<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
CAMBREX CORPORATION
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CAMBREX CORPORATION
(Name of registrant as specified in its charter)
CAMBREX CORPORATION
(Name of person Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
1Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
(LOGO)
CAMBREX CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 28, 1994
Notice Is Hereby Given that the 1994 Annual Meeting of Stockholders of
Cambrex Corporation (the "Company") will be held at the Parker Meridien Hotel,
118 West 57th Street, New York, New York on April 28, 1994, at 4:00 P.M., for
the following purposes:
1. to elect four (4) directors in Class I to hold office until the 1997
Annual Meeting of Stockholders and until their successors shall be elected and
qualified; and
2. to consider and act upon the approval of the 1993 Senior Executive
Stock Option Plan and awards thereunder; and
3. to consider and act upon the approval of the 1994 Stock Option Plan
which includes a program of awards for non-employee directors; and
4. to consider and act upon the approval of the appointment of Coopers &
Lybrand as independent accountants for 1994; and
5. to transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record of Common Stock of the Company at the close of
business on March 15, 1994, will be entitled to vote at the meeting. The list of
such stockholders will be available for inspection by stockholders during the
ten days prior to the meeting in accordance with Section 219 of the Delaware
General Corporation Law at the offices of American Stock Transfer, 6201 15th
Avenue, Brooklyn, New York 11219. Shareholders may make arrangements for such
inspection by contacting Peter E. Thauer, Vice President, General Counsel &
Secretary, Cambrex Corporation, One Meadowlands Plaza, East Rutherford, New
Jersey 07073.
By order of the Board of Directors,
Peter E. Thauer,
Secretary
March 24, 1994
THE VOTE OF EACH STOCKHOLDER IS IMPORTANT.
PLEASE DATE AND SIGN THE ACCOMPANYING PROXY CARD AND PROMPTLY
RETURN IT IN THE POSTAGE PAID ENVELOPE PROVIDED.
<PAGE> 3
CAMBREX CORPORATION
------------------------
1994 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
------------------------
PROXY SOLICITATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cambrex Corporation (the "Company") for use
at the 1994 Annual Meeting of Stockholders to be held on April 28, 1994, and at
any adjournment of the meeting. The address of the Company's principal executive
office is One Meadowlands Plaza, East Rutherford, New Jersey 07073. This Proxy
Statement and the form of proxy are being mailed to stockholders on or about
March 24, 1994.
The costs of soliciting proxies will be borne by the Company. Brokerage
houses, banks, custodians, nominees and fiduciaries are being requested to
forward the proxy material to beneficial owners, and their reasonable expenses
therefore will be reimbursed by the Company. Solicitation will be made by mail
and also may be made personally or by telephone or telegraph by the Company's
officers, directors and employees without special compensation for such
activities.
REVOCABILITY AND VOTING OF PROXY
A proxy given by a stockholder may be revoked at any time before it is
exercised by giving another proxy bearing a later date or by notifying the
Company in writing of such revocation or by a vote in person at the Annual
Meeting. Properly executed proxies received by the Company will be voted in
accordance with the instructions indicated thereon and if no instructions are
indicated, will be voted for the election of the four nominees for director
named herein, and in favor of the approval of the 1993 Senior Executive Stock
Option Plan and awards thereunder, and in favor of the 1994 Stock Option Plan
including the awards program for non-employee directors, and in favor of the
selection of Coopers & Lybrand as independent accountants for the Company. The
Company knows of no reason why any of the nominees named herein would be unable
to serve for the terms indicated. In the event, however, that any such nominee
should, prior to the election, become unable to serve as a director, the proxy
will be voted for such substitute nominee, if any, as the Board of Directors
shall propose.
The Board of Directors knows of no matters to be presented at the meeting
other than those set forth in the foregoing Notice of Annual Meeting. If other
matters properly come before the meeting, the persons named in the accompanying
form of proxy intend to vote the shares subject to such proxies in accordance
with their best judgment.
RECORD DATE AND VOTING RIGHTS
Only holders of Common Stock of the Company of record at the close of
business on March 15, 1994, will be entitled to vote at the meeting. On such
record date the Company had outstanding and entitled to vote 5,208,566 shares of
Common Stock and each such share is entitled to one vote.
<PAGE> 4
PRINCIPAL STOCKHOLDERS
The following sets forth information with respect to the only persons of
which the Company is aware as of February 11, 1994, who may be deemed to
beneficially own more than 5% of the outstanding Common Stock of the Company:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OWNED(1) OF CLASS(2)
---------------------------------------- --------------------- -----------
<S> <C> <C>
Cyril C. Baldwin, Jr. 479,748(3) 8.2%
One Meadowlands Plaza
East Rutherford, New Jersey 07073
Wellington Management Company 473,470(4) 8.1%
75 State Street
Boston, Massachusetts 02109
Pioneer Management Corp. 453,900(5) 7.7%
60 State Street
18th Floor
Boston, Massachusetts 02109
Ira Sochet 416,000 7.1%
5701 Sunset Drive
Suite 315
South Miami, Florida 33143
The TCW Group, Inc. 380,900 6.5%
(formerly known as TCW
Asset Management Company)
865 South Figuera Street
Los Angeles, California 90017
FMR Corp. 370,200(6) 6.3%
82 Devonshire Street
Boston, Ma 02109-3614
The Guardian Life Insurance 353,800(7) 6.0%
Company of America
201 Park Avenue
New York, New York 10020
Arthur I. Mendolia 311,274(8) 5.3%
One Meadowlands Plaza
East Rutherford, New Jersey 07073
</TABLE>
- ---------------
(1) Unless otherwise indicated (a) share ownership is based upon information
furnished as of February 11, 1994, by the beneficial owner, and (b) each
beneficial owner has sole voting and investment power with respect to the
shares shown.
(2) For the purpose of this table, the percent of issued and outstanding shares
of Common Stock of the Company held by each beneficial owner has been
calculated on the basis of (i) 5,196,680 shares of Common Stock issued and
outstanding (excluding treasury shares) on February 11, 1994, (ii) all
shares of Common Stock subject to stock options exercisable within 60 days
of February 11, 1994, and (iii) 7974 shares still to be issued in connection
with the conversion of the Company's 9% Convertible Subordinated Notes.
2
<PAGE> 5
(3) Includes 196,750 shares issuable under outstanding options under the
Company's stock option plans which options are exercisable within 60 days of
February 11, 1994, and 52,364 shares held at December 31, 1993, in the
Company's Savings Plan.
(4) In a Schedule 13G under the Securities Exchange Act of 1934 dated February
10, 1994, filed by Wellington Management Company ("WMC"), WMC reported that
by reason of advisory relationships with numerous investment counselling
clients, WMC may be deemed to be the beneficial owner of 473,470 shares. WMC
shares power to dispose of all shares and shares voting power as to 318,710
shares with its investment counselling clients.
(5) In a Schedule 13G under the Securities Exchange Act of 1934 dated February
11, 1994, and filed by Pioneer Management Corporation ("Pioneer"), Pioneer
reported that it has the sole voting power for 453,900 shares, and shares
dispositive power for 419,900 shares. Pioneer also has sole dispositive
power for 34,000 of the shares.
(6) In a Schedule 13G under the Securities Exchange Act of 1934 dated February
11, 1994, and filed by FMR Corp., FMR Corp. reported that Fidelity
Management & Research Company ("Fidelity"), an investment advisor and
wholly-owned subsidiary of FMR Corp., is the beneficial owner of 370,200
shares. Edward C. Johnson 3d, (reported to own 34% of FMR Corp.), FMR Corp.,
(through its control of Fidelity), and the Fidelity Contrafund, (an
investment company advised by Fidelity), share power to dispose of the
370,200 shares. Neither FMR Corp. nor Edward C. Johnson 3d, its Chairman,
has the power to vote or direct the voting of the shares owned directly by
the Fidelity Contrafund, which power resides with the Contrafund's Board of
Trustees.
(7) In a Schedule 13G under the Securities Exchange Act of 1934 dated February
13, 1991, and filed by The Guardian Life Insurance Company of America
("Guardian Life"), Guardian Life reported that it has sole power to vote and
dispose of 130,000 of the shares, and shares voting and dispositive power
for 52,000 of the shares. Guardian Life's wholly owned subsidiary, Guardian
Investor Services Corporation, shares both dispositive and voting power for
171,800 shares by reason of advisory services provided to affiliated mutual
funds.
(8) Includes 11,624 shares held at December 31, 1993, in the Company's Savings
Plan.
3
<PAGE> 6
COMMON STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table gives information concerning the beneficial ownership
of the Company's Common Stock on February 11, 1994, by (i) each director and
nominee for election as a director, (ii) the Chief Executive Officer and each of
the four highest paid executive officers and (iii) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OF
BENEFICIAL OWNERS OWNED(1) CLASS(2)
- ---------------------------------------------------------- ------------ -------------
<S> <C> <C>
Cyril C. Baldwin, Jr. 479,748(3) 8.2%
Francis X. Dwyer 5,000 Less than 1%
Edwin A. Gee 8,732 Less than 1%
George J.W. Goodman 1,872 Less than 1%
Kathryn Rudie Harrigan 0 Less than 1%
Ilan Kaufthal 4,032 Less than 1%
Robert W. Lear 9,832 Less than 1%
Robert LeBuhn 5,432 Less than 1%
James A. Mack 128,116(4) 2.2%
Arthur I. Mendolia 311,274(5) 5.3%
Dean P. Phypers 8,000 Less than 1%
Albert L. Eilender 64,460(6) 1.1%
Peter Tracey 60,843(7) 1%
Roger H. Noack 35,516(8) Less than 1%
All Directors and Executive Officers as a group (19
Persons) 1,257,388(9) 24.1%
</TABLE>
- ---------------
(1) Except as otherwise noted, reported share ownership is as of February 11,
1994. Unless otherwise stated, each person has sole voting and investment
power with respect to the shares of Common Stock he beneficially owns.
(2) For the purpose of this table, the percent of issued and outstanding shares
of Common Stock of the Company held by each beneficial owner has been
calculated on the basis of (i) 5,196,680 shares of Common Stock issued and
outstanding (excluding treasury shares) on February 11, 1994, (ii) all
shares of Common Stock subject to stock options exercisable within 60 days
of February 11, 1994, and (iii) 7974 shares still to be issued in
connection with the conversion of the Company's 9% Convertible Subordinated
Notes.
(3) The number of shares reported includes 196,750 shares issuable upon exercise
of options granted under the Company's 1987 Stock Option Plan and the 1989
Senior Executive Stock Option Plan, and 52,364 shares held at December 31,
1993, in the Company's Savings Plan.
(4) The number of shares reported includes 102,000 shares issuable upon exercise
of options under the Company's 1983 and 1987 Stock Option Plans and the
1989 Senior Executive Stock Option Plan, and 10,171 shares held at December
31, 1993, in the Company's Savings Plan. 1165 shares held by immediate
family members are not included and beneficial ownership of such shares is
disclaimed.
