SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
NEXMED, INC.
----------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NEXMED, INC.
350 CORPORATE BOULEVARD
ROBBINSVILLE, NEW JERSEY 08691
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------
To Our Stockholders:
Notice is hereby given to all of the stockholders of NexMed, Inc. (the
"Company") that the Annual Meeting of Stockholders (the "Annual Meeting") of the
Company will be held on Friday, June 21, 2002, at 10:00 a.m., local time, at the
Company's headquarter facilities located at 350 Corporate Boulevard,
Robbinsville, New Jersey for the following purposes:
(1) To elect two persons to the Board of Directors of the Company, each to
serve a three-year term, or until his successor is elected and
qualified.
(2) To consider and vote upon a proposal to approve and adopt Amended and
Restated Articles of Incorporation of the Company.
(3) To consider and vote upon a proposal to ratify the appointment
of PricewaterhouseCoopers LLP, as the Company's independent
accountants for the year ending December 31, 2002.
The enclosed Proxy Statement includes information relating to these
proposals. Additional purposes of the Annual Meeting or any adjournment or
postponement thereof are to consider and act upon such other business as may
properly come before this Annual Meeting or any adjournment or postponement
thereof.
All stockholders of record of the Company's common stock at the close
of business on April 23, 2002 are entitled to notice of and to vote at the
Annual Meeting or any adjournment or postponement thereof. At least a majority
of the outstanding shares of common stock of the Company present in person or by
proxy is required for a quorum.
By Order of the Board of Directors
/s/ Vivian H. Liu
- -----------------
Vivian H. Liu
Secretary
April 30, 2002
Robbinsville, New Jersey
This Proxy Statement is dated April 30, 2002, and was first mailed to
NexMed Stockholders on or about May 1, 2002.
THE BOARD OF DIRECTORS APPRECIATES AND ENCOURAGES YOUR PARTICIPATION IN THE
COMPANY'S ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED. ACCORDINGLY, PLEASE SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY CARD BY MAIL IN THE POSTAGE-PAID ENVELOPE
PROVIDED, OR VOTE THESE SHARES BY TELEPHONE AT (800) 240-6326 OR BY INTERNET AT
HTTP://WWW.EPROXY.COM/NEXM/. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE
ANY OF YOUR PROXIES IF YOU WISH AND VOTE IN PERSON. YOUR PROXIES ARE REVOCABLE
IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN THIS PROXY STATEMENT.
MAILED TO STOCKHOLDERS
ON OR ABOUT May 1, 2002
NEXMED, INC.
350 CORPORATE BOULEVARD
ROBBINSVILLE, NEW JERSEY 08691
-----------------------
PROXY STATEMENT
-----------------------
GENERAL INFORMATION
This Proxy Statement is furnished by the board of directors (the
"Board" or "Board of Directors") of NexMed, Inc., a Nevada corporation ("NexMed"
or the "Company"), in connection with the solicitation of proxies for use at
NexMed's Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Friday, June 21, 2002, at 10:00 a.m., local time, at NexMed's headquarter
facilities at 350 Corporate Boulevard, Robbinsville, New Jersey, and any
adjournment or postponement thereof.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is exercised by delivering to the Company
(to the attention of Vivian H. Liu, the Company's Secretary) a written notice of
revocation or a properly executed proxy bearing a later date.
SOLICITATION AND VOTING PROCEDURES
The solicitation of proxies will be conducted by mail and the Company
will bear all attendant costs. These costs will include the expense of preparing
and mailing proxy materials for the Annual Meeting and reimbursements paid to
brokerage firms and others for their expenses incurred in forwarding
solicitation material regarding the Annual Meeting to beneficial owners of the
Company's common stock, par value $.001 per share (the "Common Stock"). The
Company may use the services of Wells Fargo Shareowner Services in soliciting
proxies and, in such event, the Company expects to pay approximately $10,000,
plus out-of-pocket expenses, for such services. The Company may conduct further
solicitation personally, telephonically or by facsimile through its officers,
directors and regular employees, none of whom would receive additional
compensation for assisting with the solicitation.
The presence at the Annual Meeting of a majority of the outstanding
shares of Common Stock of the Company, represented either in person or by proxy,
will constitute a quorum for the transaction of business at the Annual Meeting.
The close of business on April 23, 2002 has been fixed as the record date (the
"Record Date") for determining the holders of shares of Common Stock (the
"Stockholders") entitled to notice of and to vote at the Annual Meeting. Each
share of Common Stock outstanding on the Record Date is entitled to one vote on
all matters. As of the Record Date, there were 25,536,654 shares of Common Stock
outstanding.
Stockholder votes will be tabulated by the persons appointed by the
Board of Directors to act as inspectors of election for the Annual Meeting.
Shares represented by a properly executed and delivered proxy will be voted at
the Annual Meeting and, when the Stockholder has given instructions, will be
voted in accordance with those instructions. If no instructions are given, the
shares will be voted FOR the election of the nominees for directors named below
and FOR Proposal Nos. 2 and 3.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NexMed's Amended and Restated Articles of Incorporation divide the
Company's Board of Directors into three classes, the term of office for each
class is arranged so that the term of office of one class expires at each
successive Annual Meeting of Stockholders. The Board of Directors presently
consists of five members as follows: Class I directors, Robert W. Gracy, Ph.D
and Stephen M. Sammut whose terms expire in 2004; Class II director, Gilbert S.
Banker, Ph.D., whose term expires in 2003; and Class III directors, Y. Joseph
Mo, Ph.D. and James L. Yeager, Ph.D., whose terms expire in 2002 and,
if-re-elected at the Annual Meeting, in 2005.
At the Annual Meeting, the Stockholders will elect two directors to
serve as Class III directors. Each of the directors who is elected at the Annual
Meeting will serve until the Annual Meeting of Stockholders to be held in 2005
and until such director's successor is elected or appointed and qualifies or
until such director's earlier resignation or removal. It is intended that,
unless authorization to do so is withheld, the proxies will be voted "FOR" the
election of each of the director nominees named below. The Board of Directors
believes that nominees Y. Joseph Mo and James L. Yeager will stand for election
and will, if elected, serve as Class III directors. However, with respect to
each nominee, in the event such nominee is unable or unwilling to serve as a
Class III director at the time of the Annual Meeting, the proxies may be voted
for any substitute nominee designated by the present Board of Directors or the
proxy holders to fill such vacancy or the Board of Directors may be reduced to
no less than three members in accordance with NexMed's Amended and Restated
Amended Articles of Incorporation.
Gilbert S. Banker, whose term as a Class II director expires in 2003,
has resigned from the Board effective as of March 14, 2002. The Board has not
nominated a replacement to fill the vacancy on the Board resulting from Mr.
Banker's departure. Under the Company's Bylaws and Amended and Restated
Articles of Incorporation, a vacancy on the Board created by a resignation of a
director may be filled by a majority vote of the remaining directors. A director
so chosen to fill the vacancy created by Mr. Banker's resignation would hold
office until the 2003 Annual Meeting of Stockholders.
NOMINEES FOR DIRECTOR
The following information was furnished to the Company by the nominees.
Y. Joseph Mo, Ph.D., nominee for a Class III director, is, and has been
since 1995, the Chief Executive Officer and President of the Company and
Chairman and member of the Board of Directors. Prior to joining the Company in
1995, Dr. Mo was President of Sunbofa Group, a privately held investment
consulting company. From 1991 to 1994, he was President of the Chemical
Division, and from 1988 to 1994, the Vice President of Manufacturing and
Medicinal Chemistry, of Greenwich Pharmaceuticals, Inc. Prior to that, he served
in various executive positions with several major pharmaceutical companies,
including Johnson & Johnson, Rorer Pharmaceuticals, and Beecham Pharmaceuticals.
Dr. Mo received his Ph.D. in Industrial and Physical Pharmacy from Purdue
University in 1977.
