<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CAMBREX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $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 transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
[CAMBREX LOGO]
CAMBREX CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 1996
Notice Is Hereby Given that the 1996 Annual Meeting of Stockholders of
Cambrex Corporation (the "Company") will be held at the offices of Schroder
Wertheim & Co. Incorporated, 4th Floor Auditorium, Equitable Center, 787 Seventh
Avenue, New York, New York on April 25, 1996, at 4:00 P.M., for the following
purposes:
1. to elect three (3) directors in Class III to hold office until the
1999 Annual Meeting of Stockholders and until their successors shall be
elected and qualified; and
2. to consider and act upon the approval of the 1996 Performance Stock
Option Plan and awards thereunder; and
3. to consider and act upon the approval of the appointment of Coopers
& Lybrand, L.L.P. as independent accountants for 1996; and
4. 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, 1996, 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. Stockholders 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 22, 1996
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
------------------------
1996 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 1996 Annual Meeting of Stockholders to be held on April 25, 1996, 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 22, 1996.
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. In addition, the Company has engaged the firm of D.F. King & Co.,
Inc. to assist in the solicitation of proxies for a fee of not more than $7,000
plus reimbursement of out-of-pocket expenses.
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 three nominees for director
named herein, and in favor of the approval of the 1996 Performance Stock Option
Plan and awards thereunder, and in favor of the selection of Coopers & Lybrand,
L.L.P. 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
The Company has only one class of voting securities, Common Stock, par
value $0.10 ("Common Stock"). Only holders of Common Stock of the Company of
record at the close of business on March 15, 1996, will be entitled to vote at
the meeting. On such record date there were outstanding and entitled to vote
7,706,177 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 15, 1996, 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>
FMR Corp.............................................. 693,200 (3) 9.03 %
82 Devonshire Street
Boston, Massachusetts 02109-3614
Ira Sochet............................................ 461,880 6.02 %
Hopetown
Abaco, Bahamas
Cyril C. Baldwin, Jr. ................................ 448,421 (4) 5.84 %
39 Locust Avenue
New Canaan, Connecticut 06840
Heine Securities Corp................................. 388,400 (5) 5.06 %
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078-0993
Mellon Bank Corporation............................... 384,000 (6) 5.00 %
One Mellon Bank Center - 4040
Pittsburgh, Pennsylvania 15258-0001
</TABLE>
- ---------------
(1) Unless otherwise indicated (a) share ownership is based upon information
furnished as of February 15, 1996, 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) 7,667,374 shares of Common Stock issued and
outstanding (excluding treasury shares) on February 15, 1996, and (ii) 7,974
shares still to be issued in connection with the 1993 conversion of the
Company's 9% Convertible Subordinated Notes.
(3) In an amendment to Schedule 13G under the Securities Exchange Act of 1934
dated February 14, 1996, 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 674,000
shares. Edward C. Johnson 3d is Chairman of FMR Corp. and reported owner of
12% of its voting stock, and Abigail P. Johnson is a director of FMR Corp.
and reported owner of 24.5% of its voting stock. Edward C. Johnson 3d,
Abigail P. Johnson, and FMR Corp. through its control of Fidelity, and the
Funds each has sole power to dispose of 674,000 shares owned by the Funds.
Neither FMR Corp. nor Edward C. Johnson 3rd, Chairman of FMR Corp., has sole
power to vote or direct the voting of shares owned directly by Fidelity
Funds, which power resides in the Funds' Boards of Trustees. Fidelity
Management Trust Company, a wholly owned subsidiary of FMR Corp. and a bank,
is the beneficial owner of 19,200 shares as the result of its serving as
investment manager of the institutional account(s). Edward C. Johnson 3d and
FMR Corp. through its control of Fidelity Management Trust Company, has sole
voting and dispositive power over 19,200 shares.
(4) Includes 75,000 shares held by a family member as to which Mr. Baldwin
disclaims beneficial ownership.
(5) In a Schedule 13G under the Securities Exchange Act of 1934 dated February
1, 1996, and filed by Heine Securities Corporation ("Heine"), Heine reported
that it has the sole voting power and sole dispositive power over those
shares.
(6) In a Schedule 13G under the Securities Exchange Act of 1934 dated January
22, 1996 and filed by Mellon Bank Corporation ("Mellon"), Mellon reported
that it has the sole voting power for 384,000 shares, and shares dispositive
power for 357,000 shares. Mellon also has sole dispositive power for 27,000
of the shares.
2
<PAGE> 5
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 15, 1996, by (i) each director and
nominee for election as a director, (ii) each of the executive officers named in
the Summary Compensation Table (below) 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. ................................. 448,421(3) 5.84%
Rosina B. Dixon, M.D. ................................. 1,000(4) *
Francis X. Dwyer....................................... 6,500(5) *
George J.W. Goodman.................................... 3,372(5) *
Kathryn Rudie Harrigan................................. 1,500(4) *
Leon J. Hendrix, Jr. .................................. 1,500(4) *
Ilan Kaufthal.......................................... 5,532(5) *
Robert LeBuhn.......................................... 5,932(5) *
James A. Mack.......................................... 136,181(6) 1.77%
Dean P. Phypers........................................ 8,000(5) *
Peter Tracey........................................... 84,123(7) 1.10%
Claes Glassell......................................... 32,000(8) *
Steven M. Klosk........................................ 67,030(9) *
Peter E. Thauer........................................ 70,833(10) *
All Directors and Executive Officers as
a group (27 Persons)................................. 1,112,691(11) 14.50%
</TABLE>
- ---------------
* Beneficial Ownership is less than 1% of the Common Stock outstanding.
(1) Except as otherwise noted, reported share ownership is as of February 15,
1996. 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) 7,667,374 shares of Common Stock issued and
outstanding (excluding treasury shares) on February 15, 1996, (ii) all
shares of Common Stock subject to stock options which are held by such
beneficial owner and are exercisable within 60 days of February 15, 1996,
and (iii) 7,974 shares still to be issued in connection with the 1993
conversion of the Company's 9% Convertible Subordinated Notes.
(3) 75,000 shares held by a family member are included and beneficial ownership
of such shares is disclaimed.
(4) The number of shares reported includes 500 shares issuable upon exercise of
options granted under the Company's 1994 Stock Option Plan.
(5) The number of shares reported includes 1,500 shares issuable upon exercise
of options granted under the Company's 1994 Stock Option Plan.
(6) The number of shares reported includes 45,000 shares issuable upon exercise
of options granted under the Company's Stock Option Plans, 11,547 shares
held at December 31, 1995, in the Company's Savings Plan, and 30,084 share
equivalents held at February 15, 1996 in the Company's Deferred
Compensation Plan. 1,205 shares held by several family members are not
included and beneficial ownership of such shares is disclaimed.
(7) The number of shares reported includes 35,000 shares issuable upon exercise
of options granted under the Company's Stock Option Plans, 3,523 shares
held at December 31, 1995, in the Company's Savings Plan, and 17,200 share
equivalents held at February 15, 1996 in the Company's Deferred
Compensation Plan.
