<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [x] Definitive Proxy Statement
[ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
NASTECH PHARMACEUTICAL COMPANY INC.
(Name of Registrant as Specified in its Charter)
NASTECH PHARMACEUTICAL COMPANY INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check in 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 is determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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 No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
NASTECH PHARMACEUTICAL COMPANY INC.
45 DAVIDS DRIVE
HAUPPAUGE, NEW YORK 11788
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 19, 1999 AT 10:00 A.M.
TO THE STOCKHOLDERS OF NASTECH PHARMACEUTICAL COMPANY INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of NASTECH
PHARMACEUTICAL COMPANY INC. (the "Company") will be held at 150 Vanderbilt Motor
Parkway, Hauppauge, New York 11788 at 10:00 A.M. on Monday, July 19, 1999, to
consider and vote on the following proposals:
1. To elect eight (8) directors, each to hold office for a term of one
(1) year or until their respective successors shall have been duly
elected or appointed;
2. To approve a proposal to execute a 1:100 reverse stock split, with a
provision for redeeming the shares of fractional holders in cash,
followed by a 100:1 forward stock split of the Company's Common Stock.
3. To ratify the appointment of KPMG LLP as the Company's independent
auditors for the year ending December 31, 1999; and
4. To transact such other business as may properly come before the
meeting.
Only holders of shares of Common Stock of record on the Company's books
at the close of business on May 20, 1999 will be entitled to vote at the
meeting. All such stockholders are requested to be represented at the meeting
either in person or by proxy. The stock transfer books will not be closed.
Enclosed is a copy of the Annual Report for the year ended December 31,
1998 along with a proxy statement and a proxy card.
It is desirable that all holders of Common Stock of the Company be
represented at the meeting either in person or by proxy.
SUCH STOCKHOLDERS WHO CANNOT ATTEND THE MEETING IN PERSON ARE REQUESTED
TO DATE AND EXECUTE THEIR PROXIES AND RETURN THEM TO THE COMPANY IN THE ENCLOSED
ENVELOPE AS PROMPTLY AS POSSIBLE.
By Order of the Board of Directors,
Joel Girsky,
Secretary
May 20, 1999
Hauppauge, New York
<PAGE> 3
NASTECH PHARMACEUTICAL COMPANY INC.
45 DAVIDS DRIVE
HAUPPAUGE, NEW YORK 11788
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 19, 1999
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the management of NASTECH PHARMACEUTICAL COMPANY INC. (the
"Company"), a Delaware corporation, for use at the Annual Meeting of
Stockholders to be held on July 19, 1999 and at any postponements or
adjournments thereof. This material is first being mailed to stockholders on or
about May 25, 1999.
The cost of such solicitation will be borne by the Company. The Company
may also agree to pay banks, brokers, nominees and other fiduciaries their
reasonable charges and expenses incurred in forwarding the proxy material to
their principles.
A form of proxy is enclosed for use at the meeting. The issuance of a
proxy by a stockholder will not affect his right to vote his shares if he
attends the meeting and desires to vote in person. A proxy may be revoked at any
time prior to the voting thereof, but a revocation will not be effective unless
notice thereof is received, in writing, by the Secretary of the Company prior to
such voting. All such shares represented by effective proxies on the enclosed
form received by the Company will be voted at the meeting or any adjourned
session thereof in accordance with the terms of such proxies. If no direction is
indicated, all shares represented by valid proxies received pursuant to this
solicitation will be voted FOR all directors and proposals contained therein.
Proxies marked "abstain" will be treated as present for the purpose of
determining a quorum but will not be voted with respect to any proposal marked
"abstain."
BENEFICIAL OWNERSHIP OF SECURITIES AND VOTING RIGHTS
Shares of common stock, of which 6,381,455 shares were outstanding as of
April 9, 1999, are the only voting securities of the Company. Each share is
entitled to one vote and a vote of a majority of the shares present, or
represented, and entitled to vote at the meeting is required to approve each
proposal to be acted upon at the meeting. Only holders of shares of Common Stock
of the Company of record on its books at the close of business on May 20, 1999
will be entitled to notice of, and to vote at the meeting. Any such stockholder
may vote his shares either in person or by his duly authorized proxy.
The following table sets forth as of April 9, 1999 certain information as
to persons known to the Company who may be deemed to be beneficial owners of
more than five percent of the outstanding shares of the Company's Common Stock,
each director of the Company and all officers and directors of the Company as a
group:
3
<PAGE> 4
<TABLE>
<CAPTION>
Amount and Nature Percentage of
of Beneficial Outstanding Shares
Name of Beneficial Owner (1) Ownership (2) Owned (3)
---------------------------- ------------- ---------
<S> <C> <C>
SAFECO Corporation and affiliates (4) 1,075,000 16.8%
Devin N. Wenig (5) 488,067 7.5
Basil Properties (6)(15) 283,537 4.4
Bruce R. Thaw (7) 163,041 2.5
Alvin Katz (8) 147,000 2.3
Vincent D. Romeo (9) 93,845 1.5
Dr. Charan R. Behl (10) 70,001 1.1
Ian Ferrier (11) 70,000 1.1
Joel Girsky (8) 48,749 *
John V. Pollock (8)(15) 48,333 *
Grant W. Denison, Jr. (12) 45,000 *
Andrew P. Zinzi (13) 15,434 *
All Officers and
Directors as a Group
(10 persons) (14) 1,473,007 21.1
</TABLE>
- ----------------
* Represents less than 1% of the outstanding shares of the Company's Common
Stock.
(1) The addresses of all persons other than Basil Properties, Messrs.
Bruce R. Thaw, Alvin Katz and John V. Pollock is c/o the Company.
The address of Bruce R. Thaw is 45 Banfi Plaza, Farmingdale, NY;
the address of Basil Properties and John V. Pollock is 1510 H
Street, N.W., Washington D.C.; and the address of Alvin Katz is
301 N. Birch Rd., Fort Lauderdale, FL.
(2) All shares are owned beneficially and of record unless indicated
otherwise. Includes 593,335 shares issuable pursuant to
outstanding stock options with the Company, which may be exercised
within 60 days of the date of this Report.
