SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
KERYX BIOPHARMACEUTICALS, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
[LOGO]
KERYX BIOPHARMACEUTICALS, INC.
5 KIRYAT MADA
JERUSALEM 91236 ISRAEL
To: Our Stockholders
From: Morris Laster
Subject: Invitation to the Keryx Biopharmaceuticals, Inc. 2001 Annual Meeting
Please come to our Annual Meeting on May 23, 2001, to find out more about
your company and the significant progress we are making. You will have the
opportunity to ask questions and make comments. Enclosed with this Proxy
Statement are your voting card and the 2000 Annual Report.
We have written our Proxy Statement in plain English, as is encouraged by
the Securities and Exchange Commission. We hope you are pleased with this
format, and find this Proxy Statement easy to read.
We look forward to seeing you at the Annual Meeting.
Sincerely,
Morris Laster
Chief Executive Officer and
Chairman
[LOGO]
KERXY BIOPHARMACEUTICALS, INC.
5 KIRYAT MADA
JERUSALEM 91236 ISRAEL
NOTICE OF 2001 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2001
The 2001 Annual Meeting of Stockholders of Keryx Biopharmaceuticals, Inc.
will be held at the offices of Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts, on Wednesday, May 23, 2001, at 2:00 p.m., local time. At the
meeting, stockholders will consider and act on the following items:
1. The election of seven directors, each for a term of one year; and
2. The transaction of any other business as may properly come before the
meeting or any adjournment of the meeting.
If you are a stockholder as of the close of business on April 2, 2001, you
are entitled to vote at the meeting or any postponements or adjournments of the
meeting. A list of stockholders entitled to vote at the Annual Meeting will be
available for your inspection beginning May 12, 2001, at the office of the
company's corporate counsel, Hale and Dorr LLP, in Boston, Massachusetts,
located at 60 State Street, or at the company's executive offices in Jerusalem,
Israel, located at 5 Kiryat Mada in the Har Hotzvim Hi-tech Industrial Park,
between the hours of 9:30 a.m. and 5:00 p.m. local time, each business day.
By Order of the Board of Directors,
BOB TRACHTENBERG
Secretary
Jerusalem, Israel
April 23, 2001
TABLE OF CONTENTS
PAGE
----------
Questions and Answers About the Meeting..................... 3
What is the purpose of the Annual Meeting?.............. 3
Who is entitled to vote at the Annual Meeting and how
many votes do they have?............................... 3
How do I vote?.......................................... 3
What is a proxy?........................................ 3
How will my proxy vote my shares?....................... 3
How do I revoke my proxy?............................... 4
Is my vote confidential?................................ 4
What constitutes a quorum?.............................. 4
What vote is required to elect directors?............... 4
How are votes counted?.................................. 4
What percentage of the Company's outstanding common
shares do the directors and officers own?.............. 4
Who are the Company's independent public accountants,
and will they be represented at the Annual Meeting?.... 4
How may I obtain a copy of the Company's Form 10-K?..... 4
Proposal 1--Election of Directors........................... 5
Nominees for Director................................... 5
Report of the Audit Committee........................... 7
Independent Auditors Fees and Other Matters............. 8
Our Executive Officers.................................. 9
Employment Agreements................................... 10
Executive Compensation.................................. 11
Summary Compensation Table.......................... 11
Fiscal Year-End Option Values and Option Exercises
During the Last Fiscal Year......................... 12
Report of the Compensation Committee................ 12
Compensation Committee Interlocks and Insider
Participation....................................... 14
Common Stock Performance Graph.......................... 14
Section 16(a) Beneficial Ownership Reporting
Compliance............................................. 15
Related Party Transactions.............................. 15
Stock Ownership of our Directors, Executive Officers, and 5%
Beneficial Owners......................................... 16
Additional Information...................................... 17
Appendix A--Audit Committee Charter
Appendix B--Form of Proxy Card
2
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card are being mailed,
beginning on or about April 23, 2001, to owners of shares of common stock of
Keryx Biopharmaceuticals, Inc. in connection with the solicitation of proxies by
the Board of Directors for our 2001 Annual Meeting of Stockholders. This proxy
procedure is necessary to permit all stockholders, many of whom are unable to
attend the Annual Meeting, the opportunity to vote. The Board of Directors
encourages you to read this document thoroughly and to take this opportunity to
vote on the matters to be decided at the Annual Meeting.
QUESTIONS AND ANSWERS ABOUT THE MEETING
Q. WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
A. At our Annual Meeting, shareholders will act upon the matters outlined in the
notice of meeting accompanying the proxy statement, including the election of
directors. In addition, we will report on our overall performance during 2000
and respond to questions from shareholders.
Q. WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING, AND HOW MANY VOTES DO THEY
HAVE?
A. Common stockholders of record at the close of business on the record date,
April 2, 2001, may vote at the Annual Meeting. Each share has one vote. There
were 19,614,644 shares of common stock outstanding on the record date. A list of
stockholders entitled to vote at the Annual Meeting will be available for your
inspection beginning May 12, 2001, at the office of the company's corporate
counsel, Hale and Dorr LLP, in Boston, Massachusetts, located at 60 State
Street, or at the company's executive offices in Jerusalem, Israel, located at 5
Kiryat Mada in the Har Hotzvim Hi-tech Industrial Park, between the hours of
9:30 a.m. and 5:00 p.m. local time, each business day.
Q. HOW DO I VOTE?
A. You may vote by completing and returning the enclosed proxy card by mail or
by voting in person at the meeting. Since many of our stockholders are unable to
attend the Annual Meeting in person, we send proxy cards to all of our
stockholders to enable them to be represented and vote at the Annual Meeting. To
vote by mail, simply mark, sign, and date the enclosed proxy card, and return it
in the enclosed postage-paid envelope. Alternatively, you may deliver your proxy
card to us in person, by facsimile, or by courier. If you hold your shares
through a broker, bank, or other nominee, you will receive separate instructions
from the nominee describing how to vote your shares.
Q. WHAT IS A PROXY?
A. A proxy is a person you appoint to vote on your behalf. If you are unable to
attend the Annual Meeting, we are seeking your appointment of proxies so that
your shares of common stock may be voted. You must complete and return the
enclosed proxy card to have your shares voted by proxy. If you complete and
return the proxy card, you will be designating Bob Trachtenberg, our General
Counsel and Secretary, and Robert Gallahue, our Chief Financial Officer and
Treasurer, as your proxies. They may act together or individually on your
behalf, and will have the authority to appoint a substitute to act as proxy.
Q. HOW WILL MY PROXY VOTE MY SHARES?
A. Your proxy will vote according to the instructions on your proxy card. If you
complete and return your proxy card but do not indicate your vote on business
matters, your proxy will vote "FOR" Proposal 1. Presently, the Board of
Directors does not know of any other matter that may come before the Annual
Meeting. However your proxies are authorized to vote on your behalf, using their
judgment, on any other business that properly comes before the Annual Meeting.
