<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ]Preliminary Proxy Statement [ ]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 Rule 14a-11 (c) or Rule 14a-12
ALBANY MOLECULAR RESEARCH, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid.
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Dated Filed:
<PAGE>
ALBANY MOLECULAR RESEARCH, INC.
21 Corporate Circle
Albany, New York 12203-5154
April 30, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Albany
Molecular Research, Inc., a Delaware corporation (the "Company"), to be held
on Thursday, June 17, 1999, at 9:00 a.m., local time, at The Italian American
Center, 257 Washington Avenue Extension, Albany, NY 12205 (together with any
adjournments or postponements thereof, the "Annual Meeting").
The Annual Meeting has been called for the purpose of (i) electing two Class
I Directors for three-year terms and (ii) considering and voting upon such
other business as may properly come before the Annual Meeting or any
adjournments or postponements thereof.
The Board of Directors has fixed the close of business on Friday, April 23,
1999 as the record date for determining stockholders entitled to notice of,
and to vote at, the Annual Meeting.
The Board of Directors of the Company recommends that you vote "FOR" the
election of each nominee of the Board of Directors as Directors of the
Company.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
Sincerely,
Thomas E. D'Ambra, Ph.D.
Chairman and Chief Executive Officer
<PAGE>
ALBANY MOLECULAR RESEARCH, INC.
21 Corporate Circle
Albany, New York 12203-5154
(518) 464-0279
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 17, 1999
----------------
Notice is hereby given that the 1999 Annual Meeting of Stockholders of
Albany Molecular Research, Inc., a Delaware corporation (the "Company"), will
be held on Thursday, June 17, 1999, at 9:00 a.m., local time, at The Italian
American Center, 257 Washington Avenue Extension, Albany, NY 12205 (the
"Annual Meeting") for the purpose of considering and voting upon:
1. The election of two Class I Directors for three-year terms; and
2. Such other business as may properly come before the Annual Meeting and
any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 23, 1999 as
the record date for determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
Only holders of Common Stock of record at the close of business on that date
will be entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof.
In the event there are not sufficient shares to be voted in favor of any of
the foregoing proposals at the time of the Annual Meeting, the Annual Meeting
may be adjourned in order to permit further solicitation of proxies.
By Order of the Board of Directors
Donald E. Kuhla, Ph.D.
Secretary
Albany, New York
April 30, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
ALBANY MOLECULAR RESEARCH, INC.
21 Corporate Circle
Albany, New York 12203-5154
(518) 464-0279
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 17, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Albany Molecular Research, Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders of the Company to be held on Thursday, June 17, 1999 at 9:00
a.m., local time, at The Italian American Center, 257 Washington Avenue
Extension, Albany, New York 12205 and any adjournments or postponements
thereof (the "Annual Meeting").
At the Annual Meeting, the stockholders of the Company will be asked to
consider and vote upon the following matters:
1. The election of two Class I Directors for three-year terms, such terms
to continue until the annual meeting of stockholders in 2002 and until such
Directors' successors are duly elected and qualified; and
2. Such other business as may properly come before the meeting and any
adjournments or postponements thereof.
The Notice of Annual Meeting, Proxy Statement and Proxy Card are first being
mailed to stockholders of the Company on or about April 30, 1999 in connection
with the solicitation of proxies for the Annual Meeting. The Board of
Directors has fixed the close of business on April 23, 1999 as the record date
for the determination of stockholders entitled to notice of, and to vote at,
the Annual Meeting (the "Record Date"). Only holders of Common Stock of record
at the close of business on the Record Date will be entitled to notice of, and
to vote at, the Annual Meeting. As of the Record Date, there were 12,894,668
shares of Common Stock outstanding and entitled to vote at the Annual Meeting
and 94 stockholders of record. Each holder of a share of Common Stock
outstanding as of the close of business on the Record Date will be entitled to
one vote for each share held of record with respect to each matter submitted
at the Annual Meeting.
The presence, in person or by proxy, of a majority of the total number of
outstanding shares of Common Stock is necessary to constitute a quorum for the
transaction of business at the Annual Meeting. A quorum being present, the
affirmative vote of a plurality of the votes cast is necessary to elect the
nominees as Directors of the Company.
Shares that reflect abstentions or "broker non-votes" (i.e., shares
represented at the meeting held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote such shares and with respect to which the broker or nominee
does not have discretionary voting power to vote such shares) will be counted
for purposes of determining whether a quorum is present for the transaction of
business at the meeting. With respect to the election of Directors, votes may
be cast in favor of or withheld from the nominee; votes that are withheld will
be excluded entirely from the vote and will have no effect. Broker non-votes
will also have no effect on the outcome of the election of the Director.
Stockholders of the Company are requested to complete, date, sign and return
the accompanying Proxy Card in the enclosed envelope. Shares of Common Stock
represented by properly executed proxies received by the Company and not
revoked will be voted at the Annual Meeting in accordance with the
instructions contained therein. If instructions are not given therein,
properly executed proxies will be voted "FOR" the election of the nominees for
Director listed in this Proxy Statement. It is not anticipated that any
matters other than the election of Directors, will be presented at the Annual
Meeting. If other matters are presented, proxies will be voted in accordance
with the discretion of the proxy holders.
<PAGE>
Any properly completed proxy may be revoked at any time before it is voted
on any matter (without, however, affecting any vote taken prior to such
revocation) by giving written notice of such revocation to the Secretary of
the Company, or by signing and duly delivering a proxy bearing a later date,
or by attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not, by itself, revoke a proxy.
