<PAGE>
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>
[LOGO] PHARMAKINETICS LABORATORIES, INC.
302 WEST FAYETTE STREET
BALTIMORE, MARYLAND 21201
October 26, 2000
Dear Shareholder,
Enclosed is the proxy statement for the shareholders' meeting to be held at our
offices on Tuesday, November 28, 2000 at 11 a.m. At this meeting we will elect
representatives to the Board of Directors and ratify the selection of
PricewaterhouseCoopers LLP as the Company's auditors.
Fiscal year 2000 was a difficult and disappointing year. The Warning Letter
received from the United States Food and Drug Administration on July 30, 1999
had an adverse impact on the financial performance of the Company that was
particularly detrimental to second and third quarter revenue. The appointment of
a new senior management team in January 2000 led efforts focusing on improved
regulatory compliance and correcting those issues raised by the FDA in the
Warning Letter. These efforts appear to have been successful and we have
continued to meet with new and existing clients to instill confidence in
PharmaKinetics. As a result, revenues increased 144% in the fourth quarter
relative to the third quarter. Our backlog also stood at $7.1 million as of June
30, 2000 as compared to $5.3 million at June 30, 1999.
LC/MS/MS continues to be an important technology for our laboratory. Demand for
this service has been strong and we anticipate continued growth in this area.
Our Clinical Trials Management group has several studies in progress and we
anticipate continued growth in the future. The demand for our Phase I clinical
services is increasing and we have every reason to believe that this will hold
true throughout the year.
As we enter fiscal year 2001, our primary goal is to continue to improve the
quality of services we offer to our clients. We continue to evaluate
opportunities that are synergistic with our current operations and broaden the
services we offer to our clients. While this past year has been challenging for
all of us, I remain optimistic with regard to the future. Our senior management
team is experienced and dedicated to returning the Company to profitability. Our
staff is enthusiastic about our ability to contribute to the drug development
efforts of our sponsors. With the support of our shareholders, Directors and
employees, we look forward to achieving our goals and creating increased value
for all of us.
With Best Regards,
/s/ James M. Wilkinson, II, Ph.D.
---------------------------------
James M. Wilkinson, II, Ph.D.
President and
Chief Executive Officer
<PAGE>
[LOGO] PHARMAKINETICS LABORATORIES, INC.
302 WEST FAYETTE STREET
BALTIMORE, MARYLAND 21201
_________________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, NOVEMBER 28, 2000, 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 28, 2000,
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 ratify the selection of PricewaterhouseCoopers LLP, as the
Company's independent auditors for the fiscal year ending June 30, 2001.
3. Any other matters that may properly come before the Meeting or any
adjournment thereof, only to the extent described on page 1 of the
accompanying Proxy Statement.
The Board of Directors has fixed the close of business on October 20, 2000,
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 and Two. 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 26, 2000
<PAGE>
[LOGO] PHARMAKINETICS LABORATORIES, INC.
302 West Fayette Street
Baltimore, Maryland 21201
PROXY STATEMENT
Annual Meeting of Stockholders to be held on
Tuesday, November 28, 2000 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 28, 2000, 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 26, 2000.
OUTSTANDING SHARES AND VOTING RIGHTS
Stockholders of record at the close of business on October 20, 2000, 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
(1) vote, 833,300 shares of Class A Convertible Preferred Stock, each of which
is entitled to two and seventeen hundredths (2.17) votes, and 250,000 shares of
Class B Convertible Preferred Stock, each of which is entitled to one (1) vote.
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
Proposal Two described herein. The members of the Board of Directors intend to
vote their shares "FOR" each director nominee and "FOR" Proposal Two described
herein. An abstention or broker non-vote is not included in calculating votes
cast for the election of directors or the approval of Proposal Two, 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.
The enclosed proxy confers discretionary authority for the persons named
therein to vote on any matter not described herein which properly comes before
the Meeting if the Company did not have notice of the matter at least 45 days
before the date on which the Company first mailed its proxy materials for the
1999 Annual Meeting of Stockholders. The proxy does not confer authority to
vote for any matter described in Securities and Exchange Commission Rule 14-
a4(d).
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. Two of these directors are elected by the holders
of Common Stock, Class A Convertible Preferred Stock and Class B Convertible
Preferred Stock, voting together. Three of these directors are elected by the
holders of Class A Convertible 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.
1
<PAGE>
The following table sets forth certain information concerning the nominees
for election by holders of Common Stock, Class A Convertible Preferred Stock and
Class B Convertible Preferred Stock, voting together. Both nominees are
currently directors of the Company.