3
<PAGE> 6
(8) The number of shares reported includes 30,000 shares issuable upon exercise
of options granted under the Company's Stock Option Plans.
(9) The number of shares reported includes 45,000 shares issuable upon exercise
of options granted under the Company's Stock Option Plans and 2,030 shares
held at December 31, 1995, in the Company's Savings Plan.
(10) The number of shares reported includes 29,800 shares issuable upon exercise
of options granted under the Company's Stock Option Plans, 7,433 shares
held at December 31, 1995, in the Company's Savings Plan, and 25,800 share
equivalents held at February 15, 1996 in the Company's Deferred
Compensation Plan.
(11) The number of shares reported includes 349,300 shares issuable upon
exercise of options that are currently exercisable or will become
exercisable within 60 days and 44,359 shares held at December 31, 1995, in
the Company's Savings Plan. 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 1995 the
Board held seven meetings.
The Board has established four standing committees, the Audit Committee,
the Compensation Committee, the Environmental Committee and the Governance
Committee.
The Audit Committee, comprised of five 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 four meetings in 1995.
The Compensation Committee, comprised of five non-employee directors,
oversees the Company's executive compensation programs and policies and
administers the Company's Stock Option and Long-term Incentive Plans. The
Compensation Committee held five meetings in 1995.
The Environmental Committee, comprised of eight non-employee directors,
oversees the Company's environmental affairs. The Environmental Committee held
five meetings during 1995.
The Governance 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 Governance Committee will consider nominees
recommended by stockholders. Such recommendations for the 1997 Annual Meeting
should be sent to the Corporate Secretary of the Company not later than January
14, 1997, and should include a statement of the nominee's qualifications. The
Governance Committee held two meetings in 1995.
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.
COMPENSATION OF DIRECTORS
During 1995 the Company paid each non-employee director of the Company an
annual fee of $12,000, as well as $600 for each Board, Committee (other than the
Environmental Committee) and Stockholders' Meeting attended, except that the
Chairmen of the Compensation, Audit and Governance Committees received $900 for
each Committee meeting attended. The Chairman of the Environmental Committee
received $900 for each Environmental Committee meeting attended, but the
remaining Committee members
4
<PAGE> 7
did not receive fees for meeting attendance. Upon recommendation of the
Governance Committee, the Board at its October meeting increased the annual and
per meeting fees, effective January 1, 1996. The annual fee is $16,000 and the
meeting fees are $1,000 for Committee members and $1,500 for the Chairman of
each Committee as described above. The Board also adopted a policy that a
minimum of one-half of Board fees shall be paid in Company Common Stock, and
that each director, within three years after joining the Board, shall have
acquired an amount of Company Common Stock equal in value to the annual Board
retainer. 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.
At a meeting held on December 19, 1995, the Board adopted a Non-Employee
Directors' Deferred Compensation Plan permitting Directors to defer receipt of
Board fees including Company Common Stock otherwise issuable in payment of Board
fees beginning with fees payable after January 1, 1996.
In October 1993 the Board of Directors adopted the 1994 Stock Option Plan
(the "1994 Plan") which was approved by stockholders at the 1994 Annual Meeting
of Stockholders. Pursuant to the terms of the Non-Employee Director Program of
the 1994 Plan, each individual who was a non-employee director on October 28,
1993 was awarded a grant of options to purchase 1,000 shares of the Company's
Common Stock. The program also provides that each new, non-employee director
shall be awarded an option to purchase 500 shares of the Company's Common Stock
upon election as a director. The 1994 Plan further provides that beginning after
the 1995 Annual Meeting each non-employee director will receive a grant of
options to purchase 500 shares of the Company's Common Stock at the first
meeting of the Board of Directors following each Annual Meeting of Stockholders
of the Company. In October 1993, the Board of Directors granted options to
purchase 1,000 shares of Common Stock under the 1994 Stock Option Plan to each
of Francis X. Dwyer, George J.W. Goodman, Kathryn Rudie Harrigan, Ilan Kaufthal,
Robert LeBuhn and Dean P. Phypers. In April 1995 the Board of Directors granted
options to purchase 500 shares of Common Stock under the 1994 Plan to Rosina B.
Dixon and Leon J. Hendrix, Jr., and options to purchase 500 shares to Francis X.
Dwyer, George J.W. Goodman, Kathryn Rudie Harrigan, Ilan Kaufthal, Robert LeBuhn
and Dean P. Phypers.
DIRECTORS' RETIREMENT PLAN
During 1995 the non-employee directors of the Company participated in a
non-qualified, noncontributory pension plan, which provided for the payment
after retirement from the Board of an annual amount equal to the Board retainer
at the time of retirement. The duration of this payment equaled the number of
years of Board service calculated starting with 1993.
At its October 1995 meeting the Board determined to discontinue the
directors' pension plan, effective January 1, 1996, and to pay out accrued
benefits actuarially reduced from age 72.
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes. The
term of office of the directors in Class III expires at this Annual Meeting with
the terms of office of the directors in Class I and Class II ending at
successive Annual Meetings. At this Annual Meeting three directors in Class III
will be elected to hold office until the 1999 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 (but not
including broker non-votes) will have the effect of votes against the nominees.
The following sets forth with respect to the three 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 1999 ANNUAL MEETING (CLASS
III)
Francis X. Dwyer (age 70). Director since 1989. Chairman of the
Environmental Committee and member of the Compensation Committee of the Board of
Directors. President of Nuodex Inc., a chemical
5
<PAGE> 8
manufacturer, since its formation in 1982 until its acquisition by Huls AG of
West Germany in 1985. Thereafter, Chairman of the Board 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 58). Director, President and Chief Operating Officer of
the Company since joining the Company in February 1990 and Chief Executive
Officer since April 1995. 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, and member of the Board of Directors of the Chemical
Manufacturing Association.
Dean P. Phypers (age 67). Director since 1988. Chairman of the
Compensation Committee and member of the Environmental and Governance 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., Bethlehem Steel Corporation and Church & Dwight Co.,
Inc.
DIRECTORS SERVING UNTIL 1997 ANNUAL MEETING (CLASS I)
Cyril C. Baldwin, Jr. (age 68). Director and President (until early 1990)
since the Company commenced business in 1981. Mr. Baldwin has been Chief
Executive Officer since 1984 until his retirement in April, 1995. Mr. Baldwin
will continue as Chairman of the Board, a position he has held since his
election in 1991. Director of Church & Dwight Co., Inc. and Congoleum
Corporation.
George J. W. Goodman (age 65). Director since the Company commenced
business in 1981. Member of the Audit, Compensation, and Environmental
Committees of the Board of Directors. Since 1971 has been the President and
currently is also Chairman and Chief Executive Officer 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 44). Director since 1994. Member of the Audit,
Environmental and Governance Committees of the Board of Directors. Since 1981,
Professor, Management of Organizations Division of the Columbia University
Business School, since 1993, the Henry L. Kravis Professor of Business
Leadership at Columbia University Business School. Since 1995, Academic Director
of the Jerome A. Chazen Institute for International Business at Columbia
University. Member of the Boards of Manville Corporation and Technical Chemicals
and Products.