The Annual Report of the Company, including financial statements for the
fiscal year ended December 31, 1998, is being mailed to stockholders of the
Company concurrently with this Proxy Statement. The Annual Report, however, is
not a part of the proxy solicitation materials.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of five members and
is divided into three classes, with two Directors in Class I, one Director in
Class II and two Directors in Class III. Directors serve for three-year terms
with one class of Directors being elected by the Company's stockholders at
each annual meeting.
At the Annual Meeting, two Class I Directors will be elected to serve until
the annual meeting of stockholders in 2002 and until each such Director's
successor is duly elected and qualified. The Board of Directors has nominated
Chester J. Opalka and Frank W. Haydu, III for re-election as Class I
Directors. Unless otherwise specified in the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the re-election of Chester J. Opalka and Frank W. Haydu,
III as Directors. The nominees have agreed to stand for re-election and to
serve, if elected, as Directors. However, if the person nominated by the Board
of Directors fails to stand for election or is unable to accept election, the
proxies will be voted for the election of such other person or persons as the
Board of Directors may recommend.
Vote Required For Approval
A quorum being present, the affirmative vote of a plurality of the votes
cast is necessary to elect each nominee as a Director of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION OF
EACH NOMINEE OF THE BOARD OF DIRECTORS AS A DIRECTOR OF THE COMPANY.
INFORMATION REGARDING DIRECTORS
The Board of Directors of the Company held eight (8) meetings during 1998.
During 1998, each of the incumbent Directors attended at least 75% of the
total number of meetings of the Board and of the committees of which he was a
member. The Board of Directors has established an Audit Committee (the "Audit
Committee") and a Compensation Committee (the "Compensation Committee"). The
Audit Committee recommends the independent accounting firm to be appointed to
audit the Company's financial statements and to perform services related to
such audit, reviews the scope and results of the audit with the independent
accountants, reviews the Company's year-end operating results with management
and the independent accountants, considers the adequacy of the internal
accounting procedures and considers the effect of such procedures on the
accountants' independence. The Compensation Committee reviews and recommends
the compensation arrangements for officers and other senior level employees,
reviews general compensation levels for other employees as a group, determines
the options or stock to be granted to eligible persons under the Company's
1998 Stock Option and Incentive Plan (the "1998 Stock Plan") and takes such
other action as may be required in connection with the Company's compensation
and incentive plans. The Audit Committee currently consists of Mr. Haydu and
Dr. Tartaglia, neither of whom is an officer or an employee of the Company,
and held one (1) meeting during 1998. The Compensation Committee currently
consists of Mr. Haydu and Dr. Tartaglia and held one (1) meeting during 1998.
2
<PAGE>
Non-employee Directors receive $10,000 annually plus $1,000 per meeting as
compensation for their services as Directors. Directors who are also employees
do not receive any additional compensation for service as Directors. Further,
each Director is reimbursed for reasonable travel and other expenses incurred
in attending meetings. Prior to joining the Company in July 1998, Dr. Kuhla
also received a consulting fee of $2,500 per quarter for miscellaneous
projects and business development activities.
Set forth below is certain information regarding the Directors of the
Company, including the Class I Directors who have been nominated for re-
election at the Annual Meeting, based on information furnished by them to the
Company.
<TABLE>
<CAPTION>
Director
Name Age Since
- ---- --- --------
<S> <C> <C>
Class I-Term Expires 1999
Chester J. Opalka*................................................. 50 1991
Frank W. Haydu, III (1)(2)*........................................ 51 1998
Class II-Term Expires 2000
Donald E. Kuhla, Ph.D.............................................. 56 1995
Class III-Term Expires 2001
Thomas E. D'Ambra, Ph.D............................................ 43 1991
Anthony M. Tartaglia, M.D.(1)(2)................................... 66 1995
</TABLE>
- --------
* Nominee for re-election.
(1) Member of Audit Committee.
(2) Member of the Compensation Committee.
The principal occupation and business experience for at least the last five
years for each Director of the Company is set forth below.
Thomas E. D'Ambra, Ph.D. co-founded the Company in 1991 and currently serves
as the Company's Chairman of the Board and Chief Executive Officer. Prior to
co-founding the Company, Dr. D'Ambra served as the Vice President, Chemistry
and co-founder of Coromed, Inc., a traditional development CRO, from 1989 to
1991 and Group Leader and Senior Research Chemist with Sterling Winthrop,
Inc., a pharmaceutical company, from 1982 to 1989. Dr. D'Ambra holds a B.A.
degree in chemistry from the College of the Holy Cross and a Ph.D. in organic
chemistry from the Massachusetts Institute of Technology.
Donald E. Kuhla, Ph.D. has served as the Company's President and Chief
Operating Officer since July 1998 and as a Director of the Company since
October 1995. Prior to joining the Company as an employee, Dr. Kuhla served as
the Vice President and Chief Technical Officer of Plexus Ventures, Inc., a
biotechnology investment and consulting company, from February 1994 to June
1998, the Chief Operating Officer of Hybridon, Inc., a pharmaceutical company,
and Enzymatics, Inc., a medical diagnostics company, from November 1990 to
February 1994, in various positions with Rorer Group, Inc., a pharmaceutical
company, from 1981 to 1990 and in various positions with Pfizer Inc., a
pharmaceutical company, from 1968 to 1981. Dr. Kuhla has a B.A. degree in
chemistry from New York University and a Ph.D. in organic chemistry from Ohio
State University.