(3) Does not give effect to the exercise of the Underwriter's
Warrants, and 392,415 shares of Common Stock reserved for issuance
under the Company's stock option plan.
(4) Based on information supplied by SAFECO Corporation and
affiliates, a registered investment advisor located at SAFECO
Plaza, Seattle, Washington 98185, in a Schedule 13G filed with
the Securities and Exchange Commission on December 31, 1998.
(5) Devin N. Wenig's shares, as indicated above, include 145,000
shares issuable pursuant to outstanding stock options with the
Company, which may be exercised within 60 days of the date of this
Report, and 166 shares held by members of Mr. Wenig's immediate
family. Mr. Wenig received 50,000 stock options in March 1999
which were granted at a price equal to market value.
(6) Includes 40,000 shares held by Mrs. Sophie Basil, a general
partner of Basil Properties.
(7) Includes 85,000 shares issuable pursuant to outstanding stock
options with the Company, which may be exercised within 60 days of
the date of this Report.
4
<PAGE> 5
(8) Includes 40,000 shares issuable pursuant to outstanding stock
options with the Company, which may be exercised within 60 days of
the date of this Report.
(9) Includes 75,000 shares issuable pursuant to outstanding stock
options with the Company, which may be exercised within 60 days of
the date of this Report. Dr. Romeo received 25,000 stock options
in March 1999 which were granted at a price equal to market value.
(10) Includes 40,001 shares issuable pursuant to outstanding stock
options with the Company, which may be exercised within 60 days of
the date of this Report.
(11) Includes 70,000 shares issuable pursuant to outstanding stock
options with the Company, which may be exercised within 60 days of
the date of this Report.
(12) Includes 45,000 shares issuable pursuant to outstanding stock
options with the Company, which may be exercised within 60 days of
the date of this Report.
(13) Includes 13,334 shares issuable pursuant to outstanding stock
options with the Company, which may be exercised within 60 days of
the date of this Report, and 600 shares owned by members of Mr.
Zinzi's immediate family.
(14) Includes shares held by Basil Properties. See notes (6) and (15).
(15) John V. Pollock is a managing director of Basil Properties and its
nominee to the Company's Board of Directors.
5
<PAGE> 6
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid by the Company during each of the Company's last three fiscal years to the
Company's Chief Executive Officer and to each of the Company's executive
officers who received salary and bonus payments in excess of $100,000 during the
fiscal year ended December 31, 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards (H)
------------------- ----------
Options All Other (G)
Name and Principle Position Year Salary Bonus (#Shares) Compensation
--------------------------- ---- ------ ----- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Vincent D. Romeo, 1998 $229,000 $ 25,000 __ __
President and Chief
Executive Officer (C) 1997 $182,000 $ 103,000 60,000 __
(A) 1996 $ 80,000 __ 25,000 __
(B) 1996 $160,000 __ __ __
Mr. Robert Rosen, 1998 $220,000 $ 80,000 __ $ 108,000
President (D)
1997 $ 87,000 $ 100,000 140,000 $ 243,000
Mr. Andrew P. Zinzi, 1998 $170,000 $ 25,000 __ __
Chief Financial Officer (E)
1997 $170,000 $ 27,000 __ $ 14,000
1996 $ 19,000 __ 40,000 __
Dr. Charan R. Behl, 1998 $182,000 $ 25,000 __ __
Executive Vice President,
Research & Development (F) 1997 $147,000 $ 30,000 30,000 __
(A) 1996 $ 57,000 $ 12,000 __ __
(B) 1996 $102,000 $ 12,000 17,500 __
</TABLE>
(A) Six months ended December 31, 1996.
(B) Twelve months ended June 30 (former fiscal year).
(C) Dr. Vincent D. Romeo served as Chief Executive Officer and President of
the Company from August 1991 through October 1997, and effective January
1, 1999. At other times he held the title of Chief Executive Officer.
(D) Mr. Rosen assumed the position of President in October 1997 and resigned
effective January 1, 1999. From May 1, 1997 to October 6, 1997, he served
as Executive Vice President of Marketing and Business Development.
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<PAGE> 7
As part of the termination agreement Mr. Rosen received a severance
payment of $108,000 and will receive a monthly retainer of $10,000 for
the initial six month term of a consulting arrangement. Additionally, the
agreement provides for certain incentive payments relating to consulting
services. Participation in the Company's stock option plan will continue
at least through December 31, 1999 and thereafter, should the consulting
arrangement be extended beyond June 30, 1999.
(E) Mr. Zinzi commenced employment with the Company in November 1996.
(F) Dr. Behl commenced employment with the Company in January 1995.
(G) The Company provides the named executive officers with certain group
life, health, medical and other non-cash benefits generally available to
all salaried employees. The amounts shown in this column include the
following:
Other compensation paid to Mr. Rosen in 1998 represents a severance
payment of $108,000 and in 1997 includes consulting fees ($40,000) prior
to employment, reimbursed travel and entertainment expenses ($28,000),
and the fair market value of accelerated stock options ($175,000).
Other compensation paid to Mr. Zinzi in 1997 includes relocation costs of
$14,000.
(H) In August 1998, the Company's Board of Directors approved a stock option
exchange program in which it offered all holders the right to exchange
their options for the same number of new options with a lower exercise
price but with a modified term of vesting. All options with an exercise
price greater than $5.63 per share were eligible for this program and
were exchanged during 1998. The Summary Compensation Table excludes
options exchanged pursuant to this program.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Other than options exchanged pursuant to the stock option exchange
program, which was authorized by the Company's Board of Directors in August
1998, there were no grants of options to executives during the fiscal year ended
December 31, 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information related to the number and value
of stock options and stock appreciation rights held at fiscal year end by the
named executive officer. The Company did not issue stock appreciation rights in
1998.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised In-the Money
Options at December 31, 1998 Options at December 31, 1998 (a)
---------------------------- --------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Dr. Vincent D. Romeo 75,000 60,000 $4,000 ---
Mr. Robert Rosen 70,000 70,000 --- ---
Mr. Andrew P. Zinzi 13,334 26,666 --- ---
Dr. Charan R. Behl 40,001 12,499 --- ---
</TABLE>
(a) Market value of shares covered by in-the-money options on December 31,
1998, less option exercise price. Options are in-the-money if the market
value of the shares covered thereby is greater than the option exercise
price.