3
Q. HOW DO I REVOKE MY PROXY?
A. You may revoke your proxy at any time before your shares are voted at the
Annual Meeting by:
- Notifying our Secretary, Bob Trachtenberg, in writing at 5 Kiryat Mada,
Jerusalem 91236 Israel, that you are revoking your proxy;
- Executing a new, subsequently dated, proxy card; or
- Attending and voting by ballot at the Annual Meeting.
Q. IS MY VOTE CONFIDENTIAL?
A. Yes. All comments remain confidential, unless you ask that your name be
disclosed.
Q. WHAT CONSTITUTES A QUORUM?
A. A majority of the issued and outstanding shares on the record date
constitutes a quorum. A quorum is necessary in order to conduct the Annual
Meeting and will be measured by the number of shares either present at the
Annual Meeting or represented by proxy. If you choose to have your shares
represented by proxy at the Annual Meeting, you will be considered part of the
quorum. If a quorum is not present at the Annual Meeting, the stockholders
present in person or by proxy may adjourn the meeting to a date when a quorum is
present. If an adjournment is for more than 30 days or a new record date is
fixed for the adjourned meeting, we will provide notice of the adjourned meeting
to each stockholder of record entitled to vote at the meeting.
Q. WHAT VOTE IS REQUIRED TO ELECT DIRECTORS?
A. The affirmative vote of a plurality of the votes cast at the meeting is
required for the election of the directors. A properly executed proxy marked
"WITHHOLD AUTHORITY" with respect to the election of one or more directors will
not be voted with respect to the director or directors indicated, although it
will counted for purposes determining whether there is a quorum.
Q. HOW ARE VOTES COUNTED?
A. Shares that (1) abstain from voting on a particular matter or (2) are held in
"street name" by brokers or nominees who indicate on their proxies that they do
not have discretionary authority to vote on a particular matter ("broker
non-votes") will not be voted in favor of the matter, and will also not be
counted as shares voting on the matter. Accordingly, abstentions and broker
non-votes will have no effect on the outcome of voting on the matters to be
voted on at the meeting.
Q. WHAT PERCENTAGE OF THE COMPANY'S OUTSTANDING COMMON SHARES DO THE DIRECTORS
AND OFFICERS OWN?
A. As of December 31, 2000, our directors and executive officers owned
approximately 45% of our outstanding common shares. See the discussion under the
heading "Stock Ownership of our Directors, Executive Officers, and 5% Beneficial
Owners" on page 22 for more details.
Q. WHO ARE THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS, AND WILL THEY BE
REPRESENTED AT THE ANNUAL MEETING?
A. KPMG has served as our independent public accountants and auditors since
1999. We have selected KPMG to serve as our auditor for 2001. We expect a
representative of KPMG to be present at the Annual Meeting. The representative
will have an opportunity to make a statement, if he or she desires, and be
available to answer questions.
Q. HOW MAY I OBTAIN A COPY OF THE COMPANY'S FORM 10-K?
A. You may request a copy of our Annual Report on Form 10-K for the year ended
December 31, 2000, by writing to our Secretary at POB 23706, 5 Kiryat Mada,
Jerusalem 91236 Israel or via e-mail at info@keryxbiopharm.com.
4
PROPOSAL 1--ELECTION OF DIRECTORS
The Board of Directors has seven members. Each member has been nominated for
re-election, and has agreed to serve a one-year term if elected. If any nominee
is unable to stand for election, which circumstance we do not contemplate, the
Board may provide for a lesser number of directors or designate a substitute. In
the latter event, shares represented by proxies may be voted for a substitute
nominee.
The Board of Directors recommends a vote "FOR" each of the nominees.
MORRIS LASTER, M.D., 36, has served as our Chairman and Chief Executive
Officer since November 1999. From December 1996 to November 1999, Dr. Laster
served as the Chief Executive Officer and President of Partec Ltd., our
predecessor company. From 1990 to 1996, Dr. Laster was employed as Vice
President of Medical Venture Capital with Paramount Capital Investments LLC., a
merchant and investment bank. Dr. Laster received his M.D. from Downstate
Medical Center, performed post-doctoral training in surgery at Case Western
Reserve University Hospital and served as a physician and officer with the
paratroopers of the Israel Defense Forces.
MALCOLM HOENLEIN, 57, has served on our board since January 2001.
Mr. Hoenlein currently serves as the Executive Vice Chairman of the Conference
of Presidents of Major American Jewish Organizations, a position he has held
since 1986. He also serves on the Boards of Directors of Bank Leumi and
Rothschild Bank. Mr. Hoenlein received his B.A. from Temple University and his
M.A. from the University of Pennsylvania.
PETER MORGAN KASH, 39, has served on our board since October 1998. Mr. Kash
has been a Senior Managing Director of Paramount Capital, Inc., a NASD
registered broker-dealer and a Director of Paramount Capital Asset
Management, Inc., which manages the investments of several funds specializing in
the technology and biotechnology sectors, since 1990. From 1989 to 1991,
Mr. Kash served as an Associate Professor at the Polytechnic University. In
addition, since 1996, he has served as a Lecturer in Entrepreneurship and
International Venture Capital at the Wharton School of the University of
Pennsylvania and has accepted an appointment as a visiting professor in
entrepreneurship at Nihon University in Tokyo, Japan from 1999 to 2001. He holds
a B.S. in Management Science from the State University of New York at Binghamton
and an M.B.A. in Finance and Banking from Pace University.
MARK H. RACHESKY, M.D., 42, has served on our board since February 2000.
Dr. Rachesky is the President of MHR Fund Management LLC, which he founded in
1996. MHR is an investment manager of various private investment funds. Prior to
founding MHR, from 1990 to 1996, Dr. Rachesky was employed by Carl C. Icahn as
his Managing Director of Investments. He currently also serves as a director of
the Samsonite Corporation and Neose Technologies, Inc. Dr. Rachesky received his
B.S. from the University of Pennsylvania, and his M.D. and M.B.A. from Stanford
University.
LINDSAY A. ROSENWALD, M.D., 45, has served on our board since March 2000. He
is an investment banker, as well as a venture capitalist and fund manager.
Dr. Rosenwald has served as Chairman of Paramount Capital, Inc., since 1992,
Chairman of Paramount Capital Investments LLC, a merchant and investment bank,
since 1995, and Chairman of Paramount Capital Asset Management, Inc., since
1994. He is also a director of Neose Technologies, Inc., Interneuron
Pharmaceuticals, Inc., and Nephros, Inc. Dr. Rosenwald received his B.S. in
Finance from Pennsylvania State University, and his M.D. from Temple University
School of Medicine.
