SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Rule 14a-11(C) or Rule 14a-12
PHARMAKINETICS LABORATORIES, INC.
(Name of Registrant as Specified in Its Charter)
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>
[GRAPHIC LOGO HERE] PHARMAKINETICS LABORATORIES, INC.
302 WEST FAYETTE STREET
BALTIMORE, MARYLAND 21201
October 28, 1999
Dear Fellow Shareholder,
Enclosed you will find the proxy statement for the shareholders' meeting to be
held at our offices on Tuesday, November 30 at 11am. At this meeting we will
elect representatives to the Board of Directors, approve the appointment of
PricewaterhouseCoopers LLP as the Company's auditors and vote on a proposal to
increase the number of shares available in the Company's stock option plan.
Our financial performance in fiscal year 1999 was very disappointing, with
revenues declining 20% from the prior year. Certain portions of our business
grew strongly, but this growth was not sufficient to overcome significant
declines in other areas. In the second half of the fiscal year inflow of new
business improved. However, the Warning Letter which was received from the
United States Food and Drug Administration on July 30, regarding failure to
comply with certain protocol requirements, has recently had an adverse impact on
the inflow of new business. It is hoped that this impact will be short term.
Everyone on the staff is working very diligently to rectify this situation.
Meetings are being held with our major clients to discuss the progress the
Company has made to resolve the issues raised in the Warning Letter and to seek
additional new business. At the same time, every effort is being made to ensure
that we are in compliance with all FDA requirements and that the services we are
providing to our clients are of the highest quality. During this slow period we
are working diligently to control costs, manage cash flow and ensure that we are
operating as efficiently and effectively as possible.
During the year, significant progress was made towards the achievement of
certain long-term strategic goals. As I told you last year, we made significant
investments in two major software systems - one for the bioanalytical laboratory
and one for our Clinical Trials Management business. These systems are up and
running and are improving our capability to serve our clients with both improved
and expanded services. Further, the four LC/MS/MS instruments, which we now have
in place in the laboratory, are meeting our expectations regarding their
capabilities and the return they are providing on our investment. They provide
us with the capability to develop new assays and to complete projects rapidly. A
significant proportion of the projects we completed in fiscal year 1999 utilized
these instruments.
As I noted above this year will be full of challenges. However, we have a team
in place whose objective is to make PharmaKinetics into a leading CRO, which
provides high quality services to clients and value to shareholders. The support
of shareholders, directors and employees as we strive to meet these objectives
is appreciated.
Sincerely,
/s/James K. Leslie
- -----------------------
James K. Leslie
President and
Chief Executive Officer
<PAGE>
[GRAPHIC]
PHARMAKINETICS LABORATORIES, INC.
302 WEST FAYETTE STREET
BALTIMORE, MARYLAND 21201
------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, NOVEMBER 30, 1999, AT 11:00 A.M.
------------------------------------------------------------------------------
AT
PHARMAKINETICS LABORATORIES, INC.
302 WEST FAYETTE STREET
BALTIMORE, MARYLAND 21201
The Annual Meeting of Stockholders ("the Meeting") of PharmaKinetics
Laboratories, Inc., a Maryland corporation, will be held on NOVEMBER 30, 1999,
at 11:00 a.m., local prevailing time, at PharmaKinetics Laboratories, Inc., 302
West Fayette Street, Baltimore, Maryland 21201, to consider and vote upon:
1. The election of five directors to serve until the next Annual Meeting of
Stockholders, and until their successors are duly elected and qualified.
2. A proposal to amend the Company's 1996 Incentive Stock Option Plan to
increase the number of shares of Common Stock authorized for issuance
under the Plan.
3. A proposal to ratify the selection of PricewaterhouseCoopers LLP, as the
Company's independent auditors for the fiscal year ending June 30, 2000.
4. Any other matters that may properly come before the Meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on October 22,
1999, as the date for determining stockholders of record entitled to notice of
and to vote at the Meeting.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO BE PRESENT,
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT AS SOON AS POSSIBLE IN THE
ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. THE
AFFIRMATIVE VOTE OF AT LEAST A MAJORITY OF ALL THE SHARES VOTING AT THE MEETING
IN PERSON OR BY PROXY IS REQUIRED FOR THE APPROVAL OF PROPOSALS ONE, TWO AND
THREE. YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. IF YOU ATTEND
THE MEETING AND WISH TO VOTE IN PERSON, YOUR PROXY CAN BE REVOKED AT ANY TIME
BEFORE IT IS VOTED.
By Order of the Board of Directors,
/s/Taryn L. Kunkel
-----------------------------------
Taryn L. Kunkel
Secretary
October 28, 1999
<PAGE>
[GRAPHIC]
PHARMAKINETICS LABORATORIES, INC.
302 West Fayette Street
Baltimore, Maryland 21201
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
TUESDAY, NOVEMBER 30, 1999 AT 11:00 A.M.
