x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware
|
|
14-1742717
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification No.)
|
|
|
|
26 Corporate Circle
|
|
|
Albany, New York
|
|
12203
|
(Address of principal executive offices)
|
|
(zip code)
|
Title of each class
|
|
Name of exchange on which registered
|
Common Stock, par value $.01 per share
|
|
The NASDAQ Stock Market LLC
|
Preferred Stock Purchase Rights
|
|
|
¨ Large accelerated filer
|
|
x Accelerated filer
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¨ Non-accelerated filer
|
|
¨ Smaller reporting company
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|
|
|
|
Page No.
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|
|
Cover page
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|
|
|
|
Part I.
|
|
|
Forward-Looking Statements
|
|
3
|
||
Item 1.
|
|
Business
|
|
4
|
Item 1A.
|
|
Risk Factors
|
|
14
|
Item 1B.
|
|
Unresolved Staff Comments
|
|
21
|
Item 2.
|
|
Properties
|
|
21
|
Item 3.
|
|
Legal Proceedings
|
|
21
|
Item 4.
|
|
Mine Safety Disclosures
|
|
22
|
|
|
Part II.
|
|
|
Item 5.
|
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
23
|
Item 6.
|
|
Selected Financial Data
|
|
26
|
Item 7.
|
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
27
|
Item 7A.
|
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
36
|
Item 8.
|
|
Financial Statements and Supplementary Data
|
|
37
|
Item 9.
|
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
|
37
|
Item 9A.
|
|
Controls and Procedures
|
|
37
|
Item 9B.
|
|
Other Information
|
|
38
|
|
|
Part III.
|
|
|
Item 10.
|
|
Directors, Executive Officers and Corporate Governance of the Registrant
|
|
39
|
Item 11.
|
|
Executive Compensation
|
|
39
|
Item 12.
|
|
Security Ownership of Certain Beneficial Owners and Management
|
|
39
|
Item 13.
|
|
Certain Relationships, Related Transactions and Director Independence
|
|
39
|
Item 14.
|
|
Principal Accountant Fees and Services
|
|
39
|
|
|
Part IV.
|
|
|
Item 15.
|
|
Exhibits and Financial Statement Schedules
|
|
40
|
2 | ||
3 | ||
· | Organizational Leadership |
· | Enhance revenue growth and mix |
4 | ||
· | Streamline operations to improve margins |
· | Maximize licensing/partnering of proprietary compounds to enhance future cash flow |
· | Acquisitions |
5 | ||
6 | ||
7 | ||
8 | ||
9 | ||
10 | ||
· | Our globalization of both research and manufacturing facilities, which allows us to increase our access to key global markets |
· | Our ability to offer a flexible combination of high quality, cost-effective services |
· | Our comprehensive service offerings, which allow us to provide our customers a more efficient transition of experimental compounds through the research and development process, ultimately reducing the time and cost involved in bringing these compounds from concept to market. |
11 | ||
12 | ||
13 | ||
14 | ||
15 | ||
· | make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry and competitive conditions and adverse changes in government regulation; |
· | limit our flexibility in planning for, or reacting to, changes in our business and our industry; |
· | place us at a disadvantage compared to our competitors who have less debt; and |
· | limit our ability to borrow additional amounts for working capital, capital expenditures, research and development efforts, acquisitions, debt service requirements, execution of our business strategy or other purposes. |
16 | ||
· | a significant change in the extent or manner in which a long-lived asset group is being used; |
· | a significant change in the business climate that could affect the value of a long-lived asset group; and |
· | a significant decrease in the market value of assets. |
17 | ||
· | William Marth, our Chief Executive Officer and President; |
· | Michael M. Nolan, our Vice President, Chief Financial Officer and Treasurer; |
· | Steven R. Hagen, Ph.D., our Senior Vice President, Manufacturing and Pharmaceuticals; |
· | Lori M. Henderson, our Vice President, General Counsel and Secretary |
· | Michael Luther, Ph.D., our Senior Vice President, Discovery; |
· | Brian D. Russell, our Vice President, Human Resources; and |
· | George Svokos, our Senior Vice President, Sales and General Manager, API |
18 | ||
· | Our certificate of incorporation provides for three classes of directors with the term of office of one class expiring each year, commonly referred to as a “staggered board.” By preventing stockholders from voting on the election of more than one class of directors at any annual meeting of stockholders, this provision may have the effect of keeping the current members of our board of directors in control for a longer period of time than stockholders may desire. |
19 | ||
· | Our certificate of incorporation authorizes our board of directors to issue shares of preferred stock without stockholder approval and to establish the preferences and rights of any preferred stock issued, which would allow the board to issue one or more classes or series of preferred stock that could discourage or delay a tender offer or change in control. |
20 | ||
Location
|
|
Square Feet
|
|
Primary Purpose
|
Rensselaer, New York
|
|
276,000
|
|
Contract Manufacturing
|
Albany, New York
|
|
198,000
|
|
Contract Manufacturing, Contract Research and Administration
|
Aurangabad, India
|
|
208,000
|
|
Contract Manufacturing
|
Holywell, United Kingdom
|
|
68,000
|
|
Contract Manufacturing & Contract Research
|
East Greenbush, New York
|
|
64,000
|
|
Contract Research
|
Hyderabad, India
|
|
62,000
|
|
Contract Research
|
Burlington, Massachusetts
|
|
46,000
|
|
Contract Manufacturing
|
Singapore
|
|
37,000
|
|
Contract Research
|
Syracuse, New York
|
|
28,000
|
|
Contract Research
|
21 | ||
22 | ||
Period
|
|
High
|
|
Low
|
|
||
Year ending December 31, 2013
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
10.84
|
|
$
|
5.45
|
|
Second Quarter
|
|
$
|
12.23
|
|
$
|
8.99
|
|
Third Quarter
|
|
$
|
13.72
|
|
$
|
10.81
|
|
Fourth Quarter
|
|
$
|
14.28
|
|
$
|
9.88
|
|
|
|
|
|
|
|
|
|
Year ending December 31, 2012
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
3.20
|
|
$
|
2.63
|
|
Second Quarter
|
|
$
|
3.36
|
|
$
|
2.30
|
|
Third Quarter
|
|
$
|
3.73
|
|
$
|
2.64
|
|
Fourth Quarter
|
|
$
|
5.50
|
|
$
|
3.45
|
|
23 | ||
|
|
Albany Molecular
Research, Inc |
|
NASDAQ Stock
Market (U.S. Companies) Index |
|
NASDAQ
Pharmaceuticals Index |
|
December 31, 2008
|
|
100.000
|
|
100.000
|
|
100.000
|
|
December 31, 2009
|
|
93.220
|
|
143.741
|
|
112.364
|
|
December 31, 2010
|
|
57.700
|
|
170.174
|
|
121.805
|
|
December 31, 2011
|
|
30.082
|
|
171.081
|
|
130.379
|
|
December 31, 2012
|
|
54.209
|
|
202.398
|
|
173.465
|
|
December 31, 2013
|
|
103.491
|
|
281.914
|
|
285.963
|
|
Plan Category
|
|
(a)
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
|
(b)
Weighted-average exercise price of outstanding options, warrants and rights |
|
(c)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|
|
Equity compensation plans
approved by security holders(1) |
|
2,045,725
|
|
$
|
5.62
|
|
3,165,490
|
(2)
|
Equity compensation plans
not approved by security holders |
|
|
|
|
|
|
|
|
Total
|
|
2,045,725
|
|
$
|
5.62
|
|
3,165,490
|
|
(1) | Consists of the Company’s 1998 Stock Option Plan, the Company’s 2008 Stock Option Plan and the Company’s Employee Stock Purchase Plan (“ESPP”). Does not include purchase rights accruing under the ESPP because the purchase price (and therefore the number of shares to be purchased) will not be determined until the end of the purchase period. |
(2) | Includes 2,691,551 shares available under the 2008 Stock Option Plan and 473,939 shares available under the ESPP. |
24 | ||
(e) | Unregistered Sales of Equity Securities and Use of Proceeds |
Period
|
|
(a)
Total Number of Shares Purchased (1) |
|
(b)
Average Price Paid Per Share |
|
(c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
(d)
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program |
|
|
October 1, 2013 October 31, 2013
|
|
-
|
|
$
|
-
|
|
N/A
|
|
N/A
|
|
November 1, 2013 November 30, 2013
|
|
507
|
|
$
|
13.11
|
|
N/A
|
|
N/A
|
|
December 1, 2013 December 31, 2013
|
|
-
|
|
$
|
-
|
|
N/A
|
|
N/A
|
|
Total
|
|
507
|
|
$
|
13.11
|
|
N/A
|
|
N/A
|
|
25 | ||
|
|
As of and for the Year Ended December 31,
|
|
|||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
|||||
|
|
(in thousands, except per share data)
|
|
|||||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract revenue
|
|
$
|
210,001
|
|
$
|
189,858
|
|
$
|
169,611
|
|
$
|
163,228
|
|
$
|
156,800
|
|
Recurring royalties
|
|
|
36,574
|
|
|
35,988
|
|
|
35,034
|
|
|
34,838
|
|
|
34,867
|
|
Milestone revenue
|
|
|
|
|
|
840
|
|
|
3,000
|
|
|
|
|
|
4,750
|
|
Total revenue
|
|
|
246,575
|
|
|
226,686
|
|
|
207,645
|
|
|
198,066
|
|
|
196,417
|
|
Cost of contract revenue
|
|
|
171,923
|
|
|
168,064
|
|
|
168,470
|
|
|
152,673
|
|
|
138,739
|
|
Technology incentive award
|
|
|
2,767
|
|
|
3,143
|
|
|
3,557
|
|
|
3,484
|
|
|
3,594
|
|
Research and development
|
|
|
414
|
|
|
906
|
|
|
7,939
|
|
|
11,090
|
|
|
14,547
|
|
Selling, general and administrative
|
|
|
42,256
|
|
|
40,904
|
|
|
41,071
|
|
|
42,234
|
|
|
38,036
|
|
Goodwill impairment
|
|
|
|
|
|
|
|
|
15,812
|
|
|
36,844
|
|
|
22,900
|
|
Property and equipment impairment
|
|
|
1,857
|
|
|
8,334
|
|
|
4,674
|
|
|
10,848
|
|
|
|
|
Intangible asset impairment
|
|
|
|
|
|
|
|
|
856
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
7,183
|
|
|
4,632
|
|
|
1,271
|
|
|
3,090
|
|
|
329
|
|
Arbitration charge
|
|
|
|
|
|
|
|
|
127
|
|
|
9,798
|
|
|
|
|
Total costs and expenses
|
|
|
226,400
|
|
|
225,983
|
|
|
243,777
|
|
|
270,061
|
|
|
218,145
|
|
Income (loss) from operations
|
|
|
20,175
|
|
|
703
|
|
|
(36,132)
|
|
|
(71,995)
|
|
|
(21,728)
|
|
Interest (expense) income, net
|
|
|
(1,244)
|
|
|
(454)
|
|
|
(583)
|
|
|
160
|
|
|
269
|
|
Other income (expense), net
|
|
|
772
|
|
|
(130)
|
|
|
77
|
|
|
(1,007)
|
|
|
(593)
|
|
Income (loss) before income tax expense (benefit)
|
|
|
19,703
|
|
|
119
|
|
|
(36,638)
|
|
|
(72,842)
|
|
|
(22,052)
|
|
Income tax expense (benefit)
|
|
|
7,023
|
|
|
3,896
|
|
|
(4,342)
|
|
|
(9,971)
|
|
|
(5,357)
|
|
Net income (loss)
|
|
$
|
12,680
|
|
$
|
(3,777)
|
|
$
|
(32,296)
|
|
$
|
(62,871)
|
|
$
|
(16,695)
|
|
Basic income (loss) per share
|
|
$
|
0.41
|
|
$
|
(0.12)
|
|
$
|
(1.08)
|
|
$
|
(2.05)
|
|
$
|
(0.54)
|
|
Diluted income (loss) per share
|
|
$
|
0.40
|
|
$
|
(0.12)
|
|
$
|
(1.08)
|
|
$
|
(2.05)
|
|
$
|
(0.54)
|
|
Weighted average common shares outstanding, basic
|
|
|
30,912
|
|
|
30,318
|
|
|
29,961
|
|
|
30,657
|
|
|
31,062
|
|
Weighted average common shares outstanding, diluted
|
|
|
31,845
|
|
|
30,318
|
|
|
29,961
|
|
|
30,657
|
|
|
31,062
|
|
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and investment securities -
unrestricted |
|
$
|
175,928
|
|
$
|
23,293
|
|
$
|
20,198
|
|
$
|
41,481
|
|
$
|
111,058
|
|
Property and equipment, net
|
|
|
127,775
|
|
|
135,519
|
|
|
149,729
|
|
|
163,212
|
|
|
166,746
|
|
Working capital
|
|
|
235,117
|
|
|
77,438
|
|
|
62,584
|
|
|
79,409
|
|
|
149,730
|
|
Total assets
|
|
|
445,268
|
|
|
262,862
|
|
|
263,067
|
|
|
325,106
|
|
|
373,692
|
|
Long-term debt, excluding current installments
|
|
|
123,135
|
|
|
7,227
|
|
|
3,003
|
|
|
11,737
|
|
|
13,212
|
|
Total stockholders’ equity
|
|
|
245,704
|
|
|
206,141
|
|
|
206,432
|
|
|
243,743
|
|
|
314,613
|
|
Other Consolidated Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
11,135
|
|
$
|
9,890
|
|
$
|
10,837
|
|
$
|
11,628
|
|
$
|
15,172
|
|
26 | ||
27 | ||
|
|
Year Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|
|||
|
|
(in thousands)
|
|
|||||||
DDS
|
|
$
|
77,418
|
|
$
|
73,458
|
|
$
|
74,032
|
|
LSM
|
|
|
132,583
|
|
|
116,400
|
|
|
95,579
|
|
Total
|
|
$
|
210,001
|
|
$
|
189,858
|
|
$
|
169,611
|
|
Year Ended December 31,
|
|
|||||||
2013
|
|
2012
|
|
2011
|
|
|||
|
(in thousands)
|
|
||||||
$
|
36,574
|
|
$
|
35,988
|
|
$
|
35,034
|
|
28 | ||
Year Ended December 31,
|
|
|||||||
2013
|
|
2012
|
|
2011
|
|
|||
(in thousands)
|
|
|||||||
$
|
|
|
$
|
840
|
|
$
|
3,000
|
|
|
|
Year Ended December 31,
|
|
|||||||||
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
|
|
(in thousands)
|
|
|||||||||
DDS
|
|
$
|
66,604
|
|
|
$
|
70,366
|
|
|
$
|
72,758
|
|
LSM
|
|
|
105,319
|
|
|
|
97,698
|
|
|
|
95,712
|
|
Total
|
|
$
|
171,923
|
|
|
$
|
168,064
|
|
|
$
|
168,470
|
|
DDS Gross Contract Margin
|
|
|
14.0
|
%
|
|
|
4.2
|
%
|
|
|
1.7
|
%
|
LSM Gross Contract Margin
|
|
|
20.6
|
%
|
|
|
16.0
|
%
|
|
|
(0.1)
|
%
|
Total Gross Contract Margin
|
|
|
18.1
|
%
|
|
|
11.5
|
%
|
|
|
0.7
|
%
|
29 | ||
Year Ended December 31,
|
|
|||||||
2013
|
|
2012
|
|
2011
|
|
|||
|
(in thousands)
|
|
||||||
$
|
2,767
|
|
$
|
3,143
|
|
$
|
3,557
|
|
Year Ended December 31,
|
|
|||||||
2013
|
|
2012
|
|
2011
|
|
|||
(in thousands)
|
|
|||||||
$
|
414
|
|
$
|
906
|
|
$
|
7,939
|
|
30 | ||
Year Ended December 31,
|
|
|||||||
2013
|
|
2012
|
|
2011
|
|
|||
(in thousands)
|
|
|||||||
$
|
42,256
|
|
$
|
40,904
|
|
$
|
41,071
|
|
Year Ended December 31,
|
|
|||||||
2013
|
|
2012
|
|
2011
|
|
|||
(in thousands)
|
|
|||||||
$
|
|
|
$
|
|
|
$
|
15,812
|
|
Year Ended December 31,
|
|
|||||||
2013
|
|
2012
|
|
2011
|
|
|||
(in thousands)
|
|
|||||||
$
|
1,857
|
|
$
|
8,334
|
|
$
|
4,674
|
|
31 | ||
Year Ended December 31,
|
|
|||||||
2013
|
|
2012
|
|
2011
|
|
|||
(in thousands)
|
|
|||||||
$
|
|
|
$
|
|
|
$
|
856
|
|
Year Ended December 31,
|
|
|||||||
2013
|
|
2012
|
|
2011
|
|
|||
(in thousands)
|
|
|||||||
$
|
7,183
|
|
$
|
4,632
|
|
$
|
1,271
|
|
|
|
Year Ended December 31,
|
|
|||||||
(in thousands)
|
|
2013
|
|
2012
|
|
2011
|
|
|||
Interest expense
|
|
$
|
(1,255)
|
|
$
|
(463)
|
|
$
|
(714)
|
|
Interest income
|
|
|
11
|
|
|
9
|
|
|
131
|
|
Interest (expense) income, net
|
|
$
|
(1,244)
|
|
$
|
(454)
|
|
$
|
(583)
|
|
32 | ||
Year Ended December 31,
|
|
|||||||
2013
|
|
2012
|
|
2011
|
|
|||
(in thousands)
|
|
|||||||
$
|
772
|
|
$
|
(130)
|
|
$
|
77
|
|
Year Ended December 31,
|
|
|||||||
2013
|
|
2012
|
|
2011
|
|
|||
(in thousands)
|
|
|||||||
$
|
7,023
|
|
$
|
3,896
|
|
$
|
(4,342)
|
|
33 | ||
34 | ||
|
|
Total
|
|
Under 1 Year
|
|
1-3 Years
|
|
4-5 Years
|
|
After 5 Years
|
|
|||||
Long-Term Debt (principal)
|
|
$
|
157,228
|
|
$
|
1,024
|
|
$
|
2,063
|
|
$
|
153,051
|
|
$
|
1,090
|
|
Operating Leases
|
|
|
11,126
|
|
|
3,150
|
|
|
3,452
|
|
|
2,475
|
|
|
2,049
|
|
Purchase Commitments
|
|
|
33,128
|
|
|
33,128
|
|
|
|
|
|
|
|
|
|
|
Restructuring liabilities
|
|
|
4,376
|
|
|
3,152
|
|
|
1,224
|
|
|
|
|
|
|
|
Pension Plan Contributions (1)
|
|
|
3,469
|
|
|
811
|
|
|
1,329
|
|
|
1,329
|
|
|
|
|
(1) | Pension and other postretirement benefits include estimated payments made from Company assets. No estimate of payments after five years has been provided due to many uncertainties. |
35 | ||
· | A significant change in the extent or manner in which a long-lived asset group is being used; |
· | A significant change in the business climate that could affect the value of a long-lived asset group; and |
· | A significant decrease in the market value of assets. |
36 | ||
· | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
· | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles and, that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and |
· | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
37 | ||
38 | ||
39 | ||
|
|
Page
|
|
|
Number
|
Report of Independent Registered Public Accounting Firm
|
|
F-2
|
Consolidated Statements of Operations for the Years Ended December 31, 2013, 2012 and 2011
|
|
F-3
|
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2013, 2012 and 2011
|
|
F-4
|
Consolidated Balance Sheets at December 31, 2013 and 2012
|
|
F-5
|
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2013, 2012 and 2011
|
|
F-6
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2013, 2012 and 2011
|
|
F-7
|
Notes to Consolidated Financial Statements
|
|
F-8
|
Schedule IIValuation and Qualifying Accounts
|
|
F-38
|
Exhibit
|
|
|
No.
|
|
Description
|
2.1
|
|
Agreement, dated February 17, 2010, by and among the Company and the shareholders of Excelsyn Limited, for the sale and purchase of Excelsyn Limited and its subsidiary, Excelsyn Molecular Development Limited (incorporated herein by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, File No. 000-25323).
|
2.2
|
|
Agreement, dated June 14, 2010, by and among the Company and the shareholders of Hyaluron, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-25323).
|
3.1
|
|
Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998, File No. 000-25323).
|
3.2
|
|
Amended and Restated By-Laws of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998, File No. 000-25323).
|
4.1
|
|
Specimen certificate for shares of Common Stock, $0.01 par value, of the Company (incorporated herein by reference to Exhibit 4.1 to Amendment No. 3 to the Company’s Registration Statement on Form S-1, File No. 333-58795).
|
4.2
|
|
Amended and Restated Certificate of Designations, Preferences and Rights of a Series of Preferred Stock of Albany Molecular Research, Inc. classifying and designating the Series A Junior Participating Cumulative Preferred Stock (incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on July 31, 2012, File No. 001-35622).
|
40 | ||
Exhibit
|
|
|
No.
|
|
Description
|
4.3
|
|
Shareholder Rights Agreement, dated as of July 27, 2012, between the Company and Computershare Shareowner Services LLC, as Rights Agent (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on July 31, 2012, File No. 001-35622).
|
4.4
|
|
Amendment to Shareholder Rights Agreement, dated as of June 1, 2011, between Albany Molecular Research, Inc. and Mellon Investor Services LLC, as Rights Agent (incorporated herein by reference to Exhibit 4.2 to the Company’s Registration Statement on Form 8-A/A filed on June 1, 2011. File no. 000-25323).
|
4.5
|
|
Amendment No. 2 to Shareholder Rights Agreement, dated as of July 27, 2012, between Albany Molecular Research, Inc. and Computershare Shareowner Services LLC, as Rights Agent (as successor to Mellon Investor Services LLC) (incorporated herein by reference to Exhibit 4.2 to the Company’s Registration Statement on Form 8-A/A filed on July 31, 2012. File no. 000-25323).
|
4.6
|
|
Indenture, dated as of November 25, 2013, by and between Albany Molecular Research, Inc. and Wilmington Trust, National Association (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2013, File No. 001-35622).
|
4.7
|
|
Form of 2.25% Cash Convertible Senior Note due 2018 (included in Exhibit 4.6).
|
10.1*
|
|
1998 Stock Option and Incentive Plan of the Company (incorporated herein by reference to Exhibit 10.2 to Amendment No. 3 to the Company’s Registration Statement on Form S-1, File No. 333-58795).
|
10.2*
|
|
Amended 1998 Employee Stock Purchase Plan of the Company, approved on June 1, 2011 (incorporated herein by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, File No. 000-25323).
|
10.3*
|
|
Amended 2008 Stock Option and Incentive Plan, approved on June 1, 2011 (incorporated herein by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, File No. 000-25323).
|
10.4*
|
|
Amended and Restated Employment Agreement, dated as of April 5, 2012, by and between the Company and Bruce J. Sargent, Ph.D. (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 5, 2012, File No. 000-25323).
|
10.5
|
|
Form of Indemnification Agreement between the Company and each of its directors (incorporated herein by reference to Exhibit 10.5 to Amendment No. 2 to the Company’s Registration Statement on Form S-1, File No. 333-58795).
|
10.6
|
|
License Agreement dated March 15, 1995 by and between the Company and Marion Merrell Dow Inc. (now Sanofi) (excluding certain portions which have been omitted as indicated based upon an order for confidential treatment, but which have been filed separately with the Commission) (incorporated herein by reference to Exhibit 10.7 to Amendment No. 3 to the Company’s Registration Statement on Form S-1, File No. 333-58795).
|
10.7*
|
|
Amendment to 1998 Stock Option and Incentive Plan of the Company (incorporated herein by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, File No. 000-25323).
|
10.8*
|
|
Amended and Restated Technology Development Incentive Plan (filed herein).
|
10.9
|
|
Form of Employee Innovation, Proprietary Information and Post-Employment Activity Agreement between the Company and each of its executive officers (incorporated herein by reference to Exhibit 10.14 to Amendment No. 3 to the Company’s Registration Statement on Form S-1, File No. 333-58795).
|
10.10*
|
|
Amended and Restated Employment Agreement, dated as of April 5, 2012, by and between the Company and Lori M. Henderson (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 5, 2012, File No. 000-25323).
|
10.11*
|
|
Form of Restricted Stock Award Agreement under 1998 Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 17, 2005, File No. 000-25323).
|
10.12*
|
|
Albany Molecular Research, Inc. Incentive Bonus Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 3, 2005, File No. 000-25323).
|
41 | ||
Exhibit
|
|
|
No.