James L. Yeager, Ph.D., nominee for a Class III director, is, and has
been since December 1998, a member of the Board of Directors and, since January
2002, Senior Vice President for Scientific Affairs. From June 1996 through
December 2001, Dr. Yeager served as the Company's Vice President of Research and
Development and Business Development. Before joining the Company, Dr. Yeager was
Vice President of Research and Development at Pharmedic Company. From 1979 to
1992, Dr. Yeager held various managerial positions with Abbott Laboratories and
Schiapparelli-Searle. Dr. Yeager received his Ph.D. in Industrial and Physical
Pharmacy from Purdue University in 1978.
REQUIRED VOTE AND RECOMMENDATION OF BOARD OF DIRECTORS
Under Nevada law, where NexMed is incorporated, shares as to which
there is an abstention or broker non-vote shall be deemed to be present at the
meeting for purposes of determining a quorum. However, because under Nevada law
the nominees for the election of directors must be elected by a plurality of the
votes cast at the election, abstentions and broker non-votes will have no effect
on the outcome of this vote.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES NAMED ABOVE.
-2-
DIRECTORS
Set forth below is certain information as of the Record Date regarding
the directors of the Company.
NAME AGE TITLE
- ---- --- -----
Y. Joseph Mo, Ph.D. 54 Chairman of the Board of Directors,
President and Chief Executive Officer
Robert W. Gracy, Ph.D. 60 Director
Stephen M. Sammut 50 Director
James L. Yeager, Ph.D. 55 Director, Senior Vice President for
Scientific Affairs
Biographical information concerning each of the director nominees is
set forth above under the caption "Proposal No. 1 - Election of Directors."
Biographical information concerning the remaining directors of the Company is
set forth below.
Robert W. Gracy, Ph.D., is and has been a director of the Company since
January 1997 and a member of the Executive Compensation Committee and the Audit
Committee of the Board of Directors since February 2000. His current term as a
member of the Board of Directors expires in 2004. Since 1993, Dr. Gracy has been
Associate Vice President for Research and Biotechnology at the University of
North Texas Health Science Center in Fort Worth, Texas. Dr. Gracy is recipient
of Research Career Development and MERIT Awards from the National Institutes of
Health and research awards from the American Chemical Society and the American
Osteopathic Medical Association. Dr. Gracy has published approximately 200
research papers and book chapters, holds patents in biotechnology and lectures
internationally on aging and age-related medical problems. He serves as a
consultant or as a director on the board of directors of several pharmaceutical,
healthcare, and biotechnology organizations. Dr. Gracy received his Ph.D. in
Biochemistry from the University of California, Riverside in 1968 and was a
Damon Runyon Cancer Fellow at Albert Einstein College of Medicine and an
Alexander von Humboldt Fellow at the University of Wurzburg in Germany. Dr.
Gracy is also a member of the Company's Scientific Advisory Committee.
Stephen M. Sammut, is and has been a director of the Company since May
2001, and a member of the Executive Compensation Committee and the Audit
Committee of the Board of Directors since May 2001. His current term as a member
of the Board of Directors expires in 2004. Since 2000, Mr. Sammut has been
Chairman & CEO of Buttonwood Ventures, a merchant bank and private equity
advisory firm and holds appointments as a Lecturer at the Wharton School, the
Law School and the School of Engineering and Applied Science of the University
of Pennsylvania. From 1993-1999, Mr. Sammut was the Managing Director of Access
Management Services, Inc., a seed stage venture firm focusing on the formation
and funding of life science firms built around university technologies. From
1986-1993, Mr. Sammut served in various executive positions with Teleflex
Incorporated, a NYSE-listed international engineering/manufacturing company, and
S.R. One, Limited, a venture capital fund of SmithKline Beckman Corporation. Mr.
Sammut serves on the board of directors and advisory boards
-3-
of several development-stage biotechnology companies. Mr. Sammut holds an A.B.
and M.A. from Villanova University and an MBA from the University of
Pennsylvania.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the
beneficial ownership of Common Stock by (a) each person known by NexMed to be
the beneficial owner of more than 5% of its outstanding voting securities, (b)
NexMed's directors and executive officers, individually, and (c) NexMed's
directors and executive officers as a group. Unless otherwise noted herein, the
information set forth below is as of the Record Date.
NAME, POSITION AND ADDRESS OF BENEFICIAL NUMBER OF SHARES BENEFICIALLY OWNED(2) PERCENT OF CLASS (%)
- ----------------------------------------- -------------------------------------- --------------------
OWNER(1)
- --------
Y. Joseph Mo, Ph.D. 3,102,666 11.4
Chairman of the Board of Directors,
President and Chief Executive Officer (3)
Kenneth Anderson 42,500 0.17
Vice-President- Commercial Development (4)
Vivian H. Liu 445,000 1.73
Vice President-Corporate Affairs & Secretary (5)
James L. Yeager, Ph.D. 445,000 1.72
Director and Senior Vice President-
Scientific Affairs (6)
Robert W. Gracy, Ph.D. 130,000 0.51
Director (7)
Stephen M. Sammut 38,000 0.15
Director (8)
All Executive Officers and Directors as a 4,203,166 15.08
Group (seven persons) (9)
Vergemont International Limited 2,000,000 7.83
dba NexMed (Asia) Limited
Suite 2401-2408, 24F CITIC Tower, One Tim Mei
Avenue, Central, Hong Kong (10)
1) The address for the executive officers and directors of the Company is
350 Corporate Boulevard, Robbinsville, NJ 08691.
2) Except as may otherwise be noted below, all shares are solely and
directly owned, with sole voting and dispositive power.
3) Includes 1,602,666 shares issuable upon exercise of immediately
exercisable stock options.
4) Represents 42,500 shares issuable upon exercise of immediately
exercisable stock options.
5) Includes 255,000 shares issuable upon exercise of immediately
exercisable stock options.
6) Includes 290,000 shares issuable upon exercise of immediately
exercisable stock options.
7) Includes 100,000 shares issuable upon exercise of immediately
exercisable stock options.
8) Represents 38,000 shares issuable upon exercise of immediately
exercisable stock options.
9) Includes 2,328,166 shares issuable upon exercise of immediately
exercisable stock options.
10) Represents shares issued upon the exercise of 2,000,000 warrants in
June 2000. The warrants were issued in May 1999, in connection with
Vergemont International Limited's acquisition of the Company's Asian
operations.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires NexMed's executive officers, directors and persons who
beneficially own greater than 10% of a registered class of its
-4-
equity securities to file certain reports ("Section 16 Reports") with the
Securities and Exchange Commission with respect to ownership and changes in
ownership of the Common Stock and other equity securities of the Company. Based
solely on the Company's review of the Section 16 Reports furnished to the
Company, all Section 16(a) requirements applicable to its officers, directors
and greater than 10% beneficial owners were complied with.
DIRECTOR COMPENSATION
In 2001, the Board of Directors adopted a stock option and cash
compensation package for its non-employee directors. Upon joining the Board,
each new director will receive a grant of 20,000 immediately exercisable stock
options issued pursuant to the NexMed, Inc. Recognition and Retention Stock
Incentive Plan, (the "Recognition Plan"), as well as a grant of 60,000
additional stock options to be granted under the Recognition Plan which will
vest in three equal installments upon the first three annual meetings following
such new director joining the Board. The stock options will have an exercise
price equal to the fair market value of the Company's common stock on the date
such stock options are granted. This approach is designed to align the interests
of the directors with those of the Stockholders over the long-term since the
full benefits of the stock option compensation package cannot be realized unless
the stock price appreciation occurs over a number of years. Each non-employee
director also receives $2,000 per day for Board meetings and $500 per day for
air travel. In addition, for service on a Board committee, each non-employee
director receives annual compensation of $2,500, with non-employee chairpersons
of Board committees receiving additional annual compensation of $2,500.
THE BOARD AND ITS COMMITTEES
MEETINGS OF THE BOARD OF DIRECTORS
During the year ended December 31, 2001, four meetings of the Board of
Directors were held. All directors attended at least 75% of the combined number
of meetings of the Board and the Committees on which they served during the
year ended December 31, 2001.
COMMITTEES
The Board of Directors presently has three committees, the Executive
Compensation Committee, the Audit Committee and the Nominating Committee.
