<PAGE>
As filed with the Securities and Exchange Commission on April 24, 1998
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
|_| Confidential, for the use of the Commission only (as permitted by Rule
14a-6(e)(2)
---------------
NEXMED, INC.
(Name of Registrant as Specified in Its Charter)
---------------
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 0-1l(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:
<PAGE>
NEXMED, INC.
350 Corporate Boulevard
Robbinsville, New Jersey 08691
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 15, 1998
To Our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of NexMed, Inc. (the "Company") to all of the shareholders of
the Company. The Annual Meeting will be held in the conference room of the
Company's facilities at 350 Corporate Boulevard, Robbinsville, New Jersey on
Friday, May 15, 1998 at 10:00 a.m. for the following purposes:
(1) The election of three persons to the Board of Directors of the
Company, one nominee to serve a two-year term and two nominees
to serve a three-year term, or until their respective
successors are elected and qualified;
(2) Ratification of the appointment of Price Waterhouse LLP,
independent accountants, as the Company's independent
accountants for the ensuing year;
(3) Approval of an amendment to the NexMed, Inc. Stock Option and
Long-Term Incentive Compensation Plan (the "Stock Option
Plan") to increase the number of shares authorized for
issuance thereunder;
(4) Approval of an amendment to the NexMed, Inc. Recognition and
Retention Stock Incentive Compensation Plan (the "Recognition
Plan") to increase the number of shares authorized for
issuance thereunder; and
Consideration and action upon such other business as may properly come before
this meeting or any adjournment thereof.
The enclosed Proxy Statement includes information relating to these
proposals.
All shareholders of record of the Company's common stock at the close
of business on April 22, 1998 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 24, 1998
Robbinsville, New Jersey
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 BY MAIL IN THE POSTAGE-PAID
ENVELOPE PROVIDED, AND FOR INTERNATIONAL REGISTERED OWNERS ONLY, BY MAIL OR BY
FACSIMILE TO NORWEST SHAREOWNER SERVICES PROXY UNIT AT 1-612-450-4026. IF YOU
ATTEND THE ANNUAL MEETING, YOU MAY WITHDRAW YOUR PROXY, IF YOU WISH, AND VOTE IN
PERSON. YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN
THE PROXY STATEMENT.
<PAGE>
Mailed to Shareholders
on or about April 24, 1998
NEXMED, INC.
350 Corporate Boulevard
Robbinsville, New Jersey 08691
-----------------------
PROXY STATEMENT
-----------------------
GENERAL INFORMATION
This Proxy Statement is furnished to Shareholders of NexMed, Inc., a
Nevada corporation (the "Company"), in connection with the solicitation by the
board of directors (the "Board" or "Board of Directors") of the Company of
proxies in the accompanying form for use in voting at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held on May 15, 1998 at
10:00 a.m., local time, at the Company'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, or by attending
the Annual Meeting and voting in person.
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 Norwest Shareowner Services in soliciting
proxies and, in such event, the Company expects to pay approximately $ 1,000,
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 22, 1998 has been fixed as the record date (the
"Record Date") for determining the holders of shares of Common Stock (the
"Shareholders") 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 6,295,098 shares of Common Stock
outstanding.
<PAGE>
Shareholder votes will be tabulated by the persons appointed by the
Board 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 instructions have been given by the Shareholder, will
be voted in accordance with those instructions. If no instructions are given,
the shares will be voted FOR the election of each of the three nominees for
director named below and FOR Proposals Nos. 2, 3 and 4.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Articles of Incorporation divide the
Company's Board of Directors into three classes, the term of office for each
class arranged so that the term of office of one class shall expire at each
successive Annual Meeting of Shareholders. The Board of Directors presently
consists of four members as follows: Class I directors, Robert W. Gracy, Ph.D
and Yu-Chung Wei, whose terms expire in 1998 (and, if re-elected at the Annual
Meeting, in the year 2001); Class II Director, Gilbert S. Banker, Ph.D., whose
term expires in 1998 (and, if re-elected at the Annual Meeting, in the year
2000); and Class III Director, Y. Joseph Mo, Ph.D., whose term expires in 1999.
At the Annual Meeting, the Shareholders will elect two Directors to
serve as Class I Directors and one Director to serve as a Class II Director. The
Class I Directors and the Class II Director who are elected at the Annual
Meeting will serve until the Annual Meeting of Shareholders to be held in 2001
and 2000, respectively, and until such Directors' respective successors are
elected or appointed and qualify or until any such Director's earlier removal.
It is intended that, unless authorization to do so is withheld, the proxies will
be voted "FOR" the election of the Director nominees named below. The Board of
Directors believes that nominees Gilbert S. Banker, Robert W. Gracy and Yu-Chung
Wei will stand for election and will, if elected, serve as such Class I and II
Directors. However, in the event any nominee is unable or unwilling to serve as
a Class I or II Director at the time of the Annual Meeting, the proxies may be
voted for the balance of those nominees named and for any substitute nominee
designated by the present Board of Directors or the proxy holders to fill such
vacancy or for the balance of those nominees named without nomination of a
substitute, or the Board of Directors may be reduced to no less than three
member in accordance with the Amended and Restated Articles of Incorporation of
the Company.