|
|
Description
|
10.13*
|
|
Form of Incentive Stock Option Agreement under 1998 Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 filed with the Securities and Exchange Commission on May 10, 2005, File No. 000-25323).
|
10.14*
|
|
Form of Non-Qualified Stock Option Agreement under 1998 Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 filed with the Securities and Exchange Commission on May 10, 2005, File No. 000-25323).
|
10.15
|
|
Supply Agreement, effective as of January 1, 2012, between AMRI Rensselaer and GE Healthcare AS (incorporated herein by reference to Exhibit 10.15 (with certain information omitted pursuant to a request for confidential treatment and filed with the Securities and Exchange Commission) to the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2012, filed with the Securities and Exchange Commission on August 27, 2013, File No. 001-35622).
|
10.16
|
|
License and Research Agreement, dated as of October 20, 2005, between Albany Molecular Research, Inc., AMR Technology, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, File No. 000-25323).
|
10.17*
|
|
Amended and Restated Employment Agreement, dated as of April 5, 2012, by and between the Company and Thomas E. D’Ambra, Ph.D. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 5, 2012, File No. 000-25323).
|
10.18*
|
|
Amended and Restated Employment Agreement, dated as of April 5, 2012, by and between the Company and Mark T. Frost (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 5, 2012, File No. 000-25323).
|
10.19*
|
|
Separation Agreement, dated September 10, 2012, between Albany Molecular Research, Inc. and Mark T. Frost (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, filed with the Securities and Exchange Commission on November 9, 2012, File No. 001-35622).
|
10.20
|
|
Amendment to License Agreement Regarding Sublicensing, dated November 19, 2008, by and between Albany Molecular Research, Inc., AMR Technology, Inc. (formerly a subsidiary of AMRI, which has subsequently been merged into AMRI) and Sanofi U.S. LLC (filed with certain information omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission) (incorporated herein by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, File No. 000-25323).
|
10.21*
|
|
Amended and Restated Employment Agreement, dated as of April 5, 2012, by and between the Company and Steven R. Hagen, Ph.D. (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 5, 2012, File No. 000-25323).
|
10.22
|
|
Research/Manufacturing Agreement between Schering Corporation and Albany Molecular Research, Inc. dated January 13, 2006 (filed with certain information omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission) (incorporated herein by reference to Exhibit 10.1 to the Company’s Amended Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2010, filed with the Securities and Exchange Commission on February 17, 2011, File No. 000-25323).
|
10.23
|
|
Seventh Amendment dated July 14, 2010 to the Research/Manufacturing Agreement between Schering Corporation and Albany Molecular Research, Inc. dated January 13, 2006 (filed with certain information omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission) (incorporated herein by reference to Exhibit 10.2 to the Company’s Amended Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2010, filed with the Securities and Exchange Commission on February 17, 2011, File No. 000-25323).
|
42 | ||
Exhibit
|
|
|
No.
|
|
Description
|
10.24
|
|
Credit and Security Agreement dated April 11, 2012, by and among Albany Molecular Research, Inc., AMRI Rensselaer, Inc., AMRI Burlington, Inc., AMRI Bothell Research Center, Inc. and Wells Fargo Bank, National Association. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 12, 2012, File No. 000-25323)
|
10.25
|
|
First Amendment, dated December 20, 2012, to Credit and Security Agreement dated April 11, 2012, by and among Albany Molecular Research, Inc., AMRI Rensselaer, Inc., AMRI Burlington, Inc., and AMRI Bothell Research Center, Inc., as the borrower and Wells Fargo Bank, National Association as the lender (incorporated herein by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the Securities and Exchange Commission on March 18, 2013, File No. 001-35622).
|
10.26
|
|
Second Amendment, dated November 13, 2013, to Credit and Security Agreement dated April 11, 2012, by and among Albany Molecular Research, Inc., AMRI Rensselaer, Inc., AMRI Burlington, Inc., and AMRI Bothell Research Center, Inc., as the borrower and Wells Fargo Bank, National Association as the lender (filed herein).
|
10.27
|
|
Development and Supply Agreement between Organichem Corporation (now AMRI Rensselaer, Inc., a wholly-owned subsidiary of the Company) and Purepac Pharmaceuticals Co. (now Actavis, Inc.) effective May 10, 2000 (incorporated herein by reference to Exhibit 10.26 (with certain information omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the Securities and Exchange Commission on March 18, 2013, File No. 001-35622).
|
10.28*
|
|
Separation Agreement, dated October 16, 2013, by and between the Company and Bruce J. Sargent (filed herein).
|
10.29*
|
|
Amended Employment Agreement, effective September 17, 2012, as amended on December 27, 2012, between Albany Molecular Research, Inc. and Michael M. Nolan (incorporated herein by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the Securities and Exchange Commission on March 18, 2013, File No. 001-35622).
|
10.30*
|
|
Amended Form of Restricted Stock Award Agreement under the 2008 Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the Securities and Exchange Commission on March 18, 2013, File No. 001-35622).
|
10.31*
|
|
Amended Form of Non-Qualified Stock Option Agreement under the 2008 Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the Securities and Exchange Commission on March 18, 2013, File No. 001-35622).
|
10.32*
|
|
Employment Agreement, dated September 5, 2013, by and between Albany Molecular Research, Inc. and William S. Marth (incorporated herein by reference to Exhibit 10.1 the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, File No. 001-35622).
|
10.33*
|
|
Transition Agreement, dated September 6, 2013, by and between Albany Molecular Research, Inc. and Thomas E. D’Ambra, Ph.D. (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, File No. 001-35622).
|
10.34*
|
|
Employment Agreement, dated as of October 16, 2013, by and between the Company and Michael Luther, Ph.D. (filed herein).
|
10.35
|
|
Call Option Transaction Confirmation, dated November 19, 2013, between Albany Molecular Research, Inc. and JPMorgan Chase Bank, National Association, London Branch (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2013, File No. 001-35622).
|
10.36
|
|
Call Option Transaction Confirmation, dated November 19, 2013, between Albany Molecular Research, Inc. and Morgan Stanley & Co. International plc (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2013, File No. 001-35622).
|
43 | ||
Exhibit
|
|
|
No.
|
|
Description
|
10.37
|
|
Base Warrants Confirmation, dated November 19, 2013, between Albany Molecular Research, Inc. and JPMorgan Chase Bank, National Association, London Branch (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2013, File No. 001-35622).
|
10.38
|
|
Base Warrants Confirmation, dated November 19, 2013, between Albany Molecular Research, Inc. and Morgan Stanley & Co. International plc (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2013, File No. 001-35622).
|
10.39
|
|
Amendment to Call Option Transaction Confirmation, dated November 29, 2013, between Albany Molecular Research, Inc. and JPMorgan Chase Bank, National Association, London Branch (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 4, 2013, File No. 001-35622).
|
10.40
|
|
Amendment to Call Option Transaction Confirmation, dated November 29, 2013, between Albany Molecular Research, Inc. and Morgan Stanley & Co. International plc (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 4, 2013, File No. 001-35622).
|
10.41
|
|
Additional Warrants Confirmation, dated November 29, 2013, between Albany Molecular Research, Inc. and JPMorgan Chase Bank, National Association, London Branch (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 4, 2013, File No. 001-35622).
|
10.42
|
|
Additional Warrants Confirmation, dated November 29, 2013, between Albany Molecular Research, Inc. and Morgan Stanley & Co. International plc (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 4, 2013, File No. 001-35622).
|
10.43*
|
|
Second Amended 1998 Employee Stock Purchase Plan of the Company, approved on June 5, 2013 (filed herein).
|
10.44*
|
|
Second Amended 2008 Stock Option and Incentive Plan, approved on June 5, 2013 (filed herein).
|
21.1
|
|
Subsidiaries of the Company (filed herein).
|
23.1
|
|
Consent of KPMG LLP (filed herein).
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) certification (filed herein).
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) certification (filed herein).
|
32.1
|
|
Section 1350 certification (furnished herein). (1)
|
32.2
|
|
Section 1350 certification (furnished herein). (1)
|
101
|
|
XBRL (extensible Business Reporting Language). The following materials from Albany Molecular Research, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2013 formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations , (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements.
|
* | Denotes management contract of compensation plan or arrangement |
(1) | This certification is not “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference into any filing under the Securities Act or the Exchange Act. |
44 | ||
Dated: March 17, 2014
|
Albany Molecular Research, Inc.
|
|
|
|
|
|
By:
|
/s/ William S. Marth
|
|
|
William S. Marth
|
|
|
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ William S. Marth
|
|
President, Chief Executive Officer
|
|
March 17, 2014
|
William S. Marth
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Michael M. Nolan
|
|
Vice President, Chief Financial Officer and Treasurer
|
|
March 17, 2014
|
Michael M. Nolan
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Thomas E. D’Ambra
|
|
Chairman of the Board
|
|
March 17, 2014
|
Thomas E. D’Ambra, Ph.D.
|
|
|
|
|
|
|
|
|
|
/s/ Veronica G.H. Jordan
|
|
Director
|
|
March 17, 2014
|
Veronica G.H. Jordan, Ph.D.
|
|
|
|
|
|
|
|
|
|
/s/ Gabriel Leung
|
|
Director
|
|
March 17, 2014
|
Gabriel Leung
|
|
|
|
|
|
|
|
|
|
/s/ Kevin O’Connor
|
|
Director
|
|
March 17, 2014
|
Kevin O’Connor
|
|
|
|
|
|
|
|
|
|
/s/ Arthur J. Roth
|
|
Director
|
|
March 17, 2014
|
Arthur J. Roth
|
|
|
|
|
|
|
|
|
|
/s/ Una S. Ryan
|
|
Director
|
|
March 17, 2014
|
Una S. Ryan, Ph.D., O.B.E.
|
|
|
|
|
45 | ||
|
Page
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
|
Consolidated Statements of Operations for the Years Ended December 31, 2013, 2012 and 2011
|
F-3
|
|
|
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2013, 2012 and 2011
|
F-4
|
|
|
Consolidated Balance Sheets at December 31, 2013 and 2012
|
F-5
|
|
|
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2013, 2012 and 2011
|
F-6
|
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2013, 2012 and 2011
|
F-7
|
|
|
Notes to Consolidated Financial Statements
|
F-8
|
F-1 | ||
F-2 | ||
|
|
Year Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|
|||
Contract revenue
|
|
$
|
210,001
|
|
$
|
189,858
|
|
$
|
169,611
|
|
Recurring royalties
|
|
|
36,574
|
|
|
35,988
|
|
|
35,034
|
|
Milestone revenue
|
|
|
|
|
|
840
|
|
|
3,000
|
|
Total revenue
|
|
|
246,575
|
|
|
226,686
|
|
|
207,645
|
|
Cost of contract revenue
|
|
|
171,923
|
|
|
168,064
|
|
|
168,470
|
|
Technology incentive award
|
|
|
2,767
|
|
|
3,143
|
|
|
3,557
|
|
Research and development
|
|
|
414
|
|
|
906
|
|
|
7,939
|
|
Selling, general and administrative
|
|
|
42,256
|
|
|
40,904
|
|
|
41,071
|
|
Goodwill impairment
|
|
|
|
|
|
|
|
|
15,812
|
|
Property and equipment impairment
|
|
|
1,857
|
|
|
8,334
|
|
|
4,674
|
|
Intangible asset impairment
|
|
|
|
|
|
|
|
|
856
|
|
Restructuring charges
|
|
|
7,183
|
|
|
4,632
|
|
|
1,271
|
|
Arbitration charge
|
|
|
|
|
|
|
|
|
127
|
|
Total costs and expenses
|
|
|
226,400
|
|
|
225,983
|
|
|
243,777
|
|
Income (loss) from operations
|
|
|
20,175
|
|
|
703
|
|
|
(36,132)
|
|
Interest expense
|
|
|
(1,255)
|
|
|
(463)
|
|
|
(714)
|
|
Interest income
|
|
|
11
|
|
|
9
|
|
|
131
|
|
Other income (expense) net
|
|
|
772
|
|
|
(130)
|
|
|
77
|
|
Income (loss) before income tax expense (benefit)
|
|
|
19,703
|
|
|
119
|
|
|
(36,638)
|
|
Income tax expense (benefit)
|
|
|
7,023
|
|
|
3,896
|
|
|
(4,342)
|
|
Net income (loss)
|
|
$
|
12,680
|
|
$
|
(3,777)
|
|
$
|
(32,296)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
0.41
|
|
$
|
(0.12)
|
|
$
|
(1.08)
|
|
Diluted earnings (loss) per share
|
|
$
|
0.40
|
|
$
|
(0.12)
|
|
$
|
(1.08)
|
|
F-3 | ||
|
|
Years Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|
|||
Net income (loss)
|
|
$
|
12,680
|
|
$
|
(3,777)
|
|
$
|
(32,296)
|
|
Unrealized gain (loss) on marketable securities, net of taxes
|
|
|
|
|
|
1
|
|
|
(21)
|
|
Foreign currency translation (loss) gain
|
|
|
(2,529)
|
|
|
1,239
|
|
|
(4,813)
|
|
Net actuarial gain (loss) of pension and postretirement benefits
|
|
|
1,547
|
|
|
531
|
|
|
(2,292)
|
|
Total comprehensive income (loss)
|
|
$
|
11,698
|
|
$
|
(2,006)
|
|
$
|
(39,422)
|
|
F-4 | ||
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
175,928
|
|
$
|
23,293
|
|
Restricted cash
|
|
|
714
|
|
|
702
|
|
Accounts receivable, net
|
|
|
52,216
|
|
|
42,496
|
|
Royalty income receivable
|
|
|
7,523
|
|
|
8,180
|
|
Inventory
|
|
|
31,991
|
|
|
28,216
|
|
Prepaid expenses and other current assets
|
|
|
7,061
|
|
|
7,337
|
|
Deferred income taxes
|
|
|
3,586
|
|
|
3,200
|
|
Total current assets
|
|
|
279,019
|
|
|
113,424
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
127,775
|
|
|
135,519
|
|
Notes hedges
|
|
|
22,654
|
|
|
|
|
Restricted cash
|
|
|
3,810
|
|
|
4,524
|
|
Intangible assets and patents, net
|
|
|
3,042
|
|
|
3,065
|
|
Deferred income taxes
|
|
|
2,047
|
|
|
3,520
|
|
Other assets
|
|
|
6,921
|
|
|
2,810
|
|
Total assets
|
|
$
|
445,268
|
|
$
|
262,862
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
24,179
|
|
$
|
18,194
|
|
Deferred revenue and licensing fees
|
|
|
6,588
|
|
|
7,365
|
|
Accrued compensation
|
|
|
5,995
|
|
|
5,372
|
|
Arbitration reserve
|
|
|
1,351
|
|
|
2,717
|
|
Income taxes payable
|
|
|
3,954
|
|
|
1,148
|
|
Accrued pension benefits
|
|
|
811
|
|
|
414
|
|
Current installments of long-term debt
|
|
|
1,024
|
|
|
776
|
|
Total current liabilities
|
|
|
43,902
|
|
|
35,986
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
Long-term debt, excluding current installments
|
|
|
123,135
|
|
|
7,227
|
|
Notes conversion derivative
|
|
|
22,654
|
|
|
|
|
Deferred licensing fees
|
|
|
1,926
|
|
|
2,857
|
|
Pension and postretirement benefits
|
|
|
6,059
|
|
|
8,691
|
|
Deferred income taxes
|
|
|
631
|
|
|
753
|
|
Other long-term liabilities
|
|
|
1,257
|
|
|
1,207
|
|
Total liabilities
|
|
|
199,564
|
|
|
56,721
|
|
Commitments and contingencies (Notes 10 and 12)
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, authorized 2,000 shares, none issued or outstanding
|
|
|
|
|
|
|
|
Common stock, $0.01 par value, authorized 50,000 shares, 37,023 shares issued in 2013
and 36,326 shares issued in 2012 |
|
|
370
|
|
|
363
|
|
Additional paid-in capital
|
|
|
235,806
|
|
|
207,784
|
|
Retained earnings
|
|
|
87,857
|
|
|
75,177
|
|
Accumulated other comprehensive loss, net
|
|
|
(11,277)
|
|
|
(10,295)
|
|
|
|
|
312,756
|
|
|
273,029
|
|
Less, treasury shares at cost, 5,425 shares in 2013 and 5,411 shares in 2012
|
|
|
(67,052)
|
|
|
(66,888)
|
|
Total stockholders’ equity
|
|
|
245,704
|
|
|
206,141
|
|
Total liabilities and stockholders’ equity
|
|
$
|
445,268
|
|
$
|
262,862
|
|
F-5 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Additional
|
|
|
|
|
Other
|
|
Treasury Stock
|
|
|
|
|
||||||||
|
|
Preferred
|
|
Number of
|
|
Par
|
|
Paid-in
|
|
Retained
|
|
Comprehensive
|
|
Number of
|
|
|
|
|
|
|
|
|||||
|
|
Stock
|
|
Shares
|
|
Value
|
|
Capital
|
|
Earnings
|
|
Income (Loss)
|
|
Shares
|
|
Amount
|
|
Total
|
|
|||||||
Balances at January 1, 2011
|
|
$
|
|
|
35,667
|
|
$
|
357
|
|
$
|
203,964
|
|
$
|
111,250
|
|
$
|
(4,940)
|
|
(5,411)
|
|
$
|
(66,888)
|
|
$
|
243,743
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(32,296)
|
|
|
|
|
|
|
|
|
|
|
(32,296)
|
|
Unrealized loss on investment securities,
available-for-sale, net of taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(21)
|
|
|
|
|
|
|
|
(21)
|
|
Pension and other postretirement benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of actuarial loss, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
323
|
|
|
|
|
|
|
|
323
|
|
Current year actuarial loss, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,615)
|
|
|
|
|
|
|
|
(2,615)
|
|
Foreign currency translation loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,813)
|
|
|
|
|
|
|
|
(4,813)
|
|
Tax expense from share-based compensation
|
|
|
|
|
|
|
|
|
|
|
(202)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(202)
|
|
Share-based payment expense
|
|
|
|
|
|
|
|
|
|
|
1,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,643
|
|
Issuance of restricted stock
|
|
|
|
|
318
|
|
|
3
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Forfeiture of unearned compensation - restricted stock
|
|
|
|
|
(124)
|
|
|
(1)
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Issuance of common stock in connection with
stock option plan and ESPP |
|
|
|
|
155
|
|
|
1
|
|
|
671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
672
|
|
Balances at December 31, 2011
|
|
|
|
|
36,016
|
|
|
360
|
|
|
206,074
|
|
|
78,954
|
|
|
(12,066)
|
|
(5,411)
|
|
|
(66,888)
|
|
|
206,434
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,777)
|
|
|
|
|
|
|
|
|
|
|
(3,777)
|
|
Unrealized loss on investment securities,
available-for-sale, net of taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Pension and other postretirement benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of actuarial loss, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
498
|
|
|
|
|
|
|
|
498
|
|
Current year actuarial gain, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
|
|
|
|
|
|
|
|
33
|
|
Foreign currency translation gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,239
|
|
|
|
|
|
|
|
1,239
|
|
Tax shortfall from share-based compensation
|
|
|
|
|
|
|
|
|
|
|
(747)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(747)
|
|
Share-based payment expense
|
|
|
|
|
|
|
|
|
|
|
1,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,896
|
|
Issuance of restricted stock
|
|
|
|
|
140
|
|
|
1
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Forfeiture of unearned compensation - restricted stock
|
|
|
|
|
(56)
|
|
|
-
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
|
|
Issuance of common stock in connection with
stock option plan and ESPP |
|
|
|
|
226
|
|
|
2
|
|
|
529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
531
|
|
Balances at December 31, 2012
|
|
|
|
|
36,326
|
|
|
363
|
|
|
207,784
|
|
|
75,177
|
|
|
(10,295)
|
|
(5,411)
|
|
|
(66,888)
|
|
|
206,141
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,680
|
|
|
|
|
|
|
|
|
|
|
12,680
|
|
Pension and other postretirement benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of actuarial loss, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
535
|
|
|
|
|
|
|
|
535
|
|
Current year actuarial gain, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,012
|
|
|
|
|
|
|
|
1,012
|
|
Foreign currency translation gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,529)
|
|
|
|
|
|
|
|
(2,529)
|
|
Excess tax benefit from share-based compensation
|
|
|
|
|
|
|
|
|
|
|
785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
785
|
|
Share-based payment expense
|
|
|
|
|
|
|
|
|
|
|
2,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,620
|
|
Issuance of restricted stock
|
|
|
|
|
266
|
|
|
3
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Forfeiture of unearned compensation - restricted stock
|
|
|
|
|
(49)
|
|
|
(1)
|
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
Issuance of common stock in connection with
stock option plan and ESPP |
|
|
|
|
480
|
|
|
5
|
|
|
1,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,527
|
|
Treasury repurchases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14)
|
|
|
(164)
|
|
|
(164)
|
|
Sale of Warrants
|
|
|
|
|
|
|
|
|
|
|
23,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,100
|
|
Balances at December 31, 2013
|
|
$
|
|
|
37,023
|
|
$
|
370
|
|
$
|
235,806
|
|
$
|
87,857
|
|
$
|
(11,277)
|
|
(5,425)
|
|
$
|
(67,052)
|
|
$
|
245,704
|
|
F-6 | ||
|
|
Year ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|
|||
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
12,680
|
|
$
|
(3,777)
|
|
$
|
(32,296)
|
|
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
15,871
|
|
|
17,332
|
|
|
17,970
|
|
Accretion of discount on long-term debt
|
|
|
531
|
|
|
|
|
|
|
|
Provision for doubtful accounts
|
|
|
267
|
|
|
148
|
|
|
200
|
|
Deferred income tax benefit
|
|
|
125
|
|
|
3,368
|
|
|
(976)
|
|
Goodwill impairment
|
|
|
|
|
|
|
|
|
15,812
|
|
Property and equipment impairment
|
|
|
1,857
|
|
|
8,334
|
|
|
4,674
|
|
Intangible asset impairment
|
|
|
|
|
|
|
|
|
856
|
|
Loss on disposal of property and equipment
|
|
|
234
|
|
|
176
|
|
|
83
|
|
Share-based compensation expense
|
|
|
2,620
|
|
|
1,896
|
|
|
1,643
|
|
Excess tax benefit of stock option exercises
|
|
|
(785)
|
|
|
|
|
|
|
|
Other
|
|
|
20
|
|
|
41
|
|
|
224
|
|
Changes in operating assets and liabilities that provide (use) cash:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(9,987)
|
|
|
(12,207)
|
|
|
2,129
|
|
Royalty income receivable
|
|
|
657
|
|
|
(1,361)
|
|
|
597
|
|
Inventory
|
|
|
(5,141)
|
|
|
(3,577)
|
|
|
(4,618)
|
|
Prepaid expenses and other assets
|
|
|
541
|
|
|
1,467
|
|
|
3,794
|
|
Accounts payable, accrued compensation and accrued expenses
|
|
|
7,697
|
|
|
196
|
|
|
(6,233)
|
|
Income taxes receivable/payable
|
|
|
3,591
|
|
|
4,555
|
|
|
4,258
|
|
Deferred revenue and licensing fees
|
|
|
(1,708)
|
|
|
(528)
|
|
|
(9,047)
|
|
Pension and postretirement benefits
|
|
|
145
|
|
|
(540)
|
|
|
(355)
|
|
Other long-term liabilities
|
|
|
(1,039)
|
|
|
(186)
|
|
|
(196)
|
|
Net cash provided by (used in) operating activities
|
|
|
28,176
|
|
|
15,337
|
|
|
(1,481)
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
Purchases of marketable securities
|
|
|
|
|
|
|
|
|
(817)
|
|
Proceeds from sales and maturities of marketable securities
|
|
|
|
|
|
213
|
|
|
16,044
|
|
Purchases of property and equipment
|
|
|
(11,135)
|
|
|
(9,890)
|
|
|
(10,837)
|
|
Payments for patent applications and other costs
|
|
|
(411)
|
|
|
(552)
|
|
|
(423)
|
|
Proceeds from disposal of property and equipment
|
|
|
300
|
|
|
447
|
|
|
|
|
Net cash (used in) provided by investing activities
|
|
|
(11,246)
|
|
|
(9,782)
|
|
|
3,967
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Issuance of long-term debt
|
|
|
150,000
|
|
|
5,000
|
|
|
|
|
Proceeds from sale of warrants
|
|
|
23,100
|
|
|
|
|
|
|
|
Payment for bond hedge options
|
|
|
(33,600)
|
|
|
|
|
|
|
|
Principal payments on long-term debt
|
|
|
(775)
|
|
|
(2,839)
|
|
|
(7,370)
|
|
Deferred financing costs
|
|
|
(4,690)
|
|
|
|
|
|
|
|
Purchases of treasury stock
|
|
|
(164)
|
|
|
|
|
|
|
|
Changes in restricted cash
|
|
|
702
|
|
|
(5,226)
|
|
|
|
|
Tax benefit (expense) of stock option exercises
|
|
|
785
|
|
|
|
|
|
(270)
|
|
Proceeds from exercise of options and Employee Stock Purchase Plan
|
|
|
1,527
|
|
|
531
|
|
|
671
|
|
Net cash provided by (used in) financing activities
|
|
|
136,885
|
|
|
(2,534)
|
|
|
(6,969)
|
|
Effect of exchange rate changes on cash flows
|
|
|
(1,180)
|
|
|
288
|
|
|
(1,280)
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
152,635
|
|
|
3,309
|
|
|
(5,763)
|
|
Cash and cash equivalents at beginning of year
|
|
|
23,293
|
|
|
19,984
|
|
|
25,747
|
|
Cash and cash equivalents at end of year
|
|
$
|
175,928
|
|
$
|
23,293
|
|
$
|
19,984
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash activities:
|
|
|
|
|
|
|
|
|
|
|
Actuarial loss (gain) on pension and other postretirement liability, net of tax
|
|
$
|
1,547
|
|
$
|
531
|
|
$
|
(2,292)
|
|
Issuance of restricted stock
|
|
$
|
1,960
|
|
$
|
436
|
|
$
|
1,647
|
|
Non-cash forgiveness of arbitration reserve
|
|
$
|
1,366
|
|
$
|
1,365
|
|
$
|
5,716
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
1,251
|
|
$
|
463
|
|
$
|
714
|
|
Income taxes
|
|
$
|
3,398
|
|
$
|
759
|
|
$
|
910
|
|
F-7 | ||
F-8 | ||
F-9 | ||
|
·
|
Up to $14,000 in clinical development milestones; and
|
|
·
|
Up to $30,000 in regulatory milestones, due upon acceptance and/or approval of new drug application filings with regulatory agencies in various jurisdictions.
