SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X//x/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
LEE PHARMACEUTICALSLee Pharmaceuticals
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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LEE PHARMACEUTICALS
1434 Santa Anita Avenue
South El Monte, California 91733
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The Annual Meeting of the Shareholders of LEE PHARMACEUTICALS, a California
corporation, will be held at 1434 Santa Anita Avenue, South El Monte,
California, on Tuesday, March 9, 1999,14, 2000, at 1:30 p.m., for the following
purposes:
1. To elect directors for the ensuing year or as otherwise provided in the
Bylaws;
2. To approve an amendment to the Bylaws to reduce the authorized number of
directors to not less than three nor more than five;
3. To approve the appointment of George Brenner, CPA, as independent auditor;
3.and
4. To transact such other business as may properly come before the meeting or
any adjournments thereof.
The Board of Directors has fixed January 25, 1999,14, 2000, at the close of
business, as the record date for the determination of shareholders entitled to
receive notice of, and to vote at, the meeting and any adjournments thereof.
WE URGE YOU TO VOTE ON THE BUSINESS TO COME BEFORE THE MEETING BY EXECUTING
AND RETURNING THE ENCLOSED PROXY OR BY CASTING YOUR VOTE IN PERSON AT THE
MEETING.
By order of the Board of Directors.
MICHAEL L. AGRESTI, Secretary
South El Monte, California
February 2, 19998, 2000
LEE PHARMACEUTICALS
1434 Santa Anita Avenue
South El Monte, California 91733
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS -- MARCH 9, 199914, 2000
This statement is furnished in connection with the Annual Meeting of the
Shareholders to be held on March 9, 1999.14, 2000. Shareholders of record at the close
of business on January 25, 1999,14, 2000, will be entitled to vote at the meeting and
this statement was mailed to each of them on approximately February 2, 1999.8, 2000.
VOTING SECURITIES OF THE COMPANY
Common Stock, of which 4,135,162 shares were outstanding on the record
date, constitutes the only security of the Company the holders of which are
entitled to vote at the meeting. Each share of stock is entitled to one vote
except that shareholders have cumulative voting rights with respect to the
election of directors. Cumulative voting entitles a shareholder to give one
nominee a number of votes equal to the number of directors to be elected,
multiplied by the number of shares owned by such shareholder, or to distribute
his votes on the same principle between two or more nominees as he sees fit.
However, no shareholder shall be entitled to cumulate votes unless the
candidate's name has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the meeting prior to
the voting of his intention to cumulate his votes. So called "broker nonvotes"
will be counted as present to determine if a quorum exists but will not be
counted as present and entitled to vote on any proposal.
PROXIES
Proxies are being solicited by the Company, and the persons named as
proxies were selected by the Company. The Company will bear all costs of the
solicitation (estimated to be $6,500)$7,600) and will reimburse brokers or other
persons holding stock in their names or in the names of their nominees for
reasonable expenses in forwarding proxies and proxy material to the beneficial
owners of stock. Any shareholder giving a proxy has the right to revoke it at
any time by either giving the Company's Secretary a written notice revoking the
prior proxy or by signing, dating and returning a new proxy card. The proxy card
with the latest date will be honored.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the only persons who, as of December 31,
1998,1999, were known to the Company to be beneficial owners of more than five percent or more
of the Company's Common Stock:
NAME AND ADDRESS SHARES OWNED PERCENT
OF BENEFICIAL OWNER AT DECEMBER 31, 19981999 OF CLASS
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Ronald G. Lee 1,245,4501,673,515 shares (1) 28%36%
1434 Santa Anita Avenue
South El Monte, CA 91733
Dr. Henry L. Lee 222,334 shares (1) (2) 5%
1434 Santa Anita Avenue
South El Monte, CA 91733
(1) Includes shares subject to options exercisable at or within 60 days after
December 31, 1999.
(2) Includes 28,000 shares of the Company's Common Stock which Dr. Lee holds as
trustee for the benefit of certain family members. He has the right to vote
such shares but otherwise disclaims beneficial ownership.
The following table sets forth the ownership of the Company's Common Stock
by its directors and its named executive officers and all executive officers and
directors as a group.
COMPANY SHARES
BENEFICIALLY OWNED ON PERCENT
NAME DECEMBER 31, 19981999 OF CLASS
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Ronald G. Lee 1,245,4501,673,515 shares (1) 28%36%
Dr. Henry L. Lee 197,334222,334 shares (1)(2) 5%
William M. Caldwell IV 41,60055,000 shares (1) 1%
All officers and directors
as a group (4 persons) 1,636,0862,132,218 shares (1)(2) 35%43%
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(1) Includes shares subject to options exercisable at or within 60 days after
December 31, 1998.1999.
(2) Includes 28,000 shares of the Company's Common Stock which Dr. Lee holds as
trustee for the benefit of certain family members. He has the right to vote
such shares but otherwise disclaims beneficial ownership.