NOMINEES FOR ELECTION
Name, Age, and Year
in which first
Elected a Director Business Experience
------------------ -------------------
Thomas F. Kearns, Jr. Retired from Bear, Stearns & Co., Inc. in 1987;
64 (1995) Director of Biomet, Inc.; Trustee of the
University of North Carolina Foundation and
Endowment Fund.
James M. Wilkinson, II, Ph.D. President and Chief Executive Officer of
48 (2000) PharmaKinetics Laboratories, Inc. since January
2000; Vice President Analytical Laboratory
Services from July 1996 to January 2000; Associate
Director, Pharmaco International, Inc., Analytical
Laboratory Division from December 1992 to June
1995.
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 the Class A Convertible
Preferred Stock. All nominees are currently directors of the Company.
Name, Age, and Year
in which first
Elected a Director Business Experience
------------------ -------------------
Leslie B. Daniels Principal of CAI Advisors & Co., an investment
53 (1998) company with offices in New York and Montreal,
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 NBS Technologies,
Inc., MIST, Inc., and Safeguard Health
Enterprises, Inc.
Jerome A. Halperin Retired, April 2000. Executive Vice President and
63 (2000) Chief Executive Officer, Chairman, Committee of
Revision, and Secretary, Board of Trustees and
U.S. Pharmacopeial Convention from March 1995 to
April 2000; Executive Director, Chairman,
Committee of Revision, and Secretary, Board of
Trustees and U.S. Pharmacopeial Convention from
March 1990 to March 1995.
Kamal K. Midha, C.M., Director of Drug Metabolism, Drug Disposition
Ph.D., D.Sc. Group, University of Saskatchewan, Canada since
59 (1998) 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.
2
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, Compensation Committee,
Science and Technology Committee and a Quality and Compliance Committee, each
consisting of directors who are not employees of the Company. The Board of
Directors does not have a Nominating Committee. During the fiscal year ended
June 30, 2000, the Board of Directors met eleven times, the Audit Committee met
one time, the Compensation Committee met three times, the Science and Technology
Committee met one time and the Quality and Compliance Committee met one time.
Dr. Midha was absent from 40% of the meetings held during the fiscal year.
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, Halperin, Kearns, and Midha. In
addition, Mr. Thies, who is not standing for re-election, also served on this
committee.
The Science and Technology Committee advises the Company on scientific
matters, including new method development for the Company's analytical
laboratory, trends in instrument technology, and developments within the
pharmaceutical industry, among other things. The members of this Committee are
Messrs. Daniels, Halperin, Midha and Wilkinson.
The Quality and Compliance Committee provides oversight to the Company on
its quality and compliance programs. The members of this Committee are Messrs.
Halperin, Wilkinson and Ms. Schurick, by invitation. In addition, Mr. Thies,
who is not standing for re-election, also served on this committee.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the PharmaKinetics Laboratories Board of Directors
(the "Committee") is composed of independent directors, as defined under Section
303 of the New York Stock Exchange listing standards, and does not have a
written charter. The members of the Committee are Thomas F. Kearns, Jr.
(Chairman) and Leslie B. Daniels. In addition, Roger C. Thies, who is not
standing for re-election, also served on this Committee. The Committee
recommends to the Board of Directors, subject to stockholder ratification, the
selection of the Company's independent accountants.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Committee's responsibility is to monitor and oversee
these processes.
The Audit Committee has reviewed and discussed the audited financial
statements with management, has discussed with the independent auditors the
matters required to be discussed by SAS 61, has received written disclosures and
the letter from the independent accountants required by Independence Standards
Board Standard No. 1, and has discussed with the independent accountant the
independent accountant's independence. Based upon the review and discussions
referred to above, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included on the Company's Annual Report
on Form 10-K for the last fiscal year for filing with the Commission.
Thomas F. Kearns, Jr., Chairman Leslie B. Daniels Roger C. Thies
October 23, 2000
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
3
<PAGE>
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, 2000, there were 102,500 options outstanding, 78,500 of
which were exercisable, but not exercised, and 85,500 options were available for
future issuance under the 1996 Plan. To date, 12,000 options have been
exercised. 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, 2000, regarding
stock ownership of management and owners of 5% or more of each class of the
Company's voting securities:
<TABLE>
<CAPTION>
Beneficial Ownership of Beneficial Ownership of
Common Stock Convertible Preferred Stock
----------------------------------- ------------------------------------------------------
Number of Percent of Number of Percent of
Shares Owned Shares Owned Shares Owned Class Shares Owned
------------ ------------ ------------ ----- ------------
<S> <C> <C> <C> <C> <C>
Altana, Inc. 250,155 (5) 9.1% 250,000 B 100.0%
60 Baylis Road
Melville, New York 11747
Aster S.A. 611,652 (2)(3)(4) 19.7% 166,660 A 20.0%
3 et 5 rue Eugene Millon
75015 Paris France
Dennis Chase 300,500 12.0% --- --- ---
P.O. Box 248
North Lake, Wisconsin 53064
Leslie B. Daniels 402,263 (1)(2)(3) 13.9% 103,885 A 12.5%
CAI Advisors & Co. (4)
767 Fifth Avenue, 5th Floor
New York, NY 10153
Peter M. Gottsegen 381,263 (2)(3)(4) 13.3% 103,885 A 12.5%
CAI Advisors & Co.
