<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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
LOGO
March 20, 1998
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 Tuesday, April 21, 1998, 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,
/s/ STELIOS B. PAPADOPOULOS
---------------------------
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 21, 1998
------------------------
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 Tuesday, April 21, 1998, 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 Second Amended and Restated
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 350,000 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, 1998; 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 16, 1998,
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,
/s/ JAMES G. STEWART
--------------------
James G. Stewart
Secretary
March 20, 1998
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 Tuesday, April 21, 1998, 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, 1997, this Proxy Statement
and the accompanying proxy card are first being sent or given to stockholders on
or about March 20, 1998.
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 Second 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, 1998. 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 16, 1998 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 5,653,785 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, 36, 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, Pincus Investors, L.P. ("Warburg"), a significant
stockholder of the Company. Mr. Landy also serves as a director of Level One
Communications, Inc., Nova Corporation and Indus Industries, Inc.
Dr. Richard A. Lerner, 59, 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, 35, has served as a director of the Company since June
1995. Since January 1998, Mr. Lewis has been a Managing Director of EMW LLC. Mr.
Lewis 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, 66, 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
2
<PAGE> 6
separate accounts and a Trustee of five mutual funds sponsored by The Travelers
Insurance Company. From 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, 57, 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, 56, 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, 49, has served as Vice President, Market
Development -- Niche Applications since joining the Company in April 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., 54, 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, 45, has served as Vice President, Administration, Chief
Financial Officer and Secretary of the Company since June 1995 and President of
Calbiochem-Novabiochem Corporation, the Company's U.S. operating subsidiary
since November 1997. 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 16, 1998, 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 39.8%
466 Lexington Avenue
New York, New York 10017
Putnam Investments, Inc. (2)................................ 555,100 9.8
One Post Office Square
Boston, Massachusetts 02109
The Kaufmann Fund, Inc.(3).................................. 360,000 6.4
140 East 45th Street
New York, New York 10017
Standish, Ayer & Wood, Inc.(4).............................. 318,900 5.6
One Financial Center
Boston, Massachusetts 02111
Stelios B. Papadopoulos(5).................................. 197,865 3.5
James G. Stewart(6)......................................... 33,130 *
John T. Snow(7)............................................. 44,997 *
Ben Matzilevich(8).......................................... 40,122 *
Douglas J. Greenwold........................................ 26,800 *
Joseph P. Landy(9).......................................... 2,248,485 39.8
Richard A. Lerner(10)....................................... 5,000 *
S. Joshua Lewis(11)......................................... 2,248,485 39.8
Robert E. McGill, III(12)................................... 7,732 *
Directors and Executive Officers as a group (9
persons)(13).............................................. 2,604,131 45.8
</TABLE>
Each person or entity named above has sole voting and dispositive 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. Messrs. Landy and Lewis,
directors of the Company, are Managing Directors and members of EMW LLC and
general partners of WP. As such, each of Messrs. Landy and Lewis 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 Notes (9) and (11) below.
(2) On March 6, 1998, a joint Statement on Schedule 13G was filed by Marsh &
McClennan Companies, Inc. ("MMC"), Putnam Investments, Inc. ("PII"), Putnam
Investment Management, Inc. ("PIM"), The Putnam Advisory Company, Inc.
("PAC") and The Putnam Health Sciences Trust ("PHST"). PAC and PIM are both
subsidiaries of PII, which is itself a subsidiary of MMC. PIM, as
investment advisor to Putnam mutual funds, shares dispositive power over
437,200 shares of Common Stock, including 384,000 shares held in the PHST,
but has no voting power over any shares of Common Stock. PAC, as investment
advisor to institutional clients, shares dispositive power over 124,400
shares of Common Stock and shares voting power over 118,000 shares of
Common Stock.
(3) As reflected as beneficially owned in a Statement on Schedule 13G filed on
January 28, 1998.
(4) As reflected as beneficially owned in a Statement on Schedule 13G filed on
March 3, 1998.
(5) Includes 8,000 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of March 16, 1998. Also includes
185,365 shares of Common Stock held through a trust over which Mr.
Papadopoulos has voting and dispositive power and 500 shares of Common
Stock held by Mr. Papadopoulos' wife. Mr. Papadopoulos disclaims
"beneficial ownership" of the shares held by his wife within the meaning of
Rule 13d-3 under the Exchange Act.
