<PAGE>
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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
LEE PHARMACEUTICALS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
LEE PHARMACEUTICALS
1434 Santa Anita Avenue
South El Monte, California 91733
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The Annual Meeting of the Shareholders of LEE PHARMACEUTICALS, a
California corporation, will be held at 1434 Santa Anita Avenue, South El
Monte, California, on Tuesday, March 9, 1999, at 1:30 p.m., for the following
purposes:
1. To elect directors for the ensuing year or as otherwise provided in the
Bylaws;
2. To approve the appointment of George Brenner, CPA, as independent auditor;
3. To transact such other business as may properly come before the meeting or
any adjournments thereof.
The Board of Directors has fixed January 25, 1999, at the close of
business, as the record date for the determination of shareholders entitled
to receive notice of, and to vote at, the meeting and any adjournments
thereof.
WE URGE YOU TO VOTE ON THE BUSINESS TO COME BEFORE THE MEETING BY
EXECUTING AND RETURNING THE ENCLOSED PROXY OR BY CASTING YOUR VOTE IN PERSON
AT THE MEETING.
By order of the Board of Directors.
MICHAEL L. AGRESTI, Secretary
South El Monte, California
February 2, 1999
<PAGE>
LEE PHARMACEUTICALS
1434 Santa Anita Avenue
South El Monte, California 91733
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS -- MARCH 9, 1999
This statement is furnished in connection with the Annual Meeting of the
Shareholders to be held on March 9, 1999. Shareholders of record at the
close of business on January 25, 1999, will be entitled to vote at the
meeting and this statement was mailed to each of them on approximately
February 2, 1999.
VOTING SECURITIES OF THE COMPANY
Common Stock, of which 4,135,162 shares were outstanding on the record
date, constitutes the only security of the Company the holders of which are
entitled to vote at the meeting. Each share of stock is entitled to one vote
except that shareholders have cumulative voting rights with respect to the
election of directors. Cumulative voting entitles a shareholder to give one
nominee a number of votes equal to the number of directors to be elected,
multiplied by the number of shares owned by such shareholder, or to
distribute his votes on the same principle between two or more nominees as he
sees fit. However, no shareholder shall be entitled to cumulate votes unless
the candidate's name has been placed in nomination prior to the voting and
the shareholder, or any other shareholder, has given notice at the meeting
prior to the voting of his intention to cumulate his votes. So called
"broker nonvotes" will be counted as present to determine if a quorum exists
but will not be counted as present and entitled to vote on any proposal.
PROXIES
Proxies are being solicited by the Company, and the persons named as
proxies were selected by the Company. The Company will bear all costs of the
solicitation (estimated to be $6,500) and will reimburse brokers or other
persons holding stock in their names or in the names of their nominees for
reasonable expenses in forwarding proxies and proxy material to the
beneficial owners of stock. Any shareholder giving a proxy has the right to
revoke it at any time by either giving the Company's Secretary a written
notice revoking the prior proxy or by signing, dating and returning a new
proxy card. The proxy card with the latest date will be honored.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the only persons who, as of December 31,
1998, were known to the Company to be beneficial owners of more than five
percent of the Company's Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES OWNED PERCENT
OF BENEFICIAL OWNER AT DECEMBER 31, 1998 OF CLASS
------------------- -------------------- --------
<S> <C> <C>
Ronald G. Lee 1,245,450 shares (1) 28%
1434 Santa Anita Avenue
South El Monte, CA 91733
</TABLE>
The following table sets forth the ownership of the Company's Common Stock by
its directors and its named executive officers and all executive officers and
directors as a group.
<TABLE>
<CAPTION>
COMPANY SHARES
BENEFICIALLY OWNED ON PERCENT
NAME DECEMBER 31, 1998 OF CLASS
---- --------------------- --------
<S> <C> <C>
Ronald G. Lee 1,245,450 shares (1) 28%
Dr. Henry L. Lee 197,334 shares (1)(2) 5%
William M. Caldwell IV 41,600 shares (1) 1%
All officers and directors
as a group (4 persons) 1,636,086 shares (1)(2) 35%
</TABLE>
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(1) Includes shares subject to options exercisable at or within 60 days after
December 31, 1998.