7
<PAGE> 8
<TABLE>
<CAPTION>
TEN-YEAR OPTION/SAR REPRICINGS
Number of Length of
Securities Original
Underlying Options/ Market Price of New Option Term
SARs/ Stock at Time of Exercise Price At Exercise Remaining at
Name Date Repriced Repricing Time of Repricing Price Date of Repricing
---- ---- -------- --------- ----------------- ----- -----------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Vincent D.Romeo, 8/27/98 25,000 $ 5.625 $ 14.500 $ 5.625 3 years
Chief Executive Officer 1 month
and President
60,000 $ 5.625 $ 11.750 $ 5.625 4 years
1 month
Mr. Robert Rosen, 8/27/98 100,000 $ 5.625 $ 8.750 $ 5.625 3 years
President 8 months
40,000 $ 5.625 $ 10.250 $ 5.625 4 years
1 month
Mr. Andrew P. Zinzi, 8/27/98 40,000 $ 5.625 $ 10.650 $ 5.625 3 years
Chief Financial Officer 2 months
Dr. Charan R. Behl, 8/27/98 17,500 $ 5.625 $ 8.375 $ 5.625 2 years
Executive Vice President, 7 months
Research and Development
10,000 $ 5.625 $ 13.625 $ 5.625 3 years
6 months
20,000 $ 5.625 $ 10.000 $ 5.625 3 years
10 months
</TABLE>
COMPENSATION OF DIRECTORS
For services rendered, each eligible non-employee director received
10,000 stock options to purchase the Company's Common Stock. Further, certain
eligible directors will be granted 10,000 stock options annually, effective at
the time of the Annual Meeting of Stockholders, at an option exercise price
equal to the market value of the Company's Common Stock at date of grant.
Devin N. Wenig, the Company's Chairman until March 1999, was paid $20,000
for acting as Chairman of the Executive Committee of the Company's Board of
Directors.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Dr. Vincent D. Romeo, the Company's Chief Executive Officer and President
has an employment agreement expiring December 31, 2000, receives base
compensation of $230,000 per year, and annual incentive compensation of up to
50% of base salary based on the achievement of certain business objectives of
the Company.
8
<PAGE> 9
The Company's agreement with its former President, Mr. Robert Rosen,
terminated January 1, 1999. As part of the termination agreement Mr. Rosen will
receive a severance payment of $108,000 which was accrued as of December 31,
1998 and a monthly retainer of $10,000 for the initial six month term of a
consulting arrangement. Additionally, the agreement provides for certain
incentive payments relating to consulting services. Participation in the
Company's stock option plan will continue at least through December 31, 1999 and
thereafter, should the consulting arrangement be extended beyond June 30, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee presently consists of Joel Girsky
and John V. Pollock, both outside directors of the Company. The Compensation
Committee is responsible for reviewing and approving the compensation of all
officers of the Company and administering and/or interpreting the Company's
stock option plan. The Compensation Committee held one meeting in 1998.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's Compensation Committee (the "Committee") is composed
entirely of independent, outside directors and establishes the general
compensation policies of the Company, specific compensation for each executive
officer of the Company and administers the Company's Stock Option Plan. The
Company's intent as administered through the Committee is to make compensation
packages of the executive officers of the Company sufficient to attract and
retain persons of exceptional quality, and to provide effective incentives to
motivate and reward such executives for achieving the scientific, financial and
strategic goals of the Company essential to the Company's long-term success and
growth in stockholder value. The Company's typical executive compensation
package consists of three main components: (1) base salary; (2) incentive cash
bonuses; and (3) stock options.
Base Compensation
The Committee's approach is to offer executive salaries competitive with
those of other executives in the industry in which the Company operates. To that
end, the Committee evaluates the competitiveness of its base salaries based upon
information drawn from various sources, including published and proprietary
survey data, consultants' reports and the Company's own experience recruiting
and training executives and professionals. The Company's base salary levels are
intended to be consistent with competitive practice and level of responsibility,
with salary increases reflecting competitive trends, the overall financial
performance of the Company and the performance of the individual executive.
Bonuses
In addition to base salary, executives and managers are eligible to
receive discretionary bonuses, from time to time, upon the achievement of
certain scientific, financial and marketing milestones. In addition, at the
beginning of each year, the Committee and the CEO review each individual's job
responsibilities and goals for the upcoming year. The amount of the bonus and
any performance criteria vary with the position and role of the individual
within the Company.
Stock Option Grants
The Company, from time to time, grants stock options in order to provide
certain executives with a competitive total compensation package and to reward
them for their contribution to the long-term price performance of the Company's
Common Stock. Grants of stock options are
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<PAGE> 10
designed to align the executive's interest with that of the stockholders of the
Company. In awarding option grants, the Committee will consider, among others,
the amount of stock and options presently held by the executive, the executive's
past performance and contributions, and the executive's anticipated future
contributions and responsibilities.
Compensation for the CEO and President in 1998
In 1998, executive management of the Company were awarded incentive
bonuses based upon the achievement of certain scientific, marketing, and
financial milestones, including, among others, the successful completion of
intranasal scopolamine's contractual milestones, the advancement of certain
products to later stages of development, and the foreign licensing of the
Company's intranasal B-12 product, Nascobal(R). The Chief Executive Officer
(CEO) and President received incentive bonuses of $25,000 and $80,000,
respectively.