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of
PharmaKinetics Laboratories, Inc. (the "Company") for use at the Annual Meeting
of Stockholders (the "Meeting") to be held on November 30, 1999, and is
revocable at any time prior to its exercise. In addition to solicitation by
mail, proxies may be solicited by officers, directors, and regular employees of
the Company personally or by telephone or facsimile transmission. The cost of
soliciting proxies will be borne by the Company and may include reasonable
out-of-pocket expenses in forwarding proxy materials to beneficial owners. This
proxy material is being sent to stockholders on or about October 28, 1999.
OUTSTANDING SHARES AND VOTING RIGHTS
Stockholders of record at the close of business on October 22, 1999, are
entitled to notice of and to vote at the Meeting. As of the close of business on
that date, there were outstanding and entitled to vote 2,496,129 shares of
Common Stock, $.005 par value ("Common Stock"), each of which is entitled to one
vote and 833,300 shares of Class A Convertible Preferred Stock ("Preferred
Stock"), each of which is entitled to two votes.
The presence, in person or by proxy, of stockholders entitled to cast a
majority of all votes entitled to be cast at the meeting shall constitute a
quorum. The affirmative vote of at least a majority of all votes cast at the
meeting is required for the election of directors and for the approval of
Proposals Two and Three described herein. The members of the Board of Directors
intend to vote their shares "FOR" each director nominee and "FOR" Proposals Two
and Three described herein. An abstention or broker non-vote is not included in
calculating votes cast for the election of directors or the approval of
Proposals Two and Three, but is included for purposes of determining a quorum.
The Company designates an individual to serve as the Inspector of Elections for
purposes of tallying shares voted. The Inspector of Elections will be present at
the Meeting.
ITEM ONE
ELECTION OF DIRECTORS
The Board of Directors by resolution has fixed the number of directors at
five, and five directors will be elected at the Meeting, each director to hold
office until the next Annual Meeting of Stockholders and until the election and
qualification of a successor. Three of these directors are elected by the
holders of Common Stock and Preferred Stock, voting together. Two of these
directors are elected by the holders of Preferred Stock, voting as a separate
class. The persons named in the enclosed proxy will vote all properly executed
proxies FOR the election of the nominees named below unless authority to vote is
withheld. The Board of Directors has no reason to believe that any nominee
herein named will be unable to serve as a director.
The following table sets forth certain information concerning the nominees
for election by holders of Common Stock and Preferred Stock, voting together.
All nominees are currently directors of the Company.
1
<PAGE>
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
<S> <C>
Name, Age, and Year
in which first
Elected a Director Business Experience
- ------------------ -------------------
Thomas F. Kearns, Jr. Retired from Bear, Stearns & Co., Inc. in 1987; Director of Biomet,
63 (1995) Inc., and Fibrogen, Inc.; Trustee of the University of North Carolina
Foundation and Endowment Fund.
James K. Leslie President and Chief Executive Officer of PharmaKinetics
55 (1995) Laboratories, Inc. since July 1995; Executive Vice President and
Chief Operating Officer of PharmaKinetics from
June 1995 to July 1995; President and Chief
Executive Officer of BioFin, Inc., a start up
biotechnology company from July 1993 to June
1995; President and Chief Executive Officer of
SICPA Industries of America from 1991 to 1992;
and President and Chief Operating Officer of
Ecogen, Inc. from 1988 to 1990.
Roger C. Thies Director of Hyman, Phelps and McNamara, P.C., representing a
55 (1991) broad range of clients on legal issues concerning food, drug,
medical devices, and cosmetic law and
legislation since 1988; Vice President and
General Counsel of G.D. Searle managing all of
the company's legal matters from 1986 to 1988.
The Board of Directors recommends a vote "FOR" the election of each of
these nominees.
In addition to the foregoing nominees, the following persons have been
nominated for election as directors by the holders of Preferred Stock. All
nominees are currently directors of the Company.
<CAPTION>
<S> <C>
Name, Age, and Year
in which first
Elected a Director Business Experience
- ------------------ -------------------
Leslie B. Daniels Principal of CAI Advisors & Co., an investment company with offices
52 (1998) in New York, Montreal, London and Paris, since 1988; Director of
IVAX Corporation from December 1994 to December 1995;
Chairman of the Board of Directors of Zenith Laboratories, Inc.,
a major generic drug manufacturer from April 1990 to December
1994, and a Director from December 1989 to December 1994.
Director of MIM, Inc.
Kamal K. Midha, C.M., Ph.D., D.Sc. Director of Drug Metabolism, Drug Disposition Group, University
58 (1998) of Saskatchewan, Canada since 1979, and Chief Scientific Officer
of PharmaQuest Limited, Bermuda, a newly established
Pharmaceutical Research Corporation. He serves on the Editorial
Boards of Pharmaceutical Research, Journal of Pharmaceutical
Sciences, and Xenobiotica. He is Vice President of the International
Pharmaceutical Federation and he is an Adjunct Professor of
Pharmacy and Associate Member of Psychiatry, University of
Saskatchewan, Canada and Co-Chief of the Psychopharmacology
Unit, Clinical Research Center for Study of Schizophrenia &
Rehabilitation, University of California, Los Angeles.
