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 ss. 240.14a - 11(c) or ss. 240.14a - 12
COMMONWEALTH BIOTECHNOLOGIES, INC.
----------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
--------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------
[LOGO]
Commonwealth Biotechnologies, Inc.
601 Biotech Drive
Richmond, Virginia 23235
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders,
which is to be held on May 7, 2001, at 11:00 a.m. at 601 Biotech Drive,
Richmond, Virginia 23235. The following pages contain the formal notice of the
Annual Meeting and our Proxy Statement, which describe the specific business to
be considered and voted upon at the Annual Meeting.
It is important that your shares be represented at the meeting. Whether
or not you expect to attend in person, we would greatly appreciate your efforts
to return the enclosed proxy as soon as possible. If you decide to attend the
Annual Meeting, you may withdraw your proxy should you wish to vote in person.
We look forward to seeing you at the Annual Meeting.
Sincerely yours,
/S/ Richard J. Freer
RICHARD J. FREER, PH.D.,
Chairman of the Board of Directors
COMMONWEALTH BIOTECHNOLOGIES, INC.
601 Biotech Drive
Richmond, Virginia 23235
Notice of Annual Meeting of Shareholders
To Be Held
May 7, 2001
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of Commonwealth Biotechnologies, Inc. (the "Company") will
be held on May 7, 2001, at 11:00 a.m. at 601 Biotech Drive, Richmond,
Virginia, for the following purposes:
(1) To elect three nominees as Class I Directors of the Company;
(2) To elect one nominee as a Class II Director of the Company;
(3) To elect one nominee as a Class III Director of the Company;
(4) To ratify the appointment of McGladrey & Pullen, LLP as
independent public accountants to audit the financial
statements of the Company for the fiscal year ending December
31, 2001; and
(5) To transact such other business as may properly come before
the meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 31, 2001
will be entitled to vote at the Annual Meeting.
The enclosed Proxy Statement contains more information pertaining to
matters to be voted on at the Annual Meeting. Please read the Proxy Statement
carefully.
Whether or not you plan to attend the Annual Meeting in person, to
assure the presence of a quorum, please complete, date, sign and return the
accompanying proxy in the enclosed, postage-paid envelope. If you attend the
meeting and wish to vote your shares personally, you may do so at any time
before the proxy is exercised.
By Order of the Board of Directors,
/s/ Thomas R. Reynolds
THOMAS R. REYNOLDS,
Secretary
Richmond, Virginia
April 9, 2001
COMMONWEALTH BIOTECHNOLOGIES, INC.
601 Biotech Drive
Richmond, Virginia 23235
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 7, 2001
This Proxy Statement is furnished to the holders of common stock,
without par value per share ("Common Stock"), of Commonwealth Biotechnologies,
Inc. (the "Company") in connection with the solicitation of proxies by the Board
of Directors of the Company (the "Board of Directors") to be voted at the annual
meeting of shareholders of the Company (the "Annual Meeting") to be held on May
7, 2001, at 11:00 a.m. at 601 Biotech Drive, Richmond, Virginia, and at any
adjournments or postponements thereof. This Proxy Statement and the accompanying
proxy are first being mailed on or about April 9, 2001.
Only the holders of Common Stock of record at the close of business on
March 31, 2001 (the "Record Date") will be entitled to vote at the Annual
Meeting. On such date, 2,076,164 shares of Common Stock were outstanding. Each
shareholder is entitled to one vote per share held of record on the Record Date.
The Common Stock is the Company's only outstanding voting stock.
A majority of the shares of Common Stock entitled to vote, represented
in person or by proxy, is required to constitute a quorum. If a quorum is not
present at the time of the Annual Meeting, or if for any reason the Company
believes that additional time should be allowed for the solicitation of proxies,
the Company may adjourn or postpone the Annual Meeting with or without a vote of
the shareholders. If the Company proposes adjournment, the person named on the
enclosed proxy card will vote such shares for which they have voting authority
in favor of adjournment.
All shares of Common Stock represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual Meeting and not
properly revoked will be voted at the Annual Meeting in accordance with the
instructions indicated thereon. If no specification is made, the proxies will be
voted in favor of the matters listed on the proxy card and for the
recommendation of the Board of Directors on any other proposal that may properly
come before the meeting. Directors must be elected by a plurality of votes cast
(in person or by proxy) by the holders of Common Stock entitled to vote at the
Annual Meeting if a quorum is present. All other matters shall be determined
based upon the vote of the majority of votes cast (in person or by proxy) by the
holders of Common Stock entitled to vote at the Annual Meeting if a quorum is
present. Abstentions and broker non-votes will be counted for purposes of
constituting a quorum, but will not have the effect of voting in opposition to a
director or of a vote against the other proposals.
The Company will pay all expenses of the Annual Meeting, including the
cost of soliciting proxies. The Company may reimburse persons holding shares in
their names for others, or holding shares for others who have the right to give
voting instructions, such as brokers, banks, fiduciaries and nominees, for such
persons' reasonable expenses in forwarding the proxy materials to their
principals. Certain directors, officers and other employees of the Company, not
specially employed for this purpose, may solicit proxies, without additional
remuneration therefor, by personal interview, mail, telephone, facsimile or
other electronic means.