Chester J. Opalka co-founded the Company in 1991, currently serves as Vice
President and Director of Laboratory Operations and has served as a Director
of the Company since its inception. Prior to co-founding the Company, Mr.
Opalka served as a Senior Research Chemist with Coromed, Inc. from January
1991 to September 1991 and in various positions with Sterling Winthrop, Inc.
from 1970 to 1991. Mr. Opalka holds a B.S. degree in chemistry from Niagara
University.
Anthony P. Tartaglia, M.D. has served as a Director of the Company since
October 1995. Dr. Tartaglia served as a physician with Albany Medical Center
from 1984 until his retirement in June 1998 and also served as Dean of Albany
Medical College from 1990 to June 1995. Dr. Tartaglia previously served as
Executive
3
<PAGE>
Director of the Albany Medical Center Hospital from 1987 to 1990, Senior Vice
President for Patient Care of the Albany Medical Center from 1984 to 1987 and
as Chief of Medicine at St. Peter's Hospital in Albany from 1975 to 1984. Dr.
Tartaglia is also a director of Albank Financial Corporation, a bank holding
company. Dr. Tartaglia holds a B.S. degree in biology from Union College and a
M.D. from the University of Rochester Medical School.
Frank W. Haydu, III has served as a Director of the Company since October
1998. Mr. Haydu has served as the Chairman of Haydu & Lind, LLC, a senior
living development company, since co-founding it in June 1996. Mr. Haydu also
recently served as the interim Commissioner of Education of Massachusetts from
February 1998 to July 1998. Prior to co-founding Haydu & Lind, LLC, Mr. Haydu
served as the interim President and Chief Executive Officer of the New England
Medical Center Hospitals, Inc. from October 1995 to May 1996, a Senior Advisor
to Smith Barney, Inc., an investment bank, from August 1994 to August 1995,
and as a Managing Director of Kidder, Peabody & Company, Inc., an investment
bank, from 1990 to August 1994. Mr. Haydu also serves as a director of several
private companies. Mr. Haydu holds a B.A. degree in economics from Muhlenberg
College.
EXECUTIVE OFFICERS
The names and ages of all executive officers of the Company and the
principal occupation and business experience for at least the last five years
for each are set forth below as of December 31, 1998.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------------------------------------
<C> <C> <S>
Thomas E. D'Ambra, Ph.D........ 43 Chairman of the Board of Directors and
Chief Executive Officer
Donald E. Kuhla, Ph.D.......... 56 President, Chief Operating Officer and
Lawrence D. Jones, Ph.D........ Secretary
Michael P. Trova, Ph.D......... 47 Vice President, Business Development
Harold Meckler, Ph.D........... 37 Vice President, Medicinal Chemistry
James J. Grates................ 42 Vice President, Chemical Development
David P. Waldek................ 37 Vice President, Human Resources
34 Chief Financial Officer and Treasurer
Chester J. Opalka.............. 50 Vice President, Director of Laboratory
</TABLE> Operations
Lawrence D. Jones, Ph.D. has served as the Company's Vice President,
Business Development since January 1999 and served as the Company's Vice
President, Commercial Operations and Quality from June 1998 to January 1999
and served as the Company's Vice President, Operations from March 1998 to June
1998. Prior to joining the Company, Dr. Jones served as the Executive Vice
President and co-founder of Inhalon Pharmaceuticals, Inc., a manufacturer and
distributor of generic inhalation anesthetics, from August 1991 to February
1998, the Director of Marketing and Development for Kaneka America
Corporation, a manufacturer and distributor of chemical intermediates, from
1988 to 1991, and a Sales and Marketing Manager with Johnson Matthey, Inc., a
pharmaceutical manufacturer, from 1980 to 1998. Dr. Jones holds a B.A. degree
in chemistry from Cornell University and a Ph.D. in organic chemistry from
Duke University.
Michael P. Trova, Ph.D. has served as the Company's Vice President,
Medicinal Chemistry since March 1998 and served as the Company's Director of
Medicinal Chemistry from August 1996 to March 1998 and as the Company's
Assistant Director of Medicinal Chemistry from August 1995 to August 1996.
Prior to joining the Company, Dr. Trova was a staff scientist with American
Cyanamid, Lederle Laboratories, a pharmaceutical company, from 1989 to August
1995 and a post-doctoral researcher at the Massachusetts Institute of
Technology from 1987 to 1989. Dr. Trova holds a B.S. degree in chemistry from
Rensselaer Polytechnic Institute and a Ph.D. in organic chemistry from Ohio
State University.
Harold Meckler, Ph.D. has served as the Company's Vice President, Chemical
Development since May 1997 and served as the Company's Director of Chemical
Development from August 1995 to May 1997. Prior to joining the Company, Dr.
Meckler served as Manager, Organic Chemistry of Telor Ophthalmic
Pharmaceuticals,
4
<PAGE>
Inc., a biopharmaceutical company, from March 1994 to August 1995, in various
capacities with Ciba-Geigy Corporation, a pharmaceutical company, from 1984 to
March 1994, and as Senior Research Chemist, Chemical Development with Sterling
Winthrop, Inc. from 1982 to 1984. Dr. Meckler holds a B.S. degree in chemistry
from the University of Maryland, College Park and a Ph.D. in organic chemistry
from the State University of New York, Buffalo.