|
|
·
|
The Company considered each individual milestone to be commensurate with the enhanced value of the underlying licensed intellectual property as it is advanced from the development stage to a commercialized product, and considered them to be reasonable when evaluated in relation to the total agreement consideration, including other milestones.
|
|
·
|
The milestones are deemed to relate solely to past performance, as each milestone is payable to the Company only after the achievement of the related event defined in the agreement, and is not refundable if additional future success events do not occur.
|
F-10 | ||
Laboratory equipment and fixtures
|
|
7-18 years
|
Office equipment
|
|
3-7 years
|
Computer equipment
|
|
3-5 years
|
Buildings
|
|
39 years
|
F-11 | ||
|
·
|
a significant change in the extent or manner in which a long-lived asset group is being used;
|
|
·
|
a significant change in the business climate that could affect the value of a long-lived asset group; or
|
|
·
|
a significant decrease in the market value of assets.
|
F-12 | ||
|
|
Year Ended December 31, 2013
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
||||||||||||||||||
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Net
|
|
Average
|
|
Per Share
|
|
Net
|
|
Average
|
|
Per Share
|
|
Net
|
|
Average
|
|
Per Share
|
|
||||||
|
|
Income
|
|
Shares
|
|
Amount
|
|
Loss
|
|
Shares
|
|
Amount
|
|
Loss
|
|
Shares
|
|
Amount
|
|
||||||
Basic earnings (loss) per share
|
|
$
|
12,680
|
|
30,912
|
|
$
|
0.41
|
|
$
|
(3,777)
|
|
30,318
|
|
$
|
(0.12)
|
|
$
|
(32,296)
|
|
29,961
|
|
$
|
(1.08)
|
|
Dilutive effect of share-based
equity |
|
|
|
|
936
|
|
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per
share |
|
$
|
12,680
|
|
31,848
|
|
$
|
0.40
|
|
$
|
(3,777)
|
|
30,318
|
|
$
|
(0.12)
|
|
$
|
(32,296)
|
|
29,961
|
|
$
|
(1.08)
|
|
F-13 | ||
|
2.
|
Restructuring
|
F-14 | ||
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|||||
|
|
|
|
|
|
|
|
Currency
|
|
|
|
|||||
|
|
|
|
|
|
|
|
Translation &
|
|
|
|
|||||
|
|
Balance at
|
|
|
|
Amounts
|
|
Other
|
|
Balance at
|
|
|||||
|
|
January 1,
|
|
Charges/
|
|
Paid/
|
|
Adjustments
|
|
December 31,
|
|
|||||
|
|
2013
|
|
(reversals)
|
|
Adjustments
|
|
(1)
|
|
2013
|
|
|||||
Termination benefits and personnel realignment
|
|
$
|
386
|
|
$
|
1,047
|
|
$
|
(1,114)
|
|
$
|
4
|
|
$
|
323
|
|
Lease termination and relocation charges
|
|
|
1,405
|
|
|
5,997
|
|
|
(4,950)
|
|
|
1,130
|
|
|
3,582
|
|
Other
|
|
|
470
|
|
|
139
|
|
|
(139)
|
|
|
1
|
|
|
471
|
|
Total
|
|
$
|
2,261
|
|
|
7,183
|
|
$
|
(6,203)
|
|
$
|
1,135
|
|
$
|
4,376
|
|
|
(1)
|
Included in lease termination and relocation charges adjustments are reclassifications of unamortized deferred rent balances from accrued expenses into the restructuring reserve of $1,148.
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|||||
|
|
Balance at
|
|
|
|
|
|
Currency
|
|
Balance at
|
|
|||||
|
|
January 1,
|
|
Charges/
|
|
Amounts
|
|
Translation
|
|
December 31,
|
|
|||||
|
|
2012
|
|
(reversals)
|
|
Paid
|
|
Adjustments
|
|
2012
|
|
|||||
Termination benefits and personnel realignment
|
|
$
|
456
|
|
$
|
1,076
|
|
$
|
(1,154)
|
|
$
|
8
|
|
$
|
386
|
|
Lease termination and relocation charges
|
|
|
1,128
|
|
|
2,713
|
|
|
(2,446)
|
|
|
10
|
|
|
1,405
|
|
Other
|
|
|
354
|
|
|
843
|
|
|
(727)
|
|
|
|
|
|
470
|
|
Total
|
|
$
|
1,938
|
|
$
|
4,632
|
|
$
|
(4,327)
|
|
$
|
18
|
|
$
|
2,261
|
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
Raw materials
|
|
$
|
8,384
|
|
$
|
8,575
|
|
Work in process
|
|
|
3,314
|
|
|
2,949
|
|
Finished goods
|
|
|
20,293
|
|
|
16,692
|
|
Total inventories, at cost
|
|
$
|
31,991
|
|
$
|
28,216
|
|
F-15 | ||
|
4.
|
Property and Equipment
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
Laboratory equipment and fixtures
|
|
$
|
147,747
|
|
$
|
149,448
|
|
Office equipment
|
|
|
33,604
|
|
|
32,985
|
|
Leasehold improvements
|
|
|
38,856
|
|
|
39,612
|
|
Buildings
|
|
|
61,802
|
|
|
62,146
|
|
Land
|
|
|
2,679
|
|
|
2,676
|
|
|
|
|
284,688
|
|
|
286,867
|
|
Less accumulated depreciation and amortization
|
|
|
(166,988)
|
|
|
(158,972)
|
|
|
|
|
117,700
|
|
|
127,895
|
|
Construction-in-progress
|
|
|
10,075
|
|
|
7,624
|
|
|
|
$
|
127,775
|
|
$
|
135,519
|
|
|
5.
|
Intangible Assets
|
|
|
|
|
Accumulated
|
|
|
|
Amortization
|
|
||||
|
|
Cost
|
|
Amortization
|
|
Net
|
|
Period
|
|
||||
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents and Licensing Rights
|
|
$
|
4,318
|
|
$
|
(1,514)
|
|
$
|
2,804
|
|
|
2-16 years
|
|
Customer Relationships
|
|
|
815
|
|
|
(577)
|
|
|
238
|
|
|
5 years
|
|
Total
|
|
$
|
5,133
|
|
$
|
(2,091)
|
|
$
|
3,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents and Licensing Rights
|
|
$
|
4,333
|
|
$
|
(1,669)
|
|
$
|
2,664
|
|
|
2-16 years
|
|
Customer Relationships
|
|
|
815
|
|
|
(414)
|
|
|
401
|
|
|
5 years
|
|
Total
|
|
$
|
5,148
|
|
$
|
(2,083)
|
|
$
|
3,065
|
|
|
|
|
F-16 | ||
Year ending December 31,
|
|
|
|
|
2014
|
|
$
|
426
|
|
2015
|
|
|
338
|
|
2016
|
|
|
263
|
|
2017
|
|
|
263
|
|
2018
|
|
|
259
|
|
Thereafter
|
|
|
1,493
|
|
Total
|
|
$
|
3,042
|
|
|
6.
|
Debt
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
||
Convertible senior notes, net of unamortized debt discount
|
|
$
|
116,931
|
|
$
|
|
|
Term loan
|
|
|
4,524
|
|
|
5,000
|
|
Industrial development authority bond
|
|
|
2,695
|
|
|
2,990
|
|
Miscellaneous loan
|
|
|
9
|
|
|
13
|
|
|
|
|
124,159
|
|
|
8,003
|
|
Less current portion
|
|
|
(1,024)
|
|
|
(776)
|
|
Total long-term debt
|
|
$
|
123,135
|
|
$
|
7,227
|
|
2014
|
|
$
|
1,024
|
|
2015
|
|
|
1,029
|
|
2016
|
|
|
1,034
|
|
2017
|
|
|
2,711
|
|
2018
|
|
|
150,340
|
|
Thereafter
|
|
|
1,090
|
|
Total
|
|
$
|
157,228
|
|
F-17 | ||
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
Principal amount
|
|
$
|
150,000
|
|
$
|
|
|
Unamortized debt discount
|
|
|
33,069
|
|
|
|
|
Net carrying amount of Notes
|
|
$
|
116,931
|
|
$
|
|
|
F-18 | ||
|
|
Location on Balance Sheet
|
|
December 31,
|
|
||||
|
|
|
|
2013
|
|
2012
|
|
||
Notes Hedges
|
|
Other assets
|
|
$
|
22,654
|
|
$
|
|
|
Notes Conversion Derivative
|
|
Other liabilities
|
|
$
|
(22,654)
|
|
$
|
|
|
F-19 | ||
|
|
Year Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|
|||
Income (loss) before taxes:
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
19,490
|
|
$
|
9,990
|
|
$
|
(19,498)
|
|
Foreign
|
|
|
213
|
|
|
(9,871)
|
|
|
(17,140)
|
|
|
|
$
|
19,703
|
|
$
|
119
|
|
$
|
(36,638)
|
|
Income tax expense (benefit):
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
6,155
|
|
$
|
188
|
|
$
|
(5,099)
|
|
State
|
|
|
|
|
|
|
|
|
157
|
|
Foreign
|
|
|
743
|
|
|
330
|
|
|
824
|
|
|
|
|
6,898
|
|
|
518
|
|
|
(4,118)
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
227
|
|
|
3,399
|
|
|
(839)
|
|
State
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
(102)
|
|
|
(21)
|
|
|
615
|
|
|
|
|
125
|
|
|
3,378
|
|
|
(224)
|
|
|
|
$
|
7,023
|
|
$
|
3,896
|
|
$
|
(4,342)
|
|
|
|
Year Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|
|||
Pre-tax income (loss) at statutory rate
|
|
$
|
6,896
|
|
$
|
42
|
|
$
|
(12,807)
|
|
Increase (reduction) in taxes resulting from:
|
|
|
|
|
|
|
|
|
|
|
Tax-exempt interest income
|
|
|
|
|
|
|
|
|
(35)
|
|
State taxes, net of federal benefit and valued credits
|
|
|
|
|
|
|
|
|
102
|
|
Rate differential on foreign operations
|
|
|
(1,018)
|
|
|
1,666
|
|
|
324
|
|
Domestic production deduction
|
|
|
(602)
|
|
|
(79)
|
|
|
|
|
Change in valuation allowance
|
|
|
4,518
|
|
|
671
|
|
|
1,642
|
|
Research and development credits
|
|
|
(723)
|
|
|
10
|
|
|
(115)
|
|
Employee Stock Purchase Plan
|
|
|
85
|
|
|
56
|
|
|
96
|
|
Goodwill impairment
|
|
|
|
|
|
|
|
|
4,594
|
|
Increase (reduction) in uncertain tax position reserves
|
|
|
|
|
|
|
|
|
326
|
|
Other, net
|
|
|
(2,133)
|
|
|
1,530
|
|
|
1,531
|
|
|
|
$
|
7,023
|
|
$
|
3,896
|
|
$
|
(4,342)
|
|
F-20 | ||
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
Deferred tax assets:
|
|
|
|
|
|
|
|
Nondeductible accrued expenses
|
|
$
|
458
|
|
$
|
1,181
|
|
Library amortization and impairment charges
|
|
|
1,808
|
|
|
1,922
|
|
Inventories
|
|
|
1,799
|
|
|
1,676
|
|
State tax credit carry-forwards
|
|
|
5,178
|
|
|
5,071
|
|
Investment write-downs and losses
|
|
|
867
|
|
|
867
|
|
Deferred income
|
|
|
1,090
|
|
|
1,781
|
|
Share-based compensation
|
|
|
1,377
|
|
|
1,131
|
|
Goodwill and intangibles
|
|
|
5,938
|
|
|
6,743
|
|
Arbitration reserve
|
|
|
473
|
|
|
951
|
|
Restructuring
|
|
|
2,619
|
|
|
1,655
|
|
Pension
|
|
|
2,432
|
|
|
3,270
|
|
Net operating loss carry-forwards
|
|
|
14,954
|
|
|
10,048
|
|
Federal tax credit carry-forward
|
|
|
366
|
|
|
920
|
|
Other, net
|
|
|
933
|
|
|
892
|
|
|
|
|
40,292
|
|
|
38,108
|
|
Less valuation allowance
|
|
|
(21,403)
|
|
|
(16,885)
|
|
Deferred tax assets, net
|
|
|
18,889
|
|
|
21,223
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
Property and equipment depreciation differences
|
|
|
(13,638)
|
|
|
(15,027)
|
|
Prepaid real estate taxes
|
|
|
(249)
|
|
|
(229)
|
|
Other, net
|
|
|
-
|
|
|
-
|
|
Net deferred tax asset
|
|
$
|
5,002
|
|
$
|
5,967
|
|
|
|
December 31,
|
|
December 31,
|
|
||
|
|
2013
|
|
2012
|
|
||
U.S.
|
|
$
|
10,029
|
|
$
|
7,163
|
|
Foreign
|
|
|
11,374
|
|
|
9,722
|
|
Total valuation allowance
|
|
$
|
21,403
|
|
$
|
16,885
|
|
F-21 | ||
|
|
2013
|
|
2012
|
|
||
Balance at January 1
|
|
$
|
326
|
|
$
|
326
|
|
Increases related to prior year tax positions
|
|
|
|
|
|
|
|
Decreases related to prior year tax positions
|
|
|
|
|
|
|
|
Balance at December 31
|
|
$
|
326
|
|
$
|
326
|
|
|
8.
|
Share-based Compensation
|
|
|
Number of
|
|
|
|
Shares
|
|
Stock Option Plans
|
|
2,692
|
|
Employee Stock Purchase Plan
|
|
474
|
|
Shares reserved for issuance
|
|
3,166
|
|
F-22 | ||
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Expected life in years
|
|
5
|
|
|
5
|
|
|
5
|
|
Interest rate
|
|
0.90
|
%
|
|
0.83
|
%
|
|
1.20
|
%
|
Volatility
|
|
55
|
%
|
|
57
|
%
|
|
57
|
%
|
Dividend yield
|
|
|
|
|
|
|
|
|
|
F-23 | ||
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
|
|
|
Weighted
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
|
Number of
|
|
Exercise
|
|
Contractual Term
|
|
|
Intrinsic
|
|
|
|
|
Shares
|
|
Price
|
|
(Years)
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, January 1, 2011
|
|
1,557
|
|
$
|
17.43
|
|
|
|
|
|
|
Granted
|
|
1,615
|
|
|
3.03
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
(213)
|
|
|
18.34
|
|
|
|
|
|
|
Expired
|
|
(197)
|
|
|
35.98
|
|
|
|
|
|
|
Outstanding, December 31, 2011
|
|
2,762
|
|
$
|
7.58
|
|
|
|
|
|
|
Granted
|
|
430
|
|
|
3.00
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
(678)
|
|
|
7.34
|
|
|
|
|
|
|
Expired
|
|
(125)
|
|
|
24.92
|
|
|
|
|
|
|
Outstanding, December 31, 2012
|
|
2,389
|
|
$
|
5.90
|
|
|
|
|
|
|
Granted
|
|
354
|
|
|
6.78
|
|
|
|
|
|
|
Exercised
|
|
(310)
|
|
|
3.01
|
|
|
|
|
|
|
Forfeited
|
|
(211)
|
|
|
6.52
|
|
|
|
|
|
|
Expired
|
|
(176)
|
|
|
15.24
|
|
|
|
|
|
|
Outstanding, December 31, 2013
|
|
2,046
|
|
$
|
5.62
|
|
7.1
|
|
$
|
10,214
|
|
Options exercisable, December 31, 2013
|
|
1,072
|
|
$
|
6.56
|
|
6.0
|
|
$
|
4,740
|
|
F-24 | ||
|
|
|
|
|
Weighted
|
|
|
|
Number of
|
|
|
Average Grant Date
|
|
|
|
Shares
|
|
Fair Value
|
|
|
Outstanding, January 1, 2011
|
|
483
|
|
$
|
9.61
|
|
Granted
|
|
318
|
|
|
5.19
|
|
Vested
|
|
(116)
|
|
|
11.06
|
|
Forfeited
|
|
(124)
|
|
|
8.06
|
|
Outstanding, December 31, 2011
|
|
561
|
|
$
|
7.14
|
|
Granted
|
|
140
|
|
|
3.12
|
|
Vested
|
|
(177)
|
|
|
7.68
|
|
Forfeited
|
|
(56)
|
|
|
6.16
|
|
Outstanding, December 31, 2012
|
|
468
|
|
$
|
5.85
|
|
Granted
|
|
266
|
|
|
7.37
|
|
Vested
|
|
(175)
|
|
|
6.95
|
|
Forfeited
|
|
(50)
|
|
|
5.64
|
|
Outstanding, December 31, 2013
|
|
509
|
|
$
|
6.28
|
|
F-25 | ||
|
9.
|
Employee Benefit Plans
|
F-26 | ||
|
|
|
|
|
|
|
|
Postretirement
|
|
||||
|
|
Pension Benefits
|
|
Benefits
|
|
||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at January 1
|
|
$
|
26,907
|
|
$
|
26,867
|
|
$
|
1,133
|
|
$
|
1,049
|
|
Service cost
|
|
|
|
|
|
|
|
|
63
|
|
|
61
|
|
Interest cost
|
|
|
916
|
|
|
1,008
|
|
|
48
|
|
|
48
|
|
Actuarial loss (gain)
|
|
|
(1,676)
|
|
|
597
|
|
|
103
|
|
|
(25)
|
|
Benefits paid
|
|
|
(1,566)
|
|
|
(1,565)
|
|
|
|
|
|
|
|
Benefit obligation at December 31
|
|
|
24,581
|
|
|
26,907
|
|
|
1,347
|
|
|
1,133
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at January 1
|
|
|
18,935
|
|
|
17,453
|
|
|
|
|
|
|
|
Actual return on plan assets
|
|
|
1,275
|
|
|
1,887
|
|
|
|
|
|
|
|
Employer contributions
|
|
|
414
|
|
|
1,160
|
|
|
|
|
|
|
|
Benefits paid
|
|
|
(1,566)
|
|
|
(1,565)
|
|
|
|
|
|
|
|
Fair value of plan assets at December 31
|
|
|
19,058
|
|
|
18,935
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(5,523)
|
|
$
|
(7,972)
|
|
$
|
(1,347)
|
|
$
|
(1,133)
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement
|
|
|||||||
|
|
Pension Benefits
|
|
Benefits
|
|
||||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
|
||||||
Service cost
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
63
|
|
$
|
61
|
|
$
|
63
|
|
Interest cost
|
|
|
916
|
|
|
1,008
|
|
|
1,179
|
|
|
48
|
|
|
48
|
|
|
55
|
|
Expected return on plan assets
|
|
|
(1,291)
|
|
|
(1,263)
|
|
|
(1,285)
|
|
|
|
|
|
|
|
|
|
|
Amortization of net loss
|
|
|
822
|
|
|
766
|
|
|
496
|
|
|
1
|
|
|
|
|
|
1
|
|
Net periodic benefit cost
|
|
$
|
447
|
|
$
|
511
|
|
$
|
390
|
|
$
|
112
|
|
$
|
109
|
|
$
|
119
|
|
Recognized in AOCI (pre-tax):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
2
|
|
$
|
2
|
|
$
|
3
|
|
Net actuarial loss (gain)
|
|
|
6,902
|
|
|
9,384
|
|
|
10,177
|
|
|
44
|
|
|
(58)
|
|
|
(33)
|
|
Total recognized in AOCI (pre-tax)
|
|
$
|
6,902
|
|
$
|
9,384
|
|
$
|
10,177
|
|
$
|
46
|
|
$
|
(56)
|
|
$
|
(30)
|
|
Total recognized in consolidated
statement of operations and AOCI |
|
$
|
7,349
|
|
$
|
9,895
|
|
$
|
10,567
|
|
$
|
158
|
|
$
|
53
|
|
$
|
89
|
|
F-27 | ||
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Discount rate
|
|
3.50
|
%
|
|
4.00
|
%
|
|
5.10
|
%
|
Expected return on plan assets
|
|
7.70
|
%
|
|
8.00
|
%
|
|
8.00
|
%
|
Rate of compensation increase
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Health care cost trend rate assumed for next year
|
|
7.25
|
%
|
|
7.25
|
%
|
|
10.0
|
%
|
Rate to which the cost trend rate is assumed to
decline (the ultimate trend rate) |
|
5.0
|
%
|
|
5.0
|
%
|
|
5.0
|
%
|
Year that the rate reaches the ultimate trend rate
|
|
2022
|
|
|
2021
|
|
|
2017
|
|
|
|
1-Percentage-
|
|
1-Percentage-
|
|
||
|
|
Point Increase
|
|
Point Decrease
|
|
||
Effect on total of service and interest cost
|
|
$
|
31
|
|
$
|
(23)
|
|
Effect on accumulated postretirement benefit obligation
for the year ended December 31, 2013 |
|
$
|
288
|
|
$
|
(223)
|
|
|
|
2013
|
|
|
2012
|
|
||||||
|
|
Market Value
|
|
%
|
|
|
Market Value
|
|
%
|
|
||
Mutual Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
$
|
8,539
|
|
45
|
%
|
|
$
|
8,284
|
|
44
|
%
|
Debt securities
|
|
|
8,406
|
|
44
|
|
|
|
8,427
|
|
45
|
|
Real estate
|
|
|
949
|
|
5
|
|
|
|
935
|
|
5
|
|
Commodities
|
|
|
734
|
|
4
|
|
|
|
743
|
|
4
|
|
Other
|
|
|
430
|
|
2
|
|
|
|
546
|
|
2
|
|
Total
|
|
$
|
19,058
|
|
100
|
%
|
|
$
|
18,935
|
|
100
|
%
|
F-28 | ||
Equity securities
|
|
44
|
%
|
Debt securities
|
|
45
|
|
Real estate
|
|
5
|
|
Commodities
|
|
4
|
|
Other
|
|
2
|
|
Total
|
|
100
|
%
|
F-29 | ||
|
|
Pension
|
|
|
|
|
Benefits
|
|
|
2014
|
|
$
|
1,637
|
|
2015
|
|
|
1,659
|
|
2016
|
|
|
1,634
|
|
2017
|
|
|
1,628
|
|
2018
|
|
|
1,667
|
|
2019 - 2023
|
|
|
8,074
|
|
|
10.
|
Lease Commitments
|
Year ending December 31,
|
|
|
|
2014
|
$
|
3,150
|
|
2015
|
|
2,143
|
|
2016
|
|
1,309
|
|
2017
|
|
1,214
|
|
2018
|
|
1,261
|
|
Thereafter
|
|
2,049
|
|
|
11.
