<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
CN BIOSCIENCES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(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:
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(5) Total fee paid:
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[ ] 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
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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
LOGO
March 31, 1997
Dear Stockholders:
You are cordially invited to attend the annual meeting of stockholders (the
"Annual Meeting") of CN Biosciences, Inc. (the "Company"), which will be held at
the offices of E.M. Warburg, Pincus & Co., LLC, 466 Lexington Avenue, New York,
New York on Wednesday, April 23, 1997, commencing at 10:00 A.M.
The enclosed Notice and Proxy Statement contain details concerning the
business to come before the Annual Meeting. You will note that the Board of
Directors of the Company recommends a vote "FOR" each of the proposals listed in
the Notice and Proxy Statement. Please sign and return your proxy card in the
enclosed envelope at your earliest convenience to assure that your shares will
be represented and voted at the meeting even if you cannot attend.
Sincerely,
Stelios B. Papadopoulos
Chairman of the Board
Chief Executive Officer and President
CN Biosciences, Inc. - 10394 Pacific Center Court - San Diego, Ca
92121 - Tel 619-450-5500 - Fax 619-450-5522
<PAGE> 3
CN BIOSCIENCES, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
APRIL 23, 1997
------------------------
To the Stockholders of
CN BIOSCIENCES, INC.
The annual meeting of stockholders (the "Annual Meeting") of CN
Biosciences, Inc., a Delaware corporation (the "Company"), will be held at the
offices of E.M. Warburg, Pincus & Co., LLC, 466 Lexington Avenue, New York, New
York on Wednesday, April 23, 1997, at 10:00 A.M., New York City time, for the
following purposes:
1. To elect five directors to the Company's Board of Directors;
2. To approve an amendment to the Company's Stock Option Plan to increase
the number of shares of the Company's Common Stock, par value $.01 per
share, reserved for issuance thereunder by 250,000 shares;
3. To ratify the appointment by the Board of Directors of Ernst & Young LLP
as independent auditors for the Company for the fiscal year ending
December 31, 1997; and
4. To act upon such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 25, 1997,
as the record date for the determination of stockholders entitled to receive
notice of and to vote at the Annual Meeting and any adjournment or postponement
thereof.
By order of the Board of Directors,
James G. Stewart
Secretary
March 31, 1997
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
ANNUAL MEETING, PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS
VOTED AT THE ANNUAL MEETING. IN THE EVENT YOU ATTEND THE ANNUAL MEETING AND VOTE
IN PERSON, YOUR PROXY WILL NOT BE USED.
<PAGE> 4
CN BIOSCIENCES, INC.
10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement (the "Proxy Statement") is furnished in connection
with the solicitation of proxies by the Board of Directors of CN Biosciences,
Inc., a Delaware corporation (the "Company"), to be voted at the annual meeting
of stockholders of the Company to be held on Wednesday, April 23, 1997, at 10:00
A.M., New York City time, at the offices of E.M. Warburg, Pincus & Co., LLC, 466
Lexington Avenue, New York, New York, and at any adjournment or postponement
thereof (the "Annual Meeting"). A copy of the Company's Annual Report to
Stockholders for the fiscal year ended December 31, 1996, this Proxy Statement
and the accompanying proxy card are first being sent or given to stockholders on
or about March 31, 1997.
Properly executed proxies received prior to the Annual Meeting, unless
revoked, will be voted in accordance with the specified instructions. Regarding
the election of directors, stockholders may vote in favor of all nominees or
withhold their votes as to all nominees or withhold their votes as to specific
nominees. With respect to all other proposals to be voted upon, stockholders may
vote in favor of a proposal, against a proposal or may abstain from voting.
Stockholders should specify their choices on the enclosed proxy card. If no
instructions are given with respect to the matters to be acted upon, the persons
named in the proxy solicited by the Company's Board of Directors (the "Board of
Directors") intend to vote FOR the election of the directors listed below, FOR
approval of the amendment to the Company's Amended and Restated 1992 Stock
Option Plan (the "Stock Option Plan"), and FOR ratification of the appointment
by the Board of Directors of Ernst & Young LLP as independent auditors for the
Company for the fiscal year ending December 31, 1997. If any other matter should
be presented at the Annual Meeting upon which a vote may properly be taken, the
shares represented by the proxy will be voted with respect thereto by the person
or persons holding such proxy as in their judgment is in the best interests of
the Company and its stockholders. The Board of Directors does not know of any
matters other than as described in the Notice of Annual Meeting that are to come
before the Annual Meeting.
Stockholders may vote by either completing and returning the enclosed proxy
card prior to the Annual Meeting, voting in person at the Annual Meeting or
submitting a signed proxy card at the Annual Meeting. Stockholders who execute
proxies may revoke them at any time before they are voted at the Annual Meeting
by written notice to the Secretary of the Company, by submitting a new proxy or
by personal ballot at the Annual Meeting.
The Board of Directors has fixed the close of business on March 25, 1997 as
the Record Date (the "Record Date") for determining stockholders entitled to
notice of and to vote at the Annual Meeting.
As of the Record Date, the Company had 5,172,367 shares of Common Stock,
par value $.01 per share ("Common Stock"), outstanding and entitled to vote at
the Annual Meeting. The Common Stock is the only outstanding class of voting
securities of the Company. Each stockholder is entitled to one vote for each
share of Common Stock owned at the close of business on the Record Date.
The presence in person or by proxy of the holders of a majority of
outstanding shares of Common Stock is necessary to constitute a quorum in
connection with the transaction of business at the Annual Meeting. The
affirmative vote of a majority of shares of Common Stock present in person or by
proxy and entitled to vote at the Annual Meeting is required for election of
directors, approval of the amendment to the Stock Option Plan and ratification
of the appointment of Ernst & Young LLP as auditors for the Company. Broker
"non-votes" (i.e., proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owner or other persons
entitled to vote shares as to a matter with respect to which the brokers or
nominees do not have discretionary power to vote) and shares for which duly
executed proxies have been
<PAGE> 5
received but with respect to which holders of shares have abstained from voting
will be treated as present for purposes of determining the presence of a quorum
at the Annual Meeting. Broker "non-votes" are only counted for purposes of
determining whether a quorum is present and, therefore, will not be included in
vote totals and will have no effect on the outcome of the votes on the proposals
to be acted upon at the Annual Meeting. Abstentions will be counted as present
and entitled to vote, and will have the effect of a negative vote with respect
to the proposals to be acted upon at the Annual Meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
Pursuant to the Company's Amended and Restated By-Laws, the Board of
Directors has set the number of directors of the Company at five. Accordingly,
five directors are to be elected to hold office until the next annual meeting of
stockholders and until their successors have been duly elected and qualified. If
the proxy is executed in such a manner as not to withhold authority for the
election of any or all of the nominees for directors, then the persons named in
the proxy will vote the shares represented by the proxy for the election of the
five nominees set forth below. If the proxy indicates that the stockholder
wishes to withhold a vote from one or more nominees for directors, such
instructions will be followed by the persons named in the proxy. Each of the
nominees set forth below has consented to serve as a director if elected at the
Annual Meeting. All of the nominees are currently members of the Board of
Directors.
Should any one or more of these nominees become unable to serve for any
reason, which is not anticipated, the Board of Directors may, unless the Board
of Directors by resolution provides for a lesser number of directors, designate
substitute nominees, in which event the persons named in the enclosed proxy card
will vote for the election of such substitute nominee or nominees.
NOMINEES FOR ELECTION AS DIRECTORS
The respective ages, positions with the Company, business experience during
the past five years and directorships in other companies of the nominees for
election as directors of the Company are set forth below.
Joseph P. Landy, 35, has served as a director of the Company since March
1992. Since January 1994, Mr. Landy has been a Managing Director of E.M.
Warburg, Pincus & Co., LLC ("EMW LLC") and its predecessor, E.M. Warburg, Pincus
& Co., Inc. ("EMW Inc."). Mr. Landy has been employed in various capacities by
EMW LLC and EMW Inc. since 1985. Mr. Landy serves on the Board of Directors as a
nominee of Warburg. Mr. Landy also serves as a director of Level One
Communications, Inc., Nova Corporation and several privately held companies.
Dr. Richard A. Lerner, 58, has served as a director of the Company since
February 1997. Since 1991, Dr. Lerner has been the President of The Scripps
Research Institute. From 1986 to 1991, Dr. Lerner was Director of the Research
Institute of Scripps Clinic ("Scripps"). From 1982 to 1986, Dr. Lerner served as
Chairman of the Department of Molecular Biology of Scripps. Previously, he held
staff appointments at Scripps and the Wistar Institute in Philadelphia. Dr.
Lerner is a graduate of Northwestern University and Stanford Medical School and
received postdoctoral training at Scripps. Dr. Lerner is a member of the
National Academy of Science USA and numerous editorial and scientific advisory
boards.
S. Joshua Lewis, 34, has served as a director of the Company since June
1995. Mr. Lewis is a Vice President of EMW LLC and has been employed in various
capacities by EMW LLC and EMW Inc. since 1989. Mr. Lewis serves on the Board of
Directors as a nominee of Warburg. Mr. Lewis also serves as a director of
Cambridge Neuroscience, Inc.
Robert E. McGill, III, 65, has served as a director of the Company since
November 1995. Since February 1997, Mr. McGill has served as a Managing Director
of Berkshires Management Company, L.L.C., the general partner of The Berkshires
Capital Investors Limited Partnership. For more than the past five years, Mr.
McGill has also served as a member of the Board of Managers of seven variable
annuity managed separate accounts and a Trustee of five mutual funds sponsored
by The Travelers Insurance Company. From
2
<PAGE> 6
1989 to December 1994, Mr. McGill served as Executive Vice President -- Finance
and Administration of The Dexter Corporation, where he also served as a director
from 1983 to April 1995. Mr. McGill also serves as a director of Connecticut
Surety Corporation and Chemfab Corporation.
Stelios B. Papadopoulos, 56, has served as Chairman of the Board and Chief
Executive Officer of the Company since January 1993 and President of the Company
since June 1995. From June 1992 to December 1992, Mr. Papadopoulos served as
President of Fisher Scientific Worldwide Inc. (now Fisher Scientific
International Inc.) ("Fisher") and was responsible for the day-to-day operations
of Fisher's worldwide organization which provides equipment, laboratory supplies
and various other products to customers in the life sciences research market.
From May 1989 to June 1992, Mr. Papadopoulos served as President of Fisher
Scientific Company, the principal operating unit of Fisher. Prior to joining
Fisher Scientific Company, Mr. Papadopoulos served in a number of companies
involved in the life sciences industry including Instrumentation Laboratory and
Orion Research.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE NOMINEES NAMED ABOVE.