(5) The number of shares reported includes 11,624 shares held at December 31,
1993, in the Company's Savings Plan.
(6) The number of shares reported includes 52,150 shares issuable upon exercise
of options under the Company's 1983 and 1987 Stock Option Plans and the
1989 Senior Executive Stock Option Plan, and 9,460 shares held at December
31, 1993, in the Company's Savings Plan. 500 shares held by Mr. Eilender's
wife are not included and beneficial ownership of such shares is
disclaimed.
(7) The number of shares reported includes 52,800 shares issuable upon exercise
of options under the Company's 1983, 1987 and 1992 Stock Option Plans and
the 1989 Senior Executive Stock Option Plan, and 2,743 shares held at
December 31, 1993, in the Company's Savings Plan.
4
<PAGE> 7
(8) The number of shares reported includes 35,000 shares issuable upon exercise
of options under the Company's 1992 Stock Option Plan and the 1989 Senior
Executive Stock Option Plan, and 516 shares held at December 31, 1993, in
the Company's Savings Plan.
(9) The number of shares reported includes 558,700 shares issuable upon exercise
of options or options that become exercisable within 60 days. Shares held
by immediate family members are not included and beneficial ownership of
such shares is disclaimed.
BOARD OF DIRECTORS
The Board of Directors is responsible for directing the management of the
business and affairs of the Company. The Board holds regular meetings five times
each year and holds additional special meetings as required. During 1993 the
Board held six meetings.
The Board has established four standing committees, the Audit Committee,
the Organization and Compensation Committee, the Environmental Committee and the
Nominating Committee.
The Audit Committee, comprised of six non-employee directors, recommends to
the Board the accounting firm to act as the independent accountants for the
Company, consults with the accounting firm concerning the scope of the audit,
reviews the audit results and reviews the Company's internal financial controls
and procedures with the accountants and with members of management. The Audit
Committee held three meetings in 1993.
The Organization and Compensation Committee, comprised of six non-employee
directors, oversees the Company's executive compensation programs and policies
and administers the 1983, 1987, 1989 and 1992 Stock Option Plans and 1987
Long-term Incentive Plan. The Organization and Compensation Committee held seven
meetings in 1993.
The Environmental Committee, comprised of eight non-employee directors,
oversees the Company's environmental affairs. The Environmental Committee held
five meetings during 1993.
The Nominating Committee, comprised of three non-employee directors, makes
recommendations to the Board of Directors concerning nominees for election to
the Board at Annual Meetings and candidates for newly created directorships and
vacancies on the Board. The Nominating Committee will consider nominees
recommended by stockholders. Such recommendations for the 1995 Annual Meeting
should be sent to the Corporate Secretary of the Company not later than January
14, 1995, and should include a statement of the nominee's qualifications. The
Nominating Committee did not meet in 1993.
Under the retirement policy for non-employee directors established by the
Board of Directors in 1989, a non-employee director (other than incumbent
directors when the policy was adopted) must not have attained age 72 at the time
of election and may not serve as a director beyond the Annual Meeting next
following such person's 72nd birthday (or, in the case of such incumbent
directors, the 1994 Annual Meeting, if later).
COMPENSATION OF DIRECTORS
The Company pays each non-employee director of the Company an annual fee of
$8,000 and $600 for each Board, Committee and Stockholders meeting attended,
except that the Chairmen of the Organization and Compensation, and Audit
Committees receive $900 for each Committee meeting attended. The Chairman of the
Environmental Committee receives $900 for each Environmental Committee meeting
attended, but the remaining Committee members do not receive fees for meeting
attendance. At a meeting held on February 18, 1993, the Board increased the
annual fee for non-employee directors to $12,000 per year starting April 1,
1993; no change was made in individual meeting fees. Directors also receive
reimbursement for expenses incurred in connection with attendance. Employees of
the Company who are directors are not paid any separate fees for acting as
directors.
5
<PAGE> 8
Non-employee directors of the Company or any of its subsidiaries are
eligible to receive allocations of shares under the Company's 1987 Restricted
Stock Plan in the discretion of the Board of Directors of the Company, which
administers such Plan. In April 1987, the Board of Directors allocated 432
shares of Common Stock under the Restricted Stock Plan to each of Edwin A. Gee,
George J.W. Goodman, Ilan Kaufthal, Robert W. Lear and Robert LeBuhn. No grants
were made under this Plan during 1993 and there are no shares available for
future grant at this time.
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes. The
term of office of the directors in Class I expires at this Annual Meeting with
the terms of office of the directors in Class II and Class III ending at
successive Annual Meetings. At this Annual Meeting four directors in Class I
will be elected to hold office until the 1997 Annual Meeting and until their
successors shall be elected and qualified. To be elected, each nominee for
director requires a majority of the votes cast. Abstentions from voting
(including broker non-votes) will have the effect of votes against the nominees.
The following sets forth with respect to the four persons who have been
nominated by the Board of Directors for election at this Annual Meeting and the
other directors of the Company certain information concerning their positions
with the Company (including its predecessor and now wholly-owned subsidiary
CasChem, Inc.) and principal outside occupations, and other directorships held.
NOMINEES FOR ELECTION TO SERVE AS DIRECTORS UNTIL 1997 ANNUAL MEETING (CLASS I)
Cyril C. Baldwin, Jr. (age 66). Director and President (until early 1990)
since the Company commenced business in 1981 and Chief Executive Officer since
1984. Chairman of the Board since his election in 1991. Director of Church &
Dwight Co., Inc.
George J.W. Goodman (age 63). Director since the Company commenced
business in 1981. Member of the Organization and Compensation, and Environmental
Committees of the Board of Directors. Since 1971 has been the President of
Continental Fidelity, Inc., an editorial consulting services and products firm.
Director of USAir Group, Inc. and Trustee of The Urban Institute.
Kathryn Rudie Harrigan (age 42). Since 1981, Professor, Management of
Organizations Division of the Columbia University Business School, and, since
1993, the Henry L. Kravis Professor of Business Leadership at the Columbia
University Business School. Member of the Advisory Board of Ronin Development
since 1988, and External Member, Strategic Planning Committee of the Panasonic
Industrial Controls Division, Matsushita Corporation from 1989 to 1992. Member
of the Board of Governors, Academy of Management from 1986 to 1988.
Robert LeBuhn (age 61). Director since the Company commenced business in
1981. Chairman of the Nominating Committee and member of the Audit, Organization
and Compensation, and Environmental Committees of the Board of Directors.
President (from 1984 until early 1993) and, since 1993, Chairman of the Board of
Investor International (U.S.), Inc., a private investment firm. Director of
USAir Group, Inc., Acceptance Insurance Companies, Lomas Financial Corp. and
Amdura Corp.
DIRECTORS SERVING UNTIL 1995 ANNUAL MEETING (CLASS II)
Ilan Kaufthal (age 46). Director since the Company commenced business in
1981. Chairman of the Audit Committee and member of the Environmental Committee
of the Board of Directors. A Managing Director of the investment firm of
Wertheim Schroder & Co., Incorporated since 1987. Prior to 1987 held various
executive positions with NL Industries, Inc., a firm in the chemicals and
petroleum services businesses, most recently Senior Vice President and Chief
Financial Officer since 1983. Director of Formica Corporation, Rexene
Corporation, United Retail Group, Inc. and Image Business Systems, Inc.
Robert W. Lear (age 76). Director since the Company commenced business in
1981. Chairman of the Organization and Compensation Committee and member of the
Audit, Environmental, and Nominating Committees of the Board of Directors.
Executive-in-Residence at Columbia University Business School since
6
<PAGE> 9
1977. Director of The Korea Fund, Inc., Scudder Funds and Institutional Funds,
Welsh, Curson, Anderson and Stowe Venture Capital Funds and an independent
general partner of Equitable Capital Partners, L.P. and Equitable Capital
Partners (Fund), L.P.
Arthur I. Mendolia (age 76). Director since the Company commenced business
in 1981 and Chairman of the Board from 1981 until the 1991 Annual Meeting of
Shareholders. Former Vice President and General Manager of the Explosives
Department, E.I. du Pont de Nemours and Company and served under President Nixon
as Assistant Secretary of Defense for Installation and Logistics from 1973 until
1975. Member of the Audit and Environmental Committees of the Board of
Directors.
DIRECTORS SERVING UNTIL 1996 ANNUAL MEETING (CLASS III)
Francis X. Dwyer (age 68). Director since 1989. Chairman of the
Environmental Committee and member of the Organization and Compensation
Committee of the Board of Directors. President of Nuodex Inc., a chemical
manufacturer, since its formation in 1982 until its acquisition by Huls AG of
West Germany in 1985. Thereafter, Chairman of Huls America Inc., a chemical
manufacturer, until May 1991. Since May 1991, Chairman of International Dioxide,
Inc., a chemical manufacturer.
James A. Mack (age 56). Director, President and Chief Operating Officer
since joining the Company in February 1990. Prior thereto with Olin Corporation,
a manufacturer of chemical and other products since 1984 as Vice President,
Specialty Chemicals and, more recently, Vice President, Performance Chemicals.
Executive Vice President of Oakite Products, Inc. from 1982 to 1984. Prior to
joining Oakite held various positions with The Sherwin-Williams Company, most
recently as President and General Manager of the Chemicals Division from 1977 to
1981. Past Chairman of the Board of Governors of the Synthetic Organic Chemical
Manufacturing Association and Member of the Board of Trustees of the Michigan
Tech Alumni Fund.
Dean P. Phypers (age 65). Director since 1988. Member of the Audit,
Organization and Compensation, Environmental and Nominating Committees of the
Board of Directors. Retired as Senior Vice President and director of
International Business Machines Corporation in February 1987 after 32 years in
various positions with that corporation including Chief Financial Officer,
member of the Management Committee, Corporate Office contact for international
operations and head of the Corporate Operations Staff. Director of American
International Group Inc., Cytogen Corporation, Bethlehem Steel Corporation and
Church & Dwight Co., Inc.
All of the incumbent directors attended more than 75% of the meetings of
the Board and Committees of the Board of which they were members held in 1993.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
COMPENSATION PHILOSOPHY
Cambrex seeks to be a leading specialty chemicals company, providing
superior return to its owners. To achieve this, the Company plans to be among
the top quartile of its peers within the industry. To meet these objectives, the
Company must be able to attract, motivate and retain personnel with the
requisite skills and abilities to enable the Company to achieve superior
operating results. Accordingly, the Company's compensation programs are designed
to reward above average performance and provide incentive opportunity to be
competitive in the labor markets in which the Company participates.
EXECUTIVE COMPENSATION
The Company's executive compensation administration program involves two
components. Annual compensation is in the form of base salary plus a yearly
incentive award. Long-term compensation consists of stock options, which are
intended to reward executives when improvements in operating performance
increase the market value of the Company for its shareholders.