</TABLE>
2
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee and a Compensation Committee,
each consisting of directors who are not employees of the Company. The Board of
Directors does not have a Nominating Committee.
The functions of the Audit Committee include: review of the scope of audits
and the results of such audits; review of accounting policies and adequacy of
internal controls; review of the fees paid to, and the scope of services
provided by, the independent auditors; and recommending selection of the
independent auditors. The members of this Committee are Messrs. Daniels, Kearns,
and Thies.
The Compensation Committee considers and makes recommendations to the Board
of Directors with respect to matters relating to executive compensation, and
considers and recommends grants under the Company's stock option plans. The
members of this Committee are Messrs. Daniels, Kearns, Midha, and Thies.
During the fiscal year ended June 30, 1999, the Board of Directors met five
times, the Audit Committee met one time, and the Compensation Committee met four
times.
In November 1996, the Board of Directors elected to discontinue cash
compensation for its non-employee directors and to adopt a Non-Employee
Directors Stock Option Plan (the "1996 Plan") effective November 25, 1996. The
1996 Plan was amended by resolution of the Board of Directors on January 20,
1998, in order to increase the number of shares of Common Stock subject to
options available for grant under the 1996 Plan. The 1996 Plan, as amended,
shall be administered by the Board or the Compensation Committee established by
the Board and provides that the number of shares of Common Stock that may be
issued pursuant to options granted under the 1996 Plan shall not exceed in the
aggregate 200,000 shares. As of June 30, 1999, there were 160,500 options
granted and 148,500 options outstanding under the 1996 Plan. The 1996 Plan was
ratified by the Company's stockholders at the Company's Special Meeting in lieu
of Annual Meeting of Stockholders held April 6, 1998. Each non-employee director
shall be granted options to purchase 24,000 shares of the Company's Common
Stock, at the fair market value of the stock on the date of such director's
election or appointment to the Board. Directors serving as of November 25, 1996
were granted their options as of such date. The options shall vest in four equal
installments over four years. The first installment will be pro-rated for
directors appointed to the Board after the date of an annual meeting. The first
installment shall vest on the effective date of the grant. Thereafter, on the
date of each of the next three annual meetings of stockholders at which
elections to the Board are conducted, an installment of 6,000 shares shall vest
for each director who is reelected to the Board. In addition, directors receive
reimbursement of expenses for attendance at meetings.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of August 31, 1999, regarding
stock ownership of management and owners of 5% or more of the Company's Common
Stock:
<TABLE>
<CAPTION>
Beneficial Ownership of
Beneficial Ownership of Class A Convertible
Common Stock Preferred Stock
------------ ---------------
Number of Percent of Number of Percent of
Shares Owned Shares Owned Shares Owned Shares Owned
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Allen & Company, Incorporated 170,534 6.8% --- ---
Allen Holding Inc.
711 Fifth Avenue
New York, NY 10022
Aster S.A. 583,320 (2)(3)(4) 18.9% 166,660 20.0%
3 et 5 rue Eugene Millon
75015 Paris France
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership of
Beneficial Ownership of Class A Convertible
Common Stock Preferred Stock
------------ ---------------
Number of Percent of Number of Percent of
Shares Owned Shares Owned Shares Owned Shares Owned
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Leslie B. Daniels 378,603 (1)(2)(3) 13.2% 103,885 12.5%
CAI Advisors & Co. (4)
767 Fifth Avenue, 5th Floor
New York, NY 10153
Peter M. Gottsegen 363,603 (2)(3)(4) 12.7% 103,885 12.5%
CAI Advisors & Co.
767 Fifth Avenue, 5th Floor
New York, NY 10153
GES Investments, S.A. 58,332 (2)(3)(4) 2.3% 16,666 2.0%
Avenue Delleur, 18
Brussels, Belgium 1170
Initiative & Finance Investissement 233,328 (2)(3) 8.5% 66,664 8.0%
16 rue Chauveau Lagarde
Paris, France 75008
Robert A. Mackie, Jr. 169,676 (7) 6.8% --- ---
18 North Astor Street
Irvington, NY 10533
R.A. Mackie and Co., L.P. 19,869 (7) (6) --- ---
18 North Astor Street
Irvington, NY 10533
Michael F. Price 583,320 (2)(3) 18.9% 166,660 20.0%
1180 Larger Cross Road
P.O. Box 434
Far Hills, New Jersey 07931
Peter G. Restler 87,498 (2)(3)(4) 3.4% 24,999 3.0%
CAI Advisors & Co.