Any shareholder giving a proxy may revoke it by delivering a written
notice of such revocation to Thomas R. Reynolds, the Secretary of the Company,
at 601 Biotech Drive, Richmond, Virginia 23235 prior to the Annual Meeting, by
submitting to the Company a more recently dated proxy or by attending the Annual
Meeting and voting at any time before it is exercised.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Articles of Incorporation, as amended to date, provide
that the Board of Directors shall be divided into three classes of as nearly
equal size as possible. The Board of Directors has nominated the three
individuals named below under the caption "Class I Nominees" for election as
directors to serve until the annual meeting of shareholders in 2004 or until
their successors have been elected and qualified. All of the Class I Nominees
are currently serving on the Board of Directors of the Company with terms
expiring at this Annual Meeting, with the exception of Everette G. Allen, Jr.,
who was appointed to the Board in January 2001, subject to shareholder approval.
In January 2001, the Company's Board of Directors also nominated the individual
named below under "Class II Nominee" for election as a director to serve until
the annual meeting of shareholders in 2002 or until his successor has been
elected and qualified. In January 2001, the Company's Board of Directors also
nominated the individual named below under "Class III Nominee" for election as a
director to serve until the annual meeting of shareholders in 2003 or until his
successor has been elected and qualified.
The Company's Bylaws, as amended to date, provide that the Board of
Directors shall consist of not less than five nor more than nine directors as
established by the Board of Directors. The size of the Board of Directors
currently consists of eight directors.
Required Vote
Directors must be elected by a plurality of votes cast (in person or by
proxy) by the holders of Common Stock entitled to vote at the Annual Meeting if
a quorum is present.
Class I Nominees:
EVERETTE G. ALLEN, JR. - Nominee for Director
Age -- 60
Mr. Allen is Chairman of and a senior partner in the law firm of
Hirschler, Fleischer, Weinberg, Cox & Allen, P.C. in Richmond, Virginia. Mr.
Allen concentrates his practice in litigation, real estate development,
commercial disputes law, finance and debt restructuring and has been practicing
at Hirschler, Fleischer since 1970. Mr. Allen was admitted to the Virginia State
Bar in 1965. He served as Executive Editor of the Virginia Law Review from 1964
to 1965 and served as a Law Clerk to Fourth Circuit Judge Albert V. Bryan of the
U.S. Court of Appeals during 1965 and 1966. He was a member of the Board of
Trustees of Randolph-Macon College from 1988 to 1992 and a Trustee of the
Virginia Student Aid Foundation from 1996 to 1999. Mr. Allen currently is a
member of the American College of Trial Lawyers, a member of the Board of
Directors of Virginia Gas Company and a Trustee of the Metropolitan Richmond
Sports Authority. In addition, Mr. Allen is a director of Hersha Hospitality
Trust, a real estate investment trust. Mr. Allen is a Phi Beta Kappa graduate of
Randolph Macon College in 1962 and received his law degree from the University
of Virginia in 1965.
RAYMOND HAROLD CYPESS - Director
Age -- 60
Director since 1999
Since 1993, Dr. Cypess has been the President and Chief Executive
Officer of American Type Culture Collection ("ATCC"), a leading non-profit
repository for microbiologicals. Since 2000, Dr. Cypess has been Chairman of
Biodominion Corp., a wholly-owned subsidiary of ATCC, and he is currently a
director of Mid-Atlantic Medical Services, Inc. Dr. Cypess received a bachelor's
degree in Biology from Brooklyn College, a bachelor's degree in Agriculture from
the University of Illinois, Urbanna, a doctorate degree in Veterinary Medicine
from the University of Illinois, Urbanna and a doctorate degree in Parasitology
from the University of North Carolina, Chapel Hill.
THOMAS R. REYNOLDS - Senior Vice President, Secretary, Director and Founder
Age -- 38
Director since 1992
Mr. Reynolds currently serves the Company as a Senior Vice President
and a director. He assumed the role of the Company's Secretary in 1998. From the
founding of the Company in 1992 until 1997, Mr. Reynolds served as a Vice
President of the Company. From 1987 until 1997, Mr. Reynolds served as the
Manager of the Nucleic Acids Core Laboratory at The Massey Cancer Center at
Virginia Commonwealth University ("VCU"). Mr. Reynolds received a bachelor's
degree in Biology from the Pennsylvania State University.
Class II Nominee:
SAMUEL P. SEARS, JR. - Nominee for Director
Age -- 57
Since March 1999, Mr. Sears has been in private practice as an attorney
and has been providing business consulting services. From December 1998 through
February 1999, Mr. Sears served as Vice Chairman of American Prescription
Providers, Inc., a specialty pharmacy network offering prescriptions and
nutriceuticals to patients with chronic diseases. From 1995 through May 1998,
Mr. Sears was Chief Executive Officer and Chairman of Star Scientific, Inc., a
tobacco company focusing on demonstrating the commercial viability of
potentially less harmful tobacco products. Mr. Sears is a graduate of Harvard
College and Boston College Law School.
Class III Nominee:
DONALD A. MCAFEE, PH.D. - Nominee for Director
Age -- 59
Dr. McAfee is co-founder, Chairman, and a director of Discovery
Therapeutics, Inc., a Richmond, Virginia-based clinical stage pharmaceutical
company. Dr. McAfee has been a scientist and manager in academia and industry
for more than 35 years. Before organizing Discovery Therapeutics in 1994, Dr.