|
Related Party Transactions
|
F-30 | ||
|
12.
|
Contingencies
|
F-31 | ||
|
13.
|
Concentration of Business and Geographic Information
|
|
|
Year Ended
December 31, |
|
||||||
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
United States
|
|
60
|
%
|
|
57
|
%
|
|
57
|
%
|
Europe
|
|
19
|
%
|
|
21
|
%
|
|
25
|
%
|
Asia
|
|
13
|
%
|
|
19
|
%
|
|
16
|
%
|
Other countries
|
|
8
|
%
|
|
3
|
%
|
|
2
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
2013
|
|
2012
|
|
||
United States
|
|
$
|
107,403
|
|
$
|
112,268
|
|
Asia
|
|
|
17,449
|
|
|
19,076
|
|
Europe
|
|
|
5,965
|
|
|
7,240
|
|
Total long-lived assets
|
|
$
|
130,817
|
|
$
|
138,584
|
|
|
14.
|
Business Segments
|
F-32 | ||
|
|
DDS
|
|
LSM
|
|
Total
|
|
|||
Contract revenue
|
|
$
|
77,418
|
|
$
|
132,583
|
|
$
|
210,001
|
|
Recurring royalties and milestones
|
|
|
27,612
|
|
|
8,962
|
|
|
36,574
|
|
Total revenue
|
|
$
|
105,030
|
|
$
|
141,545
|
|
$
|
246,575
|
|
Operating income before unallocated expenses
|
|
$
|
27,139
|
|
$
|
35,292
|
|
$
|
62,431
|
|
Unallocated expenses:
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
|
|
|
|
|
42,256
|
|
Total unallocated expenses
|
|
|
|
|
|
|
|
|
42,256
|
|
Operating income
|
|
|
|
|
|
|
|
|
20,175
|
|
Reconciling items:
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
(1,244)
|
|
Other income, net
|
|
|
|
|
|
|
|
|
772
|
|
Income before income taxes
|
|
|
|
|
|
|
|
$
|
19,703
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and intangible amortization
|
|
$
|
7,597
|
|
$
|
7,983
|
|
$
|
15,580
|
|
Long-lived asset impairment
|
|
$
|
1,857
|
|
$
|
|
|
$
|
1,857
|
|
Restructuring charges
|
|
$
|
6,375
|
|
$
|
808
|
|
$
|
7,183
|
|
|
|
DDS
|
|
LSM
|
|
Total
|
|
|||
Total assets
|
|
$
|
259,736
|
|
$
|
185,532
|
|
$
|
445,268
|
|
Investments in unconsolidated affiliates
|
|
|
956
|
|
|
|
|
|
956
|
|
Capital expenditures
|
|
|
2,900
|
|
|
8,235
|
|
|
11,135
|
|
|
|
DDS
|
|
LSM
|
|
Total
|
|
|||
Contract revenue
|
|
$
|
73,458
|
|
$
|
116,400
|
|
$
|
189,858
|
|
Recurring royalties and milestones
|
|
|
32,039
|
|
|
4,789
|
|
|
36,828
|
|
Total revenue
|
|
$
|
105,497
|
|
$
|
121,189
|
|
$
|
226,686
|
|
Operating income before unallocated expenses
|
|
$
|
18,331
|
|
$
|
23,276
|
|
$
|
41,607
|
|
Unallocated expenses:
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
|
|
|
|
|
40,904
|
|
Total unallocated expenses
|
|
|
|
|
|
|
|
|
40,904
|
|
Operating income
|
|
|
|
|
|
|
|
|
703
|
|
Reconciling items:
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
(454)
|
|
Other income, net
|
|
|
|
|
|
|
|
|
(130)
|
|
Income before income taxes
|
|
|
|
|
|
|
|
$
|
119
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and intangible amortization
|
|
$
|
9,550
|
|
$
|
7,782
|
|
$
|
17,332
|
|
Long-lived asset impairment
|
|
$
|
8,334
|
|
$
|
|
|
$
|
8,334
|
|
Restructuring charges
|
|
$
|
4,632
|
|
$
|
|
|
$
|
4,632
|
|
F-33 | ||
|
|
DDS
|
|
LSM
|
|
Total
|
|
|||
Total assets
|
|
$
|
122,169
|
|
$
|
140,693
|
|
$
|
262,862
|
|
Investments in unconsolidated affiliates
|
|
|
956
|
|
|
|
|
|
956
|
|
Capital expenditures
|
|
|
2,926
|
|
|
6,964
|
|
|
9,890
|
|
|
|
DDS
|
|
LSM
|
|
Total
|
|
|||
Contract revenue
|
|
$
|
74,032
|
|
$
|
95,579
|
|
$
|
169,611
|
|
Recurring royalties and milestones
|
|
|
38,034
|
|
|
|
|
|
38,034
|
|
Total revenue
|
|
$
|
112,066
|
|
$
|
95,579
|
|
$
|
207,645
|
|
Operating income (loss) before unallocated expenses
|
|
$
|
5,851
|
|
$
|
(912)
|
|
$
|
4,939
|
|
Unallocated expenses:
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
|
|
|
|
|
41,071
|
|
Total unallocated expenses
|
|
|
|
|
|
|
|
|
41,071
|
|
Operating loss
|
|
|
|
|
|
|
|
|
(36,132)
|
|
Reconciling items:
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
(583)
|
|
Other income, net
|
|
|
|
|
|
|
|
|
77
|
|
Loss before income tax benefit
|
|
|
|
|
|
|
|
$
|
(36,638)
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and intangible amortization
|
|
$
|
10,351
|
|
$
|
7,619
|
|
$
|
17,970
|
|
Goodwill impairment charge
|
|
$
|
15,812
|
|
$
|
|
|
$
|
15,812
|
|
Long-lived asset impairment
|
|
$
|
4,674
|
|
$
|
|
|
$
|
4,674
|
|
Patent impairment
|
|
$
|
856
|
|
$
|
|
|
$
|
856
|
|
Restructuring charges
|
|
$
|
1,271
|
|
$
|
|
|
$
|
1,271
|
|
|
|
DDS
|
|
LSM
|
|
Total
|
|
|||
Total assets
|
|
$
|
146,017
|
|
$
|
117,050
|
|
$
|
263,067
|
|
Investments in unconsolidated affiliates
|
|
|
956
|
|
|
|
|
|
956
|
|
Capital expenditures
|
|
|
6,578
|
|
|
4,198
|
|
|
10,776
|
|
F-34 | ||
F-35 | ||
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
Pension and
|
|
Unrealized
|
|
Foreign
|
|
Other
|
|
||||
|
|
Postretirement
|
|
gains/(losses)
|
|
Currency
|
|
Comprehensive
|
|
||||
|
|
benefit plans
|
|
on securities
|
|
adjustments
|
|
Loss
|
|
||||
Balance at January 1, 2011, net of tax
|
|
$
|
(3,926)
|
|
$
|
20
|
|
$
|
(1,034)
|
|
$
|
(4,940)
|
|
Net current period change, net of tax
|
|
|
(2,292)
|
|
|
(21)
|
|
|
(4,813)
|
|
|
(7,126)
|
|
Balance at December 31, 2011, net of tax
|
|
|
(6,218)
|
|
|
(1)
|
|
|
(5,847)
|
|
|
(12,066)
|
|
Net current period change, net of tax
|
|
|
531
|
|
|
1
|
|
|
1,239
|
|
|
1,771
|
|
Balance at December 31, 2012, net of tax
|
|
|
(5,687)
|
|
|
|
|
|
(4,608)
|
|
|
(10,295)
|
|
Net current period change, net of tax
|
|
|
1,547
|
|
|
|
|
|
(2,529)
|
|
|
(982)
|
|
Balance at December 31, 2013, net of tax
|
|
$
|
(4,140)
|
|
$
|
|
|
$
|
(7,137)
|
|
$
|
(11,277)
|
|
F-36 | ||
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
||||
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract revenue
|
|
$
|
46,493
|
|
$
|
50,764
|
|
$
|
53,029
|
|
$
|
59,715
|
|
Recurring royalties and milestones
|
|
|
12,913
|
|
|
8,528
|
|
|
7,726
|
|
|
7,407
|
|
Total revenue
|
|
|
59,406
|
|
|
59,292
|
|
|
60,755
|
|
|
67,122
|
|
Income (loss) from operations
|
|
|
9,403
|
|
|
(2,211)
|
|
|
6,017
|
|
|
6,966
|
|
Net income (loss)
|
|
|
6,505
|
|
|
(2,247)
|
|
|
3,930
|
|
|
4,492
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.21
|
|
$
|
(0.07)
|
|
$
|
0.13
|
|
$
|
0.14
|
|
Diluted
|
|
$
|
0.21
|
|
$
|
(0.07)
|
|
$
|
0.12
|
|
$
|
0.14
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract revenue
|
|
$
|
42,710
|
|
$
|
42,390
|
|
$
|
45,627
|
|
$
|
59,131
|
|
Recurring royalties and milestones
|
|
|
10,985
|
|
|
7,619
|
|
|
10,143
|
|
|
8,081
|
|
Total revenue
|
|
|
53,695
|
|
|
50,009
|
|
|
55,770
|
|
|
67,212
|
|
(Loss) income from operations
|
|
|
(1,948)
|
|
|
1,494
|
|
|
(1,097)
|
|
|
2,254
|
|
Net (loss) income
|
|
|
(3,807)
|
|
|
257
|
|
|
(2,143)
|
|
|
1,916
|
|
Net (loss) income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.13)
|
|
$
|
0.01
|
|
$
|
(0.07)
|
|
$
|
0.07
|
|
Diluted
|
|
$
|
(0.13)
|
|
$
|
0.01
|
|
$
|
(0.07)
|
|
$
|
0.07
|
|
F-37 | ||
|
|
|
|
|
|
|
|
Deductions
|
|
|
|
|
|
|
|
Balance at
|
|
(Reversal of)/
|
|
Charged to
|
|
Balance at
|
|
||||
|
|
Beginning of
|
|
Charge to Cost
|
|
Reserves/
|
|
End of
|
|
||||
Description
|
|
Period
|
|
and Expenses
|
|
Adjustment
|
|
Period
|
|
||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
$
|
487
|
|
$
|
267
|
|
$
|
61
|
|
$
|
815
|
|
2012
|
|
$
|
545
|
|
$
|
73
|
|
$
|
(131)
|
|
$
|
487
|
|
2011
|
|
$
|
557
|
|
$
|
200
|
|
$
|
(212)
|
|
$
|
545
|
|
Deferred tax asset valuation allowance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
$
|
16,885
|
|
$
|
4,518
|
|
|
|
|
$
|
21,403
|
|
2012
|
|
$
|
16,214
|
|
$
|
671
|
|
|
|
|
$
|
16,885
|
|
2011
|
|
$
|
13,113
|
|
$
|
3,101
|
|
|
|
|
$
|
16,214
|
|
F-38 | ||
Exhibit 10.8
ALBANY MOLECULAR RESEARCH, INC.
AMENDED AND RESTATED
TECHNOLOGY DEVELOPMENT INCENTIVE PLAN
Section 1. Purpose. This Amended Technology Development Incentive Plan (the “Plan”) for employees of Albany Molecular Research, Inc. and its subsidiaries (the “Company”) is being amended and restated to terminate inclusion of new programs in the Plan and provide for an orderly termination of any projects previously approved under the Plan or any predecessor thereof. The Amended and Restated Plan shall become effective on November 4, 2013; however the certain terms of the Plan in effect prior to such date shall remain in effect with respect to the participants thereof, as set forth in Appendix A hereto.
Section 2. Administration. The Plan has been administered by a committee (the “Administrator”) Effective as of the date of this Amended Plan, the Administrator has determined that the programs set forth on Appendix A are approved programs under the Plan and that no other programs are or will become eligible for inclusion under the Plan.
Section 3. Participants. The remaining employees eligible to receive payments under the programs (“Participants”) described in Appendix A and shall be entitled to receive technology incentive compensation (“TIC”) in accordance with the terms of Appendix A. Notwithstanding the existence of this Plan, the Company shall own all right, title and interest in any intellectual property developed by any Participant during such Participant’s employment with the Company as further described in the Employee Innovation, Proprietary Information and Post-Employment Activity Agreement.
Section 4. No Further Projects: No further projects will be initiated under the Plan.
Section 5. Effective Date. The Plan became effective on June 4, 2007 and this amendment shall be effective as of November 4, 2013.
Section 6. No Assignments. A Participant’s rights, if any, in any TIC payable under the Plan may not be assigned or transferred except by will or by the laws of descent and distribution, and are not subject to attachment, garnishment, judicial order, execution or other creditor’s processes. The rights and obligations of the Company under the Plan may be assigned by the Company to a successor to substantially all or any part of its business and thereupon the Company will be relieved of any obligation it may have hereunder. All references to the Company herein shall, unless otherwise indicated, be construed to include a successor to all or any part of the Company business.
Section 7. Integration. This Plan, as amended, supersedes all prior plans, agreements, arrangements and understandings relating to the subject matter hereof, including, without limitation, the Company’s predecessor Technology Incentive Plan.
Section 8. Amendments and Termination. The Board of Directors of the Company may, at any time, amend or discontinue the Plan.
Section 9. General.
(a) | The place and administration of the Plan shall be conclusively deemed to be within the State of Delaware and the validity, construction, interpretation, administration and effect of the Plan, and its rules and regulations, and the rights of any and all persons having or claiming to have an interest therein or thereunder shall be governed by, and determined exclusively and solely in accordance with, the laws of the State of Delaware. |
(b) | Nothing contained in the Plan and no action taken pursuant to the provisions of the Plan shall create or be considered to create a trust or fund of any kind or fiduciary relationship between the Company and any Participant or any of its other employees or a security interest of any kind in any property of the Company in favor of any Participant or any other person. |
Exhibit 10.26
SECOND AMENDMENT
TO CREDIT AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this “Second Amendment”) is made as of the 13th date of November 2013 by and among WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”), Albany Molecular Research, Inc., a Delaware corporation (“AMRI” or the “Administrative Borrower”), AMRI Rensselaer, Inc., a Delaware corporation (“AMRI Rensselaer”), AMRI Burlington, Inc., a Massachusetts corporation (“AMRI Burlington”), and AMRI Bothell Research Center, Inc., a Delaware corporation (“AMRI Bothell” and together with AMRI, AMRI Rensselaer and AMRI Burlington, each a “Borrower” and collectively, the “Borrowers”).
WITNESSETH:
WHEREAS, the Borrowers and Lender are party to a certain Credit and Security Agreement dated as of April 11, 2012, as amended by First Amendment to Credit and Security Agreement dated as of December 20, 2012 (as the same may be further amended, modified, supplemented or restated and in effect from time to time, the “Credit Agreement”), pursuant to which Lender has made loans and other financial accommodations to the Borrowers; and
WHEREAS, the Borrowers and Lender have agreed to enter into this Second Amendment to modify and amend certain provisions of the Credit Agreement, but only as provided for, and subject to the terms and conditions, herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lender and the Borrowers agree as follows:
1. Capitalized Terms. All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Credit Agreement.
2. Amendments to Credit Agreement. The Credit Agreement is hereby amended as follows:
(a) | Section 7.7(a)(i) of the Credit Agreement is hereby amended by adding the following provision at the end of such clause: “; provided that any Loan Party may satisfy a conversion or exchange obligation of Convertible Securities so long as the delivery of common stock of AMRI or cash, as applicable, is permitted by Section 7.9 hereof.” |
(b) | Section 7.9 of the Credit Agreement is hereby amended by deleting the word “and” immediately preceding clause (e) thereof and adding the following new clauses (f) and (g) immediately following the end of clause (e) thereof: |
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“(f) any Loan Party (i) may make required (A) interest payments under the Convertible Securities or (B) principal payments either (x) in connection with a put of Convertible Securities after the occurrence of a fundamental change (as defined or described in such Convertible Securities), or (y) at maturity of the Convertible Securities, (ii) may deliver common stock of AMRI in satisfaction of all or a portion of (x) the conversion or exchange obligation in respect of any Convertible Securities, and (y) the exercise obligations in respect of any Warrants, in each case, so long as no Change of Control would result therefrom, (iii) may pay cash in satisfaction of all or a portion of the conversion or exchange obligation in respect of such Convertible Securities so long as no Default or Event of Default has occurred or is continuing at the time of such payment, or would be caused by such payment; provided that if any payment described in clause (iii) hereof is paid in whole or in part with the proceeds of any Advances, the Administrative Borrower shall have provided Lender with at least two business days prior written notice thereof and either deposited at least $5,000,000 in a fully blocked and segregated deposit account of a Borrower subject to a Control Agreement, providing for sole and exclusive dominion by Lender until all Obligations (other than inchoate indemnification obligations for which no claim has been asserted) have been paid in full in cash and Lender’s obligations to provide additional credit hereunder shall have been terminated, which for the avoidance of doubt, shall be in addition to any Borrowing Base Eligible Cash, or, if such cash collateral is not provided, Lender shall have implemented the Availability Block prior to the Borrowers making such payment described in clause (iii), and (iv) may purchase AMRI’s common stock upon the exercise of the Call Options, so long as such purchase does not involve a payment of cash by such Loan Party; and
(g) the issuer of any Convertible Securities may make any cash payment to purchase Call Options out of, and substantially contemporaneously with the receipt of, the net proceeds of the sale of Convertible Securities.”
(c) | Section 7.12(a)(i) of the Credit Agreement is hereby amended by deleting the figure "$500,000" therefrom and substituting therefor the figure "$1,500,000"." |
(d) | Section 7.14 of the Credit Agreement is hereby amended and restated in its entirety as follows: |
"Limitation on Issuance of Stock. Except for the issuance or sale of common stock, Warrants, Convertible Securities or Permitted Preferred Stock by Borrowers or the other Loan Parties, issue or sell or enter into any agreement or arrangement for the issuance and sale of any of their Stock."
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(e) | The table in Section 8(c) of the Credit Agreement is hereby amended and restated in its entirety as follows: |
“Maximum Capital Expenditures | Applicable Period | |||
$ | 6,250,000 | For the 3 month period ending March 31 in any fiscal year” | ||
$ | 12,500,000 | For the 6 month period ending June 30 in any fiscal year” | ||
$ | 18,750,000 | For the 9 month period ending September 30 in any fiscal year” | ||
$ | 25,000,000 | For the 12 month period ending December 31 in any fiscal year” |
(f) | Section 8(d) of the Credit Agreement is hereby amended and restated in its entirety as follows: |
“(d) [Reserved].”
(g) | Section 8(e) of the Credit Agreement is hereby amended and restated in its entirety as follows: |
“(e) Cash on Hand at Foreign Subsidiaries. The Borrowers shall not permit their foreign Subsidiaries to hold Cash or Cash Equivalents in excess of an aggregate average monthly amount of $10,000,000 (calculated at current exchange rates and tested as of the close of business of the last Business Day of month).”
(h) | Section 9.7 of the Credit Agreement is hereby amended by inserting “or (c) a fundamental change (as defined or described in any Convertible Securities” after clause (b) therein. |
(i) | Schedule 1.1 to the Credit Agreement is hereby amended as follows: |
(i) | The definition of “Borrowing Base” is hereby amended and restated in its entirety as follows: |
““Borrowing Base” means as of any date of determination, the result of:
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(a) 85% of the Eligible Royalties Receivable accrued on the Borrowers’ books and records in accordance with GAAP (less the amount, if any, of the Dilution Reserve, if applicable), plus
(b) the M&E Sublimit, plus
(c) the lesser of (i) $5,000,000 and (ii) the amount of Borrowing Base Eligible Cash, minus
(d) the Availability Block, minus
(e) the aggregate amount of Reserves, if any, established by Lender.”
(ii) | The definition of “EBITDA” is hereby amended by (A) adding “without duplication” prior to the colon in clause (b) thereof, (B) deleting the word “and” at the end of clause (b)(iii) thereof, and (C) adding the following new clause (b)(v) thereto: “and (v) the net cash proceeds of any Fundamental Change Put Financing”. |
(iii) | The definition of “Eligible Royalties Receivable” is hereby amended and restated in its entirety as follows: |
“Eligible Royalties Receivables” means the royalties receivables from the Sanofi-Aventis License Agreement or the Actavis Development and Supply Agreement that are not excluded as ineligible by one or more of the excluding criteria set forth below; provided, however, that such criteria may be revised from time to time by Lender in Lender’s Permitted Discretion. Eligible Royalties Receivables shall not include the following:
(a) royalty receivables from the Sanofi-Aventis License Agreement or the Actavis Development and Supply Agreement received by a Borrower more than 65 days after the end of each fiscal quarter;
(b) at Lender’s option, all or any portion of the royalty receivables from either the Sanofi-Aventis License Agreement or the Actavis Development and Supply Agreement if 10% or more of the aggregate amount of royalty receivables payable under such agreement and due after the end of any fiscal quarter are deemed ineligible under clause (a) above;
(c) all of the royalty receivables from the Sanofi-Aventis License Agreement if Aventis Pharmaceuticals, Inc. (or its successors or assigns) is subject to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to which a Borrower has received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Person; or all of the royalty receivables from the Actavis Development and Supply Agreement if Actavis, Inc. (or its successors or assigns) is subject to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to which a Borrower has received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Person; or |
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(d) all of the royalty receivables from the Sanofi-Aventis License Agreement and/or the Actavis Development and Supply Agreement, the collection of either of which, Lender, in its Permitted Discretion, believes to be doubtful by reason of either Aventis Pharmaceuticals, Inc.’s or Actavis Inc.’s (or its successors or assigns) financial condition.
Any royalty receivables from the Sanofi-Aventis License Agreement or the Actavis Development and Supply Agreement which are not Eligible Royalties Receivables shall nonetheless constitute Collateral.”
(iv) | The definition of “Hedge Agreement” is hereby amended and restated in its entirety as follows: |
“Hedge Agreement” means a “swap agreement” as that term is defined in Section 101(53B)(A) of the Bankruptcy Code, other than any Call Options or Warrants.
(v) | The following sentence shall be added to the end of the definition of “Indebtedness”: “Notwithstanding the foregoing, and for the avoidance of doubt, any Warrants shall not constitute Indebtedness.” |
(vi) | The following sentence shall be added to the end of the definition of “Investment”: “Notwithstanding the foregoing, and for the avoidance of doubt, any Call Options shall not constitute an Investment to the extent that such Call Options provide that no cash payments (other than the initial purchase thereof in accordance with Section 7.9(g) of this Agreement) shall be payable by any Loan Party in connection therewith.” |
(vii) | The definition of “Permitted Indebtedness” is hereby amended by deleting the word “and” immediately preceding clause (h) thereof and adding the following new clauses (i) and (j) immediately following the end of clause (h) thereof: |
“(i) Indebtedness consisting of Convertible Securities; and
(j) Indebtedness consisting Fundamental Change Put Financing.”
(viii) | The following new definitions are hereby added to Schedule 1.1 in the appropriate alphabetical order: |
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““Availability Block” means either $0.00 or if the Borrowers have not provided the cash collateral described in Section 7.9(f)(iii), $5,000,000.”
““Actavis Development and Supply Agreement” means the Development and Supply Agreement by and between Organichem Corp (now AMRI) and Purepac Pharmaceutical Co. (now Actavis US) dated May 10, 2000, as amended prior to October 31, 2012.”
““Call Options” means, with respect to any Convertible Securities, any options to purchase common stock of AMRI (regardless of whether settled in cash or such common stock or any combination thereof) that are purchased by AMRI, or any other Borrower issuing such Convertible Securities, substantially contemporaneously with the sale of such Convertible Securities.”
““Convertible Securities” means any Indebtedness of AMRI or any other Borrower that is convertible, or exchangeable, at the option of the holders thereof into cash, shares of AMRI’s common stock or any combination thereof and any guarantee in respect thereof , so long as (a) the scheduled maturity thereof is on or after the date that is four years, ten months after the first date of original issuance thereof, (b) the aggregate principal amount of such Convertible Securities (including any issuance upon exercise of any underwriter’s or initial purchaser’s option) shall not exceed $150,000,000, (c) there is no sinking fund or any scheduled payment of principal prior to such date, and (d) the interest rate on such Indebtedness shall not exceed 5.0% per annum.”
““Fundamental Change Put Financing” means any Indebtedness of AMRI or any other Borrower, substantially all of the Net Cash Proceeds of which are used to satisfy AMRI’s obligations to purchase the Convertible Securities upon a fundamental change (as defined or described in such Convertible Securities).”
