<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-12
COMMONWEALTH BIOTECHNOLOGIES, INC
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[CBI LOGO]
601 Biotech Drive
Richmond, Virginia 23235
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, OCTOBER 27, 2000
TO THE STOCKHOLDERS OF COMMONWEALTH BIOTECHNOLOGIES, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of
Commonwealth Biotechnologies, Inc., a Virginia corporation ("CBI" or the
"Company"), will be held on Friday, October 27, 2000 at 10:00 a.m. local time at
601 Biotech Drive, Richmond, Virginia for the following purposes:
1. To elect one Class II director to serve until the 2002 annual meeting
of stockholders and his successor is elected and has qualified.
2. To approve CBI's 2000 Stock Incentive Plan.
3. To approve an amendment to CBI's Amended and Restated Articles of
Incorporation to authorize a new class of undesignated preferred
stock, without par value per share, consisting of 2,000,000 shares of
preferred stock.
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The Board of Directors has fixed the close
of business on September 5, 2000, as the record date for the determination of
stockholders entitled to notice of and to vote at this Special Meeting and at
any adjournment or postponement thereof.
By Order of the Board of Directors
Thomas R. Reynolds,
Secretary
Richmond, Virginia
October 2, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE IS ENCLOSED FOR THAT PURPOSE.
EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND
THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A
BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST
OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
COMMONWEALTH BIOTECHNOLOGIES, INC.
601 BIOTECH DRIVE
RICHMOND, VIRGINIA 23235
PROXY STATEMENT
FOR SPECIAL MEETING OF STOCKHOLDERS
Friday, October 27, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Commonwealth Biotechnologies, Inc., a Virginia corporation ("CBI" or the
"Company"), for use at the Special Meeting of Stockholders to be held on October
27, 2000 at 10:00 a.m. local time (the "Special Meeting"), or at any adjournment
or postponement thereof, for the purposes set forth herein and in the
accompanying Notice of Special Meeting. The Special Meeting will be held at 601
Biotech Drive, Richmond, Virginia. CBI intends to mail this proxy statement and
accompanying proxy card on or about October 2, 2000 to all stockholders entitled
to vote at the Special Meeting.
SOLICITATION
CBI will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. The cost of this
solicitation is estimated to be approximately $ 20,000. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of common stock beneficially owned by
others to forward to such beneficial owners. CBI may reimburse persons
representing beneficial owners of common stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of CBI. No
additional compensation will be paid to directors, officers or other regular
employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of common stock at the close of business on
September 5, 2000 will be entitled to notice of and to vote at the Special
Meeting. At the close of business on September 5, 2000, the Company had
outstanding and entitled to vote 1,728,164 shares of common stock. Each holder
of record of common stock on such date will be entitled to one vote for each
share held on all matters to be voted upon at the Special Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Except for Proposal 3, broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether a matter has been approved. With respect to Proposal 3, abstentions and
broker non-votes will have the same effect as negative votes.
<PAGE>
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal executive office, 601
Biotech Drive, Richmond, Virginia 23235, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
STOCKHOLDER PROPOSALS
If a stockholder wishes to have a proposal considered for inclusion in
the Company's proxy materials for the 2001 Annual Meeting of Stockholders, the
proposal must comply with the Securities and Exchange Commission's proxy rules,
be stated in writing and be submitted on or before November 27, 2000. Any
proposals should be mailed to the Company at 601 Biotech Drive, Richmond,
Virginia 23235, Attention: Thomas R. Reynolds, Secretary.
In addition to any other applicable requirements, for business to be
properly brought before the annual meeting by a stockholder, even if a proposal
is not to be included in the Company's proxy statement, the Company's Bylaws
provide that the stockholder must give timely notice in writing to the Secretary
of the Company not later than 90 days prior to the annual meeting. As to each
matter, the notice must contain (i) a brief description of the business to be
brought before the annual meeting (including the specific proposal to be
presented) and the reasons for addressing it at the annual meeting, (ii) the
name of, record address of, and class and number of shares beneficially owned by
the stockholder proposing such business and (iii) any material interest of the
stockholder in such business. The next Annual Meeting of Stockholders of the
Company will be held on May 3, 2001.
The Company's Bylaws provide that a stockholder of the Company entitled
to vote for the election of directors may nominate persons for election to the
Board of Directors by mailing written notice to the Secretary of the Company not
later than (i) with respect to an election to be held at an annual meeting of
stockholders, 90 days prior to such meeting, and (ii) with respect to an
election to be held at a special meeting of stockholders for the election of
directors, the close of business on the seventh day following the date on which
notice of such meeting is given to stockholders. Any such stockholder's notice
shall include (a) the name and address of the stockholder and of each person to
be nominated, (b) a representation that the stockholder is a holder of record of
stock of the Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate each person specified, (c) a
description of all arrangements or understandings between the stockholder and
each nominee and any other person (naming such person) pursuant to which the
nomination is to be made by the stockholder, (d) such other information
regarding each nominee as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission, and
(e) the consent of each nominee to serve as a director of the Company if so
elected.
2
<PAGE>
PROPOSAL 1
ELECTION OF CLASS II DIRECTOR
The Company's Articles of Incorporation, as amended to date, provide
that the Board of Directors shall be divided into three classes of as nearly
equal size as possible. The Company's Bylaws, as amended to date, provide that
the Board of Directors shall consist of not less than five nor more than nine
directors as established by the Board of Directors. The size of the Board of
Directors currently consists of five directors.
The Company's Board of Directors has nominated L. McCarthy Downs, III
to serve as a Class II member of CBI's Board of Directors. The director to be
elected will hold office until the 2002 Annual Meeting of Stockholders and until
his successor is elected and has qualified, or until such director's earlier
death, resignation or removal. The nominee listed below is currently a member of
the Board of Directors, having been elected by the Board of Directors.
VOTE REQUIRED
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of the nominee named below. In the event that the nominee should be unavailable
for election as a result of an unexpected occurrence, such shares will be voted
for the election of such substitute nominee as the Company may propose. The
person nominated for election has agreed to serve if elected and management has
no reason to believe that the nominee will be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF THE NAMED NOMINEE.
NOMINEE
Set forth below is biographical information for the person nominated.
L. MCCARTHY DOWNS, III Age - 47
L. McCarthy Downs, III, is Chairman of the Board of Anderson &
Strudwick Investment Corporation, the parent company of Anderson & Strudwick
Inc. ("A&S"), the underwriter of the Company's initial public offering. He has
been the manager of A&S's corporate finance department since 1990 and has been
involved in several public and private financings for a variety of companies,
including the Company. Since 1999, Mr. Downs also has been a Trustee (director)
of Hersha Hospitality Trust, a real estate investment trust headquartered in
Pennsylvania. Prior to 1990, Mr. Downs was employed by another investment
banking and brokerage firm for seven years. Mr. Downs received a bachelor's
degree in Business Administration from The Citadel and obtained an M.B.A. from
The College of William and Mary.
CONTINUING DIRECTORS
The persons named below will continue to serve as directors until the
annual meeting of stockholders in the year indicated and until their successors
are elected and take office. Stockholders are NOT voting on the election of the
two Class I directors, the one Class II Director or the two Class III directors
noted below.
3
<PAGE>
Class I Directors:
Serving until the 2001 Annual Meeting of Stockholders
RAYMOND HAROLD CYPESS Director
Age - 60
Director since 1999
Dr. Cypess is the President and Chief Executive Officer of American
Type Culture Collection, a leading non-profit repository for microbiologicals.
Dr. Cypess received a bachelor's degree in Biology from Brooklyn College, a
bachelor's degree in Agriculture from the University of Illinois, Urbana, a
doctorate degree in Veterinary Medicine from the University of Illinois, Urbana
and a doctorate degree in Parasitology from the University of North Carolina,
Chapel Hill.
THOMAS R. REYNOLDS Senior Vice President, Secretary, Director and
Founder
Age - 38
Director since 1992
Mr. Reynolds currently serves the Company as a Senior Vice President
and a Director. He assumed the role of the Company's Secretary in 1998. From the
founding of the Company in 1992 until 1997, Mr. Reynolds served as a Vice
President of the Company. From 1987 until 1997, Mr. Reynolds served as the
Manager of the Nucleic Acids Core Laboratory at The Massey Cancer Center at
Virginia Commonwealth University ("VCU"). Mr. Reynolds received a bachelor's
degree in Biology from the Pennsylvania State University.
Class II Director:
Serving until the 2002 Annual Meeting of Stockholders
ROBERT B. HARRIS, PH.D. President, Director and Founder
Age - 48
Director since 1992
Since founding the Company in 1992, Dr. Harris has served as the
President and a Director of the Company. Until 1997, Dr. Harris was employed in
the Department of Biochemistry and Molecular Biophysics at VCU, first as an
Assistant, then Associate and finally a full Professor. Dr. Harris received a
joint bachelor's degree in Chemistry and Biology from the University of
Rochester, and a master's degree and a doctorate degree in
Biochemistry/Biophysical Chemistry from New York University.