The Executive Compensation Committee establishes remuneration levels
for executive officers of the Company and implements incentive programs, for
officers, directors and consultants, including the NexMed Inc. Stock Option and
Long-Term Incentive Compensation Plan (the "Stock Plan") and the Recognition
Plan. The Executive Compensation Committee was formed on February 7, 2000, and
it met four times in 2001. The Executive Compensation Committee consisted of
Gilbert S. Banker, Robert W. Gracy and Stephen M. Sammut, none of whom is an
employee of the Company.
The Audit Committee periodically meets with the Company's financial and
accounting management and independent accountants to make recommendations
concerning the engagement of independent accountants, reviews with the
independent accountants the scope and results of the audit engagement, approves
professional services provided by the independent accountants, reviews the
independence of the independent accountants and reviews the adequacy of the
internal accounting controls. The members of the Committee meet the independence
and experience requirements of the NASDAQ Stock Market listing requirements. The
Audit Committee was formed on February 7, 2000 and acts under a written charter
first adopted and approved by the Board on the same date, and subsequently
amended and approved on May 7, 2001. The Audit Committee met seven times in
2001, and consisted of Gilbert S. Banker, Robert W. Gracy and Stephen M. Sammut,
none of whom is an employee of the company.
The Nominating Committee makes recommendations to the Board of
Directors concerning candidates for Board vacancies, and will consider written
nominations from stockholders submitted in accordance with clause (iii) of
paragraph (a)(1) of Section 2.10 of NexMed's By-Laws and delivered to the
Company's Secretary not less than 60 nor more than 90 days prior to the first
anniversary of each preceeding year's Annual Meeting of Stockholders. The
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Nominating Committee was formed on February 7, 2000. The Nominating Committee
did not meet in 2001, and consisted of Gilbert S. Banker, Robert W. Gracy, Y.
Joseph Mo and James L. Yeager.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by NexMed during
the years ended December 31, 2001, 2000 and 1999 to its Chief Executive Officer
and its three other executive officers, who were serving as NexMed's executive
officers at the end of 2001:
- ----------------------------------------------------------------------------------------------------------------------
NAME FISCAL YEAR LONG-TERM COMPENSATION
ANNUAL ANNUAL BONUS AWARDS/SECURITIES ALL OTHER
SALARY ($) ($) UNDERLYING OPTIONS(#) COMPENSATION ($)
- ----------------------------------------------------------------------------------------------------------------------
Y. Joseph Mo 2001 225,000 80,000 -- 8,461 (2)
2000 180,000 72,000 1,114,000 6,230 (2)
1999 120,000 100,000 -- --
- ----------------------------------------------------------------------------------------------------------------------
Kenneth Anderson 2001 142,000 35,000 25,000 492 (3)
2000 19,154(1) 3,000 67,500 --
1999 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Vivian H. Liu 2001 140,000 43,000 -- 4,456 (2)
2000 132,000 40,000 90,000 4,014 (2)
1999 98,000 60,000 -- --
- ----------------------------------------------------------------------------------------------------------------------
James L. Yeager 2001 195,000 62,000 -- 6,779 (2)
2000 156,000 60,000 120,000 5,379 (2)
1999 112,000 80,000 -- --
- ----------------------------------------------------------------------------------------------------------------------
(1) Kenneth Anderson started with the Company in November 2000 at an annual salary of $140,000 per year.
(2) Includes economic benefit of insurance premiums paid on behalf of the officers of the Company and 3% matching
contributions to the Scudder Kemper 401(K) plan.
(3) Includes 3% matching contributions to the Scudder Kemper 401 (K) plan, effective November 2001.
EMPLOYMENT AGREEMENTS
As of the year ended December 31, 2001, there were no employment
agreements between NexMed and any of its named executive officers.
On February 27, 2002, the Company entered in to an employment agreement
with Y. Joseph Mo, Ph.D., that has a term of five years, and pursuant to which
Dr. Mo will serve as the Company's Chief Executive Officer and President. During
his employment with the Company, Dr. Mo will receive an annual base salary of at
least $250,000 (to be raised to $350,000 after the Company sustains gross
revenues of $10 million for two consecutive fiscal quarters), subject to annual
cost of living increases. Dr. Mo will also be eligible to earn an annual bonus
based on the attainment of financial targets established by the Board of
Directors or its Compensation Committee in consultation with Dr. Mo. In addition
to other benefits and perquisites generally provided to employees of the
Company, during his employment, the Company will provide Dr. Mo with split
dollar life insurance with a death benefit of $2 million, an automobile for his
business use, payment of up to $10,000 per year in annual dues for a social
club, and up to $20,000 per year for financial and estate planning.
The employment agreement provides for three grants of options, each to
purchase 300,000 shares of Company common stock per grant under the Company's
Stock Plan. These options are intended to be incentive stock options to the
fullest extent permitted under the Internal Revenue Code. The first grant of
300,000 options was made on February 26, 2002 and will vest in annual
installments of 100,000 options each, commencing February 26, 2003 at an
exercise price of $2.91 per share. On each of the first and second anniversaries
of the date of the employment agreement, provided that Dr. Mo is employed by
NexMed, he will be granted the second and third grants of 300,000 options each.
-6-
Such options will vest in three annual installments of 100,000 each and will
have an exercise price equal to the fair market value of the Company's common
stock on the date of grant. In addition, the Company, subject to certain
financial restrictions, agrees to loan Dr. Mo up to an aggregate of $2 million
to exercise previously granted options.
Under the employment agreement, Dr. Mo is entitled to deferred
compensation in an annual amount equal to one-sixth of the sum of Dr. Mo's base
salary and bonus for the 36 calendar months preceding the date on which the
deferred compensation payments commence subject to certain limitations,
including annual vesting through January 1, 2007, as set forth in the employment
agreement. The deferred compensation will be payable monthly for 180 months
commencing on termination of employment as discussed below. In addition, Dr. Mo
is entitled to a tax gross up in the event any payments to him from the Company
are subject to an excise tax under Section 4999 of the Internal Revenue Code,
which imposes such excise tax with respect to certain payments made in
connection with a change in control.
In the event Dr. Mo's employment is terminated for "Cause" (as defined
in the employment agreement), Dr. Mo will only be entitled to receive any earned
but unpaid base salary, bonus and benefits. Any outstanding loan from the
Company to Dr. Mo to purchase Company stock options will become immediately due
and payable and Dr. Mo forfeits all deferred compensation.
In the event of the termination of Dr. Mo's employment due to death or
"permanent disability" (as defined in the employment agreement), Dr. Mo (or his
estate, if applicable) will be entitled to receive any earned but unpaid base
salary, bonus and benefits. In the event of a termination due to permanent
disability, Dr. Mo shall continue to receive his base salary at 50% of the rate
in effect at the time of termination until the earlier of (i) the fifth
anniversary of the termination or (ii) January 1, 2014. This payment will be
offset by any payments received from the Company's long term disability policy
to the extent that the sum of the monthly payments from the Company and under
the Company's long term disability policy exceed Dr. Mo's "Basic Monthly
Earnings" (as defined in the Company's long term disability policy). In the
event of Dr. Mo's death, the Company shall pay his beneficiary or estate (as
applicable) a lump sum amount equal to the present value of Dr. Mo's deferred
compensation arrangement.
In the event Dr. Mo's employment is terminated by the Company without
Cause or by Dr. Mo with "Good Reason" (as defined in the employment agreement),
Dr. Mo will be entitled to receive any earned but unpaid base salary, bonus and
benefits. In addition, in the event of either such termination, Dr. Mo will
receive the deferred compensation payments, a pro rated bonus for the year in
which the termination occurs, up to $10,000 in reimbursement for job search
services and two years continued medical coverage or its equivalent.
In the event Dr. Mo's terminates his employment without Good Reason, Dr. Mo will
be entitled to receive any earned but unpaid base salary, bonus and benefits. In
addition, Dr. Mo would begin to receive his deferred compensation payments on
January 1, 2014.