Robert LeBuhn (age 63). Director since the Company commenced business in
1981. Chairman of the Governance Committee and member of the Audit and
Environmental Committees of the Board of Directors. Retired Chairman, Investor
International (U.S.), Inc., a private investment firm. Mr. LeBuhn was President
from 1984 to 1993, and Chairman until December 1994. Director of USAir Group,
Inc., Acceptance Insurance Companies, Inc., Lomas Financial Corp., New Jersey
Steel Corporation and Enzon Corp.
DIRECTORS SERVING UNTIL 1998 ANNUAL MEETING (CLASS II)
Rosina B. Dixon, M.D. (age 53). Director since 1995 and member of the
Audit, Compensation and Environmental Committees of the Board of Directors. Dr.
Dixon has been a consultant to the pharmaceutical industry since May 1986. Prior
to that time, she was Vice President and Secretary of Medical Market Specialties
Incorporated, as well as a member of its Board of Directors. Dr. Dixon
previously served as Medical Director, Schering Laboratories, Schering-Plough
Corporation. Prior to that, she was Executive Director Biodevelopment,
Pharmaceuticals Division, CIBA-GEIGY Corporation. She is a member of the Boards
of Directors of Church & Dwight Co., Inc. and Enzon, Inc.
6
<PAGE> 9
Leon J. Hendrix, Jr. (age 54). Director since 1995 and member of the
Compensation and Environmental Committees of the Board of Directors. Principal
of Clayton, Dubilier & Rice, Inc., a private investment firm, since November
1994. Prior thereto, Mr. Hendrix was with Reliance Electric Company, a
manufacturer and seller of industrial and telecommunications equipment and
services, since 1973, where he held a series of executive level positions, most
recently Chief Operating Officer and a member of the Board of Directors since
1992. Mr. Hendrix is a member of the Boards of Directors of Keithley
Instruments, Inc., National City Bank of Cleveland, NACCO Industries, Inc.,
Wesco Distribution, Inc., and Remington Arms Co. He is also a member of the
Clemson University Board of Trustees, previously served on the Board of
Governors of the National Electrical Manufacturers Association and the Board of
Directors of the Cleveland Chapter of the American Red Cross.
Ilan Kaufthal (age 48). 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 banking firm of
Schroder Wertheim & 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 Rexene Corporation, United Retail
Group, Inc. and Russ Berrie & Co.
During 1995, each incumbent director attended more than 90% of the
aggregate of the meetings of the Board and Committees of the Board of which such
director was a member.
RELATED PARTY TRANSACTIONS
Mr. Kaufthal is a Managing Director of Schroder Wertheim & Co. Incorporated
who provide the Company from time to time with investment advisory services and
who co-managed the Company's 1995 Public Stock Offering.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
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 stockholders.
The accomplishment of results measured against the executives' goals and
objectives are reviewed by the 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 (some 32 companies including Arizona Chemical, Calgon Corporation, FMC
Corporation, Freedom Chemical Company, Nalco Chemical Company and Union Camp
Corporation) 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.
7
<PAGE> 10
Annual incentive compensation awards are based on corporate financial
performance and individual performance measured against agreed goals and
objectives. The size of the overall incentive compensation pool is determined by
the level of return on investment and total net income generated, and by the
incremental 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, the individual's performance, and the number of outstanding stock
option awards. Two types of stock options are granted to the executive group.
The first type are regular Incentive Stock Options or Non-Qualified Stock
Options. The second type of options is 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 Stock Option Plan, one-third of the grants
to senior executives became subject to exercise when the Company's publicly
traded Common Stock price equaled 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
equaled 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.
On April 28, 1994, stockholders approved the 1993 Senior Executive Stock
Option Plan (the "1993 Plan") and certain awards thereunder. The 1993 Plan
provided that one-third of the approved grants to senior executives became
subject to exercise if the Company's publicly traded common stock price equals
or exceeds an average of $30 or above for 20 consecutive trading days prior to
October 28, 1994. Similarly, a second one-third, and any of the first one-third
of the approved grant of awards not otherwise exercisable, became exercisable if
the traded share price equals or exceeds an average of $35 per share for 20
consecutive trading days prior to October 28, 1995. The final one-third of the
option awards, and any option awards not otherwise exercisable, became
exercisable if the traded share price equals or exceeds an average price of $40
per share for 20 consecutive trading days during the remaining life of the
option. All options became exercisable as the Company's publicly traded share
price exceeded an average of $40 per share for 20 consecutive trading days in
1995.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Baldwin, the Company's Chief Executive Officer until his retirement on
April 1, 1995, received $118,907 in annual compensation prior to his retirement
date. Mr. Mack, the Company's Chief Executive Officer effective April 1, 1995,
received $291,246 in annual compensation in 1995. Both Mr. Baldwin's and Mr.
Mack's compensation was determined based upon the same factors used in setting
other executive compensation.
Mr. Baldwin received an incentive compensation award of $120,000 for fiscal
1995, and Mr. Mack received an incentive compensation award for 1995 of
$360,000. These awards reflect Mr. Baldwin's and Mr. Mack's success in the
pursuit of strategic acquisitions and the substantial improvement in financial
performance achieved by the Company, as net income was increased from
$11,126,000 in 1994 to more than $19,670,000 in 1995, and total shareholder
return increased by more than 60%. The total market value of the Company's
shares increased by nearly $85,500,000 in 1995. Both Mr. Baldwin's and Mr.
Mack's annual compensation were directly related to the improvement in both
earnings and stockholder value in 1995 and the continued international growth of
the Company.
POLICY REGARDING SECTION 162(m)
Based on current levels of base salary and annual bonuses, the Compensation
Committee believes that it is highly unlikely that the Company will pay
compensation to any of its executive officers for 1996 services in excess of one
million dollars. Thus, the Compensation Committee has recommended no adjustment
with
8
<PAGE> 11
respect to 1996 cash compensation in light of the limitation 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 were designed and stockholder approval was obtained
at the 1994 Annual Meeting in order that options granted thereunder would be
exempt from the limitations contained in Section 162(m) of the Internal Revenue
Code. The 1996 Performance Stock Option Plan for which shareholder approval is
currently being sought is also designed in order that options granted thereunder
would be exempt from the limitations contained in Section 162(m) of the Internal
Revenue Code.
COMPENSATION COMMITTEE
Dean P. Phypers, Chairman
Rosina B. Dixon, M.D.
Francis X. Dwyer
George J.W. Goodman
Leon J. Hendrix, Jr.
