<PAGE>
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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
NexMed, Inc.
------------
(Name of Registrant as Specified in Its Charter)
Not Applicable
--------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
[X] No fee required.
[ ] Fee computed on table below 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 gee 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>
PRELIMINARY COPY
NEXMED, INC.
350 CORPORATE BOULEVARD
ROBBINSVILLE, NEW JERSEY 08691
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 19, 2000
----------
To Our Shareholders:
Notice is hereby given to all of the shareholders of NexMed, Inc. (the
"Company") that the Annual Meeting of Shareholders (the "Annual Meeting") of the
Company will be held in the conference room of the Company's facilities at 350
Corporate Boulevard, Robbinsville, New Jersey on Monday, June 19, 2000 at 10:00
a.m. for the following purposes:
(1) To elect one person to the Board of Directors of the Company, to
serve a three-year term, or until his successor is elected and
qualified.
(2) To consider and vote upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP, independent accountants, as the
Company's independent accountants for the ensuing year.
(3) To consider and vote upon a proposal to approve and adopt an
amendment to the Company's Stock Option and Long-Term Incentive
Compensation Plan to increase the number of shares authorized
thereunder from 3,000,000 to 6,000,000 shares of the Company's
common stock.
(4) To consider and vote upon a proposal to approve and adopt an
amendment to the Company's Recognition and Retention Stock Incentive
Plan to increase the number of shares authorized thereunder from
1,000,000 to 1,500,000 shares of the Company's common stock.
(5) To consider and vote upon a proposal to approve and adopt an
amendment to the Company's Amended and Restated Articles of
Incorporation to increase the number of shares of capital stock
authorized for issuance by the Company from 50,000,000 to 90,000,000
shares, consisting of 80,000,000 shares of common stock and
10,000,000 shares of preferred stock.
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 shareholders of record of the Company's common stock at the close of
business on April 21, 2000 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.
<PAGE>
By Order of the Board of Directors
/s/
----------------------------------------
Vivian H. Liu
Secretary
April __, 2000
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 CARD BY MAIL IN THE POSTAGE-PAID ENVELOPE
PROVIDED, OR VOTE THESE PROXIES BY TELEPHONE AT (800) 240-6326 OR BY INTERNET AT
HTTP://WWW.EPROXY.COM/NEXM/. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY WITHDRAW
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.
2
<PAGE>
MAILED TO SHAREHOLDERS
ON OR ABOUT APRIL __, 2000
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 Monday, June
19, 2000 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 $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 21, 2000 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 ________ shares of Common Stock
outstanding.
Shareholder 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 instructions have been given by the Shareholder, will
<PAGE>
be voted in accordance with those instructions. If no instructions are given,
the shares will be voted FOR the election of the nominee for director named
below and FOR Proposal Nos. 2, 3, 4 and 5.
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 five members as follows: Class I directors, Robert W. Gracy, Ph.D
and Yu-Chung Wei, whose terms expire in 2001; Class II director, Gilbert S.
Banker, Ph.D., whose term expires in 2000 (and if re-elected at the Annual
Meeting, in 2003); and Class III directors, Y. Joseph Mo, Ph.D. and James L.
Yeager, Ph.D., whose terms expire in 2002.
At the Annual Meeting, the Shareholders will elect one director to serve
as a Class II director. The director who is elected at the Annual Meeting will
serve until the Annual Meeting of Shareholders to be held in 2003 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 the director nominee named below. The Board of Directors believes that
nominee Gilbert S. Banker will stand for election and will, if elected, serve as
a Class II director. However, in the event the nominee is unable or unwilling to
serve as a Class II 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 the Amended and
Restated Articles of Incorporation of the Company.
GILBERT S. BANKER, PH.D., nominee for Class II director, has been a
director of the Company since September 1995, 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
2000. Dr. Banker Dr. Banker is Dean Emeritus and John Lach Distinguished
Professor of Drug Delivery of the College of Pharmacy at the University of Iowa.
Dr. Banker is also President & CEO of Biocontrol Inc., a research firm based in
Iowa City. 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.
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 the
Class II director. For purposes of the election of the Class II director,
abstentions and broker non-votes will have no effect on the result of the vote.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEE 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.