EXECUTIVE OFFICERS
In addition to Mr. Papadopoulos, the following persons serve as executive
officers of the Company: James G. Stewart, Ben Matzilevich, John T. Snow and
Douglas J. Greenwold. Their respective ages, positions with the Company and
business experience during the past five years are set forth below. The
Company's executive officers serve at the pleasure of the Board of Directors.
Douglas J. Greenwold, 55, has served as Vice President, Sales and Marketing
of the Company since January 1994. From 1990 to 1993, Mr. Greenwold was employed
in various capacities, including Vice President Sales and Marketing, Research
Products Americas at Life Technologies, Inc., a supplier of research products to
the life sciences research market. Prior to joining Life Technologies, Mr.
Greenwold held a number of sales and marketing positions at Survival Technology,
Inc., a supplier of cardiac monitoring and drug delivery technologies and Xerox
Corporation.
Ben Matzilevich, 48, has served as Vice President, Market
Development -- Niche Applications since joining the Company in April 1995, and
has served as General Manager of the Oncogene Research Products business since
its acquisition in August 1995. From August 1993 to March 1995, Mr. Matzilevich
served as Vice President Sales and Marketing with Endogen, Inc., a producer and
seller of research products for the study of cytokines. In November 1989, Mr.
Matzilevich co-founded Biosource International, Inc., a research products
company, and through August 1993, was primarily responsible for day-to-day
operations, product development and development of the sales and marketing
organization. Prior to founding Biosource, Mr. Matzilevich held various
positions at NEN/E.I. du Pont de Nemours and Company and acted as an industry
consultant to a number of research products companies serving the life sciences
research industry.
John T. Snow, Ph.D., 53, has served as Vice President, New Business
Development of the Company since March 1992, and was Vice President, Marketing
and Sales of the Company from April 1989 until March 1992. Dr. Snow has been
employed by the Company and its predecessors in various other capacities since
1975 and is the author and co-author of over 40 published scientific papers.
James G. Stewart, 44, has served as Vice President, Administration, Chief
Financial Officer and Secretary of the Company since June 1995. From April 1994
to April 1995, Mr. Stewart served as Vice President -- Finance and Chief
Financial Officer of Fightertown Entertainment, Inc., and from October 1988 to
April 1994, Mr. Stewart served as Vice President -- Finance and Chief Financial
Officer of VERTEQ, Inc. Mr. Stewart is a certified public accountant and a
former partner of Arthur Young & Company (now Ernst & Young LLP).
3
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 25, 1997, certain information
regarding the beneficial ownership of Common Stock by (i) each of the Company's
executive officers, (ii) each director of the Company, (iii) each person who is
known to the Company to own beneficially more than 5% of the Common Stock and
(iv) all officers and directors of the Company as a group. Such information is
based, in part, upon information provided by such persons.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-------------------------
NAME NUMBER PERCENT
-------------------------------------------------------------- ---------- -------
<S> <C> <C>
Warburg, Pincus Investors, L.P.(1)............................ 2,248,485 43.5%
466 Lexington Avenue
New York, New York 10017
ABS MB (C-N) Limited Partnership.............................. 910,190 17.6
One South Street
Baltimore, Maryland 21202
The Kaufmann Fund, Inc.(2).................................... 419,500 8.1
140 East 45th Street
New York, New York 10017
Stelios B. Papadopoulos(3).................................... 191,365 3.6
James G. Stewart(4)........................................... 15,102 *
John T. Snow.................................................. 43,597 *
Ben Matzilevich(5)............................................ 39,854 *
Douglas J. Greenwold(6)....................................... 30,190 *
Joseph P. Landy(7)............................................ 2,248,485 43.5
Richard A. Lerner............................................. -- --
S. Joshua Lewis............................................... -- --
Robert E. McGill, III(8)...................................... 4,366 *
Directors and Executive Officers as a group (9 persons)(9).... 2,572,959 48.3
</TABLE>
Each person or entity named above has sole voting and investment power as to
the shares shown to be beneficially owned, unless otherwise indicated below.
- ---------------
* Less than 1%.
(1) The sole general partner of Warburg, Pincus Investors, L.P. ("Warburg") is
Warburg, Pincus & Co., a New York general partnership ("WP"). E.M. Warburg,
Pincus & Co., LLC ("EMW LLC") manages Warburg. The members of EMW LLC are
substantially the same as the partners of WP. Lionel I. Pincus is the
managing partner of WP and the managing member of EMW LLC and may be deemed
to control both WP and EMW LLC. WP, as the sole general partner of Warburg,
has a 20% interest in the profits of Warburg. Mr. Landy, a director of the
Company, is a Managing Director and member of EMW LLC and a general partner
of WP. As such, Mr. Landy may be deemed to have an indirect pecuniary
interest (within the meaning of Rule 16a-1 under the Securities Exchange Act
of 1934 (the "Exchange Act")) in an indeterminate portion of the shares
beneficially owned by Warburg and WP. See Note (7) below.
(2) As reflected as beneficially owned at December 31, 1996 in a Statement on
Schedule 13G received by the Company on March 4, 1997.
(3) Includes 110,249 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of March 25, 1997.
(4) Includes 9,463 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of March 25, 1997.
(5) Includes 9,464 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of March 25, 1997.
(6) Includes 28,390 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of March 25, 1997.
(7) All of the shares of Common Stock indicated as owned by Mr. Landy are owned
directly by Warburg and are included because of Mr. Landy's affiliation with
Warburg. Mr. Landy disclaims "beneficial ownership" of these shares within
the meaning of Rule 13d-3 under the Exchange Act, except to the extent of
his indirect pecuniary interest. See Note (1).
(8) The shares of Common Stock beneficially owned by Mr. McGill are held through
a revocable trust.
(9) Includes shares of Common Stock which may be acquired within 60 days of
March 25, 1997. See Notes (3), (4), (5) and (6).
4
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation of the
Company's Chief Executive Officer and the four other most highly compensated
executive officers (collectively, the "Named Executive Officers") for the
periods indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- --------------------------- ----- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Stelios B. Papadoupoulos(1) 1996 $228,846 $ 45,000 $ -- 40,000 $ 2,970
Chief Executive Officer
and 1995 204,327 -- 162,640 -- 2,112
President
Douglas J. Greenwold(2) 1996 118,923 30,000 -- 20,000 3,603
Vice President, Sales and 1995 115,000 -- -- -- 3,352
Marketing
John T. Snow(3) 1996 112,019 30,000 -- 20,000 3,885
Vice President, New 1995 110,021 -- -- -- 3,804
Business Development
James G. Stewart(4) 1996 152,788 35,000 -- 25,000 7,462
Vice President, 1995 80,865 -- 21,518 47,317 45,471
Administration, Chief
Financial Officer and
Secretary
Ben Matzilevich(5) 1996 126,308 35,000 -- 25,000 345
Vice President, Market 1995 87,692 -- -- 23,659 --
Development -- Niche
Applications
</TABLE>
- ---------------
(1) "Other Annual Compensation" in 1995 represents forgiveness of principal and
interest related to a note receivable from Mr. Papadopoulos in connection
with his purchase of capital stock of the Company pursuant to his employment
agreement. "All Other Compensation" includes $1,098 and $1,098 in premiums
for personal beneficiary life insurance in excess of non-taxable group
limits, and $1,872 and $1,014 of Company matching 401(k) contributions in
1996 and 1995, respectively.
(2) "All Other Compensation" includes $753 and $580 in premiums for personal
beneficiary life insurance in excess of nontaxable group limits and $2,850
and $2,772 of Company matching 401(k) contributions in 1996 and 1995,
respectively.
(3) "All Other Compensation" includes $1,035 and $1,035 in premiums for personal
beneficiary life insurance in excess of non-taxable group limits and $2,850
and $2,769 of Company matching 401(k) contributions in 1996 and 1995,
respectively.
(4) Joined the Company in June 1995. "Other Annual Compensation" in 1995
represents tax reimbursement payments related to relocation. "All Other
Compensation" includes $39,231 relocation expense reimbursement in 1995,
$4,612 and $4,680 of premiums for personal beneficiary life insurance in
excess of non-taxable group limits and $2,850 and $1,560 of Company matching
401(k) contributions in 1996 and 1995, respectively.
(5) Joined the Company in April 1995. "All Other Compensation" represents
premiums for personal beneficiary life insurance in excess of non-taxable
group limits.
5
<PAGE> 9
The following table summarizes the number of shares and the terms of stock
options granted to the Named Executive Officers in 1996:
OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO TERM($)(1)(2)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION -----------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5% 10%
- -------------------------- ----------- ------------ -------------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stelios B. Papadopoulos... 40,000 16.4% $16.50 11/13/06 $415,070 $1,051,870
Douglas J. Greenwold...... 20,000 8.2 16.50 11/13/06 207,535 525,935
John T. Snow.............. 20,000 8.2 16.50 11/13/06 207,535 525,935
James G. Stewart.......... 25,000 10.2 16.50 11/13/06 259,419 657,419
Ben Matzilevich........... 25,000 10.2 16.50 11/13/06 259,419 657,419
</TABLE>
- ---------------
(1) The options have a ten-year term, subject to earlier termination under
certain circumstances. The options granted to each of the Named Executive
Officers vest annually in 20% increments, commencing on the first
anniversary of the date of grant.
(2) The potential realizable value is calculated based on the term of the option
at its time of grant and is calculated by assuming that the stock price on
the date of grant appreciates at the indicated annual rate compounded
annually for the entire term of the option and that the option is exercised
and sold on the last day of its term for the appreciated price. The 5% and
10% assumed rates of appreciation are derived from the rules of the
Securities and Exchange Commission (the "Commission") and do not represent
the Company's estimate or projection of the future market price of the
Common Stock.
AGGREGATED 1996 OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING OPTIONS AS IN-THE-MONEY OPTIONS AT
ACQUIRED ON DECEMBER 31, 1996(#) DECEMBER 31, 1996($)(1)
EXERCISE VALUE ----------------------------- -----------------------------
NAME (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stelios B.
Papadopoulos......... -- -- 82,686 67,563 $ 1,484,626 $ 569,894
Douglas J. Greenwold... -- -- 28,392 38,925 509,778 377,298
John T. Snow........... -- -- 6,624 20,000 118,934 37,500
James G. Stewart....... -- -- 9,463 62,854 169,908 726,544
Ben Matzilevich........ -- -- 4,732 43,927 84,964 386,710
</TABLE>
- ---------------
(1) Based on value of $18.375 per share, the closing price for the Common Stock
on December 30, 1996.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Messrs. Papadopoulos and
Matzilevich currently providing for their employment at annual base salaries of
$240,000 and $131,000, respectively. Mr. Papadopoulos' employment agreement
provides that the Board of Directors will review his compensation at least once
each year and award such bonuses and effect such increases in base salary as the
Board of Directors, in its sole discretion, determines are merited, based upon
his performance and consistent with the Company's compensation policies. Mr.