Class III Directors:
Serving until the 2003 Annual Meeting of Stockholders
RICHARD J. FREER, PH.D. Chairman of the Board, Director and Founder
Age - 58
Director since 1992
Since founding the Company in 1992, Dr. Freer has served as the
Chairman of the Board and a Director of the Company. From 1975 until 1997, Dr.
Freer was employed in the Department of Pharmacology and Toxicology at VCU,
first as an Associate Professor, and then a full Professor. In addition, from
1988 through 1995, Dr. Freer was first Director and then Chair of the Biomedical
Engineering Program. From 1996 through 1997, Dr. Freer served as Professor in
VCU's Department of Biochemistry and Molecular Biophysics. Dr. Freer received a
bachelor's degree in Biology from Marist College and a doctorate degree in
Pharmacology from Columbia University.
4
<PAGE>
GEORGE F. ALLEN Director
Age - 48
Director since 1998
Mr. Allen is a Partner in the law firm of McGuireWoods LLP, in
Richmond, Virginia. From 1994 until 1998, Mr. Allen served as the 67th Governor
of the Commonwealth of Virginia. He served as a member of the U.S. House of
Representatives in 1991, and served as a member of the Virginia House of
Delegates from 1983 until 1991. Mr. Allen also serves as a director of Xybernaut
Corporation, a firm specializing in the development of wearable mobile computer
systems and related software.
INFORMATION REGARDING THE BOARD OF DIRECTORS
The Board of Directors held four meetings during 1999, including
regular and special meetings. Each director attended at least 75% of the
meetings of the Board of Directors and the committees thereof on which the
director serves. The Committees of the Board of Directors consist of an Audit
Committee, a Compensation Committee and a Nominating Committee. The Audit
Committee and the Compensation Committee are comprised of Dr. Cypess and Mr.
Allen. The Nominating Committee is comprised of Dr. Harris, Mr. Reynolds and Dr.
Cypess. During 1999, each of the Audit Committee, Compensation Committee and
Nominating Committee met once.
The Audit Committee recommends the annual appointment of auditors, with
whom the Audit Committee reviews the scope of audit and non-audit assignments
and related fees, accounting principles used by the Company in financial
reporting, internal auditing procedures and the adequacy of the internal control
procedures of the Company.
The Compensation Committee administers the Company's 1997 Stock
Incentive Plan, will administer the Company's 2000 Stock Incentive Plan, if
approved by the Company's stockholders, and makes recommendations to the Board
of Directors regarding compensation and benefits for the executive officers. The
Compensation Committee also has oversight responsibilities for all broad-based
compensation and benefit programs.
The Nominating Committee recommends to the Board of Directors
candidates for election as director of the Company and makes recommendations to
the Board of Directors regarding director compensation.
COMPENSATION OF DIRECTORS
All directors receive a fee of $2,500 for each regularly scheduled
quarterly Board meeting attended (the "Director's Fee"). The Director's Fee may
be adjusted upwards or downwards on an annual basis in an amount equal to the
percentage change in the market price of the Company's common stock as compared
to the market price of the common stock for the previous fiscal year. In
addition to the Director's Fee, all directors receive reimbursement for travel
and other related expenses incurred in attending Board meetings and committee
meetings
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE PROPOSED CLASS II NOMINEE TO THE BOARD OF DIRECTORS.
5
<PAGE>
PROPOSAL 2
APPROVAL OF THE COMPANY'S 2000 STOCK INCENTIVE PLAN
CBI is asking its stockholders to approve the Commonwealth
Biotechnologies, Inc. 2000 Stock Incentive Plan that was adopted by the Board of
Directors on August 7, 2000. As adopted, the plan made available up to 360,000
shares of common stock for granting restricted stock awards and stock options in
the form of incentive stock options and non-statutory stock options to
employees, directors and consultants of CBI.
The more significant features of the plan are described below. A copy
of the plan, as adopted by the Board of Directors, is attached as Exhibit A
---------
hereto.
PURPOSE
The purpose of the plan is to promote the success of CBI by providing
greater incentive to employees, directors and consultants to associate their
personal interests with the long-term financial success of CBI and with growth
in stockholder value. The plan is designed to provide flexibility to CBI in its
ability to motivate, attract, and retain the services of employees, directors
and consultants upon whose judgment, interest, and special effort the successful
conduct of CBI's operations largely depends. The plan will terminate on August
7, 2010, unless sooner terminated by the Board of Directors.
ADMINISTRATION
The plan is administered by the Compensation Committee. The Committee
has the power to select plan participants and to grant stock options and stock
awards on terms the Committee considers appropriate. In addition, the Committee
has the authority to interpret the plan, to adopt, amend or waive rules or
regulations for the plan's administration, and to make all other determinations
for administration of the plan.
STOCK OPTIONS
Stock options granted under the plan may be incentive stock options or
non-statutory stock options. A stock option entitles the employee to purchase
shares of common stock at the option price. The Committee will fix the option
price at the time the stock option is granted, but in the case of an incentive
stock option the exercise price cannot be less than 100% of the shares' fair
market value on the date of grant (or, in the case of an incentive stock option
granted to a 10% stockholder of the company, 110% of the shares fair market
value on the date of grant). The value in incentive stock options, based on the
exercise price, that can be exercisable for the first time in any calendar year
under the plan or any other similar plan maintained by CBI is limited to
$100,000. The option price may be paid in cash or with shares of common stock,
or a combination of cash and common stock. Stock options may be exercised at
such times and subject to such conditions as may be prescribed by the Committee,
including the requirement that they will not be exercisable after ten years from
the grant date.
RESTRICTED STOCK AWARDS
The plan permits the grant of restricted stock awards (shares of common
stock) to plan participants. A restricted stock award may be, but is not
required to be, forfeitable or otherwise restricted until certain conditions are
satisfied. These conditions may include, for example, a requirement that the
plan participant complete a specified period of service or that certain
objectives be achieved. Any restriction imposed on a restricted stock award will
be determined by the Compensation Committee.
TRANSFERABILITY
In general, stock options and restricted stock awards granted may not
be assigned, transferred, pledged or otherwise encumbered by a participant,
other than by will or the laws of descent and distribution.
6
<PAGE>
SHARES SUBJECT TO THE PLAN
Up to 360,000 shares of common stock may be issued to plan participants
under the plan. No stock options or restricted stock awards have been granted
under the plan. The maximum number of shares with respect to which stock options
or restricted stock may be granted under the plan in any calendar year to an
employee is 50,000 shares.
In general, if any stock option or restricted stock award granted
terminates, expires or lapses for any reason other than as a result of being
exercised, or if shares issued pursuant to the plan are forfeited, the common
stock subject to the stock option or restricted stock award will be available
for further stock options and awards.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Generally, no federal income tax liability is incurred by a plan
participant at the time a stock option is granted. If the stock option is an
incentive stock option, no income will be recognized upon the participant's
exercise of the stock option. Income is recognized by participant when he or she
disposes of shares acquired under an incentive stock option. The exercise of a
non-statutory stock option generally is a taxable event that requires the
participant to recognize, as ordinary income, the difference between the shares'
fair market value and the option exercise price.
For restricted stock awards, income is recognized by a participant when
the shares first become transferable or are no longer subject to a substantial
risk of forfeiture. At that time, the participant recognizes income equal to the
fair market of the common stock.
CBI will be entitled to claim a federal business expense tax deduction
on account of the exercise of a non-statutory stock option or the vesting of a
restricted stock award. The amount of the deduction is equal to the ordinary
income recognized by the participant. CBI generally will not be entitled to a
federal income tax deduction on account of the grant or exercise of an incentive
stock option, but may claim a federal income tax deduction on account of certain
disqualifying dispositions of stock acquired upon the exercise of an incentive
stock option.
This summary of federal income tax consequences does not purport to be
complete. There may also be state and local income taxes applicable to these
items.
CHANGES IN CAPITALIZATION AND SIMILAR CHANGES
In the event of any change in the outstanding shares of common stock by
reason of any stock dividend, stock split, recapitalization or otherwise, the
aggregate number of shares of common stock reserved under the plan, and the
terms, exercise price and number of shares of any outstanding stock options or
restricted stock awards will be equitably adjusted by the Committee in its
discretion to preserve the benefits of the stock options and stock awards for
plan participants. For instance, a two-for-one stock split would double the
number of shares reserved under the plan. Similarly, for outstanding stock
options it would double the number of shares covered by each stock option and
reduce its exercise price by one-half.
OPTION GRANTS
CBI has not granted any options under the 2000 Stock Incentive Plan.
STOCK PRICE
On September 5, 2000, the closing price of CBI's common stock on the
Nasdaq SmallCap Market was $6.313 per share.
7
<PAGE>
VOTE REQUIRED
Approval of the plan requires that more shares of common stock vote in
favor of the plan than against it.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
PROPOSAL 3
APPROVAL OF THE CREATION OF BLANK CHECK PREFERRED STOCK
The Board of Directors of the Company adopted a resolution unanimously
approving and recommending to the Company's stockholders for their approval an
amendment to the Company's Articles of Incorporation to provide for the creation
of a new class of 2,000,000 shares of what is commonly known as "blank check"
preferred stock. If this resolution is approved by the stockholders, it will be
effected by the filing of Articles of Amendment to the Company's Articles of
Incorporation (the "Amendment"), which will occur promptly after this Special
Meeting. The following discussion is qualified in its entirety by reference to
the text of the proposed Amendment attached to this proxy statement as Exhibit
-------
B.