The following table summarizes the compensation earned by each individual
who served as the Chief Executive Officer and each of the four other most highly
compensated executive officers (collectively, 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
COMPEN- STOCK OPTIONS/ LTIP COMPEN-
SATION AWARD(S) SARS PAYOUTS SATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) ($) ($)(1) ($) ($)(2)
- ---------------------------------- ---- ---------- --------- ------- ---------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cyril C. Baldwin, Jr.............. 1995 118,907 120,000 -0- -0- -0- -0- 4,500
Chairman and Chief 1994 300,000 260,000 -0- -0- -0- -0- 6,750
Executive Officer(3) 1993 300,000 210,000 -0- -0- -0- -0- 10,612
James A. Mack..................... 1995 291,246 360,000 -0- -0- 80,000 -0- 6,750
President and Chief 1994 265,000 225,000 -0- -0- -0- -0- 6,750
Executive Officer(4) 1993 249,984 175,000 -0- -0- 45,000 -0- 10,612
Peter Tracey...................... 1995 202,491 265,000 -0- -0- 50,000 -0- 6,750
Executive Vice President,
Finance 1994 187,500 200,000 -0- -0- -0- -0- 6,750
Chief Financial Officer 1993 176,665 115,000 -0- -0- 25,000 -0- 8,875
Claes Glassell.................... 1995 247,875 200,000 -0- -0- 50,000 -0- -0-
Vice President(5) 1994 47,109 20,000 -0- -0- 30,000 -0- -0-
1993 -- -- -- -- -- -- --
Steven M. Klosk................... 1995 162,997 210,000 -0- -0- 50,000 -0- 6,750
Vice President, Administration 1994 152,250 140,000 -0- -0- -0- -0- 6,750
1993 142,500 85,000 -0- -0- 25,000 -0- 6,429
Peter E. Thauer................... 1995 160,625 200,000 -0- -0- 50,000 -0- 6,750
Vice President, Law and 1994 153,125 140,000 -0- -0- -0- -0- 6,750
Environment, General Counsel 1993 144,167 65,000 -0- -0- 30,000 -0- 6,488
& Secretary
</TABLE>
- ---------------
(1) Options awarded in 1995 are subject to stockholder approval of the 1996
Performance Stock Option Plan.
(2) Amounts indicated are attributable to Company contributions under the
Company's Savings Plan.
(3) Mr. Baldwin was Chief Executive Officer until his retirement on April 1,
1995.
(4) Mr. Mack was elected Chief Executive Officer effective April 1, 1995.
(5) Mr. Glassell joined the Company in October 1994.
9
<PAGE> 12
The following table sets forth stock options granted during 1995 to the
Named Executive Officers, including the potential realizable value of each grant
assuming the market value of the Company's stock appreciates from the date of
grant at annualized rates of 5% and 10% compounded annually over the full term
of the option. These assumed rates of appreciation have been mandated by the
Securities and Exchange Commission and are intended to illustrate what the
option grants might be worth if the Company's stock price increases. This
information is not based on any prediction of the Company's stock price in the
future and therefore does not necessarily reflect the value of the option at
grant. Based on the number of shares outstanding as of December 31, 1995 and the
market price of $39.875, the increase in the Company's stock price required to
obtain the indicated values would produce a corresponding aggregate gain in
shareholder value of $205,528,273. (at 5%) or $520,848,998. (at 10%).
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NAME INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ------------------------- ------------------------------------------------------------ VALUE AT ASSUMED
PERCENT OF TOTAL EXERCISE OR EXPIRATION ANNUAL RATES OF STOCK
(a) OPTIONS/SARS BASE PRICE DATE PRICE APPRECIATION
GRANTED TO ($/SH) ---------- FOR OPTION TERM
EMPLOYEES IN ----------- ---------------------
SECURITIES FISCAL YEAR(2) (e) 5%
UNDERLYING ---------------- (d) ---------
OPTIONS/SARS 10%
GRANTED (#)(1) (c) (f) ---------
-------------- (g)
(b)
<S> <C> <C> <C> <C> <C> <C>
Cyril C. Baldwin, Jr..... -0- -0- -0- -0- -0- -0-
James A. Mack............ 80,000 20% 39.875 10/26/05 2,006,174 5,084,038
Peter Tracey............. 50,000 12% 39.875 10/26/05 1,253,859 3,177,524
Claes Glassell........... 50,000 12% 39.875 10/26/05 1,253,859 3,177,624
Steven M. Klosk.......... 50,000 12% 39.875 10/26/05 1,253,859 3,177,524
Peter E. Thauer.......... 50,000 12% 39.875 10/26/05 1,253,859 3,177,524
</TABLE>
- ---------------
(1) Pursuant to the 1996 Performance Stock Option Plan and subject to its
approval by the stockholders, the Compensation Committee on October 26,
1995, granted to Mr. Mack an option to purchase 80,000 shares of Common
Stock of the Company at $39.875 per share, the share price on the date of
grant. The Committee also granted to each of Messrs. Glassell, Klosk, Thauer
and Tracey, an option to purchase 50,000 shares at the same exercise price.
Under the conditions of these grants, one-third of the option shares will
become subject to exercise if the Company's publicly traded Common Stock
price is an average of $55 or above for an average of 20 consecutive trading
days within one year following the date of stockholder approval. Similarly,
a second one-third (and the first one-third if not otherwise exercisable)
will become exercisable if the traded share price equals or exceeds an
average of $60 for 20 consecutive trading days within the second year
following stockholder approval. The final one-third (and any prior options
not otherwise exercisable) will become exercisable if the traded share price
equals or exceeds an average of $65 per share for 20 consecutive trading
days in the third year following stockholder approval. Any options not
otherwise exercisable will become exercisable regardless of traded share
price on October 26, 2004.
The options generally terminate, if not previously exercised, upon the
termination of the optionee's employment with the Corporation and its
subsidiaries. However, in the event that the optionee's employment
terminates due to death, disability, normal retirement or approved early
retirement, the optionee (or his beneficiary) will be able to exercise the
option at any time up to one year after such termination. In the event of a
change of control of the Company, the option is subject to immediate cash
out in full regardless of traded share price.
(2) Options to purchase an aggregate of 400,000 shares of Common Stock were
granted in 1995.
10
<PAGE> 13
The following table sets forth information for each Named Executive Officer
with regard to the aggregate options exercised during 1995 and the aggregate
stock options held as of December 31, 1995.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED ON VALUE AT FY-END (#) AT FY-END ($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE(2)(3) UNEXERCISABLE(2)
- -------------------------- ----------- --------- --------------------- -----------------------
<S> <C> <C> <C> <C>
Cyril C. Baldwin, Jr. .... 196,750 5,549,563 -0- -0-
-0- -0-
James A. Mack............. 25,000 781,250 90,000 Exercisable 2,570,625 Exercisable
80,000 Unexercisable 120,000 Unexercisable
Peter Tracey.............. 22,800 494,800 55,000 Exercisable 1,482,600 Exercisable
50,000 Unexercisable 75,000 Unexercisable
Claes Glassell............ -0- -0- 30,000 Exercisable 513,750 Exercisable
50,000 Unexercisable 75,000 Unexercisable
Steven M. Klosk........... -0- -0- 65,000 Exercisable 1,552,500 Exercisable
50,000 Unexercisable 75,000 Unexercisable
Peter E. Thauer........... 200 4,100 59,800 Exercisable 1,719,050 Exercisable
50,000 Unexercisable 75,000 Unexercisable
</TABLE>
- ---------------
(1) Based upon the market value of underlying securities at exercise less the
exercise price.