GILBERT S. BANKER, PH.D., Class II Director nominee, age 66. Dr. Banker has
been a Director of the Company since September 1995. Since 1992, Dr. Banker has
been Dean and a distinguished professor of the College of Pharmacy at the
University of Iowa. From 1985 to 1992, he was Dean and Professor of the College
of Pharmacy at the University of Minnesota. Prior to that time, he was the
Department Head of Industrial and Physical Pharmacy at Purdue University for 18
years. Dr. Banker has authored numerous publications, lectures internationally
and consults to several major pharmaceutical companies. Dr. Banker received his
Ph.D. in Industrial Pharmacy from Purdue University in 1957. Dr. Banker is also
a member of the Company's Scientific Advisory Committee.
ROBERT W. GRACY, PH.D., Class I Director nominee, age 57. Dr. Gracy has
been a Director of the Company since January 1997. Dr. Gracy is the Dean for
Research and Biotechnology and Associate Dean for Basic Science at the
University of North Texas Health Science Center in Fort Worth, Texas.
2
<PAGE>
Since 1985, Dr. Gracy has received over $5 million in research grants and
contracts. His current projects focus on three aspects of the biochemical
changes associated with aging: changes at the cellular level, wound and tissue
repair, and vision impairment. Dr. Gracy is a consultant to number of the major
pharmaceutical companies. Dr. Gracy lectures internationally and has published
over 140 papers regarding his research. Dr. Gracy received his Ph.D. in
Biochemistry from the University of California, Riverside in 1968 and completed
a postdoctoral in Molecular Biology at the Albert Einstein College of Medicine
in New York in 1970. Dr. Gracy is also a member of the Company's Scientific
Advisory Committee.
YU-CHUNG WEI, Class I Director nominee, age 35. Mr. Wei has been a Director
of the Company since March 1997. Mr. Wei is Chairman of the Board of Directors
and Chief Executive Officer of Alfa Romeo (Taiwan) Motor Company. From 1993 to
1994, he served as Special Advisor to Tai-Lung Holding Co., Ltd., a Taiwan-based
investment conglomerate. From 1989 to 1993, Mr. Wei held various managerial
positions at Kidder, Peabody Incorporated and Merrill Lynch & Co., Inc., in New
York City. Mr. Wei received his MBA in Finance and Management Information
Systems from Pace University in New York.
REQUIRED VOTE AND RECOMMENDATION OF BOARD OF DIRECTORS
The affirmative vote of a majority of all the votes cast at the Annual
Meeting, assuming a quorum is present, is necessary for the election of a
Director.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE.
EXECUTIVE OFFICERS AND DIRECTORS
Set forth below is certain information as of the Record Date regarding
the Executive Officers and Directors of the Company. Additional information
regarding Director nominees, all of whom are currently Directors, is provided
above.
<TABLE>
<CAPTION>
Name Age Title
<S> <C> <C>
Y. Joseph Mo, Ph.D 50 Chairman of the Board of
Directors, President and
Chief Executive Officer
James L. Yeager, Ph.D 51 Vice President, Business
Development
Vivian H. Liu 36 Vice President, Corporate
Affairs and Secretary
Gilbert S. Banker, Ph.D 66 Director
Robert W. Gracy, Ph.D 57 Director
Yu-Chung Wei 35 Director
</TABLE>
Y. JOSEPH MO, Ph.D. has been Chairman of Board of Directors, President
and Chief Executive Officer of the Company since joining the Company in 1995.
Prior to joining the Company, Dr. Mo was president of Sunbofa Group, Inc., an
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 thereto, he served
in various executive positions with several major pharmaceutical companies,
including Johnson & Johnson, Rorer Pharmaceuticals, and predecessors of
SmithKline Beecham. Dr. Mo received his Ph.D. in Industrial and Physical
Pharmacy from Purdue University in 1977.
JAMES L. YEAGER, Ph.D. has been Vice President, Business Development since
June 1996. Prior to joining the Company, Dr. Yeager was the Vice President of
Research and Development for Pharmedic Company, during which time he specialized
in the building and managing of new product development programs. From 1989 to
1992, Dr. Yeager held international managerial positions with Abbott
Laboratories. Dr. Yeager received his Ph.D. in Industrial and Physical Pharmacy
from Purdue University in 1978. Dr. Yeager is also a member of the Company's
Scientific Advisory Committee. Dr. Yeager commenced full-time employment with
the Company on January 1, 1997.