7
<PAGE> 10
The accomplishment of results measured against the executives' goals and
objectives are reviewed by the Organization and Compensation Committee
subsequent to review and recommendation from the Office of the Chairman.
Executives are rewarded for results achieved that contribute to key operating
results; i.e., sales, net income, return on investment, and other assigned goals
including but not limited to: service and quality improvement, product and
marketing development, technology development, and personnel development. The
Company uses independent salary surveys of its Peer Group and a broader range of
specialty chemical companies to assist in determining appropriate levels of
compensation for each executive position. The Company targets annual executive
compensation at the median levels in companies surveyed.
Annual incentive compensation awards are based on corporate performance and
individual performance. The size of the overall incentive compensation pool is
determined by the total net income generated and by the increase in net income
over the prior year. The achievement of personal objectives determines
individual awards which are paid out as a portion of the total incentive
compensation pool. The incentive plan provides a better than average individual
award when net income substantially exceeds prior year's earnings.
Long-term compensation for executives is in the form of company stock
option grants, which are awarded based on an individual's position in the
Company, his individual performance, and the number of his outstanding option
awards. Two types of stock options are granted to the executive group. The first
type are regular Incentive Stock Options or Non-Qualified Options. The second
type of options are available to the Company's most Senior Executives, including
those individuals named in the Summary Compensation Table (below). These options
become exercisable if the publicly traded share price of the Company's shares
exceeds predetermined levels for designated periods of time. Under the 1989
Senior Executive Option Plan, one-third of the grants to senior executives
became subject to exercise when the Company's publicly traded Common Stock price
equalled or exceeded an average of $14 or above for 20 consecutive trading days
commencing within one year from the date of grant. Similarly, a second one-third
became exercisable when the traded share price equalled or exceeded an average
of $17 for 20 consecutive trading days commencing during the second option year.
On February 1, 1994, the final one-third of the options became exercisable, as
the Company's publicly traded share price exceeded an average of $21 for 20
consecutive trading days. Shareholders are being asked to approve a 1993 Senior
Executive Stock Option Plan and awards thereunder and the 1994 Stock Option Plan
which would provide additional incentive to senior executives. (See "Adoption
and Approval of the 1993 Senior Executive Stock Option Plan" and "Adoption and
Approval of the 1994 Stock Option Plan" below.)
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's compensation for 1993 was increased by 8.3%
to $300,000 and was determined based upon the same factors used in determining
other executive compensation. It should be noted that prior to November 1992,
the CEO's base salary had not been increased since July 1989, and that he did
not receive any annual incentive compensation for 1990 and 1991.
Mr. Baldwin received an incentive compensation award for fiscal 1993 of
$210,000. This award reflects the substantial improvement in financial
performance achieved by the Company, as net income was increased from $6,230,000
in 1992 to more than $8,640,000 in 1993, and total shareholder return increased
by more than 20%. The total market value of the Company's shares increased by
nearly $17,000,000 in 1993. Mr. Baldwin's annual compensation was directly
related to the improvement in both earnings and shareholder value in 1993.
In 1993 Mr. Baldwin was not awarded any stock options due to his own
recommendation to the Organization and Compensation Committee. This
recommendation was based upon the number of prior stock option awards received
and his current level of stock ownership in the Company.
Based on current levels of base salary and annual bonuses, the Organization
and Compensation Committee believes that it is highly unlikely that the Company
will pay compensation to any of its executive officers for 1994 services in
excess of one million dollars. Thus, the Organization and Compensation Committee
has recommended no adjustment with respect to 1994 cash compensation in light of
the limitation
8
<PAGE> 11
on deductibility of compensation in excess of one million dollars under Section
162(m) of the Internal Revenue Code. However, the 1993 Senior Executive Stock
Option Plan and the 1994 Stock Option Plan, presented to shareholders for
approval at this meeting, have been designed to cause options granted thereunder
to be exempt from the limitations contained in such Section 162(m).
ORGANIZATION AND COMPENSATION COMMITTEE
Robert W. Lear, Chairman
Francis X. Dwyer
Dr. Edwin A. Gee
George J.W. Goodman
Robert LeBuhn
Dean P. Phypers
The following table summarizes the compensation paid to the Chief Executive
Officer and each of the four highest paid executive officers (the "Named
Executive Officers") during the previous three fiscal years for services in such
capacities to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION -------------------------------------
------------------------------- SECURITIES
OTHER UNDER- ALL
ANNUAL RESTRICTED LYING PAYOUTS- OTHER
COMPENSA- STOCK OPTIONS/ LTIP COMPENSA-
SALARY BONUS TION AWARD(S) SARS PAYOUTS TION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#) ($) ($)(2)
- ------------------------------------- ---- ------- ------- --------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cyril C. Baldwin, Jr................. 1993 300,000 210,000 -0- -0- -0- -0- 10,612
Chairman of the Board 1992 275,000 409,901 -0- -0- -0- -0- 10,298
and Chief Executive Officer 1991 270,100 -0-
James A. Mack........................ 1993 249,984 175,000 -0- -0- -0- -0- 10,612
President and 1992 230,000 342,827 -0- -0- -0- -0- 10,298
Chief Operating Officer 1991 210,100 105,000(3)
Peter Tracey......................... 1993 176,665 115,000 -0- -0- -0- -0- 8,875
Vice President, Finance and 1992 166,667 198,740 -0- -0- 10,000 -0- 7,500
Chief Financial Officer 1991 152,600 12,000
Albert L. Eilender................... 1993 205,341 85,000 -0- -0- -0- -0- 9,240
President and Chief Operating 1992 205,341 96,472 -0- -0- -0- -0- 9,240
Officer CasChem, Inc. 1991 205,441 -0-
Roger H. Noack....................... 1993 149,250 80,000 -0- -0- -0- -0- 6,126
President and Chief Operating 1992 140,708 106,871 -0- -0- 35,000 -0- 1,050
Officer Nepera, Inc. 1991 11,767(4) 25,000(5)
</TABLE>
- ---------------
(1) The rules require disclosure only when the aggregate value of these items
exceeds the lesser of $50,000 or 10% of salary and bonus.
(2) Amounts indicated are attributable to Company contributions under the
Company's Savings Plan.
(3) Paid in 1991 per the terms of Mr. Mack's employment agreement for the year
1990.
(4) Paid during 1991 from the date of initial employment, December 2, 1991.
(5) A one-time bonus paid upon employment with the Corporation.
9
<PAGE> 12
The following table sets forth the stock options granted during 1993 to the
Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS (1) FOR OPTION TERM
--------------------------------------------------------------- ------------------------------
(A) (B) (C) (D) (E) (F) (G)
PERCENT OF
TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---------------------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Cyril C. Baldwin, Jr........ -0- -0- -0- -0- -0- -0-
James A. Mack............... 45,000 18.75% 19.875 10/27/03 717,214 1,534,399
Peter Tracey................ 25,000 10.4% 19.875 10/27/03 398,452 852,444
Albert L. Eilender.......... 25,000 10.4% 19.875 10/27/03 398,452 852,444
Roger H. Noack.............. 25,000 10.4% 19.875 10/27/03 398,452 852,444
</TABLE>
- ---------------
(1) The options listed will become exercisable only upon the Company's publicly
traded share price reaching certain predetermined levels within certain
periods of time (See "Adoption and Approval of the 1993 Senior Executive
Stock Option Plan" below).
The following table sets forth information for each Named Executive Officer
with regard to the aggregate stock options exercised during 1993 and the
aggregate stock options held as of December 31, 1993.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
ACQUIRED ON VALUE UNDERLYING UNRESTRICTED MONEY OPTIONS/SARS AT FY-END
EXERCISE REALIZED OPTIONS/SARS AT FY-END (#) ($) EXERCISABLE/
NAME (#) ($) (1) EXERCISABLE/ UNEXERCISABLE UNEXERCISABLE (2)
- -------------------------------- ----------- ----------- -------------------------- -----------------------------
<S> <C> <C> <C> <C>
Cyril C. Baldwin, Jr............ -0- -0- 146,750 -- Exercisable 2,117,531 -- Exercisable
50,000 -- Unexercisable 725,000 -- Unexercisable
James A. Mack................... 8,000 123,040 78,666 -- Exercisable 1,062,657 -- Exercisable
23,334 -- Unexercisable 338,329 -- Unexercisable
Peter Tracey.................... 1,500 20,250 44,300 -- Exercisable 531,825 -- Exercisable
10,000 -- Unexercisable 145,000 -- Unexercisable
Albert L. Eilender.............. -0- -0- 42,150 -- Exercisable 599,200 -- Exercisable
10,000 -- Unexercisable 145,000 -- Unexercisable
Roger H. Noack.................. -0- -0- 30,000 -- Exercisable 224,167 -- Exercisable
5,000 -- Unexercisable 32,083 -- Unexercisable
</TABLE>
- ---------------
(1) Market value of underlying securities at exercise minus the exercise price.
(2) Market value of the underlying securities at December 31, 1993 ($20 per
share) minus the exercise price.
10
<PAGE> 13
The following graph compares the Company's cumulative total stockholder
return, for a five year period, with a performance indicator of the overall
stock market and a group of peer issuers.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG CAMBREX CORPORATION, THE DOW JONES INDUSTRIAL
AVERAGE AND PEER GROUP (1)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) PEER GROUP DOW JONES CAMBREX
<S> <C> <C> <C>
1988 100 100 100
1989 127 131 087
1990 140 126 031
1991 250 167 063
1992 290 181 124
1993 310 199 149
</TABLE>
- ---------------
(1) Assumes $100 invested on December 31, 1988, with all dividends reinvested.
The Company manufactures and markets a broad line of specialty chemicals,
fine chemicals and commodity chemical intermediates to a diverse group of
customers. Because the Company's products and customers are diverse, the Company
does not believe that there is a single published industry or line of business
index that is appropriate for comparing stockholder return. The Peer Group
selected by the Company for the above Performance Graph is composed of those
companies considered most comparable to the Company in terms of amount of sales,
product lines and customers.
Those companies included in the Peer Group are: Crompton & Knowles
Corporation; The Dexter Corporation; Ferro Corporation; Great Lakes Chemical
Corporation; Lawter International, Inc.; Rohm and Haas Company; Stepan Company;
and Witco Corporation.
RETIREMENT PLANS
The Named Executive Officers of the Company and salaried employees of the
Company and its subsidiaries participate in a qualified noncontributory pension
plan. Eligibility begins in the first month following one year of credited
service, and participants become vested in their retirement benefits after five
years of credited service. Retirement benefits are based on an employee's years
of service and the employee's compensation. "Compensation" for the purposes of
the computation of benefits, includes regular compensation, bonuses and
overtime, but excludes income attributable to fringe benefits and perquisites.