COMPENSATION COMMITTEE
Joel Girsky, John V. Pollock
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who beneficially own more
than 10% of the Company's Common Stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Such persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms filed by such persons. The Company is
currently in compliance with Section 16(a); however, Devin N. Wenig and John V.
Pollock, directors, and Dr. Charan R. Behl, an executive officer, were
delinquent in certain filings during the course of the year.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Bruce R. Thaw, a director, invoiced the Company approximately
$109,000 for services rendered in connection with the Company's licensing
activities, legal issues associated with various collaborative agreements, and
other legal and regulatory matters in fiscal 1998. Mr. Thaw continues to
represent the Company for which he will be paid customary
legal fees.
Dr. Ian Ferrier, a director of the Company, owes the Company
approximately $32,000 represented by a note payable on demand. The note bears
interest at 8% per annum.
PROPOSAL NO. 1 - NOMINATION AND ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders, eight directors are to be elected
by the holders of the Common Stock to serve until the next Annual Meeting and
until their successors have been elected and qualify. Certain information
concerning the nominees for election at the Annual Meeting, each of whom is
presently a director, and all the directors and officers as a group, is set
forth below. While the Board of Directors has no reason to believe that any of
those named will not be available as a candidate, should such a situation
arise, the proxy may be voted for the election of the other nominees in the
discretion of the persons acting pursuant to the proxy.
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<PAGE> 11
The following information is submitted concerning the nominees for
election as directors based upon information received by the Company from such
persons:
<TABLE>
<CAPTION>
Name Age Position Director Since
---- --- -------- --------------
<S> <C> <C> <C>
Devin N. Wenig 32 Director 1991
Dr. Vincent D. Romeo 42 President and Chief 1991
Executive Officer
Joel Girsky 59 Director, Secretary and 1983
Treasurer
Bruce R. Thaw 45 Director 1991
Dr. Ian R. Ferrier 55 Director 1995
Grant W. Denison, Jr. 49 Director 1996
Alvin Katz 69 Director 1993
John V. Pollock 60 Director 1993
</TABLE>
Mr. Wenig served as Chairman of the Company's Board of Directors from
June 1991 to March 1999, and remains as a Director. Mr. Wenig received a B.A.
degree from Union College and a J.D. degree from Columbia University School of
Law. From May 1991 to May 1994, Mr. Wenig was with the law firm of Cravath,
Swaine and Moore. From 1994 until the present, Mr. Wenig served in various
management positions with Reuters Group PLC, and at present serves as Executive
Vice President of Reuters America Inc.
Dr. Romeo has been employed by the Company since 1985 as Director of
Research and was appointed President and Chief Executive Officer of the Company
in August 1991. Dr. Romeo is a registered pharmacist and received a Ph.D. degree
from St. John's University College of Pharmacy and Allied Health Professions in
Pharmaceutical Sciences in 1984, with a specialty in pharmacology. Dr. Romeo
continues at St. John's as an Adjunct Professor of Pharmacology, Graduate
Division, College of Pharmacy and Allied Health Professions. Dr. Romeo has
devoted a significant amount of his time with the Company formulating drugs for
nasal delivery, developing animal models for nasal drug testing, and designing
clinical efficacy and safety studies. He has authored and co-authored several
published articles in the field. Dr. Romeo has also presented his work at
various meetings and conferences sponsored by the American Association of
Pharmaceutical Scientists and the American College of Clinical Pharmacology. Dr.
Romeo is an active member of the American Association of Pharmaceutical
Scientists, the American College of Clinical Pharmacology, the Rho Chi
Pharmaceutical Society, and the New York Academy of Sciences. Dr. Romeo has also
been appointed as an Adjunct Assistant Professor of Pharmaceutics at The
University of Rhode Island, College of Pharmacy.
Mr. Girsky has been a Director of the Company since October 1983, and the
Company's Secretary/Treasurer since April 1986. From 1961 to the present, Mr.
Girsky has been President and Chairman of the Board of Jaco Electronics, Inc.,
Hauppauge, New York, a publicly held company engaged in the distribution of
electronic components. Mr. Girsky received a degree in Marketing from Brooklyn
College in 1957.
Mr. Thaw has been a Director of the Company from June 1991 to January
1997 and was reappointed to the Board in January, 1998. From 1984 to the
present, Mr. Thaw has been a principal
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<PAGE> 12
in a law firm, which serves as general counsel to the Company. Mr. Thaw was
admitted to the bar of the State of New York in 1978 and the California State
Bar in 1983. Mr. Thaw is also a director of Information Resource Engineering,
Inc., a publicly traded company engaged in the computer network security
industry and Amtech Systems, Inc., a publicly traded company engaged in the
semi-conductor industry.
Dr. Ferrier, who was appointed to the Company's Board of Directors in
January 1995, is the founder, President and Chief Executive Officer of Bogart
Delafield Ferrier Inc., and has served in such capacity since its inception in
1982. Trained in medicine and pharmacology, Dr. Ferrier has managed and directed
pharmaceutical programs and guided the growth of several multinational
companies. He has served on the Board of Directors of a number of health care
and biotechnical firms, as well as serving as consultant to many of the world's
major pharmaceutical companies. From 1982 to 1987, Dr. Ferrier served as
President of McCann Healthcare Inc. From 1982 to 1983, Dr. Ferrier served as
Chairman of The Covington Group of Companies; in 1982 as Executive Vice
President of TechAmerica Group and from 1979 to 1982, as Vice President of
Kalipharma Inc. From 1975 to 1979 Dr. Ferrier served as Chief Executive Officer
of the Monadnock Medical Center. Dr. Ferrier received a BSc in Pharmacology from
the University of Edinburgh, Edinburgh Scotland; served his residency training
in nephrology/clinical pharmacology at Southmead General Hospital, University of
Bristol Associated Hospitals, Bristol, England; and his post-graduate internship
at the Western General Hospital of the University of Edinburgh Associated
Hospitals, Edinburgh, Scotland.