2
<PAGE>
NAME AGE TITLE
---- --- -----
Y. Joseph Mo, Ph.D. 52 Chairman of the Board of Directors,
President and Chief Executive Officer
James L. Yeager, Ph.D. 53 Director, Vice President, R&D and
Business Development
Vivian H. Liu 38 Vice President, Corporate Affairs,
Chief Financial Officer and Secretary
Gilbert S. Banker, Ph.D. 68 Director
Robert W. Gracy, Ph.D. 58 Director
Yu-Chung Wei 37 Director
Biographical information concerning the director nominee is set forth
above under the caption "Proposal No. 1 - Election of Directors." Biographical
information concerning the remaining directors and executive officers of the
Company is set forth below.
Y. JOSEPH MO, PH.D., is, and has been since 1995, the Chief Executive
Officer and President of the Company and Chairman and member of the Board of
Directors. His current term as member of the Board of Directors expires in 2002.
Prior to joining the Company in 1995, 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
to that, 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., is, and has been since December 1998, a member of
the Board of Directors and, since June 1996, Vice President of Research and
Development and Business Development. His current term as member of the Board of
Directors expires in 2002. Before joining the Company, Dr. Yeager was Vice
President of Research and Development of Pharmedic Company. During that time he
specialized in building and managing 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.
VIVIAN H. LIU is and has been the Vice President of Corporate Affairs and
Secretary of the Company since September 1995 and the Chief Financial Officer of
the Company since August 1999. In 1994, while the Company was in a transition
period, Ms. Liu served as the Chief Executive Officer of the Company. From
September 1995 to September 1997, Ms. Liu was Treasurer of the Company. 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 MPA in
International Finance from the University of Southern California and her BA from
the University of California, Berkeley.
3
<PAGE>
ROBERT W. GRACY, PH.D. is and has been a member of the Board of Directors
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 member of the Board of Directors expires in 2001. 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. 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 several 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 is and has been a member of the Board of Directors since
March 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
member of the Board of Directors expires in 2001. Mr. Wei is President of Dacom
Capital Ltd., an investment firm focusing on the web and wireless industries.
From 1989 to 1992, Mr. Wei held various managerial positions at Kidder, Peabody
Incorporated and Merrill Lynch & Co., Inc., in New York City. He received his
MBA in Finance and Management Information Systems from Pace University in New
York.
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 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. Unless otherwise
noted herein, the information set forth below is as of the Record Date.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME, POSITION AND ADDRESS(1) BENEFICIALLY OWNED(2) PERCENT OF CLASS (%)
- ----------------------------- --------------------- --------------------
<S> <C> <C>
Y. Joseph Mo, Ph.D. 2,360,000 (3) 12.12
Chairman of the Board of Directors,
President and Chief Executive Officer
Vivian H. Liu 400,000 (4) 2.05
Vice President-Corporate Affairs, Chief
Financial Officer and Secretary
James L. Yeager, Ph.D. 365,000 (5) 1.88
Director and Vice President-
Research and Development and Business
Development
Gilbert S. Banker, Ph.D. 155,000 (6) 0.80
Director
Robert W. Gracy, Ph.D., 110,000 (7) 0.57
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME, POSITION AND ADDRESS(1) BENEFICIALLY OWNED(2) PERCENT OF CLASS (%)
- ----------------------------- --------------------- --------------------
<S> <C> <C>
Director
Yu-Chung Wei 75,000 (8) 0.39
Director
All Executive Officers and Directors as a 3,465,000 (9) 17.80
Group (six persons)
Paramount Capital Asset Management, Inc. 1,005,412 (10) 5.17
(as representative of five persons group)
787 Seventh Avenue, 48th Floor,
New York, NY 10019
Prudent Bear Fund Inc. 999,999 (11) 5.14
8140 Walnut Hill, Suite 300
Dallas, Texas 75231
Vergemont International Limited 2,000,000 (12) 10.28
Suite 2401-2408, 24F CITIC Tower,
One Tim Mei Avenue, Central, Hong Kong
</TABLE>
- ----------
1) The address for the executive officers and directors of the Company is 350
Corporate Boulevard, Robbinsville, New Jersey, 08691.