Matzilevich's employment agreement provides that in addition to any annual
adjustment made to his salary, he is eligible for a bonus up to 35% of base
salary, based on the achievement of certain agreed-upon objectives. In addition,
both of these executives may participate in such fringe benefits as are
generally provided to the Company's executives.
Unless terminated earlier in accordance with their respective terms, Mr.
Papadopoulos' employment agreement terminates on January 4, 1998, and Mr.
Matzilevich's employment agreement terminates on
6
<PAGE> 10
April 3, 1998. In addition, each of these agreements provides that the Company
and the executive will, not later than 90 days prior to the termination thereof,
begin to negotiate in good faith the terms of any extension of the employment
agreement.
If Mr. Papadopoulos' employment is terminated without cause, if there is a
material change in his duties, or if the Company does not offer to continue his
employment with the Company after the agreement's expiration at a base salary at
least equal to his then most recent salary, Mr. Papadopoulos will be entitled to
receive severance payments equal to his base salary payable for the 12-month
period from the date of such termination. The employment agreement with Mr.
Papadopoulos also provides that if, within 90 days of a Change of Control of the
Company (as defined below), Mr. Papadopoulos resigns from the Company, he will
be entitled to receive severance payments equal to his base salary payable over
the 12-month period following such resignation. In addition, Mr. Papadopoulos'
employment agreement provides that upon any such termination, any options to
purchase Common Stock then held by him will become exercisable to the full
extent that they would otherwise have become exercisable on January 4, 1998,
without regard to certain restrictions or deferrals of the right to exercise
such options.
Under Mr. Matzilevich's employment agreement, if Mr. Matzilevich's
employment is terminated other than for cause and such termination is not within
90 days of a Change of Control of the Company, Mr. Matzilevich will be entitled
to receive severance payments equal to the compensation due under his employment
agreement for the remainder of its term. If such termination without cause is
within 90 days of a Change of Control of the Company, Mr. Matzilevich will be
entitled to receive severance payments equal to the greater of (i) the
compensation due under his employment agreement for the remainder of its term or
(ii) his base salary payable over the 12-month period following such
termination. If, within 90 days of a Change of Control of the Company, Mr.
Matzilevich resigns from the Company, he will be entitled to receive severance
payments equal to his base salary payable over the 12-month period following
such resignation.
The Company has entered into agreements with each of Messrs. Stewart and
Greenwold and Dr. Snow providing for severance pay in the event of termination
of the executive's employment other than for cause or if, within 90 days of a
Change of Control of the Company, the executive's employment is terminated by
the Company other than for cause or the executive resigns. Upon termination of
employment within 90 days of a Change of Control, the executive will be eligible
to receive severance payments equal to his base salary payable over the 12-month
period following such termination. If the executive's employment is otherwise
terminated by the Company other than for cause, he will be eligible to receive
severance payments equal to his base salary payable over the six-month period
following such termination.
"Change of Control" is defined in the employment and severance agreements
discussed above, and in the agreements governing outstanding stock options, as
(i) an acquisition (other than directly from the Company) by an individual,
entity or a group (excluding the Company, an employee benefit plan of the
Company or E.M. Warburg, Pincus & Co., LLC or its affiliates) of 50% or more of
the Company's Common Stock, or voting securities; (ii) a change in a majority of
the Company's current Board of Directors (the "Incumbent Board") (excluding any
persons approved by a vote of at least a majority of the Incumbent Board or
persons elected with the concurrence of a majority of the Incumbent Board); or
(iii) the consummation of a complete liquidation or dissolution of the Company
or a merger, consolidation or sale of all or substantially all of the Company's
assets (collectively, a "Business Combination") other than a Business
Combination in which all or substantially all of the Company's stockholders
receive 50% or more of the stock of the Company resulting from the Business
Combination, at least a majority of the board of directors of the resulting
corporation were members of the Incumbent Board, and after which no person owns
50% or more of the stock of the resulting corporation, who did not own such
stock immediately before the Business Combination.
The Company maintains $1.0 million of key man life insurance on the lives
of Messrs. Papadopoulos and Matzilevich and Dr. Snow, naming the Company as
beneficiary.
Messrs. Stewart and Greenwold and Dr. Snow are eligible for incentive
bonuses up to approximately 35% of their base salaries, based on the achievement
of certain agreed-upon objectives.
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<PAGE> 11
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met six times during 1996. During 1996, each of the
directors during such period attended at least 75% of all meetings of the Board
of Directors and of each committee on which such director served as a member.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has, as standing committees, an Audit Committee, a Stock Option
Committee and a Compensation Committee. The Company does not have a Nominating
Committee.
Compensation Committee. Messrs. Landy and McGill are the members of the
Compensation Committee. The Compensation Committee provides recommendations to
the Board of Directors concerning salaries and incentive compensation for the
Company's officers and administers the Company's benefit plans, other than the
Stock Option Plan. The Compensation Committee met one time in 1996.
Audit Committee. Messrs. Lewis and McGill are the members of the Audit
Committee. The Audit Committee recommends to the Board of Directors the
engagement of the Company's independent public accountants and reviews the scope
and results of their audits and other services. The Audit Committee meets with
management and with the independent public accountants to review matters
relating to the quality of the Company's financial reporting and internal
accounting controls, including the nature, extent and results of the audits,
proposed changes to the Company's accounting principles and otherwise maintains
communications between the independent public accountants and the Board of
Directors. The Audit Committee met one time in 1996.
Stock Option Committee. Messrs. Landy and McGill are the members of the
Stock Option Committee. The Stock Option Committee determines grants under and
otherwise administers the Company's Stock Option Plan. The Stock Option
Committee met one time in 1996.
COMPENSATION OF DIRECTORS
Directors, other than Warburg's nominees, are reimbursed for expenses
incurred in attending meetings of the Board of Directors. In addition,
directors, other than those directors who are also employees of the Company or
Warburg's nominees, are paid $1,500 for each Board of Directors meeting
attended. Prior to February 1997, such directors were paid $500 for each Board
of Directors meeting attended. At the time that Mr. McGill joined the Board of
Directors, he was granted options to purchase 11,829 shares of Common Stock at
an exercise price of $3.38 per share. Additionally, under an agreement with the
Company, Mr. McGill from time to time provides certain consulting services for
which he is compensated at the rate of $1,000 per day. During 1996, no
consulting fees were paid by the Company to Mr. McGill. At the time that Dr.
Lerner joined the Board of Directors, he was granted options to purchase 25,000
shares of Common Stock at an exercise price of $14.50 per share.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy. The Compensation Committee generally follows
several guidelines to arrive at its recommendations to the Board of Directors
concerning the compensation of the Company's executive officers. The Company's
executive compensation program is designed to (i) attract and retain executive
officers who contribute to the long-term success of the Company, (ii) motivate
executive officers to achieve strategic business objectives and reward them for
their achievement, and (iii) fairly compensate executive officers based on their
corporate and individual performance and responsibilities.
To date, the primary elements of the Company's compensation program for its
executive officers have been (i) an annual compensation component consisting of
base salary and bonus, and (ii) a long-term compensation component consisting of
stock options granted under the Stock Option Plan.
Annual Compensation. The Compensation Committee has generally targeted
annual salary and bonus levels to be competitive with those paid to executives
at other companies that have similar operating dynamics.
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<PAGE> 12
Base salaries are determined by evaluating the responsibilities associated with
the position being evaluated and the individual's overall level of experience.
Annual salary adjustments are determined by giving consideration to the
Company's performance and the individual's contribution to that performance.
With the exception of Mr. Papadopoulos, each of the executive officers'
annual bonus is determined based on the achievement of certain agreed-upon
objectives. In determining these objectives, the Compensation Committee
considers the Company's performance and the individual's contribution to that
performance. Corporate performance is measured by various quantitative and
qualitative factors. However, the Compensation Committee believes that, in
accordance with its exercise of sound business judgment, the determination of
annual salary and bonus levels is inherently subjective and must include a
review of all relevant information, with no predetermined weight given to any of
the factors considered.
Messrs. Papadopoulos and Matzilevich are the only executive officers
currently under employment agreements. These agreements establish the minimum
annual base salaries for Messrs. Papadopoulos and Matzilevich. The annual base
salaries for Messrs. Stewart and Greenwold and Dr. Snow were, and future salary
increases for the executive officers will be, based on the considerations noted
above.
Long-Term Compensation. In order to align stockholder and executive officer
interests, the long-term component of the Company's executive compensation
program utilizes stock option awards whose value is directly related to the
value of the Common Stock. The Compensation Committee makes recommendations to
the Stock Option Committee concerning awards to executive officers. These stock
options are granted by the Stock Option Committee pursuant to the Stock Option
Plan. Individuals to whom stock options awards are to be granted and the amount
of Common Stock related to such awards are determined solely at the discretion
of the Stock Option Committee. Because individual stock option award levels will
be based on a subjective evaluation of each individual's overall past and
expected future contribution, no specific formula is used to determine such
awards for any executive.
Chief Executive Officer Compensation for 1996. Under the terms of the
employment agreement with Mr. Papadopoulos, the Board of Directors reviews Mr.
Papadopoulos' compensation at least once each year, and will award such bonuses
and effect such increases in base salary as it shall determine. The
determination by the Board of Directors with respect to Mr. Papadopoulos'
compensation for 1996 was based on the considerations noted above.
COMPENSATION COMMITTEE
Joseph P. Landy
Robert E. McGill, III (appointed in
February 1997)
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<PAGE> 13
COMPARATIVE STOCK PRICE PERFORMANCE GRAPH
The graph below compares the total cumulative return of a $100 investment
in the Common Stock during the period from October 2, 1996 (the date trading of
the Common Stock commenced) to December 31, 1996, to the performance of the same
amount invested in the Nasdaq Composite Index and the AMEX Biotechnology Index
during such period. The AMEX Biotechnology Index is an equal-dollar weighted
index of 15 mid-cap and large-cap biotechnology companies. The graph assumes
that dividends were reinvested.
COMPARISON OF TOTAL RETURN AMONG
CN BIOSCIENCES, INC.,
NASDAQ COMPOSITE INDEX
AND
AMEX BIOTECHNOLOGY INDEX
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
CN BIOSCIENCES, NASDAQ COMPOSITE AMEX BIOTECHNOL-
INC. INDEX OGY INDEX
<S> <C> <C> <C>
10/2/96 100.00 100.00 100.00
12/31/96 147.00 104.44 103.69
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No officer or employee of the Company currently serves as a member of the
Compensation Committee. Mr. Landy, a current member of the Compensation
Committee, and Frederick L. Bryant, a former director and former member of the
Compensation Committee, served on the Compensation Committee in 1996. Messrs.
Landy and Bryant have in the past served as officers of the Company. Messrs.