Mr. Denison, who was appointed to the Company's Board of Directors in
September 1996, is Chairman and CEO of BioMarin, a biotechnology company based
in Novato, California. He is also Chairman of Clubb BioCapital, a London
investment bank specializing in advising and financing health care companies.
Previously he was President, Worldwide Consumer Products of G.D. Searle & Co.
("Searle") and served in such capacity from 1993 to 1995. Mr. Denison has also
served as Corporate Vice President, Strategic Planning for Searle's parent
company Monsanto Company from 1989 to 1993. In addition, Mr. Denison also served
as President of Searle's U.S. Pharmaceutical Operations from 1987 to 1989. Prior
to joining Searle, Mr. Denison was Vice President of International Operations
for Squibb Medical Systems and also held a number of senior management positions
at Pfizer, Inc. Mr. Denison holds a Master of Business Administration degree
from Harvard Business School and received a Bachelor's Degree from Colgate
University.
Mr. Katz was appointed to the Company's Board of Directors in September
1993. Mr. Katz was formerly Chief Executive Officer of Odessa Engineering Corp.,
a company engaged in the manufacturing of pollution monitoring equipment. From
1957 to 1976, Mr. Katz was employed by United Parcel Service holding various
managerial positions, including District Manager and Corporate Manager of
Operations, Planning, Research and Development. Mr. Katz serves on the Board of
Directors of several publicly held companies including Miller Industries, a
manufacturer of windows and doors; Blimpie International, Inc., which is engaged
in the franchising and marketing of quick service sandwich restaurants; Amtech
Systems, Inc., which is engaged in the semi-conductor industry; and Foremost
Industries which is engaged in the distribution and repair of commercial
refrigeration. He is also a director of Aromatics Incorporated, a manufacturer
of car wash equipment. Mr. Katz holds a B.S. in Business Administration degree
from New York University and has done graduate work at C.U.N.Y.- Baruch School.
Mr. Pollock was appointed to the Company's Board of Directors in
September 1993. From 1991 to the present Mr. Pollock has served as a director of
Frank E. Basil, Inc., a worldwide provider of facilities maintenance,
engineering and operations management services. Mr. Pollock also serves as a
consultant to the partners of Basil Properties. Mr. Pollock has been a senior
banking executive in the Washington, D.C. area since 1975 and Executive Vice
President of Sequoia National Bank.
12
<PAGE> 13
The Company does not have a nominating or similar committee. There were
nine (9) Board meetings held during the year ended December 31, 1998. Each
director attended all meetings of the Board and any committee of which he was a
member, with the exception of Bruce R. Thaw who missed one meeting; Ian Ferrier
and Devin N. Wenig, who missed two meetings; and Joel Girsky, Alvin Katz and
John V. Pollock, who missed three meetings.
PROPOSAL NO. 2 - AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
EFFECT A REVERSE STOCK SPLIT FOLLOWED BY A FORWARD STOCK SPLIT OF THE COMPANY'S
COMMON STOCK
Summary
The Board of Directors has authorized, and recommends for your approval,
a two-step recapitalization consisting of a reverse 1-for-100 stock split
followed immediately by a forward 100-for-1 stock split of the Company's common
stock. Registered stockholders whose shares of stock are converted into less
than 1 share in the initial reverse split will receive cash payments equal to
the fair value of their shares prior to the reverse split. We refer to the
reverse and forward stock splits, together with the related cash payments to
stockholders with small holdings, as the "Transaction." We also refer to our
record stockholders whose shares of Nastech stock are registered in their name
as "registered stockholders." If approved, the Transaction will take place on a
date to be determined in the discretion of the Company's Board of Directors. We
refer to this date as the "Record Date."
Background and Purpose of the Transaction
As of the date of this Proxy Statement, the Company estimates that it has
approximately 17,000 beneficial shareholders. Approximately 14,000 stockholders
own less than 100 shares of the Company's common stock.
The Transaction will provide all stockholders with fewer than 100 shares
with a cost-effective way to cash out their investments, because the Company
will pay all transaction costs such as brokerage or service fees in connection
with the Transaction. In most other cases, small stockholders would likely incur
brokerage fees disproportionately high relative to the market value of their
shares if they wanted to sell their stock. In addition, some small stockholders
might even have difficulty finding a broker willing to handle such small
transactions. The Transaction, however, eliminates these problems for most small
stockholders.
Moreover, the Company will benefit from substantial cost savings as a
result of the Transaction. The costs of administering each stockholder's account
is the same regardless of the number of shares held in each account. Therefore,
the Company's costs to maintain thousands of small accounts are
disproportionately high when compared to the total number of shares involved. In
1999, we expect that stockholders will cost the Company in excess of $150,000
for third party fees and the printing and postage costs to mail the proxy
materials and annual report. We expect that these costs will only increase over
time.
In light of these disproportionate costs, the Board believes that it is
in the best interests of the Company and its stockholders as a whole to
eliminate the administrative burden and costs associated with approximately
14,000 small accounts with fewer than 100 shares of Nastech stock. We expect
that we will reduce the total direct cost of administering stockholder accounts
by approximately $100,000 per year if we complete the Transaction.
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Effect of the Transaction Nastech Stockholders
STOCKHOLDERS WITH A RECORD ACCOUNT OF FEWER THAN 100 SHARES:
If we complete the Transaction and you are a Cashed-Out Stockholder
(i.e., a stockholder holding fewer than 100 shares of Nastech common stock in a
record account immediately prior to the reverse stock split):
- - You will not receive a fractional share of Nastech stock as a result of
the reverse split.
- - Instead of receiving a fractional share of Nastech stock, you will
receive cash equal to the trading value of your affected shares. See
"Determination of Trading Value" below.
- - After the reverse split, you will have no further interest in the Company
with respect to your cashed-out shares. These shares will no longer
entitle you to the right to vote as a stockholder or share in the
Company's assets, earnings, or profits. In other words, you will no
longer hold your cashed-out shares; you will only have the right to
receive cash for these shares.
