UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant þ                            Filed by a Party other than the Registrant ¨

Check the appropriate box:

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):

COMMONWEALTH BIOTECHNOLOGIES, INC.

601 Biotech Drive

Richmond, Virginia 23235

(804) 648-3820

Dear Shareholder:

CBI cordially invites you to attend a special meeting of shareholders to be held at 10:00 a.m. on Friday, February 9, 2007 at the offices of Commonwealth Biotechnologies, Inc. (“CBI”), 601 Biotech Drive, Richmond, Virginia 23235.

At the special meeting, you will be asked to approve, for purposes of NASD Marketplace Rule 4350, an issuance of CBI common stock which will result in the acquisition of all of outstanding securities of Mimotopes Pty Ltd (“Mimotopes”), an Australian limited company and a wholly-owned subsidiary of PharmAust Chemistry Ltd, an Australian limited company (“Chemistry”). Chemistry, in turn, is a wholly-owned subsidiary of PharmAust Limited, a limited company listed on the Australian Stock Exchange (“PharmAust”). This acquisition will occur subject to the terms of a Stock Purchase Agreement, dated as of November 24, 2006, by and between Chemistry, PharmAust and CBI. CBI’s Board of Directors unanimously recommends the approval of this proposal.

In addition, you will be asked to act on such other business as may properly come before the special meeting.

Enclosed is a notice of special meeting and proxy statement containing detailed information concerning the acquisition. Whether or not you plan to attend the special meeting, CBI urges you to read this material carefully. I look forward to seeing you at the meeting.

YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING OF SHAREHOLDERS, CBI URGES YOU TO VOTE AND SUBMIT YOUR PROXY BY TELEPHONE, THE INTERNET OR BY MAIL. IF YOU ARE A REGISTERED SHAREHOLDER AND ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON. IF YOU HOLD YOUR SHARES THROUGH A BANK OR BROKER AND WANT TO VOTE YOUR SHARES IN PERSON AT THE MEETING, PLEASE CONTACT YOUR BANK OR BROKER TO OBTAIN A LEGAL PROXY.

COMMONWEALTH BIOTECHNOLOGIES, INC.

601 Biotech Drive

Richmond, Virginia 23235

(804) 648-3820

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON FRIDAY, FEBRUARY 9, 2007

NOTICE IS HEREBY GIVEN that a special meeting of shareholders, including any adjournments or postponements thereof, of Commonwealth Biotechnologies, Inc., a Virginia corporation (“CBI”), will be held at 10:00 a.m. eastern time, on Friday, February 9, 2007, at the offices of CBI at 601 Biotech Drive, Richmond, Virginia 23235, for the following purposes:

CBI’s Board of Directors has fixed the close of business on December 27, 2006 as the date for which its shareholders are entitled to receive notice of, and to vote at, the special meeting and any adjournments or postponements thereof. This proxy statement is dated January 10, 2007 and is first being mailed to CBI’s shareholders on or about January 10, 2007. Only the holders of record of CBI common stock on that date are entitled to have their votes counted at the special meeting and any adjournments or postponements thereof. CBI will not transact any other business at the special meeting, except for business properly brought before the special meeting or any adjournment or postponement by its Board of Directors.

Your vote is important. Please sign, date and return your proxy card as soon as possible to make sure that your shares are represented at the special meeting. If you are a shareholder of record of CBI common stock, you may also cast your vote via the Internet or in person at the special meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares. CBI’s Board of Directors unanimously recommends that you vote “FOR” the proposal to effect an issuance of its common stock which will result in the Acquisition.

QUESTIONS AND ANSWERS ABOUT THE MATTERS SUBJECT TO VOTE

What is being voted on?

You are being asked to consider and vote upon a proposal, for purposes of NASD Marketplace Rule 4350, to effect an issuance of CBI common stock that will result in CBI’s acquisition of Mimotopes.

You may vote if you owned shares of CBI common stock as of the close of business on December 27, 2006. Each share of common stock is entitled to one vote. As of December 27, 2006, CBI had 3,322,769 shares of common stock outstanding.

How many votes must be present to hold the meeting?

Your shares are counted as present at the meeting if you attend the meeting and vote in person or if you properly return a proxy by Internet, telephone or mail. In order for CBI to conduct its meeting, a majority of our outstanding shares of common stock as of December 27, 2006 must be present in person or by proxy. This is referred to as a quorum. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the meeting.

Why is CBI proposing the Acquisition?

From its inception, CBI’s growth strategy has been to use traditional sales and marketing approaches to fuel growth. At the end of 2004, CBI diverted from this strategy and acquired Fairfax Identity Laboratories, a DNA profiling company (“FIL”). Based on CBI’s positive experience with FIL, CBI’s Board of Directors instructed CBI management to implement two initiatives. The first initiative was to continue to grow CBI’s commercial sector through targeted approaches, including a new hire with strong credentials in sales and marketing, and second, explore other acquisition opportunities and/or joint ventures. CBI completed the initial step of this directive by hiring Dr. Joseph Chimera as CBI’s Senior Vice President – Sales, Marketing and Business Development.

The Board of Directors’ general guidelines for the second directive were to seek opportunities that:

CBI’s Board of Directors and management believe that the Acquisition of Mimotopes, fulfills these criteria.

In addition, the Board of Directors of CBI believes that the Acquisition offers CBI and its shareholders a number of other benefits, some of which may not be obvious from a casual review of the pro forma financial information provided herein. These benefits essentially fall into three critical areas for our business: management, sales and marketing, and relationships with industry partners.

With respect to management, Mimotopes has an excellent executive management team and its current Executive Director, Dr. Paul D’Sylva, will assume the position of Chief Executive Officer of CBI after completion of the Acquisition. Dr. D’Sylva has a strong background in finance and corporate affairs and will complement the strong technical expertise of the current CBI management team.

CBI’s sales and marketing will benefit from Mimotopes’ seasoned sales force, positioned in the major global biotechnology markets of North America and Europe, as well as the rapidly expanding Asian market. Currently, CBI has minimal direct sales capabilities. Further, Mimotopes has established business operations spanning nearly 20 years, a highly respected brand, and an extensive client list.

Finally, CBI’s industry relationships will be enhanced. For example, through the efforts of Dr. D’Sylva, Mimotopes has established important relationships with some of the major players in the biotechnology industry, including Invitrogen Corporation, Genzyme Pharmaceuticals, Inc., and Amgen, Inc.. CBI expects these relationships to continue to develop and for new ones be established going forward.

What vote is required to approve the Acquisition?

Approval of the Acquisition requires the affirmative vote of a majority of the total votes cast on this proposal.

Why is CBI seeking approval for the Acquisition?

As a result of being listed for trading on the Nasdaq Capital Market, issuances of CBI common stock are subject to the NASD Marketplace Rules, such as Rule 4350. Under Rule 4350(i)(1)(B) and 4350(i)(1)(D), respectively, shareholder approval must be sought when (a) the issuance or potential issuance will result in a change of control of CBI or (b) in connection with a transaction other than a public offering involving the sale, issuance or potential issuance by CBI of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of the book or market value of the stock.

Pursuant to the Stock Purchase Agreement, CBI has agreed to issue 2,150,000 unregistered shares of its common stock in consideration for all of the outstanding securities of Mimotopes. Absent shareholder approval for such issuance and the resulting Acquisition, the issuance of common stock to Chemistry may result in a violation of either of the foregoing provisions of Rule 4350.

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What will I receive in the Acquisition?

Holders of CBI common stock will continue to hold the CBI securities they currently own. CBI is simply acquiring all of the outstanding securities of Mimotopes from Chemistry. Chemistry will receive all of the shares of common stock being issued by CBI in the Acquisition.

Who will manage CBI upon completion of the Acquisition?

Upon completion of the Acquisition, CBI will be managed by the following persons:

In addition, as discussed below, Dr. D’Sylva will also assume the role of one of CBI’s directors on a post-closing basis.

How is CBI paying for the Acquisition?

At the closing, CBI will issue to Chemistry 2,150,000 restricted shares of its common stock. The pricing for this transaction was determined through negotiations between PharmAust and CBI. The closing price of CBI common stock on December 29, 2006 was $2.14 per share and the market value of the shares to be issued to Chemistry, at the close of business on December 29, 2006, was approximately $4.601 million. The value of the shares of CBI common stock to be issued to Chemistry will be subject to change with the fluctuation of the trading price of CBI common stock on the Nasdaq Capital Market.

The issuance will result in Chemistry owning approximately 39.5% of CBI’s outstanding common stock on a post-issuance basis. CBI does not intend to modify the number of shares to be issued to Chemistry based on changes to the price of its common stock between the date of this proxy statement and the closing of the Acquisition. The number of shares of CBI common stock to be issued to Chemistry reflects the determination of CBI’s Board of Directors and the Board of Directors of PharmAust of the relative long-term worth of CBI and Mimotopes after the Acquisition, which long-term worth may not be reflected, or which may be inappropriately adjusted by, fluctuations in CBI’s stock price. Additionally, fluctuations in CBI’s stock price may reflect factors that are independent of the respective valuations of Mimotopes and CBI upon which the Acquisition consideration is based.

How Will the Acquisition Affect CBI’s Current Shareholders?

If the Acquisition is consummated, CBI will issue 2,150,000 restricted shares of CBI’s common stock to Chemistry as consideration for the shares of Mimotopes. If this occurs, Chemistry will own approximately 39.5% of CBI’s outstanding common stock. No other stockholder (based on current holdings) will own more than 5% of CBI’s common stock. Although the consummation of the Acquisition would result in a significant concentration of CBI’s common stock in one shareholder’s ownership, the Stock Purchase Agreement requires Chemistry to enter into a voting agreement that would require Chemistry to vote in favor of director candidates recommended for CBI’s board of directors by an independent nominating committee. While Chemistry is thus likely to have significant influence in shareholder votes, Chemistry will not own a majority of shares of CBI’s common stock and will not have the authority to appoint directors to CBI’s board or to veto candidates nominated by CBI’s independent nominating committee.

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What happens if the Acquisition is not approved?

If the Acquisition is not approved by CBI’s shareholders, then CBI will not be able to consummate the Acquisition upon the terms currently contemplated by the Stock Purchase Agreement.

When do you expect the Acquisition to be completed?

CBI currently anticipates that it will complete the Acquisition on or about March 1, 2007, subject to approval at its special meeting of shareholders on February 9, 2007.

How do I vote before the meeting?

If you are a registered shareholder, meaning that you hold your shares in certificate form, you have three voting options:

If you hold your shares through an account with a bank or broker, your ability to vote by the Internet depends on their voting procedures. Please follow the directions that your bank or broker provides.

May I vote at the meeting?

You may vote your shares at the meeting if you attend in person. If you hold your shares through an account with a bank or broker, you must obtain a legal proxy from the bank or broker in order to vote at the meeting. A legal proxy is an authorization from your bank or broker to vote the shares it holds in its name for your benefit on the records of CBI’s transfer agent. Even if you plan to attend the meeting, CBI encourages you to vote your shares by proxy. You may vote by proxy through the Internet, by telephone or by mail.

Can I change my mind after I return my proxy?

You may change your vote at any time before the polls close at the conclusion of voting at the meeting. You may do this by:

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What if I return my proxy card but do not provide voting instructions?

Proxies that are signed and returned but do not contain instructions will be voted FOR the Acquisition and in accordance with the best judgment of the named proxies on any other matters properly brought before the meeting.

SUMMARY

This summary discusses the material items of the Acquisition proposal which is also described elsewhere in this proxy statement. You should carefully read this entire proxy statement and the other documents to which this proxy statement refers you. See “Where You Can Find More Information.”

Acquisition of Mimotopes

Mimotopes, established in 1989 and headquartered in Melbourne, Australia, is a global leader in the development of research-grade peptides for biological and pharmaceutical applications. Mimotopes’ extensive experience and in depth know-how of its highly trained staff, as well as numerous patented and proprietary technologies in solid phase synthesis have made it one of the global leaders in its field. At present, Mimotopes is focused on the fast-growing market for research grade peptides and peptide therapeutics, a market estimated to grow at 40% per year over the next several years. Currently, peptide technologies make up about 3% of CBI’s revenues. The Acquisition would represent an immediate boost in this revenue line, potentially making peptide technologies the source of 30% of CBI’s revenues.

CBI’s Reasons for the Acquisition and Recommendation of CBI’s Board of Directors

After consideration of a large variety of factors, CBI’s Board of Directors has concluded that the Acquisition is in the best interests of its shareholders. In approving the Stock Purchase Agreement, CBI’s Board of Directors relied on information (including financial information) relating to Mimotopes, the regulatory environment and the industry fundamentals.

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In evaluating this Acquisition, CBI’s Board of Directors considered a wide variety of factors, some quantitative, some qualitative. Given their potential significance, the qualitative factors were weighed significantly by the Board of Directors in connection with its evaluation of the Acquisition and financing. Some of the positive and negative factors, however, considered by the Board are described below:

Positive Factors

Negative Factors

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Board of Directors’ Recommendation

After careful consideration, CBI’s Board of Directors has unanimously determined that the Acquisition is fair to, and in the best interests of CBI’s shareholders. In reaching its decision relating to the Acquisition, the Board of Directors also considered the opinion of Anderson & Strudwick, Incorporated (“A&S”), that, as of the date of its opinion, and based on conditions that existed as of that date, upon and subject to the considerations described in its opinion and based upon such other matters as A&S considered relevant, the consideration to be provided by CBI in connection with the Acquisition is fair to its current shareholders from a financial point of view. Such opinion will be updated prior to the completion of the transaction.

Accordingly, CBI’s Board has unanimously approved and declared advisable the Acquisition and unanimously recommends that you vote or instruct your vote to be cast “FOR” the approval of the Acquisition.

INFORMATION ABOUT MIMOTOPES

Introduction

Mimotopes is a leader in the development of research-grade peptides for biological and pharmaceutical applications. Mimotopes was established in Melbourne, Australia in 1989 as a spinout of Commonwealth Serum Laboratories, Ltd. It was acquired by Chiron Corporation in 1990 and subsequently has been owned by Mitikor (2000-2002) and Fisher Scientific Corporation (2002-2005). In March 2005, Mimotopes was acquired by PharmAust. It is currently one of two wholly owned subsidiaries of Chemistry, the other being EpiChem Pty Ltd. (“Epichem”). Both Mimotopes and EpiChem are drug discovery service companies.

The entire administration and laboratory operations for Mimotopes are in Clayton, Australia, located about 40km from Melbourne. Mimotopes has sales offices in the United States (Raleigh, NC, Minneapolis, MN, and San Diego, CA), the UK (Wirral), and Australia (Melbourne). It also has distribution channels in Europe and Japan.

Industry Overview

Mimotopes’ products and services in peptide development and synthesis serve two large and growing markets. The custom peptide synthesis market is currently estimated to be in the order of $435 million and growing at an average annual rate of 11.9%. The peptide therapeutic market is currently estimated to be $1 billion and growing at an annual average rate of 40%. Mimotopes has established a leading position in the custom synthesis market and, through targeted joint ventures with high quality discovery partners, is well positioned to enter the peptide therapeutic market.

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Custom Peptide Synthesis

The worldwide custom peptide synthesis market was estimated to be between $250 million and $450 million in 2003. The custom peptide synthesis market was projected to grow at an annual average rate of 11.9% between 2003 and 2010, which makes the market in 2005 somewhere between $310 million and $560 million and in 2010 between $550 million and $990 million.