(2) Unexercisable options are subject to stockholder approval of the 1996
Performance Stock Option Plan.
(3) In January 1996 Mr. Mack exercised 45,000 options, Mr. Tracey exercised
20,000 options, Mr. Klosk exercised 20,000 options and Mr. Thauer exercised
30,000 options.
(4) Based upon the closing price ($41.375 per share) on December 29, 1995.
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. The Company believes that the S&P 500
Composite Index is more representative of market conditions than the Dow Jones
Industrial Average which the Company has used in recent years. Both indexes are
listed this year, and the S&P 500 Composite Index will be used in future years.
Prices are as of December 31 of the year indicated.
11
<PAGE> 14
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG CAMBREX CORPORATION, THE DOW JONES INDUSTRIAL
AVERAGE, THE S&P 500 COMPOSITE INDEX AND PEER GROUP(1)
<TABLE>
<CAPTION>
31 Dec 90 31 Dec 91 31 Dec 92 31 Dec 93 31 Dec 94 31 Dec 95
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cambrex Corp. ..... $100 $206 $406 $483 $634 $1,014
Peer Group ......... $100 $159 $191 $211 $179 $ 208
S&P 500 Composite
Index .......... $100 $130 $140 $154 $157 $ 214
Dow Jones Index .... $100 $132 $144 $158 $159 $ 213
</TABLE>
- ---------------
(1) Assumes $100 invested on December 31, 1990, 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
Retirement benefits under the Company's qualified non-contributory pension
plan (the "Qualified Plan") are based on an employee's years of service and
compensation for such years. "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
earned for a given year of service is calculated by multiplying the
participant's compensation for the year by 1% and adding to that amount 0.6% of
such compensation in excess of the participant's social security covered
compensation. Similar amounts are calculated for each year of service and are
aggregated to obtain the annual retirement benefit, subject to the limitations
imposed by the Employee Retirement Income Security Act of 1974 and related
regulations ("ERISA"). For this purpose social security covered compensation is
the 35-year average of the social security wage base for the year in which the
participant reaches age 65.
Although compensation includes the items mentioned above, the Qualified
Plan limits the maximum amount of compensation which may be taken into account
for the purposes of calculating benefits to the ERISA limit, which was $150,000
during 1995. Therefore, any compensation received by any of the Named
12
<PAGE> 15
Executive Officers which exceeds the amount will not be taken into account in
the calculation of their benefits under this Plan. A Supplemental Non-Qualified
Pension Plan, which became effective on January 1, 1994, provides benefits based
on compensation levels above the ERISA maximum compensation level.
The following table shows the estimated aggregate annual retirement
benefits payable under the Company's Qualified and Supplemental pension plans to
employees listed, assuming they retire at normal retirement age (65), with
benefits payable in the form of a life annuity and that pensionable compensation
for all years after 1995 will be the same as 1995 pensionable compensation.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
PROJECTED
1995 PENSIONABLE ANNUAL BENEFITS AT
NAME COMPENSATION ($) AGE 65 ($)
- ------------------------------------------------------------- ---------------- ------------------
<S> <C> <C>
Cyril C. Baldwin, Jr. ....................................... 360,000 88,299
James A. Mack................................................ 516,246 89,506
Peter Tracey................................................. 401,491 90,073
Steven M. Klosk.............................................. 302,997 128,715
Peter E. Thauer.............................................. 300,625 57,753
</TABLE>
DEFERRED COMPENSATION PLAN
The Company has established a non-qualified Deferred Compensation Plan for
Key Executives (the "Deferred Plan"). Under the Deferred Plan, officers and key
employees may elect to defer all or any portion of their pre-tax annual bonus
and/or annual base salary (other than the minimum required Social Security
contributions and $10,000). The deferred amount is invested in Fidelity Mutual
Funds available under the Cambrex Savings Plan, except for the Cambrex Stock
Fund. During 1995 the Board amended the Deferred Plan to permit officers and key
employees to elect to defer Company stock which would otherwise have issued upon
the exercise of Company stock options. The stock deferred will be held in a
Company Stock Account, or could be sold and the proceeds placed in another
available Fidelity Fund. Transfers into the Company Stock Account are not
permitted. The Deferred Plan is not funded by the Company, but the Company has
established a Deferred Compensation Trust Fund to protect the account balance in
the case of a change of control of the Company.
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 addition, in the event of a change of control
performance options including those granted under the 1996 Performance Stock
Option Plan and for which Stockholder approval is being sought will become
immediately exercisable regardless of publicly traded share price.
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
13
<PAGE> 16
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 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 1990 the Board of Directors authorized an agreement with Mr. Baldwin
pursuant to which he might, 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 was obligated to provide
certain financial, consulting and advisory services to the Company as determined
by the Chief Executive Officer. The contract continued for the remainder of Mr.
Baldwin's life at an annual fee of $140,000. In 1994 the Company reached
agreement with Mr. Baldwin to restate his consulting arrangement. Under the
restated arrangement, he entered into two agreements at the prior rate, the
first providing for consulting services while he is able to provide such
services and the second providing an additional retirement benefit for the
remainder of his lifetime.
Mr. Baldwin retired as Chief Executive Officer, on April 1, 1995 and as an
employee of the Company, effective April 30, 1995 and elected to begin receiving
payments under the agreement at that time. During 1995 Mr. Baldwin received
$93,333 in consulting payments.
At a meeting held on January 26, 1995, the Board of Directors authorized
similar agreements with Mr. Mack at an annual rate of $100,000.
ADOPTION AND APPROVAL OF THE 1996
PERFORMANCE STOCK OPTION PLAN
There will be presented to the stockholders at the Annual Meeting a
proposal to approve the 1996 Performance Stock Option Plan (the "1996 Plan"). A
copy of the Plan is set forth as Exhibit 1 hereto. The Plan was adopted by the
Board of Directors on October 26, 1995, and certain awards made thereunder, both
actions being subject to stockholder approval.
The 1996 Plan is intended as a means of reinforcing the commonality of
interest between the Company's stockholders and its officers, directors and key
employees, and as an aid in attracting and retaining officers, directors and key
employees 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 975,000 shares of the Company's Common Stock shall be set aside for
issuance to officers and key employees under the Plan; an additional 25,000
shares are reserved for continuation of the non-employee directors' grant
program (described below) which has enabled the Company to attract new directors
and to retain current directors with the experience and expertise necessary to
facilitate the achievement of corporate goals and objectives.
KEY EMPLOYEES' INCENTIVE PROGRAM
The Company's executive compensation policies (see Executive Compensation
above) include base salaries, as well as an annual incentive program which
provides bonus payments if certain agreed financial performance criteria and
personal goals are met or exceeded. In addition, long term compensation in the
form
14
<PAGE> 17
of stock option awards is also available. This compensation structure has been
essentially unchanged since 1990 and has fostered the Company's increasing
success during this period.