VIVIAN H. LIU has been Vice President, Corporate Affairs and Secretary
of the Company since September 1995. In 1994, while the Company was in a
transitional period, Ms. Liu served as its Chief Executive Officer. In addition,
from September 1995 to September 1997, Ms. Liu had the title of Treasurer. From
1985 to 1994, she was a business and investment adviser to the government of
Quebec and numerous Canadian companies with respect to product distribution,
technology transfer and investment issues. Ms. Liu received her Masters Degree
in International Finance from the University of Southern California, and a
Bachelor of Arts degree in International Trade from the University of
California, Berkeley.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information, as of the Record Date, with
respect to the beneficial ownership of Common Stock by (a) each person known by
the Company to be the beneficial owner of more than 5% of the Company's
outstanding voting securities, (b) the Directors and executive officers of the
Company, individually, and (c) Directors and executive officers of the Company
as a group.
<TABLE>
<CAPTION>
NAME, POSITION NUMBER OF SHARES PERCENT OF
AND ADDRESS(1) BENEFICIALLY OWNED(2) SHARES(%)
- -------------- --------------------- -----------
<S> <C> <C>
Y. Joseph Mo, Ph.D., 1,610,000 (3) 23.66
Chairman of the Board of
Directors, President and
Chief Executive Officer
James L. Yeager, Ph.D., 205,000 (4) 3.23
Vice President, Business
Development
Vivian H. Liu, 265,000 (5) 4.11
Vice President, Corporate
Affairs and Secretary
Gilbert S. Banker, Ph.D., 130,000 (6) 2.04
Director
Robert W. Gracy, Ph.D., 110,000 (7) 1.72
Director
Yu-Chung Wei 25,000 (8) 0.40
Director
All Executive Officers 2,345,000 (9) 32.61
and Directors as a
Group (six persons)
Golden Water Investment 875,000 13.90
Corporation
Number 10,2F, Alley III
Han-Chou South Road
Taipei, Taiwan (10)
C.D.C. Venture Investment 500,000 7.94
(Asia) Ltd.(11)
25F Wing On Centre
111 Connaught Road
Central, Hong Kong
</TABLE>
(1) The address for the Executive Officers and Directors is: 350 Corporate
Boulevard, Robbinsville, New Jersey, 08691.
(2) All shares are solely and directly owned, with sole voting and dispositive
power.
(3) Includes 510,000 shares issuable upon exercise of immediately exercisable
stock options.
(4) Includes 55,000 shares issuable upon exercise of immediately exercisable
stock options.
(5) Includes 160,000 shares issuable upon exercise of immediately exercisable
stock options.
(6) Includes 80,000 shares issuable upon exercise of immediately exercisable
stock options.
(7) Includes 90,000 shares issuable upon exercise of immediately exercisable
stock options.
(8) Represents 25,000 shares issuable upon exercise of immediately exercisable
stock options.
(9) Includes 895,000 shares issuable upon exercise of immediately exercisable
stock options.
(10) Golden Water Investment Corporation is a privately-held investment bank
incorporated in the British Virgin Islands and based in Taiwan.
(11) C.D.C. Venture Investment (Asia) Ltd. is incorporated in the British Virgin
Islands and is a wholly-owned subsidiary of the China Development
Corporation, a publicly-traded investment banking firm based in Taipei,
Taiwan.
--------------
4
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to a unanimous written consent of the Board of Directors on
February 16, 1996, a number of persons, including certain of the Company's
officers, directors, Scientific Advisory Committee members, attorneys and
consultants received a total of 1,600,000 shares of Common Stock valued at $.50
per share, issued in reliance upon Section 4(2) of the Securities Act. In
addition, certain of the Company's Executive Officers and Directors hold options
to purchase an aggregate of 735,000 shares of Common Stock at an exercise price
of $.25 per share.
In November 1996, the Company issued warrants to purchase 150,000
shares of Common Stock to Pryor Cashman Sherman & Flynn LLP, its outside legal
counsel. Such warrants have a ten-year term, are exercisable for a price of
$1.00 per share and vest over three years.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by the Company
during the fiscal years ended December 31, 1997, 1996 and 1995 to the Chief
Executive Officer and its three other most highly compensated executive
officers:
<TABLE>
<CAPTION>
Annual Compensation Long-Term
Fiscal Compensation
Name and Position Year Salary Other Restricted Stock Awards(5)
- ----------------- ---- ------ ----- --------------------------
<S> <C> <C> <C> <C>
Y. Joseph Mo, Ph.D. 1997 $120,000 $-- --
Chairman of the Board of 1996 120,000 -- $500,000
Directors, President and Chief 1995 -- 20,000 --
Executive Officer(1)
James A Ditanna (2) 1997 33,333 12,000 --
Vice President 1996 -- -- --
1995 -- -- --
James L. Yeager, Ph.D. 1997 100,000 -- --
Vice President, Business 1996 -- 20,000 75,000
Development(3) 1995 -- -- --
Vivian H. Liu 1997 87,333 -- --
Vice President, Corporate Affairs 1996 63,666 -- 50,000
and Secretary(4) 1995 16,000 -- --
</TABLE>
(1) In 1995, Dr. Mo was paid a $20,000 consulting fee. He began receiving a
salary of $120,000 per year in 1996.