767 Fifth Avenue, 5th Floor
New York, NY 10153
GES Investments, S.A. 61,165 (2)(3)(4) 2.4% 16,666 A 2.0%
Avenue Delleur, 18
Brussels, Belgium 1170
Initiative & Finance 244,661 (2)(3) 8.9% 66,664 A 8.0%
Investissement
16 rue Chauveau Lagarde
Paris, France 75008
Robert A. Mackie, Jr. 131,200 (8) 5.3% --- --- ---
18 North Astor Street
Irvington, NY 10533
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership of Beneficial Ownership of
Common Stock Convertible Preferred Stock
------------------------------ --------------------------------------
Number of Percent of Number of Percent of
Shares Owned Shares Owned Shares Owned Class Shares Owned
------------ ------------ ------------ ---- ------------
<S> <C> <C> <C> <C> <C>
R.A. Mackie and Co., L.P. 63,862 (8) 2.6% --- --- ---
18 North Astor Street
Irvington, NY 10533
Michael F. Price 611,652 (2)(3) 19.7% 166,660 A 20.0%
1180 Larger Cross Road
P.O. Box 434
Far Hills, New Jersey 07931
Peter G. Restler 91,748 (2)(3)(4) 3.5% 24,999 A 3.0%
CAI Advisors & Co.
767 Fifth Avenue, 5th Floor
New York, NY 10153
Richard J. Schmeelk 381,263 (2)(3)(4) 13.3% 103,885 A 12.5%
CAI Advisors & Co.
767 Fifth Avenue, 5th Floor
New York, NY 10153
David von Kauffmann 61,165 (2)(3)(4) 2.4% 16,666 A 2.0%
European Equity Partners
1 rue Vernier
75017 Paris, France
Manfred Yu 18,348 (2)(3)(4) (7) 4,999 A 0.6%
CAI Advisors & Co.
767 Fifth Avenue, 5th Floor
New York, NY 10153
Jerome A. Halperin 13,500 (1) (7) --- --- ---
Thomas F. Kearns, Jr. 82,591 (1)(2)(3) 3.2% 11,110 A 1.3%
Taryn L. Kunkel 42,000 (1) 1.7% --- --- ---
Kamal K. Midha, C.M., Ph.D., D.Sc. 40,400 (1)(6) 1.6% --- --- ---
Cynthia A. Schurick 35,861 (1) 1.4% --- --- ---
Roger C. Thies 36,920 (1) 1.5% --- --- ---
James M. Wilkinson II, Ph.D. 46,500 (1) 1.8% --- --- ---
All directors and officers
as a group (10 persons) 703,785 (1)(2)(3) 22.2% 114,995 A 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, 2000, through the
exercise of options, in the amount of 21,000 shares for Mr. Daniels; 13,500
shares for Mr. Halperin; 22,000 shares for Mr. Kearns; 42,000 shares for
Ms. Kunkel; 28,000 shares for Dr. Midha; 32,000 shares for Ms. Schurick;
36,920 shares for Mr. Thies; 46,500 shares for Dr. Wilkinson; and 245,670
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 361,652 shares for
Aster S.A.; 225,430 shares for Mr. Daniels; 225,430 for Mr. Gottsegen;
36,165 shares for GES Investments, S.A.; 144,661 shares for Initiative and
Finance Investissement; 361,652 for Mr. Price; 54,248 for Mr. Restler;
225,430 for Mr. Schmeelk; 36,165 shares for Mr. Kauffmann; 10,848 for Mr.
Yu; 24,109 for Mr. Kearns; and 249,539 shares for all directors and
officers as a group.
5
<PAGE>
(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 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 shares of stock which Altana, Inc. has a right to acquire upon
conversion of Class B Convertible Preferred Stock.
(6) Includes 12,400 shares held by Dr. Midha's son.
(7) Less than 1%
(8) 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 43% of the Company's voting securities without
giving effect to the possible exercise of warrants, or approximately 56% 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 and
seventeen hundredths (2.17) 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.