James J. Grates joined the Company in December 1996 and currently serves as
the Company's Vice President, Human Resources. Prior to joining the Company,
Mr. Grates was Executive Vice President, Corporate Services with Corporate
Health Dimensions, a health care service provider company, from April 1995 to
December 1996 and Manager of Human Resources with Norton Performance Plastics,
Inc., a plastic manufacturer, from 1990 to September 1995. Mr. Grates holds a
B.S. degree in business administration from Syracuse University and an A.A.S.
degree in marketing from Herkimer County Community College.
David P. Waldek has served as the Company's Chief Financial Officer since
March 1999. Prior to joining the Company, Mr. Waldek was Vice President,
Finance of NAMIC U.S.A. Corporation, a medical device company, from November
1990 to March 1999. NAMIC U.S.A. Corporation was affiliated with Pfizer, Inc.,
a pharmaceutical company from March 1995 to September 1998 and was acquired by
Boston Scientific Corporation, a medical device company, in September 1998.
Mr. Waldek also served as Senior Accountant for Ernst & Young, an independent
public accounting firm, from September 1987 to November 1990. Mr. Waldek holds
a B.S. degree in economics from the University of Rochester and an M.B.A. in
finance from the William E. Simon Graduate School of Business Administration.
5
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation
Summary Compensation. The following table sets forth information concerning
compensation for services rendered in all capacities awarded to, earned by or
paid to the Company's Chief Executive Officer, the four other most highly
compensated executive officers and one former executive officer who each
earned in excess of $100,000 in salary and bonus during the year ended
December 31, 1998 (the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------------- ------------
Number of
Shares
Underlying
Name and Principal Fiscal Options All Other
Position Year Salary($) Bonus($) Granted(#) Compensation($)
- ------------------ ------ --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Thomas E. D'Ambra,
Ph.D.................. 1998 197,403 105,000 -- 1,821,628(1)
Chairman and Chief
Executive Officer
Donald E. Kuhla, Ph.D.
(2)................... 1998 84,135 25,000 112,500 75,487(3)
President and Chief
Operating Officer
Harold Meckler, Ph.D... 1998 118,615 18,000 -- 10,000(4)
Vice President,
Chemical Development
Michael P. Trova,
Ph.D.................. 1998 111,738 40,000 -- 10,000(4)
Vice President,
Medicinal Chemistry
Lawrence D. Jones,
Ph.D.(5).............. 1998 108,808 10,350 33,750 30,049(6)
Vice President,
Business Development
Harold M. Armstrong,
Jr.(7)................ 1998 123,462 -- -- 377,430(8)
Former Chief Financial
Officer
</TABLE>
- --------
(1) Constitutes amounts earned by Dr. D'Ambra under the Company's Technology
Development Incentive Plan.
(2) Joined the Company as an officer in July 1998.
(3) Consists of $12,400 in director fees and $5,000 in consulting fees paid to
Dr. Kuhla prior to his employment by the Company and $58,087 as
reimbursement for relocation expenses incurred when Dr. Kuhla joined the
Company.
(4) Constitutes debt forgiveness under notes payable to the Company.
(5) Joined the Company in March 1998.
(6) Constitutes reimbursement of relocation expenses incurred when Dr. Jones
joined the Company.
(7) Departed from the Company in October 1998.
(8) Constitutes a severance payment made upon Mr. Armstrong's departure from
the Company.
6
<PAGE>
Option Grants, Exercises and Holdings. The following table sets forth
information regarding stock options granted during 1998.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------------------------
Potential
Realizable Value at
Assumed Annual
Number of Percent of Rates of Stock
Securities Total Options Price Appreciation
Underlying Granted Exercise for Option Term(3)
Options to Employees or Base Expiration -------------------
Name Granted (#)(1) in Fiscal Year Price ($/Sh)(2) Date 5% ($) 10% ($)
- ---- -------------- -------------- --------------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Donald E. Kuhla, Ph.D... 112,500 58.1 8.89 6/25/08 628,973 1,593,942
Lawrence D. Jones,
Ph.D................... 33,750 17.4 4.91 3/16/08 104,216 264,103
</TABLE>
- --------
(1) Vesting of options is subject to the continuation of such employee's
service relationship with the Company. The options terminate ten years
after the grant date, subject to earlier termination in accordance with
the Company's 1992 Stock Option Plan and the applicable option agreement.
(2) The exercise price equals the fair market value of the stock as of the
grant date as determined by the Board of Directors after consideration of
a number of factors, including, but not limited to, the Company's
financial performance, the Company's status as a private company at the
time of grants, the minority interests represented by the option shares
and the price of shares of equity securities sold to or purchased by
outside investors.
(3) The amounts shown as potential realizable value illustrate what might be
realized upon exercise immediately prior to expiration of the option term
using the 5% and 10% appreciation rates established in regulations of the
Securities and Exchange Commission (the "Commission"), compounded
annually. The following table sets forth the potential realizable value of
the options held by the Named Executive Officers using the Company's
initial public offering price of $20.00 per share at the 5% and 10%
appreciation rates:
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Number of Rates of Stock
Securities Price Appreciation
Underlying for Option Term
Options -------------------
Granted (#) 5% ($) 10% ($)
----------- --------- ---------
<S> <C> <C> <C>
Donald E. Kuhla, Ph.D..................... 112,500 2,664,888 4,835,796
Lawrence D. Jones, Ph.D................... 33,750 933,791 1,585,064
</TABLE>
The potential realizable value is based solely on assumed annual
appreciation rates required by the Commission's regulations and is not
intended to predict future appreciation of the price of the Common Stock.
The values shown do not consider non-transferability, vesting or
termination of the options upon termination of such employee's employment
with the Company.