1
ELECTION OF DIRECTORS
At the meeting, three (3) directors are to be elected for the ensuing year
and until their successors are duly elected and qualified or as otherwise
provided in the Bylaws. TheCurrently, the total number of authorized directors is
five (5), therefore two vacancies exist.
The nominees for directors are Dr. Henry L. Lee, Ronald G. Lee and William
M. Caldwell IV, all currently directors of the Company. Information regarding
the nominees is set forth below.
If the enclosed proxy is duly executed and received in time for the
meeting, the shares represented thereby will be voted, and it is the intention
of the persons named therein to vote, absent instruction to the contrary, for
the three (3) persons listed above who were nominated by the Board of Directors
for re-election as directors of the Company; however, in the case of cumulative
voting, the proxy holders may cumulate the votes for one or more of the
nominees. In the event any nominee for director becomes unavailable and a
vacancy exists, it is intended either (a) that the persons named in the proxy
will vote for a substitute who will be designated by the Board of Directors, or
(b) that the number of directors will be reduced accordingly. The persons
receiving the greatest number of votes, up to five persons, will be elected.
AMENDMENT TO BYLAWS
The Bylaws of the Company currently provide that the Board of Directors of
the Company shall consist of not less than five (5) nor more than nine (9)
persons, the exact number being fixed by action of the Board of Directors. In
order to limit expenses and because of the lack of qualified directors willing
to serve on the board of directors of small companies, over the past several
years the Company has elected only three directors, resulting in two vacancies
existing.
The Board of Directors believes it is appropriate that the Bylaws be
amended to reflect the current number of directors but allow the board to
increase the number of directors in the future if they feel additional
directors are appropriate. Under California law, the Company must have a
minimum of at least three directors and, if a variable number of directors is
authorized, the maximum number cannot be greater than two times the stated
minimum minus one.
Accordingly, the Board of Directors recommends that the shareholders
approve an amendment to Section 1 of Article II of the Bylaws of the Company
to restate that Section in its entirety to read as follows:
"Subject to the limitations of the Articles of Incorporation, of the
Bylaws, and of the laws of the State of California, as to action to be
authorized or approved by the shareholders, all corporate powers shall be
exercised by or under the authority of, and the business affairs of this
Corporation shall be controlled by, a Board of Directors consisting of not less
than three (3) nor more than five (5) persons, the exact number being fixed by
the action of the Board of Directors until fixed or changed by amendment to
these Bylaws. The Board of Directors may delegate the management of the
day-to-day operation of the business of the Corporation provided that the
business and affairs of the Corporation shall be managed and all corporate
powers shall be exercised under the ultimate direction of the board."
Under California Law and the Bylaws of the Company, approval of this
proposed amendment to the Bylaws requires the affirmative vote of the holders of
a majority of the outstanding shares of the Company's Common Stock. In addition,
under California law, even if the holders of a majority of the outstanding
shares of the Company's Common Stock approve the amendment, if the number of
shares of Common Stock voting against the amendment at the Annual Meeting
constitute more than 16-2/3% of the outstanding shares of the Company's Common
Stock (or 689,194 shares), the amendment will not be approved.
The Board of Directors recommends that the shareholders vote FOR this
proposed amendment to the Bylaws of the Company.
DIRECTORS AND EXECUTIVE OFFICERS
NAME AND A DIRECTOR
POSITIONS HELD PRINCIPAL OCCUPATION OR OFFICER
WITH COMPANY AGE DURING THE PAST FIVE YEARS (1) SINCE
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DR. HENRY L. LEE 7273 Chairman of the Board of Lee Pharmaceuticals 1971
Director through April 1995, when he 1971
Director retired, available as a consultant and currently a Director of the Company.
RONALD G. LEE 4647 President, and since April 1995, Chairman of the President, Chairman Board of the Company. 1977
President, Chairman
and Director
MICHAEL L. AGRESTI 5657 Vice President - Finance, Treasurer and Secretary of the Company. 1977
Vice President - of the Company. Finance,
Treasurer and Secretary
WILLIAM M. CALDWELL IV 5152 President of CAIS Internet, an internet infrastructure solutions company, 1987
Director since February 1999, and President of Union Jack Group, Inc., a merchant
1987
Director banking firm.firm, since September 1988.
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(1) None of the companies named, other than the Company, is a parent,
subsidiary or other affiliate of the Company.
All directors attended the three meetingsone meeting of the board that occurred during
fiscal 1998 except Dr. Henry L. Lee who attended two of the three meetings.1999. The Company has an audit committee which consists of three
directors: Dr. Henry L. Lee, Ronald G. Lee and William M. Caldwell IV.
There were no audit committee meetings held during the fiscal year. The
Company does not have a nominating or compensation committee.