(2) Mr. Ditanna received $12,000 in consulting fees from May through August
1997, and began receiving a salary of $100,000 per year in September 1997.
Mr. Ditanna resigned from the Company effective February 14, 1998.
5
<PAGE>
(3) In 1996, Dr. Yeager was paid a $20,000 consulting fee. He began receiving a
salary of $100,000 per year in 1997.
(4) Ms. Liu began receiving a salary of $48,000 per year on September 1, 1995.
On May 1, 1996, her salary was increased to $80,000 per year. On February
3, 1997, Ms. Liu began receiving a salary of $88,000 per year.
(5) In February 1996, Drs. Mo and Yeager and Ms. Liu received 1 million,
150,000 and 100,000 shares of Common Stock, respectively, valued at $.50
per share, for services provided to the Company.
EMPLOYMENT AGREEMENTS
There are currently no employment agreements between the Company and
any of its executive officers.
DIRECTOR COMPENSATION
Except for the reimbursement of travel expenses and the provision of
incentive grant awards pursuant to the Recognition Plan, described in Proposal
No. 4 below, there is no arrangement for the compensation of directors.
STOCK OPTION INFORMATION
The following table sets forth information concerning options granted
during fiscal 1997 to the executives named in the Summary Compensation Table
above.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% of Total Market
Number of Options Price of
Securities Granted to Exercise Underlying
Underlying Employees Price Security on
Options in Fiscal ($ per Date of Grant Expiration
Name Granted Year share) Date
---- ----------- ---------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Y. Joseph Mo, Ph.D. -- -- -- -- --
James A. Ditanna(1) 100,000 21.05 2.00 2.00(2) 8/1/07
James L. Yeager, Ph.D. -- -- -- -- --
Vivian H. Liu -- -- -- -- --
</TABLE>
(1) In July 1997, Mr. Ditanna received options to purchase 100,000 shares of
Common Stock, exercisable for a ten-year term at $2.00 per share, through
the NexMed, Inc. Stock Option and Long-Term Compensation Plan (see "Stock
Option and Incentive Award Plans" below). The options were to vest in five
equal annual installments commencing July 31, 1998. Mr. Ditanna resigned
from the Company effective February 14, 1998, prior to the vesting of any
of his options.
(2) Estimated fair market value on date of grant (July 31, 1997.)
The following table sets forth information concerning the value of
unexercised options as of December 31, 1997 held by the executives named in the
Summary Compensation Table above. 25,000 options were exercised during 1997 at
$0.25 per share.
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Underlying
Unexercised Options at Fiscal Year End Value of Unexercised In-the-Money
[Exercisable (E)/ Options at Fiscal Year End
Unexercisable (U)] [Exercisable(E)/ Unexercisable (U)] (2)
Name
<S> <C> <C>
Y. Joseph Mo, Ph.D. 610,000 (E) $700,000 (E)
650,000 (U) 175,000 (U)
James A. Ditanna (1) 0 (E) 0 (E)
100,000 (U) 0 (U)
James L. Yeager, Ph.D. 55,000 (E) 8,750 (E)
130,000 (U) 0 (U)
Vivian H. Liu 160,000 (E) 210,000 (E)
120,000 (U) 52,500 (U)
</TABLE>
(1) Mr. Ditanna resigned from the Company effective February 14, 1998, prior to
the vesting of any of his options.
(2) Based on a selling price of $2.00, the estimated fair market value at the
Common Stock, for the three months ended December 31, 1997.
6
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
There were four meetings of the Board of Directors during the fiscal
year ended December 31, 1997. Each director attended or participated in such
meeting of the Board of Directors. The Board of Directors presently has no
committees.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Upon effectiveness on May 13, 1997 of the Company's registration
statement on Form 10-SB, filed pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), at which time the Company
voluntarily became a reporting company, Reports on Form 3 should have been filed
at that time by the Company's officers and directors and beneficial owners of
more than 10 percent of the Company's Common Stock, but were not filed on a
timely basis. The following persons filed Reports on Form 3 but not on a timely
basis: Gilbert S. Banker, Robert W. Gracy, and Yu-Chung Wei, all directors;
Vivian H. Liu, Vice President, Corporate Affairs and Secretary; Y. Joseph Mo,
President and Chief Executive Officer; James L. Yeager, Vice President, Business
Development; and Lian-Yin Chen, a ten percent shareholder. In addition, pursuant
to irrevocable proxies, terminated in December 1997, Dr. Mo had voting power
over the shares of Common Stock of the following individuals, who also filed
Form 3 Reports but not on a timely basis: Mei-Li Chang, Chun Chen, I-Chin Chen,
Tien Sin Chen, Charles Hok Sau Cheung, Chiu Hsia Chu, Ma Tsai-Feng Chu, Yia-Hwa
Ding, I-Der Huang, Wen-Gei Lee, Tran-Ming Lin, Tzi-Chen Lin, Li-Hwa Su, Meng-Tun
Su, Chen Wang, Mei-Huei Wang and Dun-Seh Wu. Dr. Mo and the 17 listed
individuals chose to file a single Form 3 as members of a "group" for purposes
of Section 13(d) of the Exchange Act. Dr. Mo no longer has voting power over the
shares of the aforementioned individuals, and such persons are no longer subject
to the requirements of Section 16 of the Exchange Act.
