<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>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
Cambrex Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(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:
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<PAGE> 2
LOGO
CAMBREX CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 23, 1998
Notice Is Hereby Given that the 1998 Annual Meeting of Stockholders of
Cambrex Corporation (the "Company") will be held at the Sheraton Meadowlands
Hotel, East Rutherford, New Jersey on April 23, 1998, at 1:00 P.M., for the
following purposes:
1. to elect three (3) directors in Class II to hold office until the 2001 Annual
Meeting of Stockholders and until their successors shall be elected and
qualified; and
2. to consider and act upon the authorization of an additional 60,000,000 shares
of common stock of the Corporation, par value ($.10) per share; and
3. to consider and act upon the approval of the 1998 Performance Stock Option
Plan; and
4. to consider and act upon the approval of the appointment of Coopers &
Lybrand, L.L.P. as independent accountants for 1998; and
5. to transact such other business as may properly come before the meeting or
any adjournment thereof.
Only stockholders of record of Common Stock of the Company at the close of
business on March 16, 1998, 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 19, 1998
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
------------------------
1997 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 1998 Annual Meeting of Stockholders to be held on April 23, 1998, 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 19, 1998.
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 $X,XXX
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 authorization of an additional
60,000,000 shares of Common Stock of the Corporation, par value $.10 per share,
and in favor of the approval of the 1998 Performance Stock Option Plan, 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 16, 1998, will be entitled to vote at
the meeting. On such record date there were outstanding and entitled to vote
X,XXX,XXX shares of Common Stock and each such share is entitled to one vote.
2
<PAGE> 4
PRINCIPAL STOCKHOLDERS
The following sets forth information with respect to the only persons of
which the Company is aware as of February 16, 1998, 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>
The Capital Group Companies, Inc...... 1,230,000(3) 10.3%
Capital Research and Management
Company
SMALLCAP World Fund, Inc.
333 South Hope Street
Los Angeles, CA 90071
FMR Corp.............................. (4) %
82 Devonshire Street
Boston, Massachusetts 02109-3614
Ira Sochet............................ 736,470 6.17%
Hopetown
Abaco, Bahamas
Cyril C. Baldwin, Jr.................. 674,237(5) 6.0%
39 Locust Avenue
New Canaan, Connecticut 06840
The Prudential Insurance Company of
America............................... 608,700(6) 5.11%
751 Broad Street
Newark, New Jersey 07102-3777
(7) %
</TABLE>
- ---------------
(1) Unless otherwise indicated (a) share ownership is based upon information
furnished as of February 16, 1998, 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) 11,929,388 shares of Common Stock issued and
outstanding (excluding treasury shares) on February 16, 1998, and (ii)
11,961 shares still to be issued in connection with the 1993 conversion of
the Company's 9% Convertible Subordinated Notes.
(3) In a Schedule 13G under the Securities Exchange Act of 1934 dated February
10, 1998 and filed by The Capital Group Companies, Inc. ("Capital"), Capital
reported that it has sole dispositive power over 1,230,000 shares. Included
in the 1,230,000 shares reported is an aggregate amount of 700,000 shares
beneficially owned by SMALLCAP World Fund, Inc., a wholly-owned subsidiary
of Capital. The shares reported on Capital's Schedule 13G are reported
beneficially owned by SMALLCAP World Fund, Inc. and beneficial ownership is
disclaimed pursuant to Rule 13d-4 by Capital and the following direct or
indirect subsidiary, Capital Research and Management Company.
(4) 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).
3
<PAGE> 5
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.
(5) Includes 112,500 shares held by a family member as to which Mr. Baldwin
disclaims beneficial ownership.
(6) In a Schedule 13G under the Securities Exchange Act of 1934 dated February
10, 1998, and filed by The Prudential Insurance Company of America
("Prudential"), Prudential reported that it has the sole voting power and
sole dispositive power over 354,200 shares and shares voting power and
dispositive power over 254,500 shares.
(7)
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 16, 1998, 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
BENEFICIAL OWNERS OWNED (1) OF CLASS (2)
- ------------------------------------------ ----------- --------------------
<S> <C> <C>
Cyril C. Baldwin, Jr...................... 675,737(3) 5.66%
Rosina B. Dixon, M.D...................... 5,750(4) *
Francis X. Dwyer.......................... 6,444(5) *
George J.W. Goodman....................... 8,808(6) *
Kathryn Rudie Harrigan.................... 5,757(4) *
Leon J. Hendrix, Jr....................... 5,694(7) *
Ilan Kaufthal............................. 11,769(5) *
Robert LeBuhn............................. 13,936(8) *
James A. Mack............................. 320,968(9) 2.69%
Dean P. Phypers........................... 15,737(10) *
Peter Tracey.............................. 175,731(11) 1.47%
Claes Glassell............................ 102,539(12) *
Steven M. Klosk........................... 140,025(13) 1.17%
Peter E. Thauer........................... 166,936(14) 1.40%
All Directors and Executive Officers
as a group (27 Persons)................. 1,754,200(15) 14.7%
</TABLE>
- ---------------
* Beneficial Ownership is less than 1% of the Common Stock outstanding
(1) Except as otherwise noted, reported share ownership is as of February 16,
1998. 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) 11,929,388 shares of Common Stock issued and
outstanding (excluding treasury shares) on February 16, 1998, (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 16, 1998,
and (iii) 11,961 shares still to be issued in connection with the 1993
conversion of the Company's 9% Convertible Subordinated Notes.
