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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 27, 2007
CAMBREX CORPORATION
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(Exact name of Registrant as specified in its charter)
DELAWARE 1-10638 22-2476135
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
ONE MEADOWLANDS PLAZA, EAST RUTHERFORD, NEW JERSEY 07073
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 804-3000
Check the appropriate box if the Form 8K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (See General Instruction A.2 below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(d) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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CAMBREX CORPORATION
FORM 8-K
CURRENT REPORT
JULY 27, 2007
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On July 27, 2007 Cambrex Corporation and its subsidiaries CasChem,
Inc., Nepera, Inc., Nepcam, Inc., Zeeland Chemicals, Inc. and Cambrex Ltd.
(collectively, "Cambrex" or the "Company") entered into a Settlement Agreement
and Release (the "Settlement Agreement") and a related Environmental Escrow
Agreement (the "Escrow Agreement") with Rutherford Chemicals LLC, Vertellus
Specialties Holdings UK Ltd. (formerly Rutherford Chemicals UK Ltd.), Vertellus
Specialties UK Ltd. (formerly Seal Sands Chemicals Ltd.), and Vertellus
Specialties Holdings Corp. (formerly Rutherford Chemicals Holdings Corp.)
(collectively, "Rutherford") settling litigation which had been commenced in
April 2006 by Rutherford as purchaser of the Rutherford Chemicals businesses
(the "Litigation"). As previously disclosed, the Litigation arose under the
Asset Purchase Agreement between Cambrex and Rutherford signed in November 2003
(the "Purchase Agreement"), pursuant to which Cambrex sold five chemical
facilities (the "Rutherford Facilities") to Rutherford. The Purchase Agreement
previously was filed as an Exhibit to the Company's Current Report on Form 8-K
dated November 10, 2003 and incorporated by reference in subsequent filings with
the SEC. In the Litigation, Rutherford claimed that the Company (i) breached
various representations, warranties and covenants related to structures,
buildings and equipment at each of the purchased facilities and, in addition,
was responsible for a related third party claim; and (ii) was obligated to
conduct certain environmental remediation at four of the five Rutherford
Facilities. The Company denied the allegations, filed counterclaims and has been
vigorously defending the matter.
Under the Settlement Agreement, the parties agreed to make the following
payments:
Within 30 days from the date of the Settlement Agreement, (i) Cambrex
agreed to pay Rutherford the sum of $635,939 in reimbursement for past
remediation expenses at the Rutherford facilities; and (ii) Rutherford
agreed to pay Cambrex (pound)399,702 (approximately $813,000) for
reimbursement of certain tax refunds received from United Kingdom
taxing authorities.
Rutherford agreed to pay to an account (the "Escrow Account") created
under the Escrow Agreement the sum of $3,149,185 plus interest
subsequent to September 30, 2007, representing the amount owed on a
Subordinated Promissory Note issued as consideration under the Purchase
Agreement. The sum of $3,149,185 is to be paid in full no later than
February 28, 2007 ("Final Note Payment").
Cambrex agreed to pay to the Escrow Account approximately $4,400,000
within 30 days after Rutherford's Final Note Payment.
The Company's second quarter 2007 results will include an approximate
$4.4 million charge to discontinued operations related to this matter.
The Escrow Account can be used only for costs arising from the
remediation of environmental contamination at the Rutherford Facilities. The
Company has the right to object to any use of the funds in the Escrow Account
for non-remediation purposes, pursuant to an accelerated dispute resolution
process involving the parties' appointment of a Special Master.
Under the Settlement Agreement, the parties waive and extinguish all
rights under the Purchase Agreement to seek damages or any other remedy for any
other obligation contained in the Purchase Agreement as they relate to
environmental liabilities, including damages related to pre-Closing ownership or
operation of the Rutherford Facilities, compliance with environmental laws, and
all remediation at the Rutherford Facilities, except for certain matters which
the Company specifically retained -- namely (i) the off-site treatment, storage
and disposal of hazardous materials occurring before the November 10, 2003
Closing of the Purchase Agreement, (ii) liability arising from the pre-Closing
sales of products, (iii) the completion of on-going remediation at the Nepera
facility under a Record of Decision ("ROD"), and (iv) completion of on-going
remediation at the Bayonne facility under the New Jersey Industrial Site
Recovery Act ("ISRA"). Rutherford, however, retains its contractual obligation
not to engage in any conduct that materially increases the Company's costs of
completing the remediation under the ROD at the Nepera facility and the ISRA
process at the Bayonne facility. The obligations specifically retained by the
Company are consistent with its remediation obligations under the Purchase
Agreement.
Further, under the Settlement Agreement, Rutherford and the Company
release each other from all claims and counterclaims asserted in the Litigation,
with the exception of the Company's claim that Rutherford's activities have
increased the Company's remediation costs at the Nepera facility, which claim
Cambrex will dismiss without prejudice to its right to reassert the claim in the
future. Rutherford and the Company also waive all rights and obligations under
the Purchase Agreement related to any claims for additional payments under the
Purchase Agreement, including Cambrex's claims for the return of tax refunds,
the payment of the Subordinated Note, and any payments under the earn-out
provision.
Under the Settlement Agreement, the Company indemnifies and holds
harmless Rutherford for damages related to the obligations the Company
specifically retained. Rutherford indemnifies and holds harmless the Company for
certain liabilities, including without limitation those arising from the
presence of Hazardous Materials at any of the Rutherford Facilities, except for
the matters specifically retained by the Company.
The foregoing description is a summary and is qualified in its entirety
by the Settlement Agreement, which shall be filed as an Exhibit to the Company's
Quarterly Report on Form 10-Q for the period ending June 30, 2007.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on behalf by the
undersigned hereunto duly authorized.
CAMBREX CORPORATION
Date: July 27, 2007 By: /s/ PETER E. THAUER
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Name: Peter E. Thauer
Title: Senior Vice President,
General Counsel and
Corporate Secretary