-
The Board of Directors believes the creation of the preferred stock is
in the best interests of the Company and its stockholders and believes it
advisable to authorize such shares to have them available for, among other
things, possible issuance in connection with such activities as public or
private offerings of shares for cash, dividends payable in stock of the Company,
acquisitions of other companies, implementation of employee benefit plans,
pursuit of financing opportunities and otherwise.
The term "blank check" preferred stock refers to stock for which the
designations, preferences, conversion rights, and cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof, are determined by the Board
of Directors of a company. As such, the Board of Directors of the Company will,
in the event of the approval of this proposal by the Company's stockholders, be
entitled to authorize the creation and issuance of 2,000,000 shares of preferred
stock in one or more series with such limitations and restrictions as may be
determined in the sole discretion of the Board of Directors, with no further
authorization by stockholders required for the creation and issuance of the
preferred stock.
Any preferred stock issued would have priority over the common stock
upon liquidation and might have priority rights as to dividends, voting and
other features. Accordingly, the issuance of preferred stock could decrease the
amount of earnings and assets allocable to or available for distribution to
holders of common stock and adversely affect the rights and powers, including
voting rights, of the common stock.
Generally, except in connection with a stockholder rights or "poison
pill" plan, preferred stock would be issued to investors in connection with
raising additional equity capital, and would typically contain terms and
conditions intended to protect the interests of investors. Such terms and
conditions typically would include preference over the holders of common stock
in the proceeds of a sale or liquidation of the Company (including the
distribution of assets upon a sale of substantially all of its assets and
businesses) and priority dividend rights (which may include cumulative
dividends), and might include special voting rights, special conversion rights
and redemption rights. Such rights, either alone or in combination under
particular circumstances, can provide the holders of preferred stock with a
disproportionate share of current distribution of earnings by way of dividends,
or of the proceeds of a sale or liquidation, or disproportionate rights of
approval with respect to certain kinds of transactions, compared to those of the
holders of common stock.
8
<PAGE>
The Board of Directors does not believe that the approval of this
proposal will have an anti-takeover effect, and, as noted below, has represented
that such preferred stock will not be issued for such purpose. The Board of
Directors and management believe that it is in the best interests of the Company
and its stockholders to have the flexibility to raise additional capital or to
pursue acquisitions to support the Company's business plan, including the
ability to authorize and issue preferred stock having terms and conditions
satisfactory to investors or to acquisition candidates, including preferred
stock which contains some features which could be viewed as having an
anti-takeover effect or a potentially adverse effect on the holders of common
stock.
The Board of Directors and management of the Company represent that
they will not, without prior stockholder approval, issue any preferred stock (i)
the principal intent of which is any defensive or anti-takeover purpose or (ii)
to implement any stockholder rights plan. No preferred stock will be issued to
any individual or group for the purpose of creating a block of voting power to
support management on a controversial issue.
While the Company may consider issuing preferred stock in the future
for purposes of raising additional capital or in connection with acquisition
transactions, the Company presently has no agreements or understanding with any
person to effect any such issuance, and the Company may never issue any
preferred stock. Therefore, the terms of any preferred stock subject to this
proposal cannot be stated or predicted with respect to any or all of the
securities authorized.
VOTE REQUIRED
Approval of this proposal requires the affirmative vote of a majority
of all of the outstanding shares of common stock present or represented and
entitled to vote at the Special Meeting.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR APPROVAL OF PROPOSAL 3.
9
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership as of the record date (unless otherwise indicated) by (i) each
director and nominee for director, (ii) each person known by the Company to be
the beneficial owner of more than 5% of the common stock of the Company, (iii)
the Named Executive Officers (as defined herein), and (iv) all directors and
officers as a group. Except as otherwise indicated, the beneficial owners listed
below have sole voting and investment power with respect to all shares owned by
them, except to the extent such power is shared by a spouse under applicable
law.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Shares Beneficially Owned (1) Percent of Class (%)
------------------------------------ ----------------------------- --------------------
<S> <C> <C>
Richard J. Freer, Ph.D. (2) 120,743 5.8
Robert B. Harris, Ph.D. (3) 104,524 4.9
Thomas R. Reynolds (4) 51,603 2.9
George F. Allen (5) 10,000 *
Raymond Harold Cypess (6) 5,000 *
L. McCarthy Downs, III (7) 25,375 1.4
James T. Martin (8) 320,000 18.5
Mills Value Adviser, Inc. (9) 371,500 21.5
All directors and executive officers as a group
(6 persons) (10) 317,245 16.0
</TABLE>
______________________________
* Less than 1%
(1) Includes shares of common stock subject to options and warrants that may be
exercised within 60 days of September 5, 2000. Such shares are deemed to be
outstanding for the purposes of computing the percentage ownership of the
individual holding such shares, but are not deemed outstanding for purposes
of computing the percentage of any other person shown in the table.
(2) Dr. Freer's address is 601 Biotech Drive, Richmond, Virginia 23235. The
number of shares deemed to be beneficially held by Dr. Freer includes
currently exercisable options to purchase an aggregate of 66,664 shares of
common stock and warrants to purchase an aggregate of 28,947 shares of
common stock.
(3) Dr. Harris' address is 601 Biotech Drive, Richmond, Virginia 23235. The
number of shares deemed to be beneficially held by Dr. Harris includes
currently exercisable options to purchase an aggregate of 46,401 shares of
common stock and warrants to purchase an aggregate of 28,947 shares of
common stock.
(4) Mr. Reynolds' address is 601 Biotech Drive, Richmond, Virginia 23235. The
number of shares deemed to be beneficially held by Mr. Reynolds includes
currently exercisable options to purchase an aggregate of 26,318 shares of
common stock and warrants to purchase an aggregate of 13,158 shares of
common stock.
(5) Mr. Allen's address is c/o McGuireWoods LLP, One James Center, 901 East
Cary Street, Richmond, Virginia 23219. The number of shares deemed to be
held by Mr. Allen represents currently exercisable options to purchase an
aggregate of 10,000 shares of common stock.
(6) Dr. Cypess address is 10801 University Boulevard, Manassass, Virginia
20110-2209. The number of shares beneficially held by Dr. Cypess represents
currently exercisable options to purchase an aggregate of 5,000 shares of
common stock.
(7) Mr. Downs' address is c/o Anderson & Strudwick, Incorporated, 707 East Main
Street, 20th Floor, Richmond, Virginia 23219. The number of shares deemed
to be beneficially owned by Mr. Downs represents currently exercisable
warrants to purchase shares of common stock.
(8) Mr. Martin's address is Tupenny House, Tuckerstown, Bermuda.
(9) Represents shares held by investment advisory clients of Mills Value
Adviser, Inc, a registered investment adviser ("MAI"). Mr. Charles A.
Mills, III, a former director of the Company serves as Chairman of MAI. MAI
possesses shared dispositive power over, and can vote, such shares. MAI's
address is 707 East Main Street, Richmond, Virginia 23219. This information
is as of September 27, 2000.
(10) Includes currently exercisable options and warrants to purchase an
aggregate of 250,810 shares of common stock within 60 days of September 5,
2000.
10
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than 10% of a registered
class of the Company's securities to file reports of ownership and changes in
ownership with the SEC.
Based solely on a review of copies of reports filed with the SEC and
written representations from certain of the Company's directors and executive
officers that no other reports were required, the Company notes that Dr. Cypess
failed to timely file one report reflecting his initial statement of beneficial
ownership. This deficiency will be promptly remedied.
EXECUTIVE COMPENSATION
Executive Officers of the Company
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Richard J. Freer, Ph.D. 58 Chairman of the Board and Director
Robert B. Harris, Ph.D. 48 President and Director
Thomas R. Reynolds 38 Senior Vice President, Secretary and Director
James H. Brennan 48 Controller
</TABLE>
Set forth below is the biographical information for Mr. Brennan. See
"Proposal 1: Election of Directors" for information regarding the backgrounds of
Dr. Freer and Dr. Harris and Mr. Reynolds.
JAMES H. BRENNAN - Controller
Age -- 48
Mr. Brennan became the Company's Controller in December 1997. From 1996
to 1997, Mr. Brennan served as the Controller of Star Tobacco, a cigarette
manufacturer. From 1995 to 1996, he served as Controller of Delta Airport
Consultants, an engineering firm. From 1994 to 1995, Mr. Brennan was the
Controller for Herald Pharmacal, a manufacturer of skin care products. Mr.
Brennan received a bachelor's degree in Political Science form Mount St. Mary's
College and a master's degree in Business Administration from Averett College.
The following table sets forth summary information concerning
compensation paid or accrued by the Company in 1998 on behalf of (i) the
Company's Chairman of the Board and (ii) the two other executive officers of the
Company whose total annual salary and bonus exceeded $100,000 in 1999
(collectively, the "Named Executive Officers").