The retirement benefit generally is calculated by multiplying the participant's
years of service by 1% of compensation and by 0.6% of compensation in excess of
the participant's social security covered compensation, and aggregating such
amounts, subject to the limitations imposed by the Employee Income Security Act
of 1974 ("ERISA"). Although Final Average Compensation includes the items
mentioned above, the Plan limits the maximum amount of compensation which may be
taken into account for the purposes of calculating benefits to the
11
<PAGE> 14
ERISA limit for covered compensation, which was $235,840 during 1993. Therefore,
any compensation received by any of the Named Executive Officers which exceeds
this amount will not be taken into account in the calculation of their benefits
under this Plan. Under an amendment to ERISA, beginning in 1994 the maximum
compensation that can be considered in the calculation of pension benefits under
a qualified pension plan is $150,000. The Board of Directors has approved a
Supplemental Non-Qualified Pension Plan to provide benefits based on
compensation levels above the ERISA maximum compensation level, which plan did
not become effective until January 1, 1994.
The following table shows the estimated annual retirement benefits payable
under the Company's qualified pension plan to employees who retire at the normal
retirement age at the stated levels of Final Average Compensation and years of
service.
ESTIMATED ANNUAL RETIREMENT BENEFITS
<TABLE>
<CAPTION>
FINAL BASED ON SERVICE OF
AVERAGE ----------------------------------------------------------------
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$125,000................... $ 27,961 $ 37,281 $ 46,602 $ 55,922 $ 65,242
$150,000................... $ 33,961 $ 45,281 $ 56,602 $ 67,922 $ 79,242
$175,000................... $ 39,961 $ 53,281 $ 66,602 $ 79,922 $ 93,242
$200,000................... $ 45,961 $ 61,281 $ 76,602 $ 91,922 $107,242
$225,000................... $ 51,961 $ 69,281 $ 86,602 $103,922 $121,242
$235,840................... $ 54,562 $ 72,750 $ 90,937 $109,125 $127,312
</TABLE>
As of December 31, 1993, the years of service credited for retirement
benefits for the Named Executive Officers who are participants in this Plan are
as follows: Cyril C. Baldwin, Jr. - 12 years; James A. Mack - 3 years; Peter
Tracey - 3 years; Albert L. Eilender - 4 years; Roger H. Noack - 2 years.
CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into agreements with a number of key employees,
including the Named Executive Officers, with the objective of preserving
management stability in the event of a threatened or actual change of control of
the Company. Under each agreement, in the event of a change of control of the
Company (defined in the agreement to include certain events involving changes in
ownership of the Company's stock or the composition of the Company's Board of
Directors or other structural changes, but, in any case, with the Board having
discretion to find other events to constitute a change of control) the employee
is awarded a three-year contract of employment in substantially the same
position he had prior to the start of the employment contract term. The contract
of employment is at a monthly salary not less than the highest monthly salary
earned by the employee during the 12 months preceding the start of the
employment contract term and provides for an annual bonus and benefits
comparable to those pertaining to the employee prior to the start of the
employment contract term.
In the event that at any time during the employment contract term the
employee's employment is terminated, (i) by the Company (other than by reason of
disability or for cause), or (ii) by the employee by reason of the Company's
violation of the terms of the employment contract, or (iii) by the employee
during the thirteenth month of the employment contract term, with or without
reason, the employee will be entitled to a lump sum payment in an amount equal
to the sum of (a) a ratable portion of the amount of the highest annual bonus
paid to the employee during the three years prior to the year of termination,
based upon the elapsed time in the year of termination, (b) up to three times
the annual salary under the contract and three times such highest annual bonus,
which amount declines ratably over a 36 month term for each month the employee
remains employed by the Company following the first anniversary of the start of
the employment contract term and (c) the present value of the pension benefit
lost by the employee by reason of the early termination of employment. In the
event of such termination the employee will also be entitled to the employment
benefits, such as health insurance and life insurance, to which he would have
been entitled had his employment not been terminated, and to the immediate right
to exercise any employee stock options
12
<PAGE> 15
notwithstanding their stated exercisability in installments. Additionally, the
employment contracts provide for an additional payment to the employee to cover
any excise tax payable by the employee on so-called excess golden parachute
payments under Section 4999 of the Internal Revenue Code of 1986, as amended.
MANAGEMENT CONTRACTS
During 1989 the Board of Directors authorized an agreement with Mr.
Mendolia pursuant to which he may, at his election and at any time after January
1, 1990, enter into a consulting arrangement with the Company upon his
resignation as an employee. Pursuant to this agreement Mr. Mendolia is obligated
to provide certain financial, consulting and advisory services to the Company as
determined by the Chief Executive Officer. The contract shall continue for the
remainder of Mr. Mendolia's life at an annual fee of $100,000. Mr. Mendolia
retired as an employee on June 1, 1993, and began receiving payments under the
agreement.
During 1990 the Board of Directors authorized an agreement with Mr. Baldwin
pursuant to which he may, at his election and at any time after January 1, 1994,
enter into a consulting arrangement with the Company upon his resignation as an
employee. Pursuant to this agreement Mr. Baldwin is obligated to provide certain
financial, consulting and advisory services to the Company as determined by the
Chief Executive Officer. The contract shall continue for the remainder of Mr.
Baldwin's life at an annual fee of $140,000.
ADOPTION AND APPROVAL OF THE 1993
SENIOR EXECUTIVE STOCK OPTION PLAN
There will be presented to the stockholders at the Annual Meeting a
proposal to approve the 1993 Senior Executive Stock Option Plan (the "Plan"). A
copy of the Plan is set forth as Exhibit 1 hereto. The Plan was adopted by the
Board of Directors on October 28, 1993, and certain awards made thereunder,
subject to stockholder approval.
The Plan is intended to expand and improve the profitability and prosperity
of the Company for the benefit of its stockholders by permitting the Company to
grant to its most senior executive officers options to purchase shares of the
Company's Common Stock. The awards are intended to provide additional incentive
to such senior executives by offering them a greater stake in the Company's
continued success. The Plan is also intended as a means of reinforcing the
commonality of interest between the Company's stockholders and its senior
executives, and as an aid in attracting and retaining senior executives of
outstanding abilities and specialized skills. The Board of Directors has
determined that it is in the interest of the Company and its stockholders to
provide for the availability of such Plan, and has determined that 300,000
shares of the Company's Common Stock shall be set aside for issuance under the
Plan. No employee may be awarded options to purchase more than 100,000 shares of
Common Stock in any twelve month period.
The options described below will only be vested and become exercisable if
the price of the Company's Common Stock achieves certain traded levels as set
forth herein. Under the terms of each option if the average market price for the
Common Stock of the Company remains at or above a stated level for a period of
20 consecutive trading days commencing during a stated period of the option
term, the option thereupon will become exercisable for the balance of the term
for a stated portion of the total number of shares covered by the option.
Pursuant to the Plan and subject to its approval by the stockholders, the
Organization and Compensation Committee on October 28, 1993, granted to Mr. Mack
an option expiring on October 27, 2003, to purchase up to 45,000 shares of
Common Stock of the Company at an exercise price of $19.875 per share, and
granted to Messrs. Klosk, Rein, Thauer, Tracey, White [deceased: January 13,
1994], Eilender and Noack an option to purchase up to 25,000 shares under the
same terms and conditions set forth for Mr. Mack, and granted Messrs. Behrend
and Smith an option to purchase up to 10,000 shares under the same terms and
conditions, all subject to its approval by stockholders.
The Plan is administered by the Board of Director's Organization and
Compensation Committee (the "Committee"), none of whose members are salaried
employees of the Company and accordingly may not participate in the Plan. Under
the Plan, the Committee is authorized to determine from time to time the
13
<PAGE> 16
senior executive of the Company who will receive options under the Plan, the
number of shares issuable upon the exercise of such options, the exercise price
(which may not be less than the fair market value of the shares on the date the
options are granted) and the duration of the option (which may not be more than
ten years). The options may be either Incentive Stock Options or non-qualified
options as determined by the Committee.
Subject to limitations which may be imposed by the Committee at the time of
grant, an option may be exercised, in whole or in part, at any time and from
time to time prior to its termination. Options granted under the Plan are not
transferable except by will or the laws of descent and distribution and are
exercisable during the optionee's lifetime only by the optionee.
The number of shares of Common Stock and the exercise price of any option
issuable under the Plan are subject to adjustment in the case of stock splits,
stock dividends, reorganizations and similar events. The Committee has the right
to modify, amend, suspend or terminate the Plan in any respect and, with the
consent of the optionee, may change the terms and conditions of outstanding
options, provided that without stockholder approval no amendment may be made
which would, (i) change the class of employees eligible to receive options, (ii)
increase the total number of shares which may be purchased under the Plan,
except as referred to above, (iii) extend the termination date of the Plan, (iv)
extend beyond ten years from the date of grant the period during which options
may be exercised or, (v) reduce the exercise price of any option, except as
referred to above. The Plan will terminate on October 27, 2003, unless sooner
terminated by the Board of Directors.
Senior executives are eligible for grants of options, regardless of length
of service. In the event an optionee's employment with the Company or a
subsidiary terminates due to retirement, an optionee or his representative will
generally have three months after the termination within which to exercise an
Incentive Stock Option and 12 months to exercise a non-qualified Option to the
extent it was exercisable at the date of termination, but in no event will the
option be exercisable beyond its stated term. In the event an optionee's
employment with the Company or a subsidiary terminates due to permanent
disability or death, an optionee or his representative will generally have one
year within which to exercise an Incentive Stock Option or non-qualified Stock
Option to the extent it was exercisable at the date of termination, but in no
event will an Option be exercisable beyond its stated term. If the optionee
ceases to be employed by the Company or a subsidiary for any other reason, any
and all rights of the optionee under any options held by him shall be forfeited
unless otherwise agreed upon by the Committee.