WAYNE ROTHBAUM, 33, has served on our board since February 2000. He has been
Managing Director at the TF/Carson Group, a strategic consulting firm providing
capital markets intelligence to over 400 publicly traded companies, since
June 1995. Mr. Rothbaum has co-managed the TF/Carson Group's life sciences team,
which provides services ranging from traditional investor relations to strategic
consulting to corporate finance for over 50 life sciences companies, since 1993.
In addition,
5
since November 1996, he has served as a principal at Evolution Capital, an NASD
registered broker-dealer focusing on the life sciences, which is a wholly- owned
subsidiary of the TF/Carson Group. Mr. Rothbaum is also an advisory director to
Enzon, Inc. and Maxim Pharmaceuticals, Inc. He received an M.A. from the Elliot
School of International Relations at the George Washington University and a B.A.
in Cognitive Psychology and Political Science from the State University of New
York at Binghamton.
J. WILSON TOTTEN, M.D., 43, has served on our board since January 2001.
Dr. Totten is Group R&D Director of Shire Pharmaceuticals, a public
biopharmaceutical company headquartered in the United Kingdom, a position he has
held since 1998. From 1995 to 1997, Dr. Totten was the Vice President for
Clinical R&D of Astra Charnwood, a United Kingom-registered pharmaceutical
company. He is a director of Shire Pharmaceuticals and of several of Shire's
subsidiaries. Dr. Totten received his M.D. from Leicester University.
HOW ARE DIRECTORS COMPENSATED?
Directors who are also Keryx employees receive no additional compensation
for serving as a director. Non-employee directors receive:
- Reimbursement for reasonable travel expenses incurred for their attendance
at meetings of the Board of Directors;
- Upon initial election or appointment to the Board of Directors, an option
to purchase 25,000 shares of common stock and upon re-election to the
Board of Directors, an option to purchase 5,000 shares of common stock.
Each automatic option grant has an exercise price equal to the fair market
value on the date of grant. Each grant has a term of ten years, subject to
earlier termination following the director's cessation of service on the
Board of Directors. One-fifth of the initial automatic option grant of
25,000 shares vests immediately upon grant. The remainder of the initial
automatic option grant (20,000 shares) vests in successive equal quarterly
installments over the director's initial one-year period of Board service.
Each re-election option grant vests in equal semi-annual installments as
measured from the grant date.
WHAT ARE THE COMMITTEES OF OUR BOARD OF DIRECTORS?
The Board of Directors has an Audit Committee and a Compensation Committee.
The Board of Directors does not have a nominating committee or other committee
performing similar functions.
- The Audit Committee consists of Dr. J. Wilson Totten, Dr. Mark Rachesky
and Wayne Rothbaum. The functions of the Audit Committee and its
activities relative to our year-end financial statements are described
below under the heading "Report of the Audit Committee". During the year,
the Board examined the composition of the Audit Committee in light of the
adoption by the Nasdaq Stock Market of new rules governing audit
committees. Based upon this examination, the Board confirmed that all
members of the Audit Committee are "independent" within the meaning of
Nasdaq's new rules.
- The Compensation Committee consists of Dr. Rachesky, Mr. Rothbaum, and
Peter Kash. The Compensation Committee determines the compensation of the
Chief Executive Officer, and reviews and takes action on the
recommendation of the Chief Executive Officer as to the appropriate
compensation of other executive officers. The Compensation Committee is
primarily responsible for the administration of our stock option plans,
under which option grants and stock issuances may be made to all
employees, directors and consultants.
6
HOW MANY BOARD AND COMMITTEE MEETINGS WERE HELD DURING 2000?
During 2000, the Board of Directors held seven meetings and acted by
unanimous written consent two times. The Compensation Committee held two
meetings and acted by unanimous written consent three times. The Audit
Committee, which was established in May 2000, did not meet in 2000. Each
incumbent director attended at least 75% of the meetings of the Board of
Directors and all meeting(s) of those committees on which he served.
REPORT OF THE AUDIT COMMITTEE
The following Report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent the Company specifically incorporates this
Report by reference therein.
During fiscal 2000, the Audit Committee of the Board of Directors developed
a charter for the Committee, which was approved by the full Board on May 12,
2000. The complete text of the new charter, which reflects standards set forth
in the new SEC regulations and Nasdaq Stock Market rules, is reproduced in the
appendix to this proxy statement.
Management is responsible for the Company's internal controls and the
financial reporting process. The Company's independent accountants are
responsible for performing an independent audit of the Company's financial
statements in accordance with generally accepted accounting principles and to
issue a report on those financial statements. The Audit Committee is responsible
for monitoring and overseeing these processes. As set forth in more detail in
the charter, the Audit Committee's primary responsibilities fall into three
broad categories:
- first, the Committee is charged with monitoring the preparation of
quarterly and annual financial reports by the Company's management,
including discussions with management and the Company's outside auditors
about draft annual financial statements and key accounting and reporting
matters;
- second, the Committee is responsible for matters concerning the
relationship between the Company and its outside auditors, including
recommending their appointment or removal; reviewing the scope of their
audit services and related fees, as well as any other services being
provided to the Company; and determining whether the outside auditors are
independent (based in part on the annual letter provided to the Company
pursuant to Independence Standards Board No. 1); and
- third, the Committee oversees management's implementation of effective
systems of internal controls, including review of policies relating to
legal and regulatory compliance, ethics, and conflicts of interests; and
review of the activities and recommendations of the Company's internal
auditing program.
The Committee has implemented procedures to ensure that during the course of
each fiscal year it devotes the attention that it deems necessary or appropriate
to each of the matters assigned to it under the Committee's charter. To carry
out its responsibilities, the Committee met on March 12, 2001.
In overseeing the preparation of the Company's financial statements, the
Committee met with both management and the Company's outside auditors to review
and discuss all financial statements prior to their issuance and to discuss
significant accounting issues. Management advised the Committee that all
financial statements were prepared in accordance with generally accepted
accounting principals, and the Committee discussed the statements with both
management and the outside auditors. The Committee's review included discussion
with the outside auditors of matters required to be discussed pursuant to
7
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
SAS 61 requires the Company's independent auditors to discuss with the
Committee, among other things, the following:
- methods to account for significant unusual transactions;
- the effect of significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or consensus;
- the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors' conclusions regarding
the reasonableness of those estimates; and
- disagreements with management over the application of accounting
principals, the basis for management's accounting estimates and the
disclosures in the financial statements.
With respect to the Company's outside auditors, the Committee, among other
things, discussed with KPMG matters relating to KPMG's independence from the
Company, including the disclosures made by KPMG to the Committee as required by
the Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees). Independence Standards Board Standard No. 1 requires auditors
annually to disclose in writing all relationships that in the auditor's
professional opinion may reasonably be thought to bear on independence, confirm
their perceived independence and engage in a discussion of independence.