(3) The number of shares reported includes 1,500 share issuable upon exercise of
options granted under the Company's 1996 Stock Option Plan and 112,500
shares held by a family member for which beneficial ownership of such shares
is disclaimed.
4
<PAGE> 6
(4) The number of shares reported includes 2,250 shares issuable upon exercise
of options granted under the Company's 1994 and 1996 Stock Option Plans.
(5) The number of shares reported includes 3,750 shares issuable upon exercise
of options granted under the Company's 1994 and 1996 Stock Option Plans.
(6) The number of shares reported includes 3,750 shares issuable upon exercise
of options granted under the Company's 1994 and 1996 Stock Option Plans and
2,250 share equivalents held at February 16, 1998 in the Company's
Directors' Deferred Compensation Plan.
(7) The number of shares reported includes 2,250 shares issuable upon exercise
of options granted under the Company's 1994 and 1996 Stock Option Plans and
1,944 share equivalents held at February 16, 1998 in the Company's
Directors' Deferred Compensation Plan.
(8) The number of shares reported includes 3,750 shares issuable upon exercise
of options granted under the Company's 1994 and 1996 Stock Option Plans,
1,500 shares held by a family member for which beneficial ownership of such
shares id disclaimed, and 2,038 share equivalents held at February 16, 1998
in the Company's Directors' Deferred Compensation Plan.
(9) The number of shares reported includes 187,500 shares issuable upon
exercise of options granted under the Company's Stock Option Plans, 18,634
shares held at December 31, 1997, in the Company's Savings Plan, and 45,126
share equivalents held at February 16, 1998 in the Company's Deferred
Compensation Plan. 1,808 shares held by several family members are not
included and beneficial ownership of such shares is disclaimed.
(10) The number of shares reported includes 3,750 shares issuable upon exercise
of options granted under the Company's 1994 and 1996 Stock Option Plans and
2,237 share equivalents held at February 16, 1998 in the Company's
Directors' Deferred Compensation Plan.
(11) The number of shares reported includes 112,500 shares issuable upon
exercise of options granted under the Company's Stock Option Plans, 5,923
shares held at December 31, 1997, in the Company's Savings Plan, and 37,108
share equivalents held at February 16, 1998 in the Company's Deferred
Compensation Plan.
(12) The number of shares reported includes 102,000 shares issuable upon
exercise of options granted under the Company's Stock Option Plans and 539
shares held at December 31, 1997, in the Company's Savings Plan.
(13) The number of shares reported includes 112,500 shares issuable upon
exercise of options granted under the Company's Stock Option Plans and
3,984 shares held at December 31, 1997, in the Company's Savings Plan, and
23,541 share equivalents held at February 16, 1998 in the Company's
Deferred Compensation Plan.
(14) The number of shares reported includes 112,500 shares issuable upon
exercise of options granted under the Company's Stock Option Plans, 1,536
shares held at December 31, 1997, in the Company's Savings Plan, and 38,700
share equivalents held at February 16, 1998 in the Company's Deferred
Compensation Plan.
(15) The number of shares reported includes 988,200 shares issuable upon
exercise of options that are currently exercisable or will become
exercisable within 60 days and 38,384 shares held at December 31, 1997, 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 1997 the
Board held eight meetings.
The Board has established four standing committees, the Audit Committee,
the Compensation Committee, the Environmental Committee and the Governance
Committee.
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<PAGE> 7
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 1997.
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 six meetings in 1997.
The Environmental Committee, comprised of eight non-employee directors,
oversees the Company's environmental affairs. The Environmental Committee held
five meetings during 1997.
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 1999 Annual Meeting
should be sent to the Corporate Secretary of the Company not later than January
23, 1999, and should include a statement of the nominee's qualifications. The
Governance Committee held two meetings in 1997.
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 1997 the Company paid each non-employee director of the Company an
annual fee of $16,000, as well as $1,000 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 $1,500
for each Committee meeting attended. The Chairman of the Environmental Committee
received $1,500 for each Environmental Committee meeting attended, but the
remaining Committee members did not receive fees for meeting attendance. In 1995
the Board 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.
In 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 1995 the Board of Directors adopted the 1996 Performance Stock
Option Plan (the "1996 Plan") which was approved by stockholders at the 1996
Annual Meeting of Stockholders. Pursuant to the terms of the Non-Employee
Director Program of the 1996 Plan, each new, non-employee director shall be
awarded an option to purchase 750 shares of the Company's Common Stock upon
election as a director. The 1996 Plan further provides that each non-employee
director will receive a grant of options to purchase 750 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 April 1997 the Board of
Directors granted options to purchase 750 shares of Common Stock under the 1996
Plan to Cyril C. Baldwin, Jr., Rosina B. Dixon, Leon J. Hendrix, Jr., Francis X.