On April 17, 2000, the Company issued 250,000 shares of a newly created Class
B Convertible Preferred Stock and warrants to purchase 100,000 shares of the
Company's Common Stock to Altana, Inc. The securities were issued pursuant to
a Settlement Agreement with Altana, Inc., which was issued in response to a
Summons in a Civil Action entitled Altana, Inc. vs. PharmaKinetics Laboratories,
Inc. (Case number CV-99 7917) received by the Company in December 1999. The
Preferred Stock is convertible at any time into shares of Common Stock at a
conversion ratio of one (1) share of Preferred Stock for one (1) share of Common
Stock. The conversion ratio is subject to adjustment under certain circumstances
to prevent dilution. There are no liquidation preferences. The warrants are
fully exercisable at $6.00 per share and expire on April 17, 2003. Altana can
elect to exchange shares of the preferred stock for future studies performed by
PharmaKinetics.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Position with the Company Employed Officer
Name Age and Principal Occupation Since Since
--- --- ------------------------ -----------------
<S> <C> <C> <C>
James M. Wilkinson II, Ph.D. 48 President and Chief Executive Officer since January 1996 1996
--------------------------------------
2000; Vice President Analytical
Laboratory Services from July 1996 to January 2000;
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.
</TABLE>
6
<PAGE>
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Position with the Company Employed Officer
Name Age and Principal Occupation Since Since
---- --- ------------------------- --------------------
<S> <C> <C> <C> <C>
Taryn L. Kunkel 39 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.
Cynthia A. Schurick 44 Vice President Business Development since 1982 2000
-----------------------------------
January 2000; Senior Director, Sales Support,
from July 1998 to January 2000; Director, Sales
Support from January 1993 to July 1998; various
other positions from May 1982 to January 1993.
Education - B.S., Speech Pathology and Audiology,
(Magna Cum Laude) West Virginia University, 1978.
Elizabeth A. Lane, Ph.D. 55 Vice President Biopharmaceutics and Regulatory Affairs 1988 1992
------------------------------------------------------ (1)
from May 1992 to August 1999; Director of
Pharmacokinetics and 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 56 President and Chief Executive Officer from July 1995 1995
------------------------------------- (2)
1995 to January 2000; 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 47 Vice President Business Development from April 1999 1999 1999
----------------------------------- (3)
to December 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>
________________________________________________________________________________
(1) Dr. Lane separated from the Company effective August 13, 1999. She has been
retained by the Company as a consultant.
(2) Mr. Leslie separated from the Company effective January 21, 2000.
(3) Mr. Ruby joined the Company on April 19, 1999 and separated effective
December 1, 1999.
7
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company's review of copies of reporting forms received by it,
during and with respect to its most recent fiscal year, or a written
representation by a reporting person that no Form 5 was required, the Company
believes that during the fiscal year ended June 30, 2000, all applicable filing
requirements were complied with, except Form 3 was filed late by Ms. Schurick
and Mr. Halperin.
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 $100,000 for the fiscal year ended June 30, 2000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term All Other
--------------------------------- --------- ----------
Compensation
------------
Securities All Other
Name and Fiscal Salary Bonus Other Annual Underlying Compensation
Principal Position Year ($) ($) Comp. ($) (1) Options(#) ($) (2)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James K. Leslie (3) 2000 100,500 - 3,700 - -
President, CEO, 1999 156,000 - 6,000 - -
and Director 1998 156,000 7,500 6,000 46,000 -
James M. Wilkinson II, Ph.D. 2000 115,200 - 6,000 71,000 17,500
President, CEO 1999 110,240 - 6,000 - -
and Director 1998 110,240 7,000 6,000 15,000 -
Elizabeth A. Lane, Ph.D. (4) 2000 17,500 - - - -
Vice President Biopharmaceutics 1999 104,000 - - - -
and Regulatory Affairs 1998 104,000 1,500 - 15,000 -
Mark D. Ruby (5) 2000 64,000 - 3,000 - -
Vice President 1999 27,000 - 1,250 15,000 -
Business Development 1998 - - - - -
Cynthia A. Schurick (6) 2000 92,740 - 3,350 53,000 11,300
Vice President
Business Development
</TABLE>
________________________________________________________________________________
(1) Other Annual Compensation includes personal benefits provided by the
Company.
(2) Other compensation includes forgiveness of Dr. Wilkinson's Note Payable to
the Company, and commissions paid to
Ms. Schurick in her role as Senior Director, Sales Support.