Finally, the Committee continued to monitor the scope and adequacy of the
Company's internal controls and other procedures, including proposals for
adequate staffing and for strengthening internal procedures and controls where
appropriate.
On the basis of these reviews and discussions, the Committee recommended to
the Board of Directors that the Board approve the inclusion of the Company's
audited financial statements in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000, for filing with the Securities and Exchange
Commission.
By the Audit Committee of the Board of
Directors
Dr. Totten, Chairman
Dr. Rachesky
Mr. Rothbaum
INDEPENDENT AUDITORS FEES AND OTHER MATTERS
AUDIT FEES
KPMG billed the Company an aggregate of approximately $70,000 in fees for
the professional services rendered in connection with the audit of the Company's
financial statements for the most recent fiscal year and the reviews of the
financial statements included in each of the Company's Quarterly Reports on
Form 10-Q during the fiscal year ended December 31, 2000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
KPMG did not bill the Company for any professional services rendered to the
Company and its affiliates for the fiscal year ended December 31, 2000 in
connection with financial information systems design or implementation, the
operation of the Company's information system or the management of its local
area network.
ALL OTHER FEES
KPMG billed the Company an aggregate of approximately $45,000 in fees for
other services rendered to the Company and its affiliates for the fiscal year
ended December 31, 2000.
8
OUR EXECUTIVE OFFICERS
Our executive officers are:
NAME AGE POSITION
- ---- -------- ------------------------------------------
Morris Laster, M.D........................ 36 Chief Executive Officer and Chairman
Benjamin Corn, M.D........................ 40 President
Robert E. Gallahue........................ 40 Chief Financial Officer and Treasurer
Ira Weinstein............................. 45 Chief Operating Officer
Bob Trachtenberg.......................... 44 General Counsel and Secretary
Noa Shelach............................... 30 Vice President, Project Management
Information about executive officers who are not directors:
BENJAMIN CORN, M.D., has served as our President since November 1999. From
October 1998 to November 1999, Professor Corn was the Chief Executive Officer of
SignalSite, Inc., a subsidiary of Partec Ltd., our predecessor company. From
1994 to 1998, he served as Professor and Vice-Chairman in the Department of
Radiation Oncology at Thomas Jefferson University Hospital in Philadelphia.
Professor Corn received his B.A. and M.D. degrees from Boston University and
completed residency training at the University of Pennsylvania, where he later
served as Assistant Professor of Radiation Oncology.
ROBERT E. GALLAHUE has served as our Chief Financial Officer and Treasurer
since June 2000. From December 1999 to May 2000, Mr. Gallahue served as Senior
Director, Finance at Millennium Pharmaceuticals, Inc. From November 1993 to
December 1999, he served as Controller and then Senior Director, Finance at
LeukoSite, Inc. From 1989 to 1993, Mr. Gallahue served as Accounting Manager and
then Senior Financial Analyst at RepliGen, Inc. From 1985 to 1989, he was an
auditor at Coopers & Lybrand. Mr. Gallahue received his B.A. from Middlebury
College and his M.S.A. from Bentley College and is a certified public
accountant.
IRA WEINSTEIN has served as our Chief Operating Officer since June 2000 and
was our Chief Financial Officer and Treasurer from November 1999 to June 2000.
From January 1997 to November 1999, Dr. Weinstein was the Chief Financial
Officer of Partec Ltd. From 1989 to 1997, Dr. Weinstein was an accountant with
the Association of Americans and Canadians in Israel. He has also served as a
consultant to the New York State Department of Health and taught business
management at Baruch College, Touro College and St. John's University.
Dr. Weinstein holds a Doctorate of Business Administration from Newport
University and an M.B.A. in Management and a B.B.A. in Accountancy from Baruch
College.
BOB TRACHTENBERG has served as our General Counsel and Secretary since
November 1999. Prior to that date, from October 1998, he was the General Counsel
of Partec Ltd. From June 1994 to October 1998, Mr. Trachtenberg was Senior Vice
President for Administration and Legal Affairs at Accent Software
International, Ltd. (now known as LanguageWare.net, Ltd.), a publicly traded
software development company. Mr. Trachtenberg received his B.A. from the State
University of New York at Binghamton and his J.D. from New York University.
NOA SHELACH has served as our Vice President, Project Management since
December 2000. From November 1999 to December 2000, Ms. Shelach was our Director
of Project Management. From December 1997 to November 1999, she was the Director
of Project Management for Partec Ltd. Ms. Shelach received her B.Sc. in Biology
and M.Sc. in Biochemistry from the Hebrew University in Jerusalem and has
completed a two-year course in clinical pharmacology at Tel Aviv University.
9
EMPLOYMENT AGREEMENTS
Our Israeli operating subsidiary has entered into an employment agreement
with Morris Laster, M.D., and we, as the US parent, have entered into a
complementary employment agreement with Dr. Laster. Dr. Laster has been retained
to serve as our chief executive officer at a base salary of $225,000 per year
for three years from November 18, 1999, with an annual discretionary bonus of up
to 100% of his base salary based upon specific development and business
milestones and achievements. The US agreement grants Dr. Laster a ten-year
option to purchase 450,000 shares of our common stock at an exercise price of
$0.10 per share. This option vests over a period of two years, with two-thirds
having already vested, and the remaining one-third vesting in two equal portions
each on May 19, 2001 and November 19, 2001, respectively. Each agreement may be
terminated on three months' notice and each contains both non-competition and
non-solicitation provisions. The agreements also provide that if Dr. Laster's
employment is terminated without cause or because of death or disability, he or
his heirs will be paid his then-current salary for 15 months in monthly
installments, in addition to the three-month notice payment, and our board of
directors will cause any outstanding, unvested options to vest immediately and
will extend the period in which they may be exercised for two years from the
date of the termination of his employment.
Our Israeli operating subsidiary has entered into an employment agreement
with Benjamin Corn, M.D., and we, as the US parent, entered into a complementary
employment agreement with Dr. Corn. We have retained Dr. Corn to serve as our
president at a current base salary of $157,500 per year for three years from
November 18, 1999, with bonuses at the discretion of our chief executive officer
acting in consultation with the Compensation Committee of our Board of
Directors. The US agreement grants Dr. Corn a ten-year option to purchase
195,000 shares of our common stock at an exercise price of $0.10 per share. This
option vests over a period of two years, with two-thirds having already vested,
and the remaining one-third vesting in two equal portions each on May 19, 2001
and November 19, 2001, respectively. Each agreement may be terminated on three
months' notice and each contains both non-competition and non-solicitation
provisions. The agreements also provide that if Dr. Corn's employment is
terminated without cause or because of death or disability, he or his heirs will
be paid his then-current salary for three months in monthly installments,
inclusive of the three-month termination notice, and our board of directors will
cause any outstanding, unvested options to vest immediately and will extend the
period in which they may be exercised for two years from the date of the
termination of his employment.