McAfee served for eight years as Vice President, Research, at Whitby Research,
Inc. (formerly Nelson Research and Development), managing the drug discovery
programs. Prior to entering industry, Dr. McAfee served as Chairman of the
Division of Neurosciences at the Beckman Research Institute (City of Hope) and
held faculty appointments at the Yale University School of Medicine and the
University of Miami School of Medicine. He has authored more than 100 articles
and book chapters in neuroscience and pharmacology. He is currently an adjunct
professor at the University of California, Irvine and at the Medical College of
Virginia, and is a frequent lecturer to the industry in drug discovery for the
Pharmaceutical Education and Research Institute. Dr. McAfee received his Ph.D.
in Physiology from the University of Oregon School of Medicine.
Continuing Directors
The persons named below will continue to serve as directors until the
annual meeting of stockholders in the year indicated and until their successors
are elected and take office. Shareholders are NOT voting on the election of the
two Class I directors and the one Class III Director noted below.
Class II Directors Serving Until the 2002 Annual Meeting:
ROBERT B. HARRIS, PH.D. - President, Director and Founder
Age -- 49
Director since 1992
Since founding the Company in 1992, Dr. Harris has served as the
President and a director of the Company. Until 1997, Dr. Harris was employed in
the Department of Biochemistry and Molecular Biophysics at VCU, first as an
Assistant, then Associate and finally a full Professor. Dr. Harris received a
joint bachelor's degree in Chemistry and Biology from the University of
Rochester, and a master's degree and a doctorate degree in
Biochemistry/Biophysical Chemistry from New York University.
L. McCARTHY DOWNS, III - Director
Age -- 48
Director since 2000
Mr. Downs is Chairman of the Board of Anderson & Strudwick Investment
Corporation, the parent company of Anderson & Strudwick, Incorporated, a
registered broker-dealer ("A&S"). Mr. Downs is a Senior Vice President with A&S.
He has been the manager of A&S' Corporate Finance department since 1990 and has
been involved in several public and private financings for real estate
investment trusts and other companies including the Company. Prior to 1990, Mr.
Downs was employed by another investment banking and brokerage firm for seven
years. In addition, Mr. Downs is a director of Hersha Hospitality Trust, a real
estate investment trust. Mr. Downs received a Bachelor of Science degree in
Business Administration from The Citadel and obtained a master's degree in
Business Administration from The College of William and Mary.
Class III Directors Serving Until the 2003 Annual Meeting:
RICHARD J. FREER, PH.D. - Chairman of the Board, Director and Founder
Age -- 58
Director since 1992
Since founding the Company in 1992, Dr. Freer has served as the
Chairman of the Board and a director of the Company. From 1975 until 1997, Dr.
Freer was employed in the Department of Pharmacology and Toxicology at VCU,
first as an Associate Professor, and then a full Professor. In addition, from
1988 through 1995, Dr. Freer was first Director and then Chair of the Biomedical
Engineering Program. From 1996 through 1997, Dr. Freer served as Professor in
VCU's Department of Biochemistry and Molecular Biophysics. Dr. Freer received a
bachelor's degree in Biology from Marist College and a doctorate degree in
Pharmacology from Columbia University.
In voting by proxy for the election of the three nominees as Class I
Directors, the one nominee as Class II Director, and the one nominee as Class
III Director to serve until the annual meeting of shareholders at which such
directors' class will stand for reelection, shareholders may vote in favor of
all nominees, withhold their votes as to all nominees, or withhold their votes
as to a specific nominee. If no instructions are indicated, such proxies will be
voted FOR the election of all nominees as directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE ELECTION OF ALL OF THE PROPOSED CLASS I, CLASS II AND CLASS III
NOMINEES TO THE BOARD OF DIRECTORS.
Information Regarding the Board of Directors
The Board of Directors held four meetings during 2000, including
regular and special meetings. Each director attended at least 75% of the
meetings of the Board of Directors and the committees thereof on which the
director serves.
The Committees of the Board of Directors consist of an Audit Committee,
a Compensation Committee, a Nominating Committee, and a Strategic Planning
Committee. The Audit Committee is currently comprised of Mr. Allen, Mr. Sears,
and Dr. Cypess. The Compensation Committee is currently comprised of Dr. Cypess,
Dr. McAfee and Mr. Sears. The Nominating Committee is comprised of Mr. Reynolds,
Mr. Downs, and Dr. Harris. The Strategic Planning Committee is comprised of Dr.
Harris, Mr. Downs, Mr. Allen, Dr. McAfee, and Mr. Reynolds. During 2000, the
Audit Committee met four times, the Compensation Committee met six times, the
Nominating Committee met two times, and the Strategic Planning Committee did not
meet. The Audit Committee recommends the annual appointment of independent
auditors, with whom the Audit Committee reviews the scope of audit and non-audit
assignments and related fees, accounting principles used by the Company in
financial reporting, internal auditing procedures and the adequacy of the
internal control procedures of the Company. The Board of Directors of the
Company has adopted a written charter for the Audit Committee, which is attached
to this Proxy Statement as Appendix A. The Compensation Committee administers
the Company's 1997 Stock Incentive Plan and 2000 Stock Incentive Plan
(collectively, the "Incentive Plans") and makes recommendations to the Board of
Directors regarding compensation and benefits for the executive officers. The
Compensation Committee also has oversight responsibilities for all broad-based
compensation and benefit programs, including the Incentive Plans. The Nominating
Committee recommends to the Board of Directors candidates for election as
director of the Company and makes recommendations to the Board of Directors
regarding director compensation. The Strategic Planning Committee is responsible
for developing, modifying, and monitoring the implementation of the Company's
long-term strategic plan.