11
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#) Compensation ($)
--------------------------- ---- ---------- --------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Freer, Ph.D., 1999 150,000 -- -- -- 7,500 (1)
Chairman of the Board 1998 162,600 -- -- 78,157 44,073 (2)
1997 97,411 43,421 -- -- 23,024 (3)
Robert B. Harris, Ph.D., 1999 150,000 -- -- -- 7,500 (1)
President 1998 164,866 -- -- 78,157 44,073 (2)
1997 91,908 43,421 -- -- 23,024 (3)
Thomas R. Reynolds, 1999 115,750 -- -- -- 5,000 (1)
Senior Vice President and 1998 118,352 -- -- 35,529 22,632 (4)
Secretary 1997 70,154 19,737 -- -- 10,963 (3)
</TABLE>
--------------
(1) Represents Director's Fees and travel expenses paid by the Company.
(2) Represents the sum of Director's Fees and travel expenses paid by the
Company and distributions to pay income taxes incurred by the recipient
as a result of the Company's status, prior to June 1997, as a
corporation taxed in accordance with Subchapter S of the Internal
Revenue Code of 1986, as amended.
(3) Represents distributions to pay income taxes incurred by the recipient
as a result of the Company's status, for the fiscal year ended December
31, 1996, as a corporation taxed in accordance with Subchapter S of the
Internal Revenue Code of 1986, as amended.
(4) Represents the sum of Director's Fees paid by the Company and
distributions to pay income taxes incurred by the recipient as a result
of the Company's status, prior to June 1997, as a corporation taxed in
accordance with Subchapter S of the Internal Revenue Code of 1986, as
amended.
The following table sets forth certain information, with respect to the
Named Executive Officers, concerning the exercise of options in 1999 and with
respect to unexercised options at December 31, 1999.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
And Fiscal Year-End Option/SAR Values
Number of Unexercised Option at Value of Unexercised In-the-Money
Fiscal Year-End (#) Options at Fiscal Year End ($)(1)
------------------- ---------------------------------
Shares Acquired
---------------
Name on Exercise (#) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Freer, Ph.D. 0 0 49,998 28,159 63,954 --
Robert B. Harris, Ph.D. 0 0 49,998 28,159 63,954 --
Thomas R. Reynolds 0 0 35,529 0 29,072 --
</TABLE>
(1) Based upon the closing sale price of the Company's common stock of $9.1562
per share, as reported on the Nasdaq SmallCap Market on December 31, 1999,
less the exercise price for the options.
The Company did not grant any stock options or stock appreciation
rights to any of the Named Executive Officers in 1999. The Company has no long-
term incentive, defined benefit or actuarial plans, as those terms are defined
in Securities and Exchange Commission regulations, covering employees of the
Company.
Employment Contracts and Termination and Change-In-Control Arrangements
On June 24, 1997, the Company entered into employment agreements with
each of Dr. Freer, Dr. Harris and Mr. Reynolds. Each of these agreements has a
term of five years and will be extended for successive one-year terms beginning
on the first anniversary of its commencement, unless either the executive
officer or the Company shall have given notice to the other of an election not
to extend the term of the employment agreement. The employment agreements
provide for base salaries of $165,000 for Dr. Freer and Dr. Harris and $120,000
for Mr. Reynolds, which are adjustable annually at the discretion of the
Compensation Committee. In addition, the employment agreements provide the
Company's executive officers with annual bonuses equal to, in the aggregate,
12
<PAGE>
15% of the Company's pre-tax net income for the preceding fiscal year. Such
bonuses will be paid within 30 days following the release of the Company's
annual audited financial statements. Under each of the employment agreements,
the Company may terminate the executive officers employment at any time for
"Cause" as such term is defined in the employment agreement, without incurring
any continuing obligations to the executive officer. If the Company terminates
an executive officer's employment for any reason other than for "Cause" or if an
executive officer terminates his or her employment for "Good Reason," as such
term is defined in the employment agreement, the Company will remain obligated
to continue to provide the compensation and benefits specified in the executive
officer's employment agreement for the duration of what otherwise would have
been the term of the employment agreement. In addition, each employment
agreement contains non-competition provisions which prohibit each executive
officer from competing with the Company or soliciting its employees under
certain circumstances. A court may, however, determine that these non-
competition provisions are unenforceable or only partially enforceable.
The Company has entered into severance agreements with each of Dr.
Freer, Dr. Harris and Mr. Reynolds. Each severance agreement (all of which are
substantially similar) has an initial term of five years and will be extended
for successive one-year periods beginning on the first anniversary of its
commencement, unless either the executive officer or the Company shall have
given notice to the other of an election not to extend the term of the severance
agreement. If the employment of any of these executive officers is terminated
(with certain exceptions) within 60 months following a "Change in Control," as
such term is defined in the severance agreement, the executive officer will be
entitled to receive a cash payment equal to two times the annual salary for the
most recent twelve-month period and three times the bonus paid with respect to
such period. To the extent the aggregate benefits available to an executive
officer, whether under his respective severance agreement or otherwise, exceed
the limit of three times the executive's average base compensation provided in
Section 280G of the Internal Revenue Code of 1986, as amended, resulting in the
executive officer incurring an excise tax under Section 4999 of the Code or any
other taxes or penalties (other than ordinary income or capital gains taxes),
the severance agreements require the Company to pay the executive officer an
additional amount to cover any such excise taxes or penalties incurred. The
Company will not be entitled to a deduction for the amount in excess of this
limit.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors during most of
1999 consisted of Charles A. Mills and Peter C. Einselen. Mr. Mills resigned
from the Company's Board of Directors in March 1999, and Mr. Einselen resigned
in March 2000. Dr. Cypess and Mr. Allen were appointed by the Board of Directors
to these vacancies. None of the members of the Compensation Committee has at any
time been an officer or employee of the Company or any of its subsidiaries, nor
have any of the members had any relationship with the Company requiring
disclosure by the Company.
13
<PAGE>
CERTAIN TRANSACTIONS
Two former directors of the Company, Charles A. Mills, III and Peter C.
Einselen, are employees of Anderson & Strudwick, Incorporated ("A&S"). In
addition, L. McCarthy Downs, III, a nominee for a Class II member of the
Company's Board of Directors, is the Chairman of Anderson & Strudwick Investment
Corporation, A&S' parent company. A&S served as underwriter for the Company's
issuance of industrial development revenue bonds in an aggregate principal
amount of $4,000,000. This transaction was completed in March 1998, and A&S'
underwriting fee associated with the issuance of such bonds was approximately
$160,000.
In addition, in September 2000, A&S served as the placement agent for
the Company's $2.6 million private placement of common stock and warrants to
purchase common stock. The placement fee for this transaction was approximately
$192,500. The Company also agreed to reissue warrants to purchase an aggregate
of 101,500 shares of common stock previously granted to A&S and certain of its
affiliates as underwriting compensation for the Company's initial public
offering. As revised, the warrants have an exercise price of $6.50 per share.
Warrants to purchase an aggregate of 50,750 have a term of eighteen months from
the date of reissuance, and warrants to purchase an aggregate of 50,750 have a
term of five years from the date of reissuance.
The Company believes that the transactions noted above were made on
terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions between the Company and its
officers, directors and principal stockholders will be approved in accordance
with the Virginia law by a majority of the Board of Directors, including a
majority of the independent and disinterested directors of the Board of
Directors, and will be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Special Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
Thomas R. Reynolds
Secretary
October 2, 2000
14
<PAGE>
Exhibit A
---------
COMMONWEALTH BIOTECHNOLOGIES, INC.
2000 STOCK INCENTIVE PLAN
1. Purpose and Effective Date.
--------------------------
(a) The purpose of the Commonwealth Biotechnologies, Inc. 2000 Stock
Incentive Plan (the "Plan") is to further the long term stability and financial
success of Commonwealth Biotechnologies, Inc. (the "Company") by attracting and
retaining personnel, including employees, directors and consultants, through the
use of stock incentives. The Company believes that ownership of Company Stock
will stimulate the efforts of those persons upon whose judgment, interest and
efforts the Company is and will be largely dependent for the successful conduct
of its business and will further the identification of those persons' interests
with the interests of the Company's shareholders.
(b) The Plan was adopted by the Board of Directors of the Company on
August 7, 2000, and shall become effective as of August 7, 2000, subject to the
approval of the Plan by the Company's shareholders.
2. Definitions.
-----------
(a) Act. The Securities Exchange Act of 1934, as amended.
---
(b) Applicable Withholding Taxes. The aggregate amount of federal,
----------------------------
state and local income and payroll taxes that the Company is required to
withhold (based on the minimum applicable statutory withholding rates) in
connection with any exercise of an Option or the award, lapse of restrictions or
payment with respect to Restricted Stock.
(c) Award. The award of an Option or Restricted Stock under the Plan.
-----
(d) Board. The Board of Directors of the Company.
-----
(e) Cause. Dishonesty, fraud, misconduct, gross incompetence, gross
-----
negligence, breach of a material fiduciary duty, material breach of an agreement
with the Company, unauthorized use or disclosure of confidential information or
trade secrets, or conviction or confession of a crime punishable by law (except
minor violations), in each case as determined by the Committee, which
determination shall be binding.