In 1989 the Company introduced a performance stock option plan (the "1989
Plan"), approved by stockholders at their 1990 Annual Meeting. Option awards
under the 1989 Plan became exercisable in one-third increments if certain
publicly traded stock price levels were achieved in certain time periods. The
first third of the options granted became exercisable when the Company's
publicly traded share price reached $14 per share for a period of 20 consecutive
days during the first year following the date options were awarded. The next
one-third became exercisable when the traded share price reached $17 per share
during the second year, and the final one-third upon achieving a traded share
price of $21. During this period, 1990 to 1992, the Company's market
capitalization increased from $21,500,000 to more than $109,000,000.
The Board recommended and the stockholders approved a second incentive
stock option plan (the "1993 Plan") at a time when the Company's Common Stock
was trading at approximately $19 per share. Like the 1989 Plan, the 1993 Plan
provided that options would vest and become exercisable in one-third increments
upon the traded share price reaching certain levels for certain periods of time.
The first one-third of the options granted became exercisable when the Company's
traded share price reached an average of $30 per share for 20 consecutive days
during the year following the first date of grant; a second one-third when the
price reached $35 per share during the second year; and the final one-third
became exercisable when a $40 share price was reached. During this period, 1993
to 1995, the Company's market capitalization increased from $102,700,000 to more
than $296,000,000.
The 1996 Plan being presented for shareholder approval authorizes the
Compensation Committee to grant stock option awards in its discretion to key
employees (including officers and employee directors) of the Company, and to
determine the exercise price (which may not be less than the fair market value
of the shares on the date the options are granted). Options granted to officers
and key employees under the 1996 Plan shall vest and become exercisable nine
years after the date of grant, subject to acceleration if the publicly traded
price of the Company's Common Stock equals or exceeds levels determined by the
Committee within certain time periods.
In the grant of options in October 1995, the Committee continued the
guidelines concerning acceleration which had been previously established under
the 1989 and 1993 Plans. All awards to officers and other key employees will
become exercisable in one-third increments dependent on the increase in the
Company's traded share price. The first one-third of any grant will accelerate
and become exercisable if the traded share price increases by 30% above the
grant price within one year following the date of shareholder approval of the
1996 Plan. The second one-third (and any of the first one-third not otherwise
exercisable) of the award will accelerate and become exercisable if the traded
share price increases to a level of 50% over the grant price in the second year,
and the final one-third (and any options not otherwise exercisable) will become
exercisable if the traded price increases to a level of 60% over the grant price
in the third year. In granting future awards the Committee may adjust these
guidelines up or down as it deems appropriate after considering the Company's
current performance and the expected changes in the Company's business
environment. The options may be either Incentive Stock Options or Non-Qualified
Stock Options as determined by the Committee, and no employee may be awarded
options in any twelve month period to purchase more than 100,000 shares of
Common Stock.
Pursuant to the 1996 Plan and subject to its approval by the stockholders,
the Compensation Committee on October 26, 1995, granted to Mr. Mack a ten year
option expiring on October 26, 2005, to purchase 80,000 shares of Common Stock
of the Company at $39.875 per share, the share price on the date of grant. Under
the conditions of the grant, the option would vest and become exercisable in
nine years, or on October 26, 2004.
The option provides for acceleration and earlier exercisability if the
price of the Company's Common Stock reaches certain levels for at least 20 days
within specified time periods. One-third of the option shares would become
subject to exercise if the Company's publicly traded Common Stock price reached
an average of $55 or above for 20 consecutive trading days within one year
following the date of stockholder approval. Similarly, a second one-third (and
the first one-third if not otherwise exercisable) would become exercisable if
the traded share price equaled or exceeded an average of $60 for 20 consecutive
trading days within the second
15
<PAGE> 18
year, and the final one-third (and any prior options not otherwise exercisable)
would become exercisable if the traded share price equaled or exceeded an
average of $65 per share for 20 consecutive trading days in the third year.
The Board also granted to each of Messrs. Glassell, Klosk, Thauer and
Tracey, an option to purchase 50,000 shares under the same terms and conditions
set forth for Mr. Mack, and granted to each of Messrs. Parlman, Smith and Van
Hulle an option to purchase up to 20,000 shares under the same terms and
conditions. On December 19, 1995, the Board granted to Mr. Guccione an option
expiring October 26, 2005, to purchase 25,000 shares of Common Stock of the
Company under the same terms and conditions at an exercise price of $37.125, the
price on the date of grant. All such grants were made subject to their approval
by stockholders.
The following table sets forth information regarding the options granted in
1995 under the Key Employee's Incentive Program of the 1996 Plan, subject to
stockholder approval. Neither the number of individuals who will be selected to
receive awards nor the size of the awards that will be approved by the
Compensation Committee can be determined at this time. There are currently 27
officers and key employees (including the Named Executive Officers) eligible to
participate in the 1996 Plan. The number of eligible participants may vary in
the future.
<TABLE>
<CAPTION>
REQUIRED MARKET EXERCISABILITY
PRICE (FOR 20 DAYS (CUMULATIVE
COMMENCING NUMBER
OPTIONEE PERIOD DURING PERIOD) OF SHARES)
- ---------------------------- ------------------------------------------- ------------------ -----------
<S> <C> <C> <C>
James A. Mack............... Within one year of stockholder approval $55 26,666
Within two years of stockholder approval $60 26,667
Within three years of stockholder approval $65 26,667
Claes Glassell.............. Within one year of stockholder approval $55 16,666
Within two years of stockholder approval $60 16,667
Within three years of stockholder approval $65 16,667
Peter Tracey................ Within one year of stockholder approval $55 16,666
Within two years of stockholder approval $60 16,667
Within three years of stockholder approval $65 16,667
Steven M. Klosk............. Within one year of stockholder approval $55 16,666
Within two years of stockholder approval $60 16,667
Within three years of stockholder approval $65 16,667
Peter E. Thauer............. Within one year of stockholder approval $55 16,666
Within two years of stockholder approval $60 16,667
Within three years of stockholder approval $65 16,667
All Executive Officers as a
Group (27 Persons)........ Within one year of stockholder approval $55 121,666
Within two years of stockholder approval $60 121,667
Within three years of stockholder approval $65 121,667
All Current Directors who
are not Executive Officers
as a Group................ NA -0- -0-
Non-Executive Officer
Employees as a Group...... NA -0- -0-
</TABLE>
NON-EMPLOYEE DIRECTORS' PROGRAM
The Board, at its October 28, 1993 meeting, adopted an option grant program
for non-employee directors. Under the program, which was approved by
shareholders at the 1994 Annual Meeting of Shareholders as part of the 1994
Stock Option Plan, each non-employee director will receive a grant of options to
purchase 500 shares of Common Stock at the first meeting of the Board of
Directors following each of the Company's Annual Shareholder's meetings. Each
such option will have an exercise price equal to the closing price of the
Company's Common Stock on the date of grant. Options granted to non-employee
directors shall be non-qualified options with a ten year term. Each option will
become exercisable six months after the date of grant. Options awarded under the
program shall not be subject to the performance criteria described above. The
16
<PAGE> 19
Board of Directors has determined that it is in the interest of the Company and
its stockholders to continue the director's program, and has determined that
25,000 shares of the Company's Common Stock shall be set aside for issuance
under the Program.