(2) Includes 28,000 shares of the Company's Common Stock which Dr. Lee holds as
trustee for the benefit of certain family members. He has the right to
vote such shares but otherwise disclaims beneficial ownership.
1
<PAGE>
ELECTION OF DIRECTORS
At the meeting, three (3) directors are to be elected for the ensuing year
and until their successors are duly elected and qualified or as otherwise
provided in the Bylaws. The total number of authorized directors is five
(5), therefore two vacancies exist.
The nominees for directors are Dr. Henry L. Lee, Ronald G. Lee and William
M. Caldwell IV, all currently directors of the Company. Information
regarding the nominees is set forth below.
If the enclosed proxy is duly executed and received in time for the
meeting, the shares represented thereby will be voted, and it is the
intention of the persons named therein to vote, absent instruction to the
contrary, for the three (3) persons listed above who were nominated by the
Board of Directors for re-election as directors of the Company; however, in
the case of cumulative voting, the proxy holders may cumulate the votes for
one or more of the nominees. In the event any nominee for director becomes
unavailable and a vacancy exists, it is intended either (a) that the persons
named in the proxy will vote for a substitute who will be designated by the
Board of Directors, or (b) that the number of directors will be reduced
accordingly. The persons receiving the greatest number of votes, up to five
persons, will be elected.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AND A DIRECTOR
POSITIONS HELD PRINCIPAL OCCUPATION OR OFFICER
WITH COMPANY AGE DURING THE PAST FIVE YEARS (1) SINCE
- -------------------- --- ----------------------------------------------- ----------
<S> <C> <C> <C>
DR. HENRY L. LEE 72 Chairman of the Board of Lee Pharmaceuticals 1971
Director through April, 1995, when he retired, available
as a consultant, currently a Director of the
Company.
RONALD G. LEE 46 President and since April 1995 Chairman of the
President, Chairman Board of the Company. 1977
and Director
MICHAEL L. AGRESTI 56 Vice President - Finance, Treasurer and Secretary 1977
Vice President - of the Company.
Finance, Treasurer and
Secretary
WILLIAM M. CALDWELL IV 51 President of Union Jack Group, Inc., a merchant 1987
Director banking firm.
</TABLE>
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(1) None of the companies named, other than the Company, is a parent,
subsidiary or other affiliate of the Company.
All directors attended the three meetings of the board that occurred during
fiscal 1998 except Dr. Henry L. Lee who attended two of the three meetings.
The Company has an audit committee which consists of three directors:
Dr. Henry L. Lee, Ronald G. Lee and William M. Caldwell IV. There were no
audit committee meetings held during the fiscal year. The Company does not
have a nominating or compensation committee.
FAMILY RELATIONSHIPS
Dr. Henry L. Lee is the father of Ronald G. Lee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENT
Based upon the Company's review of reports filed by directors and
executive officers of the Company with the Securities and Exchange Commission
pursuant to Section 16(a) of the Securities Exchange Act of 1934 and written
representations of persons required to file such reports, the Company
believes all such required reports were filed by the directors and executive
officers during fiscal 1998, except that Dr. Henry L. Lee and Ronald G. Lee
filed Form 5s late with respect to a gift of stock from Dr. Henry L. Lee to
Ronald G. Lee.