767 Fifth Avenue, 5th Floor
New York, NY 10153
Richard J. Schmeelk 363,603 (2)(3)(4) 12.7% 103,885 12.5%
CAI Advisors & Co.
767 Fifth Avenue, 5th Floor
New York, NY 10153
David von Kauffmann 70,332 (1)(2)(3) 2.7% 16,666 2.0%
European Equity Partners (4)
1 rue Vernier
75017 Paris, France
Manfred Yu 17,498 (2)(3)(4) (6) 4,999 0.6%
CAI Advisors & Co.
767 Fifth Avenue, 5th Floor
New York, NY 10153
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership of
Beneficial Ownership of Class A Convertible
Common Stock Preferred Stock
------------ ---------------
Number of Percent of Number of Percent of
Shares Owned Shares Owned Shares Owned Shares Owned
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Thomas F. Kearns, Jr. 64,702 (1)(2)(3) 2.5% 11,110 1.3%
Taryn L. Kunkel 22,750 (1) (6) --- ---
Elizabeth A. Lane, Ph.D. 18,750 (1) (6) --- ---
James K. Leslie 106,500 (1) 4.1% --- ---
Kamal K. Midha, C.M, Ph.D., D.Sc. 24,400 (1)(5) 1.0% --- ---
Roger C. Thies 20,920 (1) (6) --- ---
James M. Wilkinson II, Ph.D. 14,250 (1) (6) --- ---
Grover C. Wrenn 16,500 (1) (6) --- ---
All directors and officers
as a group (10 persons) 667,375 (1)(2)(3) 21.5% 114,995 13.8%
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes shares of stock which directors and officers have exercisable
rights to acquire as of or within 60 days of August 31, 1999, through the
exercise of options, in the amount of 15,000 shares for Mr. Daniels; 12,000
shares for Mr. Kauffmann; 6,000 shares for Mr. Kearns; 22,750 shares for
Mrs. Kunkel; 18,750 shares for Dr. Lane; 74,500 shares for Mr. Leslie;
12,000 shares for Dr. Midha; 20,920 shares for Mr. Thies; 14,250 shares for
Dr. Wilkinson; 16,500 shares for Mr. Wrenn; and 200,670 shares for all
directors and officers as a group.
(2) Includes shares for which investors have rights to acquire upon conversion
of Class A Convertible Preferred Stock, in the amount of 333,320 shares for
Aster S.A.; 207,770 shares for Mr. Daniels; 207,770 for Mr. Gottsegen;
33,332 shares for GES Investments, S.A.; 133,328 shares for Initiative and
Finance Investissement; 333,320 for Mr. Price; 49,998 for Mr. Restler;
207,770 for Mr. Schmeelk; 33,332 shares for Mr. Kauffmann; 9,998 for Mr.
Yu; 22,220 for Mr. Kearns; and 229,990 shares for all directors and
officers as a group.
(3) Includes shares for which investors have rights to acquire upon exercise of
warrants at $6.00 per share, in the amount of 250,000 shares for Aster
S.A.; 155,833 shares for Mr. Daniels; 155,833 shares for Mr. Gottsegen;
25,000 shares for GES Investments, S.A.; 100,000 shares for Initiative and
Finance Investissement; 250,000 shares for Mr. Price; 37,500 for Mr.
Restler; 155,833 shares for Mr. Schmeelk; 25,000 shares for Mr. Kauffmann;
7,500 for Mr. Yu; 16,667 shares for Mr. Kearns; and 172,500 shares for all
directors and officers as a group.
(4) Each of these individuals has reported membership in a "group" based upon
Amendment No. 2 to Schedule 13D filed with the Securities and Exchange
Commission on January 12, 1998.
(5) Includes 12,400 shares held by Dr. Midha's son.
(6) Less than 1%
(7) These are members of a "group" based upon Schedule 13D filed with the
Securities and Exchange Commission on February 2, 1998.
On December 23, 1997, the Company issued 833,300 shares of a newly created
Class A Convertible Preferred Stock and warrants to purchase 1,250,000 shares of
the Company's Common Stock, and entered into a Registration Rights Agreement and
Technology Sharing Agreement in connection therewith, to investors including
certain affiliates of Aster.Cephac S.A. and CAI Advisors & Co. (collectively,
the "Purchasers"). The securities were issued pursuant to a Preferred Share and
Warrant Purchase Agreement dated as of December 4, 1997. Purchasers beneficially
own approximately 41% of the Company's voting securities without giving effect
to the possible exercise of warrants, or approximately 54% of the Company's
voting securities if all the warrants are exercised.
The Agreement provided for the sale to the Purchasers of a total of 833,300
shares of Class A Convertible Preferred Stock for $4,937,500 or $5.925 per
share. The Preferred Stock is convertible at any time into shares of Common
Stock at a conversion ratio of one share of Preferred Stock for two shares of
Common Stock. The conversion ratio is subject to adjustment under certain
circumstances to prevent dilution. In the event of liquidation of the Company,
the holders of the shares of Preferred Stock who do not convert their shares
into Common Stock are entitled to receive $5.925 per share, prior to any
distributions being made to the holders of any other class or series of the
Company's capital stock.