Compensation of Directors
All directors receive a fee of $2,500 for each regularly scheduled
quarterly Board meeting attended (the "Director's Fee"). The Director's Fee is
adjusted upwards or downwards on an annual basis in an amount equal to the
percentage change in the market price of the Company's Common Stock as compared
to the market price of the Common Stock for the previous fiscal year. In
addition to the Director's Fee, all directors receive reimbursement for travel
and other related expenses incurred in attending Board meetings and committee
meetings.
Report of the Audit Committee
In accordance with its written charter adopted by the Board of
Directors, the Audit Committee assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company. Each of the members
of the Audit Committee is independent as defined by Rule 4200(a)(14) of the
National Association of Securities Dealers, Inc.'s listing standards.
In discharging its oversight responsibility as to the audit process,
the Audit Committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Company that
might bear on the auditors' independence consistent with Independence Standards
Board Standard No. 1, "Independence Discussions with Audit Committees,"
discussed with the auditors any relationships that may impact their objectivity
and independence and satisfied itself as to the auditors' independence. The
Audit Committee also discussed with management and the independent auditors the
quality and adequacy of the Company's internal controls, organization,
responsibilities, budget and staffing.
The Audit Committee discussed and reviewed with the independent
auditors all communications required by generally accepted auditing standards,
including those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees," and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements.
The Audit Committee reviewed the audited financial statements of the
Company as of and for the year ended December 31, 2000, with management and the
independent auditors. Management has the responsibility for the preparation of
the Company's financial statements and the independent auditors have the
responsibility for the examination of those statements.
Based on the above-mentioned review and discussions with management
and the independent auditors, the Audit Committee recommended to the Board of
Directors that the Company's audited financial statements be included in its
Annual Report on Form 10-KSB for the year ended December 31, 2000, for filing
with the Securities and Exchange Commission. The Audit Committee also
recommended the reappointment, subject to shareholder approval, of the
independent auditors and the Board of Directors concurred in such
recommendation.
Samuel P. Sears, Jr., Audit Committee Chairman
Everett G. Allen, Jr., Audit Committee Member
Raymond Harold Cypess, Audit Committee Member
Principal Accounting Firm Fees
The following table sets forth the aggregate fees billed to the Company
for the fiscal year ended December 31, 2000 by the Company's principal
accounting firm, McGladrey & Pullen, LLP:
Audit Fees.......................... $ 34,400
--------
Financial Information Systems Design and
Implementation Fees................. $ -
---------
All Other Fees...................... $ 24,402
---------
$ 58,802
---------
- ---------------
(a) Includes fees for tax return preparation, post audit and due deligence
procedures related to registration statements, services in connection
with a proposed acquisition and consultation on various accounting
matters.
(b) The Audit Committee has considered whether the provision of these
services is compatible with maintaining the principal accountant's
independence.
PROPOSAL 2: SELECTION OF AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors
of the Company has appointed, subject to the approval of the shareholders, the
firm McGladrey & Pullen, LLP as independent public accountants to audit the
Company's financial statements for the fiscal year ended December 31, 2001. If
the appointment of McGladrey & Pullen, LLP is not approved by the shareholders,
the matter will be referred to the Audit Committee for further review.
The Company appointed McGladrey & Pullen, LLP to serve as the Company's
independent public accountants on February 23, 1998. It is anticipated that
representatives of McGladrey & Pullen, LLP will attend the Annual Meeting and
will have an opportunity to make a statement, if they determine to do so, and
will be available to respond to appropriate questions at that time.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE SELECTION OF MCGLADREY & PULLEN, LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT THE
COMPANY'S FINANCIAL STATEMENTS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2001.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information regarding beneficial
ownership as of the Record Date (unless otherwise indicated) by (i) each
director and nominee for director, (ii) each person known by the Company to be
the beneficial owner of more than 5% of the Common Stock of the Company, (iii)
the Named Executive Officers (as defined herein), and (iv) all directors and
officers as a group. Except as otherwise indicated, the beneficial owners listed
below have sole voting and investment power with respect to all shares owned by
them, except to the extent such power is shared by a spouse under applicable
law.
Name and Address of Beneficial Owner Shares Beneficially Owned (1) Percent of Class (%)
- ------------------------------------ ----------------------------- --------------------
Richard J. Freer, Ph.D. (2) 120,743 *
Robert B. Harris, Ph.D. (3) 103,524 *
Thomas R. Reynolds (4) 51,603 *
L. McCarthy Downs (5) 25,375 *
Raymond Harold Cypess (6) 5,000 *
Everette G. Allen, Jr. (7) 25,000 *
Samuel P. Sears, Jr. (8) 5,500 *
Donald A. McAfee, Ph.D. (9) 5,000 *
James T. Martin (10) 719,500 34.7
Mills Value Adviser, Inc. (11) 514,369 24.8
Juniper Trading Services, Inc. (12) 719,500 34.7
All directors and executive officers as a
group (8 persons) (12) 341,745 16.5
- ----------------
* Less than 1%
(1) Includes shares of Common Stock subject to options and warrants that
may be exercised within 60 days of March 31, 2001. Such shares are
deemed to be outstanding for the purposes of computing the percentage
ownership of the individual holding such shares, but are not deemed
outstanding for purposes of computing the percentage of any other
person shown in the table.
(2) Dr. Freer's address is 601 Biotech Drive, Richmond, Virginia 23235. The
number of shares deemed to be beneficially held by Dr. Freer includes
currently exercisable options to purchase an aggregate of 66,664 shares
of Common Stock and warrants to purchase an aggregate of 28,947 shares
of Common Stock.