Landy and Bryant may be deemed to have an indirect pecuniary interest (within
the meaning of Rule 16a-1 under the Exchange Act), in an indeterminate portion
of the securities of the Company beneficially owned by Warburg and ABS MB (C-N)
Limited Partnership ("ABS"), respectively. Frederick L. Bryant served as a
director of the Company and as a member of the Compensation and Stock Option
Committees until his resignation from the Board of Directors in February 1997.
Mr. Bryant served on the Board of Directors as a nominee of ABS.
Warburg currently has the following rights with respect to the nomination
and election of directors to the Company's Board of Directors: for so long as
Warburg owns beneficially at least 20% of the outstanding shares
10
<PAGE> 14
of Common Stock, the Company will nominate and use reasonable efforts to have
two individuals designated by Warburg and reasonably acceptable to the Company
elected to the Company's Board of Directors, and from the date that Warburg owns
beneficially less than 20% of the outstanding shares of Common Stock but for so
long as it owns beneficially at least 10% of the outstanding shares of Common
Stock, the Company will nominate and use reasonable efforts to have one
individual designated by Warburg and reasonably acceptable to the Company
elected to the Company's Board of Directors.
For so long as ABS owns beneficially at least 10% of the outstanding shares
of Common Stock, the Company will nominate and use reasonable efforts to have
one individual designated by ABS and reasonably acceptable to the Company
elected to the Company's Board of Directors. ABS has not designated any
individual as a nominee for election as a director at the Annual Meeting. On
March 4, 1997, the Company filed a Registration Statement on Form S-1 with the
Commission relating to the offering of 1,000,000 shares of Common Stock, 910,190
shares of which are being sold by ABS. These shares constitute all of the shares
of Common Stock beneficially owned by ABS. Upon consummation of this offering
ABS will no longer have a nomination and election right.
CERTAIN TRANSACTIONS
The following is a summary of certain transactions among the Company and
its directors, executive officers and principal stockholders:
CONVERSION OF SERIES A CONVERTIBLE PREFERRED STOCK AND EXCHANGE OF SERIES B
PREFERRED STOCK
Upon the consummation of the initial public offering of Common Stock in
October 1996, Warburg converted its 4,001 shares of Series A Convertible
Preferred Stock into 788,814 shares of Class A Common Stock. Thereafter, Warburg
made the requisite certification required under the Certificate of Incorporation
regarding its share ownership to the Company and converted such shares of Class
A Common Stock into 788,814 shares of Common Stock.
Pursuant to an agreement among the Company, Warburg, ABS, Mr. Papadopoulos
and Dr. Snow (the "Conversion and Exchange Agreement"), upon the consummation of
the initial public offering of Common Stock, each share of Series B Preferred
Stock was exchanged for the number of shares of Common Stock that equalled the
liquidation preference of a share of Series B Preferred Stock ($100) divided by
the initial public offering price of the Common Stock ($12.50). As a result, all
of the shares of Series B Preferred Stock were exchanged for an aggregate of
1,435,424 shares. Warburg, ABS, Mr. Papadopoulos and Dr. Snow were the holders
of the Series B Preferred Stock, holding 124,023 shares, 50,356 shares, 4,377
shares and 672 shares, respectively and, accordingly, were issued 992,184,
402,848, 35,016 and 5,376 shares of Common Stock, respectively, upon such
exchange.
The Company granted certain registration rights to the holders of the
Series A Convertible Preferred Stock and Series B Preferred Stock with respect
to the shares of Common Stock issuable upon conversion or exchange, as
applicable. Additionally, the Company granted Warburg and ABS certain rights to
nominate directors as long as they continue to own specified percentages of the
outstanding shares of Common Stock as discussed above in "Compensation Committee
Interlocks and Insider Participation."
ACQUISITION OF THE COMPANY; RIGHTS OF WARBURG AND ABS
In March 1992, the Company acquired all of the issued and outstanding
capital stock, together with certain bank and intercompany indebtedness, of the
Company's subsidiaries from Biodor Holding AG, Ixora Holding AG and Biodor US
Holding Corporation. Warburg, ABS and certain current and former employees of
the Company provided the principal equity financing for these acquisitions by
purchasing from the Company 1,012,984 shares of Common Stock at $.42 per share,
4,001 shares of Series A Convertible Preferred Stock at $100 per share and
178,166 shares of Series B Preferred Stock at $100 per share, representing a
total investment of approximately $18.6 million. In addition, these investors
received certain registration rights.
11
<PAGE> 15
In connection with their initial investment in the Company, Warburg and ABS
received certain rights pursuant to a subscription and shareholder agreement,
including rights with respect to the nomination and election of directors to the
Company's Board of Directors. These rights were subsequently modified at the
time of the initial public offering. Pursuant to such rights, Warburg has
maintained two nominees to the Company's Board of Directors and ABS maintained
two nominees to the Company's Board of Directors until July 1996 and one nominee
from July 1996 until February 1997. In addition to their rights to nominate and
elect directors, until terminated at the time of the initial public offering,
Warburg and ABS were also beneficiaries of certain drag along, tag along,
subscription and informational rights.
TRANSACTIONS WITH OFFICERS
On January 4, 1993, Mr. Papadopoulos, the Company's Chairman of the Board,
Chief Executive Officer and President, purchased 44,100 shares of Common Stock
at $.42 per share and 4,377 shares of Series B Preferred Stock at $100 per
share, in exchange for $4,000 and a $452,000 promissory note. The Company has
granted Mr. Papadopoulos certain registration rights for such shares of Common
Stock. This unsecured note bore interest at the rate of 8% per annum and matured
on January 4, 1996. In accordance with the terms of the note, as a result of Mr.
Papadopoulos' continued employment with the Company, one-third of the principal
amount, together with accrued interest, was forgiven on each of the first three
anniversaries of the note.
Effective June 9, 1995, Richard B. Slansky, the former President and Chief
Operating Officer of the Company, resigned to pursue other business
opportunities. In connection therewith, the Company and Mr. Slansky entered into
an agreement which provided for the payment to Mr. Slansky of six months
severance pay and also provided for the sale by Mr. Slansky to the Company of
59,726 shares of Common Stock at a price of approximately $3.45 per share and
1,199 shares of Series B Preferred Stock at a price of $100 per share.
On January 31, 1996, Mr. Matzilevich, the Company's Vice President, Market
Development -- Niche Applications, purchased 28,390 shares of Common Stock at
$3.38 per share from the Company in exchange for a $96,000 promissory note. The
note bears interest at the rate of 5.65% per annum, matures on January 31, 1998,
and is secured by such shares of Common Stock. The Company has granted Mr.
Matzilevich certain registration rights for such shares of Common Stock.
PROPOSAL TWO
AMENDMENT OF STOCK OPTION PLAN TO INCREASE SHARES OF
COMMON STOCK RESERVED FOR ISSUANCE
AMENDMENT
Options to purchase an aggregate of 835,000 shares of Common Stock are
currently authorized under the Stock Option Plan. As of March 31, 1997, a total
of 92,675 shares of Common Stock remained available for future grants under the
Stock Option Plan. In order to provide for sufficient shares of Common Stock for
future grants, the Board of Directors has amended the Stock Option Plan, subject
to stockholder approval, to provide that the number of shares of Common Stock
reserved for issuance under the Stock Option Plan be increased by 250,000 shares
from 835,000 to 1,085,000. The Stock Option Plan as so amended is hereby
submitted to the stockholders of the Company for approval.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ADOPTION OF
THE AMENDMENT TO THE STOCK OPTION PLAN ALLOWING FOR THE INCREASE OF SHARES OF
COMMON STOCK RESERVED FOR ISSUANCE THEREUNDER.
A general description of the basic features of the Stock Option Plan is set
forth below. Such description is qualified in its entirety by reference to the
full text of the Stock Option Plan, a copy of which may be obtained without
charge upon written request to James G. Stewart, Secretary of the Company.
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<PAGE> 16
PURPOSE
The purpose of the Stock Option Plan is to provide an incentive to improve
the performance, encourage the continued employment and increase the proprietary
interest of the directors, officers, key employees and consultants of the
Company and its subsidiaries who participate in the Stock Option Plan.
ADMINISTRATION
The Stock Option Plan is administered by the Stock Option Committee, which
is appointed by the Board of Directors. The Stock Option Committee has the
discretion to determine the key employees, officers, directors and consultants
to whom options are granted and the terms of such options, including the
exercise price, vesting provisions and expiration date. The Stock Option
Committee also has the power to construe the Stock Option Plan, to determine all
questions thereunder and to adopt and amend such rules and regulations for the
administration of the Stock Option Plan as it may deem desirable.
The Board of Directors may at any time terminate the Stock Option Plan or
from time to time make such modifications or amendments to the Stock Option Plan
as it may deem advisable; provided that the Board of Directors may not, without
the approval of the Company's stockholders, increase the maximum number of
shares of Common Stock for which options may be granted under the Stock Option
Plan or increase the maximum number of shares for which options may be granted
under the Stock Option Plan to any single optionee during any calendar year.
ELIGIBILITY, GRANT OF AWARDS
Pursuant to the Stock Option Plan, directors, officers, key employees and
consultants of the Company and its subsidiaries who have been selected by the
Stock Option Committee as participants are eligible to receive grants of stock
options under the Stock Option Plan. The Company and its subsidiaries currently
have approximately 200 persons who are so eligible (comprising all employees,
directors and consultants). The maximum number of shares for which options may
be granted under the Stock Option Plan to any single optionee during any
calendar year is 100,000 shares.
All options granted under the Stock Option Plan are evidenced by a written
option agreement between the option holder and the Company. Option holders have
no voting, dividend or other rights of stockholders with respect to shares of
Common Stock covered by their options prior to exercising such options and
becoming the holders of record of shares of Common Stock. No options may be
granted with a term longer than ten years. All outstanding options provide for
full vesting upon a Change of Control of the Company. With respect to future
option grants, the Stock Option Committee retains the discretion to provide for
full vesting upon a Change of Control of the Company.
The Stock Option Plan authorizes the grant of both incentive stock options
("ISOs") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), and nonqualified stock options ("NQSOs"); provided,
however, that ISOs may only be granted to participants who are also employees of
the Company. The exercise price of the options will be determined by the Stock
Option Committee when the options are granted, subject to a minimum price in the
case of ISOs of the fair market value of the Common Stock at the time of grant,
as determined in accordance with the Stock Option Plan. Options vest and become
exercisable as determined by the Stock Option Committee. Payment for shares of
Common Stock acquired pursuant to an option granted under the Stock Option Plan
is to be made in cash. Payment may also be made by any other method established
by the Stock Option Committee including, without limitation, the tendering of
previously owned shares of Common Stock which have been held for at least six
months, or pursuant to procedures for cashless "broker-assisted" exercises
approved by the Stock Option Committee.
On March 25, 1997 the last reported sale price for the Common Stock on the
Nasdaq National Market was $14.3125 per share.