Our Israeli operating subsidiary has entered into an employment agreement
with Ira Weinstein, and we, as the US parent, entered into a complementary
employment agreement with Dr. Weinstein. We have retained Dr. Weinstein to serve
as our Chief Operating Officer at a current base salary of $96,360 per year for
three years from November 18, 1999, with bonuses at the discretion of our chief
executive officer acting in consultation with the Compensation Committee of our
Board of Directors. The US agreement grants Dr. Weinstein a ten-year option to
purchase 225,000 shares of our common stock at an exercise price of $0.10 per
share. This option vests over a period of two years, with two-thirds having
already vested, and the remaining one-third vesting in two equal portions each
on May 19, 2001 and November 19, 2001, respectively. Each agreement may be
terminated on three months' notice and each contains both non-competition and
non-solicitation provisions. The agreements also provide that if
Dr. Weinstein's employment is terminated without cause or because of death or
disability, he or his heirs will be paid his then-current salary for three
months in monthly installments, inclusive of the three-month termination notice,
and our board of directors will cause any outstanding, unvested options to vest
immediately and will extend the period in which they may be exercised for two
years from the date of the termination of his employment.
Our Israeli operating subsidiary has entered into an employment agreement
with Bob Trachtenberg, and we, as the US parent, entered into a complementary
employment agreement with Mr. Trachtenberg. We have retained Mr. Trachtenberg to
serve as our General Counsel and Secretary
10
at a current base salary of $97,824 per year for three years from November 18,
1999, with bonuses at the discretion of our chief executive officer acting in
consultation with the Compensation Committee of our Board of Directors. The US
agreement grants Mr. Trachtenberg a ten-year option to purchase 187,500 shares
of our common stock at an exercise price of $0.10 per share. This option vests
over a period of two years, with two-thirds having already vested, and the
remaining one-third vesting in two equal portions each on May 19, 2001 and
November 19, 2001, respectively. Each agreement may be terminated on three
months' notice and each contains both non-competition and non-solicitation
provisions. The agreements also provide that if Mr. Trachtenberg's employment is
terminated without cause or because of death or disability, he or his heirs will
be paid his then-current salary for three months in monthly installments,
inclusive of the three-month termination notice, and our board of directors will
cause any outstanding, unvested options to vest immediately and will extend the
period in which they may be exercised for two years from the date of the
termination of his employment.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information about all compensation earned in
2000 and 1999 by our chief executive officer and our other three most highly
compensated executive officers.
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
-------------------------------------- SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION (1) OPTIONS/SARS COMPENSATION (2)
- ------------------ -------- -------- -------- ---------------- ------------ ----------------
Morris Laster.................. 2000 $240,000 $75,000 $41,520 0 $9,650
Chief Executive Officer 1999 $225,000 $ 0 $37,000 1,972,100 $7,545
Benjamin Corn.................. 2000 $161,436 $27,500 $27,076 0 $ 0
President 1999 $150,000 $ 0 $22,000 274,026 $ 0
Bob Trachtenberg...............
General Counsel & Secretary 2000 $ 89,272 $35,000 $21,116 0 $4,000
(3) 1999 $ 85,100 $ 0 $20,000 357,620 $ 186
Ira Weinstein.................. 2000 $ 90,520 $25,000 $21,345 0 $ 0
Chief Operating Officer (4) 1999 $ 77,550 $ 0 $19,200 395,120 $ 163
- ------------------------
(1) Includes payments we made for social security, pension and disability
insurance premiums, payments made in lieu of statutory severance and
payments to continuing education plans.
(2) Includes reimbursement for automobile expenses.
(3) Mr. Trachtenberg commenced serving as an executive officer of Keryx in
November 1999.
(4) Dr. Weinstein commenced serving as an executive officer of Keryx in
November 1999.
11
FISCAL YEAR-END OPTION VALUES AND AGGREGATE OPTION EXERCISES
DURING THE LAST FISCAL YEAR
The following table provides information about the exercise of stock options
during 2000 by the named executive officers and the value of stock options held
by the named executive officers on December 31, 2000. The value of unexercised
stock options held by the named executive officers at year-end is calculated by
multiplying the number of option shares by the difference between the option
exercise price and the fair market value of our common stock on December 31,
2000 (which was $10.125).
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 2000 AT DECEMBER 31, 2000
ACQUIRED VALUE ------------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------- ------------------------------- -------------------------
Morris Laster............ 0 -- 1,822,100/150,000 $18,266,553/$1,503,750
Benjamin Corn............ 0 -- 209,026/65,000 2,095,486/651,625
Bob Trachtenberg......... 0 -- 295,120/62,500 2,958,578/626,563
Ira Weinstein............ 0 -- 320,120/75,000 3,209,203/751,875
REPORT OF THE COMPENSATION COMMITTEE
The following Report of the Compensation Committee and the common stock
performance graph on page 14 of this proxy statement do not constitute
soliciting material and should not be deemed filed or incorporated by reference
into any other filing we make under the Securities Act of 1933 or the Securities
exchange Act of 1934, except to the extent we specifically incorporate this
Report or the performance graphs by reference therein.
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for fiscal year 2000.
WHAT IS OUR COMPENSATION PHILOSOPHY?
Our philosophy is to provide competitive compensation levels and, where
appropriate, align compensation of senior management with the long-term
interests of our stockholders. We determine the compensation of the senior
management team by evaluating our corporate performance, as well as each
executive officer's own level of performance.
WHAT IS THE STRUCTURE OF OUR EXECUTIVE COMPENSATION?
The elements of our executive compensation programs are:
- Base salary;
- Annual cash bonuses; and
- Annual long-term stock-based incentives.
We have structured our compensation plan to provide incentives for senior
management performance that promote continuing improvements in our corporate
performance and stock price over both the short- and long-term.
HOW DO WE DETERMINE BASE SALARIES?
We determine base salaries by each individual's experience and personal
performance, and by comparisons to similar positions within the biotechnology
industry. Base salaries are reviewed annually based on the criteria mentioned
above.
12
HOW DO WE DETERMINE ANNUAL BONUSES?
We base the amount of the award to each executive officer on a combination
of our overall performance and the individual's performance. The Compensation
Committee approved bonuses in 2000 to our executive officers totaling $189,500.
The Compensation Committee considered our corporate performance, including our
successful public offering in August 2000, and each individual's contributions
to our success in determining their bonus amounts.
HOW IS COMPENSATION USED TO ENSURE SENIOR MANAGEMENT IS FOCUSED ON LONG-TERM
RESULTS?
We use stock options to provide long-term incentives to our executive
officers. The Compensation Committee approves all grants of stock options to
executive officers. These stock option grants are designed to align the
interests of each executive officer with those of our other stockholders.