(3) Dr. Harris' address is 601 Biotech Drive, Richmond, Virginia 23235. The
number of shares deemed to be beneficially held by Dr. Harris includes
currently exercisable options to purchase an aggregate of 46,401 shares
of Common Stock and warrants to purchase an aggregate of 28,947 shares
of Common Stock.
(4) Mr. Reynolds' address is 601 Biotech Drive, Richmond, Virginia 23235.
The number of shares deemed to be beneficially held by Mr. Reynolds
includes currently exercisable options to purchase an aggregate of
26,318 shares of Common Stock and warrants to purchase an aggregate of
13,158 shares of Common Stock.
(5) Mr. Downs' address is 707 East Main Street, 20th Floor, Richmond,
Virginia 23219. The number of shares deemed to be beneficially held by
Mr. Downs represents currently exercisable warrants to purchase an
aggregate of 25,375 shares of Common Stock.
(6) Dr. Cypess' address is 10801 University Boulevard, Manassass, Virginia
20110-2209. The number of shares deemed to be beneficially held by
Dr. Cypess represents currently exercisable options to purchase an
aggregate of 5,000 shares of Common Stock.
(7) Mr. Allen's address is c/o Hirschler, Fleischer, Weinberg, Cox & Allen,
A Professional Corporation, The Federal Reserve Bank Building, 701 East
Byrd Street, P.O. Box 500, Richmond, Virginia 23218-0500. The number of
shares deemed to be beneficially held by Mr. Allen includes currently
exercisable option to purchase an aggregate of 5,000 shares of Common
Stock.
(8) Mr. Sears' address is 1276 Hermitage Road, Manakin-Sabot, Virginia
23103. The number of shares deemed to be beneficially held by Mr. Sears
includes currently exercisable options to purchase an aggregate of
5,000 shares of Common Stock.
(9) Dr. McAfee's address is 2028 Dabney Road, Suite E-17, Richmond,
Virginia 23230. The number of shares deemed to be beneficially held by
Dr. McAfee represents currently exercisable options to purchase an
aggregate of 5,000 shares of Common Stock.
(10) Mr. Martin's address is Agars Island c/o Mainsail 11 Lulworth Lane,
Point Shares, Pembroke Bermuda HM 05.
(11) Represents shares held by investment advisory clients of Mills Value
Adviser, Inc. ("MAI"), a registered investment adviser. Mr. Charles
A. Mills, III, a former director of the Company, serves as Chairman of
MAI. MAI possesses dispositive power over such shares. MAI's address is
707 East Main Street, Richmond, Virginia 23219.
(12) Juniper Trading Services, Inc.'s address is Compass Point Building, 9
Bermudiana Road, Hamilton, HM 11 Bermuda.
(13) Includes currently exercisable options and warrants to purchase an
aggregate of 255,810 shares of Common Stock within 60 days of
March 31, 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than 10% of a registered
class of the Company's securities to file reports of ownership and changes in
ownership with the SEC.
Based solely on a review of copies of reports filed with the SEC and
written representations from certain of the Company's directors and executive
officers that no other reports were required, the Company notes that Dr. Cypess
and Mr. Downs each failed to timely file one report reflecting his initial
statement of beneficial ownership. These deficiencies were subsequently
remedied.
EXECUTIVE COMPENSATION
Executive Officers of the Company
The executive officers of the Company are as follows:
Name Age Position
---- --- --------
Richard J. Freer, Ph.D. 58 Chairman of the Board and Director
Robert B. Harris, Ph.D. 49 President and Director
Thomas R. Reynolds 38 Senior Vice President, Secretary and Director
James H. Brennan 48 Controller
Set forth below is the biographical information for Mr. Brennan.
See "Proposal 1: Election of Directors" for information regarding the
backgrounds of Dr. Freer and Dr. Harris and Mr. Reynolds.
JAMES H. BRENNAN - Controller
Age -- 48
Mr. Brennan became the Company's Controller in December 1997. From
1996 to 1997, Mr. Brennan served as the Controller of Star Tobacco, a cigarette
manufacturer. From 1995 to 1996, he served as Controller of Delta Airport
Consultants, an engineering firm. From 1994 to 1995, Mr. Brennan was the
Controller for Herald Pharmacal, a manufacturer of skin care products. Mr.
Brennan received a bachelor's degree in Political Science from Mount St. Mary's
College and a master's degree in Business Administration from Averett College.
Summary Compensation
The following table sets forth summary information concerning
compensation paid or accrued by the Company in 2000 on behalf of (i) the
Company's Chairman of the Board and (ii) the two other executive officers of the
Company whose total annual salary and bonus exceeded $100,000 in 2000
(collectively, the "Named Executive Officers").
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary ($)(1) Bonus ($) Compensation ($) Options (#) Compensation ($)
-------- ---- ------------- --------- ---------------- ----------- ----------------
Richard J. Freer, Ph.D., 2000 182,925 -- -- 7,069 24,700 (2)
Chairman of the Board 1999 150,000 -- -- -- 7,500 (2)
1998 162,600 -- -- 78,157 44,073 (4)
Robert B. Harris, Ph.D., 2000 183,846 -- -- 7,069 24,700 (2)
President 1999 150,000 -- -- -- 7,500 (2)
1998 164,866 -- -- 78,157 44,073 (4)
Thomas R. Reynolds, 2000 131,742 -- -- 6,141 15,000 (3)
Senior Vice President and 1999 115,750 -- -- -- 5,000 (3)
Secretary 1998 118,352 -- -- 35,529 22,632 (5)
- --------------
(1) Does not include certain perquisites and other personal benefits, the
amounts of which are not shown because the aggregate amount of such
compensation during the year did not exceed the lesser of $50,000 or
10% of total salary and bonus reported for such executive officer.