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<PAGE> 17
FEDERAL TAX CONSEQUENCES
Set forth below is a brief description of the federal income tax
consequences applicable to ISOs and NQSOs granted under the Stock Option Plan.
ISOs. No taxable income is realized by the option holder upon the grant or
exercise of an ISO. If Common Stock is issued to an option holder pursuant to
the exercise of an ISO, and if no disqualifying disposition of such shares is
made by such option holder within the earlier of two years after the date of
grant or within one year after the exercise of such options, then (i) upon the
sale of such shares of Common Stock, any amount realized in excess of the option
price will be taxed to such option holder as a long-term capital gain and any
loss sustained will be taxed to such option holder as a long-term capital loss,
and (ii) no deduction will be allowed to the Company for federal income tax
purposes.
If the Common Stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of either holding period described above, then generally
(i) the option holder will realize ordinary income in the year of disposition in
an amount equal to the excess, if any, of the fair market value of such shares
at the time of exercise (or, if less, the amount realized on the disposition of
such shares) over the option price paid for such shares, and (ii) the Company
will be entitled to deduct the same amount as compensation expense for federal
income tax purposes. Any further gain (or loss) realized by the option holder
will be taxed as short-term or long-term capital gain (or loss), as the case may
be, and will not result in any deduction by the Company.
NQSOs. With respect to NQSOs, (i) no income is realized by the option
holder at the time the option is granted, (ii) generally, upon exercise,
ordinary income is realized by the option holder in an amount equal to the
difference between the option price paid for the shares and the fair market
value of the shares, if unrestricted, on the date of exercise, and the Company
is generally entitled to a federal income tax deduction in the same amount as
compensation expense, subject to applicable withholding requirements and (iii)
at sale, appreciation (or depreciation) after the date of exercise is treated as
either short-term or long-term capital gain (or loss), depending on how long the
shares have been held.
The foregoing summary with respect to federal income taxation does not
purport to be complete and reference is made to the applicable provisions of the
Code.
NEW PLAN BENEFITS
Because the Stock Option Plan is a discretionary plan, it is not possible
to determine what awards the Stock Option Committee will grant under the Stock
Option Plan in the future.
PROPOSAL THREE
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has, upon recommendation of the Audit Committee and
subject to ratification by the stockholders, appointed Ernst & Young LLP as
independent auditors to report on the consolidated financial statements of the
Company for the fiscal year ending December 31, 1997, and to perform such other
services as may be required of Ernst & Young LLP. Although stockholder
ratification of the Board of Directors' selection is not required, the Board of
Directors considers it desirable for the stockholders to pass upon the selection
of the independent auditors. If the stockholders disapprove of the selection of
Ernst & Young LLP as independent auditors, the Board of Directors will consider
the selection of other independent auditors. One or more representatives of
Ernst & Young LLP will be present at the Annual Meeting, will have the
opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF
ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR 1997.
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<PAGE> 18
CHANGE IN ACCOUNTANTS
At a meeting held on November 10, 1995, (i) the Audit Committee and the
Board of Directors ratified the Company's dismissal on October 13, 1995 of
Coopers & Lybrand L.L.P. as the Company's independent auditors and (ii) the
Audit Committee recommended, and the Board of Directors approved, the engagement
of Ernst & Young LLP as the Company's independent auditors for the fiscal year
ending December 31, 1995.
The reports of Coopers & Lybrand L.L.P. on the Company's financial
statements for the years ended December 31, 1993 and 1994 did not contain
adverse opinions or disclaimers of opinions and were not qualified or modified
as to uncertainty, audit scope or accounting principles.
In connection with the audit of the Company's financial statements for the
fiscal years ended December 31, 1993 and 1994, and at all times subsequent
thereto through the date of dismissal, there were no disagreements with Coopers
& Lybrand L.L.P. on any matters of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which, if not resolved to
the satisfaction of Coopers & Lybrand L.L.P., would have caused Coopers &
Lybrand L.L.P. to make a reference to the matter in their report.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the Common Stock, to
file with the Commission initial reports of ownership and reports of changes in
ownership of Common Stock. Officers, directors and greater than 10% stockholders
are required by Commission regulation to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with during the fiscal year ended December 31, 1996, except as set
forth below. On November 8, 1996, each of Warburg, WP, E.M. Warburg, Pincus &
Company, EMW Inc. and Joseph P. Landy timely filed a Form 4 reporting the
conversion and exchange of their shares of Series A Convertible Preferred Stock
and Series B Preferred Stock. They each, however, filed one late report on Form
4 with respect to the subsequent conversion of their shares of Class A Common
Stock into Common Stock.
STOCKHOLDER PROPOSALS -- 1998 ANNUAL MEETING
Any proposals of stockholders of the Company intended to be included in the
Company's proxy statement and form of proxy relating to the Company's next
annual meeting of stockholders must be in writing and received by the Secretary
of the Company at the Company's office at 10394 Pacific Center Court, San Diego,
California 92121 no later than December 1, 1997.
OTHER MATTERS
The Board of Directors does not know of any matters other than the
foregoing that will be presented for consideration at the Annual Meeting.
However, if other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy card to take such action as
is in their judgment is in the best interests of the Company and its
stockholders.
The entire cost of soliciting proxies from its stockholders will be borne
by the Company. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone or telegram by directors, officers or regular
employees of the Company, who will not receive additional compensation for such
solicitation but may be reimbursed for reasonable out-of-pocket expenses
incurred in connection therewith. Arrangements may also be made with brokerage
firms and other custodians, nominees and fiduciaries to forward proxy
solicitation materials to the beneficial owners of shares of Common Stock held
of record by such persons, in
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<PAGE> 19
which case the Company will reimburse such brokerage firms, custodians, nominees
and fiduciaries for reasonable out-of-pocket expenses incurred by them in
connection therewith.
The Company will provide to stockholders of record and beneficial owners at
the close of business on March 25, 1997, without charge upon written request to
James G. Stewart, Secretary, at the Company's principal executive offices, a
copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
The principal executive offices of the Company are located at 10394 Pacific
Center Court, San Diego, California 92121 and the Company's telephone number is
(619)450-5500.
By order of the Board of Directors,
James G. Stewart
Secretary
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Appendix A
(EDGAR filing only)
CN BIOSCIENCES, INC.
SECOND AMENDED AND RESTATED 1992 STOCK OPTION PLAN
* * *
ARTICLE I
Purpose
The CN Biosciences, Inc. Second Amended and Restated 1992
Stock Option Plan (the "Plan") is intended as an incentive to improve the
performance, encourage the continued employment, and increase the proprietary
interest of certain directors, officers, key employees and consultants of CN
Biosciences, Inc. (the "Company") and its subsidiaries who shall participate in
the Plan. The Plan is designed to grant such directors, officers, key
employees and consultants the opportunity to share in the Company's long-term
success through stock ownership and to afford them the opportunity for
additional compensation related to the value of the Company's stock.
The word "Employer", when used in the Plan, shall include the
Company or one of its subsidiaries, whichever one employs the Participant. The
word "subsidiary", when used in the Plan, shall mean any subsidiary corporation
of the Company within the meaning of Section 424(f) of the Internal Revenue
Code of 1986, as amended (the "Code").
It is intended that certain options granted under the Plan and
designated as incentive stock options in the option agreements qualify as
"incentive stock options" under Section 422 of the Code.
For purposes of the Plan, as amended and restated, the term
"Effective Date" shall mean March 18, 1997.
ARTICLE II
Administration
The Plan shall be administered by a Stock Option Committee
(the "Committee") appointed by the Board of Directors of the Company (the
"Board") from among its members and shall consist of not less than two members
thereof. Unless otherwise determined by the Board, the membership of the
Committee shall be structured so as to qualify option grants for the exemption
from Section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act")
provided by Rule 16b-3, promulgated by the Securities and Exchange Commission
under the Exchange Act, as in effect from time to time.
Subject to the provisions of the Plan, the Committee shall
have sole authority, in its absolute discretion: (a) to determine which of the
eligible Participants (as hereinafter
<PAGE> 21
defined) shall be granted options; (b) to authorize the granting of both
incentive stock options and non-qualified stock options; (c) to determine the
times when options shall be granted and the number of shares to be subject to
options; (d) to determine the option price of the shares subject to each
option, which price shall be not less than the minimum specified in ARTICLE V;
(e) to determine the time or times when each option becomes exercisable, the
duration of the exercise period and any other restrictions on the exercise of
options issued hereunder; (f) to accelerate the exercisability of any
outstanding option; (g) to prescribe the form or forms of the option agreements
under the Plan (which forms shall be consistent with the terms of the Plan but
need not be identical and may contain such terms as the Committee may deem
appropriate to carry out the purposes of the Plan); (h) to determine the nature
of any rights and restrictions to be imposed on shares subject to options
issued hereunder; (i) to adopt, amend and rescind such rules and regulations
as, in its opinion, may be advisable in the administration of the Plan; (j) to
construe and interpret the Plan, the option agreements under the Plan and the
rules and regulations adopted from time to time, if any; and (k) to make all
other determinations deemed necessary or advisable for the administration of
the Plan. All decisions, determinations and interpretations of the Committee
shall be final and binding on all optionees.
ARTICLE III
Stock
The stock to be subject to options granted under the Plan
shall be shares of authorized but unissued common stock, par value $0.01 (the
"Stock"), of the Company, or previously issued shares of such Stock reacquired
by the Company and held in its treasury, as determined by the Board. Under the
Plan, the total number of shares of Stock which may be purchased pursuant to
options granted hereunder shall not exceed, in the aggregate, 1,085,000 shares,
and the maximum number of shares for which options may be granted to any single
optionee during any calendar year shall not exceed 100,000, except as such
numbers of shares shall be adjusted in accordance with the provisions of
ARTICLE X hereof.
Each option granted under the Plan shall be evidenced by an
option agreement between the Company and the optionee containing such
provisions as may be determined by the Committee, but shall be subject to the
following terms and conditions:
(a) Each share of Stock purchased through the exercise of an
option shall be paid for in full at the time of the exercise; and
(b) Each option shall become exercisable by the optionee in
accordance with any vesting schedule established by the Committee pursuant to
ARTICLE VI of the Plan.
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<PAGE> 22
The number of shares of Stock available for grant of options
under the Plan shall be decreased by the sum of the number of shares with
respect to which options have been issued and are then outstanding and the
number of shares issued upon exercise of options. In the event that any
outstanding option for any reason expires, lapses, or is canceled prior to the
end of the period during which options may be granted, the shares of Stock
called for by the unexercised portion of such option may again be subject to an
option under the Plan.
ARTICLE IV
Eligibility of Participants
Subject to ARTICLE VII, directors, officers, key employees and
consultants of the Company and its subsidiaries who have been selected by the
Committee as participants (collectively referred to as "Participants" and
individually as a "Participant") shall be eligible to receive grants of options
under the Plan; provided, however, that notwithstanding any other provision of
the Plan to the contrary, only employees of the Company or any of its
subsidiaries shall be eligible to receive incentive stock options.