In addition, the Agreement provided for the sale to the Purchasers, for
$62,500, of warrants to purchase 1,250,000 shares of Common Stock. The warrants
are fully exercisable at $6.00 per share and expire on December 23, 2000.
5
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
<S> <C> <C> <C> <C>
Position with the Company Employed Officer
Name Age and Principal Occupation Since Since
---- --- ------------------------ ------ -----
Melany S. Adamcio 45 Vice President Business Development since January 1997 1998
1998; Executive Director of Clinical Trials Management (1)
from June 1997 to January 1998; Director, Clinical Trials
Management of PPD Pharmaco International, Inc. from
November 1990 to June 1997. Education- Golden Gate
University, San Francisco, California; Marywood College,
Scranton, Pennsylvania.
Taryn L. Kunkel 38 Vice President, Chief Financial Officer and Treasurer 1990 1991
since February 1991; Controller from November 1990
to February 1991; and Director of Financial Analysis
from July 1990 to November 1990. Education - M.A.S.,
Management, The Johns Hopkins University, Baltimore,
Maryland 1989; B.S., Accounting (Magna Cum Laude),
Loyola College, Baltimore, Maryland 1983. Certified
Public Accountant.
Elizabeth A. Lane, Ph.D. 54 Vice President Biopharmaceutics and Regulatory Affairs 1988 1992
since May 1992; Director of Pharmacokinetics and (2)
Regulatory Affairs from September 1988 to May 1992.
Education - Ph.D., Pharmaceutical Sciences, University
of Washington, Seattle, Washington, 1981; B.S.
Pharmacy, University of Washington, Seattle,
Washington, 1973; B.Pharm., University of Sydney,
Australia, 1965.
James K. Leslie 55 President and Chief Executive Officer since July 1995; 1995 1995
Executive Vice President and Chief Operating Officer
from June 1995 to July 1995; President and Chief
Executive Officer of BioFin, Inc. a start up biotechnology
company from July 1993 to June 1995; President and Chief
Executive Officer of SICPA Industries of America from 1991
to 1992; and President and Chief Operating Officer of Ecogen,
Inc. from 1988 - 1990. Education - M.B.A. (with distinction),
Harvard Business School, Boston, Massachusetts, 1969;
B.Sc., Chemical Engineering (First Class Honors),
University of Edinburgh, Edinburgh, Scotland, 1967.
Mark D. Ruby 46 Vice President Business Development since April 1999; 1999 1999
Vice President, Marketing and Sales for Meridian Medical
Technologies from 1996 to 1999; Vice President, Marketing
and Sales for Beiersdorf-Jobst from 1992 to 1996; Sales
management and Director, Business Development positions
for MediSense from 1988 to 1991; Sales and marketing
management positions for Baxter Healthcare from 1979
to 1988. Education - M.A., Economics, Bowling Green State
University, 1981; B.A., Economics, Bluffton College, 1975.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Position with the Company Employed Officer
Name Age and Principal Occupation Since Since
---- --- ------------------------ ----- -----
James M. Wilkinson II, Ph.D 47 Vice President Analytical Laboratory Services since 1996 1996
July 1996; Associate Director, Pharmaco International,
Inc., Analytical Laboratory Division from December 1992
to June 1995. Education - Postdoctoral Associate,
University of Washington, Seattle, Washington, 1979;
Ph.D., Organic Chemistry, Duke University, Durham,
North Carolina, 1978; B.S., Chemistry, Virginia Military
Institute, Lexington, Virginia, 1974.
- ---------------------------------------------------------------------------------------------------------------------
(1) Ms. Adamcio joined the Company on June 23, 1997 and resigned effective March
19, 1999.
(2) Dr. Lane resigned from the Company effective August 13, 1999. She has been
retained by the Company as a consultant.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company's review of copies of reporting forms received by it,
the Company believes that during the fiscal year ended June 30, 1999, all
applicable filing requirements were complied with, except a Form 3 was filed
late by Mr. Ruby and a Form 5 was filed late by Mr. Patrick Ayd, the Company's
Director of Clinical Operations.