(6) Includes 5,000 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of March 16, 1998.
Footnotes continued on next page
4
<PAGE> 8
(7) Includes 4,000 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of March 16, 1998.
(8) Includes 9,732 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of March 16, 1998.
(9) 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).
(10) Includes 5,000 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of March 16, 1998.
(11) All of the Shares of Common Stock indicated as owned by Mr. Lewis are owned
directly by Warburg and are included because of Mr. Lewis' affiliation with
Warburg. Mr. Lewis 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).
(12) The shares of Common Stock beneficially owned by Mr. McGill are held
through a revocable trust.
(13) Includes shares of Common Stock which may be acquired within 60 days of
March 16, 1998. See Notes (5), (6), (7), (8) and (10).
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. Papadopoulos(1) 1997 $244,212 $ 40,000 $ -- -- $ 2,970
Chief Executive Officer
and 1996 228,846 45,000 -- 40,000 2,970
President 1995 204,327 -- 162,640 -- 2,112
Douglas J. Greenwold(2) 1997 124,838 35,000 -- -- 3,773
Vice President, Sales and 1996 118,923 30,000 -- 20,000 3,495
Marketing 1995 115,000 -- -- -- 3,352
John T. Snow(3) 1997 118,069 35,000 1,953 -- 3,885
Vice President, New 1996 112,019 30,000 -- 20,000 3,619
Business Development 1995 110,021 -- -- -- 3,804
James G. Stewart(4) 1997 162,808 40,000 -- -- 7,462
Vice President, 1996 152,788 35,000 -- 25,000 7,462
Administration, Chief 1995 80,865 -- 21,518 47,317 45,471
Financial Officer and
Secretary
Ben Matzilevich(5) 1997 133,827 15,000 10,800 -- 485
Vice President, Market 1996 126,308 35,000 -- 25,000 345
Development -- Niche 1995 87,692 -- -- 23,659 --
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, $1,098 and $1,098 in
premiums for personal beneficiary life insurance in excess of non-taxable
group limits, and $1,872, $1,872 and $1,014 of Company matching 401(k)
contributions in 1997, 1996 and 1995, respectively.
Footnotes continued on next page
5
<PAGE> 9
(2) "All Other Compensation" includes $923, $753 and $580 in premiums for
personal beneficiary life insurance in excess of nontaxable group limits and
$2,850, $2,743 and $2,772 of Company matching 401(k) contributions in 1997,
1996 and 1995, respectively.
(3) "Other Annual Compensation" in 1997 represents forgiveness of interest
related to a note receivable from Dr. Snow. "All Other Compensation"
includes $1,035, $1,035 and $1,035 in premiums for personal beneficiary life
insurance in excess of non-taxable group limits and $2,850, $2,584 and
$2,769 of Company matching 401(k) contributions in 1997, 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 reim-bursement in 1995,
$4,612, $4,612 and $4,680 of premiums for personal beneficiary life
insurance in excess of non-taxable group limits and $2,850, $2,850 and
$1,560 of Company matching 401(k) contributions in 1997, 1996 and 1995,
respectively.
(5) Joined the Company in April 1995. "Other Annual Compensation" in 1997
represents forgiveness of interest related to a note receivable from Mr.
Matzilevich. See "Certain Transactions." "All Other Compensation" represents
premiums for personal beneficiary life insurance in excess of non-taxable
group limits.
No stock options were granted to the Named Executive Officers in 1997.
Therefore, the Company has omitted the "Option Grants During Year Ended December
31, 1997" table.
AGGREGATED 1997 OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING OPTIONS AS IN-THE-MONEY OPTIONS AT
ACQUIRED ON DECEMBER 31, 1997(#) DECEMBER 31, 1997($)(1)
EXERCISE VALUE ---------------------------- ----------------------------
NAME (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stelios B.
Papadopoulos........ 110,249 $1,676,336 8,000 32,000 $ 200,000 $800,000
Douglas J.
