<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 Pursuant to Section 240.14a-12
LEE PHARMACEUTICALS
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
<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 13, 2001, at 1:30 p.m., for the
following purposes:
1. To elect directors for the ensuing year or as otherwise provided in the
Bylaws;
2. To approve an amendment to the Bylaws to reduce the authorized number of
directors to not less than three nor more than five;
3. To approve the appointment of Caldwell, Becker, Dervin, Petrick & Co., L.L.P.
as independent auditors; and
4. To transact such other business as may properly come before the meeting or
any adjournments thereof.
The Board of Directors has fixed January 18, 2001, 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 8, 2001
<PAGE>
LEE PHARMACEUTICALS
1434 Santa Anita Avenue
South El Monte, California 91733
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS -- MARCH 13, 2001
This statement is furnished in connection with the Annual Meeting of the
Shareholders to be held on March 13, 2001. Shareholders of record at the close
of business on January 18, 2001, will be entitled to vote at the meeting and
this statement was mailed to each of them on approximately February 8, 2001.
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 $6,800) 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, 2000,
were known to the Company to be beneficial owners of five percent or more of the
Company's Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES OWNED PERCENT
OF BENEFICIAL OWNER AT DECEMBER 31, 2000 OF CLASS
<S> <C> <C>
Ronald G. Lee 2,076,316 shares (1) 43%
1434 Santa Anita Avenue
South El Monte, CA 91733
Dr. Henry L. Lee 247,334 shares (1)(2) 6%
1434 Santa Anita Avenue
South El Monte, CA 91733
</TABLE>
(1) Includes shares subject to options exercisable at or within 60 days after
December 31, 2000.
(2) Includes 28,000 shares of the Company's Common Stock which Dr. Lee holds as
trustee for the benefit of certain family members. He has the right to vote
such shares but otherwise disclaims beneficial ownership.
The following table sets forth the ownership of the Company's Common Stock by
its directors and its named executive officers and all executive officers and
directors as a group.
<TABLE>
<CAPTION>
COMPANY SHARES
BENEFICIALLY OWNED ON PERCENT
NAME DECEMBER 31, 2000 OF CLASS
<S> <C> <C>
Ronald G. Lee 2,076,316 shares (1) 43%
Dr. Henry L. Lee 247,334 shares (1)(2) 6%
William M. Caldwell IV 75,000 shares (1) 1%
All executive officers and directors
as a group (4 persons) 2,613,186 shares (1)(2) 50%
</TABLE>
(1) Includes shares subject to options exercisable at or within 60 days after
December 31, 2000.
(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. Currently, 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 that the persons named in the proxy will vote for
a substitute who will be designated by the Board of Directors. The persons
receiving the greatest number of votes, up to five persons, will be elected.
AMENDMENT TO BYLAWS
The Bylaws of the Company currently provide that the Board of Directors of
the Company shall consist of not less than five (5) nor more than nine (9)
persons, the exact number being fixed by action of the Board of Directors. In
order to limit expenses and because of the lack of qualified directors willing
to serve on the board of directors of small companies, over the past several
years the Company has elected only three directors, resulting in two vacancies
existing.
The Board of Directors believes it is appropriate that the Bylaws be amended
to reflect the current number of directors but allow the board to increase the
number of directors in the future if they feel additional directors are
appropriate. Under California law, the Company must have a minimum of at least
three directors and, if a variable number of directors is authorized, the
maximum number cannot be greater than two times the stated minimum minus one.
Accordingly, the Board of Directors recommends that the shareholders approve
an amendment to Section I of Article II of the Bylaws of the Company to restate
that Section in its entirety to read as follows:
"Subject to the limitations of the Articles of Incorporation, of the Bylaws,
and of the laws of the State of California, as to action to be authorized or
approved by the shareholders, all corporate powers shall be exercised by or
under the authority of, and the business affairs of this Corporation shall be
controlled by, a Board of Directors consisting of not less than three (3) nor
more than five (5) persons, the exact number being fixed by the action of the
Board of Directors until fixed or changed by amendment to these Bylaws. The
Board of Directors may delegate the management of the day-to-day operation of
the business of the Corporation provided that the business and affairs of the
Corporation shall be managed and all corporate powers shall be exercised under
the ultimate direction of the board."
Under California Law and the Bylaws of the Company, approval of this proposed
amendment to the Bylaws requires the affirmative vote of the holders of a
majority of the outstanding shares of the Company's Common Stock. In addition,
under California law, even if the holders of a majority of the outstanding
shares of the Company's Common Stock approve the amendment, if the number of
shares of Common Stock voting against the amendment at the Annual Meeting
constitute more than 16-2/3% of the outstanding shares of the Company's Common
Stock (or 689,194 shares), the amendment will not be approved.
The Board of Directors recommends that the shareholders vote FOR this
proposed amendment to the Bylaws of the Company.
DIRECTORS AND EXECUTIVE OFFICERS
<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 74 Chairman of the Board of Lee Pharmaceuticals through April 1995, when he 1971
Director retired, available as a consultant and currently a Director of the Company.
RONALD G. LEE 48 President, and since April 1995, Chairman of the Board of the Company. 1977
President, Chairman
and Director
MICHAEL L. AGRESTI 58 Vice President - Finance, Treasurer and Secretary of the Company. 1977
Vice President - Finance,
Treasurer and Secretary
WILLIAM M. CALDWELL IV 53 President of CAIS Internet, an internet infrastructure solutions company, 1987
Director since February 1999, and President of Union Jack Group, Inc., a merchant
banking firm, since September 1988.
</TABLE>
(1) None of the companies named, other than the Company, is a parent, subsidiary
or other affiliate of the Company.