Options are generally exercisable over a ten-year period at the market price on
the date of grant. Options granted to executive officers and others pursuant to
our 2000 Stock Option Plan generally become exercisable in installments over a
three-year vesting period. The options will provide a benefit to the executive
officer only if he or she remains employed by Keryx during the vesting period,
and then only if the market price of our common stock increases. During 2000,
the Compensation Committee approved grants of options to one executive officer
to purchase 90,000 shares of common stock. No grants were made to the other
executive officers during 2000 because they all received significant grants at
the end of 1999. We based the number of shares granted to each executive officer
on a combination of our overall performance and the individual's performance, as
well as the size of option grants made to executive officers of comparable
biotechnology companies.
HOW DO WE DETERMINE THE COMPENSATION OF OUR CHIEF EXECUTIVE OFFICER?
Dr. Laster was our Chief Executive Officer during 2000. His compensation is
determined by establishing a base salary competitive with those paid by other
biotechnology companies and making a significant percentage of his total
compensation package contingent upon corporate and individual performance. In
September 2000, the Compensation Committee set Dr. Laster's annual base salary
at $270,000. His 2000 bonus of $75,000 was based on the Compensation Committee's
assessment of Dr. Laster's individual performance and his contribution to our
corporate performance, particularly his successful leadership in connection with
our initial public offering.
WHAT IS THE IMPACT OF INTERNAL REVENUE CODE SECTION 162(M)?
Under Section 162(m) of the Internal Revenue Code, we will not be allowed a
federal income tax deduction for compensation paid to certain executive
officers, to the extent that compensation exceeds $1.0 million per executive
officer in any one year. Compensation that qualifies as performance-based
compensation is not taken into account for purposes of the limitation. The
definition of performance-based compensation includes compensation deemed paid
in connection with the exercise of certain stock options. The exercised stock
options must have an exercise price equal to the fair market value of the option
shares on the grant date to qualify as performance-based compensation. Our 2000
Stock Option Plan is intended to assure that the exercise of such stock options
will qualify as performance-based compensation.
The Company generally intends to structure the stock options granted to its
executive officers in a manner that complies with the statute to mitigate any
disallowance of deductions under Section 162(m). However, the Compensation
Committee reserves the right to use its judgment to authorize compensation
payments that may be in excess of the limit when the Compensation Committee
believes such payment is appropriate, after taking into consideration changing
business conditions or the officer's performance, and is in the best interests
of the stockholders.
By the Compensation Committee of the Board
of Directors
Mr. Kash
Mr. Rothbaum
Dr. Rachesky
13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Dr. Rachesky and
Messrs. Rothbaum and Kash. No member of the Compensation Committee was at any
time during 2000, or formerly, an officer or employee of Keryx or any other
subsidiary of Keryx, nor has any other member of the Compensation Committee had
any relationship with Keryx requiring disclosure under Item 404 of
Regulation S-K under the Exchange Act, other than as set forth below under the
heading "Related Party Transactions".
No executive officer of Keryx has served as a director or member of the
Compensation Committee (or other committee serving an equivalent function) of
any other entity, one of whose executive officers served as a director of or
member of the Compensation Committee of Keryx.
COMMON STOCK PERFORMANCE GRAPH
Our Common Stock has been listed for trading on the Nasdaq National Market
under the symbol KERX since July 28, 2000. The following graph compares the
cumulative total stockholder return on the common stock for the period from
July 28, 2000, the date of our initial public offering, through December 31,
2000 with the Cumulative total return over such period on (i) the Nasdaq
National Market-US Index and (ii) the Nasdaq Stock Market-BioTech Index. The
graph assumes the investment of $100 on July 28, 2000 in our common stock (at
the initial public offering price) and in each of the indices listed above, and
assumes the reinvestment of all dividends. Measurements points are July 28, 2000
and the last trading day of the year ended December 31, 2000.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Dollars
7/28/00 12/31/00
KERYX BIOPHARMACEUTICALS, INC. 100 101.25
NASDAQ STOCK MARKET (U.S.) 100 61.66
NASDAQ BIOTECHNOLOGY 100 89.12
14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities and Exchange Commission require us to disclose
late filings of reports of stock ownership (and changes in stock ownership) by
our directors, executive officers, and 10% stockholders. Our directors,
executive officers, and 10% stockholders are required by those rules to give us
copies of the reports of stock ownership (and changes in stock ownership) they
file with the Securities and Exchange Commission. Based solely on our review of
the copies of the reports we received, we believe that our directors, executive
officers, and 10% stockholders met all of their filing requirements during the
year ended December 31, 2000, except that (a) Lindsay A. Rosenwald, a director
of the Company, failed to report in a timely fashion the purchase of 109,900
shares in October 1999; (b) Peter Kash, a director of the Company, failed to
report in a timely fashion the receipt of a warrant for 38,720 shares of common
stock in November 2000; (c) Robert Gallahue, who became an executive officer in
June 2000, failed to file his initial statement of beneficial ownership
(Form 3) in a timely manner; and (d) Noa Shelach, who became an executive
officer in December 2000, failed to file her initial statement of beneficial
ownership (Form 3) in a timely manner.
RELATED-PARTY TRANSACTIONS
PRIVATE PLACEMENT. In a private placement that closed in January 2000, Mark
Rachesky, M.D., a director, purchased 2,500 shares of our Series A Preferred
Stock (which converted into 128,850 shares of common stock in our initial public
offering) for an aggregate purchase price of $250,000. In addition, Paramount
Capital, Inc., which is 100% owned by Lindsey A. Rosenwald, M.D., a director,
acting as the finder in this private placement, received consideration of
$375,400 and a warrant to purchase 116,090 shares of our common stock at an
exercise price of $1.94 per share, which expires on January 25, 2003. In
November 2000, Paramount Capital distributed this entire warrant to various
persons associated with it.
PATENT ATTORNEYS. Pennie & Edmonds LLP acts as one of our patent counsel.
S. Leslie Misrock, who served as a director of our company from November 1999
until his resignation in January 2001, is a senior partner of Pennie & Edmonds.
15
STOCK OWNERSHIP OF OUR DIRECTORS, EXECUTIVE OFFICERS,
AND 5% BENEFICIAL OWNERS
The following table shows information, as of December 31, 2000, about the
beneficial ownership of our common stock by:
- each person we know to be the beneficial owner of at least five percent of
our common stock;
- each director (all of whom are nominees for re-election);
- each executive officer shown in our Summary Compensation Table; and
- all directors and executive officers as a group.
As of December 31, 2000, there were 19,532,772 shares of our common stock
outstanding. To calculate a shareholder's percentage of beneficial ownership, we
must include in the numerator and denominator those shares underlying options or
warrants beneficially owned by that shareholder that are vested or that will
vest within 60 days of December 31, 2000. Options or warrants held by other
shareholders, however, are disregarded in this calculation. Therefore, the
denominator used in calculating beneficial ownership among our shareholders may
differ.