Greenwold........... -- -- 41,856 25,461 1,046,400 636,525
John T. Snow.......... 6,624 104,858 4,000 16,000 100,000 400,000
James G. Stewart...... 28,391 697,851 5,000 38,926 125,000 973,150
Ben Matzilevich....... 9,464 223,161 5,000 34,195 125,000 854,875
</TABLE>
- ---------------
(1) Based on a value of $25.00 per share, the closing price for the Common Stock
on December 31, 1997.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Messrs. Papadopoulos and
Matzilevich. Mr. Papadopoulos' employment agreement provides for his employment
at an annual base salary determined by the Board of Directors (currently
$250,000) and 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 for his employment at an annual
base salary determined by the Board of Directors (currently $140,000), and 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, 2000, and Mr.
Matzilevich's employment agreement terminates on April 3, 2000. 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.
6
<PAGE> 10
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, 2000,
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.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met six times during 1997. During 1997, 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,
except for Dr. Lerner who attended 50% of all meetings of the Board of
Directors.
7
<PAGE> 11
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 two times in 1997.
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 two times in 1997.
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 three times in 1997.
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 1997, 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. 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 Compensa-
8
<PAGE> 12
tion 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 provide that their
annual base salaries will be determined annually by the Board of Directors. The
annual base salaries for Messrs. Stewart and Greenwold and Dr. Snow were, and
future salary increases 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 1997. 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 1997 was based on the considerations noted above.
Section 162(m) of the Code. Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), generally limits the deductibility of annual
compensation payable to a publicly held company's Chief Executive Officer and
four next most highly compensated officers to $1 million. Compensation
attributed to the exercise of stock options granted prior to a company's initial
public offering, as well as certain "performance-based compensation," is exempt
from the deduction limits. To date, no compensation paid to the Company's
executive officers has been affected by the deduction limits, including
compensation attributable to the exercise of options. Although the Compensation
Committee has no present intention to pay compensation in excess of the
deduction limits, it reserves the ability to do so if it determines that such
payments are in the best interests of the Company.
COMPENSATION COMMITTEE
Joseph P. Landy
Robert E. McGill, III (appointed in
February 1997)
9
<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, 1997, to the performance of the same
amount invested in the Nasdaq Total Return 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 TOTAL RETURN INDEX
AND
AMEX BIOTECHNOLOGY INDEX
<TABLE>
<CAPTION>
AMEX
MEASUREMENT PERIOD 'CN BIOSCIENCES, NASDAQ TOTAL BIOTECHNOLOGY
(FISCAL YEAR COVERED) INC.' RETURN INDEX INDEX
<S> <C> <C> <C>
10/2/96 100.00 100.00 100.00
12/31/96 137.38 104.05 103.69
12/31/97 186.92 127.28 116.71
</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 1997. Messrs.
Landy and Bryant have in the past served as officers of the Company. Mr. Landy
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. 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 MB (C-N) Limited
Partnership ("ABS"), a former significant stockholder of the Company. Mr. 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 formerly beneficially owned by 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.
ABS formerly had the following rights with respect to the nomination and
election of directors to the Company's Board of Directors: for so long as ABS
owned beneficially at least 10% of the outstanding shares of Common Stock, the
Company was obligated to 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. As of April 7, 1997, ABS beneficially owned no
shares of Common Stock, and therefore no longer has 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 the Company's
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
Company's 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 the Company's 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 of Common Stock. 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.
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
11
<PAGE> 15
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 bore interest at the rate of 5.65% per annum, matured on January 31, 1998,
and was secured by such shares of Common Stock. The principal amount of the note
was paid in full by Mr. Matzilevich and the accrued interest was forgiven by the
Company in December 1997. The Company has granted Mr. Matzilevich certain
registration rights for such shares of Common Stock.
On May 27, 1997, the Company guaranteed a portion of certain indebtedness
incurred by Mr. Papadopoulos relating to his exercise of stock options and the
payment of taxes thereon. Such indebtedness is presently secured by shares of
Common Stock owned by Mr. Papadopoulos. The maximum liability of the Company
under such guarantee is $450,000, plus certain costs and expenses of the lender;
however, based upon the principal balance of such indebtedness as of March 16,
1998, the Company's obligation under the guarantee would be limited to
approximately $150,000. The guarantee also includes provisions subordinating any
future indebtedness of Mr. Papadopoulos owed to the Company in favor of the
guaranteed indebtedness.
