any time with or without cause. If the Company terminates Mr. DiPietro's
employment without cause if Mr. DiPietro terminates his employment for good
reason (as defined in the employment agreement), he will be entitled to receive
a lump sum payment equal to eighteen months' base salary plus his highest annual
bonus from the three most recent years. In addition, upon a termination by the
Company without cause or termination by Mr. DiPietro for good reason, all
outstanding stock options of Mr. DiPietro will become vested. Pursuant to the
employment agreement, Mr. DiPietro's salary is established annually by the Board
of Directors, but may not be less than $183,750 per year. The amount of his
annual bonus is at the sole discretion of the Board of Directors. Furthermore,
Mr. DiPietro has agreed that he will not directly or indirectly compete with the
Company during the course of his employment and for an additional one-year
period thereafter.
Mr. Chow and the Company entered into an employment agreement on May 14,
1999. The employment agreement provides that Mr. Chow will serve as Senior Vice
President and Chief Technology Officer of the Company. Mr. Chow may voluntarily
terminate this employment after giving the Company written notice of intent to
terminate at least thirty (30) days prior to the effective date of such
termination. The Company may terminate his employment at any time with or
without cause. If the Company terminates Mr. Chow's employment without cause or
Mr. Chow terminates his employment for good reason (as defined in the employment
agreement), he will be entitled to a lump sum payment equal to one years' base
salary plus his highest annual bonus amount from the three most recent years. In
addition, upon a termination by the Company for cause or a termination by Mr.
Chow for good reason, all outstanding stock options of Mr. Chow will become
vested. Pursuant to the employment agreement, Mr. Chow's salary is established
annually by the Board of Directors, but may not be less than $183,750 per year.
The amount of his annual bonus is at the sole discretion of the Board of
Directors.
Mr. Gurler and the Company entered into an employment agreement on May 16,
1999. The employment agreement provides that Mr. Gurler will serve as Senior
Vice President of Operations of the Company. Mr. Gurler may voluntarily
terminate this employment after giving the Company written notice of intent to
terminate at least thirty (30) days prior to the effective date of such
termination. The Company may terminate his employment at any time with or
without cause. If the Company terminates Mr. Gurler's employment without cause,
or Mr. Gurler terminates his employment for good reason (as defined in the
employment agreement), he will be entitled to a lump sum payment equal to one
years' base salary plus his highest annual bonus amount from the three most
recent years. In addition, upon a termination by the Company for cause or a
termination by Mr. Gurler for good reason, all outstanding stock options of Mr.
Gurler will become vested. Pursuant to the employment agreement, Mr. Gurler's
salary is established annually by the Board of Directors, but may not be less
than $157,500 per year. The amount of his annual bonus is at the sole discretion
of the Board of Directors.
Mr. Parks and the Company entered into an employment agreement on August 9,
1999. The employment agreement provides that Mr. Parks will serve as President
of Chief Operating Officer of the Company. Mr. Parks may voluntarily terminate
this employment after giving the Company written notice of intent to terminate
at least thirty (30) days prior to the effective date of such termination. The
Company may terminate his employment at any time with or without cause. If the
Company terminates Mr. Parks's employment without cause or Mr. Parks terminates
his employment for good reason (as defined in the employment agreement), he will
be entitled to a lump sum payment equal to eighteen months' base salary plus the
highest annual bonus amount from the three most recent years. Pursuant to the
employment agreement, Mr. Parks's salary is established annually by the Board of
Directors, but may not be less than
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<PAGE> 13
$249,600 per year. The amount of his annual bonus is at the sole discretion of
the Board of Directors except that Mr. Parks' employment agreement sets his
annual bonus for 1999 at $175,000. Furthermore, Mr. Parks has agreed that he
will not directly or indirectly compete with the Company during the course of
his employment and for an additional one-year period thereafter.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors currently consists of
Mr. Loeb and Dr. Sprague, each of whom is an independent, non-employee director.