- - As soon as practicable after the Record Date, you will receive cash for
the Nastech stock you held in your account immediately prior to the
reverse split in accordance with the procedures described below.
- - You will not have to pay any service charges or brokerage commissions in
connection with the Transaction.
STOCKHOLDERS WITH CERTIFICATED SHARES:
If you are a Cashed-Out Stockholder with a stock certificate representing
your cashed-out shares you will receive a transmittal letter from Nastech as
soon as practicable after the Record Date. The letter of transmittal will
contain instructions on how to surrender your certificate(s) to the Company's
transfer agent, American Stock Transfer & Trust Company, for your cash payment.
You will not receive your cash payment until you surrender your outstanding
certificate(s) to American Stock Transfer & Trust Company, together with a
completed and executed copy of the letter of transmittal. Please do not send
your certificates until you receive your letter of transmittal. For further
information, see "Stock Certificates" below.
- - All amounts owed to you will be subject to applicable federal and state
income tax and state abandoned property laws.
- - You will not receive any interest on cash payments owed to you as a
result of the Transaction.
Note: If you want to continue to hold Nastech stock after the Transaction, you
may do so by taking either of the following actions far enough in advance so
that it is completed by the Record Date:
(1) purchase a sufficient number of shares of Nastech stock on the open market
and have them registered in your name so that you hold at least 100 shares in
your record account immediately prior to the reverse split; or
(2) if applicable, consolidate your record accounts so that you hold at least
100 shares of Nastech stock in one record account immediately prior to the
Record Date.
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<PAGE> 15
REGISTERED STOCKHOLDERS WITH 100 OR MORE SHARES:
If you are a registered stockholder with 100 or more shares of common
stock in your record account as of the Record Date, we will first convert your
shares into one hundredth (1/100) of the number of shares you held immediately
prior to the reverse split. Immediately after the reverse split, we will
reconvert your shares in the forward stock split into 100 times the number of
shares you held after the reverse split, which is the same number of shares you
held before the reverse split. For example, if you were a registered owner of
250 shares of Nastech stock immediately prior to the reverse split, your shares
would be converted to 2.5 shares in the reverse split and back to 250 shares in
the forward split. As a result, the Transaction will not affect the number of
shares that you hold in record name if you hold 100 or more shares of Nastech
stock in your record account immediately prior to the reverse split.
BENEFICIAL OWNERS OF NASTECH STOCK:
The Transaction may not affect stockholders holding Nastech stock in
street name through a nominee (such as a bank or broker). However, nominees may
have different procedures and Nastech stockholders holding Nastech stock in
street name should contact their nominees to determine whether they will be
affected by the Transaction.
Note: If you are a beneficial owner of fewer than 100 shares of Nastech stock
and want to have your shares exchanged for cash in the Transaction, you should
instruct your nominee to transfer your shares into a record account in your name
in a timely manner so that you will be considered a holder of record immediately
prior to the reverse split.
CURRENT AND FORMER NASTECH EMPLOYEES AND DIRECTORS:
If you are an employee or director of Nastech (or a former employee or
director), you may own Nastech stock and/or options to purchase Nastech stock
through the Nastech Stock Option Plan. The Transaction will not affect the
number of options you hold to acquire Nastech stock under the Company's stock
option plan. If you hold fewer than 100 shares of Nastech stock in a registered
account, those shares would be converted into the right to receive cash under
the Transaction; however, the Company does not believe that there are any such
accounts.
Determination of Trading Value
In order to avoid the expense and inconvenience of issuing fractional
shares to stockholders who hold fewer than 1 share in a registered account after
the reverse split, under Delaware state law, the Company will arrange to pay
cash for the fair value of such shares. If stockholders approve the Transaction
at the annual meeting and the Transaction is completed, the Board of Directors
will have Nastech, through its transfer agent, pay cash for the fractional
shares based on the trading value of the Nastech common stock that is cashed
out. The Cashed-Out Stockholders will receive cash equal to the trading value of
the shares they held immediately prior to the reverse split. The trading value
of each outstanding share of Nastech stock at that time will be based on the
average daily closing price per share of Nastech common stock on the NASDAQ
National Market for the ten trading days immediately before and including the
Record Date, without interest.
Effect of the Transaction on the Company
The Transaction will not affect the public registration of Nastech's
common stock with the SEC under the Securities Exchange Act of 1934, as amended.
Similarly, we do not expect that the Transaction will affect the Company's
continued listing of Nastech common stock on the NASDAQ National Market System.
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<PAGE> 16
Nastech's Certificate of Incorporation currently authorizes the issuance
of 25 million shares of common stock. The number of authorized shares of common
stock will not change as a result of the Transaction. On April 9, 1999, there
were 6,381,455 shares of Nastech common stock issued and outstanding. The total
number of outstanding shares of Nastech common stock will be reduced by the
number of shares held by the Cashed-Out Stockholders immediately prior to the
reverse split. Based on our best estimates if the Transaction had taken place as
of April 9, 1999, the number of outstanding shares of Nastech common stock would
have been reduced by the Transaction from 6,381,455 shares to 6,252,433 shares
or by approximately 129,000 shares. In addition, the number of beneficial
holders of Nastech common stock would have been reduced from approximately
17,000 to 3,000 or by approximately 14,000 stockholders.
The Company has no current plans to issue common stock other than
pursuant to the Company's existing stock plans and outstanding underwriters'
warrants. However, if the number of additional authorized but unissued shares
was increased, the Board would have more flexibility in the management of the
Company's capitalization and its ability to provide stock-based incentives to
its officers and other employees. Unless legally required to do so, the Company
will not seek further stockholder authorization before issuing Nastech stock.
Stockholders will not have any preemptive or other preferential rights to
purchase any of Nastech's stock that may be issued by the Company in the future,
unless such rights are specifically granted to the stockholders.