All directors attended the one meeting of the board that occurred during
fiscal 2000. The Company has an audit committee which consists of three
directors: Dr. Henry L. Lee, Ronald G. Lee and William M. Caldwell IV.
There were no audit committee meetings held during the fiscal year. The
Company does not have a nominating or compensation committee.
2
<PAGE>
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 2000.
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 2000 with
total annual salary and bonus of at least $100,000 for services in all
capacities while acting as officers and directors of the Company during the
fiscal years ended September 30, 2000, 1999, and 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------- --------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) COMPENSATION ($) OPTIONS (#) COMPENSATION ($)
------------------ ---- ---------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Ronald G. Lee 2000 230,241 9,098 (1) -- --
President, Chairman 1999 228,854 3,985 (1) -- --
and Director 1998 222,574 3,471 (1) 212,000 (2) --
</TABLE>
(1) Constitutes reimbursement of medical and dental expenses not covered by the
Company's insurance plan.
(2) No stock options were granted during fiscal years 2000 and 1999. The Company
granted 212,000 stock options on January 28, 1998, which had an option price
of $.22 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 709,334/70,660 13,632/0
</TABLE>
Based upon the market price of the stock (.20 CENTS per share) traded on
September 27, 2000 (which was the last day of fiscal year 2000 the stock was
traded), 568,000 of the options granted are currently "in-the-money."
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, 9.5%, on September 30, 2000. At September 30, 2000, the amount of loans
outstanding from the former Chairman and his mother was $2,364,000. During
fiscal year ending September 30, 2000, the total interest expensed to these
related parties was $229,000. The amount of interest paid was $88,000 and the
accrued liability for interest was $651,000 as of September 30, 2000.
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, 9.5%, on
September 30, 2000. At September 30, 2000, the amount of loans outstanding from
the President was $500,000 which includes $400,000 in loans from The Lee
Foundation which the President is the Chairman. During fiscal year ending
September 30, 2000, the total interest expensed to related parties was $36,000.
The amount of interest paid was $66,000 and the accrued liability for interest
was $48,000 as of September 30, 2000.
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
2000 and 1999 was $65,000. The amounts of rents paid to related parties were
$134,000 and $133,000 for September 30, 2000 and 1999, respectively.
APPOINTMENT OF INDEPENDENT AUDITOR
Shareholders will be asked to approve the appointment of Caldwell, Becker,
Dervin, Petrick & Co., L.L.P. as independent auditors of the Company for the
fiscal year 2001. Caldwell, Becker, Dervin, Petrick & Co., L.L.P. have served as
independent auditors of the Company commencing June 16, 2000. A representative
of Caldwell, Becker, Dervin, Petrick & Co., L.L.P. 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 Caldwell, Becker, Dervin, Petrick & Co.,
L.L.P. as the independent auditors of the Company for the fiscal year ending
September 30, 2001, is hereby ratified and approved.
Prior to such firm's engagement, Caldwell, Becker, Dervin, Petrick & Co.,
L.L.P. 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 11,
2001.
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, 2000, UPON A WRITTEN REQUEST DIRECTED TO LEE PHARMACEUTICALS, 1434
SANTA ANITA AVENUE, SOUTH EL MONTE, CALIFORNIA, 91733, ATTENTION: CORPORATE
SECRETARY.
By order of the Board of Directors.
South El Monte, California MICHAEL L. AGRESTI, Secretary
February 8, 2001
4
<PAGE>
<TABLE>
<CAPTION>
REVOCABLE PROXY
LEE PHARMACEUTICALS
<S> <C>
[X] PLEASE MARK YOUR VOTES
AS IN THIS EXAMPLE For With- For All
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 1. ELECTION OF DIRECTORS (except [ ] hold [ ] Except [ ]
For Annual Meeting of Shareholders as marked to the contrary below):
on March 13, 2001 Henry L. Lee, Jr., Ronald G. Lee and William M. Caldwell IV
The undersigned, a shareholder of LEE PHARMACEUTICALS, hereby
constitutes and appoints RONALD G. LEE and MRS. MARTHA ALVAREZ, INSTRUCTION: To withhold authority to vote for any individual
and each of them (with full power to act without the other), as nominee, mark "For All Except" and write that nominee's name
proxy of the undersigned with full power of substitution, for in the space provided below.
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 13, 2001 at 1:30 o'clock p.m. and any adjourn- 2. PROPOSAL TO APPROVE THE For Against Abstain
ment thereof, and thereat to vote as designated hereon the number AMENDMENT TO THE BYLAWS OF [ ] [ ] [ ]
of votes or shares the undersigned would be entitled to vote and THE COMPANY TO CHANGE THE
with all powers the undersigned would possess if personally present, AUTHORIZED NUMBER OF
including but not limited to the power to cumulate votes for one or DIRECTORS.
more nominees listed hereon.
3. PROPOSAL TO APPROVE THE For Against Abstain
APPOINTMENT OF CALDWELL, [ ] [ ] [ ]
BECKER, DERVIN, PETRICK
& CO., L.L.P. as independent
auditors of the Corporation.
4. Upon all matters which may properly come before said meeting,
including matters incident to the conduct of the meeting or
any adjournments thereof, hereby ratifying and confirming all
that said attorneys and proxies, or their substitutes, may
lawfully do by virtue thereof.
-------------------------
Please be sure to sign and date Date
this Proxy in the box below. , 2001
-------------------------
------------------------------------------------------------- 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
Shareholder sign above Co-holder (if any) sign above 1, 2 AND 3.
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Detach above card, sign, date and mail in postage paid envelope provided.
LEE PHARMACEUTICALS
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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 MARK/SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
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</TABLE>