The Compensation Committee is responsible for developing the compensation
programs that relate to the Company's executive officers, senior management and
other key employees and for establishing the specific short- and long-term
compensation elements thereunder. The Compensation Committee also oversees the
general compensation structure for all of the Company's employees. In addition,
the Compensation Committee administers the Company's 1993 Stock Plan, 1994 Stock
Plan, 1996 Stock Plan, 1996 Director Stock Plan, 1996 Stock Purchase Plan, 1997
Stock Plan and 1999 Stock Plan. Of these Plans, only the 1997 Stock Plan and the
1999 Stock Plan have shares remaining which are available for grant.
The Company's executive compensation program established by the
Compensation Committee is designed to provide levels of compensation in formats
that assist the Company in attracting, motivating and retaining qualified
executives by providing a competitive compensation package geared to individual
and corporate performance. The Compensation Committee strives to establish
performance criteria, evaluate performance and establish base salary, annual
bonuses and long-term incentives for the Company's key decision makers based
upon performance and is designed to provide appropriate incentives for
maximization of the Company's short- and long-term financial results for the
benefit of the Company's shareholders.
In order to meet its objectives, the Compensation Committee has chosen
three basic components for the Company's executive compensation program to meet
the Company's compensation philosophy. Base salaries, the fixed regular
component of executive compensation, are based upon (i) base salary levels among
a competitive peer group, (ii) the Company's past financial performance and
future expectations, (iii) the general and industry-specific business
environment and (iv) individual performance. Annual bonuses, which are directly
linked to the Company's yearly performance, are designed to provide additional
cash compensation based on short-term performance of certain key employees.
Stock option grants, under the long-term component of executive compensation,
are designed to incentivize and reward executive officers and key employees for
delivering value to the Company's shareholders over a longer, measurable period
of time. Historically, the Company has used the grant of stock options that vest
over some measurable period of time, currently five years, to accomplish this
objective.
Mr. Donegan is the Chief Executive Officer and Chairman of the Board of
Directors. His fiscal 1999 performance was evaluated on the basis of the factors
described above applicable to executive officers generally. His base salary was
based on a number of factors, including the base salaries of executives
performing similar functions for peer companies and his employment contract. The
annual bonus and stock option grant components of his compensation, as well as
his salary, reflect the successful completion of the Calogic acquisition, the
Company's financial performance, the continued introduction and
commercialization of new products and progress toward achieving business goals,
as well as the achievement by Mr. Donegan of other non-financial goals. In
assessing Mr. Donegan's performance for fiscal 1999, the Compensation Committee
concluded that the financial and non-financial goals on which his compensation
was based had been achieved.
In general, under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Company cannot deduct, for federal income tax
purposes, compensation in excess of $1,000,000 paid to certain executive
officers. This deduction limitation does not apply, however, to compensation
that constitutes "qualified performance-based compensation" within the meaning
of Section 162(m) of the Code and the
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<PAGE> 14
regulations promulgated thereunder. The Company has considered the limitations
on deductions imposed by Section 162(m) of the Code, and it is the Company's
present intention that, for so long as it is consistent with its overall
compensation objective, substantially all tax deductions attributable to
executive compensation will not be subject to the deduction limitations of
Section 162(m) of the Code.
Respectfully submitted by the Compensation Committee:
Manfred Loeb
Steward S. Flaschen
John L. Sprague
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors has established a Compensation Committee
currently consisting of Mr. Loeb and Dr. Sprague. No person who served as a
member of the Compensation Committee was, during the fiscal year ended December
31, 1999, an officer or employee of the Company or any of its subsidiaries, was
formerly an officer of the Company or any of its subsidiaries, or had any
relationship requiring disclosure herein. No executive officer of the Company
serves as a member of the board of directors or compensation committee of any
entity which has one or more executive officers serving as a member of the
Company's Board of Directors or Compensation Committee.
