<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 (S) 240.14a - 11(c) or (S) 240.14a - 12
COMMONWEALTH BIOTECHNOLOGIES, INC.
----------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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:
_______________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
_______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________
(5) Total fee paid:
_______________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_______________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_______________________________________________________________
(3) Filing Party:
_______________________________________________________________
(4) Date Filed:
_______________________________________________________________
<PAGE>
[LOGO]
Commonwealth Biotechnologies, Inc.
601 Biotech Drive
Richmond, Virginia 23235
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders,
which is to be held on April 27, 2000, at 11:00 a.m. at 601 Biotech Drive,
Richmond, Virginia, 23235. The following pages contain the formal notice of the
Annual Meeting and our Proxy Statement, which describe the specific business to
be considered and voted upon at the Annual Meeting.
It is important that your shares be represented at the meeting. Whether or
not you expect to attend in person, we would greatly appreciate your efforts to
return the enclosed Proxy as soon as possible. If you decide to attend the
Annual Meeting, you may withdraw your Proxy should you wish to vote in person.
We look forward to seeing you at the Annual Meeting.
Sincerely yours,
RICHARD J. FREER, PH.D.,
Chairman of the Board of Directors
<PAGE>
COMMONWEALTH BIOTECHNOLOGIES, INC.
601 Biotech Drive
Richmond, Virginia 23235
Notice of Annual Meeting of Shareholders
To Be Held
April 27, 2000
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of Commonwealth Biotechnologies, Inc. (the "Company") will be held on
April 27, 2000, at 11:00 a.m. at 601 Biotech Drive, Richmond, Virginia, for the
following purposes:
(1) To elect two nominees as Class III Directors of the Company;
(2) To elect one nominee as a Class I Director of the Company;
(3) To ratify the appointment of McGladrey & Pullen, LLP as independent
public accountants to audit the financial statements of the Company
for the year ended December 31, 2000; and
(4) To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 15, 2000 will
be entitled to vote at the Annual Meeting.
The enclosed Proxy Statement contains more information pertaining to
matters to be voted on at the Annual Meeting. Please read the Proxy Statement
carefully.
Whether or not you plan to attend the Annual Meeting in person, to assure
the presence of a quorum, please complete, date, sign and return the
accompanying proxy in the enclosed, postage-paid envelope. If you attend the
meeting and wish to vote your shares personally, you may do so at any time
before the proxy is exercised.
By Order of the Board of Directors,
THOMAS R. REYNOLDS,
Secretary
Richmond, Virginia
March 30, 2000
<PAGE>
COMMONWEALTH BIOTECHNOLOGIES, INC.
601 Biotech Drive
Richmond, Virginia 23235
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2000
This Proxy Statement is furnished to the holders of common stock, no par
value per share ("Common Stock"), of Commonwealth Biotechnologies, Inc. (the
"Company") in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board of Directors") to be voted at the annual
meeting of shareholders of the Company (the "Annual Meeting") to be held on
April 27, 2000, at 11:00 a.m. at 601 Biotech Drive, Richmond, Virginia, and at
any adjournments or postponements thereof. This Proxy Statement and the
accompanying proxy are first being mailed on or about March 30, 2000.
Only the holders of Common Stock of record at the close of business on
March 15, 2000 (the "Record Date") will be entitled to vote at the Annual
Meeting. On such date, 1,726,964 shares of Common Stock were outstanding. Each
shareholder is entitled to one vote per share held of record on the Record Date.
The Common Stock is the Company's only outstanding voting stock.
A majority of the shares of Common Stock entitled to vote, represented in
person or by proxy, is required to constitute a quorum. If a quorum is not
present at the time of the Annual Meeting, or if for any reason the Company
believes that additional time should be allowed for the solicitation of proxies,
the Company may adjourn or postpone the Annual Meeting with or without a vote of
the shareholders. If the Company proposes adjournment, the person named on the
enclosed proxy card will vote such shares for which they have voting authority
in favor of adjournment.
All shares of Common Stock represented at the Annual Meeting by properly
executed proxies received prior to or at the Annual Meeting and not properly
revoked will be voted at the Annual Meeting in accordance with the instructions
indicated thereon. If no specification is made, the proxies will be voted in
favor of the matters listed on the proxy card and for the recommendation of the
Board of Directors on any other proposal that may properly come before the
meeting. Directors must be elected by a plurality of votes cast (in person or
by proxy) by the holders of Common Stock entitled to vote at the Annual Meeting
if a quorum is present. All other matters shall be determined based upon the
vote of the majority of votes cast (in person or by proxy) by the holders of
Common Stock entitled to vote at the Annual Meeting if a quorum is present.