The major users of custom peptides are distributed throughout the life sciences sector and include biotechnology companies, universities, hospitals, and government laboratories. There are two general sources for peptides. Companies either have a catalog business, where products are made in advance and stored, or, like Mimotopes (and CBI), a custom manufacturing business where products are generated on an “as needed” basis. The market is dominated by the United States (65%), followed by Europe (30%) and the Rest of the World (5%).

Peptide Therapeutics

Beyond custom peptide synthesis, there is the potential for Mimotopes to become more involved in joint venture drug discovery at the research and development level in the development of new peptide drugs. Peptides make up only a fraction of the therapeutic pharmaceutical molecules in the market today but represent the fastest growing sector. For example, several peptides have now entered clinical trials for the treatment of human cancers. The peptide therapeutics market is growing at an annual rate of 40% and is estimated to be worth in excess of $1.6 billion by 2010. Leveraging off its proprietary technology to produce large numbers of research-grade peptides very cheaply, Mimotopes has entered into collaborative research partnerships with several Australian and international groups with the explicit aim of generating new drug candidates and sharing any resulting intellectual property.

Mimotopes’ Technology

Mimotopes’ proprietary technologies in solid phase synthesis including scavenging applications and biomolecular capture and immobilization, coupled with the extensive experience and in depth know-how of its highly trained staff, have made it one of the global leaders in its field. It is one of only 11 companies offering peptide library services and one of only three providing testable quantities (mgs) of its library products.

Mimotopes is focused on growing its business by developing innovative, patent-protected products and delivering the highest level of customer service in the global life science research marketplace. The company holds numerous patents underlying its library and synthetic chemistries. Mimotopes has recently signed global supply agreements with two major US-based biotech companies: Genzyme, Inc. and Invitrogen, Inc.

Pepsets^TM Peptide Libraries

Mimotopes’ PepSets peptide libraries permit the simultaneous synthesis and screening of large numbers of peptides using Mimotopes’ unique MultiPin™ synthesis system. The MultiPin system involves synthesizing peptides onto specially prepared polyethylene supports mounted on blocks in a format that is compatible with the standard 8 x 12 microtitre plate used for many

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assays. Both support-bound (non-cleavable peptides that remain covalently bound to the support) and solution phase peptides (those that have been cleaved off the solid surface) can be produced by this method. Mimotopes uses state of the art Fmoc based peptide chemistries and PepSets are available with a full range of chemical modifications.

Solution Phase (Cleaved) Peptides

For the production of solution phase peptides there is a choice of C-terminal endings, including acid and amide, depending on the intended peptide application. Options for the scale of synthesis are a nominal >1 micromole or 5 micromole scale. Factors such as hydrophobicity and cleavage efficiency will affect peptide recovery, such that the expected average yield of peptide is at least 1 micromole (around 2mg of a 15mer peptide) when the peptides are synthesized on the nominal >1 micromole scale, or an average yield of at least 3 micromole for peptides synthesized on the nominal 5 micromole scale.

Solid Phase (Non-cleavable) Peptides

Non-cleavable peptides remain covalently bound to the solid supports and can be used to rapidly screen for peptides of interest using ELISA techniques. Such peptides are useful for the purposes of antibody epitope scanning and structure-activity relationship studies. Removal of bound antibodies or other proteins regenerates the peptides and allows their use for up to 3-5 times.

Custom Peptides

Mimotopes is a proven source for the design and production of research-grade custom synthesised peptides. Mimotopes extensive product range caters for a broad spectrum of peptide related research. Numerous types of modifications can be made to the custom peptides to suit the individual needs of clients. These include modified residues such as phosphoamino acids, fluorescent labels, biotinylated peptides, acetylation, amidation, fatty acid capping, cyclic peptides (disulfide and N- to C-), succinylation, nonradioactive isotopic labeling, and branched peptides among others. Quantities from as little as 1mg of peptide are available.

SynPhase^TM Lanterns

SynPhase^TM Lanterns are grafted products optimized for small organic molecule and peptide synthesis. The SynPhase Lantern is cylindrical in appearance and is available in three different sizes, L-series, D-series and A-series. These properties make the SynPhase Lantern compatible with a wide range of reaction vessels and synthesizers. There are two surfaces available on SynPhase Lanterns, one hydrophobic and one hydrophilic.

The primary difference between SynPhase Lanterns and conventional resins is the modular nature of SynPhase lanterns, based on a structure of a rigid polymeric support beneath a grafted mobile phase. This gives rise to a number of unique features that lead to significant fundamental advantages over resins.

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Immunology Services

Mimotopes has many years of experience in the production and testing of anti-peptide antibodies for the development of vaccines, assays, and diagnostic kits. This stems from Mimotopes beginnings as a research organization when the company was focused on biology rather than chemistry. For example, Mimotopes scientists have published many articles in the areas of epitope mapping and in the use of peptides to raise antibodies and their subsequent applications.

Intellectual Property

Mimotopes holds a number of patents, the principal ones related to the matrix used to prepare their custom peptides.

Mimotopes also has a proprietary laboratory information management system (“LIMS”) that includes an extensive database of all syntheses carried out by the company over the last 12 years. In addition to providing the usual production tracking and in quality assurance/quality control (QA/QC) elements, the LIMS has significant enhancements to support new product syntheses.

Competition

There are approximately 90 suppliers of custom peptides worldwide. While this is not a huge list of competitors and many are not major players in the area, there are a number that offer heavily discounted pricing. For low purity compounds, the market is extremely price sensitive almost to the point of being commoditized.

There is also an extensive list of university-based core facilities that offer peptide synthesis services. Since these core facilities are typically subsidized by the university and have minimal overhead costs, they can undercut the market with heavily discounted pricing. However, university-based core facilities are generally slow and, frequently, do not provide the quality available from other commercial sources.

Mimotopes does compete effectively in this arena at the moment by efficient operations in Clayton and a favorable outsourcing arrangement with GL Biochem in China. However, Mimotopes expects to move from this market to other higher margin technologies like its peptide library products.

Of the approximately 90 companies supplying custom peptides worldwide, Mimotopes believes that about 11 can deliver peptide libraries. Most of those provide only solid phase libraries or arrays (not testable for biological functions). Mimotopes believes that 3 companies offer true competitive products to the Mimotopes PepSets. Contrary to the custom peptide market, libraries are less price sensitive and, therefore, carry higher margins.

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Risk of Loss and Liability Insurance

Mimotopes maintains all insurance in types and amounts which are customary in the industry for operations of its scope.

Employees

As of December 20, 2006, Mimotopes had a total of 34 employees, of which 22 were full-time and 12 were part-time. At such date, 28 of Mimotopes’ full time employees were salaried and performed executive, management, or administrative functions and the remaining 6 employees were paid by the hour. As of such date, 21 of Mimotopes’ employees performed production functions and the remaining 13 performed management, administration or sales and marketing functions. Mimotopes has never had a work stoppage and management characterizes its relations with its employees as good.

Litigation

Mimotopes is not currently involved in any pending material legal proceedings. Mimotopes, however, may be subject to litigation from time to time in the ordinary course of its business.

Indebtedness

Mimotopes currently has no significant long or short-term indebtedness.

Facilities

Mimotopes owns its facility located in Clayton Australia. The site has a total of 4,727 square meters (49,929 square feet) of space with total net functional floor area of 2,248 square meters (23,774 square feet). Although Mimotopes owns its facility, it leases the land upon which it sits from Monash University. The lease expires on September 1, 2009. Mimotopes has the option to extend the lease for three successive terms of seven years each.

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SELECTED FINANCIAL INFORMATION

The following tables present financial data after giving effect to the completion of CBI’s proposed acquisition of Mimotopes, for the periods ended September 30, 2006 and December 31, 2005.

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THE SPECIAL MEETING

The Special Meeting

CBI is furnishing this proxy statement to you as part of the solicitation of proxies by its Board of Directors for use at the special meeting in connection with the proposed Acquisition. This proxy statement provides you with the information you need to know to be able to vote or instruct your vote to be cast at the special meeting.

Date, Time and Place

The special meeting will be held at 10:00 a.m., Eastern time, on Friday, February 9, 2007, at Commonwealth Biotechnologies, Inc., 601 Biotech Drive, Richmond, Virginia 23235, to vote on the Acquisition proposal.

Purpose of the Special Meeting

At the special meeting, the holders of CBI’s common stock are being asked to approve a proposal, for purposes of NASD Marketplace Rule 4350, to effect an issuance of CBI common stock which will result in the Acquisition of the outstanding securities of Mimotopes pursuant to the Stock Purchase Agreement, dated as of November 24, 2006.

CBI’s Board of Directors:

Record Date; Who is Entitled to Vote

The “record date” for the special meeting is December 27, 2006. Record holders of CBI common stock at the close of business on the record date are entitled to vote or have their votes cast at the special meeting. On the record date, there were 3,327,767 outstanding shares of CBI common stock. Each share of CBI common stock is entitled to one vote per share at the special meeting.

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Voting Your Shares

Each share of CBI common stock that you own in your name entitles you to one vote. Your proxy card shows the number of shares of CBI common stock that you own. There are four ways to vote your shares of common stock at the special meeting:

IF YOU DO NOT VOTE YOUR SHARES OF COMMON STOCK IN ANY OF THE WAYS DESCRIBED ABOVE, IT WILL HAVE NO EFFECT ON THE ACQUISITION.

Who Can Answer Your Questions About Voting Your Shares

If you have any questions about how to vote or direct a vote in respect of your common stock, you may call Richard J. Freer, Ph.D., CBI’s Chairman and Chief Operating Officer, at (804) 648-3820.

No Additional Matters May Be Presented at the Special Meeting

This special meeting has been called only to consider the approval of the Acquisition. Under CBI’s bylaws, other than procedural matters incident to the conduct of the meeting, no other matters may be considered at the special meeting, if they are not included in the notice of the meeting.

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Revoking Your Proxy

If you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

Quorum

Your shares are counted as present at the meeting if you attend the meeting and vote in person or if you properly return a proxy by Internet, telephone or mail. In order for us to conduct our meeting, a majority of our outstanding shares of common stock as of December 27, 2006 must be present in person or by proxy. This is referred to as a quorum. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the meeting.

Vote Required

The approval of the Acquisition will require the affirmative vote of majority of the total votes cast on the proposal. If you abstain from voting or do not vote, either in person or by proxy or by voting instruction, it will have no effect on the approval of the Acquisition.

Abstentions and Broker Non-Votes

If your broker holds your CBI shares in its name and you do not give the broker voting instructions, under the rules of the NASD, your broker may not vote your shares on the proposal to approve the Acquisition. If you do not give your broker voting instructions and the broker does not vote your shares, this is referred to as a “broker non-vote.” Abstentions and broker non-votes are counted for purposes of determining the presence of a quorum, and will have no effect on the Acquisition.

Solicitation Costs

CBI is soliciting proxies on behalf of its Board of Directors. This solicitation is being made by mail but also may be made by telephone or in person. CBI and its directors and officers may also solicit proxies in person, by telephone or by other electronic means. These persons will not be paid for doing this. CBI has not hired a firm to assist in the proxy solicitation process but may do so if it deems this assistance necessary. CBI will pay all fees and expenses related to the retention of any proxy solicitation firm. CBI will ask banks, brokers and other institutions, nominees and fiduciaries to forward CBI’s proxy statement materials to their principals and to obtain their authority to execute proxies and voting instructions. CBI will reimburse them for their reasonable expenses.

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Stock Ownership

Of the 3,322,769 outstanding shares of CBI common stock on December 27, 2006, officers and directors of CBI, who own an aggregate of approximately 10.3% of CBI’s outstanding shares of common stock, have agreed to vote such shares in favor of the Acquisition.

THE ACQUISITION PROPOSAL

The discussion in this proxy statement of the Acquisition and the principal terms of the Stock Purchase Agreement dated as of November 24, 2006, by and between Chemistry, PharmAust and CBI is subject to, and is qualified in its entirety by reference to, the Stock Purchase Agreement. A copy of the Stock Purchase Agreement is attached as Exhibit A to this proxy statement and is incorporated in this proxy statement by reference.

General Description of the Acquisition

Pursuant to the Stock Purchase Agreement, CBI will acquire all of the outstanding securities of Mimotopes from Chemistry, Mimotope’s sole shareholder and parent company.

Background of the Acquisition

The terms of the Stock Purchase Agreement are the result of active negotiations between representatives of PharmAust and CBI. The following is a brief discussion of the background of these negotiations, the Acquisition and related transactions.

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CBI, on one hand, and Chemistry and PharmAust, on the other hand, were separately represented by counsel in all proceedings relating to the proposed transaction. CBI retained an independent firm, A&S, to evaluate the transaction for its overall fairness to the shareholders of CBI.

Necessity for Shareholder Approval

CBI’s common stock is traded on the NASDAQ Capital Market under the symbol “CBTE.” Consequently, CBI is subject to the Marketplace Rules promulgated by the NASD. The issuance of these shares requires shareholder approval under the NASD Marketplace Rules, such as Rule 4350.

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Under Rule 4350(i)(1)(B) and 4350(i)(1)(D), respectively, shareholder approval must be sought when (a) the issuance or potential issuance will result in a change of control of the issuer (the “Change of Control Rule”) or (b) in connection with a transaction other than a public offering involving the sale, issuance or potential issuance by the issuer of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of the book or market value of the stock (the “20% Rule”).

The Change of Control Rule

The Change of Control Rule requires CBI to obtain shareholder approval prior to certain issuances with respect to common stock or securities convertible into common stock which will result in a change of control of the issuer. Generally, NASD interpretations provide that 20% ownership of the shares of an issuer by one person or group of affiliated persons is deemed to be control of such issuer. Pursuant to the Stock Purchase Agreement, in consideration for all of the outstanding shares of Mimotopes, CBI will issue to Chemistry 2,150,000 restricted shares of CBI common stock at the closing. This issuance will constitute approximately 39.5% of CBI’s issued and outstanding shares of common stock on a post-issuance basis.

The 20% Rule

The 20% Rule requires Nasdaq-listed issuers to obtain shareholder approval prior to any issuance or potential issuance of securities representing 20% or more of the outstanding common stock or voting power of the issuer (on an as-converted or as-exercised basis) before such issuance for a price less than the greater of the book or market value of the issuer’s common stock. For purposes of this rule, the (i) outstanding common stock or voting power of the issuer is determined as of a date the issuer enters into a binding agreement with respect to such issuance or potential issuance, which in the case of the Acquisition of Mimotopes is November 24, 2006; and (ii) market value of the issuer’s common stock is deemed to be the closing bid price of the issuer’s common stock immediately prior to entering into such binding agreement, which in the case of the Acquisition, is $2.05 per share, the closing bid price of CBI’s common stock on November 24, 2006.

At the closing, CBI will deliver to Chemistry 2,150,000 restricted shares of CBI common stock in exchange for all of Mimotopes’ issued and outstanding securities. The closing price of CBI common stock on December 29, 2006 was $2.14 per share, and the market value of the shares to be issued to Chemistry, at the close of business on December 29, 2006, was approximately $4.601 million. The value of the shares of CBI common stock to be issued to Chemistry will be subject to change with the fluctuation of the trading price of CBI’s common stock on the Nasdaq Capital Market. Accordingly, the issuance to Chemistry on the closing date may represent a below-market issuance of more than 20% of CBI outstanding common stock as of November 24, 2006. CBI does not intend to modify the number of shares to be issued to Chemistry based on changes to the price of CBI’s common stock. The number of shares of CBI’s common stock to be issued to Chemistry reflects CBI’s and PharmAust’s determination of the relative long-term worth of CBI after the Acquisition of Mimotopes, which long term worth may not be reflected, or which may be inappropriately adjusted by, fluctuations in CBI’s stock price. Additionally, fluctuations in CBI’s stock price may reflect factors that are independent of the respective valuations of Mimotopes and CBI upon which the Acquisition consideration is based.