Effective September 1, 1997, Anton H. Amann became a Vice President and
James A. Ditanna became Vice President and Chief Financial Officer of the
Company. Messrs. Amann and Ditanna, who have since resigned from the Company,
filed Form 3 Reports on October 8, 1997. The Reports should have been filed by
September 11, 1997.
In addition, Lian-Yin Chen sold 875,000 shares of Common Stock to
Golden Water Investment Corporation on August 29, 1997, but Ms. Chen did not
file a Form 4, and Golden Water Investment Corporation did not file a Form 3,
until November 1997. The Form 4 was due on September 10, 1997 and the Form 3 was
due on August 29, 1997.
Finally, Messrs. Wen-Gei Lee and Trang-Min Lin each sold 100,000 shares
of Common Stock on October 5, 1997, but did not file Form 4 Reports, which were
due on November 10, 1997, until November 14, 1997.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP served as the Company's independent accountants
for the fiscal year ended December 31, 1997 and has been appointed by the Board
of Directors to continue as the Company's independent accountants for the fiscal
year ending December 31, 1998. In the event that ratification of this
appointment of auditors is not approved by the affirmative vote of a majority of
votes cast on this matter, then the appointment of independent accountants will
be reconsidered by the Board of Directors. Unless marked to the contrary, any
proxy received will be voted for RATIFICATION OF THE APPOINTMENT OF PRICE
WATERHOUSE LLP AS THE INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1998.
A representative of Price Waterhouse 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.
7
<PAGE>
REQUIRED VOTE AND RECOMMENDATION OF BOARD OF DIRECTORS
The affirmative vote of a majority of all the votes cast at the Annual
Meeting, assuming a quorum is present, is necessary for the approval of this
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR
THE YEAR ENDING DECEMBER 31, 1998.
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO THE STOCK OPTION PLAN TO
INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER
The Company adopted the Stock Option Plan on December 4, 1996.
1,500,000 shares of Common Stock were reserved by the Company for issuance of
awards under the Stock Option Plan, of which 27,000 shares remained available
for future grants as of the Record Date. The Company has amended the Stock
Option Plan, subject to Shareholder approval, to increase by 1,500,000, to a
total of 3,000,000, the number of shares of Common Stock reserved for awards
under the Plan.
The Board of Directors believes that the approval of this amendment to
the Stock Option Plan is in the best interests of the Company and its
Shareholders because the availability of an adequate number of shares reserved
for issuance under the Plan and the ability to grant stock options and make
other stock-based awards under the Plan is an important factor in attracting,
motivating and retaining qualified personnel essential to the success of the
Company.
SUMMARY OF THE PROVISIONS OF THE STOCK OPTION PLAN, AS AMENDED
The following summary of the Stock Option Plan, as amended, is
qualified in its entirety by the specific language of the Plan, a copy of which
is available to any Shareholder upon request.
The purpose of the Stock Option Plan is to attract, retain and maximize
the performance of executive officers and key employees. The Stock Option Plan
provides for the grant of "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, non-statutory
stock options, stock appreciation rights and restricted stock awards. It is
contemplated that the Stock Option Plan will eventually be administered by a
Compensation Committee of the Board of Directors, which Committee has not yet
been created. The exercise price for non-statutory stock options may be equal to
or less than 100 percent of the fair market value of shares of Common Stock on
the date of grant. The exercise price for incentive stock options may not be
less than 100 percent of the fair market value of shares of Common Stock on the
date of grant (110 percent of fair market value in the case of incentive stock
options granted to employees who hold more than ten percent of the voting power
of the Company's issued and outstanding shares of Common Stock).
Options granted under the Stock Option Plan may not have a term of more
than a ten-year period (five years in the case of incentive stock options
granted to employees who hold more than ten percent
8
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of the voting power of the Company's Common Stock) and generally vest over a
three-year period. Options generally terminate three months after the optionee's
termination of employment by the Company for any reason other than death,
disability or retirement, and are not transferable by the optionee other than by
will or the laws of descent and distribution.