With the exception of the awards made in 1993 subject to shareholder
approval and described in the following table, neither the number of individuals
who will be selected to receive awards nor the size of the
14
<PAGE> 17
awards that will be approved by the Organization and Compensation Committee can
be determined. The following table describes the awards that were made (subject
to shareholder approval) during 1993:
<TABLE>
<CAPTION>
REQUIRED MARKET PRICE EXERCISABILITY
(FOR 20 TRADING DAYS (CUMULATIVE
OPTIONEE PERIOD COMMENCING DURING PERIOD) NUMBER OF SHARES)
- -------------------------- ----------------------------- ------------------------- -----------------
<S> <C> <C> <C>
Cyril C. Baldwin, Jr. N/A N/A -0-
James A. Mack Year ending October 27, 1994 $30 15,000
Year ending October 27, 1995 $35 15,000
After October 27, 1995 $40 15,000
Peter Tracey Year ending October 27, 1994 $30 8,333
Year ending October 27, 1995 $35 8,333
After October 27, 1995 $40 8,334
Albert L. Eilender Year ending October 27, 1994 $30 8,333
Year ending October 27, 1995 $35 8,333
After October 27, 1995 $40 8,334
Roger H. Noack Year ending October 27, 1994 $30 8,333
Year ending October 27, 1995 $35 8,333
After October 27, 1995 $40 8,334
All Executive Officers as
a Group (19 Persons) Year ending October 27, 1994 $30 80,000
Year ending October 27, 1995 $35 80,000
After October 27, 1995 $40 80,000
All current directors who
are not executive
officers as a group N/A -0- -0-
Non-Executive Officer
Employee Group N/A -0- -0-
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
Upon exercise of non-qualified options granted under the 1993 Plan,
ordinary income is generally realized by the optionee in an amount equal to the
difference between the exercise price and the fair market value on the exercise
date and the Company is entitled to a deduction in an equivalent amount at the
time of such exercise. In the event of any subsequent sale of such shares, gain
would be recognized equal to the amount, if any, by which the sale price exceeds
the tax basis of such shares. Such gain would be long-term or short-term capital
gain, depending upon the period of time during which the shares were held
following the date of exercise. Unlike non-qualified options, an optionee
generally does not recognize taxable income upon exercise of an ISO and the
Company is not entitled to any deduction. An optionee will receive long-term
capital gain or loss treatment upon the sale of shares purchased through
exercise of an ISO if such shares are held for more than two years after the
grant of the ISO (and one year after the date of exercise). If such shares are
disposed of prior to such time, the optionee will generally realize ordinary
income equal to the difference between (i) the lesser of (x) the amount, if any,
realized on the disposition and (y) the fair market value of the shares of
Common Stock on the exercise date and (ii) the exercise price. Any such ordinary
income recognized by the optionee is deductible by the Company.
The aggregate fair market value of the shares of stock with respect to
which ISO's are exercisable for the first time by a participant under the 1993
Plan, in any calendar year, shall not exceed $100,000 (or such other individual
employee maximum as may be in effect from time to time under the Internal
Revenue Code on the date of grant).
Approval of the adoption of the Plan requires the affirmative vote of a
majority of all shares of Common Stock present in person or represented by proxy
and entitled to vote at the Annual Meeting of Shareholders. Abstention from
voting on the proposal will have the same effect as voting against the proposal.
Broker non-votes will have no effect on the outcome.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
15
<PAGE> 18
ADOPTION AND APPROVAL OF THE 1994 STOCK OPTION PLAN
There will be presented to the stockholders at the Annual Meeting a
proposal to approve the 1994 Stock Option Plan (the "Plan"). A copy of the Plan
is set forth as Exhibit 2 hereto. The Plan was adopted by the Board of Directors
on January 24, 1994.
For several years the Company has offered stock options to key employees to
provide an incentive in the form of a proprietary interest in the Company to
officers and other employees in a position to contribute materially to the
successful operation of the business of the Company. The Company currently has
in effect a 1983 Incentive Stock Option Plan (the "1983 Plan"), a 1987 Stock
Option Plan (the "1987 Plan"), a 1989 Senior Executive Stock Option Plan (the
"1989 Plan") and a 1992 Stock Option Plan (the "1992 Plan"). There are currently
only 25,150 shares available for general grant under the 1983, 1987 and 1992
Plans. The Board of Directors believes these plans have operated successfully by
assisting the Company in attracting and retaining employees of outstanding
abilities, who have been an important reason for the Company's achievements, and
further believes that the adoption of a similar program for non-employee
directors would enable the Company to attract new directors and retain current
directors with the experience and expertise necessary to facilitate the
achievement of corporate goals and objectives.
Accordingly, on January 24, 1994, the Board of Directors adopted, subject
to approval by the stockholders, the 1994 Stock Option Plan (the "1994 Plan").
The 1994 Plan is briefly described below, but reference should be made to the
text of the Plan itself, attached hereto as Exhibit 2, for complete information.
1994 STOCK OPTION PLAN
The 1994 Plan has two component parts, a key employee program (the "Key
Employee Program") and a non-employee director's program (the "Non-employee
Director's Program").
Key Employee Program. Under the 1994 Plan the Organization and
Compensation Committee of the Board of Directors (the "Committee") will award a
number of stock options to key employees of the Company. All key employees
(including officers and employee directors) of the Company and its subsidiaries
are eligible for grants of options regardless of length of service. Options,
which may be ISO's or non-qualified stock options, will give the employee the
right to purchase a specified number of shares of the Company's Common Stock at
a fixed price for a specified period of time. The Committee has complete
discretion to determine the individual participants and the number of stock
options to be awarded, determine the terms and exercise prices for stock
options, determine the frequency of awards, determine the period during which
options may be exercised and to cancel any award in the event it determines that
a participant has acted inimically to the best interests of the Company,
subject, in all cases, to the terms and conditions of the 1994 Plan.
Non-Employee Director Program. The Board, at its October 28, 1993 meeting,
adopted an option grant program for directors. Under the program, and subject to
shareholder approval, each existing director received a grant of options to
purchase 1,000 shares of the Company's Common Stock on the date of grant, and
each director will receive at the first meeting following each of the Company's
Annual Shareholder's meetings a grant of options to purchase 500 shares of
Common Stock, the grant price to be the closing price of the date of grant.
Options granted to non-employee directors shall be non-qualified options with a
ten year term and shall become exercisable six months following the grant date.
General Provisions. Up to 100,000 shares of the Company's Common Stock
will be available for the granting of ISO's or non-qualified stock options under
the 1994 Plan. No employee may be awarded options to purchase more than 100,000
shares of Common Stock in any twelve month period. Awards of ISO's and non-
qualified stock options will be made separately and not in tandem. The option
exercise price shall not be less than 100% of the fair market value on the date
of grant. Options shall have a term not exceeding ten years. The Committee may
provide that options granted to key employees become exercisable in a series of
cumulating portions and may in its discretion accelerate such exercise date.
Payment of the option exercise price may be made in cash, or, at the option
of the Committee, through delivery of shares of the Company's Common Stock equal
in value to the option exercise price, or by a combination of cash and stock.
16
<PAGE> 19
In the event an optionee ceases to be employed by the Company or a
subsidiary or, in the case of a non-employee director, ceases to serve as a
member of the Board, due to retirement, the optionee will generally have three
months in the case of an Incentive Stock Option and 12 months in the case of a
non-qualified Stock Option after the date of such termination of employment or
service to exercise an option to the extent it was exercisable at such date of
termination. In the event of a termination of employment or service due to
permanent disability or death, the optionee's representative will generally have
twelve months after the date of termination within which to exercise an option
to the extent it was exercisable at such termination date. Notwithstanding the
above, no option shall be exercisable beyond its original stated term. If an
optionee ceases to be employed or to serve as a member of the Board for any
other reason, any and all rights of the optionee under any options held by him
shall be forfeited unless otherwise agreed upon by the Committee.
With the exception of awards made to Directors in 1993 subject to
shareholder approval and described in the following table, neither the number of
individuals who will be selected to receive awards nor the size of awards that
will be approved by the Organization and Compensation Committee can be
determined. The following table describes the awards that were made to Directors
under the 1994 Plan (subject to shareholder approval) during 1993:
<TABLE>
<CAPTION>
OPTIONEE NUMBER OF SHARES
- ----------------------------------------------------------------------------- ----------------
<S> <C>
Cyril C. Baldwin, Jr......................................................... -0-
James A. Mack................................................................ -0-
Peter Tracey................................................................. -0-
Albert L. Eilender........................................................... -0-
Roger H. Noack............................................................... -0-
All Executive Officers as a Group (19 Persons)............................... -0-
All Non-employee Directors as a group (8 Persons)............................ 8,000
Non-Executive Officer Employee Group......................................... -0-
</TABLE>
Income Tax Consequences. Upon exercise of non-qualified options granted
under the 1994 Plan, ordinary income is generally realized by the optionee in an
amount equal to the difference between the exercise price and the fair market
value on the exercise date and the Company is entitled to a deduction in an
equivalent amount at the time of such exercise. In the event of any subsequent
sale of such shares, gain would be recognized equal to the amount, if any, by
which the sale price exceeds the tax basis of such shares. Such gain would be
long-term or short-term capital gain, depending upon the period of time during
which the shares were held following the date of exercise. Unlike non-qualified
options, an optionee generally does not recognize taxable income upon exercise
of an ISO and the Company is not entitled to any deduction. An optionee will
receive long-term capital gain or loss treatment upon the sale of shares
purchased through exercise of an ISO if such shares are held for more than two
years after the grant of the ISO (and one year after the date of exercise). If
such shares are disposed of prior to such time, the optionee will generally
realize ordinary income equal to the difference between (i) the lesser of (x)
the amount, if any, realized on the disposition and (y) the fair market value of
the shares of Common Stock on the exercise date and (ii) the exercise price. Any
such ordinary income recognized by the optionee is deductible by the Company.
The aggregate fair market value of the shares of stock with respect to
which ISO's are exercisable for the first time by a participant under the 1994
Plan, in any calendar year, shall not exceed $100,000 (or such other individual
employee maximum as may be in effect from time to time under the Internal
Revenue Code on the date of grant).
Term. The term of the 1994 Plan is 10 years.
The affirmative vote of a majority of the outstanding Common Stock is
required for the approval of the Plan and awards.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE 1994 STOCK
OPTION PLAN.
17
<PAGE> 20
APPOINTMENT OF AUDITORS
The Board of Directors, in accordance with the recommendation of the Audit
Committee, has selected Coopers & Lybrand to be the Company's independent
accountants for 1994, subject to the approval of the stockholders. The former
accountant, KPMG Peat Marwick, was dismissed by the Company on March 19, 1992,
upon the recommendation of the Audit Committee. The principal accountant's
report on the Company's financial statements for the past two years did not
contain any adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting principles. During the two
most recent fiscal years, there were no disagreements with the former accountant
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which would have caused the former
accountant to make reference to the subject matter of the disagreement in
connection with its report.
Coopers & Lybrand was engaged on March 19, 1992. A representative of
Coopers & Lybrand is expected to be present at the meeting, will be afforded an
opportunity to make a statement if such representative desires to do so and is
expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1995 Annual Meeting
must be received by the Company not later than November 22, 1994, in order to be
included in the Company's Proxy Statement for the 1995 Annual Meeting. In
addition, the Company's by-laws provide that any shareholder wishing to present
a nomination for the office of director before a shareholder meeting for a vote
must give the Company at least 90 days advance notice, any shareholder wishing
to bring a proposal or other business before a shareholder meeting for a vote
must give the Company at least 60 days advance notice, and that both such
notices must meet certain other requirements. Any shareholder interested in
making such a nomination or proposal should request a copy of such by-law
provisions from the Secretary of Cambrex Corporation.
By Order of the Board of Directors.