Dwyer, George J.W. Goodman, Kathryn Rudie Harrigan, Ilan Kaufthal, Robert LeBuhn
and Dean P. Phypers.
6
<PAGE> 8
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes. The
term of office of the directors in Class II expires at this Annual Meeting with
the terms of office of the directors in Class III and Class I ending at
successive Annual Meetings. At this Annual Meeting three directors in Class II
will be elected to hold office until the 2001 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 2001 ANNUAL MEETING (CLASS II)
Rosina B. Dixon, M.D. (age 55). 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.
Leon J. Hendrix, Jr. (age 56). 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., Remington Arms Co. and Riverwood International, Inc.
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 50). 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 & 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.,
Russ Berrie & Co. and ASI Solutions, Inc.
DIRECTORS SERVING UNTIL 1999 ANNUAL MEETING (CLASS III)
James A. Mack (age 60). Director, President, Chief Executive Officer 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.
7
<PAGE> 9
Dean P. Phypers (age 69). 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 2000 ANNUAL MEETING (CLASS I)
Cyril C. Baldwin, Jr. (age 70). Director and President (until early 1990)
since the Company commenced business in 1981 and Chief Executive Officer since
1984 until his retirement in April, 1995. Chairman of the Board since his
election in 1991. Director of Church & Dwight Co., Inc. and Congoleum
Corporation and a member of NewsBank's Advisory Board.
George J. W. Goodman (age 67). 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, New
England Life and member of the Advisory Council of the Princeton University
Center for International Studies.
Kathryn Rudie Harrigan (age 46). 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 Schuller Corporation and Technical Chemicals
and Products.
Robert LeBuhn (age 65). 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 US Air Group,
Inc., Acceptance Insurance Companies, Inc., New Jersey Steel Corporation and
Enzon Corp.
During 1997, 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 & Co. Incorporated who
provide the Company from time to time with investment advisory services. In 1997
the Company paid Schroder a fee of $1,000,000 in connection with advisory
services related to the Company's acquisition of BioWhittaker, Inc.
Mr. Dwyer, who is retiring as at this Annual Meeting, has been, since 1991,
Advisory Chairman and a director of International Dioxide, Inc., a chemical
manufacturer. In 1997 the Company purchased the Sulfidal(R) business from
International Dioxide for $300,000 and the payment of minimum royalties of
$15,000 in each of the next five years.
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 compensa-
8
<PAGE> 10
tion 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.
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. In January 1998 the Committee amended the Company's executive
compensation award program to include individual measurements against agreed
annual operating goals and longer-term strategic growth objectives. Under this
program two-thirds of the award will be based on annual goals and paid in cash,
while the remaining one-third will be based on longer-term growth objectives and
be awarded in the form of Company stock having a three-year holding period.
Long-term compensation for executives also includes 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.
In 1996 the stockholders approved the 1996 Performance Stock Option Plan
(the "1996 Plan") and certain awards thereunder. The 1996 Plan provided that
one-third of the approved grants to executives, as later adjusted for the
three-for-two stock split in July, 1996, will become subject to exercise if the
Company's publicly traded common stock price equals or exceeds an average of
$36.75 or above for twenty consecutive trading days prior to October 26, 1997.
Similarly, a second one-third, and any of the first one-third of the approved
grant awards not otherwise exercisable, will become exercisable if the traded
share price equals or exceeds an average of $40 per share for 20 consecutive
trading days prior to October 26, 1998. The final one-third of the option
awards, and any option awards not otherwise exercisable, will become exercisable
if the traded share price equals or exceeds an average price of $43.375 per
share for 20 consecutive trading days prior to October 26, 1999. All options
became exercisable as the Company's publicly traded share price exceeded an
average of $43.375 per share for 20 consecutive trading days in 1997.
9
<PAGE> 11
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Mack, the Company's Chief Executive Officer received $340,000 in annual
compensation in 1997. Mr. Mack's compensation was determined based upon the same
factors used in setting other executive compensation.
Mr. Mack received an incentive compensation award of $350,000 for fiscal
1997. This award reflects Mr. Mack's success in the pursuit of strategic
acquisitions and the substantial improvement in financial performance achieved
by the Company. Net income in 1997 was $17,776,000 and includes a charge against
the fourth quarter income of $14,000,000 for the value of in-process research
and development at the time of the acquisition of BioWhittaker, Inc. which was
completed on October 3, 1997. The net income (excluding the $14,000,000 R & D
charge) of $31,776,000 in 1997 increased from $28,225,000 in 1996 and total
shareholder return increased by more than 40%. The total market value of the
Company's shares increased by nearly $158,000,000 in 1997. Mr. Mack's annual
compensation was directly related to the improvement in both earnings and
stockholder value in 1997 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 1998 services in excess of one
million dollars. Thus, the Compensation Committee has recommended no adjustment
with respect to 1998 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, the 1994 Stock Option Plan and the 1996 Performance 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 1998
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.