2) Except as otherwise noted below, all shares are solely and directly owned,
with sole voting and dispositive power.
3) Includes 860,000 shares issuable upon exercise of immediately exercisable
stock options.
4) Includes 255,000 shares issuable upon exercise of immediately exercisable
stock options.
5) Includes 210,000 shares issuable upon exercise of immediately exercisable
stock options.
6) Includes 70,000 shares issuable upon exercise of immediately exercisable
stock options.
7) Includes 80,000 shares issuable upon exercise of immediately exercisable
stock options.
8) Represents 75,000 shares issuable upon exercise of immediately exercisable
stock options.
9) Includes 1,550,000 shares issuable upon exercise of immediately
exercisable stock options.
10) Represents a group including Paramount Capital Asset Management, Inc, a
New York based investment management firm ("Paramount"), Aries Domestic
Fund, L.P., a Delaware limited partnership ("Aries Domestic"), Aries
Domestic Fund II, L.P. ("Aries Domestic II"), Aries Master Fund, a Cayman
Island exempted company ("Aries Fund") and Lindsay A. Rosenwald, M.D.
Paramount is the General Partner to each of Aries Domestic and Aries
Domestic II and the Investment Manager to Aries Fund and Rosenwald is the
sole stockholder of Paramount. Paramount beneficially owns 1,005,412
shares for which it has shared voting and dispositive power. Aries
Domestic beneficially owns 302,807 shares for which it has shared voting
and dispositive power. Aries
5
<PAGE>
Domestic II beneficially owns 11,631 shares for which it has shared voting
and dispositive power. Aries Fund beneficially own 609,974 shares for
which it has shared voting and dispositive power. Rosenwald beneficially
owns 1,005,412 for which she has shared voting and dispositive power.
Share information is furnished in reliance on the Schedule 13G dated
February 8, 2000 filed with the SEC.
11) Represents a group including David W. Tice & Associates, Inc., an
investment adviser incorporated in Texas ("Tice"), and Prudent Bear Funds,
Inc., an investment company incorporated in Maryland ("Prudent"). The
number of shares includes 333,333 shares of Common Stock issuable upon
exercise of warrants and 666,666 shares of Common Stock. Tice beneficially
owns 999,999 shares for which it has sole dispositive power and Prudent
beneficially owns 999,999 shares for which it has sole voting power. Share
information is furnished in reliance on the Schedule 13G dated February
11, 2000 filed with the SEC, which represents holdings as of December 27,
1999.
12) Represents 2,000,000 shares issuable upon exercise of immediately
exercisable warrants.
DIRECTOR COMPENSATION
Except for the reimbursement of travel expenses and the provision of
incentive grant awards pursuant to the NexMed Inc. Recognition and Retention
Stock Incentive Plan, there is no arrangement for the compensation of directors.
MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1999, one meeting of the Board
of Directors was held. All of the directors attended such meeting.
The Board of Directors presently has two committees, the Executive
Compensation Committee and the Audit Committee. The Board of Directors does not
have a nominating committee or a committee performing the functions of a
nominating committee.
The Executive Compensation Committee consists of Gilbert S. Banker, Robert
W. Gracy and Yu-Chung Wei. The Executive Compensation Committee establishes
remuneration levels for executive officers of the Company and implements
incentive programs, including the Stock Option Plan and the Recognition Plan.
Since the Executive Compensation Committee was formed on February 7, 2000, it
did not meet during 1999.
The Audit Committee consists of Gilbert S. Banker, Robert W. Gracy and
Yu-Chung Wei. The Audit Committee makes 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. Since the Audit Committee was formed on February 7, 2000, it did not
meet during 1999.
6
<PAGE>
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"), the Company voluntarily became a
reporting company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1998, as part of the total consideration of $500,000 for 500
shares of common stock of New Brunswick Medical, Inc., a Delaware company and
one of the Company's subsidiaries, a private investor issued a $150,000
promissory note to New Brunswick Medical, Inc. The promissory note bore an
interest at 4% per annum and was due on April 11, 1999. In June 1999, the
Company acquired the private investor's 500 shares of common stock of New
Brunswick Medical, Inc. in exchange for total consideration of approximately
$500,000, consisting of 233,333 shares of the Company's common stock, with an
estimated fair market value of $350,000, and the forgiveness of the $150,000
note from the private investor.