Unless we have indicated otherwise, each person named in the table below has
sole voting power and investment power for the shares listed opposite such
person's name. The address of each 5% stockholder is c/o Keryx
Biopharmaceuticals, Inc., 5 Kiryat Mada, Jerusalem 91236 Israel.
NUMBER OF
COMMON SHARES PERCENTAGE OF
NAME AND ADDRESS BENEFICIALLY OWNED OUTSTANDING SHARES
- ---------------- ------------------ ------------------
Morris Laster, M.D.(1)...................................... 1,822,100 8.53%
Benjamin Corn, M.D.(2)...................................... 209,026 1.06%
Robert E. Gallahue.......................................... -- --
Ira Weinstein(3)............................................ 320,120 1.61%
Bob Trachtenberg(4)......................................... 295,120 1.49%
Noa Shelach(5).............................................. 97,391 *
Lindsay A. Rosenwald, M.D.(6)............................... 6,076,349 31.01%
Peter Morgan Kash(7)........................................ 1,018,970 5.18%
Mark Rachesky, M.D.(8)...................................... 188,850 *
Wayne Rothbaum(9)........................................... 60,000 *
Malcom Hoenlein(10)......................................... 5,000 *
J. Wilson Totten(11)........................................ 5,000 *
All executive officers and directors as a group(12)......... 10,097,926 44.64%
- ------------------------
* Less than 1%
(1) Includes 1,822,100 shares of common stock issuable upon the exercise of
options exercisable within 60 days of December 31, 2000. All 1,822,100
options are held in the name of Mogul LLC, a Delaware limited liability
company, the sole member of which is an irrevocable trust of which
Dr. Laster is a beneficiary, but over which he has no control. Dr. Laster
disclaims beneficial ownership of such shares.
(2) Includes 209,026 shares of common stock issuable upon the exercise of
options exercisable within 60 days of December 31, 2000. All 209,026 options
are held in the name of Crown Investment Holdings, Inc., a Delaware
corporation, the sole stockholder of which is an irrevocable trust of which
Dr. Corn is a beneficiary, but over which he has no control. Dr. Corn
disclaims beneficial ownership of such shares.
16
(3) Includes 320,120 shares of common stock issuable upon the exercise of
options exercisable within 60 days of December 31, 2000. All 320,120 options
are held in the name of Radio Eon, LLC, a Delaware limited liability
company, the sole member of which is an irrevocable trust of which
Dr. Weinstein is a beneficiary, but over which he has no control.
Dr. Weinstein disclaims beneficial ownership of such shares.
(4) Includes 295,120 shares of common stock issuable upon the exercise of
options exercisable within 60 days of December 31, 2000. All 295,120 options
are held in the name of Manzello Associates, LLC, a Delaware limited
liability company, the sole member of which is an irrevocable trust of which
Mr. Trachtenberg is a beneficiary, but over which he has no control.
Mr. Trachtenberg disclaims beneficial ownership of such shares.
(5) Includes 97,391 shares of common stock issuable upon the exercise of options
exercisable within 60 days of December 31, 2000.
(6) Includes 250,485 shares of common stock held by Paramount Capital
Investments LLC, an affiliate of Paramount Capital, Inc., of which
Dr. Rosenwald is Chairman. Also includes 194,600 shares of common stock held
by funds managed by Paramount Capital Asset Management, Inc., of which
Dr. Rosenwald is the Chairman and sole stockholder. In addition, it includes
14,064 shares of common stock issuable upon the exercise of a vested warrant
held by Dr. Rosenwald and 50,110 shares of common stock issuable upon the
exercise of a vested warrant held by Paramount Capital Investments LLC.
(7) Includes 112,500 shares of common stock issuable upon the exercise of vested
options and 38,720 shares of common stock issuable upon the exercise of
vested warrants. 30,000 shares of common stock beneficially owned by
Mr. Kash are subject to a 10-year purchase option that Mr. Kash transferred
to an irrevocable family trust, and 1,500 shares are subject to a 10-year
purchase option transferred to a charitable foundation. In addition,
Mr. Kash has transferred to each of three family members 10-year options to
purchase 30,000 shares.
(8) Includes 60,000 shares of common stock issuable upon the exercise of vested
options.
(9) Includes 60,000 shares of common stock issuable upon the exercise of vested
options.
(10) Includes 5,000 shares of common stock issuable upon the exercise of vested
options.
(11) Includes 5,000 shares of common stock issuable upon the exercise of vested
options.
(12) Includes 2,986,257 shares of common stock issuable upon the exercise of
vested options and 102,894 shares of common stock issuable upon the exercise
of vested warrants.
ADDITIONAL INFORMATION
SHAREHOLDERS PROPOSALS FOR THE 2002 ANNUAL MEETING
Shareholders interested in submitting a proposal for inclusion in the proxy
materials for the annual meeting of shareholders in 2002 may do so by following
the procedures prescribed in SEC Rule 14a-8. To be eligible for inclusion,
shareholder proposals must be received by the Company's Corporate Secretary no
later than December 24, 2001.
By Order of the Board of Directors
Bob Trachtenberg
Secretary
17
APPENDIX A
KERYX BIOPHARMACEUTICALS, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
1. PURPOSE.
The Audit Committee (the "Committee") is a committee of the Board of
Directors of Keryx Biopharmaceuticals, Inc. (the "Company"). Its primary
function is to assist the Board of Directors in fulfilling its oversight
responsibilities to the stockholders, potential stockholders and investment
community relating to corporate accounting reporting practices of the Company,
the quality and integrity of the financial reports of the Company, the systems
of internal controls which management and the Board of Directors have
established and the audit process. The execution of these responsibilities is
further enumerated below.
2. COMPOSITION.
The membership of the Committee shall consist of at least three members of
the Board of Directors, all of whom shall selected by, and who shall serve at
the pleasure of the Board of Directors. The Committee shall elect from its own
members a Chair, who shall preside over each meeting of the Committee. All
members of the Committee must be "independent directors". A director will not be
considered independent who:
a. is employed by the Company or any of its affiliates for the current year
or any of the past three years,
b. accepts any compensation (other than compensation for service as a
director and certain other limited amounts) from the Company or any of
its affiliates in excess of $60,000 during the previous fiscal year,
c. is employed as an executive by another entity where any of the Company's
executives serves on that entity's compensation committee,
d. is a partner in, or a controlling stockholder or an executive officer
of, any for-profit business entity to which the Company made, or from
which the Company received, payments exceeding 5% of the Company's or
such entity's consolidated gross revenues for that year, or $200,000,
whichever is more, in any of the past three years, or
e. is a member of the immediate family of any individual who is, or has
been in any of the past three years, employed as an executive officer by
the Company or any of its affiliates.