10
<PAGE> 12
The following table summarizes the compensation earned by 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
-------------------------------- UNDER-
OTHER RESTRICTED LYING PAYOUTS-
ANNUAL STOCK OPTIONS LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) /SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#) ($) ($)(3)
------------------------------ ---- ------- ------- ------------ ---------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James A. Mack................. 1997 340,000 350,000 - 0 - - 0 - - 0 - - 0 - 7,200(3)
President and 1996 315,000 500,000 - 0 - - 0 - - 0 - - 0 - 6,750(3)
Chief Executive 1995 291,246 360,000 - 0 - - 0 - 120,000 - 0 - 6,750(3)
Officer(2)
Claes Glassell................ 1997 262,790 225,000 - 0 - - 0 - - 0 - - 0 - 7,200(3)
Vice President(5) 1996 257,790 300,000 31,144 - 0 - - 0 - - 0 - - 0 - (3)
1995 247,875 200,000 - 0 - - 0 - 75,000 - 0 - - 0 - (3)
Peter Tracey.................. 1997 242,000 240,000 - 0 - - 0 - - 0 - - 0 - 7,200(3)
Executive Vice 1996 223,667 350,000 - 0 - - 0 - - 0 - - 0 - 6,750(3)
President, 1995 202,491 265,000 - 0 - - 0 - 75,000 - 0 - 6,750(3)
Corporate Development
Steven M. Klosk............... 1997 206,250 225,000 - 0 - - 0 - - 0 - - 0 - 7,200(3)
Executive Vice 1996 181,250 300,000 - 0 - - 0 - - 0 - - 0 - 6,750(3)
President, 1995 162,997 210,000 - 0 - - 0 - 75,000 - 0 - 6,750(3)
Administration
Peter E. Thauer............... 1997 177,167 200,000 - 0 - - 0 - - 0 - - 0 - 7,200(3)
Vice President, 1996 168,333 300,000 - 0 - - 0 - - 0 - - 0 - 6,750(3)
Law and 1995 160,625 200,000 - 0 - - 0 - 75,000 - 0 - 6,750(3)
Environment,
General Counsel &
Secretary
</TABLE>
- ---------------
(1) The rules require disclosure only when the aggregate value of these items
exceeds the lesser of $50,000 or 10% of salary and bonus.
(2) Mr. Mack was elected Chief Executive Officer effective April 1, 1995.
(3) Amounts indicated are attributable to Company contributions under the
Company's Savings Plan.
No stock options were awarded during 1997 to the Named Executive Officers.
11
<PAGE> 13
The following table sets forth information for each Named Executive Officer
with regard to the aggregate options exercised during 1997 and the aggregate
stock options held as of December 31, 1997.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
SHARES OPTIONS/SARS AT THE-MONEY OPTIONS/SARS AT
ACQUIRED ON VALUE FY-END (#) FY-END ($)
NAME EXERCISE (#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE(2) EXERCISABLE/UNEXERCISABLE
------------------------- ------------ --------------- ---------------------------- -------------------------
<S> <C> <C> <C> <C>
James A. Mack............ - 0 - - 0 - 187,500 - Exercisable 4,535,625 - Exercisable
- 0 - Unexercisable - 0 - Unexercisable
Peter Tracey............. 15,000 556,875 112,500 - Exercisable 2,681,250 - Exercisable
- 0 - Unexercisable - 0 - Unexercisable
Claes Glassell........... - 0 - - 0 - 102,000 - Exercisable 2,259,750 - Exercisable
- 0 - Unexercisable - 0 - Unexercisable
Steven M. Klosk.......... 30,000 1,134,375 112,500 - Exercisable 2,681,250 - Exercisable
- 0 - Unexercisable - 0 - Unexercisable
Peter E. Thauer.......... 6,000(3) 222,750(3) 112,500 - Exercisable 2,681,250 - Exercisable
- 0 - Unexercisable - 0 - Unexercisable
</TABLE>
- ---------------
(1) Based upon the market value of underlying securities at exercise less the
exercise price.
(2) Based upon the 12/31/97 closing price of $46.00.
(3) Includes exercise of 3200 shares in January 1998 with a value realized of
$121,600.
12
<PAGE> 14
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.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG CAMBREX CORPORATION, THE DOW JONES INDUSTRIAL
AVERAGE AND PEER GROUP (1)
[CHART TO COME]
- ---------------
(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
13
<PAGE> 15
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 $Xxx,xxx
during 1997. Therefore, any compensation received by any of the Named Executive
Officers which exceeds the amount will not be taken into account in the
calculation of their benefits under this Plan. A Supplemental Non-Qualified
Pension Plan, which became effective on January 1, 1994, provides benefits based
on compensation levels above the ERISA maximum compensation level.