2
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to remuneration
paid by the Company to the executive officers of the Company in fiscal 1998
with total annual salary and bonus of at least $100,000 for services in all
capacities while acting as officers and directors of the Company during the
fiscal years ended September 30, 1998, 1997, and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------- ------------
Name and Other Annual All Other
Principal Position Year Salary ($) Compensation ($) Options (#) Compensation ($)
- ------------------- ---- ---------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Ronald G. Lee 1998 222,574 3,471 (1) 212,000 (2) --
President, Chairman 1997 220,616 5,617 (1) 568,000 (2) --
and Director 1996 179,624 2,382 (1) -- --
</TABLE>
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(1) Constitutes reimbursement of medical and dental expenses not covered by
the Company's insurance plan.
(2) The Company granted 212,000 stock options on January 28, 1998, which had
an option price of $.22 at the date of grant and 568,000 stock options
on March 12, 1997, which had an option price of $.176 at the date of
grant.
Each of the directors of the Company who is not employed by the Company
receives a director's fee of $750 for each quarter and $500 for each
meeting of the Board of Directors attended, except Dr. Henry L. Lee.
As holder of the honorary title of Founder Chairman, Dr. Lee waived his
fees.
The following summary sets forth information as to certain options to
purchase shares of Common Stock from the Company.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR END (#) FISCAL YEAR END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------- ------------------------- -------------------------
<S> <C> <C>
Ronald G. Lee 297,666/617,334 6,437/12,875
</TABLE>
Based upon the market price of the stock (.21CENTS per share) on September
25, 1998, which was the closest date to September 30, 1998 that the stock was
traded, 568,000 unexercised options are currently "in-the-money."
The following summary sets forth information as to certain options to
purchase shares of Common Stock from the Company which were granted under the
Company's 1997 Employee Incentive Stock Option Plan during fiscal 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------------------
NO. OF SHARES % OF TOTAL
UNDERLYING OPTIONS GRANTED
OPTIONS TO EMPLOYEES IN EXERCISE OF BASE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE ($/SHARE) DATE
- ------------- ---------- ----------- --------------- ------------
<S> <C> <C> <C> <C>
Ronald G. Lee 212,000 100 .22 1/27/2003
</TABLE>
3
<PAGE>
RELATED PARTY TRANSACTIONS
Dr. Henry L. Lee, former Chairman of the Board, and his mother have
advanced funds to the Company, from time to time, in return for notes
payable. In January 1995, the terms of the notes with Dr. Henry L. Lee were
amended to provide for repayment in full in January 2005. Interest is
payable monthly at a bank's prime rate, 8.5%, on September 30, 1998. At
September 30, 1998, the amount of loans outstanding from the former Chairman
and his mother was $2,754,000. During fiscal year ending September 30, 1998,
the total interest expensed to related parties was $240,000. The amount of
interest paid was $153,000 and the accrued liability was $392,000 as of
September 30, 1998.
Ronald G. Lee, President, has advanced funds to the Company, from time to
time, in return for notes payable. In January 1995, the terms of Ronald G.
Lee's notes were amended (except for a $65,000 note) to provide for repayment
in full in January 2005. Interest is payable monthly at a bank's prime rate,
8.5%, on September 30, 1998. At September 30, 1998, the amount of loans
outstanding from the President was $475,000. During fiscal year ending
September 30, 1998, the total interest expensed to related parties was
$35,000. The amount of interest paid was $24,000 and the accrued liability
was $71,000 as of September 30, 1998.
In 1991, the Company sold and leased back two of its operating facilities
in a transaction with its former Chairman. An initial gain was recognized
and a deferred gain was recorded which is to be amortized over the term of
the two leases which expire November 2000. The amount of deferred gain
realized during 1998 and 1997 was $65,000. The amounts of rents paid to
related parties were $133,000 and $133,000 for September 30, 1998, and 1997
respectively.
APPOINTMENT OF INDEPENDENT AUDITOR
Shareholders will be asked to approve the appointment of George Brenner,
CPA, as independent auditor of the Company for the fiscal year 1999. George
Brenner, CPA, has served as independent auditor of the Company commencing
October 27, 1995. George Brenner, CPA, is expected to be present at the
meeting and shall have the opportunity to make any statements he desires to
make and to respond to appropriate questions.