The Plan also provides for grants of stock appreciation rights ("SARs")
which entitle a participant to receive a cash payment, equal to the difference
between the fair market value of a share of Common Stock on the exercise date
and the exercise price of SAR. The exercise price of any SAR granted under the
Stock Option Plan will be determined by the Board of Directors in its discretion
at the time of the grant. SARs granted under the Stock Option Plan may not be
exercisable for more than a ten year period. SARs generally terminate one month
after the grantee's termination of employment by the Company for any reason
other than death, disability or retirement. Although the Board of Directors has
authority to grant SARs, it does not have any present plans to grant SARs.
Restricted stock awards which consist of grants of shares of Common
Stock subject to a restricted period during which the restricted common shares
may not be sold, assigned, transferred, made subject to a gift, or otherwise
disposed of, mortgaged, pledged, or otherwise encumbered may also be made under
the Plan. At this time, the Board of Directors has not granted, and does not
have any plans to grant, restricted shares of Common Stock.
The Stock Option Plan has a term of ten years. Those employees of the
Company who are largely responsible for the management, growth and protection of
the Company's business are eligible to participate in the Stock Option Plan. As
of the Record Date, 10 employees, including three officers, were eligible to
participate in the Stock Option Plan.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE STOCK OPTION PLAN
The following summary is intended only as a general guide as to the
federal income tax consequences under current law with respect to participation
in the Stock Option Plan and does not attempt to describe all possible federal
other tax consequences of such participation. Furthermore, the tax consequences
of awards made under the Stock Option Plan are complex and subject to change,
and a taxpayer's particular situation may be such that some variation of the
described rules is applicable.
Incentive Stock Options. Options designated as incentive stock options
are intended to fall within the provisions of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). An optionee recognizes no taxable
income for regular income tax purposes as the result of the grant or exercise of
such an option. If an optionee does not dispose of his shares for two years
following the date the option was granted or within one year following the
transfer of the shares upon exercise of the option, the gain on the sale of the
shares (which is the difference between the sale price and the purchase price of
the shares) will be taxed as long-term capital gain. If an optionee satisfies
such holding periods, upon a sale of the shares, the Company will not be
entitled to any deduction for federal income tax purposes. If an optionee
disposes of the shares within two years after the date of grant or within one
year from the date of exercise (a "disqualifying disposition"), the difference
between the fair market value of the shares on the date of exercise and the
option exercise price (not to exceed the gain realized on the sale if the
disposition is a transaction with respect to which a loss, if sustained, would
be recognized) will be taxed as ordinary income at the time of disposition. Any
gain in excess of that amount will be a capital gain. If a loss is recognized,
there will be no ordinary income, and such loss
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<PAGE>
will be a capital loss. A capital gain or loss will be long-term if the
optionee's holding period is more than 12 months. Any ordinary income recognized
by the optionee upon the disposition of the shares should be deductible by the
Company for federal income tax purposes, except to the extent such deduction is
limited by Section 162(m) of the Code. This Section of the Code disallows a
public company's deductions for employee remuneration exceeding $1,000,000 per
year.
Nonstatutory Stock Options. Options that do not qualify as incentive
stock options are nonstatutory stock options and have no special tax status. An
optionee generally recognizes no taxable income as the result of the grant of
such an option.
Upon the exercise of a nonstatutory stock option, the optionee normally
recognizes ordinary income in the amount of the difference between the option
exercise price and the fair market value of the shares on the determination date
(which is generally the date of exercise). If the optionee is an employee, such
ordinary income generally is subject to withholding of income and employment
taxes. The "determination date" is the date on which the option is exercised
unless the shares are not vested and/or the sale of the shares at a profit would
subject the optionee to suit under Section 16(b) of the Exchange Act in which
case the determination date is the later of (i) the date on which the shares
vest, or (ii) the date the sale of the shares at a profit would no longer
subject the optionee to suit under Section 16(b) of the Exchange Act. (Section
16(b) of the Exchange Act generally is applicable only to officers, directors
and beneficial owners of more than 10% of the Common Stock of the Company.) Upon
the sale of stock acquired by the exercise of a nonstatutory stock option, any
gain or loss, based on the difference between the sale price and the fair market
value on the date of recognition of income, will be taxed as capital gain or
loss. A capital gain or loss will be long-term if the optionee's holding period
is more than 12 months. No tax deduction is available to the Company with
respect to the grant of a nonstatutory option or the sale of the stock acquired
pursuant to such grant. The Company should be entitled to a deduction equal to
the amount of ordinary income recognized by the optionee as a result of the
exercise of a nonstatutory option, except to the extent such deduction is
limited by Section 162(m) of the Code.
SARs and Restricted Stock Awards. A participant will not be required to
recognize any income for federal income tax purposes upon the grant of a SAR or
shares of Restricted Stock. However, upon settlement of the SAR award (the date
of its exercise), the participant will be required to recognize as ordinary
income the difference between the grant and exercise price of the shares of
Common Stock on which the SAR award is based. This amount will be taxed at
ordinary federal income tax rates. Upon settlement of the Restricted Stock award
(the date the shares become distributable), the participant will be required to
recognize as ordinary income the fair market value of the shares of Common Stock
on such date. The Company should be entitled to a deduction equal to the amount
of the ordinary income recognized by the participant upon the settlement of the
SAR or Restricted Stock award to the extent permitted by Section 162(m) of the
Code.