The following table shows the estimated aggregate annual retirement
benefits payable under the Company's Qualified and Supplemental pension plans to
employees listed, assuming they retire at normal retirement age (65), with
benefits payable in the form of a life annuity and that pensionable compensation
for all years after 1997 will be the same as 1997 pensionable compensation.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
PROJECTED
1997 PENSIONABLE ANNUAL BENEFITS AT
NAME COMPENSATION ($) AGE 65 ($)
------------------------------------ ---------------- ------------------
<S> <C> <C>
Claes Glassell...................... $562,790 $167,711
Steven M. Klosk..................... $506,250 $217,835
James A. Mack....................... $840,000 $144,327
Peter E. Thauer..................... $477,167 $ 98,401
Peter Tracey........................ $592,000 $137,380
</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
14
<PAGE> 16
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 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 1997 Mr. Baldwin received
$140,000 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 AN ADDITIONAL
60,000,000 SHARES OF COMMON STOCK
The Board of Directors recommends that the Certificate of Incorporation be
amended so as to increase the authorized number of shares of Common Stock, $.10
par value, from 20,000,000 to 80,000,000. A copy of the proposed amendment is
attached hereto as Exhibit 1.
The total number of shares of all classes of stock which the Corporation
shall have authority to issue is Twenty Five Million Seven Hundred Thirty
Thousand Seven Hundred Forty Six (25,730,746) shares, to be divided into three
classes consisting of (a) Twenty Million (20,000,000) shares of common stock of
a par value of $.10 per share (hereinafter designated "Common Stock"); (b) Seven
Hundred Thirty Thousand Seven Hundred Forty Six (730,746) shares of nonvoting
common stock of a par value of $.10 per share (hereinafter designated "Nonvoting
Common Stock"); and Five Million (5,000,000) shares of series preferred stock of
a par value of $.10 per share (hereinafter designated "Preferred Stock").
15
<PAGE> 17
As of the close of business on January 31, 1998, of the 20,000,000 shares
of Common Stock presently authorized by the Certificate of Incorporation,
11,929,388 shares were issued and outstanding, 1,035,788 shares were held as
treasury shares, and 392,075 shares were reserved for issuance under the
Corporation's stock option plans. As of the close of business on January 31,
1998, none of the Company's authorized shares of Preferred Stock was issued, but
300,000 of the Company's authorized shares of Preferred Stock were reserved for
issuance pursuant to the Preferred Stock Purchase Rights Plan described below.
Thus, as of the close of business on January 31, 1998, there were authorized,
unissued and unreserved only 6,642,749 shares of Common Stock and 4,700,000
shares of Preferred Stock. Adoption of this proposal would increase the number
of authorized, unissued and unreserved shares of Common Stock by 60,000,000.
The Board of Directors has concluded that there is not presently authorized
a sufficient number of shares of Common Stock to give the Company the ability to
react quickly to today's competitive, fast changing environment. The authorized
shares of Common Stock not needed for a stock split would provide the Company
the necessary flexibility for other actions that the Company might wish to take
relating to possible financing programs, acquisitions, mergers, employee benefit
plans, and other corporate purposes without the expense and delay of a special
stockholders' meeting to increase the authorized capital. No further action or
authorization by the Company's stockholders would be necessary prior to issuance
of the additional shares except as may be required by applicable law or
regulatory agencies or by the rules of any stock exchange on which the Company's
securities may then be listed. For example, the New York Stock Exchange, on
which the Company's Common Stock is listed, currently requires specific
stockholder approval as a prerequisite to listing shares in several instances,
including acquisition transactions where the issuance of shares could result in
a 20% or greater increase in the number of shares of Common Stock outstanding.
The additional shares for which authorization is sought would be identical
with the shares of Common Stock now authorized and outstanding. The Company's
Common Stock has no conversion, preemptive, or subscription rights and is not
redeemable.
The proposed increase in the number of authorized shares of Common Stock is
not intended to impede a change of control of the Company. Further, the Company
is not aware of any current efforts to acquire control of the Company. It should
be noted, however, that the additional shares could be issued in connection with
defending the Company against a hostile takeover bid. The issuance of additional
shares of Common Stock could have the effect of diluting earnings and book value
of outstanding shares of Common Stock, could be used to dilute the stock
ownership of a person or entity seeking to obtain control of the Company, or
could result in a private placement with purchasers who might side with the
Board of Directors if they chose to oppose a specific change of control.
The Company is presently subject to certain provisions of its Certificate
of Incorporation and By-Laws that could under certain circumstances be construed
to have the effect of discouraging attempts, or making it more difficult to gain
control of the Company. The Certificate of Incorporation of the Company
authorizes the Board of Directors to issue one or more series of Preferred Stock
up to a maximum of the 5,000,000 shares presently available and to fix the
numbers, designations, rights, preferences, privileges and limitations of such
series. The issuance of such series could have effects similar to those
described in the preceding paragraph. The Company's By-Laws limit the ability to
call a special meeting of stockholders and to nominate directors or propose
other proper business for consideration by stockholders at an annual meeting,
other than by inclusion in the Proxy Statement and form of proxy. These By-Laws
could have the effect of impeding a holder of the Company's shares from waging a
proxy contest for control of the Company.