Option Exercises and Year-End Holdings. The following table sets forth
information concerning the number and value of unexercised options to purchase
Common Stock of the Company held by the Named Executive Officers.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-
Unexercised Options the-Money Options at
Shares at Fiscal Year-End (#) Fiscal Year-End ($)(1)
Acquired On Value ---------------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ -------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas E. D'Ambra,
Ph.D................... -- -- -- 45,859 -- 767,365
Donald E. Kuhla, Ph.D... -- -- 28,125 118,125 507,000 1,346,438
Harold Meckler, Ph.D.... -- -- 54,000 47,047 1,019,520 788,975
Michael P. Trova,
Ph.D................... 18,000 171,840 36,000 23,309 679,680 389,924
Lawrence D. Jones,
Ph.D................... -- -- -- 33,750 -- 509,288
</TABLE>
- --------
(1) There was no public trading market for the Common Stock as of December 31,
1998. Accordingly, these values have been calculated on the basis of the
Company's initial public offering price of $20.00 per share, less the
applicable exercise price.
7
<PAGE>
Report of the Compensation Committee of the Board of Directors on Executive
Compensation
The Compensation Committee of the Board consists of Mr. Haydu and Dr.
Tartaglia, neither of whom is an officer or an employee of the Company. The
Compensation Committee reviews and recommends the compensation arrangements
for officers and other senior level employees, reviews general compensation
levels for other employees as a group, determines the options or stock to be
granted to eligible persons under the 1998 Stock Plan and takes such other
action as may be required in connection with the Company's compensation and
incentive plans.
Compensation Policies for Executive Officers (including the Named Executive
Officers). The Compensation Committee's executive compensation philosophy is
to: (i) provide competitive levels of compensation that integrate pay with the
individual executive's performance and the Company's short- and long-term
performance goals; (ii) motivate key executives to achieve strategic business
goals and reward them for their achievement; (iii) provide compensation
opportunities and benefits that are comparable to those offered by other
companies in the pharmaceutical and biotechnological industry, thereby
allowing the Company to compete for and retain talented executives who are
critical to the Company's short- and long-term success; (iv) align the
interests of key executives with the short- and long-term interests of
stockholders and the enhancement of stockholder value through the granting of
stock options; and (v) recognize individual contributions as well as overall
business results. The Company's objectives include qualitative factors that
strengthen the Company's ability to enhance profitable growth over the long-
term, such as demonstrated leadership ability, management development,
insuring compliance with laws, regulations and Company policies, and
anticipating and responding to changing market and economic conditions.
The compensation of the Company's Chief Executive Officer and other
executive officers is currently comprised of annual base salary, annual
performance incentives in the form of cash bonuses and long-term performance
incentives in the form of stock option grants under the 1998 Stock Option Plan
or any other plan related to the Company's stock.
The Compensation Committee has determined that base salaries of executive
officers should be set at levels that are competitive with those of executives
of comparably-sized companies in the pharmaceutical and biotechnological
industry. In addition, the Compensation Committee believes that it is
appropriate to reward performance through a combination of cash bonuses and
stock option grants and to provide a competitive compensation package that
will enable the Company to attract and retain the executives needed to enhance
the Company's short-term financial performance and to enhance profitable
growth over the long-term.
Base Salary. Base salaries for each of the Company's executive officers are
targeted according to the salaries of employees holding similar offices and
having similar responsibilities at comparably-sized companies within the
pharmaceutical and biotechnological industry. Annual salary adjustments for
executive officers are determined by evaluating the competitive marketplace,
the performance of the Company, the performance of the executive officer and
any change in the responsibilities assumed by such executive officer. Salary
adjustments are normally determined and made on an annual basis.
Bonuses. At the beginning of each year the Compensation Committee adopts a
performance bonus program setting forth strategic goals for the year and a
percentage of base salary that will be awarded to the senior management team
based upon the achievement of these goals. All awards are paid in full, in
cash, following the year of performance. The Compensation Committee awarded
bonuses to its executive officers for 1998 based on the achievement of the
Company and individual predetermined goals for 1998.
Stock Option Grants. Stock options are designed to attract and retain
executives who can make significant contributions to the Company's success;
reward executives for such significant contributions; give executives a long-
term incentive to increase shareholder value; and align the interests of the
Company's senior executives with those of its stockholders. In determining
whether to grant stock options to executive officers, the Compensation
Committee evaluates each officer's performance by examining criteria similar
to that involved in
8
<PAGE>
fixing cash bonuses. The Compensation Committee also may grant stock options
for executive retention purposes, taking into account, among other things,
general industry practices. Stock options generally have been granted with a
ten-year term, with 60% vesting on the third anniversary of the grant date and
the remainder vesting in equal annual installments over the next two years at
an exercise price equal to or above the fair market value of the Common Stock
on the grant date.
Compensation of Chief Executive Officer. Thomas E. D'Ambra, Ph.D., the
Company's Chief Executive Officer, receives competitive compensation and
regular benefits in effect for senior executives of the Company. In 1998, the
Compensation Committee reviewed information regarding the compensation paid to
the Chief Executive Officers of comparable companies, and evaluated
achievement of corporate, individual and organizational objectives for 1998.
Dr. D'Ambra's annual compensation for 1998 was $197,403, a 10.7% increase from
the year ended December 31, 1997. Dr. D'Ambra also earned a cash bonus of
$105,000 and $1,821,628 under the Company's Technology Development Incentive
Plan. The base salary for Dr. Thomas E. D'Ambra, Ph.D, the Chief Executive
Officer, was established pursuant to an employment agreement. Such employment
agreement is described more fully below under "Agreements With Named Executive
Officers" and "--Compensation of the Chief Executive Officer." Dr. D'Ambra did
not receive any options to acquire any shares of the Company's Common Stock in
1998.