(2) Represents Director's Fees and travel expenses paid by the Company.
(3) Represents Director's Fees paid by the Company.
(4) Represents the sum of Director's Fees and travel expenses paid by the
Company and distributions to pay income taxes incurred by the recipient
as a result of the Company's status, prior to June 1997, as a
corporation taxed in accordance with Subchapter S of the Internal
Revenue Code of 1986, as amended.
(5) Represents the sum of Director's Fees paid by the Company and
distributions to pay income taxes incurred by the recipient as a result
of the Company's status, prior to June 1997, as a corporation taxed in
accordance with Subchapter S of the Internal Revenue Code of 1986, as
amended.
Stock Option Exercises in 2000 and Year-End Option Values
The following table sets forth certain information, with respect to the
Named Executive Officers, concerning the exercise of options in 2000 and with
respect to unexercised options at December 31, 2000.
Number of Unexercised Option Value of Unexercised In-the-Money
at Fiscal Year-End (#) Options at Fiscal Year End ($)(1)
Shares Acquired ---------------------- ---------------------------------
---------------
Name on Exercise (#) Value Realized ($)(2) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------------------- ----------- ------------- ----------- -------------
s
Richard J. Freer, Ph.D., 0 0 66,664 11,493 -- --
Robert B. Harris, Ph.D., 20,263 281,149.125 46,401 11,493 -- --
Thomas R. Reynolds 9,211 127,802.625 26,318 0 -- --
- --------------
(1) The exercise prices of the stock options exceeded the closing price of the
stock on the Nasdaq SmallCap Market on December 31, 2000.
(2) Calculated by subtracting the exercise price from the closing price of the
stock on the Nasdaq SmallCap Market on the date of exercise.
Stock Option Grants in 2000
The following table sets forth certain information, with respect to the
Named Executive Officers, concerning the grant of options in 2000 pursuant to
the Company's Incentive Plans.
Number of securities Percent of total options Exercise or
underlying options granted to employees in base price
Name granted (#) (1) fiscal year (%)(2) ($/share)(3) Expiration Date
---- --------------- ------------------ ------------ ---------------
Richard J. Freer, Ph.D. 7,069 8.2 3.75 12/31/10
Robert B. Harris, Ph.D. 7,069 8.2 3.75 12/31/10
Thomas R. Reynolds 6,141 7.1 3.75 12/31/10
(1) Options are immediately exercisable.
(2) Based on options to purchase an aggregate of 86,344 shares of Common
Stock granted pursuant to the Company's Incentive Plans in the fiscal
year ended December 31, 2000.
(3) The exercise price is equal to the market value of a share of Common
Stock at the time of the grant.
The Company has no long-term incentive, defined benefit or actuarial
plans, as those terms are defined in Securities and Exchange Commission
regulations, covering employees of the Company.
Employment Contracts and Termination and Change-In-Control Arrangements
On June 24, 1997, the Company entered into employment agreements with
each of Dr. Freer, Dr. Harris and Mr. Reynolds. Each of these agreements has a
term of five years and will be extended for successive one-year terms beginning
on the first anniversary of its commencement, unless either the executive
officer or the Company shall have given notice to the other of an election not
to extend the term of the employment agreement. The employment agreements
provide for base salaries of $165,000 for Dr. Freer and Dr. Harris and $120,000
for Mr. Reynolds, which are adjustable annually at the discretion of the
Compensation Committee. In addition, the employment agreements provide the
Company's executive officers with annual bonuses equal to, in the aggregate, 15%
of the Company's pre-tax net income for the preceding fiscal year. Such bonuses
will be paid within 30 days following the release of the Company's annual
audited financial statements. Under each of the employment agreements, the
Company may terminate the executive officer's employment at any time for "Cause"
as such term is defined in the employment agreement, without incurring any
continuing obligations to the executive officer. If the Company terminates an
executive officer's employment for any reason other than for "Cause" or if an
executive officer terminates his or her employment for "Good Reason," as such
term is defined in the employment agreement, the Company will remain obligated
to continue to provide the compensation and benefits specified in the executive
officer's employment agreement for the duration of what otherwise would have
been the term of the employment agreement. In addition, each employment
agreement contains non-competition provisions which prohibit each executive
officer from competing with the Company or soliciting its employees under
certain circumstances. A court may, however, determine that these
non-competition provisions are unenforceable or only partially enforceable.
The Company has entered into severance agreements with each of Dr.
Freer, Dr. Harris and Mr. Reynolds. Each severance agreement (all of which are
substantially similar) has an initial term of five years and will be extended
for successive one-year periods beginning on the first anniversary of its
commencement, unless either the executive officer or the Company shall have
given notice to the other of an election not to extend the term of the severance
agreement. If the employment of any of these executive officers is terminated
(with certain exceptions) within 60 months following a "Change in Control," as
such term is defined in the severance agreement, the executive officer will be
entitled to receive a cash payment equal to two times the annual salary for the
most recent twelve-month period and three times the bonus paid with respect to
such period. To the extent the aggregate benefits available to an executive
officer, whether under his respective severance agreement or otherwise, exceed
the limit of three times the executive's average base compensation provided in
Section 280G of the Internal Revenue Code of 1986, as amended, resulting in the
executive officer incurring an excise tax under Section 4999 of the Internal
Revenue Code of 1986, as amended, or any other taxes or penalties (other than
ordinary income or capital gains taxes), the severance agreements require the
Company to pay the executive officer an additional amount to cover any such
excise taxes or penalties incurred. The Company will not be entitled to a
deduction for the amount in excess of this limit.