The following resolution will be offered by the management at the meeting:
RESOLVED that the selection of George Brenner, CPA, as the independent
auditor of the Company for the fiscal year ending September 30, 1999, is
hereby ratified and approved.
Prior to such firm's engagement, George Brenner, CPA was not consulted by
the Company (or anyone acting on its behalf) regarding (1) either the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
Lee Pharmaceuticals' financial statements or (2) any matter that was either
the subject of a "disagreement" of a "reportable event" as such terms are
defined in Regulation S-K promulgated by the Securities and Exchange
Commission.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next annual
meeting of the shareholders must be received by the Company for inclusion in
its proxy statement and form of proxy relating to such meeting on or before
October 5, 1999. A shareholders' proposal will be considered untimely filed
and not considered at the next Annual Meeting of Shareholders if it is
received by the Company after December 19, 1999.
OTHER MATTERS
The management is not aware of any other matters to be presented to the
meeting for action by the shareholders. If any other matters should properly
come before the meeting, the persons named in the enclosed proxy form will
vote the proxies in accordance with their best judgment.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANYONE RECEIVING THIS PROXY
STATEMENT A COPY OF THE COMPANY'S FORM 10-KSB FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1998, UPON A WRITTEN REQUEST DIRECTED TO LEE PHARMACEUTICALS,
1434 SANTA ANITA AVENUE, SOUTH EL MONTE, CALIFORNIA, 91733, ATTENTION:
CORPORATE SECRETARY.
By order of the Board of Directors.
MICHAEL L. AGRESTI, Secretary
South El Monte, California
February 2, 1999
4
<PAGE>
REVOCABLE PROXY
LEE PHARMACEUTICALS
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For Annual Meeting of Shareholders
on March 9, 1999
The undersigned, a shareholder of LEE PHARMACEUTICALS, hereby con-
stitutes and appoints RONALD G. LEE and MRS. MARTHA ALVAREZ, and each of them
(with full power to act without the other), as proxy of the undersigned with
full power of substitution, for and in the name, place and stead of the
undersigned, to attend the Annual Meeting of Shareholders of said Company
called and to be held at 1434 Santa Anita Avenue, South El Monte,
California, on Tuesday, March 9, 1999 at 1:30 o'clock p.m. and any
adjournment thereof, and thereat to vote as designated hereon the number of
votes or shares the undersigned would be entitled to vote and with all powers
the undersigned would possess if personally present, including but not
limited to the power to cumulate votes for one or more nominees listed
hereon.
1. ELECTION OF DIRECTORS (except as marked to the contrary below):
For Withhold For All Except
[ ] [ ] [ ]
Henry L. Lee, Jr., Ronald G. Lee and William M. Caldwell IV
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
_________________________________________________________________________
2. PROPOSAL TO APPROVE THE APPOINTMENT OF GEORGE BRENNER, CPA, as independent
auditor of the corporation.
For Against Abstain
[ ] [ ] [ ]
3. Upon all matters which may properly come before said meeting, including
matters incident to the conduct of the meeting or any adjournments thereof,
hereby ratifying and confirming all that said attorneys and proxies, or
their substitutes, may lawfully do by virtue thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN A MANNER DIRECTED
HEREIN BY THE BELOW SIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" PROPOSALS 1 AND 2.
Please sign exactly as your name appears hereon. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Please be sure to sign and date /-------------------------------------/
this Proxy in the box below. / Date , 1999 /
/-------------------------------------/
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/ /
/ _____ Shareholder sign above________Co-holder (if any) sign above_____ /
/-----------------------------------------------------------------------------/
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Detach above card, sign, date and mail in postage paid envelope provided.
LEE PHARMACEUTICALS
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/ PLEASE MARK/SIGN, DATE AND RETURN THIS PROXY /
/ PROMPTLY USING THE ENCLOSED ENVELOPE /
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