Participation in the Plan shall be limited to eligible Participants who have
entered into option agreements with the Company. No Participant, however,
shall at any time have a right to be selected for participation in the Plan.
ARTICLE V
Option Price
The option price of each option granted under the Plan shall
be determined by the Committee; provided, however, that in the case of each
incentive stock option granted under the Plan, the option price shall not be
less than the fair market value at the time the option is granted. In no event
shall the option price of any option be less than the par value per share of
Stock on the date an option is granted.
At any time when the Stock is quoted on the Nasdaq National
Market ("Nasdaq"), the fair market value shall be deemed to be the closing
price on the trading day immediately preceding the date on which the option is
granted. If the Stock is listed on one or more national securities exchanges,
the fair market value shall be deemed to be the closing price on the principal
national securities exchange on which such stock is listed and traded on the
trading day immediately preceding the date on which the option is granted. If
the Stock is not quoted on Nasdaq or listed on an exchange, or representative
quotes are not otherwise available, the fair market value of the Stock shall
mean the amount determined by the Committee to be the fair market value based
upon a good faith attempt to value the Stock accurately and
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<PAGE> 23
computed in accordance with applicable regulations of the Internal Revenue
Service.
ARTICLE VI
Terms and Conditions of Options
Options granted under the Plan shall vest and become
exercisable in such installments as the Committee shall determine at the time
of grant. Options may be exercisable in whole or in part and if an option is
exercisable in part, the portion thereof which is exercisable and not exercised
shall remain exercisable.
Any other provision of the Plan notwithstanding and subject to
ARTICLE VII, (i) no option shall be granted after the date which is ten years
from the Effective Date, (ii) no option may be exercised after the date which
is ten years after the date that the option was granted (the "Termination
Date"), and (iii) in the event the Company files a registration statement under
the Securities Act of 1933 (the "Securities Act") for the initial public
offering of its equity securities (an "IPO"), the Company may restrict the
exercisability of options granted under the Plan during the 180-day period (or
such longer period required by the underwriter of such initial public offering)
immediately following the effective date of such registration statement.
Options granted hereunder may provide that if prior to the
Termination Date an optionee shall cease to be employed by the Employer for any
reason other than death, disability or for cause, the option will remain
exercisable by the optionee for a period not extending beyond three months
after the date of cessation of employment, but in no event later than the
Termination Date, to the extent it was exercisable at the time of cessation of
employment. Options granted hereunder may provide that if prior to the
Termination Date an optionee shall cease to be employed by the Employer for
reasons of death or disability, the option will remain exercisable by the
optionee or, in the event of his death, by the person or persons to whom the
optionee's rights under the option would pass by will or the applicable laws of
descent and distribution for a period not extending beyond one year after the
date of death or disability, but in no event later than the Termination Date,
to the extent it was exercisable at the time of death or disability. Options
granted hereunder may provide that if prior to the Termination Date an optionee
shall cease to be employed by the Employer by reason of termination of
employment by the Employer for cause, or by voluntary termination at a time
when the Employer is entitled to terminate such optionee's employment for
cause, the option shall terminate immediately. For purposes of the Plan, the
Employer shall have "cause" to terminate an optionee's employment hereunder
upon (i) the commission by the optionee of a proven act of fraud or
embezzlement against the Employer, (ii) the engaging by the optionee in willful
misconduct or gross negligence which is demonstrably and materially injurious
to the Employer,
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<PAGE> 24
monetarily or otherwise, (iii) failure of the optionee to render services to
the Employer in accordance with such optionee's duties as an employee of the
Employer or (iv) the optionee being convicted of a misdemeanor involving an act
of moral turpitude or a felony. Alternatively, options granted hereunder may
provide that "cause" has the meaning set forth in an employment agreement
between the optionee and the Employer.
For purposes of the Plan, in the case of a Participant who is
a director, references to employment herein shall be deemed to refer to such
director's service to the Employer in such capacity.
Notwithstanding the foregoing, stock options granted hereunder
shall provide that no option shall be exercisable after the optionee's
cessation of employment with the Employer if at the time of exercise the
By-Laws of the Company limit the ownership of common stock of the Company to
selected persons, including employees of the Company and its wholly-owned
subsidiaries.
ARTICLE VII
Special Provisions Applicable
Only to Incentive Stock Options
To the extent the aggregate fair market value (determined at
the time the option is granted) of the Stock with respect to which incentive
stock options may be exercisable for the first time by an optionee during any
calendar year (under this Plan and any other stock option plan of the Company
and any parent or subsidiary thereof) exceeds $100,000, such incentive stock
options shall be treated as options which are non-qualified stock options.
No incentive stock option may be granted to an individual who,
at the time the option is granted, owns directly, or indirectly within the
meaning of Section 424(d) of the Code, stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or of any
parent or subsidiary thereof, unless such option (i) has an option price of at
least 110% of the fair market value of the Stock on the date of the grant of
such option; and (ii) such option by its terms cannot be exercised more than
five years after the date it is granted.
Each optionee who receives an incentive stock option must
agree to notify the Company in writing immediately after the optionee makes a
disqualifying disposition of any Stock acquired pursuant to the exercise of an
incentive stock option. A disqualifying disposition is any disposition
(including any sale) of such Stock before the later of (a) two years after the
date the optionee was granted the incentive stock option or (b) one
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<PAGE> 25
year after the date the optionee acquired Stock by exercising the incentive
stock option.
ARTICLE VIII
Payment for Shares
Payment for shares of Stock acquired pursuant to an option
granted hereunder shall be made in full, upon exercise of the option, in
immediately available funds in United States dollars, by certified or bank
cashier's check. Payment may also be made by any other method established by
the Committee including, without limitation, the tendering of previously owned
shares of Stock which have been held for at least six months, or pursuant to
procedures for cashless "broker-assisted" exercises approved by the Committee.
Payment in full shall include payment of any amounts required under paragraph
(b) of ARTICLE XIX.
ARTICLE IX
Non-Transferability of Option Rights and Stock
During the lifetime of the optionee, the option shall be
exercisable only by the optionee. No option shall be transferable, except by
will or the laws of descent and distribution.
ARTICLE X
Adjustment for Recapitalization, Merger, Etc.
The aggregate number of shares of Stock which may be purchased
or acquired pursuant to options granted hereunder, the maximum number of shares
for which options may be granted to any single optionee during any calendar
year, the number of shares of Stock covered by each outstanding option and the
price per share thereof in each such option shall be appropriately adjusted for
any increase or decrease in the number of outstanding shares of Stock resulting
from a stock split or other subdivision or consolidation of shares of Stock or
for other capital adjustments or payments of stock dividends or distributions
or other increases or decreases in the outstanding shares of Stock effected
without receipt of consideration by the Company. Any adjustment shall be
conclusively determined by the Committee.
If the Company shall be the surviving corporation in any
merger or reorganization or other business combination, any option granted
hereunder shall cover the securities or other property to which a holder of the
number of shares of Stock covered by the unexercised portion of the option
would have been entitled pursuant to the terms of the merger. Upon any merger
or reorganization or other business combination in which the Company shall not
be the surviving corporation, or a dissolution or liquidation of the Company,
or a sale of all or substantially all
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<PAGE> 26
of the Company's assets, all outstanding options shall terminate; provided,
however, that the Company shall cause either (i) the optionees to be paid an
amount equal to the difference between (A) the aggregate fair market value
(determined in accordance with ARTICLE V of the Plan) of the Stock subject to
options held by the optionees at the time of such transaction and (B) the
aggregate exercise price of such options, or (ii) the surviving or resulting
corporation to grant the optionees substitute options to purchase its shares on
such terms and conditions, both as to the number of shares and otherwise, which
the Committee shall deem appropriate.
Stock option agreements under the Plan may, at the discretion
of the Committee, provide that upon stockholder approval of a merger,
reorganization or other business combination, whether or not the Company is the
surviving corporation, or a sale of all or substantially all of the Company's
assets, all unmatured installments of the options shall vest and become
immediately exercisable in full.
The foregoing adjustments and the manner of application of the
foregoing provisions, including the issuance of any substitute options, shall
be determined by the Committee in its sole discretion. Any such adjustment may
provide for the elimination of any fractional share which might otherwise
become subject to an option.
ARTICLE XI
No Obligation to Exercise Option
Granting of an option shall impose no obligation on the
recipient to exercise such option.
ARTICLE XII
Use of Proceeds
The proceeds received from the sale of Stock pursuant to the
Plan shall be used for general corporate purposes.
ARTICLE XIII
Rights as a Stockholder
An optionee shall have no rights as a stockholder with respect
to any share covered by his option until such person shall have become the
holder of record of such share, and such person shall not be entitled to any
dividends or distributions or other rights in respect of such share for which
the record date is prior to the date on which such person shall have become the
holder of record thereof, except as otherwise provided in ARTICLE X.
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ARTICLE XIV
Employment Rights
No provision in the Plan or in any option granted hereunder
shall confer on any optionee any right to continue in the employ of the
Company, or to interfere in any way with the right of the Company to terminate
the optionee's employment at any time.
ARTICLE XV
Compliance with Law
The Company is relieved from any liability for the
non-issuance or non-transfer or any delay in the issuance or transfer of any
shares of Stock subject to options under the Plan which results from the
inability of the Company to obtain, or from any delay in obtaining, from any
regulatory body having jurisdiction or authority, any requisite approval to
issue or transfer any such shares if counsel for the Company deems such
approval necessary for lawful issuance or transfer thereof.
Each option granted under the Plan is subject to the
requirement that if at any time the Board determines, in its discretion, that
the listing, registration or qualification of shares of Stock issuable upon
exercise of options is required by any securities exchange or under any state
or Federal law, or that the consent or approval of any governmental regulatory
body is necessary or desirable as a condition of, or in connection with, the
grant of options or the issuance of shares of Stock, no shares of Stock shall
be issued, in whole or in part, unless such listing, registration,
qualification, consent or approval has been effected or obtained free of any
conditions or with such conditions as are acceptable to the Board.
ARTICLE XVI
Cancellation of Options
The Committee, in its discretion, may, with the consent of any
optionee, cancel any outstanding option hereunder.
ARTICLE XVII
Effective Date; Expiration Date of Plan
The Plan, as amended and restated, shall become effective upon
adoption by the Company's Board of Directors and approval by the stockholders
of the Company in a manner which complies with both Section 162(m)(4)(C)(ii)
and Section 422(b)(1) of the Code and the Treasury Regulations thereunder. The
expiration date of the Plan, after which no option may be granted hereunder,
shall be the tenth anniversary of the earlier of (i)
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<PAGE> 28
adoption of the Plan by the Board of Directors or (ii) the approval of the Plan
by the stockholders of the Company pursuant to the previous sentence.