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CBI’s Reasons for the Acquisition and Recommendation of CBI’s Board of Directors

CBI’s Board of Directors has concluded that the Acquisition of Mimotopes is in the best interests of its shareholders. In approving the Stock Purchase Agreement, CBI’s Board of Directors relied on information (including financial information) relating to Mimotopes, the regulatory environment and the industry fundamentals. In addition, the Board of Directors considered A&S’ opinion that, based on conditions and considerations described in its opinion, the Acquisition is fair to its current shareholders from a financial point of view.

In addition, CBI’s Board of Directors considered a wide variety of factors in connection with its evaluation of the Acquisition and financing. In light of the complexity of those factors, the Board of Directors did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its decision. Some of the positive and negative factors, however, considered by the Board are described below:

Positive Factors

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Negative Factors

Alternative Transactions

CBI’s Board of Directors considered the acquisition of another biotechnology company, but through continued negotiations with the other party, CBI believed that the Acquisition was a better opportunity for CBI. CBI’s Board of Directors also considered the alternative of not approving the Acquisition. The option of not approving any transaction was not, in the Board’s exercise of sound business judgment, as favorable to CBI or its shareholders as the Acquisition.

Business Synergy

With respect to the Acquisition, CBI’s Board of Directors felt that Mimotopes and CBI have compatible existing business models and that the combination of the two companies as contemplated by the Stock Purchase Agreement and related documents will result in certain management and operational efficiencies that would not have been otherwise achieved by each company acting alone including the ability to access less expensive materials and more timely product delivery. In addition, the Board of Directors believes that diversification of CBI’s business in the manner contemplated by the Acquisition will assist CBI in furthering its overall business strategy.

Appraisal or Dissenters Rights

No appraisal rights are available under the Virginia Stock Corporation Act for CBI’s shareholders of in connection with the Acquisition.

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Material U.S. Federal Income Tax Consequences of the Acquisition

The following discusses the material U.S. federal income tax consequences of the Acquisition to CBI and its shareholders. CBI does not anticipate any federal income tax effect to its security holders as a result of the financing. This discussion is based on the United States Internal Revenue Code of 1986, as amended (the “Code”). CBI’s security holders will continue to hold their securities and, as a result will not recognize any gain or loss from the Acquisition. The conclusions expressed above are based on current United States tax law. Future legislative, administrative or judicial changes or interpretations, which can apply retroactively, could affect the accuracy of those conclusions. No rulings have been or will be sought from the Internal Revenue Service concerning the tax consequences of the transactions contemplated by the Stock Purchase Agreement. The discussion does not address all of the tax consequences that may be relevant to particular taxpayers in light of their personal circumstances or to taxpayers subject to special treatment under the Code. Such taxpayers include non-U.S. persons, insurance companies, tax-exempt entities, dealers in securities, banks and persons who acquired their shares of capital stock pursuant to the exercise of employee options or otherwise as compensation.

BECAUSE OF THE COMPLEXITY OF THE TAX LAWS, AND BECAUSE THE TAX CONSEQUENCES TO ANY PARTICULAR SHAREHOLDER MAY BE AFFECTED BY MATTERS NOT DISCUSSED ABOVE, EACH CBI SHAREHOLDER IS URGED TO CONSULT A TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE TRANSACTION CONTEMPLATED BY THE STOCK PURCHASE AGREEMENT TO HIM, HER OR IT, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND NON-U.S. TAX LAWS, AS WELL AS FEDERAL TAX LAWS.

Regulatory Matters

The Acquisition and the transaction contemplated by the Stock Purchase Agreement are not subject to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or any other material federal or state regulatory requirement or approval, other than that described in this proxy statement relating to NASD Marketplace Rules and Virginia law.

Consequences if the Acquisition is Not Approved

If the Acquisition is not approved by CBI’s shareholders, then CBI will not be able to consummate the Acquisition upon the terms currently contemplated by the Stock Purchase Agreement.

Required Vote

To be approved by the shareholders, the proposal to approve, for purposes of NASD Marketplace Rule 4350, the issuance of securities to Chemistry pursuant to the Stock Purchase Agreement must receive the affirmative votes of a majority of the votes cast, in person or by proxy, at the special meeting. Abstentions are treated as shares present or represented and entitled to vote at the special

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meeting and will have the same effect as a vote against this proposal. Broker non-votes are not deemed to be present and represented and are not entitled to vote, and therefore will have no effect on the outcome of this proposal.

Recommendation

The Board of Directors believes that it is in CBI’s best interests that the shareholders authorize the issuance of common stock to Chemistry pursuant to the Stock Purchase Agreement.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE ACQUISITION PROPOSAL TO PURCHASE THE OUTSTANDING SECURITIES OF MIMOTOPES FROM PHARMAUST PURSUANT TO THE TERMS OF THE STOCK PURCHASE AGREEMENT.

OPINION OF CBI’S FINANCIAL ADVISOR

CBI retained A&S in September 2006 to assist it in the Acquisition of Mimotopes. As part of that engagement, CBI retained A&S to render an opinion with respect to the fairness, from a financial point of view, to the holders of CBI common stock, of any stock purchase or acquisition consideration to be paid, should CBI agree to the stock acquisition. A&S is a nationally recognized investment banking firm with substantial experience in merger and acquisition transactions and is familiar with CBI and its business. As part of its investment banking business, A&S is routinely engaged in the valuation of businesses and their securities in connection with acquisitions and mergers. CBI selected A&S as its financial advisor based upon A&S’ qualifications, experience and reputation.

On November 17, 2006, A&S delivered a written opinion that the stock acquisition consideration to be paid by CBI was fair to the shareholders of CBI, from a financial point of view, as of the date of the opinion. A&S will update this opinion prior to the closing of the transaction. Neither CBI nor its Board of Directors imposed any limitations on A&S with respect to the investigations made or the procedures followed in rendering the opinion.

A&S’ written opinion to CBI’s Board of Directors set forth the assumptions made, matters considered and extent of review by A&S, are attached and are incorporated by reference into this proxy statement. They should be read carefully and in their entirety in conjunction with this proxy statement. The following summary of A&S’ opinion is qualified in its entirety by reference to the full text of the opinion. A&S’ opinion is attached as Exhibit D hereto. A&S’ opinion is addressed to the CBI Board of Directors and does not constitute a recommendation to any shareholder of CBI as to how the shareholder should vote at the shareholder meeting.

In rendering its opinion, A&S reviewed, among other things:

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A&S also communicated with members of senior management of CBI:

A&S also:

In conducting its review and arriving at its opinion, A&S relied upon and assumed the accuracy and completeness of all of the financial and other information provided to or otherwise made available to A&S or that was discussed with, or reviewed by or for A&S. A&S did not attempt or assume any responsibility to verify such information independently. A&S relied upon the management

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of CBI and Mimotopes as to the reasonableness and achievability of the financial and operating forecasts and projections (and assumptions and bases therefore) provided to A&S. A&S did not make or obtain any evaluations or appraisals of any assets or liabilities of Mimotopes or CBI, and A&S did not audit any books or records.

The projections furnished to A&S and used by it in certain of its analyses were prepared by CBI’s and Mimotopes’ senior management. CBI and Mimotopes do not publicly disclose internal management projections of the type provided to A&S in connection with its review of the acquisition. As a result, such projections were not prepared with a view towards public disclosure. The projections were based on numerous variables and assumptions which are inherently uncertain, including factors related to general economic and competitive conditions. Accordingly, actual results could vary significantly from those set forth in the projections.

For purposes of rendering its opinion, A&S assumed that, in all respects material to its analyses:

A&S further assumed that the Acquisition will be accounted for as a purchase transaction under generally accepted accounting principles. A&S’ opinion is not an expression of an opinion as to the prices at which shares of CBI common stock trades or the actual value of the shares of common stock of the combined company when issued pursuant to the Acquisition, or the prices at which the shares of common stock of the combined company will trade following the completion of the Acquisition.

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In performing its analyses, A&S made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of A&S, CBI and Mimotopes and its parent company PharmAust. Any estimates contained in the analyses performed by A&S are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty.

The following is a summary of the material analyses provided by A&S to CBI’s Board of Directors in connection with its November 17, 2006 opinion. In connection with its written opinion, A&S performed procedures to update certain of its analyses and review the assumptions on which such analyses were based and the factors considered in connection therewith. A&S did not utilize any methods of analysis in addition to those described. The summary is not a complete description of the analyses underlying the A&S opinion, but summarizes the material analyses performed and presented in connection with the opinion. The preparation of a fairness opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, A&S did not attribute any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. The financial analyses summarized below include information presented in tabular format. Accordingly, A&S believes that its analyses and the summary of its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying its analyses and opinions. The tables alone do not constitute a complete description of the financial analyses.

Transaction Summary

A&S calculated the stock acquisition consideration to be paid as a multiple of Mimotopes total equity capital, revenue and EBITDA. The acquisition consideration was based on 2,150,000 of CBI common stock. CBI reviewed a range of CBI stock prices of $1.98 per share as of November 13, 2006 to $2.51 as of October 30, 2006. When using the high end of the range CBI’s closing price of $2.51, this amount would represent an aggregate price of $5,396,500. Even at the high end of the range, A&S found that the stock acquisition consideration to be paid by CBI was fair to the shareholders of CBI, from a financial point of view, as of the date of the opinion.

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Selected Transaction Analysis

A&S reviewed certain financial data related to a set of comparable biotech merger transactions. A&S compared multiples of price to various factors for the Acquisition to the same multiples for the comparable group’s acquisitions at the time those acquisitions and the Acquisition were announced. The results were as follows at the high end of the range of CBI’s stock price of $2.51 per share as of October 30, 2006:

Comparable Transactions

A&S also analyzed the financial data as of the trailing twelve months ended June 30, 2006 for Mimotopes and reporting periods prior to the announcement of each transaction for each target in the Selected Transactions Analysis. The results were as follows:

Comparable Targets

No company or transaction used as a comparison in the above analysis is identical to Mimotopes, CBI or the Acquisition. Accordingly, an analysis of these results is not purely mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the value of the companies to which they are being compared.

Discounted Cash Flow Analysis

Using a discounted cash flow analysis, A&S estimated the present value of the future stream of dividends that Mimotopes could produce over the next five years, under various circumstances, and assuming Mimotopes performed in accordance with management’s earnings forecast for 2007 and a minimum 7% annual revenue growth thereafter. A&S then estimated the terminal values for Mimotopes stock at the end of the period by applying multiples ranging from 1.5x to 3.0x projected revenues in year five. The terminal values of earnings in year five were then determined and discounted to present values using different discount rates (ranging from 11.0% to 14.0%) chosen to reflect different assumptions regarding the required rates of return to holders or prospective buyers of Mimotopes ordinary shares. This discounted cash flow analysis indicated reference ranges of between $2.31 and $5.27 per ordinary share of Mimotopes. At the current value of CBI’s stock price all of these values are above the consideration offered by CBI to Mimotopes in the Acquisition.

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Anderson & Strudwick also did the same analysis for CBI and compared their present value to Mimotopes. As a result, CBI would contribute 58.96% to the consolidated company in comparison to approximately 60.60% ownership that CBI would retain.

Relative Stock Price Performance

A&S also analyzed the price performance of Mimotopes (PharmAust) and CBI’s common stock from October 30, 2005 to October 30, 2006 and compared that performance to the performance of the NASDAQ Biotechnology Index (“Biotech Index”) over the same period. This analysis indicated the following cumulative changes in price over the period:

Selected Peer Group Analysis

A&S compared the financial performance of Mimotopes to those of a group of comparable companies. To perform this analysis, A&S used the financial information as of the trailing twelve months ended June 30, 2006 and market price information as of October 30, 2006. A&S included 14 publicly traded research service companies in the peer group.

A&S’ analysis showed the following concerning Mimotopes’ and CBI’s financial and market performance:

Selected Peer Group

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Contribution Analysis

A&S analyzed the relative contribution of each of CBI and Mimotopes to the pro forma balance sheet and income statement items of the combined entity, including assets, last six months revenue, equity, pro forma ownership as of June 30, 2006. This analysis excluded any purchase accounting adjustments. The contribution ownership analysis assumed the aggregate transaction consideration was all in the form of CBI common stock. The results of A&S’ analysis are set forth in the following table:

A&S analyzed the relative contribution of each of CBI and Mimotopes to the pro forma income statement items of the combined entity, including revenue, gross profit, EBITDA and net income using budgeted 2007 financials provided by senior management of CBI and Mimotopes. This analysis excluded any purchase accounting adjustments. The pro forma ownership analysis assumed the aggregate transaction consideration was all in the form of CBI common stock. The results of A&S’ analysis are set forth in the following table:

Financial Impact Analysis

A&S performed pro forma acquisition analysis that combined projected income statement and balance sheet information. Assumptions regarding the accounting treatment, acquisition adjustments and cost savings were used to calculate the financial impact that the acquisition would have on certain projected financial results of the pro forma company. This analysis indicated that the acquisition is expected to be neutral to slightly accretive to CBI’s estimated 2007 GAAP earnings per share, and accretive to CBI’s estimated 2008 GAAP earnings per share. This analysis was based on managements’ earnings estimates for Mimotopes and CBI and minimal cost savings. Mimotopes’ and CBI’s fourth quarter 2006 and 2007 earnings projections were provided by each company’s respective management. For all of the above analyses, the actual results achieved by the combined company following the acquisition will vary from the projected results and the variations may be material.

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Other Analyses

A&S reviewed the relative financial and market performance and CBI to a variety of relevant industry peer groups and indices. A&S also reviewed earnings estimates, historical stock performance, stock liquidity and research coverage.

The CBI Board of Directors has retained A&S as an independent contractor to act as financial adviser to CBI regarding the acquisition. As part of its investment banking business, A&S is continually engaged in the valuation of businesses and their securities in connection with acquisitions and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. As specialists in the securities business, A&S has experience in, and knowledge of, the valuation of such enterprises. In the ordinary course of its business as a broker-dealer, A&S may, from time to time, purchase securities from, and sell securities to, CBI, Mimotopes and its parent company PharmAust Ltd. As a market maker in securities, A&S may from time to time have a long or short position in, and buy or sell, debt or equity securities of CBI, Mimotopes and its parent company PharmAust Ltd. for A&S’ own account and for the accounts of its customers.

CBI and A&S have entered into an agreement relating to the services to be provided by A&S in connection with the acquisition. CBI has agreed to pay A&S at the time of closing a cash fee equal to $125,000. Pursuant to the A&S engagement agreement, CBI also agreed to reimburse A&S for reasonable out-of-pocket expenses and disbursements incurred in connection with its retention and to indemnify against certain liabilities, including liabilities under the federal securities laws.

THE STOCK PURCHASE AGREEMENT

The following summary of the material provisions of the Stock Purchase Agreement is qualified by reference to the complete text of the Stock Purchase Agreement, a copy of which is attached as Exhibit A to this proxy statement. All shareholders are encouraged to read the Stock Purchase Agreement in its entirety for a more complete description of the terms and conditions of the Acquisition.