Peter E. Thauer,
Secretary
March 24, 1994
Upon written request the Company will provide to each stockholder, without
charge, a copy of its Annual Report to the Securities and Exchange Commission on
Form 10-K for 1993. Requests should be directed to Mr. Peter Tracey, Vice
President, Chief Financial Officer and Treasurer, Cambrex Corporation, One
Meadowlands Plaza, East Rutherford, NJ 07073. Such report will be furnished
without exhibits. Copies of the exhibits to such Annual Report will be furnished
to requesting stockholders upon payment of the Company's reasonable expenses in
furnishing the same.
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EXHIBIT 1
CAMBREX CORPORATION
1993 SENIOR EXECUTIVE STOCK OPTION PLAN
1. PURPOSE
The Plan is intended to expand and improve the profitability and prosperity
of Cambrex Corporation for the benefit of its Stockholders by permitting the
Corporation to grant to its Senior Executive Officers Options to purchase shares
of the Corporation's Stock. These awards are intended to provide additional
incentive to such Senior Executives by offering them a greater stake in the
Corporation's continued success. The Plan is also intended as a means of
reinforcing the commonality of interest between the Corporation's stockholders
and its Senior Executives, and as an aid in attracting and retaining Senior
Executives of outstanding abilities and specialized skills.
2. DEFINITIONS
For Plan purposes, except where the context otherwise indicates, the
following terms shall have the meanings which follow:
(a) "Agreement" shall mean a written agreement (including any
amendment or supplement thereto) between the Corporation and a Participant
which specifies the terms and conditions of an Award granted to such
Participant.
(b) "Award" shall mean a Stock Option granted to a Participant.
(c) "Beneficiary" shall mean the person or persons who shall receive,
if the Participant dies, any Option exercise rights.
(d) "Board" shall mean the Board of Directors of the Corporation.
(e) "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time, and the rules and regulations promulgated
thereunder.
(f) "Committee" shall mean the Organization and Compensation
Committee, or such other Committee of the Board, which shall be designated
by the Board to administer the Plan. The Committee shall be composed of
three or more persons as from time to time are appointed to serve by the
Board. Each member of the Committee, while serving as such, shall also be a
member of the Board, and shall be a disinterested person within the meaning
of Rule 16b-3 of the Securities Exchange Act of 1934.
(g) "Common Stock" shall mean the Class A Common Stock of the
Corporation having a par value of $0.10 per share.
(h) "Corporation" shall mean Cambrex Corporation, a Delaware
corporation.
(i) "Exercise Price" shall mean the price for which a Participant may
exercise his Stock Option to purchase a stated number of shares of Common
Stock, established pursuant to Paragraph 6(a) of the Plan.
(j) "Fair Market Value" shall mean with respect to any given day, the
average of the mean between the highest and lowest reported sales prices on
the principal national stock exchange on which the Common Stock is traded,
or if such exchange was closed on such day or, if it was open but the
Common Stock was not traded on such day, then on the next preceding day
that the Common Stock was traded on such exchange, as reported by such
responsible reporting service as the Committee may select.
(k) "Incentive Stock Option" shall mean a Stock Option which is
intended to meet and comply with the terms and conditions for an "incentive
stock option" as set forth in Section 422 of the Code.
(l) "Participant" shall mean a Senior Executive, including a Senior
Executive who may also be a member of the Board, who is granted an Award
under the Plan.
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(m) "Plan" shall mean the Cambrex Corporation 1993 Senior Executive
Option Plan as set forth herein and as amended from time to time.
(n) "Senior Executive" shall mean the Chief Executive Officer or the
Chief Operating Officer or such other key senior officer so designated by
the Board or the Committee and employed by the Corporation.
(o) "Stock Option" or "Option" shall mean a right, including an
Incentive Stock Option and a "nonqualified" Stock Option which does not
meet the requirements of Section 422 of the Code, to purchase a stated
number of shares of Common Stock subject to such terms and conditions as
are set forth in an Agreement and the Plan. Also included in this
definition are any other forms of tax "qualified" stock options which may
be incorporated and defined in the Code as it may from time to time be
amended.
3. ADMINISTRATION
(a) The Committee shall administer the Plan and, accordingly, it shall have
full power to grant Awards, construe and interpret the Plan, establish rules and
regulations and perform all other acts it believes reasonable and proper,
including the authority to delegate responsibilities to others to assist in
administering the Plan.
(b) The determination of the Senior Executive to receive an Award, and the
amount, type and timing of each Award shall rest in the sole discretion of the
Committee, subject to the provisions of the Plan.
4. COMMON STOCK LIMITS
The total number of shares of Common Stock which may be issued on exercise
of Stock Options shall not exceed 300,000 shares, subject to adjustment in
accordance with Paragraph 8 of the Plan. No Participant shall be granted options
to purchase more than 100,000 shares of Common Stock in any twelve month period.
Shares issued under the Plan may be, in whole or in part, as determined by the
Committee, authorized but unissued or reacquired shares of Common Stock. If any
Option granted under the Plan shall expire or terminate without having been
exercised, the shares subject to such Option shall be available for use under
the Plan.
5. ELIGIBILITY FOR PARTICIPATION
(a) Consistent with Plan objectives, eligibility to become a Participant in
the Plan and receive Awards shall be limited to Senior Executives.
(b) No Incentive Stock Option shall be granted to an Employee ineligible at
the time to receive such an Option because of owning more than 10% of the Common
Stock in accordance with the provisions of Section 422(b)(6) of the Code, unless
the Option meets the requirements of Section 422(c)(6).
6. STOCK OPTIONS -- TERMS AND CONDITIONS
All Stock Options granted under the Plan shall be evidenced by Agreements
which shall be subject to applicable provisions of the Plan, and such other
provisions as the Committee may adopt, including the following provisions:
(a) Price: The Exercise Price per share shall not be less than 100%
of the Fair Market Value of a share of Common Stock on the date of Award.
(b) Period: The Committee may establish the term of any Option
awarded under the Plan, provided, however, that an Option shall expire no
later than ten (10) years from the date of Award.
(c) Time of Exercise: The Committee may establish installment
exercise terms based on the passage of time, publicly traded share price,
or otherwise, for an Option such that the Option becomes fully exercisable
in a series of cumulating portions. The Committee may also accelerate the
exercise of any Option.
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<PAGE> 23
(d) Exercise: An Option, or portion thereof, shall be exercised by
delivery of a written notice of exercise to the Corporation and payment of
the full price of the shares being exercised. Payment may be made: (i) in
United States dollars in cash or by check, bank draft or money order
payable to the order of the Corporation, or (ii) at the discretion of the
Committee, through the delivery of shares of Common Stock with a value
equal to the Option Price, or (iii) by a combination of both (i) and (ii)
above. The Committee shall determine acceptable methods for tendering
Common Stock as payment upon exercise of an Option and may impose such
limitations and prohibitions on the use of Common Stock to exercise an
Option as it deems appropriate. A Participant shall not have any of the
rights or privileges of a holder of Common Stock until such time as shares
of Common Stock are issued or transferred to the Participant.
(e) Special Rules for Incentive Stock Options: Notwithstanding any
other provisions of the Plan, in the case of any Incentive Stock Option
granted under the Plan, the following provisions will apply:
(i) The aggregate Fair Market Value (determined at the time the
Option is granted) of the shares of stock with respect to which
Incentive Stock Options are exercisable for the first time by a
Participant under the Plan or any other plan of the Corporation or any
Subsidiary corporation of the Corporation or any corporation which is a
parent corporation (as defined in Section 424(e) of the Code) of the
Corporation, in any calendar year, shall not exceed $100,000 (or such
other individual employee maximum as may be in effect from time to time
under the Code at the time the Incentive Stock Option is awarded).
(ii) Any Participant who disposes of shares of Common Stock
acquired on the exercise of an Incentive Stock Option by sale or
exchange either (A) within two years after the date of the grant of the
Option under which the stock was acquired or (B) within one year after
the acquisition of such shares shall notify the Corporation of such
disposition and of the amount realized upon such disposition.
(f) Proceeds on Exercise: The proceeds of the sale of the Common
Stock subject to Option are to be added to the general funds of the
Corporation and used for its corporate purposes.
7. TERMINATION OF EMPLOYMENT
(a) In the event a Participant shall cease to be employed by the
Corporation or any subsidiary corporation of the Corporation while he is holding
one or more Options, each Option shall expire at the earlier of the expiration
of its term or the following:
(i) up to one year, in the case of a "non-qualified" Stock Option, and
three months, in the case of an Incentive Stock Option, after termination
due to normal retirement, late retirement or earlier retirement with
Committee consent, under a formal plan or policy of the Corporation;
(ii) one year after termination due to disability within the meaning
of Section 22(e)(3) of the Code as determined by the Committee;
(iii) one year after the Participant's death; and
(iv) coincident with the date of termination if due to any other
reason, except as and to the extent that the Committee may determine
otherwise.
(b) For the purposes of this Section, it shall not be considered a
termination of employment when a Participant is placed by the Corporation or any
subsidiary corporation of the Corporation on a military or sick leave or such
other type of leave of absence which is considered as continuing intact the
employment relationship of the Participant. In the case of such leave of absence
the employment relationship shall be continued until the later of the date when
such leave equals ninety (90) days or the date when the Participant's right to
reemployment with the Corporation or such subsidiary shall no longer be
guaranteed either by statute or contract.
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8. ADJUSTMENTS
In the event of a stock dividend, stock split or other subdivision,
consolidation or change in the shares of Common Stock, or a spin-off, then if
the Committee shall determine in its sole discretion that such change equitably
requires an adjustment in the number or kind of shares covered by the Options,
and/or in the Option price, such adjustments shall be made by the Committee and
shall be conclusive and binding upon eligible Participants and for all purposes
of the Plan.
9. MERGER, CONSOLIDATION OR TENDER OFFER
If the Corporation shall be a party to a binding agreement to any merger,
consolidation or reorganization or sale of substantially all the assets of the
Corporation, each outstanding Option shall pertain and apply to the securities
and/or property which a holder of the number of Shares of Common Stock subject
to the Option would have been entitled to receive pursuant to such merger,
consolidation or reorganization or sale of assets.
10. AMENDMENT AND TERMINATION OF PLAN
(a) The Board, without further approval of the Stockholders, may at any
time, and from time to time, suspend or terminate the Plan in whole or in part
or amend it from time to time in such respects as the Board may deem appropriate
and in the best interests of the Corporation; provided, however, that no such
amendment shall be made, without approval of the Stockholders, which would:
(i) materially modify the eligibility requirements for Participants;
(ii) increase the total number of shares of Common Stock which may be
issued pursuant to Stock Options, except as is provided for in accordance
with Paragraph 8 under the Plan;
(iii) decrease the minimum Exercise Price per share;
(iv) extend the period for granting Stock Options; or
(v) materially increase benefits accruing to Participants.