ARTICLE XVIII
Amendment or Discontinuance of Plan
The Board may terminate, amend or modify the Plan in its sole
discretion at any time or from time to time after the Effective Date.
Notwithstanding the preceding provisions of this ARTICLE XVIII, no such action
shall, without shareholder approval, increase the number of shares as to which
options may be granted under the Plan.
ARTICLE XIX
Miscellaneous
(a) Options shall be evidenced by option agreements (which need
not be identical) in such forms as the Committee may from time to time approve.
Such agreements shall conform to the terms and conditions of the Plan and may
provide that the grant of any option under the Plan and Stock acquired pursuant
to the Plan shall also be subject to such other conditions (whether or not
applicable to the option or Stock received by any other optionee) as the
Committee determines appropriate, including without limitation, provisions to
assist the optionee in financing the purchase of Stock through the exercise of
options, provisions for the forfeiture of, or restrictions on, resale or other
disposition of shares under the Plan, provisions giving the Company the right
to repurchase shares acquired under the Plan in the event the participant
elects to dispose of such shares, and provisions to comply with Federal and
state securities laws and Federal and state income tax withholding
requirements.
(b) The Company may, in its discretion,
require that an optionee pay to the Company, at the time of exercise, such
amount as the Company deems necessary to satisfy its obligations to withhold
Federal, state, or local income or other taxes incurred by reason of the
exercise or the transfer of shares thereupon.
(c) Each optionee shall file with the Committee a written
designation of one or more persons as beneficiary, who shall be entitled to
exercise options which are exercisable, if any, or to receive shares of Stock
distributable, if any, under the Plan upon the optionee's death. An optionee
may, from time to time, revoke or change his beneficiary designation without the
consent of any prior beneficiary by filing a new designation with the Committee.
The last such designation received by the Committee shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall
be effective unless received by the Committee prior to the optionee's death,
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<PAGE> 29
and in no event shall it be effective as of a date prior to such receipt.
(d) If the Committee shall find that any person to whom any
amount is payable under the Plan is unable to care for his affairs because of
illness or accident, or is a minor, or has died, then any payment due to such
person or his estate (unless a prior claim therefor has been made by a duly
appointed legal representative), may, if the Committee so directs the Company,
be paid to his spouse, child, relative, an institution maintaining or having
custody of such person, or any other person deemed by the Committee to be a
proper recipient on behalf of such person otherwise entitled to payment. Any
such payment shall be a complete discharge of the liability of the Committee
and the Company therefor.
(e) No member of the Committee shall be personally liable by
reason of any contract or other instrument executed by such member or on his
behalf in his capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Company shall indemnify and hold harmless
each member of the Committee and each other employee, officer or director of
the Company to whom any duty or power relating to the administration or
interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim) arising out of any act or omission to act in connection
with the Plan unless arising out of such person's own fraud or bad faith;
provided, however, that approval of the Board shall be required for the payment
of any amount in settlement of a claim against any such person. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or By-Laws, as a matter of law, or otherwise, or
any power that the Company may have to indemnify them or hold them harmless.
(f) The Plan shall be governed by and construed in accordance
with the internal laws of the State of Delaware without reference to the
principles of conflicts of law thereof.
(g) No provision of the Plan shall require the Company, for the
purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets, nor shall the Company maintain separate bank
accounts, books, records or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes. Optionees shall
have no rights under the Plan other than as unsecured general creditors of the
Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same
rights as other employees under general law.
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<PAGE> 30
(h) Each member of the Committee and each member of the Board
shall be fully justified in relying, acting or failing to act, and shall not be
liable for having so relied, acted or failed to act in good faith, upon any
report made by the independent public accountant of the Company and upon any
other information furnished in connection with the Plan by any person or
persons other than such member.
(i) Except as otherwise specifically provided in the relevant
plan document, no payment under the Plan shall be taken into account in
determining any benefits under any pension, retirement, profit-sharing, group
insurance or other benefit plan of the Company.
(j) The expenses of administering the Plan shall be borne by
the Company.
(k) Masculine pronouns and other words of masculine gender
shall refer to both men and women.
* * *
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<PAGE> 31
FORM OF INCENTIVE STOCK OPTION AGREEMENT
This Option Agreement (the "Agreement), is made as of this _____ day
of __________, _____ (the "Date of Grant") between CN Biosciences, Inc., a
Delaware corporation (the "Company"), and the person signing this Agreement
adjacent to the caption "Participant" on the signature page hereof, which
person is an employee (the "Participant") of the Company and/or one or more of
its subsidiaries (the "Employer"). Capitalized terms used and not otherwise
defined herein shall have the meanings attributed thereto in the CN
Biosciences, Inc. Amended and Restated 1992 Stock Option Plan (the "Plan").
WHEREAS, pursuant to the Plan, the Company desires to afford the
Participant the opportunity to purchase shares of the Company's Common Stock,
par value $.01 per share (the "Stock");
NOW, THEREFORE, in connection with the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. Grant of Options. The Company hereby grants to the
Participant the right and option (the right to purchase any one share of Stock
pursuant to the Plan being an "Option") to purchase an aggregate _____ shares
of Stock, such shares being subject to adjustment as provided in ARTICLE X of
the Plan, and on the terms and conditions herein set forth.
2. Purchase Price. The purchase price of each share of Stock
covered by the Options shall be equal to $_____ per share.
3. Terms of Options. The term of the Options shall be for a
period of _____ (_) years from the Date of Grant.
4. Vesting of Options. Subject to the terms, conditions and
limitations contained herein, ________ percent (__%) of the Options granted
hereunder shall vest and become exercisable on the first anniversary of the
Date of Grant, and an additional _________ percent (__%) of the Options granted
hereunder shall vest on each of the next ____ anniversaries of such Date of
Grant. Notwithstanding the above, one hundred percent (100%) of the Options
granted hereunder shall vest and become exercisable upon a Change of Control of
the Company. For this purpose, a "Change of Control" shall mean (a) an
acquisition (other than directly from the Company) by an individual, entity or
a group (excluding the Company, an employee benefit plan of the Company or E.M.
Warburg, Pincus & Co., LLC or its affiliates) of 50% or more of the Company's
Common Stock or voting securities; (b) a change in a majority of the Company's
current Board of Directors (the "Incumbent Board") (excluding any persons
approved by a vote of a least a majority of the Incumbent Board or persons
elected with the concurrence of a majority of the Incumbent Board); or
<PAGE> 32
(c) the consummation of a complete liquidation or dissolution of the
Company or a merger, consolidation or sale off all or substantially all of the
Company's assets (collectively, a "Business Combination") other than a Business
Combination in which all or substantially all of the Company's stockholders
receive 50% or more of the stock of the company resulting from the Business
Combination, at least a majority of the board of directors of the resulting
corporation were members of the Incumbent Board, and after which no Person owns
50% or more of the stock of the resulting corporation, who did not own such
stock immediately before the Business Combination.
5. Termination of Employment. (a) In the event the Participant's
employment with the Employer is terminated for reasons other than due to death,
disability or cause (as defined in the Plan), the Options shall remain
exercisable for a period of up to three months after cessation of employment,
to the extent they were exercisable at the time of cessation of employment. In
the event the Participant's employment with the Employer terminates by death or
disability, the Options shall remain exercisable for a period of up to twelve
months after cessation of employment, to the extent they were exercisable at
the time of cessation of employment.
(b) If the Participant's employment with the Employer is
terminated for cause, or, at the time of the Participant's voluntary
termination, the Employer is entitled to terminate the Participant for cause
(as defined in the Plan), all unexercised Options granted to the Participant
shall lapse and be canceled.
6. Transferability of Option and Stock. The Participant is not
allowed to transfer the Options other than by will or the laws of descent and
distribution, and the Options shall be exercisable during the Participant's
lifetime, only by him.
7. No Rights as a Shareholder. The Participant shall have no
rights as a shareholder with respect to any shares of Stock covered by the
Options until the date of issuance of a certificate for such Stock. No
adjustment, other than as provided in ARTICLE X of the Plan, shall be made for
dividend (ordinary or extraordinary, whether in cash, securities or other
property) or distribution for which the record date is prior to the date such
stock certificate is issued.
8. Securities Law Compliance. No Stock will be issued hereunder
unless counsel for the Company shall be satisfied that such issuance will be in
compliance with applicable federal and state securities law.
9. Method of Exercising Option. Subject to the terms and
conditions of this Agreement and the Plan, the Options may be exercised by
written notice to the Company at its offices located in San Diego, California.
Such notice shall state the election to exercise Options and the number of
shares of Stock in respect
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<PAGE> 33
of which they are being exercised, and shall be signed by the person or persons
so exercising the Option. Such notice shall either:
(a) be accompanied by payment of the full purchase price
of such share of Stock, in which event the Company shall cause to be delivered
a certificate or certificates representing such shares of Stock as soon as
practicable after the notice shall be received;
(b) fix a date, not less than five (5) nor more than ten
(10) business days from the date such notice shall be received by the Company,
for the payment of the full purchase price of such shares of Stock against
delivery of a certificate or certificates representing such shares of Stock.
Payment of such purchase price shall be made in United States
dollars by either: (a) certified check or bank cashier's check payable to the
order of the Company, or (b) upon the Committee's approval, any other method
including, without limitation, the tendering of previously owned shares of
Stock which have been held by the Participant for at least six months, or
pursuant to procedures for cashless "broker-assisted" exercises established by
the Committee. The certificate or certificates for the shares of Stock as to
which the Options shall have been so exercised shall be registered in the name
of the person or persons so exercising the Options; or if the Options shall be
exercised by the Participant, and if the Participant shall so request in the
notice exercising the Options, such shares shall be registered in the name of
the Participant and other person, as joint tenant with right of survivorship,
and shall be delivered as provided above to or upon the written order of the
person or persons exercising the Options. All shares of Stock that shall be
purchased upon the exercise of Options as provided herein shall be fully paid
and non-assessable.
10. Income Tax Withholding. The Company may make such provisions
and take such steps as it may deem necessary or appropriate for the withholding
of all Federal, State, local or other taxes required by law to be withheld with
respect to an Option, including, but not limited to, deducting the amount of
any such withholding taxes from the amount to be paid hereunder, whether in
Stock or in cash, or from any other amount then or thereafter payable to the
optionee, or requiring the Participant, his beneficiary or legal
representative, to pay to the Company the amount required to be withheld or to
execute such documents as the Company deems necessary or desirable to enable it
to satisfy its withholding obligations.
11. Incentive Stock Options. The Options granted hereunder are
intended to be incentive stock options within the meaning of Section 422 of the
Code.
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<PAGE> 34
12. Binding Effect. This Agreement shall be binding upon the
heirs, executors, administrators and successors of the parties hereto.