Compensation Committee Interlocks and Insider Participation
From January 2000 through March 2000, the Compensation Committee of
the Board of Directors consisted of George F. Allen and Peter C. Einselen. From
March 2000 through December 2000, the Compensation Committee consisted of George
F. Allen and Raymond H. Cypess. Messrs. Allen and Einselen have since resigned
from the Company's Board of Directors. Since January 2001, the Compensation
Committee has consisted of Dr. Cypess, Dr. McAfee and Mr. Sears. None of the
members of the Compensation Committee has at any time been an officer or
employee of the Company or any of its subsidiaries, nor have any of the members
had any relationship with the Company requiring disclosure by the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Downs and one former director of the Company, Peter C. Einselen,
who resigned from the Board in March 2000, are employees of Anderson &
Strudwick, Incorporated ("A&S"). In September 2000, A&S served as the placement
agent for the Company's issuance of an aggregate of 348,000 shares of Common
Stock and warrants to purchase an aggregate of 348,000 shares of Common Stock to
Juniper Trading Services, Inc. ("Juniper"), a British Virgin Islands
corporation and a significant shareholder of the Company. The total offering
price was $2,599,908. Of the warrants so issued, warrants to purchase an
aggregate of 174,000 shares of Common Stock had a five year term and an exercise
price of $6.50 per share. The remaining warrants to purchase an aggregate of
174,000 shares of Common Stock had an eighteen month term and an exercise price
of $6.50 per share.
For its services as placement agent in connection with this offering,
the Company paid A&S a fee of approximately $192,500. In addition, the Company
reissued warrants to purchase an aggregate of 101,500 shares of Common Stock
which were previously issued to A&S as underwriter compensation in connection
with the Company's initial public offering in 1997. As originally issued, these
warrants were to expire on October 17, 2002 and had an exercise price of $9.90
per share. In connection with the closing of the Company's initial public
offering, A&S assigned warrants to purchase an aggregate of 25,375 shares of
Common Stock to Mr. Downs and warrants to purchase an aggregate of 50,750 shares
of Common Stock to Charles A. Mills, a former director of the Company. As
reissued, Mr. Downs now holds (i) warrants with a five year term to purchase an
aggregate of 12,688 shares of Common Stock at $6.50 per share and (ii) warrants
with an eighteen month term to purchase an aggregate of 12,687 shares of Common
Stock. As reissued, A&S now holds (x) warrants with a five year term to purchase
an aggregate of 12,688 shares of Common Stock at $6.50 per share and (y)
warrants with an eighteen month term to purchase an aggregate of 12,687 shares
of Common Stock.
From September 1999 to September 2000, the Company borrowed an
aggregate of $300,000 from Juniper. The Company repaid the principal amount of
the loan in full on September 27, 2000. Upon principal repayment, the Company
also paid an aggregate of $16,232 in interest and issued an option to purchase
an aggregate of 31,250 shares of Common Stock to Juniper. The options have a
term of ten years and an exercise price of $5.13 per share.
The Company believes that the transactions noted above were made on
terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions between the Company and its
officers, directors and principal shareholders will be approved in accordance
with Virginia law by a majority of the Board of Directors, including a majority
of the independent and disinterested directors of the Board of Directors, and
will be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
SHAREHOLDER PROPOSALS
If a shareholder wishes to have a proposal considered for inclusion in
the Company's proxy materials for the 2002 Annual Meeting of Shareholders, the
proposal must comply with the Securities and Exchange Commission's proxy rules,
be stated in writing and be submitted on or before August 7, 2001. Any proposals
should be mailed to the Company at 601 Biotech Drive, Richmond, Virginia 23235,
Attention: Thomas R. Reynolds, Secretary.
In addition to any other applicable requirements, for business to be
properly brought before the annual meeting by a shareholder, even if a proposal
is not to be included in the Company's proxy statement, the Company's Bylaws
provide that the shareholder must give timely notice in writing to the Secretary
of the Company not later than 90 days prior to the annual meeting. As to each
matter, the notice must contain (i) a brief description of the business to be
brought before the annual meeting (including the specific proposal to be
presented) and the reasons for addressing it at the annual meeting, (ii) the
name of, record address of, and class and number of shares beneficially owned by
the shareholder proposing such business and (iii) any material interest of the
shareholder in such business. The 2002 Annual Meeting of Shareholders of the
Company will be held on May 14, 2002.
The Company's Bylaws provide that a shareholder of the Company entitled
to vote for the election of directors may nominate persons for election to the
Board of Directors by mailing written notice to the Secretary of the Company not
later than (i) with respect to an election to be held at an annual meeting of
shareholders, 90 days prior to such meeting, and (ii) with respect to an
election to be held at a special meeting of shareholders for the election of
directors, the close of business on the seventh day following the date on which
notice of such meeting is given to shareholders. Any such shareholder's notice
shall include (a) the name and address of the shareholder and of each person to
be nominated, (b) a representation that the shareholder is a holder of record of
stock of the Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate each person specified, (c) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person (naming such person) pursuant to which the
nomination is to be made by the shareholder, (d) such other information
regarding each nominee as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission, and
(e) the consent of each nominee to serve as a director of the Company if so
elected.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be brought
before the Annual Meeting of Shareholders. If any other matters, however, are
properly brought before the Annual Meeting, the persons named in the enclosed
form of proxy will have discretionary authority to vote all proxies with respect
to such matters in accordance with their best judgment.