Abstentions and broker non-votes will be counted for purposes of constituting a
quorum, but will not have the effect of voting in opposition to a director or of
a vote against the other proposals.
<PAGE>
The Company will pay all expenses of the Annual Meeting, including the cost
of soliciting proxies. The Company may reimburse persons holding shares in
their names for others, or holding shares for others who have the right to give
voting instructions, such as brokers, banks, fiduciaries and nominees, for such
persons' reasonable expenses in forwarding the proxy materials to their
principals. Certain directors, officers and other employees of the Company, not
specially employed for this purpose, may solicit proxies, without additional
remuneration therefor, by personal interview, mail, telephone, facsimile or
other electronic means.
Any shareholder giving a proxy may revoke it by delivering a written notice
of such revocation to Thomas R. Reynolds, the Secretary of the Company, at 601
Biotech Drive, Richmond, Virginia 23235 prior to the Annual Meeting, by
submitting to the Company a more recently dated proxy or by attending the Annual
Meeting and voting at any time before it is exercised.
PROPOSAL 1: ELECTION OF DIRECTORS
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 Board of Directors has nominated the two individuals named
below under the caption "Class III Nominees" for election as directors to serve
until the annual meeting of shareholders in 2003 or until their successors have
been elected and qualified. All of the Class III Nominees are currently serving
on the Board of Directors of the Company with terms expiring at this Annual
Meeting. In May 1999, the Company's Board of Directors also nominated the
individual named below under "Class I Nominee" for election as a director to
serve until the annual meeting of shareholders in 2001 or until his successor
has been elected and qualified.
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.
Required Vote
Directors must be elected by a plurality of votes cast (in person or by
proxy) by the holders of Common Stock entitled to vote at the Annual Meeting if
a quorum is present.
Class III Nominees:
RICHARD J. FREER, PH.D. - Chairman of the Board, Director and Founder
Age -- 57
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 Virginia
Commonwealth University ("VCU"), first as an Associate Professor, and then a
full Professor. In addition, from 1988 through
2
<PAGE>
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.
GEORGE F. ALLEN - Director
Age -- 48
Director since 1998
The Board of Directors appointed Mr. Allen to the Board of Directors in
September 1998. Mr. Allen is a Partner in the law firm of McGuire, Woods,
Battle and Booth, L.L.P., 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
mobile computer systems and related software.
Class I Nominee:
Raymond Harold Cypess - Director
Age -- 59
Director since 1999
The Board of Directors appointed Dr. Cypess to the Board of Directors in
May 1999. Dr. Cypess is the President and Chief Executive Officer of American
Type Culture Collection, a leading non-profit respository 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, Urbanna, a
doctorate degree in Veterinary Medicine from the University of Illinois, Urbanna
and a doctorate degree in Parasitology from the University of North Carolina,
Chapel Hill.
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. Shareholders are NOT voting on the election of the
two Class I directors and the one Class III Director noted below.
Class I Directors Serving Until the 2001 Annual Meeting:
THOMAS R. REYNOLDS - Senior Vice President, Secretary, Director and Founder
Age -- 37
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
3
<PAGE>
until 1997, Mr. Reynolds served as the Manager of the Nucleic Acids Core
Laboratory at The Massey Cancer Center at VCU. Mr. Reynolds received a
bachelor's degree in Biology from the Pennsylvania State University.
Class II Directors Serving Until the 2002 Annual Meeting:
ROBERT B. HARRIS, PH.D. - President, Director and Founder
Age -- 47
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.
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 (the "Incentive Plan") 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, including the Incentive Plan. 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 is
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
4
<PAGE>
meetings.
In voting by proxy for the election of the two nominees as Class III
Directors and the one nominee as a Class I Director to serve until the annual
meeting of shareholders at which such directors' class will stand for
reelection, shareholders may vote in favor of all nominees, withhold their votes
as to all nominees, or withhold their votes as to a specific nominee. If no
instructions are indicated, such proxies will be voted FOR the election of all
nominees as directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE ELECTION OF ALL OF THE PROPOSED CLASS I AND CLASS III NOMINEES TO
---
THE BOARD OF DIRECTORS.
PROPOSAL 2: SELECTION OF AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors of
the Company has appointed, subject to the approval of the shareholders, the firm
McGladrey & Pullen, LLP as independent public accountants to audit the Company's
financial statements for the fiscal year ended December 31, 2000. If the
appointment of McGladrey & Pullen, LLP is not approved by the shareholders, the
matter will be referred to the Audit Committee for further review.