PROPOSAL TWO
AMENDMENT OF STOCK OPTION PLAN TO INCREASE SHARES OF
COMMON STOCK RESERVED FOR ISSUANCE
AMENDMENT
Options to purchase an aggregate of 1,085,000 shares of Common Stock are
currently authorized under the Stock Option Plan. As of March 16, 1998, a total
of 84,362 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 350,000 shares
from 1,085,000 to 1,435,000. The Stock Option Plan as so amended is hereby
submitted to the stockholders of the Company for approval.
12
<PAGE> 16
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.
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 275 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 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
13
<PAGE> 17
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 16, 1998 the last reported sale price for the Common Stock on the
Nasdaq National Market was $26.00 per share.
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.
14
<PAGE> 18
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 in respect of the requested increase in share
authorization. The following table, however, sets forth options granted between
January 1, 1998 and March 16, 1998 from shares presently available for grant
under the Stock Option Plan to each of the Named Executive Officers, all
executive officers as a group and all employees, other than executive officers,
as a group. No stockholder approval is required in connection with such option
grants. The dollar value of such options is based upon the future performance of
the Common Stock and therefore is not readily ascertainable.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND POSITION UNDERLYING OPTIONS(1)
----------------- ---------------------
<S> <C>
Stelios B. Papadopoulos................................... 12,000
Chief Executive Officer and President
Douglas J. Greenwold...................................... 12,000
Vice President, Sales and Marketing
John T. Snow.............................................. 12,000
Vice President, New Business Development
James G. Stewart.......................................... 12,000
Vice President, Administration, Chief Financial Officer
and Secretary
Ben Matzilevich........................................... 12,000
Vice President, Market Development -- Niche Applications
All executive officers as a group......................... 60,000
All employees, other than executive officers, as a
group................................................... 204,450
</TABLE>
- ---------------
(1) These options were granted on January 15, 1998 and are subject to vesting of
20% on each of the first five anniversaries of the date of grant. As of March
16, 1998, no options had vested. The exercise price for all options is $24.88
per share.
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, 1998, 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 1998.
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.
15
<PAGE> 19
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, 1997.
STOCKHOLDER PROPOSALS -- 1999 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 November 20, 1998.
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 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 16, 1998, 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, 1997.
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,
/s/ JAMES G. STEWART
--------------------
James G. Stewart
Secretary
16
<PAGE> 20
Appendix A
(EDGAR Filing Only)
CN BIOSCIENCES, INC.
THIRD AMENDED AND RESTATED 1992 STOCK OPTION PLAN
* * *
ARTICLE I
Purpose
The CN Biosciences, Inc. Third 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 February 26, 1998.
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.
<PAGE> 21
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 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, 1,435,000 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
-2-
<PAGE> 22
(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.
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
-3-
<PAGE> 23
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 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
-4-
<PAGE> 24
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, 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)
-5-
<PAGE> 25
of such Stock before the later of (a) two years after the date the optionee was
granted the incentive stock option or (b) one 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
-6-
<PAGE> 26
shall not be the surviving corporation, or a dissolution or liquidation of the
Company, or a sale of all or substantially all 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
-7-
<PAGE> 27
holder of record thereof, except as otherwise provided in ARTICLE X.
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)
-8-
<PAGE> 28
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) 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
-9-
<PAGE> 29
designation, or change or revocation thereof, shall be effective unless received
by the Committee prior to the optionee's death, 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
-10-
<PAGE> 30
compensation by performance of services, they shall have the same rights as
other employees under general law.
(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.
* * *
-11-
<PAGE> 31
Appendix B
(EDGAR filing only)
PROXY [FORM OF PROXY] 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 21, 1998
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 20,
1998 (the "Proxy Statement"), is hereby acknowledged.
PLEASE SIGN AND DATE ABOVE AND
MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 32
CN BIOSCIENCES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING
MANNER USING DARK INK ONLY.
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.
1. Election of Directors
Nominees: Joseph P. Landy, Richard A. Lerner, S. Joshua Lewis,
Robert E. McGill, III and Stelios B. Papadopoulos
FOR all: [ ]
WITHHOLD all: [ ]
FOR ALL, Except nominee(s) written below:
__________________________________________________________
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 350,000 shares from 1,085,000 to 1,435,000.
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,
1998.
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: _____________________________________________________________________
Signature (if held jointly):____________________________________________________
Dated____________, 1998
(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.)