COMPENSATION OF DIRECTORS
During 1999, Directors who were not employees of the Company received
$2,500 per quarter as a retainer (in 2000, the Directors will also receive a
$2,500 retainer per quarter), $1,000 for each meeting of the Board of Directors
attended in person, $500 for each teleconference meeting of the Board of
Directors and $1,000 for each committee meeting, unless such committee meeting
is held on the same day as a meeting of the Board of Directors in which case the
compensation is reduced to $500. No employee of the Company receives separate
compensation for services rendered as a director. All directors are reimbursed
for expenses in connection with attending Board and committee meetings.
On March 14, 1997, the Board of Directors of the Company adopted the 1997
Stock Option Plan, which was approved by the Company's shareholders at the
Special Meeting in Lieu of Annual Meeting held on May 30, 1997. Among other
provisions of the 1997 Stock Option Plan, each director, who is not also an
employee or consultant of the Company, will receive on the third Monday in July,
1997 (and on the same day each year thereafter) an option to purchase 5,000
shares of Common Stock (the "Director Options"). Each person who is not also an
employee or consultant of the Company and becomes a director after the third
Monday in July, 1997 will receive, upon the date of his or her initial election
as a director, an option to purchase 5,000 shares of Common Stock. In 1999, the
Company increased this option grant from 5,000 to 7,500 shares. The Director
Options granted will vest one-fifth on each anniversary of the date of grant and
have an exercise price equal to the fair market value of the Common Stock on the
date of grant. The term of each Director Option will be for a period of ten
years from the date of grant. Director Options will be subject to accelerated
vesting under certain circumstances and may be transferred to the extent vested.
On February 17, 1999, the Board of Directors adopted the 1999 Stock Plan, which
was approved by the Company's shareholders at the Annual Meeting held on May 28,
1999. The 1999 Stock Plan provides for 1,200,000 shares of the Company's Common
Stock to be reserved for the grant of incentive stock options to employees of
the Company and the grant of non-qualified stock options, stock awards and
opportunities to make direct purchases of stock in the Company to employees,
directors, officers and consultants of the Company. Directors are eligible to
receive option grants under the 1999 Stock Plan and the Company intends to grant
options to the Directors consistent with past practices.
The Company has purchased directors' and officers' liability insurance
covering all of the Company's directors and officers. The aggregate premium for
this insurance policy in 1999 was 225,000.
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STOCK PERFORMANCE GRAPH
The following performance graph compares the percentage change in the
cumulative total shareholder return on the Company's Common Stock during the
period from the Company's initial public offering on April 2, 1996 through
December 31, 1999, with the cumulative total return on (i) a group consisting of
the Company's peer corporations on a line-of-business basis (the "Peer Group")
and (ii) the Nasdaq Composite Index (Total Return). The comparison assumes $100
was invested on April 2, 1996 in the Company's Common Stock, the Peer Group and
the Nasdaq Composite Index and assumes reinvestment of dividends, if any. The
Peer Group consists of all corporations that are members of the semiconductor
industry with 3674 as their Primary Standard Industrial Classification Number.
<TABLE>
<CAPTION>
SIPEX CORPORATION NASDAQ COMPOSITE INDEX
COMMON STOCK PEER GROUP (TOTAL RETURN)
----------------- ---------- ----------------------
<S> <C> <C> <C>
4/2/96 100.00 100.00 100.00
12/31/96 271.58 164.79 115.56
12/31/97 509.47 171.73 141.36
12/31/98 591.58 258.55 199.37
12/31/99 413.68 556.30 351.64
</TABLE>
CERTAIN TRANSACTIONS
Pursuant to an Agreement of Lease, dated January 31, 1996, as amended
September 15, 1997, the Company leases its Billerica facility of approximately
66,000 square feet from ATC Billerica Corporation, an affiliate of Tractebel
S.A. Under the Agreement of Lease, the Company will pay monthly rent of $28,534
for the first year of the lease, which payments are subject to an annual
escalation. The Agreement of Lease expires on January 31, 2003, subject to an
option of the Company to extend such lease for an additional five-year period.
Mr. Loeb is affiliated with Tractebel S.A.