2
FAMILY RELATIONSHIPS
Dr. Henry L. Lee is the father of Ronald G. Lee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENT
Based upon the Company's review of reports filed by directors and executive
officers of the Company with the Securities and Exchange Commission pursuant to
Section 16(a) of the Securities Exchange Act of 1934 and written representations
of persons required to file such reports, the Company believes all such required
reports were filed by the directors and executive officers during fiscal 1998, except that Dr. Henry L. Lee and Ronald G. Lee
filed Form 5s late with respect to a gift of stock from Dr. Henry L. Lee to
Ronald G. Lee.
2
1999.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to remuneration
paid by the Company to the executive officers of the Company in fiscal 19981999 with
total annual salary and bonus of at least $100,000 for services in all
capacities while acting as officers and directors of the Company during the
fiscal years ended September 30, 1999, 1998, 1997, and 1996.1997.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
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Name and Other Annual All Other
Principal Position Year SalaryNAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) CompensationCOMPENSATION ($) OptionsOPTIONS (#) CompensationCOMPENSATION ($)
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Ronald G. Lee 1999 228,854 3,985 (1) -- --
President, Chairman 1998 222,574 3,471 (1) 212,000 (2) --
President, Chairman 1997 220,616 5,617 (1) 568,000 (2) --
and Director 1996 179,624 2,3821997 220,616 5,617 (1) --568,000 (2) --
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(1) Constitutes reimbursement of medical and dental expenses not covered by the
Company's insurance plan.
(2) No stock options were granted during fiscal year 1999. The Company granted
212,000 stock options on January 28, 1998, which had an option price of
$.22 at the date of grant and 568,000 stock options on March 12, 1997,
which had an option price of $.176 at the date of grant.
Each of the directors of the Company who is not employed by the Company
receives a director's fee of $750 for each quarter and $500 for each
meeting of the Board of Directors attended, except Dr. Henry L. Lee. As
holder of the honorary title of Founder Chairman, Dr. Lee waived his fees.
The following summary sets forth information as to certain options to
purchase shares of Common Stock from the Company.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR END (#) FISCAL YEAR END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
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Ronald G. Lee 297,666/617,334 6,437/12,875529,333/330,667 0/0
Based upon the market price of the stock (.21CENTS (.17(cent)per share) traded on
September 25, 1998, which was30, 1999, none of the closest date to September 30, 1998 that the stock was
traded, 568,000 unexercised options granted are currently "in-the-money."
The following summary sets forth information as to certain options to
purchase shares of Common Stock from the Company which were granted under the
Company's 1997 Employee Incentive Stock Option Plan during fiscal 1998.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
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NO. OF SHARES % OF TOTAL
UNDERLYING OPTIONS GRANTED
OPTIONS TO EMPLOYEES IN EXERCISE OF BASE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE ($/SHARE) DATE
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Ronald G. Lee 212,000 100 .22 1/27/2003
3
RELATED PARTY TRANSACTIONS
Dr. Henry L. Lee, former Chairman of the Board, and his mother have
advanced funds to the Company, from time to time, in return for notes payable.
In January 1995, the terms of the notes with Dr. Henry L. Lee were amended to
provide for repayment in full in January 2005. Interest is payable monthly at a
bank's prime rate, 8.5%8.25%, on September 30, 1998.1999. At September 30, 1998,1999, the
amount of loans outstanding from the former Chairman and his mother was
$2,754,000.$2,561,000. During fiscal year ending September 30, 1998,1999, the total interest
expensed to related parties was $240,000.$215,000. The amount of interest paid was
$153,000$88,000 and the accrued liability for interest was $392,000$519,000 as of September 30,
1998.1999.
Ronald G. Lee, President, has advanced funds to the Company, from time to
time, in return for notes payable. In January 1995, the terms of Ronald G. Lee's
notes were amended (except for a $65,000 note) to provide for repayment in full
in January 2005. Interest is payable monthly at a bank's prime rate, 8.5%8.25%, on
September 30, 1998.1999. At September 30, 1998,1999, the amount of loans outstanding from
the President was $475,000.$475,000 which includes $400,000 in loans from The Lee
Foundation which the President is the Chairman. During fiscal year ending
September 30, 1998,1999, the total interest expensed to related parties was $35,000.$32,000.
The amount of interest paid was $24,000$25,000 and the accrued liability for interest
was $71,000$78,000 as of September 30, 1998.1999.
In 1991, the Company sold and leased back two of its operating facilities
in a transaction with its former Chairman. An initial gain was recognized and a
deferred gain was recorded which is to be amortized over the term of the two
leases which expire November 2000. The amount of deferred gain realized during
19981999 and 19971998 was $65,000. The amounts of rents paid to related parties were
$133,000 and $133,000 for September 30, 1998,1999, and 19971998 respectively.