Goodman & Company, L.L.P. ("Goodman") served as the Company's independent
public accountants for the fiscal years ended December 31, 1995, December 31,
1996 and December 31, 1997. For various business reasons, the Audit Committee
recommended the dismissal of Goodman to the Company's Board of Directors, and on
February 23, 1998, the Board officially terminated its business relationship
with Goodman. Goodman's reports on the Company's financial statements for each
of the last two fiscal years did not contain an adverse opinion or disclaimer of
opinion. Similarly, Goodman did not modify either such report as to
uncertainty, audit scope or accounting principles. There were no disagreements
between the Company and Goodman regarding any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.
The Company appointed McGladrey & Pullen, LLP to serve as the Company's
independent public accountants on February 23, 1998.
It is anticipated that representatives of McGladrey & Pullen, LLP will
attend the Annual Meeting and will have an opportunity to make a statement, if
they determine to do so, and will be available to respond to appropriate
questions at that time.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE SELECTION OF MCGLADREY & PULLEN, LLP AS THE
---
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT THE
COMPANY'S FINANCIAL STATEMENTS FOR THE FISCAL
YEAR ENDED DECEMBER 31, 2000.
5
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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) 104,050 5.8
Robert B. Harris, Ph.D. (3) 87,858 4.9
Thomas R. Reynolds (4) 51,603 2.9
George F. Allen (5) 5,000 *
Raymond Harold Cypess (6) 5,000 *
James T. Martin (7) 320,000 18.5
Mills Value Adviser, Inc. (8) 274,277 15.8
All directors and executive officers as a
group (5 persons) (9) 253,511 13.3
</TABLE>
_____________________________
* Less than 1%
(1) Includes shares of Common Stock subject to options and warrants that may be
exercised within 60 days of March 15, 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 49,998 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 29,735 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 McGuire, Woods, Battle & Boothe, L.L.P., 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 5,000 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. Martin's address is Tupenny House, Tuckerstown, Bermuda.
(8) Represents shares held by investment advisory clients of Mills Value
Adviser, Inc.("MAI"), 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
(9) Includes currently exercisable options and warrants to purchase an
aggregate of 177,103 shares of Common Stock within 60 days of March 15,
1999.
6
<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 was subsequently 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. 57 Chairman of the Board and Director
Robert B. Harris, Ph.D. 47 President and Director
Thomas R. Reynolds 37 Senior Vice President, Secretary and Director
James H. Brennan 47 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, Dr. Harris and Mr. Reynolds.
JAMES H. BRENNAN - Controller
Age -- 47
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 1999 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 $100,000 in 1999 (collectively, the
"Named Executive Officers").
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Summary Compensation Table
<TABLE>
<CAPTION>
Securities
----------
Name and Principal Other Annual Underlying All Other
------------ ---------- ---------
Position Year Salary ($) Bonus ($) Compensation ($) Option (#) Compensation ($)
-------- ---- ---------- --------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Freer, Ph.D., 1999 150,000 -- -- -- 7,500 (1)
Chairman of the Board 1998 162,600 -- -- 78,157 44,073 (2)
1997 97,411 43,421 -- -- 23,024 (3)
Robert B. Harris, Ph.D., 1999 150,000 -- -- -- 7,500 (1)
President 1998 164,866 -- -- 78,157 44,073 (2)
1997 91,908 43,421 -- -- 23,024 (3)
Thomas R. Reynolds, 1999 115,750 -- -- -- 5,000 (1)
Senior Vice President and 1998 118,352 -- -- 35,529 22,632 (4)
Secretary 1997 70,154 19,737 -- -- 10,963 (3)
</TABLE>
______________
(1) Represents Director's Fees and travel expenses paid by the Company.
(2) Represents the sum of Director's Fees and travel expenses paid by the
Company and distributions to pay income taxes incurred by the recipient as
a result of the Company's status, prior to June 1997, as a corporation
taxed in accordance with Subchapter S of the Internal Revenue Code of 1986,
as amended.
(3) Represents distributions to pay income taxes incurred by the recipient as a
result of the Company's status, for the fiscal year ended December 31,
1996, as a corporation taxed in accordance with Subchapter S of the
Internal Revenue Code of 1986, as amended.
(4) Represents the sum of Director's Fees paid by the Company and distributions
to pay income taxes incurred by the recipient as a result of the Company's
status, prior to June 1997, as a corporation taxed in accordance with
Subchapter S of the Internal Revenue Code of 1986, as amended.