EXECUTIVE COMPENSATION
The following table sets forth, for the Company's last three fiscal years,
the cash compensation paid or accrued by the Company, as well as certain other
compensation paid or accrued for those years, to its Chief Executive Officer and
other most highly compensated executive officers whose total annual salary and
bonus exceeded $100,000 for the fiscal year ended June 30, 1999.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term All Other
Compensation
Securities All Other
Name and Fiscal Salary Bonus Other Annual Underlying Compensation
Principal Position Year ($) ($) Comp. ($)(1) Options(#) ($)(2)
- ------------------------- ------------------------------------------------------------------------------------------
James K. Leslie 1999 156,000 - 6,000 - -
President, CEO, 1998 156,000 7,500 6,000 46,000 -
and Director 1997 150,000 - 6,000 20,000 -
Melany S. Adamcio (3) 1999 69,400 - 3,500 - -
Vice President 1998 96,500 2,250 5,000 24,000 -
Business Development 1997 - - - 3,000 -
Elizabeth A. Lane, Ph.D. 1999 104,000 - - - -
Vice President Biopharmaceutics 1998 104,000 1,500 - 15,000 -
and Regulatory Affairs 1997 100,000 - - - -
Mark D. Ruby (4) 1999 27,000 - 1,250 15,000 -
Vice President 1998 - - - - -
Business Development 1997 - - - - -
James M. Wilkinson II, Ph.D. 1999 110,240 - 6,000 - -
Vice President 1998 110,240 7,000 6,000 15,000 -
Analytical Laboratory Services 1997 106,000 - 6,000 14,000 7,000
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Other Annual Compensation includes personal benefits provided by the
Company.
</TABLE>
7
<PAGE>
(2) Other compensation includes amounts paid for relocation and related
expenses.
(3) Ms. Adamcio joined the Company on June 23, 1997 and resigned her position
effective March 19, 1999. Her annual salary for fiscal 1999 was $98,000,
plus other annual compensation of $5,000.
(4) Mr. Ruby joined the Company on April 19, 1999. Mr. Ruby's annual salary is
$130,000, plus other annual compensation of $6,000.
SEVERANCE AGREEMENTS
The Company has severance agreements with Mr. Leslie and Mrs. Kunkel. The
Agreements, which are identical, provide for continuance of their respective
annual base salaries for a period of twelve (12) months from the date of
termination of employment if such termination occurs at any time during a two
(2) year period after a "Significant Transaction" or a "Change of Board
Composition" and is for reasons other than "Just Cause", such terms being
defined in the Agreements. Upon termination of employment, the Agreements also
provide for accelerated vesting of all stock options and the option to extend
the exercise period of such options. The Agreements were effective April 22,
1997. As of June 30, 1999 benefits payable would be approximately $163,800 for
Mr. Leslie and approximately $95,000 for Mrs. Kunkel.
STOCK OPTION GRANTS
The following table sets forth information concerning the grant of stock
options under the Company's 1996 Incentive Stock Option Plan during fiscal 1999
to the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
% of Total
Options
Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#)(1) Fiscal Year ($/share) Date
- ----------------- -------------------- ----------------- ----------------------------------
<S> <C> <C> <C> <C>
Mark D. Ruby 15,000 59.5% $0.9375 04/27/09
- ----------------- ------------------- ------------------ ----------------------------------
(1) All options were granted under the 1996 Incentive Stock Option Plan. All
options vest over a four year period from the date of grant and all options
expire ten years from the date of grant, if not exercised earlier. Material
terms of the options are set forth under the caption "Incentive Stock
Option Plans."
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth information related to the number and value
of options held by four of the Company's executive officers. No options were
exercised by these individuals during the fiscal year ended June 30, 1999.
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<S> <C> <C> <C> <C> <C> <C>
Value of Unexercised
Shares ($) Number of Unexercised In-the-Money
Acquired Value Options at FY-End (#) Options at FY-End ($) (1)
Name in Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ -------- ----------- ------------- ----------- -------------
James K. Leslie --- --- 60,500 49,500 --- ---
Elizabeth A. Lane, Ph.D. --- --- 18,750 11,250 --- ---
Mark D. Ruby --- --- --- 15,000 --- $6,563
James M. Wilkinson II, Ph.D. --- --- 10,750 18,250 --- ---
- -----------------------------------------------------------------------------------------------------------------
(1) Not all of the options granted and outstanding are in-the-money at June
30, 1999. At June 30, 1999, the fair market value of the shares
underlying the options was $1.375, as determined by the average of the
closing bid and ask prices on that date.
</TABLE>
8
<PAGE>
INCENTIVE STOCK OPTION PLANS
The Company's Incentive Stock Option Plan (the "ISO Plan") was adopted by
the Board of Directors on September 9, 1985, and approved by stockholders on
November 14, 1985. The ISO Plan permits the Company to grant options to purchase
up to an aggregate of 340,000 shares of its Common Stock to key employees of the
Company. As of June 30, 1999, an aggregate of 93,640 shares of Common Stock were
subject to options granted under the ISO Plan. By its terms, the ISO Plan
expired in September 1995.