The Company also has a Preferred Stock Purchase Rights Plan adopted in 1996
and designed to protect stockholders in the event of an unsolicited attempt to
acquire the Company, whether through a gradual accumulation of shares in the
open market, a partial tender offer, or other abusive takeover tactics which the
Board believe are not in the best interests of stockholders. One of the features
of the Rights Plan provides, as adjusted for the June 1996 stock split, that if
a person or group acquires beneficial ownership of 15% or more of the Company's
outstanding Common Stock, every Right will entitle its holder (other than such
acquiring person or members of such group) to purchase, at the aggregate
exercise price of the Right, the number of shares of the Company's Common Stock
having a market value at that time of twice such aggregate exercise
16
<PAGE> 18
price. Furthermore, at any time after a person or group acquires beneficial
ownership of 15% or more (but less than 50%) of the Company's Common Stock, the
Board may, at its option, exchange part or all of the Rights (other than Rights
held by the acquiring person or group) for shares of the Company's Common Stock
for a one-share-for-each-Right basis. The increased number of authorized shares
of common Stock could be utilized to satisfy the need for shares of Common Stock
in the event of an exercise of Rights or an exchange for Rights as described
above. However, as stated above, this is not the Board's purpose in recommending
the increase in authorized shares of Common Stock.
Change of control provisions in the Company's incentive plans and in
certain individual employment agreements could have the effect of increasing the
cost of any attempt to gain control of the Company.
Financial statements are not material to the exercise of prudent judgment
with respect to the proposed amendment and are therefore omitted from this Proxy
Statement.
The affirmative vote of holders of a majority of the outstanding shares of
Common Stock is required for approval of this proposal. Consequently, any shares
not voted (whether by abstention, broker non-vote or otherwise) will have the
same effect as votes against the proposed amendment to the Company's
Certificate. If the amendment is approved by the stockholders, it will become
effective upon the filing of a Certificate of Amendment in accordance with the
General Corporation Law of Delaware.
The Board of Directors recommends a vote FOR the proposal.
ADOPTION AND APPROVAL OF THE 1998
PERFORMANCE STOCK OPTION PLAN
There will be presented to the stockholders at the Annual Meeting a
proposal to approve the 1998 Performance Stock Option Plan (the "1998 Plan"). A
copy of the Plan is set forth as Exhibit 2 hereto. The Plan was adopted by the
Board of Directors on January 22, 1998, and certain awards made thereunder, both
actions being subject to stockholder approval.
The 1998 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 600,000 shares of the Company's Common Stock shall be set aside for
issuance to officers, directors and key employees under the Plan.
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 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
17
<PAGE> 19
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 $310,000,000.
The Board recommended and the stockholders approved another incentive stock
option plan (the "1996 Plan") at a time when the Company's Common Stock was
trading at approximately $28 per share. Like the earlier Plans, the 1996 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 $36.75 per share for 20 consecutive
days during the year following the first date of grant; a second one-third when
the price reached $40 per share during the second year; and the final one-third
became exercisable when a $43.375 per share price was reached. During this
period, 1995 to 1997, the Company's market capitalization increased from
$310,000 to more than $549,000,000.
The 1998 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 1998 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 by the Committee in October 1997 and approved by
the Board in January 1998, the Committee continued the guidelines concerning
acceleration which had been previously established under the earlier 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 approximately 35% above the grant price within
one year following the date of shareholder approval of the 1998 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 nearly 60% 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 more than 80% over the grant price in
the third year. In addition, to encourage retention of the key executives, no
stock acquired upon exercise of an option can be sold before the expiration of
three years from the date of grant.
In granting future awards the Committee may adjust these price 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 1998 Plan and subject to its approval by the Board and the
stockholders, the Compensation Committee on October 23, 1997, granted to Mr.
Mack a ten year option expiring on January 22, 2008, to purchase 80,000 shares
of Common Stock of the Company at $44.125 per share, the share price on the date
of the Board's approval of the grant, January 22, 1998. Under the conditions of
the grant, the option would vest and become exercisable in nine years, or on
January 22, 2007.
The option provides for acceleration and earlier excercisability 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 $60 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 $70 for 20 consecutive
trading days within the second
18
<PAGE> 20
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 $80 per share for 20 consecutive trading days in the third year.
The Board also granted to each of Messrs. Glassell, Klosk and Thauer, an
option to purchase 40,000 shares under the same terms and conditions set forth
for Mr. Mack. Executive officers other than the Named Executive Officers were
granted an aggregate of 250,000 options on the same terms and conditions. All
such grants were made subject to their approval by stockholders.
The following table sets forth information regarding the options granted in
January 1998 under the Key Employee's Incentive Program of the 1998 Plan,
subject to stockholder approval. There are currently 27 officers and key
employees (including the Named Executive Officers) eligible to participate in
the 1998 Plan. The number of eligible participants may vary in the future.