The total number of shares that will be purchased from the Cash-Out
Stockholders and the total cash to be paid by the Company are unknown. However,
if the Transaction had been completed as of April 9, 1999, when the average
daily closing price per share of Nastech stock on the NASDAQ National Market for
the ten trading days immediately preceding and including such date was $3.125,
then the cash payments that would have been issued to Cashed-Out Stockholders
instead of fractional shares would have been approximately $400,000, with
approximately 129,000 shares purchased by the Company. The actual amounts will
depend on the number of Cashed-Out Stockholders on the Record Date, which may
vary from the number of such stockholders on April 9, 1999. In addition, we do
not know what the average daily closing price per share of Nastech stock on the
NASDAQ National Market for the ten trading days prior to and including the
Record Date will be or, if applicable, what the net proceeds of the sale of the
aggregate fractional shares by the exchange agent will be.
The par value of Nastech's common stock will remain at $.006 per share
after the Transaction under either option available to the Board under Delaware
law.
Stock Certificates
In connection with the Transaction, Nastech's common stock will be
identified by a new CUSIP number. This new CUSIP number will appear on any stock
certificates representing shares of Nastech common stock after the Record Date.
The Transaction will not affect any certificates representing shares of common
stock held by registered stockholders owning 100 or more shares immediately
prior to the reverse split. Old certificates held by any of these stockholders
will continue to evidence ownership of the same number of shares as is set forth
on the face of the certificate. Any stockholder with 100 or more shares
immediately prior to the reverse split who wants to receive a certificate
bearing the new CUSIP number can do so at any time by contacting Nastech's
transfer agent for instructions on how to surrender old certificates. After the
Record Date, an old certificate presented to an exchange agent in settlement of
a trade will be exchanged for a new certificate bearing the new CUSIP number.
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<PAGE> 17
As described above, any Cashed-Out Stockholder with share certificates
will receive a letter of transmittal after the Transaction is completed. These
stockholders must complete and sign the letter of transmittal and return it with
their stock certificate(s) to Nastech's transfer agent before they can receive
cash payment for those shares.
Certain Federal Income Tax Consequences
We have summarized below certain federal income tax consequences to the
Company and stockholders resulting from the Transaction. This summary is based
on existing U.S. federal income tax law, which may change, even retroactively.
This summary does not discuss all aspects of federal income taxation which may
be important to you in light of your individual circumstances. Many stockholders
(such as financial institutions, insurance companies, broker-dealers, tax-exempt
organizations, and foreign persons) may be subject to special tax rules. Other
stockholders may also be subject to special tax rules, including but not limited
to: stockholders who received Nastech stock as compensation for services or
pursuant to the exercise of an employee stock option, or stockholders who have
held, or will hold, stock as part of a straddle, hedging, or conversion
transaction for federal income tax purposes. In addition, this summary does not
discuss any state, local, foreign, or other tax considerations. This summary
assumes that you are a U.S. citizen and have held, and will hold, your shares as
capital assets for investment purposes under the Internal Revenue Code of 1986,
as amended. You should consult your tax advisor as to the particular federal,
state, local, foreign, and other tax consequences, in light of your specific
circumstances.
We believe that the Transaction will be treated as a tax-free
"recapitalization" for federal income tax purposes. This will result in no
material federal income tax consequences to the Company.
FEDERAL INCOME TAX CONSEQUENCES TO STOCKHOLDERS WHO ARE NOT CASHED OUT BY THE
TRANSACTION:
If you (1) continue to hold Nastech stock immediately after the
Transaction, and (2) you receive no cash as a result of the Transaction, you
will not recognize any gain or loss in the Transaction and you will have the
same adjusted tax basis and holding period in your Nastech stock as you had in
such stock immediately prior to the Transaction.
FEDERAL INCOME TAX CONSEQUENCES TO CASHED-OUT STOCKHOLDERS:
If you receive cash as a result of the Transaction, your tax consequences
will depend on whether, in addition to receiving cash, you or a person or entity
related to you continues to hold Nastech stock immediately after the
Transaction, as explained below.
a) Stockholders Who Exchange All of Their Nastech Stock for Cash as a Result
of the Transaction.
If you (i) receive cash in exchange for a fractional share as a result of
the Transaction, (ii) do not continue to hold any Nastech stock immediately
after the Transaction, and (iii) are not related to any person or entity which
holds Nastech stock immediately after the Transaction, you will recognize
capital gain or loss. The amount of capital gain or loss you recognize will
equal the difference between the cash you receive for your cashed-out stock and
your aggregate adjusted tax basis in such stock.
If you are related to a person or entity who continues to hold Nastech
stock immediately after the Transaction, you will recognize gain in the same
manner as set forth in the previous paragraph, provided that your receipt of
cash either (i) is "not essentially equivalent" to a dividend, or (ii) is a
"substantially disproportionate" redemption of stock, as described as follows:
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<PAGE> 18
(i) A distribution is considered "not essentially equivalent" as to a
shareholder if, the reduction in your proportionate interest in the Company
resulting from the transaction is considered a "meaningful reduction" given your
particular facts and circumstances. The Internal Revenue Service has ruled that
a small reduction by a minority stockholder whose related stock in interest is
minimal and who exercises no control over the affairs of the corporation will
meet this test.
(ii) A distribution is "substantially disproportionate" as to a shareholder if
the ratio of outstanding shares of Nastech stock owned by you immediately after
the Transaction is less than 80% of the percentage of shares of Nastech stock
owned by you immediately before the Transaction
In addition, if the shareholder is entirely bought out, the transaction
is treated as an exchange of stock, and no part of the distribution is taxed as
a dividend.
In applying these tests, you will be treated as owning shares actually or
constructively owned by certain individuals and entities related to you. If the
taxable amount is not treated as capital gain under any of the tests, it will be
treated first as ordinary dividend income to the extent of your ratable share of
Nastech's undistributed earnings and profits, then as a tax-free return of
capital to the extent of your aggregate adjusted tax basis in your shares, and
any remaining gain will be treated as capital gain. See "Maximum Tax Rates
Applicable to Capital Gain" below.
b) Stockholders Who Both Receive Cash and Continue to Hold Nastech Stock
Immediately After the Transaction.