The ISO Plan had a ten-year term, subject to earlier termination by the
Board of Directors, and was administered by the Compensation Committee of the
Board of Directors. Under the ISO Plan, options were granted to selected key
employees of the Company. Approximately 100 employees were eligible for option
grants. Subject to the terms and conditions of the ISO Plan, the Committee
selected optionees and determined the number of shares to be granted, the option
prices, the term of each option, and the terms and conditions of stock option
agreements. Payment of the option price is made, as specified in the option
agreement, either in cash at the time of exercise or, at the discretion of the
Board of Directors or Committee, (i) by delivery of shares of the Company's
Common Stock, valued as of the option exercise date, (ii) according to a
deferred payment or other arrangement or (iii) in any other form of payment
acceptable to the Board of Directors or Committee in its discretion, either at
the time of grant or exercise of the option.
Options granted under the ISO Plan are intended to qualify as "incentive
stock options" within the meaning of Section 422A of the Internal Revenue Code.
The exercise price of options granted under the ISO Plan may not be less than
100% of the fair market value of the Common Stock at the time of the grant, or
110% of the fair market value of the Common Stock at the time of the grant in
the case of a key employee who holds more than 10% of the combined voting power
of the Common Stock as of the date of the grant. The term of any option granted
under the ISO Plan may not exceed ten years, or five years in the case of a key
employee who holds more than 10% of the combined voting power of the Common
Stock as of the date of grant.
Options granted under the ISO Plan are non-assignable and may be
exercised, except in the case of death, only by the option holder. Options
terminate ninety days after termination of employment, except by reason of death
or total and permanent disability.
The Board of Directors may alter, suspend or amend the ISO Plan at any
time. However, no such action by the Board of Directors shall affect any option
theretofore granted under the ISO Plan without the consent of the option holder
so affected. In addition, no such action by the Board of Directors may, without
stockholder approval (except pursuant to the anti-dilution provisions of the ISO
Plan), increase the number of shares reserved for options under the ISO Plan,
materially modify the requirements as to eligibility for participation in the
ISO Plan, or materially increase the benefits accruing to participants under the
ISO Plan.
An optionee recognizes no taxable income at the time a stock option is
granted or exercised under the ISO Plan. However, the excess of the fair market
value of the shares received on the date of exercise (or six months after the
date of exercise, in the case of an optionee subject to Section 16(b) of the
Securities Exchange Act of 1934) over the exercise price is taken into account
in determining whether he is subject to the alternative minimum tax. Assuming
compliance with applicable holding period requirements, an optionee realizes
long-term capital gain or loss when he disposes of his shares, measured by the
difference between the exercise price and the amount received for the shares at
the time of disposition. If the optionee disposes of shares acquired by the
exercise of the option before the expiration of at least one year from the date
of exercise and two years from the date of grant of the option, any amount
realized from such disqualifying disposition is generally taxable as ordinary
income in the year of disposition to the extent that the lesser of (i) fair
market value on the date the option was exercised or (ii) the amount realized
upon such disposition, exceeds the exercise price. Any amount realized in excess
of fair market value on the date of exercise will be treated as long or
short-term capital gain, depending upon the holding period of the shares. If the
amount realized upon such disposition is less than the exercise price, the loss
is treated as long or short-term capital loss, depending upon the holding period
of the shares.
No deduction is allowed to the Company for federal income tax purposes at
the time of grant or exercise of an option under the ISO Plan. In the event of a
disqualifying disposition by an optionee, the Company is entitled to a deduction
for the amount taxable to the optionee as ordinary income.
9
<PAGE>
The Company also has an 1996 Incentive Stock Option Plan effective as of
January 31, 1996 (the "1996 ISO Plan") which was adopted by the Board of
Directors on October 10, 1996 and approved by the stockholders on November 25,
1996. The provisions of the 1996 ISO Plan and the tax consequences thereunder
are virtually identical to those of the ISO Plan. The 1996 ISO Plan permits the
Company to grant options to purchase up to an aggregate of 300,000 shares of its
Common Stock to key employees of the Company. As of June 30, 1999, 197,800
shares of the Company's Common Stock were subject to options granted under the
1996 ISO Plan.
ITEM TWO
PROPOSAL TO APPROVE AMENDMENT OF
1996 INCENTIVE STOCK OPTION PLAN
The Company's 1996 Incentive Stock Option Plan is described in the Proxy
Statement under the heading "Executive Compensation - Incentive Stock Option
Plans." The 1996 Incentive Stock Option Plan was approved by stockholders on
November 25, 1996 and provides for the issuance of 300,000 shares of common
stock. As of August 31, 1999, 3,980 shares have been exercised and options for
197,800 shares were outstanding, leaving 98,220 available for future grants.
Upon the recommendation of the Compensation Committee, the Board of Directors
concluded that it was in the Company's best interests that the 1996 ISO Plan be
amended to increase the number of shares available for grant. A copy of the 1996
ISO Plan is available upon written request to the Company's Secretary.
On October 15, 1999, the Board of Directors amended the 1996 ISO Plan to
increase the number of shares authorized for issuance thereunder by an
additional 150,000 shares subject to approval of the Company's stockholders at
the Annual Meeting of Stockholders.