The following table sets forth certain information, with respect to the
Named Executive Officers, concerning the exercise of options in 1999 and with
respect to unexercised options at December 31, 1999.
Aggregated Option/SAR Exercises in Last Fiscal Year
And Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Unexercised Option Value of Unexercised In-the-Money
at Fiscal Year-End (#) Options at Fiscal Year End ($)(1)
Shares Acquired on ---------------------- ---------------------------------
------------------
Name 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.
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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, 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.
9
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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. Mr. Cypess and Mr. Allen were appointed by the Board of Directors
to fill 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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Two former directors of the Company, Charles A. Mills, III and Peter C.
Einselen, are employees of Anderson & Strudwick, Incorporated ("A&S"). 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.
The Company believes that the transaction noted above was 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 shareholders 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.
SHAREHOLDER PROPOSALS
If a shareholder wishes to have a proposal considered for inclusion in the
Company's proxy materials for the 2001 Annual Meeting of Shareholders, 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 shareholder, even if a proposal
is not to be included in the Company's proxy statement, the Company's Bylaws
provide that the shareholder 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 shareholder proposing such business and (iii) any material interest of the
shareholder in such business. The 2000 annual meeting of shareholders of the
Company will be held on May 3, 2001.
10
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The Company's Bylaws provide that a shareholder 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
shareholders, 90 days prior to such meeting, and (ii) with respect to an
election to be held at a special meeting of shareholders 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 shareholders. Any such shareholder's notice
shall include (a) the name and address of the shareholder and of each person to
be nominated, (b) a representation that the shareholder 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 shareholder and
each nominee and any other person (naming such person) pursuant to which the
nomination is to be made by the shareholder, (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.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be brought
before the Annual Meeting of Shareholders. If any other matters, however, are
properly brought before the Annual Meeting, the persons named in the enclosed
form of proxy will have discretionary authority to vote all proxies with respect
to such matters in accordance with their best judgment.
UPON THE WRITTEN REQUEST OF ANY HOLDER OF THE COMPANY'S COMMON STOCK
ENTITLED TO VOTE AT THE 2000 ANNUAL MEETING OF SHAREHOLDERS, THE COMPANY WILL
FURNISH, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB
FOR THE YEAR ENDED DECEMBER 31, 1999, INCLUDING FINANCIAL STATEMENTS, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS SHOULD BE DIRECTED TO THE
COMPANY AT 601 BIOTECH DRIVE, RICHMOND, VIRGINIA 23235, ATTENTION: JAMES H.
BRENNAN, CONTROLLER.
By Order of the Board of Directors,
THOMAS R. REYNOLDS
Secretary
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COMMONWEALTH BIOTECHNOLOGIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 2000
The undersigned hereby appoints Richard J. Freer, Ph.D. and Robert B. Harris,
Ph.D., or either of them, with power of substitution, as proxies to vote all
stock of Commonwealth Biotechnologies, Inc. (the "Company") owned by the
undersigned at the Annual Meeting of Shareholders to be held on April 27, 2000,
at 11:00 a.m. at 601 Biotech Drive, Richmond, Virginia, and any adjournment
thereof, on the following matters as indicated below and such other business as
may properly come before the meeting.
1. [_] FOR the election as director of all nominees listed: Richard J. Freer,
Ph.D., George F. Allen and Raymond Harold Cypess (except as marked to
the contrary below).
[_] WITHHOLD AUTHORITY to vote for all nominees listed: Richard J. Freer,
Ph.D., George F. Allen and Raymond Harold Cypess (except as marked to
the contrary below).
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR INDIVIDUAL NOMINEES, WRITE THE
APPLICABLE NAME(S) IN THE SPACE PROVIDED BELOW:
______________________________________________________________________________
2. Proposal to ratify the appointment of McGladrey & Pullen, LLP as the
independent public accountants of the Company for the fiscal year ended
December 31, 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
IN THEIR DISCRETION, THE PROXIES NAMED ABOVE MAY VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY MUST BE DATED AND SIGNED. THIS PROXY IS SOLICITED ON BEHALF OF THE
COMPANY'S BOARD OF DIRECTORS.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted (i) FOR the two nominees as Class III Directors of the Company and the
one nominee as a Class I Director of the Company; and (ii) FOR the proposal to
ratify the appointment of McGladrey & Pullen, LLP as the independent public
accountants of the Company for the fiscal year ended December 31, 2000.
Please sign exactly as your name appears on this Proxy Card. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership or limited liability entity,
please sign in full name such entity by authorized person.
Dated: ______________________, 2000
___________________________________
Signature of Shareholder
___________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