<TABLE>
<CAPTION>
REQUIRED MARKET PRICE EXERCISABILITY
(FOR 20 DAYS (CUMULATIVE
COMMENCING DURING NUMBER OF
OPTIONEE PERIOD PERIOD) SHARES)
- ------------------------------ ---------------------------- --------------------- ----------------
<S> <C> <C> <C>
James A. Mack................. Within one year of
stockholder approval $60 26,666
Within two years of
stockholder approval $70 26,667
Within three years of
stockholder approval $80 26,667
Claes Glassell................ Within one year of
stockholder approval $60 13,333
Within two years of
stockholder approval $70 13,333
Within three years of
stockholder approval $80 13,334
Steven M. Klosk............... Within one year of
stockholder approval $60 13,333
Within two years of
stockholder approval $70 13,333
Within three years of
stockholder approval $80 13,334
Peter E. Thauer............... Within one year of
stockholder approval $60 13,333
Within two years of
stockholder approval $70 13,333
Within three years of
stockholder approval $80 13,334
All Executive Officers as a
Group (27 Persons) including
the Named Executive Within one year of
Officers.................... stockholder approval $60 150,000
Within two years of
stockholder approval $70 150,000
Within three years of
stockholder approval $80 150,000
All Current Directors who are
not Executive Officers as a
Group....................... N/A - 0 - - 0 -
Non-Executive Officer
Employees as a Group........ N/A - 0 - - 0 -
</TABLE>
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<PAGE> 21
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 750 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
Board of Directors has determined that it is in the interest of the Company and
its stockholders to continue the director's program under the 1998 Plan.
The number of shares of Common Stock subject to stock options expected to
be awarded in 1998 in respect of all current non-employee directors as a group
is 4,000. There are currently eight 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 and the 1998 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 1998
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 1998 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 1998
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 1998 Plan, except as referred to above, (iii) extend the
termination date of the 1998 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 1998 Plan will
terminate on January 22, 2008, 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.
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<PAGE> 22
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 1998 Plan,
ordinary income is generally realized by the optionee in an amount equal to the
difference between the exercise price and the fair market value on the exercise
date and the Company is entitled to a deduction in an equivalent amount at the
time of such exercise. In the event of any subsequent sale of such shares, gain
would be recognized equal to the amount, if any, by which the sale price exceeds
the tax basis of such shares. Such gain would be long-term or short-term capital
gain, depending upon the period of time during which the shares were held
following the date of exercise. Unlike non-qualified options, an optionee
generally does not recognize taxable income upon exercise of an ISO and the
Company is not entitled to any deduction. An optionee will receive long-term
capital gain or loss treatment upon the sale of shares purchased through
exercise of an ISO if such shares are held for more than two years after the
grant of the ISO (and one year after the date of exercise). If such shares are
disposed of prior to such time, the optionee will generally realize ordinary
income equal to the difference between (i) the lesser of (x) the amount, if any,
realized on the disposition and (y) the fair market value of the shares of
Common Stock on the exercise date and (ii) the exercise price. Any such ordinary
income recognized by the optionee is deductible by the Company.
The aggregate fair market value of the shares of stock with respect to
which ISO's are exercisable for the first time by a participant under the 1998
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 $XX.XX per share at the date of this Proxy Statement.
Approval of the adoption of the 1998 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 1998, 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.
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<PAGE> 23
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1999 Annual Meeting
must be received by the Company not later than November 21, 1998, in order to be
included in the Company's Proxy Statement for the 1999 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 19, 1998
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 1997. REQUESTS SHOULD BE DIRECTED TO MR. DOUGLAS MACMILLAN, 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.
22
<PAGE> 24
EXHIBIT 1
RESTATED CERTIFICATE OF INCORPORATION
OF
CAMBREX CORPORATION
------------------------
PARAGRAPH 1 OF ARTICLE FOURTH
------------------------
FOURTH: The total number of shares or all classes of stock which the
Corporation shall have the authority to issue is 86,263,835 shares, consisting
of 400,000 shares of Class A 8.25% Cumulative Preferred Stock, par value $.10
per share (the "Class A Preferred"), 40,597 shares of Class B 8.25% Cumulative
Convertible Preferred Stock, par value $.10 per share (the "Class B Preferred),
19,403 shares of Class C Convertible Preferred Stock, par value $.10 per share
(the "Class C Preferred"), 73,089 shares of Class D 8% Convertible Preferred
Stock, par value $.10 per share (the "Class D Preferred"), 5,000,000 shares of
Series Preferred Stock, par value $.10 per share (the "Series Preferred Stock"),
730,746 shares of Nonvoting Common Stock, par value $.10 per share (the
"Nonvoting Common"), and 80,000,000 shares of Common Stock, par value $.10 per
share (the "Voting Common"). The Class B Preferred and the Class C Preferred are
referred to herein collectively as the "1981 Convertible Preferred Stock"; the
1981 Convertible Preferred Stock and the Class A Preferred are referred to
herein collectively as the "1981 Preferred Stock"); the 1981 Preferred Stock and
the Class D Preferred are referred to herein collectively as the "Preferred
Stock"; and the Voting Common and the Nonvoting Common are referred to herein
collectively as the "Common Stock". A share of Preferred Stock will be referred
to herein as a "Share". The Voting Common is also referred to herein as the
"Class A Common" and the Non-voting Common is also referred to herein as the
"Class B Common". Unless otherwise provided, other capitalized terms used in
Section A of this Article FOURTH are defined in subdivision VI thereof, other
capitalized terms used in Section C of this Article FOURTH are defined in
subdivision VIII thereof and definitions set forth in any Section of this
Article FOURTH apply only to capitalized terms used in such Section. All
cross-references in each Section of this Article FOURTH refer to other parts,
paragraphs and subdivisions in such Section unless otherwise indicated.