(f) Change of Control.
-----------------
(i) The Acquisition by any Person (as defined below) of
beneficial ownership of 50% or more of the then outstanding shares of
common stock of the Company;
(ii) Individuals who constitute the Board on the effective date
of this Plan (the "Incumbent Board") cease to constitute a majority of
the Board, provided that any director whose nomination was approved by
a vote of at least two-thirds of the directors then comprising the
Incumbent Board will be considered a member of the Incumbent Board,
but excluding any such individual whose initial assumption of office
is in connection with an actual or threatened election contest
relating to the election of the directors of the Company (as such
terms are used in Rule 14a-11 promulgated under the Act);
(iii) Approval by the shareholders of the Company of a
reorganization, merger, share exchange or consolidation (a
"Reorganization"), provided that shareholder approval of a
A-1
<PAGE>
Reorganization will not constitute a Change of Control if, upon
consummation of the Reorganization, each of the following conditions
is satisfied:
(x) no Person beneficially owns 20% or more of either (1)
the then outstanding shares of common stock of the corporation
resulting from the transaction or (2) the combined voting power
of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors; and
(y) at least a majority of the members of the board of
directors of the corporation resulting from the Reorganization
were members of the Incumbent Board at the time of the execution
of the initial agreement providing for the Reorganization.
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company, or of the sale or other
disposition of all or substantially all of the assets of the Company.
(v) For purposes of this Section 2(f), "Person" means any
individual, entity or group (within the meaning of Section 13(d)(3) of
the Act), other than any employee benefit plan (or related trust)
sponsored or maintained by the Company or any affiliated company, and
"beneficial ownership" has the meaning given the term in Rule 13d-3
under the Act.
(vi) Neither the sale of Company Stock in an initial public
offering nor any restructuring of the Company or its Board in
contemplation of or as a result of an initial public offering shall
constitute a Change of Control for purposes of this Plan.
(g) Code. The Internal Revenue Code of 1986, as amended.
----
(h) Committee. The Committee appointed to administer the Plan
---------
pursuant to Plan Section 15, or if no such Committee has been appointed, the
Board.
(i) Company. Commonwealth Biotechnologies, Inc., a Virginia
-------
corporation.
(j) Company Stock. Common stock of the Company. If the par value of
-------------
the Company Stock is changed, or in the event of a change in the capital
structure of the Company (as provided in Section 12 below), the shares resulting
from such a change shall be deemed to be Company Stock within the meaning of the
Plan.
(k) Consultant. A person or entity rendering services to the Company
----------
who is not an "employee" for purposes of employment tax withholding under the
Code.
(l) Date of Grant. The effective date of an Award granted by the
-------------
Committee.
(m) Disability or Disabled. As to an Incentive Stock Option a
----------------------
Disability within the meaning of Code Section 22(e)(3). As to all other
Incentive Awards, the Committee shall determine whether a Disability exists and
such determination shall be conclusive.
A-2
<PAGE>
(n) Fair Market Value.
-----------------
(i) If the Company Stock is listed on any established stock
exchange or quoted on the NASDAQ stock market system, its Fair Market
Value shall be the closing price for such Stock on the Date of Grant
as reported by such exchange or the NASDAQ stock market system, or, if
there are no trades on such date, the value shall be determined as of
the last preceding day on which the Company Stock was traded.
(ii) If the Company Stock is not publicly traded, the Fair
Market Value shall be determined by the Committee using any reasonable
method in good faith.
(iii) Fair Market Value shall be determined as of the Date of
Grant specified in the Award.
(o) Incentive Stock Option. An Option intended to meet the
----------------------
requirements of, and qualify for favorable federal income tax treatment under,
Code Section 422.
(p) Nonstatutory Stock Option. An Option that does not meet the
-------------------------
requirements of Code Section 422, or that is otherwise not intended to be an
Incentive Stock Option and is so designated.
(q) Option. A right to purchase Company Stock granted under the Plan,
------
at a price determined in accordance with the Plan.
(r) Participant. Any individual who is granted an Award under the
-----------
Plan.
(s) Restricted Stock. Company Stock awarded upon the terms and
----------------
subject to the restrictions set forth in Section 8 below.
(t) Rule 16b-3. Rule 16b-3 promulgated under the Act, including any
----------
corresponding subsequent rule or any amendments to Rule 16b-3 enacted after the
effective date of the Plan.
(u) 10% Shareholder. A person who owns, directly or indirectly, stock
---------------
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary of the Company. Indirect
ownership of stock shall be determined in accordance with Code Section 424(d).
3. General. Awards of Options or Restricted Stock may be granted under
-------
the Plan. Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options.
4. Stock. Subject to Section 12 of the Plan, there shall be reserved for
-----
issuance under the Plan an aggregate of 360,000 shares of Company Stock, which
may include authorized, but unissued, shares. Shares allocable to Options
granted under the Plan that expire or otherwise terminate unexercised and shares
that are forfeited pursuant to restrictions on Restricted Stock awarded under
the Plan may again be subjected to an Award under this Plan. For purposes of
determining the number of shares that are available for Awards under the Plan,
such number shall include the number of shares surrendered by a Participant or
retained by the Company (a) in connection with the exercise of an Option or (b)
in payment of Applicable Withholding Taxes.
A-3
<PAGE>
5. Eligibility.
-----------
(a) Any employee of, director of, or Consultant to the Company
(including an employee of, director of, or consultant to an affiliate of the
Company) who, in the judgment of the Committee, has contributed or can be
expected to contribute to the profits or growth of the Company is eligible to
become a Participant. The Committee shall have the power and complete
discretion, as provided in Section 14, to select eligible Participants and to
determine for each Participant the terms, conditions and nature of the Award and
the number of shares to be allocated as part of the Award; provided, however,
that any Award made to a member of the Committee must be approved by the Board.
The Committee is expressly authorized to make an Award to a Participant
conditioned on the surrender for cancellation of an existing Award.
(b) The grant of an Award shall not obligate the Company to pay an
employee any particular amount of remuneration, to continue the employment of
the employee after the grant or to make further grants to the employee at any
time thereafter.
(c) Non-employee directors and Consultants shall not be eligible to
receive the Award of an Incentive Stock Option.
(d) The maximum number of shares with respect to which an Award may
be granted in any calendar year to any employee during such calendar year shall
be 50,000 shares.
6. Stock Options.
-------------
(a) Whenever the Committee deems it appropriate to grant Options,
notice shall be given to the Participant stating the number of shares for which
Options are granted, the exercise price per share, whether the options are
Incentive Stock Options or Nonstatutory Stock Options, and the conditions to
which the grant and exercise of the Options are subject. This notice, when duly
accepted in writing by the Participant, shall become a stock option agreement
between the Company and the Participant.
(b) The Committee shall establish the exercise price of Options. The
exercise price of an Incentive Stock Option shall be not less than 100% of the
Fair Market Value of such shares on the Date of Grant, provided that if the
Participant is a 10% Shareholder, the exercise price of an Incentive Stock
Option shall not be less than 110% of the Fair Market Value of such shares on
the Date of Grant. The exercise price of Nonstatutory Stock Option Awards
intended to be performance-based for purposes of Code Section 162(m) shall not
be less than 100% of the Fair Market Value of such shares on the Date of Grant.
(c) Subject to subsection (d) below, Options may be exercised in
whole or in part at such times as may be specified by the Committee in the
Participant's stock option agreement. The Committee may impose such vesting
conditions and other requirements as the Committee deems appropriate, and the
Committee may include such provisions regarding a Change of Control as the
Committee deems appropriate.
(d) The Committee shall establish the term of each Option in the
Participant's stock option agreement. The term of an Incentive Stock Option
shall not be longer than ten years from the Date of Grant, except that an
Incentive Stock Option granted to a 10% Shareholder shall not have a term in
excess of five years. No Option may be exercised after the expiration of its
term or, except as set forth in the Participant's stock option agreement, after
the termination of the Participant's employment. The Committee shall set forth
in the Participant's stock option agreement when, and under what circumstances,
an Option may be exercised after termination of the Participant's employment or
period of service; provided that no Incentive Stock Option may be exercised
after (i) three months from the Participant's termination of employment with the
Company for reasons other than Disability or death, or (ii) one year from the
Participant's termination of employment on account of Disability or death. The
Committee may, in its sole discretion, amend a previously granted Incentive
Stock Option to provide for more liberal exercise provisions, provided however
that if the Incentive Stock Option as amended no longer meets the
A-4
<PAGE>
requirements of Code Section 422, and, as a result the Option no longer
qualifies for favorable federal income tax treatment under Code Section 422, the
amendment shall not become effective without the written consent of the
Participant.
(e) An Incentive Stock Option, by its terms, shall be exercisable in
any calendar year only to the extent that the aggregate Fair Market Value
(determined at the Date of Grant) of the Company Stock with respect to which
Incentive Stock Options are exercisable by the Participant for the first time
during the calendar year does not exceed $100,000 (the "Limitation Amount").
Incentive Stock Options granted under the Plan and all other plans of the
Company and any parent or subsidiary of the Company shall be aggregated for
purposes of determining whether the Limitation Amount has been exceeded. The
Board may impose such conditions as it deems appropriate on an Incentive Stock
Option to ensure that the foregoing requirement is met. If Incentive Stock
Options that first become exercisable in a calendar year exceed the Limitation
Amount, the excess Options will be treated as Nonstatutory Stock Options to the
extent permitted by law.
(f) If a Participant dies and if the Participant's stock option
agreement provides that part or all of the Option may be exercised after the
Participant's death, then such portion may be exercised by the personal
representative of the Participant's estate during the time period specified in
the stock option agreement.
(g) If a Participant's employment or services is terminated by the
Company for Cause, the Participant's Options shall terminate as of the date of
the misconduct.
7. Method of Exercise of Options.
-----------------------------
(a) Options may be exercised by giving written notice of the exercise
to the Company, stating the number of shares the Participant has elected to
purchase under the Option. Such notice shall be effective only if accompanied by
the exercise price in full in cash; provided that, if the terms of an Option so
permit, the Participant may (i) deliver Company Stock that the Participant has
previously acquired and owned (valued at Fair Market Value on the date of
exercise), or (ii) deliver a properly executed exercise notice together with
irrevocable instructions to a broker to deliver promptly to the Company, from
the sale or loan proceeds with respect to the sale of Company Stock or a loan
secured by Company Stock, the amount necessary to pay the exercise price and, if
required by the Committee, Applicable Withholding Taxes. Unless otherwise
specifically provided in the Option, any payment of the exercise price paid by
delivery of Company Stock acquired directly or indirectly from the Company shall
be paid only with shares of Company Stock that have been held by the Participant
for more than six months (or such longer or shorter period of time required to
avoid a charge to earnings for financial accounting purposes).
(b) The Company may place on any certificate representing Company
Stock issued upon the exercise of an Option any legend deemed desirable by the
Company's counsel to comply with federal or state securities laws. The Company
may require of the Participant a customary indication of his or her investment
intent. A Participant shall not possess shareholder rights with respect to
shares acquired upon the exercise of an Option until the Participant has made
any required payment, including payment of Applicable Withholding Taxes, and the
Company has issued a certificate for the shares of Company Stock acquired.
(c) Notwithstanding anything herein to the contrary, Awards shall
always be granted and exercised in such a manner as to conform to the provisions
of Rule 16b-3.
8. Restricted Stock Awards.
-----------------------
(a) Whenever the Committee deems it appropriate to grant a Restricted
Stock Award, notice shall be given to the Participant stating the number of
shares of Restricted Stock for which the Award is granted, the Date of Grant,
and the terms and conditions to which the Award is subject. Certificates
representing the shares shall be issued in the name of the Participant, subject
to the restrictions imposed by the Plan and the Committee. A Restricted Stock
Award may be made by the Committee in its discretion without cash consideration.
A-5
<PAGE>
(b) The Committee may place such restrictions on the transferability
and vesting of Restricted Stock as the Committee deems appropriate, including
restrictions relating to continued employment and financial performance goals.
Without limiting the foregoing, the Committee may provide performance or Change
of Control acceleration parameters under which all, or a portion, of the
Restricted Stock will vest on the Company's achievement of established
performance objectives. Restricted Stock may not be sold, assigned, transferred,
disposed of, pledged, hypothecated or otherwise encumbered until the
restrictions on such shares shall have lapsed or shall have been removed
pursuant to subsection (c) below.
(c) The Committee shall establish as to each Restricted Stock Award
the terms and conditions upon which the restrictions on transferability set
forth in paragraph (b) above shall lapse. Such terms and conditions may include,
without limitation, the passage of time, the meeting of performance goals, the
lapsing of such restrictions as a result of the Disability, death or retirement
of the Participant, or the occurrence of a Change of Control.
(d) A Participant shall hold shares of Restricted Stock subject to
the restrictions set forth in the Award agreement and in the Plan. In other
respects, the Participant shall have all the rights of a shareholder with
respect to the shares of Restricted Stock, including, but not limited to, the
right to vote such shares and the right to receive all cash dividends and other
distributions paid thereon. Certificates representing Restricted Stock shall
bear a legend referring to the restrictions set forth in the Plan and the
Participant's Award agreement. If stock dividends are declared on Restricted
Stock, such stock dividends or other distributions shall be subject to the same
restrictions as the underlying shares of Restricted Stock.
9. Applicable Withholding Taxes. Each Participant shall agree, as a
----------------------------
condition of receiving an Award, to pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, all Applicable Withholding
Taxes with respect to the Award. Until the Applicable Withholding Taxes have
been paid or arrangements satisfactory to the Company have been made, no stock
certificates (or, in the case of Restricted Stock, no stock certificates free of
a restrictive legend) shall be issued to the Participant. As an alternative to
making a cash payment to the Company to satisfy Applicable Withholding Tax
obligations, the Committee may establish procedures permitting the Participant
to elect to (a) deliver shares of already owned Company Stock or (b) have the
Company retain that number of shares of Company Stock that would satisfy all or
a specified portion of the Applicable Withholding Taxes. Any such election shall
be made only in accordance with procedures established by the Committee to avoid
a charge to earnings for financial accounting purposes and in accordance with
Rule 16b-3.
10. Nontransferability of Awards.
----------------------------
(a) In general, Awards, by their terms, shall not be transferable by
the Participant except by will or by the laws of descent and distribution or
except as described below. Options shall be exercisable, during the
Participant's lifetime, only by the Participant or by his guardian or legal
representative.
(b) Notwithstanding the provisions of (a) and subject to federal and
state securities laws, the Committee may grant or amend Nonstatutory Stock
Options that permit a Participant to transfer the Options to one or more
immediate family members, to a trust for the benefit of immediate family
members, or to a partnership, limited liability company, or other entity the
only partners, members, or interest-holders of which are among the Participant's
immediate family members. Consideration may not be paid for the transfer of
Options. The transferee of an Option shall be subject to all conditions
applicable to the Option prior to its transfer. The agreement granting the
Option shall set forth the transfer conditions and restrictions. The Committee
may impose on any transferable Option and on stock issued upon the exercise of
an Option such limitations and conditions as the Committee deems appropriate.
11. Termination, Modification, Change. If not sooner terminated by
---------------------------------
the Board, this Plan shall terminate at the close of business on August 7, 2010.
No Awards shall be made under the Plan after its termination.
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The Board may terminate the Plan or may amend the Plan in such respects as it
shall deem advisable; provided, that, unless authorized by the Company's
shareholders, no change shall be made that (a) increases the total number of
shares of Company Stock reserved for issuance pursuant to Awards granted under
the Plan (except pursuant to Section 12), (b) expands the class of persons
eligible to receive Awards, (c) materially increases the benefits accruing to
Participants under the Plan, or (d) otherwise requires shareholder approval
under the Code, Rule 16b-3, or the rules of a domestic exchange on which Company
Stock is traded. Notwithstanding the foregoing, the Board may unilaterally amend
the Plan and Awards as it deems appropriate to ensure compliance with Rule 16b-3
and to cause Incentive Stock Options to meet the requirements of the Code and
regulations thereunder. Except as provided in the preceding sentence, a
termination or amendment of the Plan shall not, without the consent of the
Participant, adversely affect a Participant's rights under an Award previously
granted to him.
12. Change in Capital Structure.
---------------------------
(a) In the event of a stock dividend, stock split or combination of
shares, spin-off, recapitalization or merger in which the Company is the
surviving corporation, or other change in the Company's capital stock
(including, but not limited to, the creation or issuance to shareholders
generally of rights, options or warrants for the purchase of common stock or
preferred stock of the Company), the number and kind of shares of stock or
securities of the Company to be issued under the Plan (under outstanding Awards
and Awards to be granted in the future), the exercise price of options, and
other relevant provisions shall be appropriately adjusted by the Committee,
whose determination shall be binding on all persons. If the adjustment would
produce fractional shares with respect to any Award, the Committee may adjust
appropriately the number of shares covered by the Award so as to eliminate the
fractional shares.
(b) In the event the Company distributes to its shareholders a
dividend, or sells or causes to be sold to a person other than the Company or a
subsidiary shares of stock in any corporation (a "Spinoff Company") which,
immediately before the distribution or sale, was a majority owned Subsidiary of
the Company, the Committee shall have the power, in its sole discretion, to make
such adjustments as the Committee deems appropriate. The Committee may make
adjustments in the number and kind of shares or other securities to be issued
under the Plan (under outstanding Awards and Awards to be granted in the
future), the exercise price of Options, and other relevant provisions, and,
without limiting the foregoing, may substitute securities of a Spinoff Company
for securities of the Company. The Committee shall make such adjustments as it
determines to be appropriate, considering the economic effect of the
distribution or sale on the interests of the Company's shareholders and the
Participants in the businesses operated by the Spinoff Company. The Committee's
determination shall be binding on all persons. If the adjustment would produce
fractional shares with respect to any Award, the Committee may adjust
appropriately the number of shares covered by the Award so as to eliminate the
fractional shares.
(c) Notwithstanding anything in the Plan to the contrary, the
Committee may take the foregoing actions without the consent of any Participant,
and the Committee's determination shall be conclusive and binding on all persons
for all purposes. The Committee shall make its determinations consistent with
Rule 16b-3 and the applicable provisions of the Code.
(d) To the extent required to avoid a charge to earnings for
financial accounting purposes, adjustments made by the Committee pursuant to
this Section 13 to outstanding Awards shall be made so that both (i) the
aggregate intrinsic value of an Award immediately after the adjustment is not
less than the Award's aggregate intrinsic value before the Award and (ii) the
ratio of the exercise price per share to the market value per share is not
reduced.
13. Change of Control. In the event of a Change of Control of the Company,
-----------------
the Committee may take such actions with respect to Awards as the Committee
deems appropriate. These actions may include, but shall not be limited to the
following:
(a) At the time the Award is made, provide for the acceleration of
the
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vesting schedule relating to the exercise or realization of the Award so
that the Award may be exercised or realized in full on or before a date
initially fixed by the Committee.
(b) Provide for the purchase or settlement of any such Award by the
Company for any amount of cash equal to the amount which could have been
obtained upon the exercise of such Award or realization of a Participant's
rights had such Award been currently exercisable or payable.
(c) Make adjustments to Awards then outstanding as the Committee
deems appropriate to reflect such Change of Control provided, however, that
to the extent required to avoid a charge to earnings for financial
accounting purposes, such adjustments shall be made so that both (i) the
aggregate intrinsic value of an Award immediately after the adjustment is
not less than the Award's aggregate intrinsic value before the Award and
(ii) the ratio of the exercise price per share to the market value per
share is not reduced; or
(d) Cause any such Award then outstanding to be assumed, or new
rights substituted therefore by the acquiring or surviving corporation in
such Change of Control.
14. Administration of the Plan.
--------------------------
(a) The Plan shall be administered by the Committee, who shall be
appointed by the Board. If no Committee is appointed, the Plan shall be
administered by the Board. To the extent required by Rule 16b-3, all Awards
shall be made by members of the Committee who are "Non-Employee Directors" as
that term is defined in Rule 16b-3, or by the Board. Awards that are intended to
be performance-based for purposes of Code section 162(m) shall be made by a
Committee, or subcommittee of the Committee, comprised solely of two or more
"outside directors" as that term is defined for purposes of Code section 162(m).
(b) The Committee shall have the authority to impose such limitations
or conditions upon an Award as the Committee deems appropriate to achieve the
objectives of the Award and the Plan. Without limiting the foregoing and in
addition to the powers set forth elsewhere in the Plan, the Committee shall have
the power and complete discretion to determine (i) which eligible persons shall
receive an Award and the nature of the Award, (ii) the number of shares of
Company Stock to be covered by each Award, (iii) whether Options shall be
Incentive Stock Options or Nonstatutory Stock Options, (iv) the Fair Market
Value of Company Stock, (v) the time or times when an Award shall be granted,
(vi) whether an Award shall become vested over a period of time, according to a
performance-based vesting schedule or otherwise, and when it shall be fully
vested, (vii) the terms and conditions under which restrictions imposed upon an
Award shall lapse, (viii) whether a Change of Control exists, (ix) factors
relevant to the lapse of restrictions on Restricted Stock or Options, (x) when
Options may be exercised, (xi) whether to approve a Participant's election with
respect to Applicable Withholding Taxes, (xii) conditions relating to the length
of time before disposition of Company Stock received in connection with an Award
is permitted, (xiii) notice provisions relating to the sale of Company Stock
acquired under the Plan, and (xiv) any additional requirements relating to
Awards that the Committee deems appropriate. Notwithstanding the foregoing, no
"tandem stock options" (where two stock options are issued together and the
exercise of one option affects the right to exercise the other option) may be
issued in connection with Incentive Stock Options.
(c) The Committee shall have the power to amend the terms of
previously granted Awards so long as the terms as amended are consistent with
the terms of the Plan and, where applicable, consistent with the qualification
of an Option as an Incentive Stock Option. The consent of the Participant must
be obtained with respect to any amendment that would adversely affect the
Participant's rights under the Award, except that such consent shall not be
required if such amendment is for the purpose of complying with Rule 16b-3 or
any requirement of the Code applicable to the Award.
(d) The Committee may adopt rules and regulations for carrying out
the Plan. The Committee shall have the express discretionary authority to
construe and interpret the Plan and the Award agreements, to resolve any
ambiguities, to define any terms, and to make any other determinations required
by the
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Plan or an Award agreement. The interpretation and construction of any
provisions of the Plan or an Award agreement by the Committee shall be final and
conclusive. The Committee may consult with counsel, who may be counsel to the
Company, and shall not incur any liability for any action taken in good faith in
reliance upon the advice of counsel.
(e) A majority of the members of the Committee shall constitute a
quorum, and all actions of the Committee shall be taken by a majority of the
members present. Any action may be taken by a written instrument signed by all
of the members, and any action so taken shall be fully effective as if it had
been taken at a meeting.
15. Notice. All notices and other communications required or permitted to
------
be given under this Plan shall be in writing and shall be deemed to have been
duly given if delivered personally, electronically, or mailed first class,
postage prepaid, as follows: (a) if to the Company - at its principal business
address to the attention of the Secretary; (b) if to any Participant - at the
last address of the Participant known to the sender at the time the notice or
other communication is sent.
16. Interpretation and Governing Law. The terms of this Plan and Awards
--------------------------------
granted pursuant to the Plan shall be governed, construed and administered in
accordance with the laws of the State of Virginia. The Plan and Awards are
subject to all present and future applicable provisions of the Code and, to the
extent applicable, they are subject to all present and future rulings of the
Securities and Exchange Commission with respect to Rule 16b-3. If any provision
of the Plan or an Award conflicts with any such Code provision or ruling, the
Committee shall cause the Plan to be amended, and shall modify the Award, so as
to comply, or if for any reason amendments cannot be made, that provision of the
Plan or the Award shall be void and of no effect.
IN WITNESS WHEREOF, our Company has caused this Plan to be adopted this
7/th/ day of August, 2000.
Commonwealth Biotechnologies, Inc.
By: /s/ Richard J. Freer, Ph.D.
Title: Chairman
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<PAGE>
Exhibit B
Proposed Amendment to the Company's Amended and Restated Articles of
Incorporation
Article III will be replaced in its entirety with the following:
III.
1. The Corporation shall have authority to issue up to 10,000,000 shares
of common stock, without par value per share ("Common Stock"). The rights,
preferences, voting powers, qualifications, limitations and restrictions of the
Common Stock shall be as follows:
(a) Each share of Common Stock shall be entitled to one vote on all
matters submitted to a vote at any meeting of the Corporation's shareholders.
The holders of the Common Stock shall, to the exclusion of the holders of the
Preferred Stock (as defined below), have the sole and full power to vote for the
election of directors and for all other purposes without limitation except (i)
as otherwise recited or provided in these Articles of Incorporation applicable
to the Preferred Stock, (ii) with respect to a class or series of Preferred
Stock, as shall be determined by the Board of Directors pursuant these Articles
and (iii) with respect to any voting rights provided by law.
(b) Except as otherwise provided in these Articles applicable to the
Preferred Stock, or otherwise, as they may hereafter be amended:
(i) Any corporate action, except the election of directors, an
amendment or restatement of these Articles, a merger, a statutory share
exchange, the sale or other disposition of all or substantially all the
Corporation's assets otherwise than in the usual and regular course of business,
or dissolution shall be approved at a meeting at which a quorum of the
Corporation's shareholders is present if the votes cast in favor of the action
exceed the votes cast against the action;
(ii) Directors shall be elected by a plurality of the votes cast
by the holders of the Common Stock entitled to vote in the election at a meeting
at which a quorum is present;
(iii) An amendment or restatement of these Articles other than an
amendment or restatement described, or involved in a transaction described in
Subsection (iv), (v) or (vi) of this Section shall be approved by a majority of
the votes entitled to be cast by the holders of the Common Stock;
(iv) Any transaction with the Corporation or any subsidiary that
constitutes or involves an affiliated transaction, as defined in Section 13.1-
725 of the Virginia Stock Corporation Act, as in effect on the effective date of
these Articles, shall be approved by at least two-thirds of the votes entitled
to be cast by the holders of the Common Stock;
(v) A merger, statutory share exchange, sale or other
disposition of all or substantially all the Corporation's assets otherwise than
in the usual and regular course of business, or dissolution shall be approved by
at least two-thirds of the votes entitled to be cast by the holders of the
Common Stock entitled to vote on such transactions;
(vi) An amendment to these Articles that amends or affects the
classification of the Board of Directors provided in Section 1 of Article V
hereof shall be approved by at least two-thirds of the votes entitled to be cast
by the holders of the Common Stock.
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For the purposes of Subsection (iv) of this Section, a transaction shall not
constitute an affiliated transaction if it is with an interested shareholder, as
defined in Section 13.1-725 of the Virginia Stock Corporation Act, as in effect
on the effective date of these Articles: (i) who has been an interested
shareholder continuously or who would have been such but for the unilateral
action of the Corporation since the later of (A) the date on which the
Corporation first had 300 shareholders of record or (B) the date such person
became an interested shareholder with the prior or contemporaneous approval of a
majority of the disinterested directors as defined in Section 13.1-725 of the
Virginia Stock Corporation Act, as in effect on the effective date of these
Articles; (ii) who became an interested shareholder as a result of acquiring
shares from a person specified in Subdivision (i) or Subdivision (ii) of this
Subsection by gift, testamentary bequest or the laws of descent and distribution
or in a transaction in which consideration was not exchanged and who continues
thereafter to be an interested shareholder, or who would have so continued but
for the unilateral action of the Corporation, (iii) who became an interested
shareholder inadvertently or as a result of the unilateral action of the
Corporation and who, as soon as practicable thereafter, divested beneficial
ownership of sufficient shares so that such person ceased to be an interested
shareholder, and who would not have been an interested shareholder but for such
inadvertence or the unilateral action of the Corporation; or (iv) whose
acquisition of shares making such person an interested shareholder was approved
by a majority of the disinterested directors.
(c) Dividends may be paid upon the Common Stock out of any assets of
the Corporation available for dividends remaining after full dividends on the
outstanding Preferred Stock (as defined below) at the dividend rate or rates
therefor, together with the full additional amount required by any participation
right, with respect to all past dividend periods and the current dividend period
shall have been paid or declared and set apart for payment and all mandatory
sinking funds payment that shall have become due in respect of any series of the
Preferred Stock shall have been made.
2. The number of shares of preferred stock which the Corporation shall
have the authority to issue shall be 2,000,000 shares, without par value per
share ("Preferred Stock").
(a) The Board of Directors is hereby empowered to cause any class of
the Preferred Stock of the Corporation to be issued in series with such of the
variations permitted by Subdivisions (i) - (xi) of this Section below, as shall
be determined by the Board of Directors. The shares of Preferred Stock of
different classes or series may vary as to:
(i) the designation of such class or series, the number of
shares to constitute such class or series and the stated value thereof;
(ii) whether the shares of such class or series shall have
voting rights in addition to any voting rights provided by law, and if so, the
terms of such voting rights, which (x) may be general or limited, and (y) may
permit more than one vote per share;
(iii) the rate or rates (which may be fixed or variable) at which
dividends, if any, are payable on such class or series, whether any such
dividends shall be cumulative, and if so, from what dates, the conditions and
dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any shares of stock
of any other class or any other series of such class;
(iv) whether the shares of such class or series shall be subject
to redemption by the Corporation, and if so, the times, prices and other
conditions of such redemption;
(v) the amount or amounts payable upon shares of such class or
series upon, and the rights of the holders of such class or series in, the
voluntary or involuntary liquidation, dissolution or winding up, or any
distribution of the assets of, the Corporation;
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<PAGE>
(vi) whether the shares of such class or series shall be
subject to the operation of a retirement or sinking fund, and if so, the extent
to and manner in which any such retirement or sinking fund shall be applied to
the purchase or redemption of the shares of such series for retirement or other
corporate purposes and the terms and provisions relative to the operation
thereof;
(vii) whether the shares of such series shall be convertible
into, or exchangeable for, shares of stock of any other class or any other
series of such class or any other securities (including Common Stock) and, if
so, the price or prices or the rate or rates of conversion or exchange and the
method, if any, of adjusting the same, and any other terms and conditions of
conversion or exchange;
(viii) the limitations and restrictions, if any, to be effective
while any shares of such class or series are outstanding upon the payment of
dividends or the making of other distributions on, and upon the purchase,
redemption or other acquisition by the Corporation of, the Common Stock or
shares of stock of any other class or any other series of such class;
(ix) the conditions or restrictions, if any, upon the creation
of indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such class or series or of any other series of
such class or of any other class;
(x) the ranking (be it pari passu, junior or senior) of each
class or series as to the payment of dividends, the distribution of assets and
all other matters; and
(xi) any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications, limitations and
restrictions thereof, insofar as they are not inconsistent with the provisions
of these Articles of Incorporation, to the full extent permitted in accordance
with the laws of the Commonwealth of Virginia.
(b) In the event of any liquidation, dissolution or winding up of the
Corporation, after there shall have been paid to or set aside for the holders of
the Preferred Stock the full preferential amounts to which they are respectively
entitled under the provisions of these Articles of Incorporation applicable to
the Preferred Stock, the holders of the Preferred Stock shall have no claim to
any of the remaining assets of the Corporation.
(c) The powers, preferences and relative, participating, option and
other special rights of each class or series of Preferred Stock and the
qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other classes and series at any time outstanding. All
shares of Preferred Stock of each series shall be equal in all respects.
3. In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, if the assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay in full all
amounts to which the holders of Preferred Stock and any other stock of any class
ranking on a parity as to liquidation preference are entitled, the amount
available for distribution to stockholders shall be shared by the holders of all
such classes and any series thereof pro rata according to the preferential
amounts to which the shares of each such series or class are entitled. For the
purposes of this Section 3, a consolidation or merger of the Corporation with
any other corporation, or the sale, transfer or lease of all or substantially
all its assets shall not constitute or be deemed a liquidation, dissolution, or
winding up of the Corporation.
4. Any and all shares of Preferred Stock and Common Stock of the
Corporation, at the time authorized but not issued and outstanding, may be
issued and disposed of by the Board of Directors of the Corporation in any
lawful manner, consistently, in the case of shares of Preferred Stock, with the
requirements set forth in the provisions of these Articles of Incorporation
applicable to the Preferred Stock, at any time and from time to time, for such
considerations as may be fixed by the Board of Directors of the Corporation.
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<PAGE>
5. No holder of shares of any class of stock of the Corporation shall
have any preemptive or preferential right to purchase or subscribe to (i) any
shares of any class of the Corporation, whether now or hereafter authorized;
(ii) any warrants, rights, or options to purchase any such shares; or (iii) any
securities or obligations convertible into any such shares or into warrants,
rights or options to purchase any such shares, except as may be provided for in
any written agreement entered into by the Corporation with any such holder or
holders of shares.
6. Any class of stock of the Corporation shall be deemed to rank --
(a) prior to another class either as to dividends or upon
liquidation, if the holders of such class shall be entitled to the receipt of
dividends or of amounts distributable on liquidation, dissolution or winding up,
as the case may be, in preference or priority to holders of such other class;
(b) on a parity with another class either as to dividends or upon
liquidation, whether or not the dividend rates, dividend payment dates, or
redemption or liquidation prices per share thereof are different from those of
such others, if the holders of such class of stock shall be entitled to receipt
of dividends or amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in proportion to their respective dividend rates or
prices, without preference or priority one over the other with respect to the
holders of such other class; and
(c) junior to another class either as to dividends or upon
liquidation, if the rights of the holders of such class shall be subject or
subordinate to the rights of the holders of such other class in respect of the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be.
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<PAGE>
COMMONWEALTH BIOTECHNOLOGIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, OCTOBER 27, 2000
The undersigned hereby appoints Richard J. Freer and James H. Brennan, and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Commonwealth
Biotechnologies, Inc.(the "Company") which the undersigned may be entitled to
vote at the Special Meeting of Stockholders of Commonwealth Biotechnologies,
Inc. to be held at 601 Biotech Drive, Richmond, Virginia 23235 on Friday,
October 27, 2000 at 10:00 a.m. (local time), and at any and all postponements,
continuations and adjournments thereof, with all powers that the undersigned
would possess if personally present, upon and in respect of the following
matters and in accordance with the following instructions, with discretionary
authority as to any and all other matters that may properly come before the
meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
NOMINEE LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3 AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH. PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE.
PROPOSAL 1: To elect one Class II director to hold office until the 2002 Annual
Meeting of Stockholders and until his successor is elected and qualified.
[_] FOR the nominee listed below [_] WITHHOLD AUTHORITY to vote for the
nominee listed below
NOMINEE: L. McCarthy Downs, III
PROPOSAL 2: To approve the Company's 2000 Stock Incentive Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 3: To approve an amendment to the Company's Amended and Restated
Articles of Incorporation to authorize a new class of undesignated preferred
stock, without par value per share, consisting of 2,000,000 shares of preferred
stock.
[_] FOR [_] AGAINST [_] ABSTAIN
Dated _________________
________________________________
________________________________
SIGNATURE(S)
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF THE STOCK IS REGISTERED
IN THE NAMES OF TWO OR MORE PERSONS, EACH SHOULD SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, GUARDIANS AND ATTORNEYS-IN-FACT SHOULD ADD THEIR
TITLES. IF SIGNER IS A CORPORATION, PLEASE GIVE FULL CORPORATE NAME AND HAVE A
DULY AUTHORIZED OFFICER SIGN, STATING TITLE. IF SIGNER IS A PARTNERSHIP, PLEASE
SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. PLEASE VOTE, DATE AND PROMPTLY
RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE.