On December 14, 1998, the Company made a loan to Frank R. DiPietro,
Executive Vice President, Treasurer and Chief Financial Officer of the Company,
in the sum of $250,000 cash. The loan was secured by a Pledge and Security
Agreement dated December 14, 1998 and was evidenced by the issuance and delivery
to the Company of a Promissory Note bearing interest at a rate of 8% per annum,
with interest payable on a monthly basis and the principal and any remaining
interest payable to the order of the Company on December 14, 1999. On December
21, 1999, the repayment of the loan was extended through the issuance and
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<PAGE> 16
delivery to the Company of a Promissory Note bearing interest at a rate of 8%
per annum, with interest payable on a monthly basis and the principal and any
remaining interest payable to the order of the Company on December 21, 2000.
INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of KPMG LLP as the Company's
independent accountants for the 2000 fiscal year. KPMG LLP has served as the
Company's independent accounts commencing with the year ended December 31, 1995.
Representatives of KPMG LLP are expected to be present at the Annual Meeting.
They will have the opportunity to make a statement if they desire to do so and
will also be available to respond to appropriate questions from stockholders.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who own more than ten percent of a
registered class of the Company's equity securities (collectively, "Reporting
Persons"), to file reports of ownership on Forms 3, 4 and 5 with the Securities
and Exchange Commission and the Company. Based on the Company's review of copies
of such forms and written representations from the Reporting Persons, the
Company believes that all its officers, directors and greater than ten percent
shareholders complied with all filing requirements applicable to them with
respect to transactions during fiscal year 1999.
EXPENSES AND SOLICITATION
The cost of soliciting proxies on behalf of the Company will be borne by
the Company. The Company will pay banks, brokers and other entities that
exercise fiduciary powers which hold shares of Common Stock of record in nominee
name or otherwise or as a participant in a registered clearing agency or which
hold shares of Common Stock on behalf of beneficial owners and deposit such
shares for safekeeping with another entity that exercises fiduciary powers their
reasonable expenses for completing the mailing to security holders of proxy
soliciting material and annual reports supplied by the Company. Further
solicitation may be made by the officers and employees of the Company by mail,
telephone, telegraph or personal interview without additional compensation. The
Company also may retain a professional proxy solicitation service at the
Company's expense to assist in the solicitation of proxies if necessary.
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the Company's proxy
materials to be furnished to all stockholders entitled to vote at the 2001
Annual Meeting of Stockholders pursuant to SEC Rule 14a-8 must be received at
the Company's principal executive offices not later than December 15, 2000.
------------------------
THE BOARD OF DIRECTORS ENCOURAGES SHAREHOLDERS TO ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. SHAREHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
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SKU # 1504-PS-00
<PAGE> 18
DETACH HERE
PROXY
SIPEX CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 2000
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of SIPEX Corporation, a Massachusetts
corporation (the "Corporation"), hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders and Proxy Statement, each dated April 13, 2000
and hereby appoints James E. Donegan and Frank R. DiPietro, and each of them,
proxies and attorneys-in-fact, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
Annual Meeting of Shareholders of the Corporation to be held at BankBoston
Conference & Training Center, 35th Floor, 100 Federal Street, Boston,
Massachusetts 02110 on Friday, May 19, 2000 at 10:00 a.m., local time, and at
any adjournment or adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on all the matters set forth on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE SEE REVERSE SIDE
<PAGE> 19
DETACH HERE
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR AND AS SAID PROXIES
DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL
MEETING OF SHAREHOLDERS.
1. To elect Mr. Manfred Loeb as a member of the Board of Directors to
serve for a three-year term as a Class I Director.
[ ] FOR [ ] WITHHOLD
and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment or adjournments thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
(THIS PROXY SHOULD BE DATED AND MUST BE SIGNED BY THE SHAREHOLDER(S)
EXACTLY AS HIS OR HER NAME APPEARS HEREON, AND RETURNED PROMPTLY IN THE ENCLOSED
ENVELOPE. Persons signing in a fiduciary capacity should so indicate. If shares
are held by joint tenants or as community property, both should sign.)
Signature: ______________ Date: _______ Signature:________________ Date: ______