(3) Mr. Leslie separated from the Company effective January 21, 2000. His
annual salary at the time of his departure was $163,800, plus other annual
compensation of $6,000.
(4) Dr. Lane separated from the Company effective August 13, 1999. Her
annual salary at the time of her departure was $109,200.
(5) Mr. Ruby joined the Company on April 19, 1999 and separated effective
December 1, 1999. Mr. Ruby's annual salary was $130,000, plus other annual
compensation of $6,000.
(6) Ms. Schurick was promoted to Vice President Business Development effective
January 27, 2000. Her annual salary was adjusted to $110,000, plus other
annual compensation of $6,000.
Severance Agreements
The Company has a severance agreement with Ms. Kunkel. The Agreement
provides for continuance of her annual base salary 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 Agreement. Upon termination of employment, the
Agreement also
8
<PAGE>
provides for accelerated vesting of all stock options and the option to extend
the exercise period of such options. The Agreement was effective April 22,
1997. As of June 30, 2000 benefits payable would be approximately $104,500 for
Ms. Kunkel.
Stock Option Grants
The following table sets forth information concerning the grant of stock
options under the Company's 1996 Incentive Stock Option Plan during fiscal 2000
to the executive officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
% of Total
Options
Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#)(1) Fiscal Year ($/share) Date
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cynthia A. Schurick 53,000 27.5% $1.2188 02/29/10
James M. Wilkinson, II, Ph.D. 71,000 36.9% $1.2188 02/29/10
---------------------------------------------------------------------------------------------
</TABLE>
(1) Options were granted under the 1996 Incentive Stock Option Plan. These
options vest over a two year period from the date of grant and expire ten
years from the date of grant, if not exercised earlier. Material terms of
the options are set forth under the caption "Incentive Stock Option Plans."
Stock Option Exercises and Holdings
The following table sets forth information related to the number and value
of options held by two of the Company's executive officers. No options were
exercised by these individuals during the fiscal year ended June 30, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Shares ($) 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
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cynthia A. Schurick --- --- 17,000 58,000 --- ---
James M. Wilkinson II, Ph.D. --- --- 18,000 82,000 --- ---
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) None of the options granted and outstanding are in-the-money at June 30,
2000. At June 30, 2000, the fair market value of the shares underlying the
options was $0.75, as determined by the average of the closing bid and ask
prices on that date.
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 permitted 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, 2000, an aggregate of 38,580 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
9
<PAGE>
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.
The Company also has a 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. A proposal to increase the number of shares of Common Stock authorized
for issuance under the 1996 Incentive Stock Option Plan, from 300,000 shares to
450,000 shares, was approved by the stockholders on November 30, 1999. 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 450,000 shares of its
Common Stock to key employees of the Company. As of June 30, 2000, 284,250
shares of the Company's Common Stock were subject to options granted under the
1996 ISO Plan.
10
<PAGE>
ITEM TWO
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors desires to obtain from the stockholders their
ratification 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, 2001.
PricewaterhouseCoopers LLP has served the Company in such capacity since
January 1992. The Company has been informed that neither PricewaterhouseCoopers
LLP 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 LLP 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.
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 2001 must be received in
writing by the Company at its principal executive offices on or before June 29,
2001. After September 11, 2001, notice of a stockholder proposal submitted
outside of Securities and Exchange Commission Rule 14a-8 will be considered
untimely. 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,
2000, 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 only as described on page 1
of this Proxy Statement.
By Order of the
Board of Directors,
/s/ Taryn L. Kunkel
-------------------
Taryn L. Kunkel
Secretary
October 26, 2000
11
<PAGE>
PROXY
PHARMAKINETICS LABORATORIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 28, 2000
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James M. Wilkinson, II, Ph.D. 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 28, 2000 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 Proposal Two, and FOR both of the nominees for director
named on the reverse. The Board of Directors recommends a vote FOR both of the
nominees for director and FOR Proposal Two set forth on the reverse.
(Continued and to be signed on reverse side)
______________________________________________________________________________
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
PHARMAKINETICS LABORATORIES, INC.
November 28, 2000
__X__ Please mark your votes as in this example.
ITEM 1
To elect directors (for both of the following nominees except as marked to the
contrary):
Thomas F. Kearns, Jr. and James M. Wilkinson, II, Ph.D.
____ FOR both nominees, except as indicated
____ Withhold authority for both nominees
To withhold authority for any individual nominee(s), write the nominee(s)
name(s) below:
________________________________________________________________________________
ITEM 2
To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent auditors for the fiscal year ending June 30, 2001.
____ FOR ____ AGAINST ____ ABSTAIN
ITEM 3
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: _________________ 2000
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.