The number of shares of Common Stock subject to stock options expected to
be awarded in 1996 in respect of all current non-employee directors as a group
is 4,500. There are currently nine non-employee directors. The number of
non-employee directors who will participate in the Non-Employee Directors'
Program in the future will vary from year to year. Employees of the Company or a
subsidiary, whether or not directors, are not eligible to receive grants under
the Non-Employee Directors' Program of the 1996 Plan.
GENERAL PROVISIONS
Subject to limitations which may be imposed by the Committee at the time of
grant, including the vesting provisions set forth above in the Key Employees'
Incentive Program, 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 1996
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 1996 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 1996
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 1996 Plan, except as referred to above, (iii) extend the
termination date of the 1996 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 1996 Plan will
terminate on October 26, 2005, unless sooner terminated by the Board of
Directors.
In the event an optionee's employment with the Company or a subsidiary
terminates due to retirement, the optionee or his representative will generally
have three months after the termination within which to exercise an Incentive
Stock Option and twelve months to exercise a Non-Qualified Stock 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, the 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. Any options (or
portions thereof) which are not exercisable at the time the optionee's
employment terminates will be canceled as of such date. 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.
In the event a non-employee director ceases to serve as a director of the
Company due to death, disability or retirement, any option held by such director
will remain exercisable, to the extent exercisable at the date of termination,
for a period of one year after termination or the remainder of the option term,
if shorter. Any options which are not exercisable as of the date the director
terminates service will be canceled as of such date. In the event a non-employee
director ceases to serve as a director of the Company for any other reason, all
options held by such director will terminate as of the date of termination.
FEDERAL INCOME TAX CONSEQUENCES
Upon exercise of non-qualified options granted under the 1996 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
17
<PAGE> 20
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 1996
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). The Company's Common Stock traded at a level
of $46.25 per share at the date of this Proxy Statement.
Approval of the adoption of the 1996 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 Stockholders. 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.
APPOINTMENT OF AUDITORS
The Board of Directors, in accordance with the recommendation of the Audit
Committee, has selected Coopers & Lybrand, L.L.P. to be the Company's
independent accountants for 1996, subject to the approval of the stockholders.
Coopers & Lybrand, L.L.P. was engaged on March 19, 1992. A representative
of Coopers & Lybrand, L.L.P. 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 1997 Annual Meeting
must be received by the Company not later than November 22, 1996, in order to be
included in the Company's Proxy Statement for the 1997 Annual Meeting. In
addition, the Company's by-laws provide that any stockholder wishing to present
a nomination for the office of director before a stockholder meeting for a vote
must give the Company at least 90 days advance notice, any stockholder wishing
to bring a proposal or other business before a stockholder 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 stockholder 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 22, 1996
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 1995. REQUESTS SHOULD BE DIRECTED TO MR. PETER TRACEY, EXECUTIVE
VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER, 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.
18
<PAGE> 21
EXHIBIT 1
CAMBREX CORPORATION
1996 PERFORMANCE 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 directors and 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, officers and other key employees, and as an 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) "Change in Control" shall mean the occurrence of any of the
following events:
(i) the acquisition (other than from the Corporation) by any
person, entity or "group" (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act") but
excluding for this purpose the Corporation or its subsidiaries or any
employee benefit plan of the Corporation or its subsidiaries which
acquires beneficial ownership of voting securities of the Corporation)
of "beneficial ownership" (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of twenty percent (20%) or more of either the
then outstanding shares of Stock or the combined voting power of the
Corporation's then outstanding voting securities entitled to vote
generally in the election of directors; or
(ii) individuals who, as of the date hereof, constitute the Board
of Directors of the Corporation (the "Board" and as of the date hereof
the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided that any person becoming a member of the
Board subsequent to the date hereof whose election or nomination for
election by the Corporation's stockholders (other than an election or
nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Corporation, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be, for purposes of this Agreement,
considered a member of the Incumbent Board; or
(iii) approval by the stockholders of the Corporation of either a
reorganization, or merger, or consolidation, with respect to which
persons who were the stockholders of the Corporation immediately prior
to such reorganization, merger or consolidation do not, immediately
thereafter, own more than fifty percent (50%) of the combined voting
power entitled to vote generally in the
19
<PAGE> 22
election of directors of the reorganized, merged or consolidated
entity's then outstanding voting securities, or a liquidation or
dissolution of the Corporation, or the sale of all or substantially all
of the assets of the Corporation; or
(iv) any other event or series of events which is determined by a
majority of the Incumbent Board to constitute a Change of Control for
the purposes of the Plan.
(f) "Change in Control Price" shall mean the highest price per share
paid or offered in any bona fide transaction related to a Change in
Control, as determined by the Committee, except that, in the case of
Incentive Stock Options, such price shall be the Fair Market Value on the
date on which the cash out described in Paragraph 10(a) occurs.
(g) "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.
(h) "Committee" shall mean the 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 Exchange Act.
(i) "Common Stock" shall mean the Class A Common Stock of the
Corporation having a par value of $0.10 per share.
(j) "Corporation" shall mean Cambrex Corporation, a Delaware
corporation.
(k) "Employee" shall mean any person who is employed on a full time
basis by the Corporation or any Subsidiary corporation of the Corporation,
including a person who is also a member of the Board, and who is
compensated, at least in part, on a regular salary basis.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "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.
(n) "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.
(o) "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.
(p) "Non-Employee Director" shall mean a member of the Board who is
not an employee of the Corporation or any Subsidiary.
(q) "Participant" shall mean a Non-Employee Director or Employee who
is granted an Award under the Plan.
(r) "Plan" shall mean the Cambrex Corporation 1996 Performance Stock
Option Plan as set forth herein and as amended from time to time.
(s) "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.
20
<PAGE> 23
(t) "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, 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.
(c) Notwithstanding the foregoing, the Plan shall be administered such
that any Non-Employee Director participating in the Plan shall continue to
be deemed to be a "disinterested person" under Rule 16b-3 of the Exchange
Act, as such Rule is in effect on the effective date of the Plan and as it
may be subsequently amended, for purposes of such Director's ability to
serve on any committee charged with administering any of the Corporation's
stock based plans for executive officers intended to qualify for exemptive
relief available under Rule 16b-3.
4. COMMON STOCK LIMITS
The total number of shares of Common Stock which may be issued on exercise
of Stock Options shall not exceed 1,000,000 shares, subject to adjustment in
accordance with Paragraph 9 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 Non-Employee
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).