(b) No amendment, suspension or termination of this Plan shall, without the
Participant's consent, alter or impair any of the rights or obligations under
any Award theretofore granted to him under the Plan.
(c) The Board may amend the Plan, subject to the limitations cited above,
in such manner as it deems necessary to permit the granting of Stock Options
meeting the requirements of future amendments or issued regulations, if any, to
the Code.
11. GOVERNMENT AND OTHER REGULATIONS
The granting of Stock Options under the Plan and the obligation of the
Corporation to issue, or transfer and deliver shares for Stock Options exercised
under the Plan shall be subject to all applicable laws, regulations, rules and
orders which shall then be in effect.
12. UNFUNDED PLAN
The Plan, insofar as it provides for payments, shall be unfunded and the
Corporation shall not be required to segregate any assets which may at any time
be subject to Awards under the Plan. Any liability of the Corporation to any
person with respect to any Award under this Plan shall be based solely upon any
contractual obligations which may be created by Agreements reflecting grants or
Awards under this Plan.
13. MISCELLANEOUS PROVISIONS
(a) Rights to Continued Employment: No person shall have any claim or
right to be granted an Award under the Plan, and the grant of an Award under the
Plan shall not be construed as giving any Participant the right to be retained
in the employ of the Corporation or any Subsidiary corporation of the
Corporation and the
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<PAGE> 25
Corporation expressly reserves the right at any time to dismiss a Participant
with or without cause, free from any liability, or any claim under the Plan,
except as provided herein or in an Agreement or a Certificate.
(b) No obligation to exercise Option: The granting of an Option shall
impose no obligation upon the Participant to exercise such Option.
(c) Who Shall Exercise: During a Participant's lifetime, Options may be
exercised only by the Participant except as provided by the Plan or as otherwise
specified by the Committee.
(d) Non-Transferability: Except by will or the laws of descent and
distribution, no right or interest of any Participant in the Plan or in any
Award shall be assignable or transferable and no right or interest of any
Participant shall be liable for, or subject to, any lien, obligation or
liability of such Participant.
(e) Plan Expenses: Any expenses of administering this Plan shall be borne
by the Corporation.
(f) Legal Considerations: The Corporation shall not be required to issue
shares of Common Stock under the Plan until all applicable legal, listing or
registration requirements, as determined by legal counsel, have been satisfied,
including, if necessary, appropriate written representations from Participants.
(g) Other Plans: Nothing contained herein shall prevent the Corporation
from establishing other incentive and benefit plans in which Participants in the
Plan may also participate.
(h) No Warranty of Tax Effect: Except as may be contained in any
Agreement, no opinion shall be deemed to be expressed or warranties made as to
the effect for federal, state or local tax purposes of any Awards.
(i) Construction of Plan: The validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined in accordance with the laws of
the State of Delaware.
14. STOCKHOLDER APPROVAL AND EFFECTIVE DATES
This Plan shall become operative and in effect on such date as shall be
fixed by the Board of Directors of the Corporation, in its discretion, after
approval and authorization thereof by the stockholders of the Corporation. No
Option shall be granted hereunder after the expiration of ten years following
the date of adoption of the Plan by the Board of Directors.
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EXHIBIT 2
CAMBREX CORPORATION
1994 STOCK OPTION PLAN
1. PURPOSE
The Plan is intended to expand and improve the profitability and prosperity
of the Corporation for the benefit of its stockholders by permitting the
Corporation to grant to directors and other key employees Options to purchase
shares of the Corporation's Stock. These awards are intended to provide
additional incentive to such personnel by offering them a greater stake in the
Corporation's continued success. The Plan is also intended as a means of
reinforcing the commonality of interest between the Corporation's stockholders
and its directors, executives and other key employees, and as aid in attracting
and retaining directors and key employees of outstanding abilities and
specialized skills.
2. DEFINITIONS
For Plan purposes, except where the context otherwise indicates, the
following terms shall have the meanings which follow:
(a) "Agreement" shall mean a written agreement (including any
amendment or supplement thereto) between the Corporation and a Participant
which specifies the terms and conditions of an Award granted to such
Participant.
(b) "Award" shall mean a Stock Option granted to a Participant.
(c) "Beneficiary" shall mean the person or persons who shall receive,
if the Participant dies, any Option exercise rights.
(d) "Board" shall mean the Board of Directors of the Corporation.
(e) "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time, and the rules and regulations promulgated
thereunder.
(f) "Committee" shall mean the Organization and Compensation
Committee, or such other Committee of the Board, which shall be designated
by the Board to administer the Plan. The Committee shall be composed of two
or more persons as from time to time are appointed to serve by the Board
with respect to awards to employees. Each member of the Committee, while
serving as such, shall also be a member of the Board, and shall be a
disinterested person within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1934.
(g) "Common Stock" shall mean the Class A Common Stock of the
Corporation having a par value of $0.10 per share.
(h) "Corporation" shall mean Cambrex Corporation, a Delaware
corporation.
(i) "Director" shall mean a member of the Board.
(j) "Employee" shall mean any person who is employed on a full time
basis by the Corporation or any Subsidiary corporation of the Corporation
and who is compensated, at least in part, on a regular salary basis.
(k) "Exercise Price" shall mean the price for which a Participant may
exercise his Stock Option to purchase a stated number of shares of Common
Stock, established pursuant to Paragraph 6(a) of the Plan.
(l) "Fair Market Value" shall mean with respect to any given day, the
average of the mean between the highest and lowest reported sales prices on
the principal national stock exchange on which the Common Stock is traded,
or if such exchange was closed on such day or, if it was open but the
Common
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<PAGE> 27
Stock was not traded on such day, then on the next preceding day that the
Common Stock was traded on such exchange, as reported by such responsible
reporting service as the Committee may select.
(m) "Incentive Stock Option" shall mean a Stock Option which is
intended to meet and comply with the terms and conditions for an "incentive
stock option" as set forth in Section 422 of the Code.
(n) "Participant" shall mean a Director or Employee, including an
Employee who may also be a member of the Board, who is granted an Award
under the Plan.
(o) "Plan" shall mean the Cambrex Corporation 1994 Stock Option Plan
as set forth herein and as amended from time to time.
(p) "Stock Option" or "Option" shall mean a right, including an
Incentive Stock Option and a "nonqualified" Stock Option which does not
meet the requirements of Section 422 of the Code, to purchase a stated
number of shares of Common Stock subject to such terms and conditions as
are set forth in an Agreement and the Plan. Also included in this
definition are any other forms of tax "qualified" stock options which may
be incorporated and defined in the Code as it may from time to time be
amended.
(q) "Subsidiary Corporation" or "Subsidiary" shall mean any
corporation which is a subsidiary corporation of the Corporation as defined
in Section 424(f) of the Code.
3. ADMINISTRATION
(a) The Committee shall administer the Plan and, accordingly, it shall have
full power to grant Awards to employees, construe and interpret the Plan,
establish rules and regulations and perform all other acts it believes
reasonable and proper, including the authority to delegate responsibilities to
others to assist in administering the Plan.
(b) The determination of those employees eligible to receive Awards, and
the amount, type and timing of each Award shall rest in the sole discretion of
the Committee, subject to the provisions of the Plan.
4. COMMON STOCK LIMITS
The total number of shares of Common Stock which may be issued on exercise
of Stock Options shall not exceed 100,000 shares, subject to adjustment in
accordance with Paragraph 8 of the Plan. No Participant shall be granted options
to purchase more than 100,000 shares of Common Stock in any twelve month period.
Shares issued under the Plan may be, in whole or in part, as determined by the
Committee, authorized but unissued or reacquired shares of Common Stock. If any
Option granted under the Plan shall expire or terminate without having been
exercised, the shares subject to such Option shall be available for use under
the Plan.
5. ELIGIBILITY FOR PARTICIPATION
(a) Consistent with Plan objectives, eligibility to become a Participant in
the Plan and receive Awards shall be limited to Directors and key Employees.
(b) No Incentive Stock Option shall be granted to an Employee ineligible at
the time to receive such an Option because of owning more than 10% of the Common
Stock in accordance with the provisions of Section 422(b)(6) of the Code, unless
the Option meets the requirements of Section 422(c)(6).
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<PAGE> 28
6. STOCK OPTIONS -- TERMS AND CONDITIONS
All Stock Options granted under the Plan shall be evidenced by Agreements
which shall be subject to applicable provisions of the Plan, and such other
provisions as the Committee may adopt, including the following provisions:
(a) Price: The Exercise Price per share shall not be less than 100%
of the Fair Market Value of a share of Common Stock on the date of Award.
(b) Period: The Committee may establish the term of any Option
awarded under the Plan. Provided, however, that an Incentive Stock Option
shall expire no later than ten (10) years from the date of Award.
(c) Time of Exercise: The Committee may establish installment
exercise terms for an Option such that the Option becomes fully exercisable
in a series of cumulating portions. The Committee may also accelerate the
exercise of any Option.
(d) Exercise: An Option, or portion thereof, shall be exercised by
delivery of a written notice of exercise to the Corporation and payment of
the full price of the shares being exercised. Payment may be made: (i) in
United States dollars in cash or by check, bank draft or money order
payable to the order of the Corporation, or (ii) at the discretion of the
Committee, through the delivery of shares of Common Stock with a value
equal to the Option Price, or (iii) by a combination of both (i) and (ii)
above. The Committee shall determine acceptable methods for tendering
Common Stock as payment upon exercise of an Option and may impose such
limitations and prohibitions on the use of Common Stock to exercise an
Option as it deems appropriate. A Participant shall not have any of the
rights or privileges of a holder of Common Stock until such time as shares
of Common Stock are issued or transferred to the Participant.
(e) Special Rules for Incentive Stock Options: Notwithstanding any
other provision of the Plan, in the case of any Incentive Stock Option
granted under the Plan, the following provisions will apply:
(i) The aggregate Fair Market Value (determined at the time the
Option is granted) of the shares of stock with respect to which
Incentive Stock Options are exercisable for the first time by a
Participant under the Plan or any other plan of the Corporation or any
Subsidiary corporation of the Corporation or any corporation which is a
parent corporation (as defined in Section 424(e) of the Code) of the
Corporation, in any calendar year, shall not exceed $100,000 (or such
other individual employee maximum as may be in effect from time to time
under the Code at the time the Incentive Stock Option is awarded).
(ii) Any Participant who disposes of shares of Common Stock
acquired on the exercise of an Incentive Stock Option by sale or
exchange either (A) within two years after the date of the grant of the
Option under which the stock was acquired or (B) within one year after
the acquisition of such shares shall notify the Corporation of such
disposition and of the amount realized upon such disposition.
(iii) Non-employee Directors shall not be eligible to receive
Incentive Stock Options.