-7-
STOCK OPTION INFORMATION
The following table sets forth the stock options granted to the named
executive officers during the year 2001, pursuant to the Stock Plan:
- --------------------------------------------------------------------------------------------------------------------------
PERCENTAGE OF TOTAL GRANT DATE
NUMBER OF SHARES OPTIONS GRANTED TO EXERCISE PRICE PRESENT VALUE
NAME UNDERLYING OPTIONS EMPLOYEES IN 2001 PER SHARE ($) (1) EXPIRATION ($) (3)
(%) DATE
- --------------------------------------------------------------------------------------------------------------------------
Y. Joseph Mo 0 -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Kenneth Anderson 25,000 (2) 7.8 $3.00 12/31/2011 $2.53
- --------------------------------------------------------------------------------------------------------------------------
Vivian H. Liu 0 -- -- --
- --------------------------------------------------------------------------------------------------------------------------
James L. Yeager 0 -- -- --
- --------------------------------------------------------------------------------------------------------------------------
(1) The exercise price (the price that the officer must pay to purchase each
share of stock that is subject to an option) is equal to the fair market
value of the stock on the date of grant of the option.
(2) The options expire on December 13, 2011 and vest in five equal installments
on December 31, 2001, 2002, 2003, 2004 and 2005.
(3) The fair value of each stock option is estimated on the date of grant using
the Black-Scholes option-pricing model. For options with ten-year terms,
the assumptions are 80%, 5.4% and 0% for the volatility, risk free yield
and dividend yield, respectively.
FISCAL YEAR 2001-END OPTION VALUES
The following table sets forth information concerning each exercise of
stock options during 2001 as well as the value of unexercised options at
December 31, 2001 held by the executives named in the Summary Compensation Table
above.
- --------------------------------------------------------------------------------------------------------------------------
VALUE OF
NAME SHARES ACQUIRED ON VALUE REALIZED ($) SECURITIES UNDERLYING UNEXERCISED
EXERCISE OF STOCK UNEXERCISED OPTIONS AT IN-THE-MONEY
OPTIONS (#) FISCAL YEAR END (#) OPTIONS AT FISCAL
EXERCISABLE YEAR END ($)
(E)/UNEXERCISABLE (U) EXERCISABLE
(1) (E)/UNEXERCISABLE
(U) (1)
- --------------------------------------------------------------------------------------------------------------------------
Y. Joseph Mo 0 0 1,602,666 (E)(2) 1,154,000 (E)
371,334 (U)(3) 0 (U)
- --------------------------------------------------------------------------------------------------------------------------
Kenneth Anderson 0 0 42,500 (E)(4) 2,000 (E)
50,000 (U)(4) 8,000 (U)
- --------------------------------------------------------------------------------------------------------------------------
Vivian H. Liu 0 0 255,000 (E)(5) 353,000 (E)
30,000 (U)(3) 0 (U)
- --------------------------------------------------------------------------------------------------------------------------
James L. Yeager 0 0 290,000 (E)(2) 279,000 (E)
40,000 (U)(3) 0 (U)
- --------------------------------------------------------------------------------------------------------------------------
(1) Based on a closing sale price of the Company's Common Stock on the NASDAQ
Stock Market of $3.40 on December 31, 2001.
(2) Includes stock options at exercise prices ranging from $2.00 - $4.00 per
option share.
(3) Includes stock options at an exercise price of $4.00 per option share.
(4) Includes stock options at exercise prices ranging from $3.00 - $16.25 per
option share.
(5) Includes stock options at exercise prices ranging from $2.00 - $4.00 per
option share.
-8-
PERFORMANCE COMPARISON OF TOTAL RETURNS OF NEXMED, INC.,
THE U.S. NASDAQ STOCK MARKET AND NASDAQ PHARMACEUTICALS STOCKS
The following graph shows the yearly change in cumulative total
stockholder return on NexMed Common Stock (assuming a $100 investment on May 30,
1997* and quarterly reinvestment of dividends during the period) compared to the
cumulative total return on the Nasdaq Stock Market (U.S.) and Nasdaq
Pharmaceutical Stocks for the past 5 fiscal years. The Company believes that
while total stockholder return is an important indicator of corporate
performance, the stock prices of drug delivery technology stocks like NexMed are
subject to a number of market-related factors other than company performance,
such as the current market conditions, the general state of the economy and the
performance of other drug delivery technology stocks.
*NexMed has been a reporting company under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), since the effectiveness on May 13, 1997 of its
registration statement on Form 10-SB, which NexMed filed in March 1997 pursuant
to Section 12(g) of the Exchange Act.
[GRAPH OMITTED]
- --------------------------------------------------------------------------------------------------------------------------
5/30/97 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
NexMed $100 72.710 103.005 199.952 387.785 164.809
- --------------------------------------------------------------------------------------------------------------------------
Nasdaq $100 100.509 127.582 240.561 300.066 255.710
Pharmaceutical
- --------------------------------------------------------------------------------------------------------------------------
U.S. Nasdaq Stock $100 184.679 260.380 483.866 291.038 230.935
Market
- --------------------------------------------------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July, 2001, NexMed advanced $100,000 to Vivian Liu, the Company's
Vice President and Secretary, in connection with her tax liabilities resulting
from the exercise of options to purchase common stock of the Company. The full
amount of $100,000 remained outstanding as of April 30, 2002. The advance is
evidenced by a promissory note, which bears interest at 5% per annum and such
interest is payable quarterly. The principal amount is due on May 24, 2002.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Gilbert S. Banker, Robert W. Gracy and Stephen M. Sammut served on the
Executive Compensation Committee in 2001. None of these three individuals has
ever been an employee of NexMed or its subsidiaries. No NexMed executive officer
has ever served as a member of the board of directors or the compensation
committee of any company whose executive officers include a member of the Board
of Directors or the Executive Compensation Committee.
AUDIT COMMITTEE REPORT
We have reviewed and discussed with management NexMed's audited
consolidated financial statements for the year ended December 31, 2001.
We have discussed with PricewaterhouseCoopers LLP
("PricewaterhouseCoopers"), NexMed's independent auditor, the matters required
to be discussed by Statements on Auditing Standards No. 61, Communications with
Audit Committees, as amended.
-9-
We have also received the written disclosures and the letter from
PricewaterhouseCoopers required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as amended, and have discussed
with PricewaterhouseCoopers its independence.
Based on the reviews and discussions referred to above, we recommended
to the Board of Directors that the audited financial statements referred to
above be included in NexMed's Annual Report on Form 10-K for the year ended
December 31, 2001, to be filed with the Securities and Exchange Commission.
The Audit Committee of the Board of Directors
Robert W. Gracy
Stephen M. Sammut
EXECUTIVE COMPENSATION COMMITTEE REPORT
OVERALL POLICY
NexMed's executive compensation program is designed to be linked to
corporate performance and the total return to Stockholders over the long-term.
The overall objectives of this strategy are to attract and retain the best
possible executive talent, to motivate these executives to achieve the goals
inherent in the Company's business strategy, to link executive and Stockholder
interests and finally to reward individual contributions as well as overall
business results.
The key elements of the Company's executive compensation during the
last fiscal year consisted of base salary, an annual bonus and the grant of
stock options under the Stock Plan.
SALARIES
The Executive Compensation Committee approves the salaries of the Chief
Executive Officer of the Company and exercises oversight over the compensation
of the other named executive officers of the Company. All final determinations
are subjective. In establishing salary levels for 2001, the Executive
Compensation Committee placed the most emphasis on the progression of the
proprietary products under development and the financial condition of the
Company based primarily on readily available working capital as of the end of
the preceding fiscal year. The Executive Compensation Committee also relied on a
comparison conducted by PricewaterhouseCoopers of fifteen peer companies in
terms of compensation for members of the Board, the Chief Executive Officer and
other officers. The Executive Compensation Committee also afforded substantial
weight to the Company's long-term prospects and performance. A factor of less
significance considered was the respective experience of the executive officers.
BONUSES
Cash bonuses are awarded to named executive officers based upon a
subjective evaluation by the Executive Compensation Committee of the performance
of each named executive officer during the year. Of particular significance was
the progression of the proprietary products under development and the financial
condition of the Company. All named executive officers at fiscal year end were
awarded bonuses in 2001 (see "Summary Compensation Table" under the heading
"Executive Compensation" of this Proxy Statement).