If you both receive cash as a result of the Transaction and continue to
hold Nastech stock immediately after the Transaction, you generally will
recognize gain, but not loss, in an amount equal to the lesser of (1) the excess
of the sum of aggregate fair market value of your shares of Nastech stock plus
the cash received over your adjusted tax basis in the shares, or (2) the amount
of cash received in the Transaction. In determining whether you continue to hold
stock immediately after the Transaction, you will be treated as owning shares
actually or constructively owned by certain individuals and entities related to
you. Your aggregate adjusted tax basis in your shares of Nastech stock held
immediately after the Transaction will be equal to your aggregate adjusted tax
basis in your shares of Nastech stock held immediately prior to the Transaction,
increased by any gain recognized in the Transaction, and decreased by the amount
of cash received in the Transaction.
Any gain recognized in the Transaction will be treated, for federal
income tax purposes, as capital gain, provided that your receipt of cash either
(1) is "not essentially equivalent to a dividend" with respect to you, or (2) is
a "substantially disproportionate redemption of stock" with respect to you.
(Each of the terms in quotation marks in the previous sentence is discussed
above under the heading "Stockholders Who Exchange All of Their Nastech Stock
for Cash as a Result of the Transaction.") In applying these tests, you may
possibly take into account sales of shares of Nastech stock that occur
substantially contemporaneously with the Transaction. If your gain is not
treated as capital gain under any of these tests, the gain will be treated as
ordinary dividend income to you to the extent of your ratable share of Nastech's
undistributed earnings and profits, then as a tax-free return of capital to the
extent of your aggregate adjusted tax basis in your shares, and any remaining
gain will be treated as a capital gain.
Maximum Tax Rates Applicable to Capital Gain:
Under the Internal Revenue Service Restructuring and Reform Act of 1998,
your net capital gain (defined generally as your total capital gains in excess
of capital losses for the year) recognized upon the sale of capital assets that
have been held for more than 12 months generally will be subject to tax at a
rate not to exceed 20% for sales occurring in taxable years ending after
December 31,
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1998. Net capital gain recognized from the sale of capital assets that have
been held for 12 months or less will continue to be subject to tax at ordinary
income tax rates. In addition, capital gain recognized by a corporate taxpayer
will continue to be subject to tax at the ordinary income tax rates applicable
to corporations.
As explained above, the amounts paid to you as result of the Transaction
may result in dividend income, capital gain income, or some combination of
dividend and capital gain income to you depending on your individual
circumstances. YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR FEDERAL,
STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES OF THE TRANSACTION, IN LIGHT
OF YOUR SPECIFIC CIRCUMSTANCES.
Appraisal Rights
Dissenting stockholders do not have appraisal rights under Delaware state
law or under the Company's Certificate or bylaws in connection with the
Transaction.
Reservation of Rights
The Board of Directors reserves the right to abandon the Transaction
without further action by the stockholders at any time before the filing of the
Certificate amendments with the Delaware Secretary of State, even if the
Transaction has been authorized by the stockholders at the annual meeting.
The Board recommends that you vote FOR this proposal. Proxies solicited
by the Board of Directors will be voted FOR this proposal, unless you specify
otherwise in your proxy.
PROPOSAL NO. 3 - INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company's Board of Directors has appointed KPMG LLP to perform the
annual audit of the books of the Company for the fiscal year ended December 31,
1999. A representative of KPMG LLP is expected to be present at the Annual
Meeting to respond to appropriate questions.
The Board of Directors unanimously recommends a vote FOR approval of
Proposals No. 1, 2 and 3 and proxies solicited by the Board of Directors will be
so voted unless stockholders specify on their proxy card a contrary choice.
STOCKHOLDER PROPOSALS
Stockholders who wish to present proposals for action at the 2000 Annual
Meeting of Stockholders should submit their proposals in writing to the
Secretary of the Company at the address of the Company set forth on the first
page of this Proxy Statement. Proposals must be received by the Secretary on or
before January 11, 2000 in order to be considered for inclusion in next year's
proxy materials
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COMPARISON OF STOCK PERFORMANCE
The following graph and table compare the cumulative total shareholder
returns of the Company's Shares, the NASDAQ Composite and NASDAQ Pharmaceutical
Stocks. The graph assumes $100 invested on 12/31/93 in the Company's Shares in
each of the indices. The shareholder return shown on the graph below is not
necessarily indicative of future performance, and the Company will not make or
endorse any predictions as to future shareholder returns.
<TABLE>
<CAPTION>
NASTECH NASDAQ COMPOSITE PHARMACEUTICAL STOCKS
------- ---------------- ---------------------
<S> <C> <C> <C>
12/93 100.000 100.000 100.000
12/94 111.765 97.752 75.262
12/95 235.294 138.256 138.040
12/96 470.588 170.015 138.469
12/97 305.882 208.580 142.976
12/98 91.176 293.209 183.019
</TABLE>
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to Stockholders of the Company for the year ended
December 31, 1998, including audited financial statements is included herein.
OTHER MATTERS
The Company has retained Morrow & Co., a professional proxy solicitation
firm, to assist in the solicitation of proxies. Representatives of Morrow & Co.
will be available to respond to any questions concerning the proposals contained
in this proxy statement. They may be reached at 1-800-566-9061.
The Board of Directors of the Company does not know of any other matters
that are to be presented for action at the Annual Meeting of Stockholders. If
any other matters are properly brought before the meeting or any adjournments
thereof, the persons named in the enclosed proxy will have the discretionary
authority to vote all proxies received with respect to such matters in
accordance with their best judgment.
By order of the Board of Directors,
Joel Girsky,
Secretary
May 20, 1999
Hauppauge, New York
20