The Board of Directors contemplates that through the increase of the
number of shares authorized for issuance under the 1996 ISO Plan the Company
will better be able to compete for prospective personnel and retain the services
of its existing personnel. If this amendment is approved, and if all options
were granted, vested and exercised within the terms allowed by the 1996 ISO
Plan, the number of outstanding shares would increase by 446,020.
On September 24, 1999, the last reported sale price of the Company's
Common Stock (based upon the average of the closing bid and ask prices as
reported on the OTC Bulletin Board on that date) was $1.516 per share.
The Board of Directors recommends a vote "FOR" the proposal to amend the
Company's 1996 Incentive Stock Option Plan.
ITEM THREE
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors desires to obtain from the stockholders their
approval of the Board of Directors' actions in appointing PricewaterhouseCoopers
LLP, Certified Public Accountants, as independent auditors of the Company for
the fiscal year ending June 30, 2000.
PricewaterhouseCoopers has served the Company in such capacity since
January 1992. The Company has been informed that neither PricewaterhouseCoopers
nor any of its partners has any direct financial interest or any material
indirect financial interest in the Company and during the past three years has
had no connection therewith in the capacity of promoter, underwriter, voting
trustee, director, officer or employee.
A representative of PricewaterhouseCoopers is expected to be present at the
Meeting with the opportunity to make a statement, if such representative so
desires, and to be available to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" the ratification of the
appointment of PricewaterhouseCoopers LLP.
10
<PAGE>
DEADLINE FOR SUBMITTING
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy material for
the Annual Meeting of Stockholders to be held in 2000 must be received in
writing by the Company on or before July 1, 2000. The inclusion of any proposal
will be subject to applicable rules of the Securities and Exchange Commission.
REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1999, as filed with the Securities and Exchange Commission is enclosed herewith.
Additional copies are available to shareholders without charge on written
request directed to Taryn L. Kunkel, Secretary, PharmaKinetics Laboratories,
Inc., 302 West Fayette Street, Baltimore, Maryland 21201.
OTHER MATTERS
Management knows of no other business to be presented for action at the
Meeting, but if any other business should properly come before the Meeting, it
is intended that the proxies will be voted in accordance with the best judgment
of the persons acting thereunder in their discretion.
By Order of the Board of Directors,
/s/Taryn L. Kunkel
--------------------------------
Taryn L. Kunkel
Secretary
October 28, 1999
11
<PAGE>
PROXY
PHARMAKINETICS LABORATORIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 30, 1999
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James K. Leslie and Taryn L. Kunkel, or
either of them as attorney or attorneys-in-fact of the undersigned, with full
power of substitution, in them and in each of them, to vote in the name, place
and stead of the undersigned, in the manner indicated herein, and with
discretionary authority as to any other matters that may properly come before
the meeting, all shares of common stock of PharmaKinetics Laboratories, Inc.
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
of PharmaKinetics Laboratories, Inc. to be held on November 30, 1999 at 11:00
a.m., local time, at the offices of the Company located at 302 West Fayette
Street, Baltimore, Maryland 21201, or at any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is indicated, this proxy
will be voted FOR Proposals Two and Three, and FOR all of the nominees for
director named on the reverse. The Board of Directors recommends a vote FOR all
of the nominees for director and FOR Proposals Two and Three set forth on the
reverse.
(Continued and to be signed on reverse side)
- ------------------------------------------------------------------------------
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
PHARMAKINETICS LABORATORIES, INC.
November 30, 1999
__X__ Please mark your votes as in this example.
ITEM 1
To elect directors (for all of the following nominees except as marked to the
contrary):
Thomas F. Kearns, Jr., James K. Leslie,
And Roger C. Thies
____ FOR all nominees, except as indicated
____ Withhold authority for all nominees
To withhold authority for any individual nominee(s), write the nominee(s)
name(s) below:
- ------------------------------------------------------------------------------
<PAGE>
ITEM 2
To amend the Company's 1996 Incentive Stock Option Plan to increase the number
of shares of Common Stock authorized for issuance under the Plan.
____ FOR ____ AGAINST ____ ABSTAIN
ITEM 3
To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent auditors for the fiscal year ending June 30, 2000.
____ FOR ____ AGAINST ____ ABSTAIN
ITEM 4
In their discretion, to act upon any other matter that may properly come before
the meeting or any adjournment thereof.
Receipt of notice of the meeting and proxy statement is hereby acknowledged, and
the terms of the notice and statement are hereby incorporated by reference into
this proxy. The undersigned hereby revokes all proxies heretofore given for the
meeting described in this proxy.
SIGNATURE(S): ___________________________ DATED: _________________ 1999
Note: Proxy must be signed exactly as the name appears herein. Please mark,
sign, date and return this proxy promptly using the enclosed envelope. If
signing for a trust, estate, corporation, or other entity, please state your
title or the capacity in which you are signing. If shares are held jointly, each
joint owner should personally sign.