STOCK OPTIONS
Under the Stock Plan, which was adopted by the Company in December
1996, the Company's employees, including the named executive officers, are
eligible to receive stock options, stock appreciation rights, restricted
-10-
stock and other stock-based awards. The Executive Compensation Committee is
responsible for determining the recipients and the size of the awards. In
selecting the size and type of awards under the Stock Plan, the Executive
Compensation Committee considers the nature of the position held as well as the
other factors used to determine salaries and its subjective expectation of the
potential for appreciation in the market value of the Common Stock. All final
determinations are subjective.
Stock options awarded under the Stock Plan generally vest over a period
of several years from the date of grant. This approach is designed to align the
interests of the executive officers with those of the Stockholders over the
long-term since the full benefits of the compensation package cannot be realized
unless stock price appreciation occurs over a number of years.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Compensation for Y. Joseph Mo, Ph.D., the Company's Chairman of the
Board, President and Chief Executive Officer, historically has been established
in accordance with the principles described above. The Executive Compensation
Committee reviews Dr. Mo's performance and establishes his base salary
considering the various factors described above for named executive officers.
The amount of Dr. Mo's cash bonus was awarded based upon a subjective evaluation
by the Executive Compensation Committee of the performance of Dr. Mo during the
year. Of particular significance was the progression of the proprietary products
under development and the financial condition of the Company. Dr. Mo received
bonuses of $80,000, $72,000, and $100,000 for fiscal years 2001, 2000 and 1999
respectively. Dr. Mo's base salary was $225,000, $180,000, and $120,000 for
fiscal years 2001, 2000 and 1999 respectively. In January 2000, the Company
granted Dr. Mo 1,114,000 stock options at an exercise price of $4.00 per option.
The stock options vest as follows: 371,333 stock options on December 31, 2000,
371,333 stock options on December 31, 2001 and 371,334 stock options on December
31, 2002. The purpose of the grant is to retain and maximize the performance of
Dr. Mo, the Company's key employee, and to reward him for succeeding in raising
sufficient capital in 1999 and 2000 to enable the Company to proceed with and
accelerate its development of one or more proprietary products without undue
financial pressure.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code (the "Code"), and the
Treasury Regulations issued thereunder, generally disallow a federal income tax
deduction to any publicly-held corporation for compensation paid in excess of $1
million in any taxable year to the Chief Executive Officer or any of the four
other most highly compensated executive officers employed on the last day of the
taxable year, unless such compensation is paid pursuant to a qualified
"performance-based compensation" arrangement, the material terms of which are
disclosed to and approved by stockholders.
It is the general policy of the Executive Compensation Committee to
have executive compensation paid by the Company treated as fully tax deductible,
without regard to the limitations imposed by Section 162(m) of the Code. All
compensation paid during fiscal year 2001 was determined to be tax deductible.
However, due to the inflexibility of qualifying all compensation for an
exemption from the application of Section 162(m) of the Code, the Executive
Compensation Committee reserves the right to grant future compensation awards in
such amounts as it may deem appropriate in the exercise of its business
judgment, notwithstanding whether those awards are fully tax deductible.
The Executive Compensation Committee of the
Board of Directors
Robert W. Gracy
Stephen M. Sammut
-11-
PROPOSAL NO. 2
APPROVAL OF AMENDED AND RESTATED ARTICLES OF INCORPORATION
The Company's articles of incorporation, filed on October 20, 1987,
were amended on February 24, 1989, May 25, 1994, September 21, 1995, amended and
restated on January 29, 1994, and again amended on June 23, 2000 (the "Articles
of Incorporation"). The Board of Directors deems it advisable that the Company's
Articles of Incorporation be further amended and restated, subject to approval
by the stockholders, to delete in their entirety Section D of Article Sixth,
all of Article Ninth, and Article Tenth and insert a new Article Ninth in the
further amended and restated articles of incorporation of the Company, a copy of
which is attached hereto as Exhibit A.
Section D of Article Sixth provides that, subject to the rights of the
holders of any series of preferred stock then outstanding, any directors, or the
entire Board of Directors, may be removed from office at any time, but only for
cause and only by the affirmative vote of the holders of at least fifty percent
of the voting power of all of the then outstanding shares of capital stock of
the Company entitled to vote generally in the election of directors, voting
together as a single class. This provision is inconsistent with Section 78.335
of Nevada Revised Statutes, which provides that any director of the Company may
be removed from office only by the affirmative vote of the holders of at least
two-thirds of the voting power of the then issued and outstanding shares of
capital stock of the Company (or such greater percentage of the voting power as
the Articles may require). While the revision to Section D of Article Sixth
makes it more difficult for the Company's Stockholders to remove a director from
office, compliance with the minimum requirements of Section 78.335 of the Nevada
Revised Statutes is mandatory. Any attempt to remove a director from office by
an affirmative vote that is a lesser percentage than that proscribed by the
Nevada Revised Statutes, notwithstanding that such vote may be in compliance
with the Company's Articles of Incorporation, would be ineffective. Therefore,
the Board of Directors has determined that Section D of Article Sixth should be
deleted from the Company's Articles of Incorporation so that the Articles comply
with Nevada law.
Article Ninth sets forth certain factors which the Board of Directors
may consider when evaluating any offer of another party to (a) make a tender or
exchange offer for any equity security of the Company, (b) merger or consolidate
the Company with another corporation or (c) purchase or otherwise acquire all or
substantially all of the properties and assets of the Company. These factors
include (i) the social, legal, environmental and economic effects on the
employees, customers, suppliers and other affected persons, firms and
corporations, and on the communities and geographical areas in which the Company
and its subsidiaries operate or are located and on any of the businesses and
properties of the Company or any of its subsidiaries, as well as other factors
as the directors deem relevant, (ii) not only the financial consideration being
offered in relation to the then current market price for the Company's
outstanding shares of capital stock, but also in relation to the then current
value of the Company in a freely negotiated transaction and in relation to the
Board of Directors' estimate of the future value of the Company (including the
unrealized value of its properties and assets) as an independent going concern,
and (iii) the obligations of the Company, and any of its subsidiaries, to
provide stable, reliable public utility services on a continuing or long term
basis. Section 78.138 of Nevada Revised Statutes expressly sets forth the
factors that directors of the Company may consider when exercising their
respective powers, which factors include (a) the interests of the Company's
employees, suppliers, creditors and customers, (b) the economy of the state and
nation, (c) the interests of the community and of society, and (d) the long-term
as well as short-term interests of the Company and its stockholders, including
the possibility that these interests may be best served by the continued
independence of the Company. Section 78.138 of Nevada Revised Statutes further
provides that the directors of the Company are not required to consider the
effect of a proposed corporate action upon any particular group having an
interest in the Company as a dominant factor. As Section 78.138 of the Nevada
Revised Statues and Article Ninth of the Company's Articles of Incorporation are
essentially duplicative and may be confusing when read together, the Board of
Directors has determined that all of Article Ninth should be deleted from the
Company's Articles of Incorporation. The deletion of all of Article Ninth from
the Company's Articles of Incorporation does not directly impact the
Stockholders of the Company. It does, however, provide greater certainty to the
Stockholders of the Company that the Board of Directors will consider only those
factors enumerated in Section 78.138 of the Nevada Revised Statutes when
exercising their respective powers, thus eliminating possible confusion or
conflict that may arise from the combined operation of the Company's Articles of
Incorporation and the Nevada Revised Statutes.