Structure of the Acquisition

At the effective time of the Acquisition, Mimotopes will continue as an operating company and become CBI’s wholly-owned subsidiary.

Purchase Price Payments

At the closing, CBI will deliver to Chemistry 2,150,000 restricted shares of CBI’s common stock, without par value per share, for all of the outstanding securities of Mimotopes. The closing price of CBI’s common stock on December 29, 2006 was $2.14 per share and the market value of the shares to be issued to Chemistry, at the close of business on December 29, 2006 was approximately

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$4.601 million. The value of the shares of CBI’s common stock to be issued to Chemistry, the sole shareholder and parent corporation of Mimotopes, will be subject to change with the fluctuation of the trading price of CBI’s common stock on the Nasdaq Capital Market. CBI do not intend to modify the number of shares to be issued to Chemistry based on changes to the price of CBI’s common stock. The number of shares of CBI’s common stock to be issued to Chemistry reflects CBI’s Board of Directors’ and PharmAust’s determination of the relative long-term worth of CBI after the Acquisition of Mimotopes, which long term worth may not be reflected, or which may be inappropriately adjusted by, fluctuations in CBI’s stock price. Additionally, fluctuations in CBI’s stock price may reflect factors that are independent of the respective valuations of Mimotopes and CBI upon which the Acquisition consideration is based.

Closing of the Acquisition

Subject to the provisions of the Stock Purchase Agreement, the closing of the Acquisition will take place on the first day following the date that CBI’s shareholders approve the Acquisition, or at such other time as the parties may agree.

Representations and Warranties

The Stock Purchase Agreement contains a number of representations and warranties that Chemistry, PharmAust and CBI have made to each other. These representations and warranties relate to:

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Materiality and Material Adverse Effect

Many of the representations and warranties are qualified by materiality or material adverse effect. For the purposes of the Stock Purchase Agreement, a material adverse effect on PharmAust means a material adverse effect on the business, operations, properties, assets or financial condition of Mimotopes.

Interim Covenants Relating to Mimotopes

Under the Stock Purchase Agreement, Chemistry and PharmAust, prior to completion of the Acquisition, have agreed to conduct Mimotope’s business in the ordinary course consistent with past practice.

Access to Information

To aid in the orderly transition of the business of Mimotopes, during the period prior to the closing date, Chemistry, PharmAust, Mimotopes and their representatives will give CBI and its representatives, reasonable access to the personnel, properties, contracts, books and records and other documents and data concerning Mimotopes as CBI may reasonably request.

Indemnification

If the closing occurs, Chemistry and PharmAust have jointly and severely agreed to indemnify and hold harmless CBI, for any damages, whether as a result of any third party claim or otherwise, and which arise from or in connection with the breach of representations and warranties and agreements and covenants of Chemistry and PharmAust or for any brokerage or finder’s fees or commissions or similar payments in connection with the Acquisition. CBI shall indemnify and hold harmless Chemistry and PharmAust from and against any damages which arise from or in connection with the breach of representations and warranties and agreements and covenants of CBI’s. The representations and warranties will survive the closing date for a period of two years following closing date.

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Fees and Expenses

Except as provided in the Stock Purchase Agreement, Chemistry and PharmAust, on the one hand, and CBI, on the other hand, shall be responsible for their own fees and expenses (including the fees and expenses of their own lawyers, accountants and other advisers) in connection with the Stock Purchase Agreement and the transactions contemplated thereby.

Public Announcements

Chemistry, PharmAust and CBI have agreed that any public announcement or similar publicity with respect to the Stock Purchase Agreement will be issued at such time and in such manner as CBI determines based upon its requirements as publicly traded companies.

Conditions to the Completion of the Acquisition

CBI’s obligations consummate the Acquisition are subject to the following conditions:

The obligation of Chemistry and PharmAust to consummate the Acquisition is subject to the following conditions:

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Termination

The Stock Purchase Agreement may be terminated at any time, but not later than the closing, as follows:

Effect of Termination

In the event of termination by Chemistry, PharmAust or CBI, the Stock Purchase Agreement will become void and have no effect, without any liability or obligation on the part of PharmAust, Chemistry or CBI.

Assignment

The rights and obligations of a party under the Stock Purchase Agreement may not be assigned without the prior consent of the other parties to such agreement.

Amendment

Any purported amendment to the Stock Purchase Agreement shall be null and void unless it is in writing and signed by the party to be charged with the amendment.

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Further Assurances

Chemistry, PharmAust and CBI have agreed that each will execute and deliver on or after the date of the Stock Purchase Agreement, all such other documents and will take all reasonable actions as may be necessary to carry out the intent of the Stock Purchase Agreement.

Voting and Lock-up Agreement

In addition, pursuant to the terms of the Stock Purchase Agreement, Chemistry and PharmAust will enter into a Voting and Lock-Up Agreement. Pursuant to the terms of this agreement, Chemistry shall agree not to sell or otherwise dispose of the CBI common stock issued to it in the Acquisition for a period of 12 months following execution of the agreement. In addition, pursuant to the Voting and Lock-Up Agreement, for so long as they hold shares of CBI common stock, PharmAust and Chemistry have agreed to vote such shares in favor of any director nominees nominated by CBI’s Nominating Committee for election to CBI’s Board of Directors. A copy of the Voting and Lock-Up Agreement is attached as Exhibit B hereto.

Registration Rights

In addition to customary covenants contained in the Stock Purchase Agreement, CBI has agreed to certain registration obligations with regard to the shares issued to Chemistry. Upon closing, CBI has agreed to execute the Registration Rights Agreement. The Registration Rights Agreement will provide that at any time one (1) year after execution of the such agreement, Chemistry may demand that CBI register all or any portion of the shares issued to Chemistry with the Securities and Exchange Commission. This demand registration right is a one-time right. Pursuant to the terms of this arrangement, CBI will pay the costs associated with registration; provided, however, that Chemistry is responsible for any underwriting discounts, spreads and commissions and any costs, fees and disbursements of accountants and counsel retained by Chemistry. A copy of the Registration Rights Agreements is attached as Exhibit C hereto.

Effect of Acquisition

If the Acquisition is consummated, CBI will issue 2,150,000 restricted shares of CBI’s common stock to Chemistry as consideration for the shares of Mimotopes. If this occurs, Chemistry will own approximately 39.5% of CBI’s outstanding common stock. No other stockholder (based on current holdings) will own more than 5% of CBI’s common stock. Although the consummation of the Acquisition would result in a significant concentration of CBI’s common stock in one shareholder’s ownership, the Stock Purchase Agreement requires Chemistry to enter into a voting agreement that would require Chemistry to vote in favor of director candidates recommended for CBI’s board of directors by an independent nominating committee. While Chemistry is thus likely to have significant influence in shareholder votes, Chemistry will not own a majority of shares of CBI’s common stock and will not have the authority to appoint directors to CBI’s board or to veto candidates nominated by CBI’s independent nominating committee.

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DIRECTORS AND MANAGEMENT OF

COMMONWEALTH BIOTECHNOLOGIES, INC.

FOLLOWING THE ACQUISITION OF MIMOTOPES

As of the completion of the Acquisition, CBI’s Board of Directors and executive officers will be as follows:

The following information with respect to the principal occupation or employment of each director, the principal business of the corporation or other organization in which such occupation or employment is carried on, and such director’s business experience during the past five years, has been furnished to CBI by the respective directors:

PAUL D’SYLVA, PH.D.

Chief Executive Officer

Dr. D’Sylva is the co-founder and Managing Director of PharmAust. Prior to the listing of PharmAust, Dr. D’Sylva served as the Director of Research and Development at Murdoch University from 2001 to 2005. Dr. D’Sylva has a strong track record in raising investment capital for early stage business ventures and has led the development of a number of successful research joint-venture institutes, companies and funds. During his tenure at Murdoch University, he founded and directed the AU$12.5m Investment Fund – Murdoch Westscheme Enterprise Partnership, founded and directed the commercial consulting company MurdochLink Pty Ltd, and was involved in the establishment and governance of a number of key research centers and institutes. He sits on the advisory board of the Centre for Computational Comparative Genomics, a joint-venture research institute in Bioinformatics based at Murdoch University and retains a non-executive role at Murdoch University as an Adjunct Professor of Business. He received a Ph.D. from the University of Arizona in public finance and econometrics.

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ROBERT B. HARRIS, PH.D.

President and Director

Since founding CBI in 1992, Dr. Harris has served as the President and a director of CBI. He also assumed the position of Chief Executive Officer in 2002. Until 1997, Dr. Harris was employed in the Department of Biochemistry and Molecular Biophysics at Virginia Commonwealth University (“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.

RICHARD J. FREER, PH.D.

Chairman of the Board, Chief Operating Officer and Director

Since founding CBI in 1992, Dr. Freer has served as the Chairman of the Board and a director of CBI. He assumed the role of Chief Operating Officer in 2002. 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.

THOMAS R. REYNOLDS

Executive Vice President - Science and Technology, Secretary and Director

Thomas R. Reynolds currently serves CBI as Executive Vice President for Science and Technology and a director. He assumed the role of CBI’s Secretary in 1998. Since the founding of CBI in 1992, Mr. Reynolds has served as Vice President and Senior Vice President. From 1987 until 1997, Mr. Reynolds served as Manager of the Nucleic Acids Core Laboratory at the Massey Cancer Center in the Department of Microbiology and Immunology at Virginia Commonwealth University. Mr. Reynolds received a Bachelor’s degree in Biology from the Pennsylvania State University.

JAMES H. BRENNAN, MBA

Vice President – Financial Operations

Mr. Brennan became CBI’s Vice President, Financial Operations in January 2006. From December 1997 until January 2006, he served as CBI’s Controller. From 1996 to 1997, Mr. Brennan served as the Controller of Star Tobacco, a tobacco product manufacturer. From 1995, Mr. Brennan was the Controller of 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.

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GERALD P. KRUEGER

Director

Since 1999, Dr. Krueger has served as the Principal Research Scientist and Ergonomist at the Wexford Group International in Vienna, Virginia where he is director of Wexford’s Human Factors Engineering, Ergonomics, and Medical Research Program. He provides a wide variety of scientific advisory services to organizations in the Department of Defense and the Department of Transportation. For the Undersecretary of Defense for Laboratories and Basic Science, Dr. Krueger led a project to elicit exemplary practices in management of large industrial and government research labs for applicability to Department of Defense laboratories. He directed Wexford’s business management consulting effort in advising staff officers of the U.S. Army Medical Research and Materiel Command, Fort Detrick, Maryland on alternative schemes for prioritization of medical research programs. Recently, Dr. Krueger led a Human Systems Integration team for the Defense Information Systems Agency Teleport Satellite Communications upgrade program. He also served as a principal consultant on three National Academy of Sciences Transportation Research Board (“TRB”) Synthesis studies on commercial driver safety issues. His current TRB Synthesis work is evaluating Health and Wellness Programs for commercial truck and bus operators. Dr. Krueger has his Ph.D. in experimental and engineering psychology from the Johns Hopkins University. He had a highly successful 25-year Army career in occupational and preventive medicine research, is a graduate of the Army War College, and is an adjunct associate professor of military psychology at the Uniformed Services University of the Health Sciences in Bethesda, Maryland.

DONALD A. MCAFEE, PH.D.

Director

Since 2004, Dr. McAfee has served as Vice President of New Product Development for Cardiome Pharma Corp., a Vancouver-based drug discovery and development company. In addition, since 2004, Dr. McAfee has also served as a consultant for McAfee Scientific, a drug development consulting firm. In 1994, he co-founded Aderis Pharmaceuticals, Inc. (formerly Discovery Therapeutics, Inc.), a clinical stage pharmaceutical company, where he served as Chief Technical Officer and Director. Before organizing Discovery Therapeutics, Dr. McAfee served for eight years as Vice President, Research, at Whitby Research, Inc., Richmond, Virginia (formerly Nelson Research and Development, Irvine, California), managing 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), Duarte, California, and held faculty appointments at the Yale University School of Medicine and the University of Miami School of Medicine. Dr. McAfee earned a doctorate degree. in Physiology at the University of Oregon School of Medicine, and has authored more than 100 articles and book chapters in neuroscience and pharmacology. He is currently an adjunct professor at the Medical College of Virginia and a Director of the Virginia Biotech Association, an industry advocacy group.

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JOSEPH R. SLAY

Director

Since November 1992, Mr. Slay has served as President of Slay Public Relations, a Richmond, Virginia-based public relations firm. Since November 1994, Mr. Slay has served as a Partner of the Martin Agency, a Richmond, Virginia-based advertising firm. Mr. Slay has lectured on business communication issues in New York, Los Angeles, Chicago and Washington, D.C. He is an accredited member of the Public Relations Society of America. In 1995, he was the recipient of the group’s Thomas Jefferson Citation for Public Relations. In 2000, Mr. Slay was inducted into the VCU Communications Hall of Fame. Mr. Slay received a bachelor’s degree in History from Washington & Lee University. Since graduation, Mr. Slay has taken several graduate courses in Divinity from Edinburgh University and Business from VCU.

JAMES D. CAUSEY

Director

Since 2004, Mr. Causey has served as Vice President of Trader Publishing Company, a nationwide network of classified publications. From 2003 until 2004, Mr. Causey served as a consultant in the publishing industry. From 1999 to 2003, Mr. Causey served as the chief executive officer of Sabot Publishing, a Richmond, Virginia based publisher of leading special interest publications. Mr. Causey received a master’s degree in business from the University of Maryland.

SAMUEL P. SEARS, JR., ESQ.

Director

From September 2006 until the present, Mr. Sears has been Managing Partner of Cetrulo & Capone, LLP, a Boston, Massachusetts law firm. From March 1999 to September 2006, Mr. Sears was in private practice as an attorney and had 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 to 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.

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BENEFICIAL OWNERSHIP OF CBI’S SECURITIES

The following table sets forth information regarding the beneficial ownership of CBI’s common stock as of December 27, 2006 by:

Unless otherwise indicated, CBI believes that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. This table demonstrates the alignment of the interests of CBI’s directors and executive officers with the interests of CBI’s shareholders by showing how much of CBI’s outstanding common stock is beneficially owned by CBI’s directors, each of the Named Executive Officers and all directors and executive officers as a group as of December 27, 2006. Except as otherwise noted, the beneficial owners listed have sole voting and investment power with respect to the shares shown.

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MARKET PRICE INFORMATION AND DIVIDENDS

Commonwealth Biotechnologies, Inc.

CBI’s common stock trades on the Nasdaq Capital Market under the symbol “CBTE.” The closing price per share of CBI’s common stock on November 24, 2006, the last trading day prior to the announcement of the execution of the Stock Purchase Agreement, was $2.05.

The following table sets forth the high and low sales prices for each quarter for CBI’s common stock as reported on the Nasdaq Capital Market System from January 1, 2004 through December 31, 2006.

Holders of CBI’s common stock should obtain current market quotations for their securities. The market price of CBI’s common stock could vary at any time before the Acquisition. As of December 27, 2006, there were approximately 31 holders of record of CBI’s common stock.

CBI has not paid any dividends on its common stock to date, and does not intend to pay dividends prior to the completion of the Acquisition. Upon completion of the Acquisition CBI does not intend to pay any dividends on its shares of common stock. Rather, CBI intends to reinvest any earnings back into the combined company. At this time, the combined company anticipates that it will retain any earnings and will not pay dividends in the foreseeable future.

Mimotopes

There is no established public trading market for the shares of common stock of Mimotopes. Chemistry is the only holder of Mimotopes common stock.