13. Governing Law. This Agreement shall be construed and
interpreted in accordance with the law of the State of Delaware.
14. Headings. Headings are for the convenience of the parties and
are not deemed to be part of this Agreement.
15. Plan. The terms and provisions of the Plan are incorporated
herein by reference. In the event of a conflict or inconstancy between
discretionary terms and provisions of the Plan and the express provision of
this Agreement, this Agreement shall govern and control. In all other
instances of conflicts or inconsistencies or omissions, the terms and
provisions of the Plan shall govern and control.
EXECUTED the day and year first written above.
COMPANY: CN BIOSCIENCES, INC.
By: ______________________________
Name:
Title:
PARTICIPANT:
By: ______________________________
Name:
Title:
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<PAGE> 35
FORM OF NONQUALIFIED STOCK OPTION AGREEMENT
This Option Agreement (the "Agreement), is made as of this _____ day
of __________, _____ (the "Date of Grant") between CN Biosciences, Inc., a
Delaware corporation (the "Company"), and the person signing this Agreement
adjacent to the caption "Participant" on the signature page hereof, which
person is a director, officer, key employee or consultant (the "Participant")
of the Company and/or one or more of its subsidiaries (the "Employer").
Capitalized terms used and not otherwise defined herein shall have the meanings
attributed thereto in the CN Biosciences, Inc. Amended and Restated 1992 Stock
Option Plan (the "Plan").
WHEREAS, pursuant to the Plan, the Company desires to afford the
Participant the opportunity to purchase shares of the Company's Common Stock,
par value $.01 per share (the "Stock");
NOW, THEREFORE, in connection with the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. Grant of Options. The Company hereby grants to the
Participant the right and option (the right to purchase any one share of Stock
pursuant to the Plan being an "Option") to purchase an aggregate _____ shares
of Stock, such shares being subject to adjustment as provided in ARTICLE X of
the Plan, and on the terms and conditions herein set forth.
2. Purchase Price. The purchase price of each share of Stock
covered by the Options shall be equal to $_____ per share.
3. Terms of Options. The term of the Options shall be for a
period of _____ (_) years from the Date of Grant.
4. Vesting of Options. Subject to the terms, conditions and
limitations contained herein, ________ percent (__%) of the Options granted
hereunder shall vest and become exercisable on the first anniversary of the
Date of Grant, and an additional _________ percent (__%) of the Options granted
hereunder shall vest on each of the next ____ anniversaries of such Date of
Grant. Notwithstanding the above, one hundred percent (100%) of the Options
granted hereunder shall vest and become exercisable upon a Change of Control of
the Company. For this purpose, a "Change of Control" shall mean (a) an
acquisition (other than directly from the Company) by an individual, entity or
a group (excluding the Company, an employee benefit plan of the Company or E.M.
Warburg, Pincus & Co., LLC or its affiliates) of 50% or more of the Company's
Common Stock or voting securities; (b) a change in a majority of the Company's
current Board of Directors (the "Incumbent Board") (excluding any persons
approved by a vote of a least a majority of the Incumbent Board or persons
elected
<PAGE> 36
with the concurrence of a majority of the Incumbent Board); or (c)
the consummation of a complete liquidation or dissolution of the Company or a
merger, consolidation or sale off all or substantially all of the Company's
assets (collectively, a "Business Combination") other than a Business
Combination in which all or substantially all of the Company's stockholders
receive 50% or more of the stock of the company resulting from the Business
Combination, at least a majority of the board of directors of the resulting
corporation were members of the Incumbent Board, and after which no Person owns
50% or more of the stock of the resulting corporation, who did not own such
stock immediately before the Business Combination.
5. Termination of Employment or Service. (a) In the event the
Participant's employment or service with the Employer is terminated for reasons
other than due to death, disability or cause (as defined in the Plan), the
Options shall remain exercisable for a period of up to three months after
cessation of employment or service, to the extent they were exercisable at the
time of cessation of employment or service. In the event the Participant's
employment or service with the Employer terminates by death or disability, the
Options shall remain exercisable for a period of up to twelve months after
cessation of employment or service, to the extent they were exercisable at the
time of cessation of employment or service.
(b) If the Participant's employment or service with the
Employer is terminated for cause, or, at the time of the Participant's
voluntary termination, the Employer is entitled to terminate the Participant
for cause (as defined in the Plan), all unexercised Options granted to the
Participant shall lapse and be canceled.
6. Transferability of Option and Stock. The Participant is not
allowed to transfer the Options other than by will or the laws of descent and
distribution, and the Options shall be exercisable during the Participant's
lifetime, only by him.
7. No Rights as a Shareholder. The Participant shall have no
rights as a shareholder with respect to any shares of Stock covered by the
Options until the date of issuance of a certificate for such Stock. No
adjustment, other than as provided in ARTICLE X of the Plan, shall be made for
dividend (ordinary or extraordinary, whether in cash, securities or other
property) or distribution for which the record date is prior to the date such
stock certificate is issued.
8. Securities Law Compliance. No Stock will be issued hereunder
unless counsel for the Company shall be satisfied that such issuance will be in
compliance with applicable federal and state securities law.
9. Method of Exercising Option. Subject to the terms and
conditions of this Agreement and the Plan, the Options may be
-2-
<PAGE> 37
exercised by written notice to the Company at its offices located in San Diego,
California. Such notice shall state the election to exercise Options and the
number of shares of Stock in respect of which they are being exercised, and
shall be signed by the person or persons so exercising the Option. Such notice
shall either:
(a) be accompanied by payment of the full purchase price
of such share of Stock, in which event the Company shall cause to be delivered
a certificate or certificates representing such shares of Stock as soon as
practicable after the notice shall be received;
(b) fix a date, not less than five (5) nor more than ten
(10) business days from the date such notice shall be received by the Company,
for the payment of the full purchase price of such shares of Stock against
delivery of a certificate or certificates representing such shares of Stock.
Payment of such purchase price shall be made in United States
dollars by either: (a) certified check or bank cashier's check payable to the
order of the Company, or (b) upon the Committee's approval, any other method
including, without limitation, the tendering of previously owned shares of
Stock which have been held by the Participant for at least six months, or
pursuant to procedures for cashless "broker-assisted" exercises established by
the Committee. The certificate or certificates for the shares of Stock as to
which the Options shall have been so exercised shall be registered in the name
of the person or persons so exercising the Options; or if the Options shall be
exercised by the Participant, and if the Participant shall so request in the
notice exercising the Options, such shares shall be registered in the name of
the Participant and other person, as joint tenant with right of survivorship,
and shall be delivered as provided above to or upon the written order of the
person or persons exercising the Options. All shares of Stock that shall be
purchased upon the exercise of Options as provided herein shall be fully paid
and non-assessable.
10. Income Tax Withholding. The Company may make such provisions
and take such steps as it may deem necessary or appropriate for the withholding
of all Federal, State, local or other taxes required by law to be withheld with
respect to an Option, including, but not limited to, deducting the amount of
any such withholding taxes from the amount to be paid hereunder, whether in
Stock or in cash, or from any other amount then or thereafter payable to the
optionee, or requiring the Participant, his beneficiary or legal
representative, to pay to the Company the amount required to be withheld or to
execute such documents as the Company deems necessary or desirable to enable it
to satisfy its withholding obligations.
-3-
<PAGE> 38
11. Nonqualified Stock Options. The Options granted hereunder are
not intended to be incentive stock options within the meaning of Section 422 of
the Code.
12. Binding Effect. This Agreement shall be binding upon the
heirs, executors, administrators and successors of the parties hereto.
13. Governing Law. This Agreement shall be construed and
interpreted in accordance with the law of the State of Delaware.
14. Headings. Headings are for the convenience of the parties and
are not deemed to be part of this Agreement.
15. Plan. The terms and provisions of the Plan are incorporated
herein by reference. In the event of a conflict or inconstancy between
discretionary terms and provisions of the Plan and the express provision of
this Agreement, this Agreement shall govern and control. In all other
instances of conflicts or inconsistencies or omissions, the terms and
provisions of the Plan shall govern and control.
EXECUTED the day and year first written above.
COMPANY: CN BIOSCIENCES, INC.
By: ______________________________
Name:
Title:
PARTICIPANT:
By: ______________________________
Name:
Title:
-4-
<PAGE> 39
Appendix B
(EDGAR filing only)
[FORM OF PROXY]
CN BIOSCIENCES, INC.
10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AT THE OFFICES OF E.M. WARBURG, PINCUS & CO., LLC,
466 LEXINGTON AVENUE, NEW YORK, NEW YORK
AT 10:00 A.M., LOCAL TIME, ON APRIL 23, 1997
The undersigned hereby appoints Stelios B. Papadopoulos and James G.
Stewart, and each of them, with full power of substitution, as proxies of the
undersigned to vote all shares of stock which the undersigned is entitled in any
capacity to vote at the above-stated annual meeting, and at any and all
adjournments or postponements thereof (the "Annual Meeting"), on the matters set
forth on the reverse side of this Proxy Card, and, in their discretion, upon all
matters incident to the conduct of the Annual Meeting and upon such other
matters as may properly be brought before the Annual Meeting. This proxy revokes
all prior proxies given by the undersigned.
All properly executed proxies will be voted as directed. If no instructions
are indicated on a properly executed proxy, such proxy will be voted FOR
approval of Proposals 1, 2 and 3. All ABSTAIN votes will be counted in
determining the existence of a quorum at the Annual Meeting, but will have the
same effect as a vote AGAINST Proposals 2 and 3.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CN BIOSCIENCES,
INC.
Receipt of the Notice of Meeting and the Proxy Statement, dated March 31,
1997 (the " Proxy Statement"), is hereby acknowledged.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND
MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED ON REVERSE SIDE)
<PAGE> 40
(CONTINUED FROM REVERSE SIDE)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CN
BIOSCIENCES, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
PLEASE MARK BOXES IN BLUE OR BLACK INK.
1. Election of Directors
FOR all nominees listed below: [ ]
WITHHELD all nominees lested below: [ ]
Nominees: Joseph P. Landy, Richard A. Lerner, S. Joshua Lewis,
Robert E. McGill, III and Stelios B. Papadopoulos
FOR, except vote withheld from the following nominee(s):
__________________________________________________________
2. Proposal to approve an amendment to the Company's Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 250,000 shares from 835,000 to 1,085,000.
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
3. Proposal to ratify the appointment of Ernst & Young LLP as the independent
public auditors of the Company for the fiscal year ending December 31,
1997.
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
4. In the discretion of the persons named as proxies with respect to any other
matters that may properly come before the Annual Meeting.
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND MAIL THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature(s):__________________________________________ Dated____________, 1997
(Joint owners should EACH sign. Please sign EXACTLY as your name(s) appears on
this card. When signing as attorney, trustee, executor, administrator, guardian
or corporate officer, please give your FULL title.)