COMPENSATION COMMITTEE
Frank W. Haydu, III Anthony P. Tartaglia, M.D.
Compensation Committee Interlocks and Insider Participation
All executive officer compensation decisions are made by the Compensation
Committee. The Compensation Committee reviews and recommends the compensation
arrangements for officers and other senior level employees, reviews general
compensation levels for other employees as a group, determines the options or
stock to be granted to eligible persons under the 1998 Stock Plan and takes
such other action as may be required in connection with the Company's
compensation and incentive plans. The current members of the Compensation
Committee are Mr. Haydu and Dr. Tartaglia, neither of whom are executive
officers of the Company. Prior to joining the Company as an executive officer
in June 1998, Dr. Kuhla served as a member of the Compensation Committee.
While serving as a member of the Compensation Committee, Dr. Kuhla received a
consulting fee of $2,500 per quarter unrelated to such service.
Agreements with Named Executive Officers
The Company has entered into employment agreements with each of the Named
Executive Officers (other than Mr. Armstrong, who departed the Company in
October 1998). The terms of the agreements are substantially similar, except
with respect to minimum annual base salary ($200,000, $175,000, $150,000,
$138,000, $120,000 and $115,000 for Dr. D'Ambra, Dr. Kuhla, Mr. Waldek, Dr.
Jones, Dr. Meckler and Dr. Trova, respectively) and as set forth below with
respect to the termination of employment upon a "change of control." In
addition to their annual base salary, these Named Executive Officers will be
eligible to receive bonus compensation to be determined at the discretion of
the Board of Directors. The agreements have initial employment terms of three
years and automatically renew for one year periods thereafter. If the Company
elects not to extend an agreement for any reason or if the executive's
employment is terminated by the Company without "cause" (as defined) or by the
executive upon a material breach of the agreement by the Company, the Company
will continue to pay the executive his base salary for one year and will pay
to the executive in monthly installments over such one year period an amount
equal to the executive's cash bonus received in respect of the immediately
preceding year.
Upon termination by the Company of the executive's employment without
"cause" or upon a resignation by the executive for "good reason" (as defined)
or if an employment agreement is not renewed by the Company
9
<PAGE>
within twelve months following a "change of control" (as defined), such
executive will be entitled to receive a severance amount equal to the sum of
(i) a multiple of the executive's annual base salary, plus (ii) the
executive's cash bonus received in respect of the immediately preceding year.
The multiples of base salary to be paid by the Company to Dr. D'Ambra, and Dr.
Kuhla upon the termination of their employment following a "change of control"
are three and two times, respectively, and the multiple of base salary to be
paid by the Company to Mr. Waldek, Dr. Jones, Dr. Meckler and Dr. Trova upon
the termination of their employment following a "change of control" is one
time.
On October 28, 1998, the Company's former chief financial officer, Harold M.
Armstrong, departed from the Company. In connection with Mr. Armstrong's
departure, the Company and Mr. Armstrong entered into a letter agreement
pursuant to which the Company paid Mr. Armstrong a severance payment equal to
his annualized base salary for the 1998 fiscal year and bonus for the 1997
fiscal year. The Company also repurchased a total of 1,131,903 shares of
Common Stock from Mr. Armstrong and a trust for the benefit of his family for
an aggregate purchase price of approximately $9.9 million, of which $2.0
million was paid in cash and $7.9 million was paid in promissory notes. The
remaining amounts due under these notes were repaid from the net proceeds of
the Company's initial public offering. On March 1, 1999, the Company hired Mr.
David P. Waldek as its new Chief Financial Officer.
The Company has also entered into Employment Innovation, Proprietary
Information and Post-Employment Activity Agreements with its Named Executive
Officers. Each agreement provides that, during the six month period
immediately following the termination of his employment with the Company, the
Named Executive Officer will not engage, directly or indirectly, in the sale
or performance of any services for a customer for whom he performed services
at any time during the twelve month period immediately preceding the
termination of his employment.
Certain Transactions
In March 1995, the Company entered into a license agreement with Hoechst
Marion Roussel, Inc. ("HMRI"). Under the terms of the license agreement, the
Company granted HMRI an exclusive, worldwide license to any patents issued to
the Company related to its original 1993 U.S. patent application for a new
process to prepare terfenadine carboxylic acid ("TAM") and the substantially
pure form of TAM this process chemistry produced, fexofenadine HCl.
Fexofenadine HCl is marketed by HMRI as Allegra in the Americas and as Telfast
elsewhere. Pursuant to the license agreement, HMRI paid the Company $19.6
million in milestones and royalties in 1998. Included in the $19.6 million
milestones and royalties paid in 1998 was $8.1 million of non-recurring
milestones and royalty payments related to prior periods. HMRI is also
obligated to pay ongoing royalties to the Company based upon sales of
fexofenadine HCl. In connection with the transactions contemplated by the
license agreement, the Company granted HMRI demand registration rights with
respect to such shares whereby HMRI has the right (i) on any one occasion
beginning six months after completion of the Company's initial public offering
to require the Company to register its shares under the Securities Act for
resale to the public (provided that the aggregate offering price of such
shares must be at least $3.0 million), (ii) to require the Company to register
its shares on a "shelf" registration statement in the event the Company
registers shares held by Dr. D'Ambra and or Mr. Opalka under certain specified
circumstances and (iii) to require the Company to include shares held by HMRI
on registration statements independently filed by the Company, subject to
certain restrictions. In addition, the Company has agreed to indemnify HMRI,
its subsequent transferees, and any underwriters and each of their controlling
persons, against certain claims and liabilities incurred in connection with
any such registration, including claims and liabilities arising under the
securities laws.