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DESCRIPTION OF CBI’S SECURITIES

CBI’s total authorized capital stock of consists of 10,000,000 shares of common sock, without par value per share. The following descriptions contain all material terms and features of CBI’s securities, are qualified in all respects by reference to CBI’s Articles of Incorporation and Bylaws.

The following summary description of CBI’s capital stock is qualified in its entirety by reference to CBI’s Articles of Incorporation.

Common Stock

CBI is authorized to issue up to 10,000,000 shares of Common Stock. As of December 27, 2006, 3,322,769 shares of Common Stock are issued and outstanding. The holders of Common Stock are entitled to one vote for each share on all matters voted on by shareholders, including elections of directors, and possess exclusively all voting power except as otherwise required by law. CBI’s Articles of Incorporation do not provide for cumulative voting for the election of directors. The holders of Common Stock are entitled to such dividends as may be declared from time to time by CBI’s Board of Directors from funds available therefor, and upon liquidation will be entitled to receive pro rata all of CBI’s assets available for distribution to such holders. The holders of Common Stock have no preemptive or other subscription rights, and there are no conversion rights or redemption or sinking fund provisions with respect to the Common Stock.

Warrants

CBI has reserved 71,053 shares of common stock issuable upon the exercise of warrants issued to certain of its executives in connection with a private placement of securities that occurred simultaneously with CBI’s initial public offering in 1997. The warrants are exercisable June 24, 2007 and have an exercise price of $9.90 per share. Prior to exercise, holders of such warrants will not, as such, have any of the rights of shareholders of CBI.

CBI has reserved 32,778 shares of common stock issuable upon the exercise of warrants issued to investors in its August 2002 private placement of common stock and warrants to purchase common stock. Such warrants have an exercise price of $0.90 per share and an expire on August 29, 2007.

CBI has reserved 124,000 shares of common stock issuable upon the exercise of warrants issued to investors in its May 2004 private placement of common stock and warrants to purchase shares of common stock. Of these warrants, warrants to purchase 100,000 shares of common stock have an exercise price of $7.59 per share. The remaining warrants to purchase 24,000 shares of common stock have an exercise price of $7.50 per share. These warrants expire on May 27, 2009.

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Certain Provisions of CBI’s Articles of Incorporation and Bylaws

CBI’s Articles of Incorporation and Bylaws contain provisions that make more difficult the acquisition of control of CBI’s company by means of a tender offer, a proxy contest, open market purchases or otherwise. The Articles of Incorporation provide for the CBI’s Board of Directors to be divided into three classes serving staggered terms. One class of directors will be elected each year for a three-year term. A director may be removed only for cause.

The Articles of Incorporation require the affirmative vote of more than two-thirds of the outstanding shares of Common Stock for the approval of mergers, share exchanges, certain dispositions of assets and other extraordinary transactions. In addition, the affirmative vote of at least two-thirds of the outstanding shares of each voting group of capital stock is required for approval of an Affiliated Transaction (as defined below) with an Interested Shareholder (as defined below), subject to certain exceptions comparable to those contained in the Virginia Stock Corporation Act (the “Virginia Act”). The Articles of Incorporation further require the affirmative vote of the majority of the outstanding shares of Common Stock for the approval of amendments to the Articles of Incorporation, except that the affirmative vote of at least two-thirds of the outstanding shares of Common Stock is required to approve an amendment to the provisions of the Articles of Incorporation establishing the classified board and the super majority voting requirement for Affiliated Transactions.

The Bylaws establish an advance notice procedure for the nomination of candidates for election as directors, other than by the Board of Directors of CBI, and for certain matters to be brought before an Annual Meeting of CBI. A shareholder must give CBI notice not less than 90 days prior to an Annual Meeting of shareholders to (i) nominate persons to be elected directors of CBI at such meeting or (ii) propose business matters to be considered at such meeting.

The purpose of the relevant provisions of the Articles of Incorporation and Bylaws is to discourage certain types of transactions that may involve an actual or threatened change of control of CBI and to encourage persons seeking to acquire control of CBI’s company to consult first with CBI’s company Board of Directors to negotiate the terms of any proposed business combination or offer. The provisions are designed to reduce the vulnerability of CBI’s company to an unsolicited proposal for a takeover of CBI’s company that does not have the effect of maximizing long-term shareholder value or is otherwise unfair to shareholders of CBI’s company, or an unsolicited proposal for the restructuring or sale of all or part of CBI’s company that could have such effects.

Certain Corporate Governance Provisions of the Virginia Act

CBI is subject to the “affiliated transactions” provisions of the Virginia Act which restrict certain transactions between CBI and any person (an “Interested Shareholder”) who beneficially owns more than 10% of any class of CBI’s voting securities (“Affiliated Transactions”). These restrictions, which are described below, do not apply to an Affiliated Transaction with an Interested Shareholder who has been such continuously since the date CBI first had 300 shareholders of record or whose acquisition of shares making such person an Interested Shareholder was previously approved by a majority of CBI’s Disinterested Directors.

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“Disinterested Director” means, with respect to a particular Interested Shareholder, a member of CBI’s Board of Directors who was (i) a member on the date on which an Interested Shareholder became an Interested Shareholder or (ii) recommended for election by, or was elected to fill a vacancy and received the affirmative vote of, a majority of the Disinterested Directors then on the Board of Directors. Affiliated Transactions include mergers, share exchanges, material dispositions of corporate assets not in the ordinary course of business, any dissolution of CBI proposed by or on behalf of an Interested Shareholder, or any reclassification, including reverse stock splits, recapitalization or merger of CBI with its subsidiaries, which increases the percentage of voting shares owned beneficially by an Interested Shareholder by more than five percent.

The “affiliated transactions” statute prohibits CBI from engaging in an Affiliated Transaction with an Interested Shareholder for a period of three years after the Interested Shareholder became such unless the transaction is approved by the affirmative vote of a majority of the Disinterested Directors and by the affirmative vote of the holders of two-thirds of the voting shares other than those shares beneficially owned by the Interested Shareholder. Following the three-year period, in addition to any other vote required by law or by the Articles of Incorporation, an Affiliated Transaction must be approved either by a majority of the Disinterested Directors or by the shareholder vote described in the preceding sentence unless the transaction satisfies the fair-price provisions of the statute. These fair-price provisions require, in general, that the consideration to be received by shareholders in the Affiliated Transaction (i) be in cash or in the form of consideration used by the Interested Shareholder to acquire the largest number of its shares and (ii) not be less, on a per share basis, than an amount determined in the manner specified in the statute by reference to the highest price paid by the Interested Shareholder for shares it acquired and the fair market value of the shares on specified dates. CBI is also subject to the “control share acquisitions” provisions of the Virginia Act, which provide that shares of CBI’s voting securities which are acquired in a “Control Share Acquisition” have no voting rights unless such rights are granted by a shareholders’ resolution approved by the holders of a majority of the votes entitled to be cast on the election of directors by persons other than the acquiring person or any officer or employee-director of CBI’s company. A “Control Share Acquisition” is an acquisition of voting shares which, when added to all other voting shares beneficially owned by the acquiring person, would cause such person’s voting strength with respect to the election of directors to meet or exceed any of the following thresholds: (i) one-fifth, (ii) one-third or (iii) a majority. “Beneficial ownership” means the sole or shared power to dispose or direct the disposition of shares, or the sole or shared power to vote or direct the voting of shares, or the sole or shared power to acquire shares, including any such power which is not immediately exercisable, whether such power is direct or indirect or through any contract, arrangement, understanding, relationship or otherwise. A person shall be deemed to be a beneficial owner of shares as to which such person may exercise voting power by virtue of an irrevocable proxy conferring the right to vote. An acquiring person is entitled, before or after a Control Share Acquisition, to file a disclosure statement with CBI and demand a special meeting of shareholders to be called for the purpose of considering whether to grant voting rights for the shares acquired or proposed to be acquired. CBI may, during specified periods, redeem the shares so acquired if no disclosure statement is filed or if the shareholders have failed to grant voting rights to such shares. In the event full voting rights are granted to an acquiring person who then has majority voting power, those shareholders who did not vote in favor of such grant are

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entitled to dissent and demand payment of the fair value of their shares from CBI. The control share acquisitions statute does not apply to an actual or proposed Control Share Acquisition if the Articles of Incorporation or CBI’s Bylaws are amended, within the time limits specified in the statute, to so provide.

A corporation may, at its option, elect not to be governed by the foregoing provisions of the Virginia Act by amending its Articles of Incorporation or Bylaws to exempt itself from coverage; provided, however, any such election not to be governed by the “affiliated transactions” statute must be approved by the corporation’s shareholders and will not become effective until 18 months after the date it is adopted. CBI has not elected to exempt its company from coverage under these statutes.

Effect of Certain Provisions Upon an Attempt to Acquire Control of CBI’s Company

The foregoing provisions of CBI’s Articles of Incorporation and Bylaws, as well as the provisions of Virginia law described above, make more difficult, and may discourage certain types of potential acquirers from proposing, a merger, tender offer or proxy contest, even if such transaction or occurrence may be favorable to the interests of the shareholders. Similarly, such provisions may delay or frustrate the assumption of control by a holder of a large block of Common Stock and the removal of incumbent management, even if such removal might be beneficial to shareholders. By discouraging takeover attempts, these provisions might have the incidental effect of inhibiting (i) certain changes in management and (ii) the temporary fluctuations in the market price of the shares that often result from actual or considered takeover attempts.

Transfer Agent and Registrar

Computershare serves as the CBI’s transfer agent and registrar.

FORWARD-LOOKING STATEMENTS

Some of the information in this proxy statement constitutes forward-looking statements within the definition of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as “may,” “expect,” “anticipate,” “contemplate,” “believe,” “estimate,” “intends,” and “continue” or similar words. You should read statements that contain these words carefully because they:

CBI believes it is important to communicate its expectations to its shareholders. However, there may be events in the future that it is not able to accurately predict or over which it has no control. The risk factors and cautionary language discussed in this proxy

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statement provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by CBI in its forward-looking statements, including among other things:

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement. All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, CBI undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events.

Before you grant your proxy or instruct how your vote should be cast or vote on the approval of the Acquisition you should be aware that the occurrence of the events described in this proxy statement could have a material adverse effect on CBI upon completion of the Acquisition.

SHAREHOLDER PROPOSALS

CBI’s annual meeting of shareholders will be held on or about Friday, May 18, 2007 unless the date is changed by the Board of Directors. If you are a shareholder and you want to include a proposal in the proxy statement for the year 2007 annual meeting, you need to provide it to CBI by no later than December 14, 2006. You should direct any proposals to CBI’s secretary at CBI’s principal office. If you want to present a matter of business to be considered at this special meeting, under CBI’s bylaws you must give timely notice of the matter, in writing, to CBI’s secretary.

EXPERTS

The financial statements of Mimotopes included in this proxy statement have been audited by RSM Bird Cameron Partners, independent registered public accounting firm, to the extent and for the period set forth in their report included herein, and are included herein in reliance upon such report given upon authority of said firm as experts in accounting.

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WHERE YOU CAN FIND MORE INFORMATION

CBI files reports, proxy statements and other information with the Securities and Exchange Commission as required by the Securities Exchange Act of 1934, as amended. You may read and copy reports, proxy statements and other information filed by CBI with the Securities and Exchange Commission at the Securities and Exchange Commission public reference room located at 100 F Street, N.E., Washington, D.C. 20549.

You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. You may also obtain copies of the materials described above at prescribed rates by writing to the Securities and Exchange Commission, Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.

CBI files their reports, proxy statements and other information electronically with the Securities and Exchange Commission. You may access information on CBI at the Securities and Exchange Commission web site containing reports, proxy statements and other information at: http://www.sec.gov.

Information and statements contained in this proxy statement, or any annex to this proxy statement, are qualified in all respects by reference to the copy of the relevant contract or other annex filed as an exhibit to this proxy statement.

All information contained in this proxy statement relating to CBI has been supplied by CBI, and all such information relating to Mimotopes has been supplied by Chemistry and PharmAust. Information provided by Chemistry, PharmAust or CBI does not constitute any representation, estimate or projection of the other.

If you would like additional copies of this proxy statement, or if you have questions about the Acquisition, you should contact:

COMMONWEALTH BIOTECHNOLOGIES, INC.

601 BIOTECH DRIVE

RICHMOND, VIRGINIA 23235

(804) 648-3820

ATTENTION: RICHARD J. FREER, PH.D.

Exhibits:

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EXHIBIT A

STOCK PURCHASE AGREEMENT

BY AND AMONG

COMMONWEALTH BIOTECHNOLOGIES, INC.,

PHARMAUST LIMITED

AND

PHARMAUST CHEMISTRY LTD.

DATED

NOVEMBER 24, 2006

TABLE OF CONTENTS

—i—

TABLE OF CONTENTS

—ii—

TABLE OF CONTENTS

—iii—

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of November 24, 2006, by and between COMMONWEALTH BIOTECHNOLOGIES, INC., a Virginia corporation (the “Buyer”), PHARMAUST LIMITED, an Australian limited company (the “Parent”), and PHARMAUST CHEMISTRY LTD, an Australian limited company (the “Seller”). The Buyer, the Seller and the Parent are referred to collectively herein as the “Parties”. The Seller owns all of the outstanding capital stock of MIMOTOPES PTY LTD, an Australian proprietary limited company (the “Target”).

WHEREAS, the Target is in the business of developing high quality research-grade peptide products and applications for the drug discovery industry;

WHEREAS, the Target is a wholly-owned subsidiary of the Seller;

WHEREAS, the Seller is a wholly-owned subsidiary of the Parent;

WHEREAS, the Buyer is in the business of providing analytical and synthetic chemistries and biophysical analysis technologies to the global biotechnology industry, academic institutions, government agencies and pharmaceutical companies;

WHEREAS, the Buyer desires to acquire the outstanding capital stock of the Target from the Buyer pursuant to the terms of this Stock Purchase Agreement; and

WHEREAS, the Parent is willing to enter into this Stock Purchase Agreement solely for the purposes described herein.

NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.

1. Definitions.

“A&S” means Anderson & Strudwick, Incorporated.

“Adverse Consequences” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses.

“Affiliate” means a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

“Australian Dollars” and the symbol “A$” shall mean sums of money in the currency of Australia.

“Buyer” has the meaning set forth in the preface above.

“Closing” has the meaning set forth in Section 2(c) below.

“Closing Date” has the meaning set forth in Section 2(c) below.

“Confidential Information” means any information concerning the businesses and affairs of the Target that is not already generally available to the public.

“Corporations Act” means the Corporations Act 2001 (Commonwealth).

“COTS” has the meaning set forth in Section 4(1)(iii).

“Disclosure Schedule” has the meaning set forth in Section 4 below.

“Environmental, Health, and Safety Requirements” shall mean all federal, state, local and foreign statutes, regulations, ordinances and similar provisions having the force or effect of law, all judicial and administrative orders and determinations, and all common law concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation.

“Financial Statements” has the meaning set forth in Section 4(f) below.

“GAAP” means United States generally accepted accounting principles as in effect from time to time.

“GST” means the Australian Goods and Services Tax.

“Income Tax” means any federal, state, local, or foreign income tax, including any interest, penalty, or addition thereto, whether disputed or not.

“Income Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Income Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Indemnified Party” has the meaning set forth in Section 8(d) below.

“Indemnifying Party” has the meaning set forth in Section 8(d) below.