Article Tenth sets forth the limitation of liability of the Company's
officers and directors. Section 78.138 of the Nevada Revised Statutes has been
amended to codify existing legal decisions in the State of Nevada, providing
that, with certain specified statutory exceptions, an officer or director of a
Nevada corporation has limited individual liability to the corporation or its
stockholders for damages that may occur as a result of the director's or
officer's action or inaction, unless it is proven that (a) his or her act or
failure to act constituted a breach of his or her fiduciary duties as a
director or officer, and (b) his or her breach of those duties involved
intentional misconduct, fraud or a knowing violation of law. While Section
78.138 of the Nevada Revised Statutes limits common law and statutory
liability of corporate directors and officers, it does not (a) prevent
criminal prosecution of corporate directors or officers, (b) prevent personal
liability of corporate directors or officers where fraud exists, and (c)
eliminate corporate responsibility for damages incurred as a result of
wrongful corporate acts. In order to afford greater protection to directors
and officers of the Company, the Board of Directors has determined that
Article Tenth should be replaced in its entirety to mirror the limitation of
liability currently afforded
-12-
by Section 78.138 of the Nevada Revised Statutes. It is anticipated that
affording a high standard and greater level of certainty to the limitation of
liability will make it easier for the Company to retain, or attract, high
caliber individuals as directors and officers of the Company's management, as
these individuals may be more willing to accept the limited and codified
liability risks involved in acting as a corporate principal. The new Article
Ninth further seeks to ensure that if that section is later amended to further
limit the liability of corporate principals, that such limitation is effective
without the necessity of incurring the time or expense of further amending the
Company's restated and amended articles of incorporation. New Article Ninth is
drafted to accomplish this purpose.
Lastly, the Board of Directors noted some matters of "clean-up" in the
Company's Articles of Incorporation, such as correcting references to the
"Nevada General Corporation Law" which should be to "Nevada Revised Statutes,"
among others, and these corrections have been made. The corrections were either
typographical or corrective in nature, and were not substantive.
The Board of Directors believes the adoption of the attached amended
and restated articles of incorporation is advisable since it will bring the
Company's Articles of Incorporation into compliance with the applicable sections
of the Nevada Revised Statutes.
REQUIRED VOTE AND RECOMMENDATION OF BOARD OF DIRECTORS
Under applicable Nevada law, the affirmative vote of the Stockholders
holding a majority of the outstanding shares of Common Stock is required for
approval of the proposed amendment to the amended and restated articles of
incorporation. Consequently, abstentions from voting on the proposal and broker
non-votes will have the same effect as a negative vote on this proposal. If
approved by the Stockholders, it is anticipated that the Company will file
amended and restated articles of incorporation as soon as practicable
thereafter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF THE COMPANY
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee, has
selected PricewaterhouseCoopers LLP as independent accountants to audit and
report upon the consolidated financial statements of the Company for the 2002
fiscal year and is submitting this matter to the Stockholders for their
ratification. PricewaterhouseCoopers LLP served as the Company's independent
auditors in fiscal year 2001 and in prior years.
AUDIT FEES
PricewaterhouseCoopers is the Company's principal independent auditor.
PricewaterhouseCoopers' audit fees for auditing the Company's annual
consolidated financial statements for the year ended December 31, 2001 and
reviews of the Company's interim financial statements included in the Company's
Forms 10-Q filed with the Securities and Exchange Commission during 2001 were
$102,953.
ALL OTHER FEES
All other fees for PricewaterhouseCoopers' services, including tax and
consulting, and other services, for the year ended December 31, 2001, were
$72,192. PricewaterhouseCoopers is the only tax and actuarial services provider
used by the Company.
The Audit Committee of the Board of Directors has considered whether
the provision of the services set forth in the preceding paragraphs is
compatible with maintaining PricewaterhouseCoopers' independence.
A representative of PricewaterhouseCoopers LLP is expected to be
present at the Annual Meeting. The representative will have an opportunity to
make a statement and will be able to respond to appropriate questions.
-13-
REQUIRED VOTE AND RECOMMENDATION OF BOARD OF DIRECTORS
Under Nevada law shares as to which there is an abstention or broker
non-vote shall be deemed to be present at the meeting for purposes of
determining a quorum. However, because under Nevada law approval of this
proposal requires that the votes cast in favor of it exceeds the votes cast
opposing it, abstentions and broker non-votes will have no effect on the outcome
of this proposal. If Stockholders do not ratify the selection of
PricewaterhouseCoopers LLP, the Board of Directors will consider other
independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS
THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE YEAR
ENDING DECEMBER 31, 2002.
STOCKHOLDER PROPOSALS
Stockholder proposals will be considered for inclusion in the Proxy
Statement for the 2003 Annual Meeting in accordance with Rule 14a-8 under the
Exchange Act, if they are received by the Secretary of the Company on or before
November 29, 2002.
Stockholders who intend to present a proposal at the 2003 Annual
Meeting of Stockholders without inclusion of such proposal in the Company's
proxy materials for the 2003 Annual Meeting are required to provide notice of
such proposal to the Company no later than 35 days nor more than 60 days prior
to the 2003 Annual Meeting of Stockholders. The Company reserves the right to
reject, rule out of order, or take other appropriate action with respect to any
proposal that does not comply with these and other applicable requirements.
Proposals and notices of intention to present proposals at the
2003 Annual Meeting should be addressed to Vivian H. Liu, Secretary, NexMed,
Inc., 350 Corporate Boulevard, Robbinsville, New Jersey 08691
OTHER MATTERS
The Board of Directors knows of no other business, which will be
presented to the Annual Meeting. If any other business is properly brought
before the Annual Meeting, it is intended that proxies in the enclosed form will
be voted in respect thereof in accordance with the judgment of the persons
voting the proxies.
It is important that the proxies be returned promptly and that your
shares be represented. Stockholders are urged to vote. Stockholders are urged to
mark, date, execute and promptly return the accompanying proxy card in the
enclosed envelope or vote these proxies by telephone at (800) 240-6326 or by
internet at http/www.eproxy.com/nexm/.
-14-
By Order of the Board of Directors,
/s/ Vivian H. Liu
------------------
Vivian H. Liu
Secretary
April 30, 2002
Robbinsville, NJ
-15-
\
[FORM OF PROXY-FRONT SIDE OF TOP PORTION]
TO OUR STOCKHOLDERS,
YOU ARE CORDIALLY INVITED TO ATTEND OUR ANNUAL
MEETING OF STOCKHOLDERS, TO BE HELD IN THE CONFERENCE
ROOM OF NEXMED, INC.'S FACILITIES AT 350 CORPORATE
BOULEVARD, ROBBINSVILLE, NJ 08691, AT 10:00 A.M. ON
FRIDAY, JUNE 21, 2002.
[COMPANY LOGO]
THE ENCLOSED PROXY STATEMENT PROVIDES YOU WITH
ADDITIONAL DETAILS ABOUT ITEMS THAT WILL BE ADDRESSED
AT THE ANNUAL MEETING. FOLLOWING CONSIDERATION OF THE
PROPOSALS SET FORTH IN THE PROXY STATEMENT, AN
OVERVIEW OF NEXMED, INC.'S ACTIVITIES WILL BE
PRESENTED AND WE WILL BE AVAILABLE TO ANSWER ANY
QUESTIONS YOU MAY HAVE. AFTER REVIEWING THE PROXY
STATEMENT, PLEASE SIGN, DATE AND INDICATE YOUR VOTE
FOR THE ITEMS LISTED ON THE PROXY CARD BELOW AND
RETURN IT BY MAIL IN THE ENCLOSED, POSTAGE-PAID
ENVELOPE, OR VOTE BY TELEPHONE BY CALLING (800)
240-6326 (U.S. ONLY), OR BY INTERNET AT
HTTP://WWW.EPROXY.COM/NEXM/, WHETHER OR NOT YOU PLAN
TO ATTEND THE ANNUAL MEETING.
THANK YOU FOR YOUR PROMPT RESPONSE.
SINCERELY,
VIVIAN H. LIU
SECRETARY
NEXMED, INC. 350 CORPORATE BOULEVARD ROBBINSVILLE, NJ 08691
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES FOR
DIRECTORS NAMED BELOW AND FOR PROPOSAL NOS. 2 AND 3.
PROPOSAL 1: Election of Directors: Y. Joseph Mo and James L. Yeager
Y. Joseph Mo: FOR WITHHOLD James L. Yeager: FOR WITHHOLD
AUTHORITY AUTHORITY
|-| |-| |-| |-|
PROPOSAL 2: To consider and vote upon a proposal to approve and adopt Amended
and Restated Articles of Incorporation of the Company.
FOR AGAINST ABSTAIN
|-| |-| |-|
PROPOSAL 3: Ratification of the appointment of PricewaterhouseCoopers LLP as the
independent accountants of the Company.