10
<PAGE>
REQUIRED VOTE AND RECOMMENDATION OF BOARD OF DIRECTORS
The affirmative vote of a majority of all the votes cast at the Annual
Meeting, assuming a quorum is present, is necessary for the approval of this
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCREASE
IN THE SHARE RESERVE OF THE STOCK OPTION PLAN BY 1,500,000 SHARES.
PROPOSAL NO. 4
APPROVAL OF AN AMENDMENT TO THE RECOGNITION PLAN TO
INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER
The Company adopted the Recognition Plan on December 4, 1996. 500,000
shares of Common Stock were reserved by the Company for issuance of awards under
the Recognition Plan, of which 65,000 shares remained available for future
grants as of the Record Date. The Company has amended the Recognition Plan,
subject to Shareholder approval, to increase by 500,000, to a total of
1,000,000, the number of shares of Common Stock reserved for awards under the
Plan.
The Board of Directors believes that the approval of this amendment to
the Recognition Plan is in the best interests of the Company and its
Shareholders because the availability of an adequate number of shares reserved
for issuance under the Plan and the ability to grant stock options and make
other stock-based awards under the Plan is an important factor in attracting,
motivating and retaining qualified personnel essential to the success of the
Company.
SUMMARY OF THE PROVISIONS OF THE RECOGNITION PLAN, AS AMENDED
The following summary of the Recognition Plan, as amended, is qualified
in its entirety by the specific language of the Plan, a copy of which is
available to any Shareholder upon request.
The purposes of the Recognition Plan are to attract and retain
individuals with renown, ability and intelligence to serve the Company as
directors and consultants and to provide a direct link between the compensation
of such individuals with Shareholder value. The Recognition Plan provides for
incentive award grants that are substantially similar to those made under the
Stock Option Plan (see Proposal No. 3 above). As with the Stock Option Plan, it
is contemplated that the Recognition Plan will eventually be administered by a
Compensation Committee, which Committee has not yet been created. An eligible
director or consultant selected for participation in this Plan may be granted a
non-statutory stock option, a stock appreciation right or a restricted stock
award. Incentive stock options will not be granted under this Plan. Recognition
Plan awards generally vest over a three-year period and will be subject to
attainment of performance goals, with all such terms to be specified in the
written grant agreement between the Company and the award holder.
The Recognition Plan has a term of ten years. Those Directors and
consultants of the Company who are largely responsible for the management,
growth and protection of the Company's business are
11
<PAGE>
eligible to participate in the Recognition Plan. As of the Record Date, four
Directors and eight consultants were eligible to participate in the Plan.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE RECOGNITION PLAN
In general, no gain or loss is recognized by the option holder at the
time an option is granted under the Recognition Plan. Upon the exercise of an
option, the difference between the fair market value of the Common Stock on the
date of exercise and the option price will be taxable as compensation income to
the option holder and the Company would be entitled to a deduction for federal
income tax purposes for the same amount. Upon a subsequent sale or exchange of
stock acquired pursuant to the exercise of an option, the option holder would
have taxable gain or loss, measured by the difference between the amount
realized on the disposition and the tax basis of such shares.
The foregoing statements are intended to summarize the general
principles of current federal income tax law applicable to options that may be
granted under the Recognition Plan. The tax consequences of awards made under
this Plan are complex, subject to change, and may vary depending on the
taxpayer's particular circumstances.
REQUIRED VOTE AND RECOMMENDATION OF BOARD OF DIRECTORS
The affirmative vote of a majority of all the votes cast at the Annual
Meeting, assuming a quorum is present, is necessary for the approval of this
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCREASE
IN THE SHARE RESERVE OF THE RECOGNITION PLAN BY 500,000 SHARES.
SHAREHOLDER PROPOSALS
To be considered for presentation at the annual meeting of the
Company's Shareholders to be held in 1999, a Shareholder proposal must be
received by Vivian H. Liu, Secretary, NexMed, Inc., 350 Corporate Boulevard,
Robbinsville, New Jersey 08691, no later than March 16, 1999.
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. Shareholders are urged to mark, date, execute and
promptly return the accompanying proxy card in the enclosed envelope, and for
international registered owners only, by mail or by facsimile to Norwest
Shareowner Services Proxy Unit at 1-612-450-4026.
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<PAGE>
INCORPORATION BY REFERENCE
The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997 is incorporated by reference into this Proxy Statement. A copy
of such Annual Report on Form 10-KSB has been mailed herewith to Shareholders of
the Company on the Record Date.