A-2

“Intellectual Property” means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissues, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof (collectively “Patents”), (b) all trademarks, service marks, trade dress, logos, trade names, corporate names and domain names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith (collectively, “Marks”), (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith (collectively “Copyrights”), (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals) (collectively “Trade Secrets”), (f) all computer software (including data, compilations of data and related documentation) collectively, “Software”), (g) all other proprietary rights, and (h) all copies and tangible embodiments thereof (in whatever form or medium).

“Knowledge” means actual knowledge after reasonable investigation.

“Licenses In” has the meaning set forth in Section 4(1)(iii) below.

“Licenses Out” has the meaning set forth in Section 4(1)(iv) below.

“Licensed Intellectual Property” has the meaning set forth in Section 4(1)(iii) below.

“Most Recent Balance Sheet” means the balance sheet contained within the Most Recent Financial Statements.

“Most Recent Financial Statements” has the meaning set forth in Section 4(f) below.

“Most Recent Fiscal Month End” has the meaning set forth in Section 4(f) below.

“Most Recent Fiscal Year End” has the meaning set forth in Section 4(f) below.

“Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

“Owned Intellectual Property” has the meaning set forth in Section 4(1)(iii) below.

“Parent” has the meaning set forth in the preface above.

“Party” has the meaning set forth in the preface above.

A-3

“Person” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof).

“Purchase Price” has the meaning set forth in Section 2(b) below.

“Purchase Shares” collectively means the shares of the Common Stock of the Buyer, without par value per share, paid to the Seller pursuant to Section 2(b)(i) below.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Security Interest” means any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) mechanic’s, materialmen’s, and similar liens, (b) liens for taxes not yet due and payable, (c) purchase money liens and liens securing rental payments under capital lease arrangements, and (d) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money.

“Seller” has the meaning set forth in the preface above.

“Target” has the meaning set forth in the preface above.

“Target Shares” collectively means (a) all issued and outstanding ordinary shares of the Target and (b) any ordinary shares held in treasury by the Target.

“Third Party Claim” has the meaning set forth in Section 8(d) below.

2. Purchase and Sale of Target Shares.

(a) Basic Transaction. On and subject to the terms and conditions of this Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees to sell to the Buyer, all Target Shares for the consideration specified below in this Section 2.

(b) Purchase Price.

(i) Purchase Price. The Parties have agreed that the purchase price for the Target Shares (the “Purchase Price”) will be satisfied by the Buyer issuing 2,150,000 shares of its unregistered common stock, without par value per share, to the Seller (the “Purchase Shares”). The number of Purchase Shares to be so issued will not be adjusted to account for changes occurring between the date hereof and the Closing Date in the closing prices of the Seller’s common stock on the Nasdaq Capital Market or the Parent’s ordinary shares on the Australian Stock Exchange. The Buyer has engaged A&S to provide a fairness opinion regarding the Purchase Price.

A-4

(ii) Delivery of Purchase Price and Target Shares. On the Closing Date, the Buyer shall cause to be transferred to the Seller certificates for the Purchase Shares. The Purchase Shares shall be issued per instructions from the Seller. In exchange for the Purchase Shares, the Seller shall deliver to the Buyer the Target Shares, duly endorsed by the holder to the Buyer.

(c) The Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of the Buyer in Richmond, Virginia commencing at 9:00 a.m. local time on the second business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself) or such other date as the Buyer and the Seller may mutually determine (the “Closing Date”); provided, however, that the Closing Date shall be no later than March 31, 2007.

(d) Deliveries at the Closing. At the Closing, (i) the Parent and the Seller will deliver to the Buyer the various certificates, instruments, and documents referred to in Section 7(a) below, (ii) the Buyer will deliver to the Parent and the Seller the various certificates, instruments, and documents referred to in Section 7(b) below, (iii) the Seller will deliver to the Buyer stock certificates representing the Target Shares it holds, endorsed in blank or accompanied by duly executed assignment documents, and (iv) the Buyer will deliver to the Seller the Purchase Shares.

3. Representations and Warranties Concerning the Transaction.

(a) Representations and Warranties of the Parent and the Seller. The Parent and the Seller collectively represent and warrant to the Buyer that the statements contained in this Section 3(a) are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 3(a)), except as set forth in Annex I attached hereto.

(i) Organization of the Parent and the Seller. The Parent and the Seller are limited companies duly organized, validly existing, and in good standing under the laws of the Country of Australia, State of Victoria, including, but not limited to the Corporations Act.

(ii) Authorization of Transaction. The Parent and the Seller have full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the Parent and the Seller, enforceable in accordance with its terms and conditions. The Parent and the Seller need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. The Parent is not required by applicable law to obtain shareholder approval in order to consummate the transactions contemplated by this Agreement.

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(iii) Noncontravention. Neither the execution and the delivery of this Agreement nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Parent or the Seller is subject or any provision of its constitution or other governing documents or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Parent or the Seller is a party or by which either is bound or to which any of their assets is subject.

(iv) Brokers’ Fees. Each of the Parent and the Seller have no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Parent or the Buyer could become liable or obligated.

(v) Target Shares. The Seller holds of record and owns beneficially all of the issued and outstanding Target Shares free and clear of any restrictions on transfer, taxes, Security Interests, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. The Seller is not a party to any option, warrant, purchase right, or other contract or commitment that could require the Seller to sell, transfer, or otherwise dispose of any capital stock of the Target (other than this Agreement). The Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of the Target.

(vi) Investment. The Seller (A) understands that the Purchase Shares have not been, and will not be, registered under the Securities Act, or under any other securities laws, and are being offered and sold in reliance upon exemptions for transactions not involving any public offering, (B) is acquiring the Purchase Shares solely for its own account for investment purposes, and not with a view to the distribution, (C) is a sophisticated investor with knowledge and experience in business and financial matters, (D) has received certain information concerning the Buyer and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Purchase Shares, and (E) is able to bear the economic risk and lack of liquidity inherent in holding the Purchase Shares.

(vii) Regulation S. The Seller is a “non-U.S. person” as defined in Regulation S of the Securities Act. The issuance of the Purchase Shares will be completed in an offshore transaction, as defined in Rule 902(h) of Regulation S of the Securities Act, as now in effect, and the Seller shall submit to the Buyer such further assurances of such status as may be reasonably requested by the Buyer. The Seller:

(A) agrees to resell the Purchase Shares only in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an exemption from registration under the Securities Act;

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(B) acknowledges that the Buyer is required to refuse to register any sale of the Purchase Shares unless the transfer is in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an exemption from registration under the Securities Act; and

(C) agrees not to engage in hedging transactions with regards to the securities purchased unless in compliance with the Securities Act.

(b) Representations and Warranties of the Buyer. The Buyer represents and warrants to the Parent and the Seller that the statements contained in this Section 3(b) are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 3(b)), except as set forth in Annex II attached hereto.

(i) Organization of the Buyer. The Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the Commonwealth of Virginia.

(ii) Authorization of Transaction. The Buyer has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the Buyer, enforceable in accordance with its terms and conditions. With the exception of filing a proxy statement relating to the transaction contemplated by this Agreement with the SEC and responding to any comments thereto, the Buyer need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement.

(iii) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Buyer is subject or any provision of its articles of incorporation or bylaws or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Buyer is a party or by which it is bound or to which any of its assets is subject.

(iv) Brokers’ Fees. The Buyer has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Seller or Parent could become liable or obligated.

(v) Purchase Shares. The Buyer holds of record and owns beneficially the Purchase Shares which constitute the Purchase Price for the Target Shares, free and clear of any restrictions on transfer (other than any restrictions under the Securities Act and

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state securities laws), taxes, Security Interests, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands.

4. Representations and Warranties Concerning the Target. The Parent and the Seller collectively represent and warrant to the Buyer that to the best of their collective knowledge and having made all reasonable investigations the statements contained in this Section 4 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 4), except as set forth in the disclosure schedule delivered by the Seller to the Buyer on the date hereof and initialed by the Parties (the “Disclosure Schedule”). The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Section 4.

(a) Organization, Qualification, and Corporate Power. The Target is a proprietary limited company duly organized, validly existing, and in good standing under the laws of the Country of Australia, State of Victoria, including, but not limited to, the Corporations Act. The Target is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required, except where the lack of such qualification would not have a material adverse effect on the business, financial condition, operations, results of operations, or future prospects of the Target. The Target has full power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. Section 4(a) of the Disclosure Schedule lists the directors and officers of the Target.

(b) Capitalization. The entire issued capital stock of the Target consists of 5,682,074 Target Shares. All of the Target Shares have been duly authorized, are validly issued, fully paid, and nonassessable, and are held of record by the Seller. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Target to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Target. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of the Target.

(c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Target is subject or any provision of the charter or bylaws of the Target or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Target is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Security Interest upon any of its assets). The Target does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement.

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(d) Brokers’ Fees. The Target has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

(e) Title to Assets. The Target has good and marketable title to, or a valid leasehold interest in, the properties and assets used by it, located on its premises, or shown on the Most Recent Balance Sheet or acquired after the date thereof, free and clear of all Security Interests, except for properties and assets disposed of in the Ordinary Course of Business since the date of the Most Recent Balance Sheet.

(f) Financial Statements. Attached hereto, as Section 4(f) of the Disclosure Schedule, are the following financial statements (collectively, the “Financial Statements”): (i) audited balance sheets and statements of income, dated as of June 30, 2006 (the “Most Recent Fiscal Year End”) for the Target; and (ii) unaudited and normalized balance sheets and statements of income, dated as of June 30, 2005. The Financial Statements (including the notes thereto) are correct and complete and consistent with the books and records of the Target, and present fairly the financial condition of the Target as of such dates and the results of operations of the Target for such periods; provided, however, that the Most Recent Financial Statements are subject to normal year-end adjustments (which will not be material individually or in the aggregate) and lack footnotes and other presentation items.

(g) Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent Fiscal Year End, there has not been any material adverse change in the business, financial condition, operations, results of operations, or future prospects of the Target taken as a whole. Without limiting the generality of the foregoing, since that date:

(i) the Target has not sold, leased, transferred, or assigned any assets, tangible or intangible, outside the Ordinary Course of Business;

(ii) the Target has not entered into any agreement, contract, lease, or license outside the Ordinary Course of Business;

(iii) no party (including the Target) has accelerated, terminated, made modifications to, or canceled any material agreement, contract, lease, or license to which the Target is a party or by which it is bound;

(iv) the Target has not imposed any Security Interest upon any of its assets, tangible or intangible;

(v) the Target has not made any capital expenditures outside the Ordinary Course of Business;

(vi) the Target has not made any capital investment in, or any material loan to, any other Person outside the Ordinary Course of Business;

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(vii) the Target has not created, incurred, assumed, or guaranteed any indebtedness for borrowed money and capitalized lease obligations;

(viii) the Target has not granted any license or sublicense of any material rights under or with respect to any Intellectual Property;

(ix) there has been no change made or authorized in the constitution of the Target;

(x) the Target has not issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock;

(xi) the Target has not declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock;

(xii) the Target has not experienced any material damage, destruction, or loss (whether or not covered by insurance) to its property;

(xiii) the Target has not made any loan to, or entered into any other transaction with, any of its directors, officers, and employees outside the Ordinary Course of Business;

(xiv) the Target has not entered into any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement;

(xv) the Target has not granted any increase in the base compensation of any of its directors, officers, and employees;

(xvi) the Target has not adopted, amended, modified, or terminated any bonus, profit-sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees;

(xvii) the Target has not made any other material change in employment terms for any of its directors, officers, and employees; and

(xviii) the Target has not committed to any of the foregoing.

(h) Undisclosed Liabilities. The Target has no liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes), except for (i) liabilities set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) liabilities which have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business.

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(i) Legal Compliance. The Target has complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local, and foreign governments (and all agencies thereof), and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against any of them alleging any failure so to comply.

(j) Tax Matters.

(i) The Target has filed all Income Tax returns that it was required to file. All such Income Tax returns were correct and complete in all material respects. All Income Taxes owed by the Target (whether or not shown on any Income Tax return) have been paid. The Target is not currently the beneficiary of any extension of time within which to file any Income Tax return.

(ii) There is no dispute or claim concerning any Income Tax liability of the Target either (A) claimed or raised by any authority in writing or (B) as to which the Parent, the Seller or the directors and officers of the Target has Knowledge based upon personal contact with any agent of such authority.

(iii) Section 4(j) of the Disclosure Schedule lists all federal, state, local, and foreign Income Tax returns filed with respect to the Target for taxable periods ended on or after December 31, 2004, indicates those Income Tax returns that have been audited, and indicates those Income Tax returns that currently are the subject of audit. The Seller has delivered to the Buyer correct and complete copies of all federal Income Tax returns, examination reports, and statements of deficiencies assessed against, or agreed to by the Target since December 31, 2004. The Target has not waived any statute of limitations in respect of Income Taxes or agreed to any extension of time with respect to an Income Tax assessment or deficiency.

(k) Real Property.

(i) Section 4(k)(i) of the Disclosure Schedule lists and describes briefly all real property owned by the Target. With respect to each such parcel of owned real property:

(A) the identified owner has good and marketable title to the parcel of real property, free and clear of any Security Interest, easement, covenant, or other restriction, except for installments of special assessments not yet delinquent, recorded easements, covenants, and other restrictions, and utility easements, building restrictions, zoning restrictions, and other easements and restrictions existing generally with respect to properties of a similar character;

(B) there are no pending or, to the Knowledge of the Parent, the Seller and the directors and officers of the Target, threatened condemnation proceedings, lawsuits, or administrative actions relating to the property or other matters affecting the current use, occupancy, or value thereof;

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(C) the legal description for the parcel contained in the deed thereof describes such parcel fully and adequately, the buildings and improvements are located within the boundary lines of the described parcels of land, are not in violation of applicable setback requirements, zoning laws, and ordinances, and do not encroach on any easement which may burden the land;

(D) all facilities have received all approvals of governmental authorities (including material licenses and permits) required in connection with the ownership or operation thereof, and have been operated and maintained in accordance with applicable laws, rules, and regulations;

(E) except as noted in Section 4(k)(i) of this Disclosure Schedule, there are no leases, subleases, licenses, concessions, or other agreements, written or oral, granting to any party or parties the right of use or occupancy of any portion of the parcel of real property;

(F) except as noted in Section 4(k)(i) of this Disclosure Schedule, there are no outstanding options or rights of first refusal to purchase the parcel of real property, or any portion thereof or interest therein;

(G) except as noted in Section 4(k)(i) of this Disclosure Schedule, there are no parties (other than the Target) in possession of the parcel of real property.

(ii) Section 4(k)(ii) of the Disclosure Schedule lists and describes briefly all real property leased or subleased by the Target. The Seller has delivered to the Buyer correct and complete copies of the leases and subleases listed in Section 4(k)(ii) of the Disclosure Schedule (as amended to date). With respect to each lease and sublease listed in Section 4(k)(ii) of the Disclosure Schedule:

(A) the lease or sublease is legal, valid, binding, enforceable, and in full force and effect;

(B) no party to the lease or sublease is in breach or default, and no event has occurred which, with notice or lapse of time, would constitute a breach or default or permit termination, modification, or acceleration thereunder;

(C) no party to the lease or sublease has repudiated any provision thereof;

(D) there are no disputes, oral agreements, or forbearance programs in effect as to the lease or sublease;

(E) the Target has not assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in the leasehold or subleasehold; and

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(F) all facilities leased or subleased thereunder have received all approvals of governmental authorities (including licenses and permits) required in connection with the operation thereof, and have been operated and maintained in accordance with applicable laws, rules, and regulations.