APPOINTMENT OF INDEPENDENT AUDITOR
Shareholders will be asked to approve the appointment of George Brenner,
CPA, as independent auditor of the Company for the fiscal year 1999.2000. George
Brenner, CPA, has served as independent auditor of the Company commencing
October 27, 1995. George Brenner, CPA, is expected to be present at the meeting
and shall have the opportunity to make any statements he desires to make and to
respond to appropriate questions.
The following resolution will be offered by the management at the meeting:
RESOLVED that the selection of George Brenner, CPA, as the independent
auditor of the Company for the fiscal year ending September 30, 1999,2000, is hereby
ratified and approved.
Prior to such firm's engagement, George Brenner, CPA was not consulted by
the Company (or anyone acting on its behalf) regarding (1) either the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
Lee Pharmaceuticals' financial statements or (2) any matter that was either the
subject of a "disagreement" of a "reportable event" as such terms are defined in
Regulation S-K promulgated by the Securities and Exchange Commission.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next annual meeting of
the shareholders must be received by the Company for inclusion in its proxy
statement and form of proxy relating to such meeting on or before October 5, 1999. A shareholders' proposal will be considered untimely filed
and not considered at the next Annual Meeting of Shareholders if it is
received by the Company after December 19, 1999.10,
2000.
OTHER MATTERS
The management is not aware of any other matters to be presented to the
meeting for action by the shareholders. If any other matters should properly
come before the meeting, the persons named in the enclosed proxy form will vote
the proxies in accordance with their best judgment.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANYONE RECEIVING THIS PROXY
STATEMENT A COPY OF THE COMPANY'S FORM 10-KSB FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1998,1999, UPON A WRITTEN REQUEST DIRECTED TO LEE PHARMACEUTICALS, 1434
SANTA ANITA AVENUE, SOUTH EL MONTE, CALIFORNIA, 91733, ATTENTION: CORPORATE
SECRETARY.
By order of the Board of Directors.
South El Monte, California MICHAEL L. AGRESTI, Secretary
South El Monte, California
February 2, 19998, 2000
4
REVOCABLE PROXY
LEE PHARMACEUTICALS
[X] PLEASE MARK YOUR VOTES
AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For Annual Meeting of Shareholders
on March 9, 1999FOR ANNUAL MEETING OF SHAREHOLDERS ON MARCH 14, 2000
The undersigned, a shareholder of LEE PHARMACEUTICALS, hereby con-
stitutesconstitutes
and appoints RONALD G. LEE and MRS. MARTHA ALVAREZ, and each of them (with
full power to act without the other), as proxy of the undersigned with full
power of substitution, for and in the name, place and stead of the
undersigned, to attend the Annual Meeting of Shareholders of said Company
called and to be held at 1434 Santa Anita Avenue, South El Monte, California,
on Tuesday March 9, 199914, 2000 at 1:30 o'clock p.m. and any adjournment thereof,
and thereat to vote as designated hereon the number of votes or shares the
undersigned would be entitled to vote and with all powers the undersigned
would possess if personally present, including but not limited to the power
to cumulate votes for one or more nominees listed hereon.
Please be sure to sign and date
this Proxy in the box below. Date __________________, 2000
Shareholder sign above _________ Co-holder (if any) sign above____________
For With- For All
1. ELECTION OF DIRECTORS (except [ ] hold [ ] Except [ ]
as marked to the contrary below):
For Withhold For All Except
[ ] [ ] [ ]
Henry L. Lee, Jr., Ronald G. Lee and William M. Caldwell IV
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
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2. PROPOSAL TO APPROVE THE AMENDMENT TO THE BYLAWS For Against Abstain
OF THE COMPANY TO CHANGE THE AUTHORIZED NUMBER OF [ ] [ ] [ ]
DIRECTORS
3. PROPOSAL TO APPROVE THE APPOINTMENT OF GEORGE For Against Abstain
BRENNER, CPA, as independent auditor of the corporation.
For Against Abstain
[ ] [ ] [ ]
3.Corporation.
4. Upon all matters which may properly come before said meeting, including
matters incident to the conduct of the meeting or any adjournments thereof,
hereby ratifying and confirming all that said attorneys and proxies, or their
substitutes, may lawfully do by virtue thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN A MANNER DIRECTED
HEREIN BY THE BELOW SIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 2.3.
Please sign exactly as your name appears hereon. When shares are held by the
joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Please be sure to sign and date /-------------------------------------/
this Proxy in the box below. / Date , 1999 /
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/ /
/ _____ Shareholder sign above________Co-holder (if any) sign above_____ /
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Detach above card, sign, date and mail in postage paid envelope provided.
LEE PHARMACEUTICALS
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PLEASE MARK/SIGN, DATE AND RETURN THIS PROXY
/
/ PROMPTLY USING THE ENCLOSED ENVELOPE
/
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