During 1998 and 1999, Dr. Y. Joseph Mo, one of the Company's officers and
directors, advanced the Company an aggregate of $600,500 under an informal
agreement. The advances bore interest at 12% per annum and were due at various
intervals in 1999. During 1999, the Company repaid an aggregate of $567,408 of
advances and interest payment to Dr. Mo.
At December 31, 1998, $217,441 of an unsecured, un-collateralized
revolving line of credit with the Company's former partner in the China joint
venture was outstanding. The line of credit bore interest at 11% per annum and
expires in September 2000. During 1998 and 1999, the Company's former joint
venture in China also paid $120,000 and $253,000 in rent and management fees,
respectively, to the China joint venture partner. In May 1999, the Company sold
the joint venture.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by the Company during
the fiscal years ended December 31, 1999, 1998 and 1997 to the Chief Executive
Officer and its two other most highly compensated executive officers:
NAME AND POSITION FISCAL YEAR ANNUAL SALARY
- ----------------- ----------- -------------
Y. Joseph Mo, Ph.D. 1999 $ 220,000
Chairman of the Board of Directors, 1998 120,000
President and Chief Executive Officer(1) 1997 120,000
Vivian H. Liu 1999 158,000
Vice President, Chief Financial 1998 88,000
Officer and Secretary(2) 1997 87,333
James L. Yeager, Ph.D. 1999 192,000
Director, Vice-President of R&D and 1998 100,000
Of Business Development(3) 1997 100,000
7
<PAGE>
NAME AND POSITION FISCAL YEAR ANNUAL SALARY
- ----------------- ----------- -------------
Joseph M. Warusz (4) 1999 59,500
1998 34,615
1997 -------
(1) Dr Mo receives a salary of $120,000 per year. In December 1999, Dr. Mo
received a year-end bonus payment of $100,000.
(2) Ms. Liu receives a salary of $98,000 per year. In December 1999, Ms. Liu
received a year-end bonus payment of $60,000.
(3) Dr. Yeager receives a salary of $112,000 per year. In December 1999, Dr.
Yeager received a year-end bonus payment of $80,000.
(4) Mr. Warusz was Vice President and Chief Financial Officer and received a
salary of $102,000 per year. His employment was terminated on July 30,
1999.
EMPLOYMENT AGREEMENTS
There are currently no employment agreements between the Company and any
of its executive officers.
STOCK OPTION INFORMATION
No stock options were granted during fiscal 1999 to the executive officers
named in the Summary Compensation Table above.
The following table sets forth information concerning the value of
unexercised options as of December 31, 1999 held by the executives named in the
Summary Compensation Table above. No stock options were exercised during fiscal
1999.
8
<PAGE>
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING
UNEXERCISED OPTIONS AT FISCAL YEAR VALUE OF UNEXERCISED IN-THE-MONEY
END [EXERCISABLE (E)/ OPTIONS AT FISCAL YEAR END
NAME UNEXERCISABLE (U)] EXERCISABLE(E)/UNEXERCISABLE(U) (1)
---- ------------------ -----------------------------------
<S> <C> <C>
Y. Joseph Mo, Ph.D. 1,260,000(E) $1,777,500(E)
0(U) 0(U)
Vivian H. Liu 255,000(E) $726,875(E)
0(U) 0(U)
James L. Yeager, Ph.D. 210,000(E) $431,250(E)
0(U) 0(U)
Joseph M. Warusz (4) 0(E) 0(E)
0(U) 0(U)
</TABLE>
(1) Based on a closing sale price of $4.125 on December 31, 1999.
(2) On July 30, 1999, Mr. Warusz's employment with us was terminated. In
accordance with the terms of the Stock Option and Long-Term Compensation
Plan, all unvested options granted to Mr. Warusz thereunder expired on the
date of his termination. The Company extended by two weeks the 90 day
period available under the Stock Option and Long-Term Incentive
Compensation Plan from the date of termination of employment for Mr.
Warusz to exercise all vested options granted to him thereunder. Mr.
Warusz did not exercise any of his vested options prior to the expiration
thereof.