(l) Intellectual Property.

(i) Except as is stated with specificity in Section 4(l)(i) of the Disclosure Schedule, the Target has never interfered with, infringed upon, diluted, misappropriated, or otherwise violated any Intellectual Property rights of third parties; none of the Seller and the directors and officers of the Target has ever received any charge, complaint, claim, demand, invitation to license or notice either alleging any such interference, infringement, misappropriation, or violation or suggesting that the Target may must limit its use or exploitation of Intellectual Property or must take a license in order to continue exploiting Intellectual Property; the use and exploitation of the Intellectual Property owned by or, to the Knowledge of the Seller, used by the Target will not interfere with, infringe, dilute, misappropriate or otherwise violate any Intellectual Property rights of any third party.

(ii) Except as is stated with specificity in Section 4(1)(ii) of the Disclosure Schedule, to the Knowledge of the Seller and the directors and officers of the Target, no third party has interfered with, infringed upon, misappropriated, or violated any Intellectual Property owned by the Target.

(iii) Section 4(1)(iii) of the Disclosure Schedule identifies all Patents, Marks, Copyrights, Trade Secrets, Software that is used in and material to the operation of the Target’s business, including without limitation any unregistered Intellectual Property and any pending applications for registration, for Patents, in all jurisdictions. Section 4(l)(iii)(A) of the Disclosure Schedule lists all such Intellectual Property that is owned by the Target (“Owned Intellectual Property”), and Section 4(l)(iii)(B) of the Disclosure Schedule lists all such Intellectual Property (excepting consumer off-the-shelf Software, or “COTS”) that is used by the Target pursuant to a license or other authorization from the owner of such Intellectual Property (“Licensed Intellectual Property”). The Seller has delivered to the Buyer correct and complete copies of all such registrations and applications for registration identifying the Intellectual Property identified in Section 4(l)(iii)(A) of the Disclosure Schedule; all assignments, invention disclosures and other documents evidencing how the Target acquired ownership of the Intellectual Property identified in Section 4(l)(iii)(A) of the Disclosure Schedule; and all licenses, authorization and permissions (in original form and as amended to date) by which the Target has been and is authorized to use the Intellectual Property required to be identified in Section 4(l)(iii)(B) of the Disclosure Schedule (“Licenses In”).

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(iv) With respect to each item of the Owned Intellectual Property required to be identified in Section 4(l)(iii)(A) of the Disclosure Schedule:

(A) the Target is the sole owner of the Intellectual Property, and there are no joint owners;

(B) the Target has all assignments or other transfers from any third-party inventors, authors or other creators of such Intellectual Property (including but not necessarily limited to employees and consultants) necessary to be the sole owner of such Owned Intellectual Property, and such assignments and other documents are valid and enforceable, and Target is not in breach of any such agreements;

(C) the Target possess all right, title, and interest in and to the item, free and clear of any lien, Security Interest, encumbrance, license to others, or other restriction;

(D) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, consent judgment, settlement agreement, consent agreement, concurrent use agreement or other restriction that may limit or impair its use;

(E) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, administrative action, or demand is pending or, to the Knowledge of the Seller and the directors and officers of the Target, is threatened which challenges the legality, validity, enforceability, use, scope or ownership of the item;

(F) all applications for renewals, affidavits of use, maintenance fees and other actions and filings necessary to maintain and secure the Target’s sole ownership of the Owned Intellectual Property have been filed, accepted, paid, or taken, as the case may be;

(G) Neither the Seller nor the Target has any reason to believe that any Item of Owned Intellectual Property is invalid, unenforceable, abandoned, dedicated to the public, or otherwise subject to challenge, or that there is any factual basis for a third party to allege any such deficiency;

(H) Except as is identified in Section 4(l)(vii) of the Disclosure Schedule, the Target has not authorized, licensed or granted any permission to any third party to use or exploit the Owned Intellectual Property (“Licenses Out”);

(I) the Target has not assigned, conveyed, or transferred to any third party any interest in the Owned Intellectual Property; and

(J) the Target has never agreed to indemnify any Person for or against any interference, infringement, misappropriation, or other conflict with respect to their use of such Owned Intellectual Property.

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(v) With respect to each item of Licensed Intellectual Property required to be disclosed in Section 4(l)(iii)(B) of the Disclosure Schedule:

(A) the Target has all authorization, licenses and approvals from the Owner of the Licensed Intellectual Property to use same as it is used in Target’s business;

(B) the Target’s use of Licensed Intellectual Property is and has been in accordance with the terms and conditions of the Licenses In to use such Licensed Intellectual Property, the Target is not and has not been in breach or default of same, and the Licenses In are valid, enforceable and subsisting;

(C) To the Knowledge of the Seller and the Target, the Licensed Intellectual Property is valid, enforceable, and the use thereof by the Target has not infringed and does not infringe the Intellectual Property or contractual rights of any third party;

(D) no party to the License In is in material breach or default, and no event has occurred which with notice or lapse of time would constitute a material breach or default or permit termination, modification, or acceleration thereunder;

(E) no party to the license, sublicense, agreement, or permission has repudiated any material provision thereof; and

(F) the Target has not granted any sublicense or similar right with respect to the license, sublicense, agreement, or permission.

(vi) With respect to COTS and to the Target’s use of and access to third party Software, whether via the Internet or otherwise:

(A) all COTS used by the Target and/or residing on servers or computers under the Target’s ownership, custody and control is properly licensed by the owner of the Intellectual Property in such COTS; such licenses are valid, enforceable and subsisting; the Target is using such COTS in accordance with such licenses; the Target has not breached and is not in default of or arrears of its obligations under any such licenses; and

(B) all access to and use by the Target of third party Software residing on computers or servers not under the Target’s custody and control, including but not limited to access to Software via the Internet, has been authorized and in accordance with any terms of use, access agreements or other terms and restrictions imposed by the owner or provider of such Software.

(vii) Section 4(l)(vii) of the Disclosure Schedule identifies all licenses, sublicenses, permissions or other authorizations granted or made by the Target to use either Owned Intellectual Property or Licensed Intellectual Property. With respect to Licenses Out:

(A) Seller and Target have provided to Buyer all Licenses Out;

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(B) no third party is using Owned Intellectual Property without a written, binding and enforceable License Out, and to the Knowledge of the Seller and the Target, no party to any License Out is or has been in breach or default of same;

(C) to the Knowledge of the Seller and the Target, no third party is using any Licensed Intellectual Property pursuant as the result of any action, disclosure or omission of the Target or the Seller without a written, binding and enforceable License Out, and to the Knowledge of the Seller and the Target, not party to any such License out is or has been in breach or default of same; and

(D) licenses out of Licensed Intellectual Property are authorized and in full compliance with the terms and conditions of the Licenses In of such Licensed Intellectual Property, and to the Knowledge of the Seller and the Target no act or omission of either the Target or third parties to Licenses out does constitute or has constitute a breach or default of any License In;

(viii) With respect to Trade Secrets, except as is stated to the contrary in Section 4(l)(viii) of the Disclosure Schedule:

(A) the Target and the Seller have provided to the Buyer copies of all nondisclosure agreements, confidentiality agreements, and other agreements of any type pursuant to which any third party may have had access to or the right to use any Trade Secrets of the Target;

(B) the Target is the sole owner of the Trade Secrets, excepting only for Trade Secrets of third parties held by the Target in confidence as identified in Section 4(l)(viii) of the Disclosure Schedule;

(C) the Target has not violated and is not violating the terms and restrictions on which it holds, uses, and/or discloses any Trade Secrets of third parties that have been entrusted to the Target in confidence;

(D) the Target is not in breach or default, and has not breached or defaulted upon any confidentiality or similar agreement with any third party;

(E) the Target has not disclosed or licensed any Trade Secrets to any third parties without binding and enforceable written obligations of confidentiality;

(F) the Target has not waived, forfeited, surrendered, dedicated to the public, or released any material Trade Secret once owned by it and material to the conduct of its business, whether by action or omission;

(G) the Target has employed reasonable precautions to safeguard the Trade Secrets against unauthorized use or disclosure, including but not limited to restricting access to the Target’s facilities, employing security Software on all computer systems, including confidentiality provisions in all vendor, supplier,

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customer, joint venture, research and other agreements pursuant to which others may have access to the Target’s Trade Secrets; and

(H) to the knowledge of the Seller and the Target, the Target’s rights in the Trade Secrets it owns are valid and enforceable in all jurisdictions in which the Target uses or authorizes the use of such Trade Secrets.

(m) Tangible Assets. The buildings, machinery, equipment, and other tangible assets necessary for the conduct of the Target’s Ordinary Business that the Target owns and leases are free from patent defects, have been appropriately maintained, and are in good operating condition and repair (subject to normal wear and tear).

(n) Inventory. The inventory of the Target consists of raw materials and supplies, manufactured and processed parts, work in process, and finished goods, all of which is merchantable and fit for the purpose for which it was procured or manufactured, and none of which is slow-moving, obsolete, damaged, or defective.

(o) Contracts. Section 4(n) of the Disclosure Schedule lists the following contracts and other agreements to which the Target is a party:

(i) any agreement (or group of related agreements) for the lease of personal property to or from any Person;

(ii) any agreement (or group of related agreements) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services;

(iii) any agreement concerning a partnership or joint venture;

(iv) any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation;

(v) any agreement concerning confidentiality or noncompetition;

(vi) any agreement with the Seller and its Affiliates (other than the Target);

(vii) any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other material plan or arrangement for the benefit of its current or former directors, officers, and employees;

(viii) any collective bargaining agreement;

(ix) any agreement for the employment of any individual on a full-time, part-time, consulting, or other basis;

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(x) any agreement under which it has advanced or loaned any amount to any of its directors, officers, and employees;

(xi) any agreement under which the consequences of a default or termination could have a material adverse effect on the business, financial condition, operations, results of operations, or future prospects of the Target; or

(xii) any other agreement (or group of related agreements) the performance of which involves consideration in excess of A$10,000.

The Seller has delivered to the Buyer a correct and complete copy of each written agreement listed in Section 4(n) of the Disclosure Schedule (as amended to date). With respect to each such agreement: (A) the agreement is legal, valid, binding, enforceable, and in full force and effect; (B) no party is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement; and (C) no party has repudiated any provision of the agreement.

(p) Notes and Accounts Receivable. All notes and accounts receivable of the Target are reflected properly on their books and records, are valid receivables subject to no setoffs or counterclaims, are current and collectible, and will be collected in accordance with their terms at their recorded amounts, subject only to the reserve for bad debts set forth on the face of the Most Recent Balance Sheet as adjusted for operations and transactions through the Closing Date in accordance with the past custom and practice of the Target.

(q) Powers of Attorney. There are no outstanding powers of attorney executed on behalf of the Target.

(r) Insurance. Section 4(q) of the Disclosure Schedule sets forth the following information with respect to each insurance policy with respect to which the Target is a party, a named insured, or otherwise the beneficiary of coverage:

(i) the name, address, and telephone number of the agent;

(ii) the name of the insurer, the name of the policyholder, and the name of each covered insured;

(iii) the policy number and the period of coverage;

(iv) the scope (including an indication of whether the coverage is on a claims made, occurrence, or other basis) and amount (including a description of how deductibles and ceilings are calculated and operate) of coverage; and

(v) a description of any retroactive premium adjustments or other loss-sharing arrangements.

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With respect to each such insurance policy: (A) the policy is legal, valid, binding, enforceable, and in full force and effect; (B) neither the Target nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; and (C) no party to the policy has repudiated any provision thereof. Section 4(q) of the Disclosure Schedule describes any self-insurance arrangements affecting the Target.

(s) Litigation. The Target is not (i) subject to any outstanding injunction, judgment, order, decree, ruling, or charge and (ii) is not a party or, to the Knowledge of the Parent, the Seller and the directors and officers of the Target, is threatened to be made a party to any action, suit, proceeding, hearing, or investigation of, in, or before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator.

(t) Employees. To the Knowledge of the Parent, the Seller and the directors and officers of the Target, no executive, key employee, or significant group of employees plans to terminate employment with the Target during the next 12 months. The Target is not a party to or bound by any collective bargaining agreement, nor has it experienced any strike or material grievance, claim of unfair labor practices, or other collective bargaining dispute within the past three years. The Target has not committed any material unfair labor practice. None of the Parent, the Seller and the directors and officers of the Target has any Knowledge of any organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of the Target.

(u) Guaranties. The Target is not a guarantor or otherwise responsible for any liability or obligation (including indebtedness) of any other Person.

(v) Environment, Health, and Safety Matters.

(i) Each of the Target and its predecessors and Affiliates, if any, has complied and is in compliance with all Environmental, Health, and Safety Requirements.

(ii) Without limiting the generality of the foregoing, each of the Target and its Affiliates, if any, has obtained, has complied, and is in compliance with all permits, licenses and other authorizations that are required pursuant to Environmental, Health, and Safety Requirements for the occupation of its facilities and the operation of its business.

(iii) Neither the Target nor any of its Affiliates has received any written or oral notice, report or other information regarding any actual or alleged violation of Environmental, Health, and Safety Requirements, or any liabilities or potential liabilities (whether accrued, absolute, contingent, unliquidated or otherwise), including any investigatory, remedial or corrective obligations, relating to any of them or its facilities arising under Environmental, Health, and Safety Requirements.

(iv) None of the Target or its predecessors or Affiliates, if any, has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, or released any substance, including without limitation any hazardous substance, or owned

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or operated any property or facility (and no such property or facility is contaminated by any such substance) in a manner that has given or would give rise to material liabilities, including any material liability for response costs, corrective action costs, personal injury, property damage, natural resources damages or attorney fees.

(x) Disclosure. The representations and warranties contained in this Section 4 do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Section 4 not misleading.

(w) Employment Agreements. The Target will have entered into employment agreements with each of the individuals indicated in Section 4(y) of the Disclosure Schedule by the Closing Date. Each of these employees were formerly employed by the Seller, but provided services to the Target exclusively. Each of the employment agreements with the Target are identical to the former employment agreements with the Seller in all material respects.

5. Pre-Closing Covenants. The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing.

(a) General. Each of the Parties will use its reasonable best efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Section 7 below).

(b) As promptly as practicable after the execution of this Agreement, the Buyer shall prepare, and file with the SEC, preliminary proxy materials relating to this Agreement to obtain shareholder approval. The Parent, the Seller and the officers and directors of the Target shall provide promptly to the Buyer such information concerning the Target and the Seller as, in the reasonable judgment of the Buyer, may be required or appropriate for inclusion in the proxy statement, or in any amendments or supplements thereto. At the earliest practicable time following the later of:

(i) receipt and resolution of SEC comments thereon, or

(ii) the expiration of the 10-day waiting period provided in Rule 14a-6(a) promulgated under the Securities Exchange Act.

The Buyer shall file definitive proxy materials with the SEC and cause the proxy statement to be mailed to its shareholders.

(c) Notices and Consents. The Parent and the Seller will cause the Target to give any notices to third parties, and will cause the Target to use its reasonable best efforts to obtain any third party consents, that the Buyer reasonably may request in connection with the matters referred to herein. Each of the Parties will (and the Parent and the Seller will cause the Target to) give any notices to, make any filings with, and use its reasonable best efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies in connection with the matters referred to herein.