““Warrants” means, with respect to any Convertible Securities, any warrants to purchase common stock of AMRI that are issued by AMRI substantially contemporaneously with the sale of such Convertible Securities.”
3. Ratification of Loan Documents. Except as specifically amended by this Second Amendment, all of the terms and conditions of the Credit Agreement and of each of the other Loan Documents shall remain in full force and effect. Each of the Loan Parties hereby ratifies, confirms, and reaffirms all of the representations, warranties and covenants contained in the Credit Agreement or any other Loan Document. The Loan Parties warrant and represent that no Event of Default exists before or after giving effect to this Second Amendment. Each of the Loan Parties hereby acknowledges and agrees that it has no offsets, defenses, claims, or counterclaims against Lender with respect to the Obligations, or otherwise, and that if such Loan Party now has, or ever did have, any offsets, defenses, claims, or counterclaims against Lender, whether known or unknown, at law or in equity, all of them are hereby expressly waived and such Loan Party hereby releases Lender from any liability thereunder.
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4. Waiver. Each Loan Party hereby absolutely and unconditionally releases and forever discharges Lender, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which such Loan Party has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Second Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown.
5. Conditions to Effectiveness. This Second Amendment shall become effective on the date hereof (“Second Amendment Effective Date”) only upon satisfaction of each of the following conditions to the satisfaction of Lender:
(a) | This Second Amendment shall have been duly executed and delivered by the respective parties hereto and shall be in form and substance satisfactory to Lender. |
(b) | All corporate and shareholder action on the part of each Loan Party necessary for the valid execution, delivery and performance of this Second Amendment shall have been duly and effectively taken and evidence thereof satisfactory to Lender shall have been provided to Lender. |
(c) | No Default or Event of Default shall have occurred and be continuing. |
(d) | There shall be no material misstatements in the materials furnished by the Loan Parties to Lender prior to closing of this Second Amendment, or in representations or warranties of the Loan Parties made in the Credit Agreement. Lender shall be satisfied that any financial statements of the Loan Parties delivered to it by the Loan Parties fairly present in all material respects the financial condition of the Loan Parties and that there has been no material adverse change in the assets, business, financial condition or income of the Loan Parties since the date of the most recent financial statements of the Loan Parties delivered to Lender pursuant to Section 6.1 of the Credit Agreement. |
(e) | The Loan Parties shall have paid to Lender all costs and expenses of Lender (including, without limitation, reasonable attorneys’ fees) in connection with the preparation, negotiation, execution and delivery of this Second Amendment. |
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(f) | The Loan Parties shall have paid to Lender a one-time amendment fee of $50,000 which shall be fully earned and payable upon the execution of this Second Amendment and shall not be subject to refund or rebate under any circumstances. |
6. Miscellaneous.
(a) | This Second Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument. Delivery of an executed counterpart by facsimile or other electronic transmission shall be equally as effective as delivery of an original executed counterpart hereof. |
(b) | This Second Amendment expresses the entire understanding of the parties with respect to the transactions contemplated hereby. No prior negotiations or discussions shall limit, modify, or otherwise affect the provisions hereof. |
(c) | Any determination that any provision of this Second Amendment or any application hereof is invalid, illegal or unenforceable in any respect and in any instance shall not affect the validity, legality, or enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provisions of this Second Amendment. |
(d) | The Loan Parties represent and warrant that they have consulted with independent or internal legal counsel of their selection in connection with this Second Amendment and are not relying on any representations or warranties of Lender or its counsel in entering into this Second Amendment. |
(e) | THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS SECOND AMENDMENT AND ANY DISPUTE ARISING OUT OF THE RELATIONSHIP BETWEEN THE PARTIES HERETO, WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS OF STATE OF NEW YORK. |
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Second Amendment as a sealed instrument by their respective duly authorized officers.
BORROWERS: | ALBANY MOLECULAR RESEARCH, INC. | |
By: | /s/ Michael M. Nolan | |
Name: | Michael M. Nolan | |
Title: | Vice President & CFO | |
AMRI RENSSELLAER, INC. | ||
By: | /s/ Michael M. Nolan | |
Name: | Michael M. Nolan | |
Title: | Treasurer | |
AMRI BURLINGTON, INC. | ||
By: | /s/ Michael M. Nolan | |
Name: | Michael M. Nolan | |
Title: | Vice President & CFO | |
AMRI BOTHELL RESEARCH, INC. | ||
By: | /s/ Michael M. Nolan | |
Name: | Michael M. Nolan | |
Title: | Vice President & CFO |
LENDER: | WELLS FARGO BANK, NATIONAL ASSOCIATION | |
By: | /s/ Patricia Farrell | |
Name: | Patricia Farrell | |
Title: | Vice President |
Exhibit 10.28
SEPARATION AGREEMENT
This Separation Agreement (“Separation Agreement”) is made between Bruce Sargent (“Executive”) and ALBANY MOLECULAR RESEARCH, INC. (the “Company,” together with Executive, the “Parties”) and is effective as of the 16th day of October 2013.
WHEREAS, Executive is serving as the Company’s Senior Vice President of Drug Discovery;
WHEREAS, the Parties entered into an Amended and Restated Employment Agreement dated April 5, 2012 (the “Employment Agreement”);
WHEREAS, the Parties also entered into a Confidentiality and Non-Disclosure Agreement dated April 3, 2006 (“Employee Agreement”), the terms of which expressly survive the termination of Executive’s employment;
WHEREAS, Executive holds options to purchase shares of the Company’s common stock which are both vested and unvested options and are governed by the Company’s Amended 2008 Stock Option and Incentive Plan or any predecessor plan under which equity was granted to Executive (collectively, the “Stock Plan”) and associated stock option agreements and shares of restricted stock which are unvested and are governed by the Stock Plan and associated restricted stock agreements (collectively “Equity Documents”);
WHEREAS, pursuant the Employment Agreement, the Company has agreed to provide Executive with certain termination benefits (the “Termination Benefits”) in the event of a termination without Cause provided that, among other things, the Executive enters into a Separation Agreement which includes a general release of claims in favor of the Company and related persons and entities;
WHEREAS, in exchange for, among other things, Executive’s agreement to the terms of this Separation Agreement, the Company shall provide Executive with the Termination Benefits as described below;
WHEREAS, the Non-Contingent Payments set forth in Section 1 and the Termination Benefits set forth in Section 2 are the exclusive source of payments, benefits and equity rights to Executive in connection with the termination of Executive’s employment. By entering into this Separation Agreement, which includes the severance pay and benefits set forth in the Employment Agreement, Executive acknowledges and agrees that he is not entitled to any other severance pay, benefits or equity rights including without limitation pursuant to any severance plan, or program or arrangement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:
1. Non-Contingent Payments. Executive and the Company acknowledge and agree that (a) Executive shall continue to remain an active, full-time employee of the Company, receiving base salary and benefits (in each case at the same amount and level as in effective immediately prior to the date hereof, provided however, that any benefits available to the Executive may be modified to the extent such benefits are modified for the other members of the executive staff of the Company), through the date on which the Company and the Employee agree that he no longer must report to work which will be no later than December 31, 2013 (the “Termination Date”), and (b) except as specifically revised by, amended by, or as otherwise set forth in, this Separation Agreement, the Employment Agreement, the Employee Agreement and the Equity Documents shall remain in full force and effect in accordance with their terms. On the Termination Date, the Executive will resign all of his positions with the Company, including any positions as director or officer of any of the Company’s subsidiaries and will sign any documents reflecting such resignations reasonably requested by the Company. The Company shall also pay all accrued but unused vacation through the Termination Date, such payment to be made on the first payroll date following the Termination Date. The Company shall promptly reimburse Executive for any outstanding, reasonable business expenses that Executive has incurred on the Company’s behalf through the Termination Date, provided the Company receives appropriate documentation pursuant to the Company’s business expense reimbursement policy.
2. Termination Benefits. For purposes of the Employment Agreement, Executive’s employment shall be treated as having been terminated without Cause. Accordingly, in exchange for his signing, not revoking and complying with the terms of this Separation Agreement, the Company agrees to provide Executive with the following Termination Benefits:
(a) the Company shall continue to pay Executive the base salary that is in effect as of the date hereof for a period commencing on the Termination Date and continuing through December 31, 2014:
(b) the Company shall pay to the Executive in twelve monthly installments, a bonus amount equal to $131,124, such bonus payments beginning with the first payroll date that begins thirty (30) days after the Termination Date;
(c) notwithstanding the employment status of the Executive, the Executive shall continue to be eligible to receive technology incentive compensation payments under the provisions of the Technology Development Incentive Plan established by the Company for any Identified Compounds, which for purposes of this Agreement, shall be the biogenic amines compounds currently named: BMS-820836 (at 0.17%), BMS-866949 (at 0.20%), BMS-911278 (at 0.10%) and BMT-026589 (at 0.10%), each of which was identified prior to the date of this Agreement and for which technology incentive payments have been made prior to the date of this Agreement based upon revenue from the License and Research Agreement by and among Bristol-Myers Squibb Company, AMR Technology, Inc., and the Company dated as of October 20, 2005 (the “BMS Agreement”), provided, however, that (i) any such future payments shall be at the percentages of revenue set forth above and (ii) the parties agree that such payments shall be due to Executive on revenue related to such Identified Compounds whether such revenue arises from the BMS Agreement or from some other third party source pursuant to an agreed upon assignment or other transfer of the Identified Compounds to such third party.
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(d) upon approval by the Compensation Committee of the Company, the following shares of restricted stock and stock options previously issued to the Executive (a total of 10,650 shares of Restricted Stock and stock options to purchase 31,950 shares of Common Stock) shall not terminate on the Termination Date, but instead shall continue to vest according to their terms on the vesting dates set forth below. The stock options referenced in this Section 2(d) shall be eligible to be exercised for three months following the vesting date set forth below (the relevant exercise period) and if not exercised by such time, shall expire. All such awards shall be otherwise governed by the terms of the Equity Documents (including the forfeiture of any other shares covered by such restricted stock and option agreements other than those specifically set forth below):
Restricted Stock
Grant Date | Vesting Date | Shares | ||||
03/16/2009 Award | 3/16/14 | 700 | ||||
03/08/2010 Award | 3/8/14 | 700 | ||||
01/05/2011 Award | 1/5/14 | 3,000 | ||||
06/02/2011 Time Award | 6/2/14 | 1,250 | ||||
02/17/2012 Time | 2/17/14 | 1,250 | ||||
02/17/2012 Performance | 2/17/14 | 1,250 | ||||
01/31/2013 Time | 1/31/14 | 1,250 | ||||
01/31/2013 Performance | 1/31/14 | 1,250 | ||||
Total | 10,650 |
Options
Grant Date | Vesting Date | Shares | ||||
03/16/2009 | 3/16/14 | 2,100 | ||||
03/08/2010 | 3/8/14 | 2,100 | ||||
01/05/2011 | 1/5/14 | 9,000 | ||||
06/02/2011 | 6/2/14 | 3,750 | ||||
02/17/2012 | 2/17/14 | 3,750 | ||||
02/17/2012 | 2/17/14 | 3,750 | ||||
01/31/2013 | 1/31/14 | 3,750 | ||||
01/31/2013 | 1/31/14 | 3,750 | ||||
Total | 31,950 |
In the event that during the relevant exercise period as set forth above, for any of the stock options listed above or otherwise vested on the Termination Date, the Executive is restricted from selling or otherwise trading in the Company’s stock, for whatever reason as may be notified to the Executive by the Company, then the exercise period for such stock options will be extended to a date that is 30 days following the date that Executive is informed in writing that he is no longer restricted from trading in the Company’s stock.
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(e) the Company shall pay 100% of the costs to provide up to twelve (12) months of outplacement support services at a level appropriate for the Executive’s title and responsibility, which the parties agree to be $15,000 which will be paid in a lump sum to the designated outplacement firm within thirty (30) days of the Termination Date;
(f) the Company shall provide the Executive with health and dental insurance continuation at a level consistent with the level and type the Executive had in place at the Termination Date for a period from the Termination Date through December 31, 2014. In the event that the Executive is not participating in the Company’s health and dental insurance on the Termination Date, Executive shall be eligible to re-enroll at any time prior to December 31, 2014 subject to a qualifying event as solely determined by the Vice President of Human Resources at the Company;
(g) the Company will pay Executive a bonus in a final amount to be determined following the close of the 2013 fiscal year (the “2013 Bonus”) which will be calculated based on the Company’s achievement of the 2013 bonus targets that were established by the Board of Directors and will be finally determined by the Compensation Committee of the Board of Directors following completion of the audit of the fiscal year results. The parties agree that the amount of the bonus payable with respect to the Executive’s personal goals is equal to $31,487. For purposes of this Section 2(g) Executive’s corporate bonus allocation, if any, shall be determined in the same manner as the other Executives at the Company. The 2013 Bonus will be paid no later than the date that the bonuses, if any, for such time period are paid to the other executive officers of the Company or March 15, 2014, whichever is earlier; and
(h) any other equity awards pursuant to the Equity Documents which do not continue to vest pursuant to Section 2(b) shall cease to vest on the Termination Date and exercise of such equity awards shall be subject to the terms of the Equity Documents.
3. General Release.
(a) Executive irrevocably and unconditionally releases and forever discharges the Company, all of its affiliated and related entities, its and their respective predecessors, successors and assigns, its and their respective executive benefit plans and the fiduciaries of such plans, and the current and former officers, directors, stockholders, executives, attorneys, accountants, and agents of each of the foregoing in their official and personal capacities (collectively referred to as the “Releasees”) generally from all claims, demands, debts, damages and liabilities of every name and nature, known or unknown (“Claims”) that, as of the date when Executive signs this Separation Agreement, he has, ever had, now claims to have or ever claimed to have had against any or all of the Releasees. This release includes, without implication of limitation, the complete waiver and release of all Claims of or arising in connection with or for: the Employment Agreement including Claims for breach of express or implied contract; wrongful termination of employment whether in contract or tort; intentional, reckless, or negligent infliction of emotional distress; breach of any express or implied covenant of employment, including the covenant of good faith and fair dealing; interference with contractual or advantageous relations, whether prospective or existing; deceit or misrepresentation; discrimination or retaliation under state, federal, or municipal law, including, without implication of limitation, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., as amended, the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq.; the New York Executive Law; the New York Constitution; the New York Labor Law; the New York Civil Rights Law; defamation or damage to reputation; reinstatement; punitive or emotional distress damages; wages, severance pay, vacation pay, back or front pay or other forms of compensation; and attorney’s fees and costs. Executive understands that this general release of Claims extends to any and all Claims related to Executive’s employment by the Company and the termination of his employment and all claims in his capacity as a Company stockholder. Executive understands that this general release does not release any rights arising under or preserved by this Separation Agreement, or to claims that may arise out of acts or events that occur after the date on which Executive signs this Separation Agreement. Executive represents that he has not assigned to any third party and has not filed with any agency or court any Claim released by this Separation Agreement. The Company represents that it is unaware of any claims, demands, debts, damages and liabilities of any kind that the Company may have against the Executive as of the date of this Separation Agreement and that Executive’s willingness to enter into this Separation Agreement and provide the release set forth in this Section is in consideration, in part, on that representation.
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(b) Executive also agrees to confirm on the Termination Date, in the form of the confirmation attached to this Separation Agreement, that the general release set forth in Section 3(a) remains in effect and that it also is applicable to any claims which may have arisen during the period from the execution of this Separation Agreement through the Termination Date.
4. Communications Regarding Departure and Nondisparagement Other than to state the fact that the termination of Executive’s employment has occurred and other public filings required by law, neither the Company nor Executive will communicate with any of the Company’s current customers, suppliers or business partners (collectively “Company Contacts”) about his departure from the Company without the express consent of the other party. Executive further agrees not to make any disparaging statements concerning the Company or any of its affiliates or current or former officers, directors, shareholders, employees or agents. The executives and directors of the Company will be instructed not to make any disparaging statements concerning Executive.
5. Return of Property. Executive commits to returning to the Company all Company property, including, without limitation, computer equipment, software, keys and access cards, credit cards, files and any documents (including computerized data and any copies made of any computerized data or software) containing information concerning the Company, its business or its business relationships (in the latter two cases, actual or prospective). Executive further commits to deleting and finally purging any duplicates of files or documents that may contain Company or customer information from any computer or other device that remains Executive’s property after the Termination Date (except to the extent any such information was automatically backed up and is not reasonably accessible).
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6. Restrictive Covenants; Injunctive Relief. Executive’s obligations under Sections 7 and 8 of the Employment Agreement, and under Sections 4 and 5 of this Separation Agreement, and those set forth in the Employee Agreement shall be referred to as the “Restrictive Covenants.” Executive agrees that it would be difficult to measure any harm caused to the Company that might result from any breach by Executive of any of the Restrictive Covenants, and that in any event money damages would be an inadequate remedy for any such breach. Accordingly, Executive agrees that if he breaches, or proposes to breach, any portion of the Restrictive Covenants the Company shall be entitled, in addition to all other remedies it may have, to an injunction or other appropriate equitable relief to restrain any such breach, without showing or proving any actual damage to the Company and without the necessity of posting a bond. In the event that the Company prevails in any action to enforce any part of the Restrictive Covenants, then Executive also shall be liable to the Company for attorney’s fees and costs incurred by the Company in enforcing such provision(s).
7. Advice of Counsel. This Separation Agreement is a legally binding document and Executive’s signature will commit Executive to its terms. Executive acknowledges that he has been advised to discuss all aspects of this Separation Agreement with his attorney, that he has carefully read and fully understands all of the provisions of this Separation Agreement and that Executive is voluntarily entering into this Separation Agreement.
8. Termination of Termination Benefits. Executive acknowledges that his right to the Termination Benefits is conditional on his compliance with the Restrictive Covenants. In the event that Executive fails to comply with any of the Restrictive Covenants, in addition to any other legal or equitable remedies it may have for such breach, the Company shall have the right to terminate the Termination Benefits set forth in Section 2 of this Separation Agreement. Such termination of those payments and benefits in the event of such breach by the Executive shall not affect Executive’s ongoing obligations and shall be in addition to and not in lieu of the Company’s rights to injunctive relief and other legal and equitable remedies that the Company may have.
9. Time for Consideration; Effective Date. Executive acknowledges that he has been provided with the opportunity to consider this Separation Agreement for twenty-one (21) days before signing it. To accept this Separation Agreement, Executive must return a signed original of this Separation Agreement so that it is received by Brian Russell on or before the expiration of this twenty-one (21) day period. If Executive signs this Separation Agreement within less than twenty-one (21) days of the date of its delivery to him, Executive acknowledges by signing this Separation Agreement that such decision was entirely voluntary and that he had the opportunity to consider this Separation Agreement for the entire twenty-one (21) day period. Executive and the Company agree that any changes or modifications to this Separation Agreement shall not restart the twenty-one (21) day period. For a period of seven (7) days from the day of the execution of this Separation Agreement, Executive shall retain the right to revoke this Separation Agreement by written notice that must be received by Brian Russell before the end of such revocation period. This Separation Agreement shall become effective on the business day immediately following the expiration of the revocation period (the “Effective Date”), provided that Executive does not revoke this Separation Agreement during the revocation period.
10. Enforceability. Executive acknowledges that, if any portion or provision of this Separation Agreement or the Restrictive Covenants shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision shall be valid and enforceable to the fullest extent permitted by law.
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11. Entire Agreement. This Separation Agreement, the Employee Agreement, the Equity Documents, and the sections of the Employment Agreement specifically referenced herein (except as specifically revised by, amended by, or as otherwise set forth in, this Separation Agreement) constitute the entire agreement between Executive and the Company concerning Executive’s relationship with the Company, and supersedes and replaces any and all prior agreements and understandings between the Parties concerning Executive’s relationship with the Company.
12. Waiver. No waiver of any provision of this Separation Agreement shall be effective unless made in writing and signed by the waiving party. The failure of either Party to require the performance of any term or obligation of this Separation Agreement, or the waiver by either Party of any breach of this Separation Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.
13. Taxes. The Company shall undertake to make deductions, withholdings and tax reports with respect to payments and benefits under this Separation Agreement and in connection with other compensation matters to the extent that it reasonably and in good faith determines that it is required to make such deductions, withholdings and tax reports. Payments under this Separation Agreement shall be in amounts net of any such deductions or withholdings. Nothing in this Separation Agreement shall be construed to require the Company to make any payments to compensate Executive for any adverse tax effect associated with any payments or benefits made to Executive in connection with Executive’s employment with the Company.
14. Governing Law; Disputes; Interpretation. This Separation Agreement shall be construed and regulated in all respects under the laws of the State of New York without regard to conflict of law principles. Any dispute or controversy arising under or in connection with this Separation Agreement shall be settled exclusively by arbitration in Albany, New York, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered in any court having jurisdiction. In the event of any dispute, this Separation Agreement is intended by the Parties to be construed as a whole, to be interpreted in accordance with its fair meaning, and not to be construed strictly for or against either Party or the “drafter” of all or any portion of this Separation Agreement.
15. Counterparts. This Separation Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original, but all of which together shall constitute one and the same document. Facsimile and pdf signatures shall be deemed to be of equal force and effect as originals.
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16. Section 409A.
(a) Anything in this Agreement to the contrary notwithstanding, if at the time of Executive’s separation from service within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the Company determines that Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that Executive becomes entitled to under this Agreement on account of Executive’s separation from service would be considered deferred compensation otherwise subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after Executive’s separation from service, or (B) Executive’s death. If any such delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of this provision, and the balance of the installments shall be payable in accordance with their original schedule.
(b) To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon Executive’s termination of employment, then such payments or benefits shall be payable only upon Executive’s “separation from service.” The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).
(c) The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2). The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.
(d) The Company makes no representation or warranty and shall have no liability to Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.
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IN WITNESS WHEREOF, the Parties, intending to be legally bound, have executed this Separation Agreement on the date(s) indicated below.
ALBANY MOLECULAR RESEARCH, INC. | ||
By: | /s/ Thomas E. D’Ambra | |
Thomas E. D’Ambra, Ph.D. | ||
President and Chief Executive Officer | ||
Date: October 16, 2013 |
I HAVE READ THIS AGREEMENT THOROUGHLY, UNDERSTAND ITS TERMS AND HAVE SIGNED IT KNOWINGLY AND VOLUNTARILY. I UNDERSTAND THAT THIS AGREEMENT IS A LEGAL DOCUMENT.
/s/ Bruce J. Sargent | |
Bruce J. Sargent, Ph.D. | |
Date: October 16, 2013 |
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CONFIRMATION OF RELEASE PROVISION IN SEPARATION AGREEMENT
I, Bruce J. Sargent, acknowledge and agree:
1. I executed a Separation Agreement dated October 16, 2013 with the advice of counsel.
2. Section 3(a) of the Separation Agreement includes a General Release which released Claims (as defined in the Separation Agreement) against the Releasees (as defined in the Separation Agreement) and was applicable to Claims through the date of execution of the Separation Agreement.
3. As provided in Section 3(b) of the Separation Agreement, I confirm that, from the date of execution of the Separation Agreement through the Termination Date (as defined in the Separation Agreement), Section 3(a) of the Separation Agreement remains in effect and also applies to any and all Claims which may have accrued against the Releasees (other than excepted rights described in Section 3(a) of the Separation Agreement) during that period.
Bruce Sargent | Date |
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Exhibit 10.34
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the “Agreement”) is made this 16 day of October 2013 (the “Effective Date”) by and between Albany Molecular Research, Inc., a Delaware corporation (the “Company”), and Michael Luther, Ph.D. (the “Executive”).
WHEREAS, the Executive is an officer and key employee of the Company; and
WHEREAS, the parties hereto desire to assure that the Executive’s knowledge and familiarity with the business of the Company will continue to be available to the Company after the date hereof.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the parties agree as follows:
1. Employment. Subject to the provisions of Section 6, the Company hereby employs the Executive, effective on the Employment Date, and the Executive agrees to accept such employment on the Employment Date upon the terms and conditions hereinafter set forth. The Employment Date is October 28, 2013. In the event that the Executive becomes an employee of the Company on any date other than October 28, 2013, then the actual date of employment shall be considered the Employment Date hereunder.
2. Term of Employment. The term of the Executive’s employment pursuant to this Agreement shall commence on and as of the Employment Date (the “Effective Date”) and shall remain in effect for a period of two (2) years from the Effective Date (the “Term”). The Term shall be renewed automatically for periods of two (2) years (each a “Renewal Term”) commencing at the second anniversary of the Effective Date and on each subsequent anniversary thereafter, unless notice that this Agreement will not be extended is given by either the Executive or the Company not less than one-hundred eighty (180) days prior to the expiration of the Term (as extended by any Renewal Term). The period during which the Executive serves as an employee of the Company in accordance with and subject to the provisions of this Agreement is referred to in this Agreement as the “Term of Employment.”
3. Capacity.
(a) Duties. During the Term of Employment, the Executive shall report directly to the to the President and Chief Executive Officer or such other senior executive officer as may be determined by the Board of Directors of the Company and (i) shall serve as an executive officer of the Company with the title Senior Vice President, Discovery Services, (ii) shall perform such duties and responsibilities as may be reasonably determined by the President and Chief Executive Officer and the Board of Directors of the Company consistent with the Executive’s title and position, duties and responsibilities as an executive officer of the Company as of the Effective Date; provided that such duties and responsibilities shall be within the general area of the Executive’s experience and skills, (iii) upon the request of the Board of Directors of the Company, shall serve as an officer and/or director of the Company and any of its subsidiaries or affiliates (provided that the Company shall indemnify the Executive for liabilities incurred as such in accordance with its current practices to the fullest extent permitted by applicable law); and (iv) shall render all services incident to the foregoing.
(b) Extent of Service. The Executive agrees to diligently serve the interests of the Company and shall devote substantially all of his working time, attention, skill and energies to the advancement of the interests of the Company and its subsidiaries and affiliates and the performance of his duties and responsibilities hereunder; provided that nothing in this Agreement shall be construed as preventing the Executive from (i) investing the Executive’s assets in any entity in a manner not prohibited by Section 7 and in such form or manner as shall not require any material activities on the Executive’s part in connection with the operations or affairs of the entities in which such investments are made, or (ii) engaging in religious, charitable or other community or non-profit activities that do not impair the Executive’s ability to fulfill the Executive’s duties and responsibilities under this Agreement.
4. Compensation.
(a) Salary. During the Term of Employment, the Company shall pay the Executive a salary (the “Base Salary”) at an annual rate as shall be determined from time to time by the Board of Directors of the Company or the Compensation Committee of the Board of Directors consistent with the general policies and practices of the Company and subject to periodic review in accordance with the policies and practices of the Company; provided, however, that in no event shall such rate per annum be less than $310,000.00. Such salary shall be subject to withholding under applicable law and shall be payable in periodic installments in accordance with the Company’s usual practice for its senior executives, as in effect from time to time.
(b) Bonus. Annually, the Company shall review the performance of the Company and of the Executive during the prior year, and the Company may provide the Executive with additional compensation as a bonus in accordance with any bonus plan then in effect from time to time for senior executives of the Company. Any such bonus plan shall have such terms as may be established in the sole discretion of the Board of Directors of the Company or the Compensation Committee of the Board of Directors.
5. Benefits.
(a) Regular Benefits. During the Term of Employment, the Executive shall be entitled to participate in any and all medical, dental, pension and life insurance plans, disability income plans and other employee benefit plans as in effect from time to time for senior executives of the Company. Such participation shall be subject to (i) the terms of the applicable plan documents, (ii) generally applicable policies of the Company and (iii) the discretion of the Board of Directors of the Company or the administrative or other committee provided for in, or contemplated by, such plan. Compliance with this Section 5(a) shall in no way create or be deemed to create any obligation, express or implied, on the part of the Company or any subsidiary or affiliate of the Company with respect to the continuation of any benefit or other plan or arrangement maintained as of or prior to the Effective Date or the creation and maintenance of any particular benefit or other plan or arrangement at any time after the Effective Date.
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(b) Reimbursement of Expenses. The Company shall promptly reimburse the Executive for all reasonable business expenses incurred by the Executive during the Term of Employment in accordance with the Company’s practices for senior executives of the Company, as in effect from time to time.
(c) Vacation. During the Term of Employment, the Executive shall receive at least four (4) weeks paid vacation annually or such greater amount as is in accordance with the Company’s practices for senior executives of the Company, as in effect from time to time.
(d) New Employment Benefits. AMRI will pay Executive a new hire bonus of $60,000, which shall be payable at the time that the bonuses are paid to the other executives of the Company in early 2014, but no later than March 15, 2014 (the “New Hire Bonus”). Executive will also be eligible for additional bonus based on performance during 2013 at the discretion of the Compensation Committee of the Company. In the event that Executive chooses to relocate or is requested by the Company to relocate his primary residence within 12 months of the Effective Date, the Company will provide relocation and temporary living assistance for Executive and family in connection with the relocation from Andover, Massachusetts to the capital region of New York. The date that Executive relocates his primary residence will be called the “Relocation Date.” The Company will cover reasonable expenses consistent with the AMRI Relocation Policy for Executives as will be specifically determined at the time of relocation. These expenses will be reimbursed to Executive or directly paid as incurred, subject to confirmation. All such reimbursed expenses, including the New Hire Bonus, and all relocation and temporary living expenses are referred to herein as the “Relocation Expenses”.
(e) Grant of Company Equity. Effective on Employment Date, the Company will grant to Executive 20,000 shares of restricted stock and non-qualified stock options to purchase 40,000 shares of the Company’s Common Stock, such restricted stock and stock options to be granted pursuant to the Company’s 2008 Stock Option and Incentive Plan. Such restricted stock and stock options will be evidenced by standard agreements to be entered into between Executive and the Company. The restricted stock and stock options granted pursuant to this Section 5(e) will vest 25% per year on each anniversary of the date of grant. The shares of restricted stock and stock options granted in this Section 5(e) are referred to herein as the New Hire Grant.
6. Termination of Employment. Notwithstanding the provisions of Section 2, the Executive’s employment under this Agreement shall terminate under the following circumstances set forth in this Section 6.
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For purposes of this Agreement, “Date of Termination” means (i) if the Executive’s employment is terminated by his death as provided in Section 6(c), the date of his death; (ii) if the Executive’s employment is terminated due to his permanent disability as provided in Section 6(c), the date on which notice of termination is given; (iii) if the Executive’s employment is terminated by the Company without Cause under Section 6(e) or Section 6(g), sixty (60) days after the date on which notice of termination is given; and (iv) if the Executive’s employment is terminated under Section 6(f), or for Good Reason under Section 6(g), the date on which the applicable cure period expires. In the event that Executive’s employment terminates at any time from the date hereof to the date that is 12 months following the payment of the New Hire Bonus and such termination is pursuant to Section 6(b) or 6(d); then within 30 days of the Date of Termination Executive shall repay the New Hire Bonus if such has been paid to Executive and, if applicable, the Relocation Expenses, in full to the Company.
(a) Mutual Consent. The Executive’s employment under this Agreement may be terminated at any time by the mutual consent of the Executive and the Company on such terms as both parties shall mutually agree.
(b) Termination by the Company for Cause. The Executive’s employment under this Agreement may be terminated by the Company for Cause at any time upon written notice to the Executive without further liability on the part of the Company. For purposes of this Agreement, a termination shall be for Cause if:
(i) the Executive shall commit an act of fraud, embezzlement, misappropriation or breach of fiduciary duty against the Company or any of its subsidiaries or affiliates or shall be convicted by a court of competent jurisdiction or shall plead guilty or nolo contendere to any felony or any crime involving moral turpitude;
(ii) the Executive shall commit a material breach of any of the covenants, terms or provisions of Section 7 or 8 hereof which breach has not been cured within fifteen (15) days after delivery to the Executive by the Company of written notice thereof;
(iii) the Executive shall commit a material breach of any of the covenants, terms or provisions hereof (other than pursuant to Section 7 or 8 hereof) which breach has not been remedied within thirty (30) days after delivery to the Executive by the Company of written notice thereof; or
(iv) the Executive shall have disobeyed reasonable written instructions from the Company’s Board of Directors, Compensation Committee or other appropriate governing committee which are consistent with the terms and conditions of this Agreement or shall have deliberately, willfully, substantially and continuously failed to perform the Executive’s duties hereunder, after written notice and under circumstances effectively constituting a voluntary resignation of the Executive’s position with the Company.
Upon termination for Cause as provided in this Section 6(b), all obligations of the Company under this Agreement shall thereupon immediately terminate other than any obligations with respect to earned but unpaid Base Salary. The Company shall have any and all rights and remedies under this Agreement and applicable law.
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(c) Death; Disability. The Executive’s employment under this Agreement may be terminated by the Company upon the earlier of death or permanent disability (as defined below) of the Executive continuing for a period of one hundred eighty (180) days. Upon any such termination of the Executive’s employment, all obligations of the Company under this Agreement shall thereupon immediately terminate other than any obligations with respect to (i) earned but unpaid salary through the Date of Termination, (ii) bonus payments with respect to the calendar year within which such termination occurred on the basis of and to the extent contemplated in any bonus plan then in effect with respect to senior executive officers of the Company, pro-rated on the basis of the number of days of the Executive’s actual employment hereunder during such calendar year through the Date of Termination, and (iii) in the case of permanent disability, continuation at the Company’s expense of health insurance benefits (medical and dental) until the first anniversary of the Date of Termination to the extent permitted under the Company’s group health insurance policy. As used herein, the term “permanent disability” or “permanently disabled” means the inability of the Executive, by reason of injury, illness or other similar cause, after reasonable accommodation by the Company, to perform a major part of his duties and responsibilities in connection with the conduct of the business and affairs of the Company. The Company shall provide written notice to the Executive of the termination of his employment hereunder due to permanent disability.
(d) Voluntary Termination by the Executive. At any time during the Term of Employment, the Executive may terminate his employment under this Agreement upon sixty (60) days’ prior written notice to the Company. Upon termination by the Executive as provided in this Section 6(d), all obligations of the Company under this Agreement shall thereupon immediately terminate.
(e) Termination by the Company Without Cause. The Executive’s employment under this Agreement may be terminated by the Company at any time without Cause by the Company upon sixty (60) days’ prior written notice to the Executive. Any termination by the Company of the Executive’s employment under this Agreement which does not constitute a termination for Cause under Section 6(b) and is not a termination on account of death or disability under Section 6(c) shall be deemed a termination without Cause. Upon any such termination of the Executive’s employment, all obligations of the Company under this Agreement shall thereupon immediately terminate other than any obligations with respect to earned but unpaid Base Salary and bonus under Section 4. In addition, subject to the Executive signing a general release of claims in a form and manner satisfactory to the Company and the lapse of any statutory revocation period, the Company shall continue to pay the Executive his Base Salary at the rate then in effect pursuant to Section 4(a) for a period of one (1) year from the Date of Termination and shall pay to the Executive in monthly installments over the one (1) year period, an amount equal to the Executive’s cash bonus, if any, received in respect of the year immediately preceding the year of termination pursuant to Section 4(b) beginning with the first payroll date that begins thirty (30) days after the Date of Termination. For purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), each monthly payment shall be considered a separate payment. The Company shall also pay 100% of the costs to provide up to twelve (12) months of outplacement support services at a level appropriate for the Executive’s title and responsibility and provide the Executive with health and dental insurance continuation at a level consistent with the level and type the Executive had in place at the time of termination for a period of twelve (12) months from the Date of Termination. In addition, on or prior to the Date of Termination, Executive will become fully vested in any unvested shares or options granted as part of the New Hire Grant.
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(f) Termination by the Executive upon Company Breach. The Executive shall have the right to terminate his employment hereunder upon written notice to the Company in the event of (i) a material diminution in the nature or scope of the powers, duties or responsibilities of the Executive or (ii) a breach by the Company of any of its material obligations hereunder, in each case after the Executive has given written notice to the Company specifying such default by the Company within sixty (60) days of the occurrence of the default and giving the Company a reasonable time, not less than thirty (30) days, to conform its performance to its obligations hereunder. Upon any such termination of the Executive’s employment, all obligations of the Company under this Agreement shall thereupon immediately terminate other than any obligations with respect to earned but unpaid Base Salary and bonus under Section 4. In addition, subject to the Executive signing a general release of claims in a form and manner satisfactory to the Company and the lapse of any statutory revocation period, the Company shall continue to pay the Executive his Base Salary at the rate then in effect pursuant to Section 4(a) for a period of one (1) year from the Date of Termination and shall pay to the Executive in monthly installments over the one (1) year period, an amount equal to the Executive’s cash bonus, if any, received in respect of the year immediately preceding the year of termination pursuant to Section 4(b) beginning with the first payroll date that begins thirty (30) days after the Date of Termination. For purposes of Section 409A of the Code, each monthly payment shall be considered a separate payment. The Company shall also pay 100% of the costs to provide up to twelve (12) months of outplacement support services at a level appropriate for the Executive’s title and responsibility and provide the Executive with health and dental insurance continuation at a level consistent with the level and type the Executive had in place at the time of termination for a period of twelve (12) months from the Date of Termination. In addition, on or prior to the Date of Termination, Executive will become fully vested in any unvested shares or options granted as part of the New Hire Grant.
(g) Termination Pursuant to a Change of Control. If there is a Change of Control, as defined below, during the Term of Employment, the provisions of this Section 6(g) shall apply and shall continue to apply throughout the remainder of the Term (as extended by any Renewal Term). Upon a Change of Control, the Executive will become fully vested in any outstanding stock options, Restricted Stock or other stock grants awarded and become fully vested in all Company contributions made to the Executive’s 401(k), Profit Sharing or other retirement account(s). In addition, within thirty (30) days of the Change of Control, the Company shall pay to the Executive a lump sum equal to the Executive’s pro rata target cash bonus for the year in which the Change of Control occurred (as such may be set forth in the Company’s bonus plan for such year and calculated assuming target achievement of corporate and personal goals); such pro rata amount to be determined based on the actual date of the closing of such Change of Control transaction.
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If, within two (2) years following a Change of Control, the Executive’s employment is terminated by the Company without Cause (in accordance with Section 5(e) above) or by the Executive for “Good Reason” (as defined in Section 6(g)(ii) below), in lieu of any severance and other benefits payable under Section 6(e) or Section 6(f), subject to the Executive signing a general release of claims in a form and manner satisfactory to the Company and the lapse of any statutory revocation period, the Company shall pay to the Executive (or the Executive’s estate, if applicable) a lump sum amount equal to 1.5 times the sum of (x) the Executive’s Base Salary at the rate then in effect pursuant to Section 4(a), plus (y) an amount equal to the Executive’s cash bonus, if any, received in respect of the year immediately preceding the year of termination pursuant to Section 4(b) within thirty (30) days of the Date of Termination. Notwithstanding the foregoing, to the extent the cash severance payment to the Executive is considered deferred compensation subject to Section 409A of the Code, and if the Change of Control does not constitute a “change in control event” within the meaning of Section 409A of the Code, such cash severance shall be payable in installments over the same period as provided in Section 6(e). The Company shall also pay 100% of the costs to provide up to twelve (12) months of outplacement support services at a level appropriate for the Executive’s title and responsibility and provide the Executive with health and dental insurance continuation at a level consistent with the level and type the Executive had in place at the time of termination for a period of twelve (12) months from the Date of Termination.
(i) “Change of Control” shall mean the occurrence of any one of the following events: (A) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (B) a merger, reorganization or consolidation in which the outstanding shares of Stock are converted into or exchanged for securities of the successor entity and the holders of the Company’s outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction, or (C) the sale of all of the Stock of the Company to an unrelated person or entity.
(ii) “Good Reason” shall mean the occurrence of any of the following:
(A) a material diminution in the nature or scope of the powers, duties or responsibilities of the Executive; or
(B) a breach by the Company of any of its material obligations hereunder.
(iii) The Executive shall provide the Company with reasonable notice and an opportunity to cure any of the events listed in Section 6(g)(ii) within sixty (60) days of the occurrence of the event and shall not be entitled to compensation pursuant to this Section 6(g) unless the Company fails to cure within a reasonable period of not less than thirty (30) days.
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(h) Additional Limitation. Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 280G of the Code and the applicable regulations thereunder (the “Severance Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, the following provisions shall apply:
(A) if the Severance Payments, reduced by the sum of (1) the Excise Tax and (2) the total of the federal, state, and local income and employment taxes payable by the Executive on the amount of the Severance Payments which are in excess of the Threshold Amount, are greater than or equal to the Threshold Amount, the Executive shall be entitled to the full amount of Severance Payments.
(B) if the Threshold Amount is less than (x) the Severance Payments, but greater than (y) the Severance Payments reduced by the sum of (1) the Excise Tax and (2) the total of the federal, state, and local income and employment taxes on the amount of the Severance Payments which are in excess of the Threshold Amount, then the Severance Payments shall be reduced (but not below zero) to the extent necessary so that the sum of all Severance Payments shall not exceed the Threshold Amount. In such event, the Severance Payments shall be reduced in the following order: (i) cash payments not subject to Section 409A of the Code; (ii) cash payments subject to Section 409A of the Code; (iii) equity-based payments and acceleration; and (iv) non-cash forms of benefits. To the extent any payment is to be made over time (e.g., in installments, etc.), then the payments shall be reduced in reverse chronological order.
For the purposes of this Section 6(h) “Threshold Amount” shall mean three (3) times the Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code and the regulations promulgated thereunder less one dollar ($1.00); and “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by the Executive with respect to such excise tax.
The determination as to which of the alternative provisions of this Section 6(h) shall apply to the Executive shall be made by a nationally recognized accounting firm selected by the Company (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or the Executive. For purposes of determining which of the alternative provisions of this Section 6(g)(iii) above shall apply, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. Any determination by the Accounting Firm shall be binding upon the Company and the Executive.
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(i) No Mitigation. Without regard to the reason for the termination of the Executive’s employment hereunder, the Executive shall be under no obligation to mitigate damages with respect to such termination under any circumstances and in the event the Executive is employed or receives income from any other source, there shall be no offset against the amounts due from the Company hereunder.
(j) Section 409A.
(i) Anything in this Agreement to the contrary notwithstanding, if at the time of the Executive’s separation from service within the meaning of Section 409A of the Code, the Company determines that the Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after the Executive’s separation from service, or (B) the Executive’s death. If any such delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of this provision, and the balance of the installments shall be payable in accordance with their original schedule. Any such delayed cash payment shall earn interest at an annual rate equal to the prime rate reported by The Wall Street Journal as of the date of separation from service, from such date of separation from service until the payment.
(ii) The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.
(iii) To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’s termination of employment, then such payments or benefits shall be payable only upon the Executive’s “separation from service”. The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).
(iv) The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.
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7. Non-Competition and No Solicitation.
(a) Because the Executive’s services to the Company are special and because the Executive has access to the Company’s confidential information, during the Term of Employment and for a period of twelve (12) months following the termination, the Executive shall not, without the express written consent of the Company, directly or indirectly, engage, participate, invest in, be employed by or assist, whether as owner, part-owner, shareholder, partner, director, officer, trustee, employee, agent or consultant, or in any other capacity, any Person (as hereinafter defined) other than the Company and its affiliates in the Designated Industry (as hereinafter defined); provided, however, that nothing herein shall be construed as preventing the Executive from making passive investments in a Person in the Designated Industry if the securities of such Person are publicly traded and such investment constitutes less than one percent (1%) of the outstanding shares of capital stock or comparable equity interests of such Person.
(b) For purposes of this Agreement, the following terms have the following meanings:
“Person” means an individual, a corporation, an association, a partnership, a limited liability company, an estate, a trust and any other entity or organization; and
“Designated Industry” means the business of providing research and development services to pharmaceutical and biotechnology companies involved in drug development and discovery and any and all activities related thereto, including, without limitation, biological testing and biological research services, medicinal chemistry, chemical development, biocatalysis, analytical chemistry services and small-scale manufacturing and any other business conducted by the Company during the Executive’s employment with the Company.
(c) For a period of twelve (12) months following the termination of this Agreement for any reason, the Executive shall not, directly or indirectly, alone or as a member of any partnership or limited liability company or entity, or as an officer, director, shareholder, or employee of any corporation or entity (a) solicit or otherwise encourage any employee or independent contractor of the Company to terminate his/her relationship with the Company, or (b) recruit, hire or solicit for employment or for engagement as an independent contractor, any person who is or was employed by the Company at any time during the Executive’s employment with the Company. This paragraph shall not apply to persons whose employment and/or retention with the Company has been terminated for a period of twelve (12) months or longer.
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8. Confidentiality. In the course of performing services hereunder and otherwise, the Executive has had, and it is anticipated that the Executive will from time to time have, access to confidential records, data, customer lists, trade secrets, technology and similar confidential information owned or used in the course of business by the Company and its subsidiaries and affiliates (the “Confidential Information”). The Executive agrees (i) to hold the Confidential Information in strict confidence, (ii) not to disclose the Confidential Information to any Person (other than in the regular business of the Company), and (iii) not to use, directly or indirectly, any of the Confidential Information for any competitive or commercial purpose; provided, however, that the limitations set forth above shall not apply to any Confidential Information which (A) is then generally known to the public, (B) became or becomes generally known to the public through no fault of the Executive, or (C) is disclosed in accordance with an order of a court of competent jurisdiction or applicable law. Upon termination of the Executive’s employment with the Company, all data, memoranda, customer lists, notes, programs and other papers and items, and reproductions thereof relating to the foregoing matters in the Executive’s possession or control, shall be returned to the Company and remain in its possession. This Section 8 shall survive the termination of this Agreement for any reason.
9. Conflicting Agreements. The Executive hereby represents and warrants that the execution of this Agreement and the performance of his obligations hereunder will not breach or be in conflict with any other agreement to which he is a party or is bound, and that he is not now subject to any covenants which would affect the performance of his obligations hereunder. As of the Effective Date, the Executive is not performing any other duties for, and is not a party to any similar agreement with, any Person competing with the Company or any of its affiliates.
10. Severability. In case any of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, any such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had been limited or modified (consistent with its general intent) to the extent necessary to make it valid, legal and enforceable, or if it shall not be possible to so limit or modify such invalid, illegal or unenforceable provision or part of a provision, this Agreement shall be construed as if such invalid, illegal or unenforceable provision or part of a provision had never been contained in this Agreement.
11. Litigation and Regulatory Cooperation. During and after the Executive’s employment, the Executive shall cooperate fully with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company which relate to events or occurrences that transpired while the Executive was employed by the Company. The Executive’s full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. During and after the Executive’s employment, the Executive also shall cooperate fully with the Company in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while the Executive was employed by the Company. The Company shall reimburse the Executive for any reasonable out-of-pocket expenses incurred in connection with the Executive’s performance of obligations pursuant to this Section 11. This Section 11 shall survive the termination of this Agreement for any reason.
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12. Arbitration of Disputes. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Albany, New York, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered in any court having jurisdiction. In the event that the Company terminates the Executive’s employment for cause under Section 6(b) and the Executive contends that cause did not exist, then the Company’s only obligation shall be to submit such claim to arbitration and the only issue before the arbitrator will be whether the Executive was in fact terminated for cause. If the arbitrator determines that the Executive was not terminated for cause by the Company, then the only remedies that the arbitrator may award are (i) payment of amounts which would have been payable if the Executive’s employment had been terminated under Section 6(e), (ii) the costs of arbitration, (iii) the Executive’s attorneys’ fees, and (iv) all rights and benefits granted or in effect with respect to the Executive under the Company’s stock option plans and agreements with the Executive pursuant thereto, with the vesting and exercise of any stock options and the forfeit ability of any stock-based grants held by the Executive to be governed by the terms of such plans and the related agreements between the Executive and the Company. If the arbitrator finds that the Executive’s employment was terminated for cause, the arbitrator will be without authority to award the Executive anything, and the parties will each be responsible for their own attorneys’ fees, and they will divide the costs of arbitration equally. Furthermore, should a dispute occur concerning the Executive’s mental or physical capacity as described in Section 6(c), a doctor selected by the Executive and a doctor selected by the Company shall be entitled to examine the Executive. If the opinion of the Company’s doctor and the Executive’s doctor conflict, the Company’s doctor and the Executive’s doctor shall together agree upon a third doctor, whose opinion shall be binding. This Section 12 shall survive the termination of this Agreement for any reason.
13. Specific Performance. Notwithstanding Section 12 hereof, it is specifically understood and agreed that any breach of the provisions of this Agreement, including, without limitation, Sections 7 and 8 hereof, by the Executive is likely to result in irreparable injury to the Company and its subsidiaries and affiliates, that the remedy at law alone will be inadequate remedy for such breach and that, in addition to any other remedy it may have, the Company shall be entitled to enforce the specific performance of this Agreement by the Executive and to seek both temporary and permanent injunctive relief (to the extent permitted by law), without the necessity of proving actual damages. To the extent that any court action is permitted consistent with or to enforce Section 7 or 8 of this Agreement, the parties hereby agree to the sole and exclusive jurisdiction of the Supreme Court of the State of New York (Albany County) and the United States District Court for the Northern District of New York (City of Albany). Accordingly, with respect to any such court action, the Executive (i) submits to the personal jurisdiction of such courts, (ii) consents to service of process, and (iii) waives any other requirement (whether imposed by statute, rule of court or otherwise) with respect to personal jurisdiction or service of process.
14. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) when delivered by hand, (ii) when transmitted by facsimile and receipt is acknowledged, or (iii) if mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:
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To the Company:
Albany Molecular Research, Inc.
26 Corporate Circle
Albany, New York 12212-5154
Facsimile: (518) 867-4375
Attention: Board of Directors
To the Executive, at the address on file with the Company
or to such other address of which any party may notify the other parties as provided above. Notices shall be effective as of the date of such delivery or mailing.
15. Amendment; Waiver. This Agreement shall not be amended, modified or discharged in whole or in part except by an Agreement in writing signed by both of the parties hereto. The failure of either of the parties to require the performance of a term or obligation or to exercise any right under this Agreement or the waiver of any breach hereunder shall not prevent subsequent enforcement of such term or obligation or exercise of such right or the enforcement at any time of any other right hereunder or be deemed a waiver of any subsequent breach of the provision so breached, or of any other breach hereunder.
16. Successors and Assigns. This Agreement shall inure to the benefit of successors of the Company by way of merger, consolidation or transfer of all or substantially all of the assets of the Company, and may not be assigned by the Executive. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if no succession had taken place. Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a material breach of this Agreement.
17. Entire Agreement. This Agreement constitutes the entire agreement between the parties concerning the subjects hereof and supersedes all prior understandings and agreements between the parties relating to the subject matter hereof.
18. Governing Law. This Agreement shall be construed and regulated in all respects under the laws of the State of New York.
19. Counterparts. This Agreement may be executed in counterparts, each of which when so executed and delivered shall be taken to be an original, but such counterparts shall together constitute one and the same document.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
ALBANY MOLECULAR RESEARCH, INC. | ||
By: | /s/ Thomas E. D’Ambra | |
EXECUTIVE: | ||
By: | /s/ Michael Luther | |
Michael Luther, Ph.D. |
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Exhibit 10.43
ALBANY MOLECULAR RESEARCH, INC.
SECOND AMENDED 1998 EMPLOYEE STOCK PURCHASE PLAN
The purpose of the Albany Molecular Research, Inc. 1998 Employee Stock Purchase Plan ("the Plan") is to provide eligible employees of Albany Molecular Research, Inc. (the "Company") and its subsidiaries with opportunities to purchase shares of the Company's common stock, par value $.01 per share (the "Common Stock"). One Million Four Hundred Thousand (1,400,000) shares of Common Stock in the aggregate have been approved and reserved for this purpose. The Plan is intended to constitute an "employee stock purchase plan" within the meaning of Section 423(b) of the Internal Revenue Code of 1986, as amended (the "Code"), and shall be interpreted in accordance with that intent.
1. | Administration. The Plan will be administered by the Company's Board of Directors (the "Board") or by a committee appointed by the Board for such purpose (the "Committee"). The Board or the Committee has authority to make rules and regulations for the administration of the Plan, and its interpretations and decisions with regard thereto shall be final and conclusive. No member of the Board or the Committee shall be liable for any action or determination with respect to the Plan or any option granted hereunder. |
2. | Offerings. The Company will make one or more offerings to eligible employees to purchase the Common Stock under the Plan ("Offerings"). The initial Offering will begin on January 1, 1999 and will end on June 30, 1999. Thereafter, an Offering will begin on the first business day occurring on or after each January 1 and July 1 and will end on the last business day occurring on or before the following June 30 and December 31, respectively. The Committee may, in its discretion, choose an Offering period of six months or less for each of the Offerings and choose a different Offering period for each Offering. |
3. | Eligibility. All employees of the Company (including employees who are also directors of the Company) and all employees of each Designated Subsidiary (as defined in Section 11) are eligible to participate in any one or more of the Offerings under the Plan, provided that as of the first day of the applicable Offering (the "Offering Date") they are customarily employed by the Company or a Designated Subsidiary for more than twenty (20) hours a week. |
4. | Participation. An employee eligible on any Offering Date may participate in such Offering by submitting an enrollment form to his or her appropriate payroll location at least fifteen (15) business days before the Offering Date (or by such other deadline as shall be established for the Offering). The form will (a) state a whole percentage to be deducted from such employee's Compensation (as defined in Section 11) per pay period , (b) authorize the purchase of Common Stock for such employee in each Offering in accordance with the terms of the Plan and (c) specify the exact name or names in which shares of Common Stock purchased for such employee are to be issued pursuant to Section 10. An employee who does not enroll in accordance with these procedures will be deemed to have waived the right to participate. Unless an employee files a new enrollment form or withdraws from the Plan, such employee's deductions and purchases will continue at the same percentage of Compensation for future Offerings, provided such employee remains eligible. Notwithstanding the foregoing, participation in the Plan will neither be permitted nor be denied contrary to the requirements of the Code. |
5. | Employee Contributions. Each eligible employee may authorize payroll deductions at a minimum of one percent (1%) up to a maximum of ten percent (10%) of his or her Compensation for each pay period. The Company will maintain book accounts showing the amount of payroll deductions made by each participating employee for each Offering. No interest will accrue or be paid on payroll deductions. |
6. | Deduction Changes. An employee may not increase his or her payroll deduction during any Offering, but may decrease his or her payroll deduction for the remainder of the Offering. An employee may also terminate his or her payroll deduction for the remainder of the Offering, either with or without withdrawing from the Offering under Section 7. To reduce or terminate his or her payroll deduction (without withdrawing from the Offering), an employee must submit a new enrollment form at least fifteen (15) business days (or such shorter period as shall be established) before the payroll date on which the change becomes effective. Subject to the requirements of Sections 4 and 5, an employee may either increase or decrease his or her payroll deduction with respect to the next Offering by filing a new enrollment form at least fifteen (15) business days before the next Offering Date (or by such other deadline as shall be established for the Offering). |
7. | Withdrawal. An employee may withdraw from participation in the Plan by delivering a written notice of withdrawal to his or her appropriate payroll location. The employee's withdrawal will be effective as of the next business day. Following an employee's withdrawal, the Company will promptly refund such employee's entire account balance under the Plan (after payment for any Common Stock purchased before the effective date of withdrawal). Partial withdrawals are not permitted. The employee may not begin participation again during the remainder of the Offering, but may enroll in a subsequent Offering in accordance with Section 4. |
8. | Grant of Options. On each Offering Date, the Company will grant to each eligible employee who is then a participant in the Plan an option ("Option") to purchase on the last day of such Offering (the "Exercise Date"), at the Option Price hereinafter provided for, a maximum of two thousand (2,000) shares of Common Stock reserved for the purposes of the Plan, or such other maximum number of shares as shall have been established by the Board or the Committee in advance of the offering. The purchase price for each share purchased under such Option (the "Option Price") will be 85% of the Fair Market Value of the Common Stock on the Offering Date or the Exercise Date, whichever is less. Notwithstanding the foregoing, no employee may be granted an option hereunder if such employee, immediately after the option was granted, would be treated as owning stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any Parent or Subsidiary (as defined in Section 11). |
For purposes of the preceding sentence, the attribution rules of Section 424(d) of the Code shall apply in determining the stock ownership of an employee, and all stock which the employee has a contractual right to purchase shall be treated as stock owned by the employee. In addition, no employee may be granted an Option which permits his or her rights to purchase stock under the Plan, and any other employee stock purchase plan of the Company and its Parents and Subsidiaries, to accrue at a rate which exceeds $25,000 of the fair market value of such stock (determined on the option grant date or dates) for each calendar year in which the Option is outstanding at any time. The purpose of the limitation in the preceding sentence is to comply with Section 423(b)(8) of the Code.
9. | Exercise of Option and Purchase of Shares. Each employee who continues to be a participant in the Plan on the Exercise Date shall be deemed to have exercised his or her Option on such date and shall acquire from the Company such number of whole shares of Common Stock reserved for the purpose of the Plan as his or her accumulated payroll deductions on such date will purchase at the Option Price, subject to any other limitations contained in the Plan. Any amount remaining in an employee's account at the end of an Offering solely by reason of the inability to purchase a fractional share will be carried forward to the next Offering; any other balance remaining in an employee's account at the end of an Offering will be refunded to the employee promptly. |
10. | Issuance of Certificates. Certificates representing shares of Common Stock purchased under the Plan may be issued only in the name of the employee, in the name of the employee and another person of legal age as joint tenants with rights of survivorship, or in the name of a broker authorized by the employee to be his or her nominee for such purpose. |
11. | Definitions. The term "Compensation" means the amount of total cash compensation, prior to salary reduction pursuant to either Section 125 or 401(k) of the Code, including base pay, overtime, commissions and bonuses, but excluding allowances and reimbursements for expenses such as relocation allowances or travel expenses, income or gains on the exercise of Company stock options, and similar items. |
The term "Designated Subsidiary" means any present or future Subsidiary (as defined below) that has been designated by the Board or the Committee to participate in the Plan. The Board or the Committee may so designate any Subsidiary, or revoke any such designation, at any time and from time to time, either before or after the Plan is approved by the stockholders.
The term "Fair Market Value of the Common Stock" means (i) if the Common Stock is admitted to trading on a national securities exchange or the National Association of Securities Dealers National Market System, the closing price reported for the Common Stock on such exchange or system for such date or, if no sales were reported for such date, for the last date preceding such date for which a sale was reported, or (ii) if clause (i) does not apply but the Common Stock is admitted to quotation on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the average of the highest bid and lowest asked prices of the Common Stock reported on NASDAQ for such date or, if no bid and asked prices were reported for such date, for the last day preceding such date for which such prices were reported.
The term "Parent" means a "parent corporation" with respect to the Company, as defined in Section 424(e) of the Code. The term "Subsidiary" means a "subsidiary corporation" with respect to the Company, as defined in Section 424(f) of the Code.
12. | Rights on Termination of Employment. If a participating employee's employment terminates for any reason before the Exercise Date for any Offering, no payroll deduction will be taken from any pay due and owing to such employee and the balance in such employee's account will be paid to such employee or, in the case of death, to such employee's designated beneficiary as if such employee had withdrawn from the Plan under Section 7. An employee will be deemed to have terminated employment, for this purpose, if the corporation that employs such employee, having been a Designated Subsidiary, ceases to be a Subsidiary, or if such employee is transferred to any corporation other than the Company or a Designated Subsidiary. |
13. | Special Rules. Notwithstanding anything herein to the contrary, the Board or the Committee may adopt special rules applicable to the employees of a particular Designated Subsidiary, whenever the Board or the Committee determines that such rules are necessary or appropriate for the implementation of the Plan in a jurisdiction where such Designated Subsidiary has employees; provided that such rules are consistent with the requirements of Section 423(b) of the Code. Such special rules may include (by way of example, but not by way of limitation) the establishment of a method for employees of a given Designated Subsidiary to fund the purchase of shares other than by payroll deduction, if the payroll deduction method is prohibited by local law or is otherwise impracticable. Any special rules established pursuant to this Section 13 shall, to the extent possible, result in the employees subject to such rules having substantially the same rights as other participants in the Plan. |
14. | Optionees Not Stockholders. Neither the granting of an Option to an employee nor the deductions from his or her pay shall constitute such employee a holder of the shares of Common Stock covered by an Option under the Plan until such shares have been purchased by and issued to such employee. |
15. | Rights Not Transferable. Rights under the Plan are not transferable by a participating employee other than by will or the laws of descent and distribution, and are exercisable during the employee's lifetime only by the employee. |
16. | Application of Funds. All funds received or held by the Company under the Plan may be combined with other corporate funds and may be used for any corporate purpose. |
17. | Adjustment in Case of Changes Affecting Common Stock. In the event of a subdivision of outstanding shares of Common Stock, or the payment of a dividend in Common Stock, the number of shares approved for the Plan, and the share limitation set forth in Section 8, shall be increased proportionately, and such other adjustment shall be made as may be deemed equitable by the Board or the Committee. In the event of any other change affecting the Common Stock, such adjustment shall be made as may be deemed equitable by the Board or the Committee to give proper effect to such event. |
18. | Amendment of the Plan. The Board or the Committee may at any time, and from time to time, amend the Plan in any respect, except that without the approval, within twelve (12) months of such Board or Committee action, by the holders of a majority of the shares of stock of the Company present or represented and entitled to vote at a meeting of stockholders, no amendment shall be made increasing the number of shares approved for the Plan or making any other change that would require stockholder approval in order for the Plan, as amended, to qualify as an "employee stock purchase plan" under Section 423(b) of the Code. |
19. | Insufficient Shares. If the total number of shares of Common Stock that would otherwise be purchased on any Exercise Date plus the number of shares purchased under previous Offerings under the Plan exceeds the maximum number of shares issuable under the Plan, the shares then available shall be apportioned among participants in proportion to the amount of payroll deductions accumulated on behalf of each participant that would otherwise be used to purchase Common Stock on such Exercise Date. |
20. | Termination of the Plan. The Plan may be terminated at any time by the Board or the Committee. Upon termination of the Plan, all amounts in the accounts of participating employees shall be promptly refunded. |
21. | Governmental Regulations. The Company's obligation to sell and deliver Common Stock under the Plan is subject to obtaining all governmental approvals required in connection with the authorization, issuance, or sale of such stock. |
The Plan shall be governed by Delaware law except to the extent that such law is preempted by federal law.
22. | Issuance of Shares. Shares may be issued upon exercise of an Option from authorized but unissued Common Stock, from shares held in the treasury of the Company, or from any other proper source. |
23. | Tax Withholding. Participation in the Plan is subject to any required tax withholding on income of the participant in connection with the Plan. Each employee agrees, by entering the Plan, that the Company and its Subsidiaries shall have the right to deduct any such taxes from any payment of any kind otherwise due to the employee, including shares issuable under the Plan. |
24. | Notification Upon Sale of Shares. Each employee agrees, by entering the Plan, to give the Company prompt notice of any disposition of shares purchased under the Plan where such disposition occurs within two years after the date of grant of the Option pursuant to which such shares were purchased. |
25. | Effective Date and Approval of Stockholders The Plan shall take effect on the first day of the Company's initial public offering, subject to approval by the holders of a majority of the shares of stock of the Company present or represented and entitled to vote at a meeting of stockholders, which approval must occur within twelve (12) months of the adoption of the Plan by the Board. |
Exhibit 10.44
ALBANY MOLECULAR RESEARCH, INC.
SECOND AMENDED 2008 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Albany Molecular Research, Inc. Second Amended 2008 Stock Option and Incentive Plan (the “Plan”). The purpose of the Plan is to encourage and enable the officers, employees, Non-Employee Directors and other key persons (including consultants and prospective employees) of Albany Molecular Research, Inc. (the “Company”) and its Subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company’s welfare will assure a closer identification of their interests with those of the Company and its stockholders, thereby stimulating their efforts on the Company’s behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
“Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Administrator” means either the Board or the compensation committee of the Board or a similar committee performing the functions of the compensation committee and which is comprised of not less than two Non-Employee Directors who are independent.
“Award” or “Awards,” except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Deferred Stock Awards, Restricted Stock Awards, Unrestricted Stock Awards, Cash-based Awards, Performance Share Awards and Dividend Equivalent Rights.
“Award Agreement” means a written or electronic agreement setting forth the terms and provisions applicable to an Award granted under the Plan. Each Award Agreement is subject to the terms and conditions of the Plan.
“Board” means the Board of Directors of the Company.
“Cash-based Award” means an Award entitling the recipient to receive a cash-denominated payment.
“Code” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.
“Covered Employee” means an employee who is a “Covered Employee” within the meaning of Section 162(m) of the Code.
“Deferred Stock Award” means an Award of phantom stock units to a grantee.
“Dividend Equivalent Right” means an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other award to which it relates) if such shares had been issued to and held by the grantee.
“Effective Date” means the date on which the Plan is approved by stockholders as set forth in Section 20.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
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“Fair Market Value” of the Stock on any given date means the fair market value of the Stock determined in good faith by the Administrator; provided, however, that if the Stock is admitted to quotation on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), NASDAQ Global Market or another national securities exchange, the determination shall be made by reference to market quotations. If there are no market quotations for such date, the determination shall be made by reference to the last date preceding such date for which there are market quotations.
“Incentive Stock Option” means any Stock Option designated and qualified as an “incentive stock option” as defined in Section 422 of the Code.
“Non-Employee Director” means a member of the Board who is not also an employee of the Company or any Subsidiary.
“Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.
“Option” or “Stock Option” means any option to purchase shares of Stock granted pursuant to Section 5.
“Performance-based Award” means any Restricted Stock Award, Deferred Stock Award, Performance Share Award or Cash-based Award granted to a Covered Employee that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code and the regulations promulgated thereunder.
“Performance Criteria” means the criteria that the Administrator selects for purposes of establishing the Performance Goal or Performance Goals for an individual for a Performance Cycle. The Performance Criteria (which shall be applicable to the organizational level specified by the Administrator, including, but not limited to, the Company or a unit, division, group, or Subsidiary of the Company) that will be used to establish Performance Goals are limited to the following: earnings before interest, taxes, depreciation and amortization, net income (loss) (either before or after interest, taxes, depreciation and/or amortization), changes in the market price of the Stock, economic value-added, funds from operations or similar measure, sales or revenue, acquisitions or strategic transactions, operating income (loss), cash flow (including, but not limited to, operating cash flow and free cash flow), return on capital, assets, equity, or investment, stockholder returns, return on sales, gross or net profit levels, productivity, expense, margins, operating efficiency, customer satisfaction, working capital, earnings (loss) per share of Stock, sales or market shares and number of customers, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group.
“Performance Cycle” means one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Criteria will be measured for the purpose of determining a grantee’s right to and the payment of a Restricted Stock Award, Deferred Stock Award, Performance Share Award or Cash-based Award.
“Performance Goals” means, for a Performance Cycle, the specific goals established in writing by the Administrator for a Performance Cycle based upon the Performance Criteria.
“Performance Share Award” means an Award entitling the recipient to acquire shares of Stock upon the attainment of specified Performance Goals.
“Restricted Stock Award” means an Award entitling the recipient to acquire, at such purchase price (which may be zero) as determined by the Administrator, shares of Stock subject to such restrictions and conditions as the Administrator may determine at the time of grant.
“Sale Event” shall mean (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation in which the outstanding shares of Stock are converted into or exchanged for securities of the successor entity and the holders of the Company’s outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction, or (iii) the sale of all of the Stock of the Company to an unrelated person or entity.
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“Sale Price” means the value as determined by the Administrator of the consideration payable, or otherwise to be received by stockholders, per share of Stock pursuant to a Sale Event.
“Section 409A” means Section 409A of the Code and the regulations and other guidance promulgated thereunder.
“Stock” means the Common Stock, par value $0.01 per share, of the Company, subject to adjustments pursuant to Section 3.
“Stock Appreciation Right” means an Award entitling the recipient to receive shares of Stock having a value equal to the excess of the Fair Market Value of the Stock on the date of exercise over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.
“Subsidiary” means any corporation or other entity (other than the Company) in which the Company has at least a 50 percent interest, either directly or indirectly.
“Ten Percent Owner” means an employee who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation.
“Unrestricted Stock Award” means an Award of shares of Stock free of any restrictions.
SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS
(a) Administration of Plan. The Plan shall be administered by the Administrator.
(b) Powers of Administrator. The Administrator shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority:
(i) to select the individuals to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Deferred Stock Awards, Unrestricted Stock Awards, Cash-based Awards, Performance Share Awards and Dividend Equivalent Rights, or any combination of the foregoing, granted to any one or more grantees;
(iii) to determine the number of shares of Stock to be covered by any Award;
(iv) to determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve the form of written instruments evidencing the Awards;
(v) to accelerate at any time the exercisability or vesting of all or any portion of any Award;
(vi) subject to the provisions of Section 5(a)(ii), to extend at any time the period in which Stock Options may be exercised; and
(vii) at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan.
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All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Plan grantees.
(c) Delegation of Authority to Grant Options. Subject to applicable law, the Administrator, in its discretion, may delegate to the Chief Executive Officer of the Company all or part of the Administrator’s authority and duties with respect to the granting of Options, to individuals who are (i) not subject to the reporting and other provisions of Section 16 of the Exchange Act and (ii) not Covered Employees. Any such delegation by the Administrator shall include a limitation as to the amount of Options that may be granted during the period of the delegation and shall contain guidelines as to the determination of the exercise price and the vesting criteria. The Administrator may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Administrator’s delegate or delegates that were consistent with the terms of the Plan.
(d) Award Agreement. Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions and limitations for each Award which may include, without limitation, the term of an Award, the provisions applicable in the event employment or service terminates, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award.
(e) Indemnification. Neither the Board nor the Administrator, nor any member of either or any delegate thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and the Administrator (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under the Company’s articles or bylaws or any directors’ and officers’ liability insurance coverage which may be in effect from time to time and/or any indemnification agreement between such individual and the Company.
(f) Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Administrator, in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Administrator determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 3(a) hereof; and (v) take any action, before or after an Award is made, that the Administrator determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Stock Issuable. The maximum number of shares of Stock reserved and available for issuance under the Plan shall be 5,700,000 shares, subject to adjustment as provided in Section 3(b); provided that not more than 5,700,000 shares shall be issued in the form of Incentive Stock Options. For purposes of this limitation, the shares of Stock underlying any Awards that are forfeited, canceled or otherwise terminated (other than by exercise) shall be added back to the shares of Stock available for issuance under the Plan. Shares tendered or held back upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding shall not be available for future issuance under the Plan. In addition, upon exercise of Stock Appreciation Rights, the gross number of shares exercised shall be deducted from the total number of shares remaining available for issuance under the Plan. Subject to such overall limitations, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award; provided, however, that Stock Options or Stock Appreciation Rights with respect to no more than 300,000 shares of Stock may be granted to any one individual grantee during any one calendar year period. The shares available for issuance under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company.
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(b) Changes in Stock. Subject to Section 3(c) hereof, if, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Company’s capital stock, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Stock or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the Company, the outstanding shares of Stock are converted into or exchanged for securities of the Company or any successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance under the Plan, [including the maximum number of shares that may be issued in the form of Unrestricted Stock Awards, Restricted Stock Awards, Deferred Stock Awards or Performance Share Awards,] (ii) the number of Stock Options or Stock Appreciation Rights that can be granted to any one individual grantee and the maximum number of shares that may be granted under a Performance-based Award, (iii) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, (iv) the repurchase price, if any, per share subject to each outstanding Restricted Stock Award, [(v) the number of Stock Options automatically granted to Non-Employee Directors,] and (vi) the price for each share subject to any then outstanding Stock Options and Stock Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Stock Options and Stock Appreciation Rights) as to which such Stock Options and Stock Appreciation Rights remain exercisable. The Administrator shall also make equitable or proportionate adjustments in the number of shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into consideration cash dividends paid other than in the ordinary course or any other extraordinary corporate event. Notwithstanding the foregoing, no adjustment shall be made under this Section 3(b) if the Administrator determines that such action could cause any Award to fail to satisfy the conditions of any applicable exception from the requirements of Section 409A or otherwise could subject the grantee to the additional tax imposed under Section 409A in respect of an outstanding Award or constitute a modification, extension or renewal of an Incentive Stock Option within the meaning of Section 424(h) of the Code. The adjustment by the Administrator shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional shares.
(c) Mergers and Other Transactions. Except as the Administrator may otherwise specify with respect to particular Awards in the relevant Award documentation, in the case of and subject to the consummation of a Sale Event, all Options and Stock Appreciation Rights that are not exercisable immediately prior to the effective time of the Sale Event shall become fully exercisable as of the effective time of the Sale Event, all other Awards with time-based vesting, conditions or restrictions shall become fully vested and nonforfeitable as of the effective time of the Sale Event and all Awards with conditions and restrictions relating to the attainment of performance goals may become vested and nonforfeitable in connection with a Sale Event in the Administrator’s discretion, unless, in any case, the parties to the Sale Event agree that Awards will be assumed or continued by the successor entity. Upon the effective time of the Sale Event, the Plan and all outstanding Awards granted hereunder shall terminate, unless provision is made in connection with the Sale Event in the sole discretion of the parties thereto for the assumption or continuation of Awards theretofore granted by the successor entity, or the substitution of such Awards with new Awards of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree (after taking into account any acceleration hereunder). In the event of such termination, (i) the Company shall have the option (in its sole discretion) to make or provide for a cash payment to the grantees holding Options and Stock Appreciation Rights, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the Sale Price multiplied by the number of shares of Stock subject to outstanding Options and Stock Appreciation Rights (to the extent then exercisable (after taking into account any acceleration hereunder) at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding Options and Stock Appreciation Rights; or (ii) each grantee shall be permitted, within a specified period of time prior to the consummation of the Sale Event as determined by the Administrator, to exercise all outstanding Options and Stock Appreciation Rights held by such grantee.