Dr. D'Ambra is entitled to payments under the Company's Technology
Development Incentive Plan for amounts paid to the Company under the license
agreement with HMRI, including 10% of all royalties paid to the Company. Under
this plan, Dr. D'Ambra earned $1,821,628 in 1998.
10
<PAGE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 23, 1999 of (i) each
person known by the Company to own beneficially five percent or more of the
outstanding shares of the Company's Common Stock, (ii) each director and the
Named Executive Officers of the Company (other than Mr. Armstrong, who to the
Company's knowledge owns no shares of Common Stock) and (iii) all directors
and executive officers of the Company as a group. Unless otherwise indicated
below, to the knowledge of the Company, all persons listed below have sole
voting and investment power with respect to their shares of Common Stock,
except to the extent authority is shared by spouses under applicable law.
<TABLE>
<CAPTION>
Shares Beneficially
Owned
--------------------
Name of Beneficial Owner(2) Number Percent(1)
- --------------------------------------------------------- --------- ----------
<S> <C> <C>
Thomas E. D'Ambra, Ph.D.(3).............................. 4,335,378 33.6%
Chester J. Opalka(4)..................................... 2,136,478 16.6
Hoechst Aktiengesellschaft(5)............................ 1,627,231 12.6
Charles W. Stiefel(6).................................... 1,260,000 9.8
Harold Meckler, Ph.D.(7)................................. 54,400 *
Michael P. Trova, Ph.D.(8)............................... 54,000 *
Lawrence D. Jones, Ph.D.(9).............................. 11,000 *
Anthony P. Tartaglia, M.D.(10)........................... 39,497 *
Donald E. Kuhla, Ph.D. (11).............................. 45,304 *
Frank W. Haydu, III (12)................................. 1,125 *
All executive officers and directors as a group (10
persons)(13)............................................ 6,677,282 51.8
</TABLE>
- --------
* Less than 1%.
(1) All percentages have been determined as of December 31, 1998 in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). For purposes of this table, a person or group of persons
is deemed to have "beneficial ownership" of any shares of Common Stock
which such person has the right to acquire within 60 days after April 23,
1999. For purposes of computing the percentage of outstanding shares of
the Company's Common Stock held by each person or group of persons named
above, any security which such person or persons has or have the right to
acquire within 60 days after April 23, 1999 is deemed to be outstanding,
but is not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person. As of April 23, 1999, a total of
12,894,668 shares of Common Stock were issued and outstanding.
(2) The address of all listed stockholders other than Hoechst
Aktiengesellschaft and Charles W. Stiefel is c/o Albany Molecular
Research, Inc., 21 Corporate Circle, Albany, New York 12203. The address
of Hoechst Aktiengesellschaft is c/o Hoechst Marion Roussel, Inc., 10236
Marion Park Drive, Kansas City, Missouri 64137. The address of Charles W.
Stiefel is c/o Stiefel Laboratories, Inc., 255 Alhambra Circle, Suite
1000, Coral Gables, Florida 33134.
(3) Includes 1,719,164 shares held by the Thomas E. D'Ambra GRAT I trust of
which Dr. D'Ambra serves as the trustee. By virtue of his position as
trustee, Dr. D'Ambra may be deemed to be the beneficial owner of all
shares held by such trust. Excludes 45,859 shares subject to options not
exercisable within 60 days.
(4) Includes 409,995 shares held by the Chester J. Opalka 1997 Retained
Annuity Trust of which Mr. Opalka serves as a co-trustee. By virtue of his
position as a co-trustee, Mr. Opalka may be deemed to be the beneficial
owner of all shares held by such trust. Excludes 17,054 shares subject to
options not exercisable within 60 days.
(5) Hoechst Aktiengesellschaft is a publicly-held company and the parent of
Hoechst Marion Roussel Aktiengesellschaft, a German corporation ("HMRA").
HMRA, in turn, is the parent of both HMR Pharma, Inc., a Delaware
corporation, and Hoechst Marion Roussel, S.A., a French corporation, which
together own all of the outstanding shares of Hoechst Marion Roussel,
Inc., the holder of record of these shares.
11
<PAGE>
(6) Includes 630,000 shares subject to options exercisable within 60 days.
Charles W. Stiefel may be deemed to be the beneficial owner of all of the
shares beneficially held by Stiefel Laboratories, Inc., the holder of
record of these shares.
(7) Includes 54,000 shares subject to options exercisable within 60 days.
Excludes 49,047 shares subject to options not exercisable within 60 days.
(8) Includes 36,000 shares subject to options exercisable within 60 days.
Excludes 25,909 shares subject to options not exercisable within 60 days.
(9) Excludes 35,750 shares subject to options not exercisable within 60 days.
(10) Includes 33,694 shares subject to options exercisable within 60 days.
Excludes 5,681 shares subject to options not exercisable within 60 days.
(11) Includes 43,088 shares subject to options exercisable within 60 days.
Excludes 107,162 shares subject to options not exercisable within 60 days.
(12) Excludes 5,625 shares subject to options not exercisable within 60 days.