FOR AGAINST ABSTAIN
|-| |-| |-|
Address Change? Mark Box [ ] Indicate changes below:
Date:___________________________________
_____________________________________________
_____________________________________________
Signature(s) in Box
Please sign exactly as your name appears at the left. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or corporation, please sign in full corporate name by
president or other authorized person. If a partnership, please sign in
partnership name by authorized person.
[FORM OF PROXY-REVERSE SIDE OF TOP PORTION]
PROXY PROXY
NEXMED, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Vivian H. Liu and Y. Joseph
Mo, or either of them, the lawful attorneys and proxies 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
Stockholders of NexMed, Inc. to be held at the Company's headquarter
facilities at 350 Corporate Boulevard, Robbinsville, New Jersey on
Friday, June 21, 2002, at 10:00 a.m., local time, and any
adjournment(s) or postponement(s) thereof, with all powers the
undersigned would possess if personally present, and to vote the number
of shares the undersigned would be entitled to vote if personally
present.
In accordance with their discretion, said attorneys and
proxies are authorized to vote upon such other matters or proposals not
known at the time of solicitation of this proxy which may properly come
before the meeting.
This proxy when properly executed will be voted in the manner
described herein by the undersigned stockholder. If no instructions are
given, the shares will be voted FOR the election of the nominees for
directors named below and FOR Proposal Nos. 2 and 3. Any prior proxy is
hereby revoked.
(PLEASE DETACH HERE)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[FORM OF PROXY DETACHABLE PROXY CARD]
COMPANY #
CONTROL #
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZED THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
o USE ANY TOUCH-TONE TELEPHONE TO VOTE YOU PROXY 24 HOURS A DAY, 7 DAYS
A WEEK, UNTIL NOON (EST) ON THURSDAY, JUNE 20, 2002.
o YOUR WILL BE PROMPTED TO ENTER YOUR 3-DIGIT COMPANY NUMBER AND YOUR
7-DIGIT CONTROL NUMBER WHICH ARE LOCATED ABOVE.
o FOLLOW THE SIMPLE INSTRUCTIONS THE VOICE PROVIDES YOU.
VOTE BY INTERNET - HTTP://WWW.EPROXY.COM/NEXM/ - QUICK *** EASY *** IMMEDIATE
---------------------------
o USE THE INTERNET TO VOTE YOUR PROXY 24 HOURS A DAY, 7 DAYS A WEEK,
UNTIL NOON (EST) ON THURSDAY, JUNE 20, 2002.
o YOU WILL BE PROMPTED TO ENTER YOUR 3-DIGIT COMPANY NUMBER AND YOUR
7-DIGIT CONTROL NUMBER, WHICH ARE LOCATED ABOVE TO OBTAIN YOUR RECORDS
AND CREATE AN ELECTRONIC BALLOT.
VOTE BY MAIL
MARK, SIGN AND DATE YOUR PROXY CARD AND RETURN IT IN THE POSTAGE-PAID ENVELOPE
WE'VE PROVIDED OR RETURN IT TO NEXMED, INC., C/O SHAREOWNER SERVICES(SM), P.O.
BOX 64873, ST-PAUL, MN 55164-0873.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD.
PLEASE DETACH HERE
EXHIBIT A
- ---------
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF NEXMED, INC.
FIRST: The name of the corporation is NexMed, Inc. (the
"Corporation").
SECOND: The name and address of the registered agent of the
Corporation is Corporation Trust Company of Nevada, 1 East 1st Street, Reno,
Nevada 89501.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the Nevada Revised
Statutes.
FOURTH: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A. The governing board of the Corporation shall be known as
the board of directors (the "Board of Directors" or the "Board") and its members
all be known as directors, and the number of directors may from time to time be
increased or decreased by resolution of the Board of Directors, provided that
the number of directors shall not be reduced to less than three (3). The Board
of Directors shall be divided into three classes, as nearly equal in number as
possible, and the term of office for each respective class of directors shall be
so arranged that the term of office of directors of one class shall expire at
each successive annual meeting of stockholders, and in all cases as to each
director until their successor shall be elected and shall qualify, or until his
earlier resignation, removal from office, death or incapacity. At each annual
meeting of stockholders after the first annual meeting, the number of directors
equal to the number of directors of the class whose term expires at the time of
such meeting (or such greater or lesser number as would be required by an
increase or decrease in the size of the Board of Directors) shall be elected to
hold office until the third succeeding annual meeting of stockholders after
their election. This Article FOURTH may not be amended or repealed without the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the
voting power of the shares entitled to vote thereon.
B. Special meetings of stockholders of the Corporation may be
called only by the Chairman of the Board or the President or by the Board of
Directors acting pursuant to a resolution adopted by a majority of the Whole
Board. For purposes of these Amended and Restated Articles of Incorporation, the
term "Whole Board" shall mean the total number of authorized directors whether
or not there exist any vacancies in previously authorized directorships.
FIFTH: A. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is ninety million (90,000,000),
consisting of eighty million (80,000,000) shares of common stock, par value
one-tenth of one cent ($0.001) per share (the "Common Stock") and ten million
(10,000,000) shares of preferred stock, par value one-tenth of one cent ($0.001)
per share (the "Preferred Stock").
B. COMMON STOCK. The shares of Common Stock shall have no
pre-emptive or preferential rights of subscription concerning further issuance
or authorization of any securities of the Corporation. Each share of Common
Stock shall entitle the holder thereof to one vote, in person or by proxy. The
holders of the Common Stock shall be entitled to receive dividends if, as and
when declared by the Board of Directors.
A-1
The Common Stock may be issued from time to time in one or
more series and shall have such other relative, participant, optional or special
rights, qualifications, limitations or restrictions thereof as shall be stated
and expressed in the resolution or resolutions providing for the issuance of
such Common Stock from time to time adopted by the Board of Directors pursuant
to authority so to adopt which is hereby vested in the Board of Directors.
C. PREFERRED STOCK. The Preferred Stock may be issued from
time to time in one or more series and (a) may have such voting powers, full or
limited, or may be without voting powers; (b) may be subject to redemption at
such time or times and at such prices; (c) may be entitled to receive dividends
(which may be cumulative or noncumulative) at such rate or rates, on such
conditions, and at such times, and payable in preference to, or in such relation
to, the dividends payable on any other class or classes or series of stock; (d)
may have such rights upon the dissolution of, or upon any distribution of the
assets of, the Corporation; (e) may be made convertible into, or exchangeable
for, shares of any other class or classes or of any other series of the same or
any other class or classes of stock of the Corporation, at such price or prices
or at such rates of exchange, and with such adjustments; and (f) shall have such
other relative, participating, optional or special rights, qualifications,
limitations or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions providing for the issuance of such Preferred Stock
from time to time adopted by the Board of Directors pursuant to the authority to
do so which is hereby vested in the Board of Directors.
At any time from time to time when authorized by resolution of
the Board of Directors and without any action by its stockholders, the
Corporation may issue or sell any shares of its stock of any class or series,
whether out of the unissued shares thereof authorized by these Amended and
Restated Articles of Incorporation, as amended, or out of shares of its stock
acquired by it after the issue thereof, and whether or not the shares thereof so
issued or sold shall confer upon the holders thereof the right to exchange or
convert such shares for or into other shares of stock of the Corporation of any
class or classes or any series thereof. When similarly authorized, but without
any action by its stockholders, the Corporation may issue or grant rights,
warrants or options, in bearer or registered or such other form as the Board of
Directors may determine, for the purchase of shares of the stock of any class or
series of the Corporation within such period of time, or without limit as to
time, of such aggregate number of shares, and at such price per share, as the
Board of Directors may determine. Such rights, warrants or options may be issued
or granted separately or in connection with the issue of any bonds, debentures,
notes, obligations or other evidences of indebtedness or shares of the stock of
any class or series of the Corporation and for such consideration and on such
terms and conditions as the Board of Directors, in its sole discretion, may
determine. In each case, the consideration to be received by the Corporation for
any such shares so issued or sold shall be such as shall be fixed from time to
time by the Board of Directors.
D. The capital stock, after the amount of the subscription
price, or par value, has been paid in, shall not be subject to assessment.
E. No holder of shares of stock of the Corporation shall be
entitled as of right to purchase or subscribe for any part of any unissued stock
of this Corporation or of any new or additional authorized stock of the
Corporation of any class whatsoever, or of any issue of securities of the
Corporation convertible into stock, whether such stock or securities be issued
for money or for a consideration other than money or by way of dividend, but any
such unissued stock or such new or additional authorized stock or such
securities convertible into stock may be issued and disposed of to such persons,
firms, corporations and associations, and upon such terms as may be deemed
advisable by the Board of Directors without offering to stockholders of record
or any class of stockholders upon the same terms or upon any terms.
SIXTH: A. Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances,
the number of directors shall be fixed from time to time exclusively by the
Board of Directors pursuant to a resolution adopted by a majority of the Whole
Board.
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B. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships resulting from any
increase in the authorized number of directors or any vacancies in the Board of
Directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause shall, unless otherwise provided by law or by
resolution of the Board of Directors, be filled only by a majority vote of the
directors then in office, though less than a quorum, and directors so chosen
shall hold office for a term expiring at the annual meeting of stockholders at
which the term of office of the class to which they have been chosen expires. No
decrease in the authorized number of directors shall shorten the term of any
incumbent director.
C. Advance notice of stockholder nominations for the election
of directors and of business to be brought by stockholders before any meeting of
stockholders of the Corporation shall be given in the manner provided in the
By-Laws of the Corporation.
SEVENTH: The Board of Directors is expressly empowered to adopt, amend or repeal
By-Laws of the Corporation. Any adoption, amendment or repeal of any provision
of the By-Laws of the Corporation by the Board of Directors shall require the
approval of a majority of the Whole Board. The stockholders shall also have
power to adopt, amend or repeal the By-Laws of the Corporation. Any adoption,
amendment or repeal of any provision of the By-Laws of the Corporation by the
stockholders shall require, in addition to any vote of the holders of any class
or series of stock of the Corporation required by law or by these Amended and
Restated Articles of Incorporation, the affirmative vote of the holders of at
least fifty percent (50%) of the voting power of all of the then-outstanding
shares of the capital stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class.
EIGHTH: The Corporation reserves the right to amend or repeal any provision
contained in this Amended and Restated Articles of Incorporation in the manner
prescribed by the laws of the State of Nevada and all rights conferred upon
stockholders are granted subject to this reservation; provided, however, that,
notwithstanding any other provision of this Amended and Restated Articles of
Incorporation or any provision of law that might otherwise permit a lesser vote
or not vote, but in addition to any vote of the holders of any class or series
of the stock of this Corporation required by law or by this Amended and Restated
Articles of Incorporation, the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all the
then-outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of Directors, voting together as a single class, shall
be required to amend or repeal this Article EIGHTH, Article SIXTH, or Article
SEVENTH.
NINTH: The personal liability of a director or officer of the Corporation to the
Corporation or its stockholders shall be eliminated or limited to the fullest
extent permitted by the Nevada Revised Statutes. If the Nevada Revised Statutes
are amended after approval by the stockholders of this Article NINTH to further
eliminate or limit or authorize corporate action further eliminating or limiting
the personal liability of directors or officers, the liability of a director or
officer of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Nevada Revised Statutes, as so amended from time to time. No
repeal or modification of this Article NINTH by the stockholders shall adversely
affect any right or protection of a director or officer of the Corporation
existing by virtue of this Article NINTH at the time of such repeal or
modification.
TENTH: A. The Corporation shall indemnify and hold harmless any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was or has agreed to
become a director or officer of the Corporation or is serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise or by reason of
actions alleged to have been taken or omitted in such capacity or in any other
capacity while serving as a director or officer. The indemnification of
directors and officers by the Corporation shall be to the fullest extent
authorized or permitted by applicable law, as such law exists or may hereafter
be amended (but only to the extent that such amendment permits the
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Corporation to provide broader indemnification rights than permitted prior to
the amendment). The indemnification of directors and officers shall be against
all loss, liability and expense (including attorneys' fees, costs, damages,
judgments, fines, amounts paid in settlement and ERISA excise taxes or
penalties) actually and reasonably incurred by or on behalf of a director or
officer in connection with such action, suit or proceeding, including any
appeal; provided, however, that with respect to any action, suit or proceeding
initiated by a director or officer, the Corporation shall indemnify such
director or officer only if the action, suit or proceeding was authorized by the
Board of Directors of the Corporation, except with respect to a suit for the
enforcement of rights to indemnification or advancement of expenses in
accordance with Section C of this Article TENTH below.
B. The expenses of directors and officers incurred as a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative shall be paid by the
Corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding: provided, however, that if applicable law so
requires, the advance payment of expenses shall be made only upon receipt by the
Corporation of an undertaking by or on behalf of the director or officer to
repay all amounts so advanced in the event that it is ultimately determined by a
final decision, order or decree of a court of competent jurisdiction that the
director or officer is not entitled to be indemnified for such expenses under
this Article TENTH.
C. Any director or officer may enforce his or her rights to
indemnification or advance payments for expenses in a suit brought against the
Corporation if his or her request for indemnification or advance payments for
expenses is wholly or partially refused by the Corporation or if there is no
determination with respect to such request within 60 days from receipt by the
Corporation of a written notice from the director or officer for such a
determination. If a director or officer is successful in establishing in a suit
his or her entitlement to receive or recover an advancement of expenses or a
right to indemnification, in whole or in part, he or she shall also be
indemnified by the Corporation for costs and expenses incurred in such suit. It
shall be a defense to any such suit (other than a suit brought to enforce a
claim for the advancement of expenses under Section B of this Article TENTH
where the require undertaking, if any, has been received by the Corporation)
that the claimant has not met the standard of conduct set forth in the Nevada
Revised Statutes. Neither the failure of the Corporation to have made a
determination prior to the commencement of such suit that indemnification of the
director or officer is proper in the circumstances because the director or
officer has met the applicable standard of conduct nor a determination by the
Corporation that the director or officer has not met such applicable standard of
conduct shall be a defense to the suit or create a presumption that the director
or officer has not met the applicable standard of conduct. In a suit brought by
a director or officer to enforce a right under this Section C or by the
Corporation to recover and advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that a director or officer is not entitled to
be indemnified or is not entitled to an advancement of expenses under this
Section C or otherwise, shall be on the Corporation.
D. The right to indemnification and to the payment of expenses
as they are incurred and in advance of the final disposition of the action, suit
or proceeding shall not be exclusive of any other right to which a person may be
entitled under these Amended and Restated Articles of Incorporation or any
by-law, agreement, statute, vote of stockholders or disinterested directors or
otherwise. The right to indemnification under Section A of this Article TENTH
above shall continue for a person who has ceased to be a director or officer and
shall inure to the benefit of his or her heirs, next of kin, executors,
administrators and legal representatives.
E. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any loss, liability or expense, whether or not the Corporation would
have the power to indemnify such person against such loss, liability or expense
under the Nevada Revised Statutes.
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F. The Corporation shall not be obligated to reimburse the
amount of any settlement unless it has agreed to such settlement. If any person
shall unreasonably fail to enter into a settlement of any action, suit or
proceeding within the scope of Section A of this Article TENTH above, offered or
assented to by the opposing party or parties and which is acceptable to the
Corporation, then, notwithstanding any other provision of this Article TENTH,
the indemnification obligation of the Corporation in connection with such
action, suit or proceeding shall be limited to the total of the amount at which
settlement could have been made and the expenses incurred by such person prior
to the time the settlement could reasonably have been effected.
G. The Corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation or to any
director, officer, employee or agent of any of its subsidiaries to the fullest
extent of the provisions of this Article TENTH subject to the imposition of any
conditions or limitations as the Board of Directors may deem necessary or
appropriate.
ELEVENTH: In the event of a conflict between the terms of these Amended and
Restated Articles of Incorporation and the By-Laws of the Corporation, the terms
and provisions of these Amended and Restated Articles of Incorporation shall
govern.
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