By Order of the Board of Directors,
/s/ Vivian H. Liu
Vivian H. Liu
Secretary
Date: April 24, 1998
Robbinsville, New Jersey
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<PAGE>
APPENDIX I
FIRST AMENDMENT TO THE NEXMED, INC.
STOCK OPTION AND LONG-TERM
INCENTIVE COMPENSATION PLAN
WHEREAS, the NexMed, Inc. Stock Option and Long-Term Incentive
Compensation Plan (the "Plan") was adopted by NexMed, Inc. (the "Company") on
December 4, 1996; and
WHEREAS, pursuant to Section 15 of the Plan, the Board of Directors of
the Company retained the right to amend the Plan;
NOW, THEREFORE, subject to the approval of this First Amendment by
shareholders of the Company at the 1998 Annual Meeting of Shareholders, the Plan
is amended as follows:
1. Section 3(c) of the Plan is amended to delete the first sentence thereof and
to insert in lieu thereof a new first sentence, to read as follows:
The total number of shares of Company Stock available for
grants of Incentive Awards under the Plan shall be 3,000,000
subject to adjustment in accordance with Section 10 of the
Plan.
2. This First Amendment to the Plan shall be effective, if at all, upon its
approval by shareholders at the Company's 1998 Annual Meeting of Shareholders.
<PAGE>
APPENDIX II
FIRST AMENDMENT TO THE NEXMED, INC.
RECOGNITION AND RETENTION STOCK
INCENTIVE COMPENSATION PLAN
WHEREAS, the NexMed, Inc. Recognition and Retention Stock Incentive
Compensation Plan (the "Plan") was adopted by NexMed, Inc. (the "Company") on
December 4, 1996; and
WHEREAS, pursuant to Section 15 of the Plan, the Board of Directors of
the Company retained the right to amend the Plan;
NOW, THEREFORE, subject to the approval of this First Amendment by
shareholders of the Company at the 1998 Annual Meeting of Shareholders, the Plan
is amended as follows:
1. Section 3(c) of the Plan is amended to delete the first sentence thereof and
to insert in lieu thereof a new first sentence, to read as follows:
The total number of shares of Company Stock available for
grants of Incentive Awards under the Plan shall be 1,000,000
subject to adjustment in accordance with Section 10 of the
Plan.
2. This First Amendment to the Plan shall be effective, if at all, upon its
approval by shareholders at the Company's 1998 Annual Meeting of Shareholders.
<PAGE>
APPENDIX III
FORM OF PROXY CARD
[FRONT SIDE OF TOP PORTION]
To Our Shareholders,
You are cordially invited to attend our Annual
Meeting of Shareholders, 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 May 15, 1998.
[Company logo]
The enclosed Proxy Statement provides you with more
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, and for international registered holders,
by facsimile to Norwest Shareowner Services Proxy
Unit at (612) 450-4026, 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
(Please detach here)
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<PAGE>
[FORM OF PROXY CARD - FRONT OF BOTTOM PORTION]
(Continued from other side)
PROPOSAL 4: Approval of amendment to FOR AGAINST ABSTAIN
the NexMed, Inc. Recognition
and Retention Stock Incentive Plan
to increase the number of shares
authorized for issuance thereunder. |_| |_| |_|
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.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, BY MAIL IN THE
ENCLOSED ENVELOPE, AND FOR INTERNATIONAL REGISTERED HOLDERS, BY FACSIMILE TO
NORWEST SHAREOWNER SERVICES PROXY UNIT AT (612) 450-4026. THANK YOU.
[Shareholder Name and Address]
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.
Dated___________________________________, 1998
---------------------------------------------
Signature
---------------------------------------------
(Signature if held jointly)
<PAGE>
[FORM OF PROXY CARD - REVERSE SIDE OF BOTTOM 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 Shareholders of NexMed, Inc. to be held in the
conference room of NexMed, Inc.'s facilities at 350 Corporate Boulevard,
Robbinsville New Jersey on Friday, May 15, 1998, 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.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DESCRIBED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. ANY PRIOR PROXY IS HEREBY REVOKED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS NUMBER 1, 2, 3 AND 4.
<TABLE>
<S> <C> <C>
PROPOSAL 1: The Election of Directors: Gilbert S. Banker, Robert W. Gracy and Yu-Chung Wei. FOR all nominees WITHHOLD
listed above (except AUTHORITY
as marked to vote for
to the contrary) all nominees
listed above
|_| |_|
Instructions: To withhold authority to vote for any individual nominee, write
that nominee's name here:
- ---------------------------------------------
PROPOSAL 2: Ratification of the appointment of Price Waterhouse LLP as the FOR AGAINST ABSTAIN
independent auditors of the Company.
|_| |_| |_|
PROPOSAL 3: Approval of amendment to the NexMed, Inc. Stock Option and FOR AGAINST ABSTAIN
Long-Term Incentive Compensation Plan to increase the number of shares
authorized for issuance thereunder. |_| |_| |_|
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
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</TABLE>