STOCK OPTION AND INCENTIVE AWARD PLANS
On December 4, 1996, the Company adopted the NexMed, Inc. Stock Option and
Long-Term Incentive Compensation Plan (the "Stock Option Plan"), for the purpose
of attracting, retaining and maximizing the performance of executive officers
and key employees, and the NexMed, Inc. Recognition and Retention Stock
Incentive Plan (the "Recognition Plan"), for the purpose of attracting and
retaining 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. 1,500,000 shares of
Common Stock were reserved by the Company for issuance of awards under the Stock
Option Plan and 500,000 shares of Common Stock were reserved for awards under
the Recognition Plan. On May 15, 1998, the shareholders approved an additional
1,500,000 shares of Common Stock reserved for issuance of awards under the Stock
Option Plan and 500,000 shares of Common Stock reserved for issuance of awards
under the Recognition Plan.
STOCK OPTION PLAN. 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. The Stock Option Plan will be
administered by the Executive Compensation Committee of the Board of Directors
which was created on February 7, 2000. 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
9
<PAGE>
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 of the voting power of the
Company's Common Stock) and generally vest over a three to five 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 Stock Option 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 currently has no plans to grant SARs.
The Stock Option Plan also provides for grants of restricted stock which
consist of grants of shares of Common Stock subject to a restricted period
during which the restricted 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 Stock Option Plan. At this time, the Board
of Directors has not granted, and does not have any plans to grant, restricted
stock.
RECOGNITION PLAN. The Recognition Plan provides for award grants that are
substantially similar to those made under the Stock Option Plan. The Recognition
Plan will also be administered by the Executive Compensation Committee. An
eligible director or consultant selected for participation in this Plan may be
granted a non-statutory stock option, a stock appreciation right or restricted
stock award. Incentive stock options will not be granted under this Plan.
Recognition Plan awards generally vest immediately or over a three-year period
and may be subject to attainment of performance goals.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP served as the Company's independent accountants
for the fiscal year ended December 31, 1999, and has been appointed by the Board
of Directors to continue as the Company's independent accountants for the fiscal
year ending December 31, 2000. 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
PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2000.
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.
REQUIRED VOTE AND RECOMMENDATION OF BOARD OF DIRECTORS
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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. Abstentions and broker non-votes will have no effect on the outcome of
this proposal.
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, 2000.
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO THE NEXMED, INC. STOCK OPTION AND LONG-TERM
INCENTIVE COMPENSATION PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR
ISSUANCE THEREUNDER
The Company adopted and amended the Stock Option Plan on December 4, 1996
and May 15, 1998, respectively. The Company has reserved a total of 3,000,000
shares of Common Stock for issuance of awards under the Stock Option Plan, of
which 59,400 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 3,000,000, to a total of 6,000,000, the number of shares of
Common Stock reserved for issuance of awards under the Stock Option 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 Stock Option Plan and the ability to grant stock options and make
other stock-based awards under the Stock Option 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 Stock Option 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. The Stock
Option Plan will be administered by the Executive Compensation Committee of the
Board of Directors which was created on February 7, 2000. 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 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
11
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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 Stock Option 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.
The Recognition Plan also provides for grants of restricted stock which
consist of grants of shares of Common Stock subject to a restricted period
during which the restricted 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 Recognition Plan. At this time, the Board
of Directors has not granted, and does not have any plans to grant, restricted
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, twenty employees, including three officers, had outstanding
options that were granted under 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, and no deduction generally is then available to the Company. The
difference between the incentive stock option exercise price and the fair market
value, at the time of exercise, of the shares acquired upon the exercise of an
incentive stock option may give rise to alternative minimum taxable income
subject to an alternative minimum tax. 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
optionee will realize ordinary income on the difference between the fair market
value of the shares on the date of exercise and the option exercise price or, if
less, the difference between the amount realized on the disposition and the
adjusted basis of the stock. A different rule for measuring ordinary income may
apply in the case of optionees who are subject to Section 16 of the Act. Any
further gain or loss from the arm's length sale or exchange will be taxable as a
long-term or short-term capital gain or loss depending upon the holding period
before disposition. Any ordinary income recognized by the optionee upon the
disposition of the shares should be
12
<PAGE>
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. Certain special rules apply if an incentive stock option is
exercised by tendering stock.
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 date of
exercise. If the optionee is an employee, such ordinary income generally is
subject to withholding of income and employment taxes. A different rule for
measuring ordinary income may apply in the case of optionees who are subject to
Section 16 of the Act. 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 depending on the holding period of the shares.
The holding period commences upon exercise of the nonqualified stock option. If
the amount received is less than such fair market value, the loss will be
treated as a long-term or short-term capital loss, depending on the holding
period of the shares. The exercise of a nonqualified stock option will not
trigger the alternative minimum tax consequences applicable to incentive stock
options. 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. Certain special rules apply if a nonqualified stock option
is exercised by tendering stock.
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 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 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.
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 NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER THE STOCK OPTION PLAN BY
3,000,000 SHARES.
PROPOSAL NO. 4
APPROVAL OF AN AMENDMENT TO THE NEXMED, INC. RECOGNITION AND RETENTION STOCK
INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
THEREUNDER
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The Company adopted and amended the Recognition Plan on December 4, 1996
and May 15, 1998, respectively. The Company has reserved a total of 1,000,000
shares of Common Stock for issuance of awards under the Recognition Plan, of
which 503,600 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 1,500,000, the number of shares of Common
Stock reserved for issuance of awards under the Recognition 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 Recognition Plan and the ability to grant stock options and make other
stock-based awards under the Recognition 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 such 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 is administered by the Executive
Compensation Committee which the Company formed on February 7, 2000. 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 eligible to participate in
the Recognition Plan. As of the Record Date, four directors and two consultants
had outstanding options that were granted under the Recognition 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.
14
<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 NUMBER OF SHARES RESERVED UNDER THE RECOGNITION PLAN BY 500,000 SHARES.
PROPOSAL NO. 5
APPROVAL OF AMENDMENT TO COMPANY'S AMENDED AND RESTATED ARTICLES OF
INCORPORATION TO INCREASE NUMBER OF AUTHORIZED SHARES OF STOCK
The Company's Amended and Restated Articles of Incorporation (the
"Articles of Incorporation") presently authorizes the Company to issue
50,000,000 shares of stock, consisting of 40,000,000 shares of Common Stock and
10,000,000 shares of the Company's preferred stock, par value $.001 per share
("Preferred Stock"). The Nevada General Corporation Law provides that a
company's articles of incorporation may be amended to increase or decrease the
aggregate number of shares of capital stock that the Company has authority to
issue.
The Board of Directors deems it advisable that the Articles of
Incorporation be amended, subject to approval by the stockholders, to increase
the aggregate number of shares of common stock of the that the Company has
authority to issue.
The Board of Directors unanimously recommends a vote FOR approval of the
amendment of Paragraph A of Article FIFTH of the Company's Articles of
Incorporation so that, as amended and restated, it shall read as follows:
"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")."
The Board of Directors believes the adoption of the foregoing amendment is
advisable because it will provide the Company with greater flexibility in
connection with possible future financing transactions, acquisitions of other
companies or business properties, stock dividends or splits, employee benefit
plans and other proper corporate purposes. The Company's authorized but unissued
Common Stock and Preferred Stock could be issued in one or more transactions
which would make more difficult or costly, and less likely, a takeover of the
Company. In fact, the Board of Directors adopted a shareholder rights plan (the
"Rights Plan") pursuant to which it declared a dividend distribution of one
preferred share purchase right on each outstanding share of the Common Stock to
shareholders of record at the close of business on April 21, 2000. A summary of
the Rights Plan is provided in a letter dated April 27, 2000 being sent to such
shareholders with this Proxy Statement. The authorized but unissued shares of
Common Stock and Preferred Stock would be available for use in connection with
the issuance of such rights. The proposed amendment to the Company's Restated
Certificate of Incorporation makes no change
15
<PAGE>
in authorized Preferred Stock and is not being recommended in response to any
specific effort of which the Company is aware to obtain control of the Company.
At this time, the Company has no present plans, understandings, or
agreements for the issuance or use of the proposed additional shares of Common
Stock other than for the Rights Plan, the Stock Option Plan and the Recognition
Plan. Authorized but unissued shares of the Common Stock may be issued at such
times, for such purposes and for such consideration as the Board of Directors
may determine to be appropriate without further authority from the Company's
shareholders, except as otherwise required by applicable corporate law or stock
exchange policies.