(f) Special Rules for Grants to Non-employee
Directors: Notwithstanding any other provision of the Plan, grants to
non-employee Directors shall be made pursuant to the following provisions:
(i) All individuals who are non-employee Directors as of October
28, 1993, will receive as of that date a one-time grant of options to
purchase 1,000 shares of Common Stock;
(ii) On the date of the first meeting of the Board of Directors
after each Annual Meeting of stockholders of the Company occurring
during the term of this Plan, each non-employee Director shall receive
an award of options to purchase 500 shares of Common Stock;
(iii) All options granted to non-employee Directors pursuant to
paragraphs (i) and (ii) shall have an exercise price equal to the fair
market value of the Common Stock on the date of grant, a
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<PAGE> 29
term of ten years, and shall become exercisable, subject to the
provisions of the Plan, six months after the grant date; and
(iv) Non-employee Directors shall not be eligible for any grants
under the Plan other than those provided for in paragraphs (i) and (ii).
(g) Proceeds on Exercise: The proceeds of the sale of the Common
Stock subject to Option are to be added to the general funds of the
Corporation and used for its corporate purposes.
7. TERMINATION OF EMPLOYMENT
(a) In the event a Participant shall cease to be employed by the
Corporation or any Subsidiary corporation of the Corporation or, in the case of
a Director, to be a member of the Board, while he is holding one or more
Options, each Option shall expire at the earlier of the expiration of its term
or the following:
(i) up to one year, in the case of a "non-qualified" Stock Option, and
three months, in the case of an Incentive Stock Option, after termination
due to normal retirement, late retirement or earlier retirement with
Committee consent, under a formal plan or policy of the Corporation;
(ii) up to one year (or such shorter period as the Committee may
determine) after termination due to disability within the meaning of
Section 22(e)(3) of the Code as determined by the Committee;
(iii) one year after the Participant's death; and
(iv) coincident with the date of termination if due to any other
reason, except as and to the extent that the Committee may determine
otherwise. In the event of death within the up to three month or one year
period set forth in clause (i) above, as appropriate, after normal or early
retirement while any portion of the Option remains exercisable, the
Committee in its discretion may provide for an extension of the exercise
period of up to one year after the Participant's death but not beyond the
expiration of the term of the Option.
(b) For the purposes of this Section, it shall not be considered a
termination of employment when a Participant is placed by the Corporation or any
Subsidiary corporation of the Corporation on a military or sick leave or such
other type of leave of absence which is considered as continuing intact the
employment relationship of the Participant.
8. ADJUSTMENTS
In the event of a stock dividend, stock split or other subdivision,
consolidation or change in the shares of Common Stock, or a spin-off, then if
the Committee shall determine in its sole discretion that such change equitably
requires an adjustment in the number or kind of shares covered by the Options,
and/or in the Option price, such adjustments shall be made by the Committee and
shall be conclusive and binding upon eligible Participants and for all purposes
of the Plan.
9. MERGER, CONSOLIDATION OR TENDER OFFER
If the Corporation shall be a party to a binding agreement to any merger,
consolidation or reorganization or sale of substantially all the assets of the
Corporation, each outstanding Option shall pertain and apply to the securities
and/or property (including cash) which a holder of the number of Shares of
Common Stock subject to the Option would have been entitled to receive pursuant
to such merger, consolidation or reorganization or sale of assets.
10. AMENDMENT AND TERMINATION OF PLAN
(a) The Board, without further approval of the Stockholders, may at any
time, and from time to time, suspend or terminate the Plan in whole or in part
or amend it from time to time in such respects as the Board
27
<PAGE> 30
may deem appropriate and in the best interests of the Corporation; provided,
however, that no such amendment shall be made, without approval of the
Stockholders, which would:
(i) materially modify the eligibility requirements for Participants;
(ii) materially increase the total number of shares of Common Stock
which may be issued pursuant to Stock Options, except as is provided for in
accordance with Paragraph 8 under the Plan;
(iii) decrease the minimum Exercise Price per share; or
(iv) extend the period for granting Stock Options.
(b) No amendment, suspension or termination of this Plan shall, without the
Participant's consent, alter or impair any of the rights or obligations under
any Award theretofore granted to her or him under the Plan.
(c) The Board may amend the Plan, subject to the limitations cited above,
in such manner as it deems necessary to permit the granting of Stock Options
meeting the requirements of future amendments or issued regulations, if any, to
the Code.
11. GOVERNMENT AND OTHER REGULATIONS
The granting of Stock Options under the Plan and the obligation of the
Corporation to issue, or transfer and deliver shares for Stock Options exercised
under the Plan shall be subject to all applicable laws, regulations, rules and
orders which shall then be in effect.
12. UNFUNDED PLAN
The Plan, insofar as it provides for payments, shall be unfunded and the
Corporation shall not be required to segregate any assets which may at any time
be subject to Awards under the Plan. Any liability of the Corporation to any
person with respect to any Award under this Plan shall be based solely upon any
contractual obligations which may be created by Agreements reflecting grants or
Awards under this Plan.
13. MISCELLANEOUS PROVISIONS
(a) Rights to Continued Employment: No person shall have any claim or
right to be granted an Award under the Plan, and the grant of an Award under the
Plan shall not be construed as giving any Participant the right to be retained
in the employ of the Corporation or any Subsidiary corporation of the
Corporation and the Corporation expressly reserves the right at any time to
dismiss a Participant with or without cause, free from any liability, or any
claim under the Plan, except as provided herein or in an Agreement or a
Certificate.
(b) Rights to Serve as a Director: This Plan shall not impose any
obligation on the Company to retain any individual as a Director nor shall it
impose any obligation on the part of any Director to remain as a Director of the
Company, provided that each Director by accepting each award under the Plan
shall represent to the Company that it is his good faith intention to continue
to serve as a Director of the Company until its next annual meeting of
shareholders and that he agrees to do so unless a change in circumstances
arises.
(c) No obligation to exercise Option: The granting of an Option shall
impose no obligation upon the Participant to exercise such Option.
(d) Who Shall Exercise: During a Participant's lifetime, Options may be
exercised only by the Participant except as provided by the Plan or as otherwise
specified by the Committee in the case of Options which are not Incentive Stock
Options.
(e) Non-Transferability: Except by will or the laws of descent and
distribution, no right or interest of any Participant in the Plan or in any
Award shall be assignable or transferable and no right or interest of any
Participant shall be liable for, or subject to, any lien, obligation or
liability of such Participant.
28
<PAGE> 31
(f) Withholding Taxes:
(i) The Corporation may require a payment to cover applicable
withholding for income and employment taxes in the event of the exercise of
a Stock Option. At any time when a Participant is required to pay to the
Corporation an amount required to be withheld under applicable income tax
laws in connection with the exercise of a Stock Option, the Participant may
satisfy this obligation in whole or in part by electing (the "Election") to
have the Corporation withhold shares of Common Stock having a value equal
to the amount required to be withheld. The value of the shares to be
withheld shall be equal to the Fair Market Value of the Common Stock, as
determined on the date that the amount of tax to be withheld shall be
determined (the "Tax Date"). Each Election must be made prior to the Tax
Date. The Committee may disapprove of any Election or may suspend or
terminate the right to make Elections. An Election is irrevocable.
(g) Plan Expenses: Any expenses of administering this Plan shall be borne
by the Corporation.
(h) Legal Considerations: The Corporation shall not be required to issue
shares of Common Stock under the Plan until all applicable legal, listing or
registration requirements, as determined by legal counsel, have been satisfied,
including, if necessary, appropriate written representations from Participants.
(i) Other Plans: Nothing contained herein shall prevent the Corporation
from establishing other incentive and benefit plans in which Participants in the
Plan may also participate.
(j) No Warranty of Tax Effect: Except as may be contained in any
Agreement, no opinion shall be deemed to be expressed or warranties made as to
the effect for federal, state or local tax purposes of any Awards.
(k) Construction of Plan: The validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined in accordance with the laws of
the State of Delaware.
14. STOCKHOLDER APPROVAL AND EFFECTIVE DATES
This Plan shall become operative and in effect on such date as shall be
fixed by the Board of Directors of the Corporation, in its discretion, after
approval and authorization thereof by the shareholders of the Corporation. No
Option shall be granted hereunder after the expiration of ten years following
the date of adoption of the Plan by the Board of Directors.
29
<PAGE> 32
CAMBREX CORPORATION
SOLICITED BY BOARD OF DIRECTORS FOR 1994 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Cambrex Corporation, (the "Company")
hereby appoints C.C. Baldwin, Jr., J.A. Mack and P. Tracey, and each of them
acting singly and each with power of substitution and resubstition, attorneys
and proxies of the undersigned, with all the powers the undersigned would
possess if personally present, to vote the shares of Common Stock of the
Company which the undersigned is entitled to vote at the 1994 Annual Meeting of
Stockholders of the Company to be held on April 28, 1994 at the Parker Meridien
Hotel, 118 West 57th Street, New York, New York, and any adjournment thereof.
Without otherwise limiting the general authorization hereby given, said
attorney and proxies are instructed to vote as indicated on the reverse side
hereof on the proposals set forth in the Notice of Annual Meeting of
Stockholders of the Company and accompanying Proxy statement, each dated March
24, 1994.
THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE 4 NOMINEES FOR
DIRECTOR LISTED IN THE PROXY STATEMENT ACCOMPANYING THE NOTICE OF SAID MEETING
(PROPOSAL NO. 1), "FOR" APPROVAL OF THE 1993 SENIOR EXECUTIVE STOCK OPTION PLAN
(PROPOSAL NO. 2), "FOR" APPROVAL OF THE 1994 STOCK OPTION PLAN (PROPOSAL NO.
3), AND "FOR" APPROVAL OF THE SELECTION OF ACCOUNTANTS (PROPOSAL NO.4), UNLESS
OTHERWISE MARKED.
SEE REVERSE
SIDE
PLEASE COMPLETE AND SIGN PROXY ON REVERSE SIDE AND RETURN IN ENCLOSED ENVELOPE.
Please mark your
[ X ] votes as in this
example. DO NOT PRINT IN THIS AREA
- --------------------------------------------------------------------------------
NOMINEES: Cyril C. Baldwin, Jr.
1. Election of FOR WITHHOLD George J.W. Goodman,
Directors [ ] [ ] Robert LeBuhn and
Kathryn Rudie Harrigan
For, except vote withheld from the following nominees(s):
_______________________________________
FOR AGAINST ABSTAIN
2. Approval of the 1993 Senior Executive [ ] [ ] [ ]
Stock Option Plan and awards thereunder
3. Approval of the 1994 Stock Option Plan and [ ] [ ] [ ]
a program of awards for non-employee
directors thereunder
4. Approval of the appointment of [ ] [ ] [ ]
Coopers & Lybrand as independent
public accountants for 1994
SHAREHOLDER NAME AND ADDRESS
DO NOT PRINT IN THIS AREA
SIGNATURE(S)_____________________________________ DATE______________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