(d) Substitute Awards. The Administrator may grant Awards under the Plan in substitution for stock and stock based awards held by employees, directors or other key persons of another corporation in connection with the merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the employing corporation. The Administrator may direct that the substitute awards be granted on such terms and conditions as the Administrator considers appropriate in the circumstances. Any substitute Awards granted under the Plan shall not count against the share limitation set forth in Section 3(a).
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SECTION 4. ELIGIBILITY
Grantees under the Plan will be such full or part-time officers and other employees, Non-Employee Directors and key persons (including consultants and prospective employees) of the Company and its Subsidiaries as are selected from time to time by the Administrator in its sole discretion.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted only to employees of the Company or any Subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f) of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.
(a) Stock Options Granted to Employees and Key Persons. The Administrator in its discretion may grant Stock Options to eligible employees and key persons of the Company or any Subsidiary. Stock Options granted pursuant to this Section 5(a) shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable. If the Administrator so determines, Stock Options may be granted in lieu of cash compensation at the optionee’s election, subject to such terms and conditions as the Administrator may establish.
(i) Exercise Price. The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5(a) shall be determined by the Administrator at the time of grant but shall not be less than 100 percent of the Fair Market Value on the date of grant. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the option price of such Incentive Stock Option shall be not less than 110 percent of the Fair Market Value on the grant date.
(ii) Option Term. The term of each Stock Option shall be fixed by the Administrator, but no Stock Option shall be exercisable more than ten years after the date the Stock Option is granted. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the term of such Stock Option shall be no more than five years from the date of grant.
(iii) Exercisability; Rights of a Stockholder. Stock Options shall become exercisable at such time or times, whether or not in installments, as shall be determined by the Administrator at or after the grant date. The Administrator may at any time accelerate the exercisability of all or any portion of any Stock Option. An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in whole or in part, by giving written notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods to the extent provided in the Option Award Agreement:
(A) In cash, by certified or bank check or other instrument acceptable to the Administrator;
(B) Through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the optionee on the open market or that are beneficially owned by the optionee and are not then subject to restrictions under any Company plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date. To the extent required to avoid variable accounting treatment under FAS 123R or other applicable accounting rules, such surrendered shares shall have been owned by the optionee for at least six months; or
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(C) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure.
Payment instruments will be received subject to collection. The transfer to the optionee on the records of the Company or of the transfer agent of the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Option Award Agreement or applicable provisions of laws (including the satisfaction of any withholding taxes that the Company is obligated to withhold with respect to the optionee). In the event an optionee chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the optionee upon the exercise of the Stock Option shall be net of the number of attested shares. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the exercise of Stock Options, such as a system using an internet website or interactive voice response, then the paperless exercise of Stock Options may be permitted through the use of such an automated system.
(v) Annual Limit on Incentive Stock Options. To the extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or its parent and subsidiary corporations become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.
(b) Stock Options Granted to Non-Employee Directors.
(i) Automatic Grant of Options.
(A) Each Non-Employee Director who is serving as Director of the Company shall be granted a Non-Qualified Stock Option to acquire shares of Stock valued at $35,000 on the grant date (valued using the Black Sholes valuation model). The Stock Options to such Directors shall be granted at the same time as the annual grant of equity to the management team or in no event more than five (5) business days following the annual shareholders meeting..
(B) The exercise price per share for the Stock covered by a Stock Option granted under this Section 5(b) shall be equal to the Fair Market Value of the Stock on the date the Stock Option is granted.
(C) The Administrator, in its discretion, may grant additional Non-Qualified Stock Options to Non-Employee Directors. Any such grant may vary among individual Non-Employee Directors.
(ii) Exercise; Termination.
(A) Unless otherwise determined by the Administrator, an Option granted under Section 5(b) shall not be exercisable after the expiration of ten years from the date of grant.
(B) Options granted under this Section 5(b) may be exercised only by written notice to the Company specifying the number of shares to be purchased. Payment of the full purchase price of the shares to be purchased may be made by one or more of the methods specified in Section 5(a)(iv). An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.
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SECTION 6. STOCK APPRECIATION RIGHTS
(a) Exercise Price of Stock Appreciation Rights. The exercise price of a Stock Appreciation Right shall not be less than 100 percent of the Fair Market Value of the Stock on the date of grant.
(b) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation Rights may be granted by the Administrator independently of any Stock Option granted pursuant to Section 5 of the Plan.
(c) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined from time to time by the Administrator.
SECTION 7. RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock Awards. The Administrator shall determine the restrictions and conditions applicable to each Restricted Stock Award at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives. The grant of a Restricted Stock Award is contingent on the grantee executing the Restricted Stock Award Agreement. The terms and conditions of each such Award Agreement shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees.
(b) Rights as a Stockholder. Upon execution of the Restricted Stock Award Agreement and payment of any applicable purchase price, a grantee shall have the rights of a stockholder with respect to the voting of the Restricted Stock, subject to such conditions contained in the Restricted Stock Award Agreement. Unless the Administrator shall otherwise determine, (i) uncertificated Restricted Stock shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they are subject to forfeiture until such Restricted Stock are vested as provided in Section 7(d) below, and (ii) certificated Restricted Stock shall remain in the possession of the Company until such Restricted Stock is vested as provided in Section 7(d) below, and the grantee shall be required, as a condition of the grant, to deliver to the Company such instruments of transfer as the Administrator may prescribe.
(c) Restrictions. Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the Restricted Stock Award Agreement. Except as may otherwise be provided by the Administrator either in the Award Agreement or, subject to Section 18 below, in writing after the Award Agreement is issued if a grantee’s employment (or other service relationship) with the Company and its Subsidiaries terminates for any reason, any Restricted Stock that has not vested at the time of termination shall automatically and without any requirement of notice to such grantee from or other action by or on behalf of, the Company be deemed to have been reacquired by the Company at its original purchase price (if any) from such grantee or such grantee’s legal representative simultaneously with such termination of employment (or other service relationship), and thereafter shall cease to represent any ownership of the Company by the grantee or rights of the grantee as a stockholder. Following such deemed reacquisition of unvested Restricted Stock that are represented by physical certificates, a grantee shall surrender such certificates to the Company upon request without consideration.
(d) Vesting of Restricted Stock. The Administrator at the time of grant shall specify the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the non-transferability of the Restricted Stock and the Company’s right of repurchase or forfeiture shall lapse. Notwithstanding the foregoing, in the event that any such Restricted Stock granted to employees shall have a performance-based goal, the restriction period with respect to such shares shall not be less than one year, and in the event any such Restricted Stock granted to employees shall have a time-based restriction, the total restriction period with respect to such shares shall not be less than three years; provided, however, that Restricted Stock with a time-based restriction may become vested incrementally over such three-year period. Subsequent to such date or dates and/or the attainment of such pre-established performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Stock and shall be deemed “vested.” Except as may otherwise be provided by the Administrator either in the Award Agreement or, subject to Section 18 below, in writing after the Award Agreement is issued, a grantee’s rights in any shares of Restricted Stock that have not vested shall automatically terminate upon the grantee’s termination of employment (or other service relationship) with the Company and its Subsidiaries and such shares shall be subject to the provisions of Section 7(c) above.
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(e) Restricted Stock Granted to Non-Employee Directors
(i) Automatic Grant of Restricted Stock.
(A) Each Non-Employee Director who is serving as Director of the Company shall be granted restricted stock valued at $35,000 on the grant date (based on the value on date of grant). The restricted stock to such Directors shall be granted at the same time as the annual grant of equity to the management team or in no event more than five (5) business days following the annual shareholders meeting.
SECTION 8. DEFERRED STOCK AWARDS
(a) Nature of Deferred Stock Awards. The Administrator shall determine the restrictions and conditions applicable to each Deferred Stock Award at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives. The grant of a Deferred Stock Award is contingent on the grantee executing the Deferred Stock Award Agreement. The terms and conditions of each such Award Agreement shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees. Notwithstanding the foregoing, in the event that any such Deferred Stock Award granted to employees shall have a performance-based goal, the restriction period with respect to such Award shall not be less than one year, and in the event any such Deferred Stock Award granted to employees shall have a time-based restriction, the total restriction period with respect to such Award shall not be less than three years; provided, however, that any Deferred Stock Award with a time-based restriction may become vested incrementally over such three-year period. At the end of the deferral period, the Deferred Stock Award, to the extent vested, shall be settled in the form of shares of Stock.
(b) Election to Receive Deferred Stock Awards in Lieu of Compensation. The Administrator may, in its sole discretion, permit a grantee to elect to receive a portion of future cash compensation otherwise due to such grantee in the form of a Deferred Stock Award. Any such election shall be made in writing and shall be delivered to the Company no later than the date specified by the Administrator and in accordance with Section 409A and such other rules and procedures established by the Administrator. Any such future cash compensation that the grantee elects to defer shall be converted to a fixed number of phantom stock units based on the Fair Market Value of Stock on the date the compensation would otherwise have been paid to the grantee if such payment had not been deferred as provided herein. The Administrator shall have the sole right to determine whether and under what circumstances to permit such elections and to impose such limitations and other terms and conditions thereon as the Administrator deems appropriate.
(c) Rights as a Stockholder. A grantee shall have the rights as a stockholder only as to shares of Stock acquired by the grantee upon settlement of a Deferred Stock Award; provided, however, that the grantee may be credited with Dividend Equivalent Rights with respect to the phantom stock units underlying his Deferred Stock Award, subject to such terms and conditions as the Administrator may determine.
(d) Termination. Except as may otherwise be provided by the Administrator either in the Award Agreement or, subject to Section 18 below, in writing after the Award Agreement is issued, a grantee’s right in all Deferred Stock Awards that have not vested shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION 9. UNRESTRICTED STOCK AWARDS
Grant or Sale of Unrestricted Stock. The Administrator may, in its sole discretion, grant (or sell at par value or such higher purchase price determined by the Administrator) an Unrestricted Stock Award under the Plan. Unrestricted Stock Awards may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to such grantee.
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SECTION 10. CASH-BASED AWARDS
(a) Grant of Cash-based Awards. The Administrator may, in its sole discretion, grant Cash-based Awards to any grantee in such number or amount and upon such terms, and subject to such conditions, as the Administrator shall determine at the time of grant. The Administrator shall determine the maximum duration of the Cash-based Award, the amount of cash to which the Cash-based Award pertains, the conditions upon which the Cash-based Award shall become vested or payable, and such other provisions as the Administrator shall determine. Each Cash-based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Administrator. Payment, if any, with respect to a Cash-based Award shall be made in accordance with the terms of the Award and may be made in cash or in shares of Stock, as the Administrator determines.
SECTION 11. PERFORMANCE SHARE AWARDS
(a) Nature of Performance Share Awards. The Administrator may, in its sole discretion, grant Performance Share Awards independent of, or in connection with, the granting of any other Award under the Plan. The Administrator shall determine whether and to whom Performance Share Awards shall be granted, the Performance Goals, the periods during which performance is to be measured, which may not be less than one year, and such other limitations and conditions as the Administrator shall determine.
(b) Rights as a Stockholder. A grantee receiving a Performance Share Award shall have the rights of a stockholder only as to shares actually received by the grantee under the Plan and not with respect to shares subject to the Award but not actually received by the grantee. A grantee shall be entitled to receive shares of Stock under a Performance Share Award only upon satisfaction of all conditions specified in the Performance Share Award agreement (or in a performance plan adopted by the Administrator).
(c) Termination. Except as may otherwise be provided by the Administrator either in the Award agreement or, subject to Section 18 below, in writing after the Award agreement is issued, a grantee’s rights in all Performance Share Awards shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION 12. PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES
(a) Performance-based Awards. Any employee or other key person providing services to the Company and who is selected by the Administrator may be granted one or more Performance-based Awards in the form of a Restricted Stock Award, Deferred Stock Award, Performance Share Awards or Cash-based Award payable upon the attainment of Performance Goals that are established by the Administrator and relate to one or more of the Performance Criteria, in each case on a specified date or dates or over any period or periods determined by the Administrator. The Administrator shall define in an objective fashion the manner of calculating the Performance Criteria it selects to use for any Performance Period. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, or an individual. The Administrator, in its discretion, may adjust or modify the calculation of Performance Goals for such Performance Period in order to prevent the dilution or enlargement of the rights of an individual (i) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development, (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or (iii) in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions provided however, that the Administrator may not exercise such discretion in a manner that would increase the Performance-based Award granted to a Covered Employee. Each Performance-based Award shall comply with the provisions set forth below.
(b) Grant of Performance-based Awards. With respect to each Performance-based Award granted to a Covered Employee, the Administrator shall select, within the first 90 days of a Performance Cycle (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) the Performance Criteria for such grant, and the Performance Goals with respect to each Performance Criterion (including a threshold level of performance below which no amount will become payable with respect to such Award). Each Performance-based Award will specify the amount payable, or the formula for determining the amount payable, upon achievement of the various applicable performance targets. The Performance Criteria established by the Administrator may be (but need not be) different for each Performance Cycle and different Performance Goals may be applicable to Performance-based Awards to different Covered Employees.
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(c) Payment of Performance-based Awards. Following the completion of a Performance Cycle, the Administrator shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Cycle have been achieved and, if so, to also calculate and certify in writing the amount of the Performance-based Awards earned for the Performance Cycle. The Administrator shall then determine the actual size of each Covered Employee’s Performance-based Award, and, in doing so, may reduce or eliminate the amount of the Performance-based Award for a Covered Employee if, in its sole judgment, such reduction or elimination is appropriate.
(d) Maximum Award Payable. The maximum Performance-based Award payable to any one Covered Employee under the Plan for a Performance Cycle is 100,000 Shares (subject to adjustment as provided in Section 3(b) hereof) or $500,000 in the case of a Performance-based Award that is a Cash-based Award.
SECTION 13. DIVIDEND EQUIVALENT RIGHTS
(a) Dividend Equivalent Rights. A Dividend Equivalent Right may be granted hereunder to any grantee as a component of another Award or as a freestanding award. The terms and conditions of Dividend Equivalent Rights shall be specified in the Award Agreement. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Stock, which may thereafter accrue additional equivalents. Any such reinvestment shall be at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled in cash or shares of Stock or a combination thereof, in a single installment or installments. A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award. A Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other Award.
(b) Interest Equivalents. Any Award under this Plan that is settled in whole or in part in cash on a deferred basis may provide in the grant for interest equivalents to be credited with respect to such cash payment. Interest equivalents may be compounded and shall be paid upon such terms and conditions as may be specified by the grant.
(c) Termination. Except as may otherwise be provided by the Administrator either in the Award Agreement or, subject to Section 18 below, in writing after the Award Agreement is issued, a grantee’s rights in all Dividend Equivalent Rights or interest equivalents granted as a component of another Award that has not vested shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION 14. Transferability of Awards
(a) Transferability. Except as provided in Section 14(b) below, during a grantee’s lifetime, his or her Awards shall be exercisable only by the grantee, or by the grantee’s legal representative or guardian in the event of the grantee’s incapacity. No Awards shall be sold, assigned, transferred or otherwise encumbered or disposed of by a grantee other than by will or by the laws of descent and distribution. No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation hereof shall be null and void.
(b) Administrator Action. Notwithstanding Section 14(a), the Administrator, in its discretion, may provide either in the Award Agreement regarding a given Award or by subsequent written approval that the grantee (who is an employee or director) may transfer his or her Awards (other than any Incentive Stock Options) to his or her immediate family members, to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Award.
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(c) Family Member. For purposes of Section 14(b), “family member” shall mean a grantee’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee’s household (other than a tenant of the grantee), a trust in which these persons (or the grantee) have more than 50 percent of the beneficial interest, a foundation in which these persons (or the grantee) control the management of assets, and any other entity in which these persons (or the grantee) own more than 50 percent of the voting interests.
(d) Designation of Beneficiary. Each grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the grantee’s death. Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the Administrator. If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee’s estate.
SECTION 15. TAX WITHHOLDING
(a) Payment by Grantee. Each grantee shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the grantee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld by the Company with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee. The Company’s obligation to deliver evidence of book entry (or stock certificates) to any grantee is subject to and conditioned on tax withholding obligations being satisfied by the grantee.
(b) Payment in Stock. Subject to approval by the Administrator, a grantee may elect to have the Company’s minimum required tax withholding obligation satisfied, in whole or in part, by authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due.
SECTION 16. Additional Conditions Applicable to Nonqualified Deferred Compensation Under Section 409A.
In the event any Stock Option or Stock Appreciation Right under the Plan is materially modified and deemed a new grant at a time when the Fair Market Value exceeds the exercise price, or any other Award is otherwise determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a “409A Award”), the following additional conditions shall apply and shall supersede any contrary provisions of this Plan or the terms of any agreement relating to such 409A Award.
(a) Exercise and Distribution. Except as provided in Section 16(b) hereof, no 409A Award shall be exercisable or distributable earlier than upon one of the following:
(i) Specified Time. A specified time or a fixed schedule set forth in the written instrument evidencing the 409A Award.
(ii) Separation from Service. Separation from service (within the meaning of Section 409A) by the 409A Award grantee; provided, however, that if the 409A Award grantee is a “key employee” (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) and any of the Company’s Stock is publicly traded on an established securities market or otherwise, exercise or distribution under this Section 16(a)(ii) may not be made before the date that is six months after the date of separation from service.
(iii) Death. The date of death of the 409A Award grantee.
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(iv) Disability. The date the 409A Award grantee becomes disabled (within the meaning of Section 16(c)(ii) hereof).
(v) Unforeseeable Emergency. The occurrence of an unforeseeable emergency (within the meaning of Section 16(c)(iii) hereof), but only if the net value (after payment of the exercise price) of the number of shares of Stock that become issuable does not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the exercise, after taking into account the extent to which the emergency is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the grantee’s other assets (to the extent such liquidation would not itself cause severe financial hardship).
(vi) Change in Control Event. The occurrence of a Change in Control Event (within the meaning of Section 16(c)(i) hereof), including the Company’s discretionary exercise of the right to accelerate vesting of such grant upon a Change in Control Event or to terminate the Plan or any 409A Award granted hereunder within 12 months of the Change in Control Event.
(b) No Acceleration. A 409A Award may not be accelerated or exercised prior to the time specified in Section 16(a) hereof, except in the case of one of the following events:
(i) Domestic Relations Order. The 409A Award may permit the acceleration of the exercise or distribution time or schedule to an individual other than the grantee as may be necessary to comply with the terms of a domestic relations order (as defined in Section 414(p)(1)(B) of the Code).
(ii) Conflicts of Interest. The 409A Award may permit the acceleration of the exercise or distribution time or schedule as may be necessary to comply with the terms of a certificate of divestiture (as defined in Section 1043(b)(2) of the Code).
(iii) Change in Control Event. The Administrator may exercise the discretionary right to accelerate the vesting of such 409A Award upon a Change in Control Event or to terminate the Plan or any 409A Award granted thereunder within 12 months of the Change in Control Event and cancel the 409A Award for compensation.
(c) Definitions. Solely for purposes of this Section 16 and not for other purposes of the Plan, the following terms shall be defined as set forth below:
(i) “Change in Control Event” means the occurrence of a change in the ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company (as defined in Section 1.409A-3(g) of the proposed regulations promulgated under Section 409A by the Department of the Treasury on September 29, 2005 or any subsequent guidance).
(ii) “Disabled” means a grantee who (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company or its Subsidiaries.
(iii) “Unforeseeable Emergency” means a severe financial hardship to the grantee resulting from an illness or accident of the grantee, the grantee’s spouse, or a dependent (as defined in Section 152(a) of the Code) of the grantee, loss of the grantee’s property due to casualty, or similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the grantee.
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SECTION 17. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise so provides in writing.
SECTION 18. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder’s consent. Except as provided in Section 3(b) or 3(c), in no event may the Administrator exercise its discretion to reduce the exercise price of outstanding Stock Options or Stock Appreciation Rights or effect repricing through cancellation and re-grants. To the extent required under the rules of any securities exchange or market system on which the Stock is listed, to the extent determined by the Administrator to be required by the Code to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code, or to ensure that compensation earned under Awards qualifies as performance-based compensation under Section 162(m) of the Code, Plan amendments shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders. Nothing in this Section 18 shall limit the Administrator’s authority to take any action permitted pursuant to Section 3(c).
SECTION 19. STATUS OF PLAN
With respect to the portion of any Award that has not been exercised and any payments in cash, Stock or other consideration not received by a grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to meet the Company’s obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence.
SECTION 20. GENERAL PROVISIONS
(a) No Distribution. The Administrator may require each person acquiring Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof.
(b) Delivery of Stock Certificates. Stock certificates to grantees under this Plan shall be deemed delivered for all purposes when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company. Uncertificated Stock shall be deemed delivered for all purposes when the Company or a Stock transfer agent of the Company shall have given to the grantee by electronic mail (with proof of receipt) or by United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic “book entry” records). Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed, quoted or traded. All Stock certificates delivered pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the Stock is listed, quoted or traded. The Administrator may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Administrator may require that an individual make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws, regulations, or requirements. The Administrator shall have the right to require any individual to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.
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(c) Stockholder Rights. Until Stock is deemed delivered in accordance with Section 20(b), no right to vote or receive dividends or any other rights of a stockholder will exist with respect to shares of Stock to be issued in connection with an Award, notwithstanding the exercise of a Stock Option or any other action by the grantee with respect to an Award.
(d) Other Compensation Arrangements; No Employment Rights. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary.
(e) Trading Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to such Company’s insider trading policy and procedures, as in effect from time to time.
(f) Forfeiture of Awards under Sarbanes-Oxley Act. If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, then any grantee who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 shall reimburse the Company for the amount of any Award received by such individual under the Plan during the 12-month period following the first public issuance or filing with the United States Securities and Exchange Commission, as the case may be, of the financial document embodying such financial reporting requirement.
SECTION 21. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the holders of a majority of the votes cast at a meeting of stockholders at which a quorum is present. No grants of Stock Options and other Awards may be made hereunder after the tenth anniversary of the date the Second Amended Plan is approved by stockholders and no grants of Incentive Stock Options may be made hereunder after the tenth anniversary of the date the Second Amended Plan is approved by the Board.
SECTION 22. GOVERNING LAW
This Plan and all Awards and actions taken thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles.
ORIGINAL 2008 STOCK INCENTIVE PLAN | ||
DATE APPROVED BY BOARD OF DIRECTORS: | February 7, 2008 | |
DATE APPROVED BY STOCKHOLDERS: | June 4, 2008 | |
AMENDED 2008 STOCK INCENTIVE PLAN | ||
DATE APPROVED BY BOARD OF DIRECTORS: | March 22, 2011 | |
DATE APPROVED BY STOCKHOLDERS: | June 1, 2011 | |
SECOND AMENDED 2008 STOCK INCENTIVE PLAN | ||
DATE APPROVED BY BOARD OF DIRECTORS: | January 31, 2013 | |
DATE APPROVED BY STOCKHOLDERS: | June 5, 2013 |
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I, William Marth certify that: |
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1.
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I have reviewed this annual report on Form 10-K of Albany Molecular Research, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: March 17, 2014
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/s/ William S. Marth
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Name:
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William S. Marth
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Title:
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President and Chief Executive Officer
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I, Michael M. Nolan certify that: |
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1.
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I have reviewed this annual report on Form 10-K of Albany Molecular Research, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: March 17, 2014
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/s/ Michael M. Nolan
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Name:
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Michael M. Nolan
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Title:
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Vice President, Chief Financial Officer and
Treasurer |
Date: March 17, 2014
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/s/ William S. Marth
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Name:
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William S. Marth
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Title:
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President and Chief Executive Officer
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Date: March 17, 2014
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/s/ Michael M. Nolan
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Name:
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Michael M. Nolan
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Title:
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Vice President, Chief Financial Officer and Treasurer
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