23
<PAGE> 25
EXHIBIT 2
CAMBREX CORPORATION
1998 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 election of directors of the
reorganized, merged or consolidated entity's then outstanding voting
24
<PAGE> 26
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.
25
<PAGE> 27
(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 600,000 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 establish other conditions of
exercise as it shall determine and may accelerate the exercisability of any
Option granted to an Employee under the Plan.
26
<PAGE> 28
(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.
(h) Deferral on Exercise: If the Corporation maintains an appropriate
deferred compensation plan available for such purpose, the Committee, in
its discretion, may permit a Participant to elect to defer the receipt of
Common Stock which would otherwise be issued upon the exercise of Options
as provided in such deferred plan.
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 any
27
<PAGE> 29
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.
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<PAGE> 30
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.
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<PAGE> 31
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: Unless the Committee shall permit (on such terms
and conditions as it shall establish) an award to be transferred to a member of
the Participant's immediate family or to a trust or similar vehicle for the
benefit of such immediate family members (collectively, the "Permitted
Transferees"), no award shall be assignable or transferable except by will or
the laws of descent and distribution, and except to the extent required by law,
no right or interest of any Participant shall be subject to any lien, obligation
or liability of the Participant. All rights with respect to awards granted to a
Participant under the Plan shall be exercisable during his lifetime only by such
Participant or, if applicable, the Permitted Transferees. The rights of a
Permitted Transferee shall be limited to the rights conveyed to such Transferee,
who shall be subject to and bound by the terms of the agreement or agreements
between the Participant and the Corporation."
(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.
30
<PAGE> 32
(h) Legal Considerations: The Corporation shall not be required to issue
shares of Common Stock under the Plan until all applicable legal, listing or
registration requirements, as determined by legal counsel, have been satisfied,
including, if necessary, appropriate written representations from Participants.
(i) Other Plans: Nothing contained herein shall prevent the Corporation
from establishing other incentive and benefit plans in which Participants in the
Plan may also participate.
(j) No Warranty of Tax Effect: Except as may be contained in any
Agreement, no opinion shall be deemed to be expressed or warranties made as to
the effect for 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.
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<PAGE> 33
CAMBREX CORPORATION
SOLICITED BY BOARD OF DIRECTORS FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Cambrex Corporation, (the "Company") hereby
appoints C. C. Baldwin, Jr., J. A. Mack and D. H. MacMillan, and each of them
acting singly and each with 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 1998 Annual Meeting of
Stockholders of the Company to be held on April 23, 1998 at 1:00 p.m. at the
Sheraton Meadowlands Hotel, Meadowlands Plaza, East Rutherford, New Jersey and
any adjournment thereof. Without otherwise limiting the general authorization
hereby given, said attorneys and proxies are instructed to vote 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 19, 1998.
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" THE AUTHORIZATION OF AN ADDITIONAL 60,000,000 SHARES OF COMMON
STOCK OF THE CORPORATION, PAR VALUE $.10 PER SHARE PROPOSAL NO. 2), "FOR" THE
APPROVAL OF THE 1998 PERFORMANCE STOCK OPTION PLAN (PROPOSAL NO. 3), AND "FOR"
APPROVAL OF THE SELECTION OF ACCOUNTANTS (PROPOSAL NO. 4), UNLESS OTHERWISE
MARKED.
Please Complete And Sign Proxy on Reverse
Side And Return in Enclosed Envelope.
<PAGE> 34
X Please mark your
votes as in this
example.
1. ELECTION OF DIRECTORS FOR / / WITHHOLD / / Nominees; Rosina B. Dixon,
Leon J. Hendrix, Jr., Ilan Kaufthal
For except vote withheld from the following nominees(s)
-----------------------------------------------
2. Approval of the Authorization of an Additional 60,000,000 Shares of Common
Stock, par value $.10 per share
FOR AGAINST ABSTAIN
/ / / / / /
3. Approval of the 1998 Performance Stock Option Plan
FOR AGAINST ABSTAIN
/ / / / / /
4. Approval of the appointment of Coopers & Lybrand L.L.P. as independent
public accountants for 1997
FOR AGAINST ABSTAIN
/ / / / / /
Signature(s) Date
--------------------------------------------- -----------------
Note: Pleas 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.