Notwithstanding the foregoing, one director who is neither a current
employee nor an immediate family member of a current employee, but who otherwise
is not independent, may be appointed to the Committee if the Board, under
exceptional and limited circumstances, determines that membership is required by
the best interests of the Company and its stockholders. In such case, the Board
must disclose in its next annual proxy statement the nature of the relationship
and the reasons for the determination.
Each member of the Committee must be able to read and understand fundamental
financial statements or become able to do so within a reasonable period of time
after appointment to the Committee. In addition, at least one member of the
Committee must have past employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background which results in the individual's financial
sophistication.
The Board may designate one or more Directors as alternative members of the
Committee, who may replace any absent or disqualified member or members at any
meetings of the Committee. In addition, no person may be made a member of the
Committee if his or her service on the Committee would violate any restriction
on service imposed by any rule of the United States Securities and
Exchange Commission ("SEC") or any exchange on which shares of the common stock
of the Company are traded.
3. AUTHORITY.
The Committee is granted authority to investigate any activity of the
Company. The Committee shall be empowered to retain persons, as necessary, to
assist in fulfilling its responsibilities. All employees are directed to
cooperate as requested by members of the Committee or persons empowered by the
Committee.
4. MEETINGS.
The Committee is to meet two times per year, with additional meetings when
circumstances require, as determined by the Chair. Members of the Committee are
to be present, in person or telephonically, at all meetings. As necessary, the
Chair may request that members of management, internal auditor and/or
representatives of the independent auditors be present at Committee meetings.
The Committee will submit the minutes of its meetings to, or discuss the matters
deliberated at each meeting with, the Board.
5. COMMITTEE RESPONSIBILITIES.
The Committee will have the following responsibilities:
a. Provide an open avenue of communication between the independent auditor
and the Board of Directors.
b. Review annually and recommend to the Board of Directors as appropriate
an update of Audit Committee's charter.
c. Recommend to the Board of Directors the independent auditor to be
nominated for approval at the Company's annual meeting of stockholders
and approve the compensation of the independent auditor.
d. Review the performance of the independent auditor and approve any
proposed discharge of the independent auditor when circumstances warrant.
e. Review and take appropriate action to oversee the independence of the
independent auditor, including, without limitation:
i. Receiving a formal written statement from the independent auditor
delineating all relationships between the auditor and the Company,
consistent with Independence Standards Board Statement No. 1.
ii. Actively engaging in a dialog with the independent auditor with
respect to any disclosed relationships or services that may have an
impact on the objectivity and independence of the independent
auditor.
f. Inquire of management and the independent auditor about significant
risks or exposures and assess the steps management has taken to minimize
such risks to the Company.
g. Consider, in consultation with the independent auditor, the audit scope
and plan of the independent auditor.
h. Consider and review with the independent auditor, out of the presence of
management:
i. The adequacy of the Company's internal controls, including
computerized information system controls and security.
ii. Any related significant findings and recommendations of the
independent auditor together with management's responses thereto.
iii. The independent auditor's judgment about the quality and
appropriateness of the Company's accounting principles as applied
in its financial reporting.
i. Review with management and the independent auditor at the completion of
the annual examination:
i. The Company's annual financial statements and related footnotes.
ii. The independent auditor's audit of the financial statements and its
report thereon.
iii. Any significant changes required in the independent auditor's audit
plan.
iv. Any significant difficulties encountered during the course of the
audit (including any restriction on the scope of work or access to
required information).
v. Any significant disagreement among management and the independent
auditor in connection with preparation of the financial statements.
vi. Other matters related to the conduct of the audit that are to be
communicated to the Audit Committee under generally accepted
auditing standards.
j. Recommend to the Board of Directors whether the Company's audited
financial statements should be included in the Company's Annual Report on
Form 10-K for filing with the SEC.
k. Review the Company's SEC filings and other published documents
containing the Company's annual financial statements, including any
certification, report, opinion or review rendered by the independent
auditor.
l. Review with management and the independent auditor the interim financial
report before it is filed with the SEC or other regulators (the Chair of
the Audit Committee may represent the entire Audit Committee for purposes
of this review).
m. Review policies and procedures with respect to officers? expense accounts
and perquisites, including their use of corporate assets and consider the
results of any review of these areas by the independent auditor.
n. Review legal and regulatory matters that may have a material impact on
the financial statements, related company compliance policies, and
reports received from regulators.
o. Meet with the independent auditor and management in separate executive
sessions to discuss any matters that the Audit Committee believes should
be discussed privately with the Audit Committee.
p. Report Audit Committee actions to the Board of Directors with such
recommendations as the Audit Committee may deem appropriate.
q. At the Audit Committee's discretion, conduct or authorize investigations
into any matters within the Audit Committee's scope of responsibilities.
The Audit Committee shall be empowered to retain independent counsel,
auditors or others to assist it in the conduct of any investigation.
r. Instruct the independent auditor that the Board of Directors, as the
stockholders' representative, is the auditor's client.
s. Perform such other functions as assigned by law, the Company's
Certificate of Incorporation or Bylaws, or the Board of Directors.
Annex B
PROXY CARD
KERYX BIOPHARMACEUTICALS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 23, 2001
(This Proxy is solicited by the Board of Directors of the Company)
The undersigned stockholder of Keryx Biopharmaceuticals, Inc. hereby
appoints Bob Trachtenberg, General Counsel and Secretary, and Robert E.
Gallahue, Chief Financial Officer and Treasurer, and each of them, with full
power of substitution, proxies to vote the shares of stock that the undersigned
could vote if personally present at the Annual Meeting of Stockholders of Keryx
Biopharmaceuticals, Inc. to be held at the offices of Hale and Dorr LLP, 60
State Street, Boston, Massachusetts, on Wednesday, May 23, 2001, at 2:00 p.m.,
local time, or any adjournment thereof.
(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
KERYX BIOPHARMACEUTICALS, INC.
May 23, 2001
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE: |X|
1. ELECTION OF DIRECTORS
FOR all nominees below (except as WITHHOLD AUTHORITY to vote
marked to the contrary below) for all nominees below
\__\ \__\
INSTRUCTION: To withhold authority to vote for an individual nominee, strike a
line through that nominee's name in the list at right.
NOMINEES: Morris Laster
Malcolm Hoenlein
Peter Kash
Mark H. Rachesky
Lindsay A. Rosenwald
Wayne Rothbaum
J. Wilson Totten
2. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS NAMED IN PROPOSAL 1.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND THE RELATED PROXY STATEMENT.
Signature______________________________________________ Dated:______________
_______________________________________________________ Dated:______________
SIGNATURE: IF HELD JOINTLY
Note: Please date and sign exactly as your name appears on the envelope in which
this material was mailed. If shares are held jointly, each stockholder should
sign. Executors, administrators, trustees, etc. should use full title, and if
more than one, all should sign. If the stockholder is a corporation, please sign
full corporate name by an authorized officer. If the stockholder is a
partnership, please sign full partnership name by an authorized person.