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. Abstention from voting on the proposal will have the same effect as a
negative vote on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE ARTICLES OF INCORPORATION TO INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK BY 40,000,000 SHARES.
SHAREHOLDER PROPOSALS
To be considered for presentation at the annual meeting of the Company's
Shareholders to be held in 2001, a Shareholder proposal must be received by
Vivian H. Liu, Secretary, NexMed, Inc., 350 Corporate Boulevard, Robbinsville,
New Jersey 08691, no later than December 6, 2000.
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 vote. Shareholders 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/.
INCORPORATION BY REFERENCE
The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999 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
Secretary
April __, 2000
Robbinsville, NJ
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[Company logo]
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 Monday, June 19, 2000.
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
- --------------------------------------------------------------------------------
[Company logo] 350 CORPORATE BOULEVEARD
ROBBINSVILLE, NJ 08691 PROXY
- --------------------------------------------------------------------------------
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 Monday, June 19, 2000, 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 proporsals 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 SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5. ANY PRIOR PROXY IS HEREBY REVOKED.
(Please detach here)
- --------------------------------------------------------------------------------
<PAGE>
------------------
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 12:00 p.m. on June 16, 2000.
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
12:00 p.m. on June 16, 2000.
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 ServicesSM, P.O. Box
64873, St-Paul, MN 55164-0873.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD.
| |
V PLEASE DETACH HERE V
<TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS NUMBER 1, 2, 3, 4 AND 5.
<S> <C> <C>
1. Election of Director: 01 Gilbert S. Banker |_| Vote FOR |_| Vote WITHHELD
the nominee from the nominee
(except as marked)
2. Ratification of the appointment of PricewaterhouseCoopers LLP as the independent
auditors of NexMed, Inc. |_| FOR |_| AGAINST |_| ABSTAIN
3. Approval of an amendment to the NexMed, Inc. Stock Option and Long-Term Incentive
Compensation Plan to increase the number of shares authorized for issuance
thereunder from 3,000,000 to 6,000,000. |_| FOR |_| AGAINST |_| ABSTAIN
4. Approval of an amendment to the NexMed, Inc. Recognition and Retention Stock
Incentive Plan to increase the number of shares authorized for issuance
thereunder from 1,000,000 to 1,500,000. |_| FOR |_| AGAINST |_| ABSTAIN
5. Approval of an amendment to the Articles of Incorporation of NexMed, Inc. to
increase the number of shares of common stock authorized for issuance thereunder
from 40,000,000 to 80,000,000. |_| 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.
</TABLE>
<PAGE>
NEXMED, INC.
350 Corporate Boulevard
Robbinsville, New Jersey
April 27, 2000
Dear Shareholder:
On April 3, 2000, the Board of Directors of NexMed, Inc., a Nevada
corporation (the "Company"), declared a dividend distribution of one preferred
share purchase right (the "Right") for each outstanding share of the Company's
common stock, $.001 par value per share (the "Common Stock"), to shareholders of
record at the close of business on April 21, 2000. One Right will also be
distributed for each share of Common Stock issued after April 21, 2000, until
the Distribution Date (which is described in the next paragraph). Each Right
entitles the registered holder to purchase from the Company a unit consisting of
one one-hundredths of a share (a "Unit") of Series A Junior Participating
Preferred Stock, $.001 par value per share (the "Preferred Stock"), at a
Purchase Price of $100.00 per Unit, subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement dated as of April 3,
2000 (the "Rights Agreement") between the Company and Norwest Bank Minnesota,
N.A., as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) ten (10) business days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the "Stock Acquisition Date"), or (ii) ten (10) business days
following the public announcement of a tender offer or exchange offer that
would, if consummated, result in a person or group beneficially owning 15% or
more of such outstanding shares of Common Stock, subject to certain limitations.