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: Except as provided in Paragraph 6(f) below, 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: Subject to the provisions of Paragraph 10
below, the Committee shall establish installment exercise terms in Awards
to Employees based on the Company's publicly traded share price, and may
establish installment exercise terms based on the passage of time or
otherwise, such that the Option becomes fully exercisable in a series of
cumulating portions. The Committee may also
21
<PAGE> 24
establish other conditions of exercise as it shall determine and may
accelerate the exercisability of any Option granted to an Employee under
the Plan.
(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) through the delivery of
shares of Common Stock which have been held by a Participant for at least
six months with a value equal to the Option Price, provided that the use by
an Employee (but not a Non-Employee Director) of previously acquired shares
shall be subject to the approval of the Committee, 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 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) 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) On the date of the first meeting of the Board 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 Non-qualified
Options to purchase 500 shares of Common Stock;
(ii) All options granted to Non-Employee Directors pursuant to
paragraph (i) shall have an exercise price equal to the fair market
value of the Common Stock on the date of grant, a term of ten years, and
shall become exercisable, subject to the provisions of the Plan, six
months after the grant date; and
(iii) Non-Employee Directors shall not be eligible for any grants
under the Plan other than those provided for in paragraph (i) above.
(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 (other than a Non-Employee Director)
shall cease to be employed by the Corporation or any Subsidiary while he is
holding one or more Options, each outstanding Option, or
22
<PAGE> 25
any portion thereof, which is exercisable on the date of such termination
shall expire at the earlier of the expiration of its term or the following:
(i) 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; or
(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 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.
Unless otherwise determined by the Committee, any portion of an Option held
by a Participant (other than a Non-Employee Director) that is not exercisable on
the date such Participant's employment terminates shall expire as of such
termination date.
8. TERMINATION OF SERVICE AS DIRECTOR
(a) In the event a Director shall cease to serve as a Director of the
Corporation while he or she is holding one or more Options, each
outstanding Option which is exercisable as of the date of such termination
shall expire at the earlier of the expiration of its term or the following:
(i) one year after termination of service due to retirement under a
mandatory retirement policy of the Board as may be in effect on the date
of such termination of service;
(ii) one year after termination of service due to disability within
the meaning of Section 22(e)(3) of the Code;
(iii) one year after termination of service due to the Director's
death; or
(iv) coincident with the date service terminates for any other
reason.
(b) Any Options which have not become exercisable as of the date a
Director ceases to serve as a Director of the Corporation shall terminate
as of such date.
9. ADJUSTMENTS
In the event that a stock dividend, stock split or other subdivision,
recapitalization, reorganization, merger, consolidation or change in the shares
of Common Stock, extraordinary cash dividend, spin-off or other similar event
affects the Common Stock, then if the Committee shall determine in its sole
discretion that such change equitably requires an adjustment in the number or
kind of shares which may be awarded under the Plan or in the number or kind of
shares covered by any outstanding Options, and/or in such Option's Exercise
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.
23
<PAGE> 26
10. CHANGE IN CONTROL
(a) Accelerated Vesting and Payment. Subject to the provisions of
Paragraph 10(b) below, in the event of a Change in Control, each Option
(including an Option held by a Non-Employee Director) whether or not
currently exercisable shall promptly be canceled in exchange for a payment
in cash of an amount equal to the excess of the Change of Control Price
over the Exercise Price for such Option.
(b) Alternative Awards. Notwithstanding Paragraph 10(a), no
cancellation and cash settlement shall occur with respect to any Award or
class of Awards if the Committee reasonably determines in good faith prior
to the occurrence of a Change of Control that such Award or class of Awards
shall be honored or assumed, or new rights substituted therefor (such
honored, assumed or substituted award hereinafter called an "Alternative
Award") by a Participant's employer (or the parent or a subsidiary of such
employer) immediately following the Change of Control, provided that any
such Alternative Award must:
(i) be based on stock which is traded on an established securities
market, or which will be so traded within 60 days following the Change
of Control;
(ii) provide such Participant (or each Participant in a class of
Participants) with rights and entitlements substantially equivalent to
or better than the rights and entitlements applicable under such Award;
(iii) have substantially equivalent economic value to such Award
(determined by the Committee as constituted immediately prior to the
Change in Control, in its sole discretion, promptly after a Change in
Control); and
(iv) have terms and conditions which provide that following a
Change of Control, any conditions on a Participant's rights under, or
any restrictions or conditions on transfer or exercisability applicable
to each such Award, shall be waived or lapse as the case may be.
11. 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 9 under the Plan;
(iii) decrease the minimum Exercise Price per share;
(iv) extend the period for granting Stock Options.
(b) No amendment may be made to Paragraph 6(f) or any other provision
of the Plan relating to Options granted to or held by Non-Employee
Directors within six months of the last date on which any such provision
was amended.
(c) 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.
(d) 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.
24
<PAGE> 27
12. 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.
13. 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.
14. 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 Non-Employee
Director nor shall it impose any obligation on the part of any Non-Employee
Director to remain as a director of the Company, provided that each
Non-Employee 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
stockholders 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.
(f) Withholding Taxes: 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 pursuant to such rules as the Committee shall
establish. 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.
25
<PAGE> 28
(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 foreign, 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.
15. STOCKHOLDER APPROVAL AND EFFECTIVE DATES
This Plan shall become operative and in effect on such date as it shall be
approved 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.
26
<PAGE> 29
CAMBREX CORPORATION
SOLICITED BY BOARD OF DIRECTORS FOR 1996 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 the power of substitution and resubstitution, 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 1996 Annual Meeting of
Stockholders of the Company to be on April 25, 1996 at 4:00 p.m. at the offices
of Schroder Wertheim & Co. Inc., 4th Floor Auditorium, Equitable Center, 787
Seventh Avenue, New York, N.Y. and any adjournment thereof. Without otherwise
limiting the general authorization hereby given, said attorneys 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 22, 1996.
THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE 3 NOMINEES FOR DIRECTOR
LISTED IN THE PROXY STATEMENT ACCOMPANYING THE NOTICE OF SAID MEETING (PROPOSAL
NO. 1), "FOR" APPROVAL OF THE 1996 PERFORMANCE STOCK OPTION PLAN (PROPOSAL NO.
2), AND "FOR" APPROVAL OF THE SELECTION OF ACCOUNTANTS (PROPOSAL NO. 3)
UNLESS OTHERWISE MARKED.
PLEASE COMPLETE AND SIGN PROXY ON REVERSE SIDE AND RETURN IN ENCLOSED ENVELOPE.
-----------
SEE REVERSE
SIDE
-----------
- ------------------------------------------------------------------------------
/X/ PLEAE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHOLD
1. ELECTION NOMINEES: Francis X. Dwyer,
OF DIRECTORS / / / / James A. Mack and
Dean P. Phypers
For except vote withheld from the following nominee(s):
- ---------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of the 1996 Performance Stock / / / / / /
Option Plan and awards thereunder
3. Approval of the appointment of Coopers & / / / / / /
Lybrand, as independent public
accountants for 1996.
PLEASE SIGN AND DATE BELOW AND RETURN IN THE ENCLOSED POSTAGE PAID ENVELOPE.
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.