(13) Includes 166,782 shares subject to options exercisable within 60 days.
Excludes 381,922 shares subject to options not exercisable within 60 days.
MARKET VALUE
There was no public trading market for the Common Stock as of December 31,
1998.
12
<PAGE>
EXPENSES OF SOLICITATION
The Company will pay the entire expense of soliciting proxies for the Annual
Meeting. In addition to solicitations by mail, certain Directors, officers and
regular employees of the Company (who will receive no compensation for their
services other than their regular compensation) may solicit proxies by
telephone, telegram or personal interview. Banks, brokerage houses,
custodians, nominees and other fiduciaries have been requested to forward
proxy materials to the beneficial owners of shares held of record by them and
such custodians will be reimbursed for their expenses.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholder proposals intended to be presented at the Company's 2000 annual
meeting of stockholders must be received by the Company on or before December
31, 1999 in order to be considered for inclusion in the Company's proxy
statement and form of proxy for that meeting. These proposals must also comply
with the rules of the Commission governing the form and content of proposals
in order to be included in the Company's proxy statement and form of proxy.
Such proposals should be sent to: Secretary, Albany Molecular Research, Inc.,
21 Corporate Circle, Albany, New York 12203-5154. A stockholder who wishes to
present a proposal at the Company's next annual meeting of stockholders, other
than a proposal to be considered for inclusion in the Company's proxy
statement described above, must deliver the proposal to: Secretary, Albany
Molecular Research, Inc., 21 Corporate Circle, Albany, New York 12203-5154.
The Company's By-laws provide that the Company must receive the proposal at
its principal executive offices not less than 75 days nor more than 120 days
prior to the first anniversary of the date of the previous year's annual
meeting. In the event, however, that the annual meeting is scheduled to be
held more than 30 days before or more than 60 days after the anniversary date
of the immediately preceding annual meeting, notice must be so delivered not
later than the close of business on the later of (i) the 75th day prior to the
scheduled date of such annual meeting or (ii) the 15th day following the day
on which public announcement of the date of such meeting is first made by the
Company. The proposal must also comply with the other requirements contained
in the Company's By-laws, including supporting documentation and other
information. Proxies solicited by the Board of Directors will confer
discretionary voting authority with respect to these proposals, subject to the
Commission's rules governing the exercise of this authority.
INDEPENDENT ACCOUNTANTS
The Company has selected KPMG LLP as the independent public accountants for
the Company for the fiscal year ending December 31, 1999. The firm of KPMG LLP
has served as the Company's independent public accountants since 1994. A
representative of KPMG LLP will be present at the Annual Meeting and will be
given the opportunity to make a statement if he or she so desires. The
representative will be available to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors, and persons who own more than 10% of the Company's
outstanding shares of Common Stock (collectively, "Section 16 Persons"), to
file initial reports of ownership and reports of changes in ownership with the
Commission and Nasdaq. Section 16 Persons are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Because the Company was not subject to the reporting requirements of the
Exchange Act during 1998, and, therefore, not subject to the provisions of
Section 16(a), the Section 16 Persons complied with all Section 16(a) filing
requirements applicable to them during 1998.
13
<PAGE>
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are duly presented, proxies will be voted in
accordance with the discretion of the proxy holders.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
14
<PAGE>
ALBANY MOLECULAR RESEARCH, INC.
21 Corporate Circle
Albany, New York 12203-5154
Proxy for the 1999 Annual Meeting of Stockholders
June 17, 1999
This Proxy is Solicited on Behalf of the Board of Directors of
Albany Molecular Research, Inc.
The undersigned acknowledge(s) receipt of the accompanying Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated April 30, 1999, and
hereby constitutes and appoints Thomas E. D'Ambra, Donald E. Kuhla and
David P. Waldek (the "Proxies") and each of them, as Proxies of the undersigned,
each with the power to appoint his substitute and to act alone, and authorizes
each of them acting singly, to represent and to vote, as designated on the
reverse side of this proxy card, all shares of Common Stock of Albany Molecular
Research, Inc., held of record by the undersigned on April 23, 1999, at the 1999
Annual Meeting of Stockholders (the "Annual Meeting") to be held on Thursday,
June 17, 1999 at 9:00 a.m., local time, and at any adjournments or
postponements thereof.
The Board of Directors Recommends a Vote FOR Proposal 1
appearing on the Reverse Side hereof.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder(s). If no directions are indicated, this proxy
will be voted FOR the election of the nominees set forth in Proposal 1. A
stockholder wishing to vote in accordance with the Board of Directors'
recommendations need only sign and vote this proxy and return it in the postage
paid envelope provided.
Please mark
your vote as [X]
indicated in
this example
1. ELECTION OF DIRECTORS:
FOR all nominees WITHHOLD Chester J. Opalka and Frank W. Haydu, III
listed to the right AUTHORITY
(except as marked to vote for all
to the contrary) nominees listed (INSTRUCTION: To withhold authority to
to the right vote for any individual nominee, draw
a line through that individual's name
[ ] [ ] above.)
2. In their discretion, the Proxies are each authorized to vote upon such other
business as may properly come before the Annual Meeting and any adjournments
and postponements thereof.
Date , 1999
----------------------
--------------------------------
Signature
--------------------------------
Signature, if held jointly
Please sign exactly as name
appears hereon. When shares are
held by joint tenants, both
should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such. If executed by
a corporation or partnership, the
proxy should be signed by a duly
authorized person of the
stockholders' corporation or
partnership, stating his or her
title or authority.
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