Under the terms of the Rights Agreement, Dr. Y. Joseph Mo, who
beneficially owns approximately 12.12% of the outstanding shares of the
Company's Common Stock as of the date hereof, and certain of Dr. Mo's affiliates
and associates (collectively, with Dr. Mo, the "Mo Entities") will be permitted
to continue to own such shares and to increase such ownership to up to 25% of
the outstanding shares of Common Stock, without becoming an Acquiring Person and
triggering a Distribution Date.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), (i) the Rights will be evidenced by the Common Stock certificates and
will be transferred with and only with such Common Stock certificates, (ii) new
Common Stock certificates issued after April 21, 2000 will contain a notation
incorporating the Rights Agreement by
1
<PAGE>
reference and (iii) the surrender for transfer of any certificates for Common
Stock outstanding, even without such notation, will also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.
As soon as practicable after the Distribution Date, Rights Certificates will be
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate Rights Certificates alone
will represent the Rights. The Rights are not exercisable until the Distribution
Date and will expire at the close of business on April 3, 2010, subject to
extension by the Board of Directors, unless earlier redeemed by the Company as
described below.
In the event that any person becomes an Acquiring Person, each holder of a
Right will thereafter have the right (the "Flip-In Right") to receive, at the
time specified in the Rights Agreement, (x) upon exercise and payment of the
Purchase Price, Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a value equal to two times the Purchase
Price of the Right or (y) at the discretion of the Board of Directors, upon
exercise and without payment of the Purchase Price, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a value
equal to the difference between the Purchase Price of the Right and the value of
the consideration which would be payable under clause (x). Notwithstanding any
of the foregoing, following the occurrence of any of the events set forth in
this paragraph, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person will
be null and void. Rights are not exercisable following the occurrence of the
event set forth above until such time as the Rights are no longer redeemable by
the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger, statutory share exchange or other business
combination in which the Company is not the surviving corporation, (ii) the
Company is the surviving party in a merger, statutory share exchange or other
business combination and all or part of the Company's Common Stock is exchanged
for stock or other securities of another corporation, or (iii) 50% or more of
the Company's assets or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided as set forth above) shall
thereafter have the right (the "Flip-Over Right") to receive, upon exercise,
common stock of the acquiring corporation having a value equal to two times the
Purchase Price of the Right. The holders of a Right will continue to have the
Flip-Over Right whether or not such holder exercises or surrenders the Flip-In
Right. The events set forth in this paragraph and in the second preceding
paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number of Units of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible
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securities at less than the current market price of the Preferred Stock, or
(iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above). The number
of outstanding Rights and the number of one one-hundredths of a share of
Preferred Stock issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in each such case, prior to the
Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
At any time after any person becomes an Acquiring Person, the Company may
exchange all or part of the Rights for shares of Common Stock at an exchange
ratio of one share per Right, as appropriately adjusted to reflect any stock
dividend, stock split or similar transaction.
In general, the Company may redeem the Rights in whole, but not in part,
at a price of $0.001 per Right, at any time until 10 business days following the
Stock Acquisition Date. After the redemption period has expired, the Company's
right of redemption may be reinstated if an Acquiring Person reduces his
beneficial ownership to less than 15% (or, in the case of the Mo Entities, 25%
or less) of the outstanding shares of Common Stock in a transaction or series of
transactions not involving the Company and there are no other Acquiring Persons.
Immediately upon the action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the $0.001 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for stock (or other consideration) of the Company or for common
stock of the acquiring company as set forth above.
Prior to the Distribution Date, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made when the Rights are not redeemable.
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The Rights Agreement between the Company and the Rights Agent specifying
the terms of the Rights, which includes the Certificate of Designation setting
forth the terms of the Series A Junior Participating Preferred Stock, the Form
of the Rights Certificate and the Summary of Rights to Purchase Shares, was
filed on April __, 2000 with the Securities and Exchange Commission as an
exhibit to the Company's Form 8-A and as an exhibit to the Company's current
report on Form 8-K and incorporated herein by reference. The foregoing is
qualified in its entirety by reference thereto.
Your Board of Directors and management are enthusiastic about the
potential of the Company and are committed to serving the best interests of its
shareholders. These new Rights are intended to preserve the value of your
investment in the Company.
Very truly yours,
/s/
----------------------------------------
Y. Joseph Mo
Chairman of the Board of Directors,
President and Chief Executive Officer
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