UPON THE WRITTEN REQUEST OF ANY HOLDER OF THE COMPANY'S COMMON STOCK
ENTITLED TO VOTE AT THE 2001 ANNUAL MEETING OF SHAREHOLDERS, THE COMPANY WILL
FURNISH, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB
FOR THE YEAR ENDED DECEMBER 31, 2000, INCLUDING FINANCIAL STATEMENTS, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS SHOULD BE DIRECTED TO THE
COMPANY AT 601 BIOTECH DRIVE, RICHMOND, VIRGINIA 23235, ATTENTION: JAMES H.
BRENNAN, CONTROLLER.
By Order of the Board of Directors,
/s/ Thomas R. Reynolds
THOMAS R. REYNOLDS
Secretary
Appendix A
COMMONWEALTH BIOTECHNOLOGIES, INC.
AUDIT COMMITTEE CHARTER
Organization
There shall be a committee of the Board of Directors to be known as the Audit
Committee. The Audit Committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the Board of Directors, would interfere
with their exercise of independent judgment as a committee member. It is
intended that the composition of the committee shall comply with the regulations
of the Securities and Exchange Commission and of the National Association of
Securities Dealers, as they may be applicable.
Statement of Policy
The Audit Committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders relating to corporate
accounting, reporting practices of the corporation, and the quality and
integrity of the financial reports of the corporation. In so doing, it is the
responsibility of the Audit Committee to maintain free and open means of
communication between the directors, the independent auditors, the internal
auditors, and the financial management of the corporation.
Responsibilities
In carrying out its responsibilities, the Audit Committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions. This is to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the corporation are in
accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will,
o Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and its
divisions and subsidiaries.
o Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof
review such audit, including any comments or recommendations of the
independent auditors.
o Review with the independent auditors, the corporation's internal auditor,
and financial and accounting personnel, the adequacy and effectiveness of
the accounting and financial controls of the corporation. It will elicit
any recommendations for the improvement of such internal control procedures
or particular areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy of such
internal controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper. Further the committee
periodically should review corporation's policy statements to determine
their adherence to the code of conduct.
o Review the internal accounting and auditing function of the corporation,
the proposed audit plans for the coming year and the coordination of such
plans with the independent auditors.
o Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine that
the independent auditors are satisfied with the disclosure and contents of
the financial statements to be presented to the shareholders. Any changes
in accounting principles should be reviewed.
o Provide sufficient opportunity for the internal and independent auditors to
meet with the members of the Audit Committee without members of management
present. Among the items to be discussed in these meetings are the
independent auditors' evaluation of the corporation's financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors received during the course of the audit.
o Review accounting and financial human resources and succession planning
within the corporation.
o Submit the minutes of all meetings of the Audit Committee to, or discuss
the matters discussed at each committee meeting with, the Board of
Directors.
o Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose, if, in
its judgment, that is appropriate.
COMMONWEALTH BIOTECHNOLOGIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
May 7, 2001
The undersigned hereby appoints Richard J. Freer, Ph.D. and Robert B.
Harris, Ph.D., or either of them, with power of substitution, as proxies to vote
all stock of Commonwealth Biotechnologies, Inc. (the "Company") owned by the
undersigned at the Annual Meeting of Shareholders to be held on May 7, 2001, at
11:00 a.m. at 601 Biotech Drive, Richmond, Virginia, and any adjournment
thereof, on the following matters as indicated below and such other business as
may properly come before the meeting.
1. [ ] FOR the election as director of all nominees listed:
Everette G. Allen, Jr., Raymond Harold Cypess, Thomas R.
Reynolds, Samuel P. Sears, Jr., and Donald A. McAfee, Ph.D.
(except as marked to the contrary below).
[ ] WITHHOLD AUTHORITY to vote for all nominees listed:
Everette G. Allen, Jr., Raymond Harold Cypess, Thomas R.
Reynolds, Samuel P. Sears, Jr., and Donald A. McAfee, Ph.D.
(except as marked to the contrary below).
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR INDIVIDUAL NOMINEES,
WRITE THE APPLICABLE NAME(S) IN THE SPACE PROVIDED BELOW:
- ------------------------------------------------------------------------------
2. Proposal to ratify the appointment of McGladrey & Pullen, LLP as the
independent public accountants of the Company for the fiscal year
ending December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IN THEIR DISCRETION, THE PROXIES NAMED ABOVE MAY VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY MUST BE DATED AND SIGNED. THIS PROXY IS SOLICITED ON BEHALF OF THE
COMPANY'S BOARD OF DIRECTORS.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted (i) FOR the three nominees as Class I Directors of the Company, the one
nominee as a Class II Director of the Company, and the one nominee as a Class
III Director of the Company; and (ii) FOR the proposal to ratify the appointment
of McGladrey & Pullen, LLP as the independent public accountants of the Company
for the fiscal year ended December 31, 2001.
Please sign exactly as your name appears on this Proxy Card. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership or limited liability entity, please
sign in full name such entity by authorized person.
Dated: ______________________, 2001
---------------------------------
Signature of Shareholder
---------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.