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(d) Operation of Business. The Parent and the Seller will not cause or permit the Target to engage in any practice, take any action, or enter into any transaction outside the Ordinary Course of Business. Without limiting the generality of the foregoing, the Parent and the Seller will not cause or permit the Target to (i) declare, set aside, or pay any dividend or make any distribution with respect to its capital stock or redeem, purchase, or otherwise acquire any of its capital stock or (ii) otherwise engage in any practice, take any action, or enter into any transaction of the sort described in Section 4(g) above.

(e) Preservation of Business. The Parent and the Seller will cause the Target to keep its business and properties substantially intact, including its present operations, physical facilities, working conditions, and relationships with lessors, licensors, suppliers, customers, and employees.

(f) Full Access. The Parent and the Seller will permit, and the Parent and the Seller will cause the Target to permit, representatives of the Buyer to have full access at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Target, to all premises, properties, personnel, books, records (including tax records), contracts, and documents of or pertaining to the Target. The Buyer will treat and hold as such any Confidential Information it receives from the Parent, the Seller, the Target, or any of the Seller’s subsidiaries in the course of the reviews contemplated by this Section 5(e), will not use any of the Confidential Information except in connection with this Agreement, and, if this Agreement is terminated for any reason whatsoever, will return to the Parent, the Seller, the Target, and the Seller’s subsidiaries all tangible embodiments (and all copies) of the Confidential Information which are in its possession.

(g) Notice of Developments. The Parent and the Seller will give prompt written notice to the Buyer of any material adverse development causing a breach of any of the representations and warranties in Section 4 above. Each Party will give prompt written notice to the others of any material adverse development causing a breach of any of its own representations and warranties in Section 3 above. No disclosure by any Party pursuant to this Section 5(g), however, shall be deemed to amend or supplement Annex I, Annex II, or the Disclosure Schedule or to prevent or cure any misrepresentation, breach of warranty, or breach of covenant.

6. Post-Closing Covenants. The Parties agree as follows with respect to the period following the Closing.

(a) General. In case at any time after the Closing any further action is necessary to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Section 8 below). The Parent and the Seller acknowledge and agree that from and after the Closing the Buyer will be entitled to possession of all documents, books, records (including tax records), agreements, and financial data of any sort relating to the Target.

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(b) Litigation Support. In the event and for so long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the Target, each of the other Parties will cooperate with it and its counsel in the contest or defense, make available their personnel, and provide such testimony and access to their books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under Section 8 below).

(c) Transition. The Parent and the Seller will not take any action that is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier, or other business associate of the Target from maintaining the same business relationships with the Target after the Closing as it maintained with the Target prior to the Closing.

(d) Confidentiality. The Parent and the Seller will treat and hold as such all of the Confidential Information, refrain from using any of the Confidential Information except in connection with this Agreement, and deliver promptly to the Buyer or destroy, at the request and option of the Buyer, all tangible embodiments (and all copies) of the Confidential Information which are in their possession. In the event that the Parent or the Seller is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, the Parent or the Seller, as applicable, will notify the Buyer promptly of the request or requirement so that the Buyer may seek an appropriate protective order or waive compliance with the provisions of this Section 6(d). If, in the absence of a protective order or the receipt of a waiver hereunder, the Parent or the Seller is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, the Parent or the Seller may disclose the Confidential Information to the tribunal; provided, however, that the Parent or the Seller, as applicable, shall use its reasonable best efforts to obtain, at the reasonable request of the Buyer, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as the Buyer shall designate.

(e) Covenant Not to Compete. For a period of three years from and after the Closing Date, the Parent and the Seller will not engage directly or indirectly in any business that the Target conducts as of the Closing Date in any geographic area in which the Target conducts that business as of the Closing Date. If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 6(e) is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed.

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7. Conditions to Obligation to Close.

(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:

(i) the representations and warranties set forth in Sections 3(a) and 4 above shall be true and correct in all material respects at and as of the Closing Date;

(ii) the Parent, the Seller and the Target shall have performed and complied with all of their respective covenants hereunder in all material respects through the Closing;

(iii) the shareholders of the Buyer shall have approved the transactions contemplated by this Agreement at a special shareholders meeting arranged in connection with the Company’s proxy statement;

(iv) the Target shall have procured all of the material third party consents specified in Section 5(c) above;

(v) the Company shall have resolved any SEC comments on its proxy statement OR the SEC’s 10-day waiting period mandated by Rule 14a-6(a) promulgated under the Securities and Exchange Act shall have expired;

(vi) the Target shall have procured all of the material third party consents specified in Section 5(c) above;

(vii) the Buyer’s Board of Directors shall have received an opinion from A&S, dated as of the date hereof, to the effect that, as of the date hereof, the consideration to be paid by the Buyer to the Seller for the Target Shares is fair to the Buyer’s shareholders from a financial point of view;

(viii) no action, suit, or proceeding shall be threatened or pending before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement, (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, (C) affect adversely the right of the Buyer to own the Target Shares and to control the Target, or (D) affect materially and adversely the right of the Target to own its assets and to operate its businesses (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect);

(ix) the Seller shall have delivered to the Buyer a certificate to the effect that each of the conditions specified above in Section 7(a)(i)-(iv) is satisfied in all respects;

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(x) The Parties and the Target shall have received all other material authorizations, consents, and approvals of governments and governmental agencies referred to in Sections 3(a)(ii) and 3(b)(ii) above;

(xi) the Parent and the Buyer shall have entered into a voting agreement in form and substance as set forth in Exhibit A attached hereto and the same shall be in full force and effect;

(xii) the Buyer shall have received from counsel to the Seller an opinion in form and substance as set forth in Exhibit B attached hereto, addressed to the Buyer, and dated as of the Closing Date;

(xiii) the employees of Seller shall have terminated their employment with the Seller and entered into new employment agreements with the Target, copies of which will be delivered to the Buyer at Closing and will be substantially in the form and substance as set forth in Exhibit C hereto;

(xiv) the Parent shall have entered into a registration rights agreement with the Buyer in form and substance as set forth in Exhibit D hereto; and

(xv) all actions to be taken by the Seller in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Buyer.

The Buyer may waive any condition specified in this Section 7(a) if it executes a writing so stating at or prior to the Closing.

(b) Conditions to Obligation of the Seller. The obligation of the Parent and the Seller to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:

(i) the representations and warranties set forth in Section 3(b) above shall be true and correct in all material respects at and as of the Closing Date;

(ii) the Buyer shall have performed and complied with all of its covenants hereunder in all material respects through the Closing;

(iii) no action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement or (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect);

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(iv) the Buyer shall have delivered to the Seller a certificate to the effect that each of the conditions specified above in Section 7(b)(i)-(iii) is satisfied in all respects;

(v) the Parties and the Target shall have received all other material authorizations, consents, and approvals of governments and governmental agencies referred to in Sections 3(a)(ii) and 3(b)(ii) above;

(vi) the Parent and the Buyer shall have entered into a voting agreement in form and substance as set forth in Exhibit A and the same shall be in full force and effect;

(vii) the Nominating Committee of the Buyer’s Board of Directors shall have appointed the Parent’s nominee (who in the first instance shall be Paul D’Sylva) as a director of the Company, subject to shareholder approval at the Buyer’s 2007 Annual Meeting of Shareholders;

(viii) the Seller shall have received from counsel to the Buyer an opinion in form and substance as set forth in Exhibit E attached hereto, addressed to the Seller, and dated as of the Closing Date;

(ix) the Buyer shall have entered into a registration rights agreement with the Parent in form and substance as set forth in Exhibit D hereto; and

(x) all actions to be taken by the Buyer in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Seller.

The Seller may waive any condition specified in this Section 7(b) if it executes a writing so stating at or prior to the Closing.

8. Remedies for Breaches of this Agreement.

(a) Survival of Representations and Warranties. All of the representations and warranties of the Parent and the Seller contained in Section 4 above shall survive the Closing hereunder (even if the Buyer knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) and continue in full force and effect for a period of two years thereafter.

(b) Indemnification Provisions for Benefit of the Buyer. In the event the Parent or the Seller breaches any of their representations, warranties, and covenants contained herein and, if there is an applicable survival period pursuant to Section 8(a) above, provided that the Buyer makes a written claim for indemnification against the Parent or the Seller pursuant to Section 10(h) below within such survival period, then the Parent and the Seller, jointly and severally agree to indemnify the Buyer from and against the entirety of any Adverse Consequences the Buyer may suffer through and after the date of the claim for indemnification

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(including any Adverse Consequences the Buyer may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach.

(c) Indemnification Provisions for Benefit of the Seller. In the event the Buyer breaches any of its representations, warranties, and covenants contained herein, and, if there is an applicable survival period pursuant to Section 8(a) above, provided that the Parent or the Seller makes a written claim for indemnification against the Buyer pursuant to Section 10(h) below within such survival period, then the Buyer agrees to indemnify the Parent and the Seller from and against the entirety of any Adverse Consequences the Parent or the Seller may suffer through and after the date of the claim for indemnification (including any Adverse Consequences the Parent or the Seller may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach.

(d) Matters Involving Third Parties.

(i) If any third party shall notify any Party (the “Indemnified Party”) with respect to any matter (a “Third Party Claim”) which may give rise to a claim for indemnification against any other Party (the “Indemnifying Party”) under this Section 8, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is prejudiced.

(ii) The Indemnifying Party will have the right to assume the defense of the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party at any time within 15 days after the Indemnified Party has given notice of the Third Party Claim; provided, however, that the Indemnifying Party must conduct the defense of the Third Party Claim actively and diligently thereafter in order to preserve its rights in this regard; and provided further that the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim.

(iii) So long as the Indemnifying Party has assumed and is conducting the defense of the Third Party Claim in accordance with Section 8(d)(ii) above, (A) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably) unless the judgment or proposed settlement involves only the payment of money damages by the Indemnifying Party and does not impose an injunction or other equitable relief upon the Indemnified Party and (B) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably).

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(iv) In the event the Indemnifying Party does not assume and conduct the defense of the Third Party Claim in accordance with Section 8(d)(ii) above, however, (A) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, the Indemnifying Party in connection therewith) and (B) the Indemnifying Party will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest extent provided in this Section 8.

(e) Non-Exclusive Remedy. The Buyer and the Seller acknowledge and agree that the foregoing indemnification provisions in this Section 8 are in addition to and not in derogation of any other statutory, equitable, or common law remedies (including any such remedies relating to environmental matters).

9. Tax Matters.

The following provisions shall govern the allocation of responsibility as between the Buyer and the Seller for certain tax matters following the Closing Date:

(a) Tax Periods Ending on or Before the Closing Date. The Buyer shall prepare or cause to be prepared and file or cause to be filed all tax returns for the Target for all periods ending on or prior to the Closing Date which are filed after the Closing Date other than Income tax returns with respect to periods for which a consolidated, unitary or combined income tax return of the Seller will include the operations of the Target. The Buyer shall permit the Seller to review and comment on each such tax return described in the preceding sentence prior to filing and shall make such revisions to such tax returns as are reasonably requested by the Seller. The Seller shall reimburse the Buyer for taxes of the Target with respect to such periods within fifteen (15) days after payment by the Buyer or the Target of such taxes.

(b) Tax Periods Beginning Before and Ending After the Closing Date. The Buyer shall prepare or cause to be prepared and file or cause to be filed any tax returns of the Target for tax periods which begin before the Closing Date and end after the Closing Date. The Seller shall pay to the Buyer within fifteen (15) days after the date on which taxes are paid with respect to such periods an amount equal to the portion of such taxes which relates to the portion of such taxable period ending on the Closing Date. For purposes of this Section, in the case of any taxes that are imposed on a periodic basis and are payable for a taxable period that includes (but does not end on) the Closing Date, the portion of such tax which relates to the portion of such taxable period ending on the Closing Date shall (x) in the case of any taxes other than taxes based upon or related to income or receipts, be deemed to be the amount of such tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in the entire taxable period, and (y) in the case of any tax based upon or related to income or receipts be deemed equal to the amount which would be payable if the relevant taxable period ended on the Closing Date. Any credits relating to a taxable period that begins before and ends after the Closing Date shall be taken into account as though the relevant taxable period ended on the Closing Date. All determinations necessary to give effect to the foregoing allocations shall be made in a manner consistent with prior practice of the Target.

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(c) Cooperation on Tax Matters.

(i) The Buyer, the Parent, the Target and the Seller shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax returns pursuant to this Section and any audit, litigation or other proceeding with respect to taxes. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Target and the Seller agree (A) to retain all books and records with respect to tax matters pertinent to the Target relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by the Buyer or the Seller, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Target or the Seller, as the case may be, shall allow the other party to take possession of such books and records.

(ii) The Buyer and the Seller further agree, upon request, to use their best efforts to obtain any certificate or other document from any governmental authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby).

(d) Certain Taxes. All transfer, documentary, sales, use, stamp, registration and other such taxes and fees (including GST and any penalties and interest) incurred in connection with this Agreement, shall be paid by the Seller when due, and the Seller will, at its own expense, file all necessary tax returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other taxes and fees, and, if required by applicable law, the Buyer will, and will cause its Affiliates to, join in the execution of any such tax returns and other documentation.

10. Termination.

(a) Termination of Agreement. Certain of the Parties may terminate this Agreement as provided below:

(i) the Buyer and the Seller may terminate this Agreement by mutual written consent at any time prior to the Closing;

(ii) the Buyer may terminate this Agreement by giving written notice to the Parent and the Seller at any time prior to the Closing (A) in the event the Parent or the Seller has breached any representation, warranty, or covenant contained in this

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Agreement; (B) in the event the Buyer, in its sole and absolute discretion, is not satisfied with the results of its continuing business, legal, environmental, and accounting due diligence concerning the Target (including, without limitation, the valuation of the Target and the Target Shares); or (C) if the Closing shall not have occurred on or before March 31, 2007, by reason of the failure of any condition precedent under Section 7(a) hereof (unless the failure results primarily from the Buyer itself breaching any representation, warranty, or covenant contained in this Agreement); and

(iii) the Parent or the Seller may terminate this Agreement by giving written notice to the Buyer at any time prior to the Closing (A) in the event the Buyer has breached any material representation, warranty, or covenant contained in this Agreement in any material respect; (B) in the event the Seller, in its sole and absolute discretion, is not satisfied with the results of its continuing business, legal, environmental, and accounting due diligence concerning the Buyer; or (C) if the Closing shall not have occurred on or before March 31, 2007, by reason of the failure of any condition precedent under Section 7(b) hereof (unless the failure results primarily from the Seller breaching any representation, warranty, or covenant contained in this Agreement).

(b) Effect of Termination. If any Party terminates this Agreement pursuant to Section 10(a) above, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to any other Party (except for any liability of any Party then in breach); provided, however, that the confidentiality provisions contained above shall survive termination.

11. Miscellaneous.

(a) Specific Performance. The parties agree that specific performance of the obligations under this Agreement may be enforced by a suit in equity. The rights and remedies provided by this Stock Purchase Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise.

(b) Press Releases and Public Announcements. No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement prior to the Closing without the prior written approval of the Buyer, the Parent and the Seller; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities (in which case the disclosing Party will use its reasonable best efforts to advise the other Parties prior to making the disclosure).

(c) No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.

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(d) Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement between the Parties and supersedes any prior understandings, agreements, or representations by or between the Parties, written or oral, to the extent they related in any way to the subject matter hereof.

(e) Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the Buyer, the Parent and the Seller.

(f) Counterparts. This Agreement may be executed in one or more facsimile or original counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

(g) Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

(h) Notices. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then seven business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: