SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| 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
HYDRON TECHNOLOGIES, INC.
-------------------------
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:__________________________________
2) Aggregate number of securities to which transaction
applies:__________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined):__________________________________
4) Proposed maximum aggregate value of
transaction:__________________________________
5) Total fee paid:__________________________________
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:__________________________________
2) Form, Schedule, or Registration Statement No.:_____________________
3) Filing Party:__________________________________
4) Date Filed:__________________________________
<PAGE>
HYDRON TECHNOLOGIES, INC.
1001 Yamato Road, Suite 403
Boca Raton, Florida 33431
Fellow Shareholders:
In the President's letter accompanying the 1997 Annual Report, our primary focus
was on the past and present. Here, we will share our strategic goals and solicit
your support to help make these goals a reality.
Strategic Goals
Your Board of Directors believes our company must expand the marketing of its
products beyond live electronic retailing and cosmetic skin care. Broadly, the
Board believes that the company is well positioned to enter several new market
segments and distribution channels. These include the healthcare and health-food
markets, with both over-the-counter drugs and "cosmeceutical" products (i.e.,
cosmetic products that have clinically proven therapeutic benefits). Your Board
believes a combination of internal growth and acquisitions will be needed to
meet these objectives.
Board of Directors
To streamline and sharpen its focus, your Board voted to reduce its size from
nine to five members. Despite the smaller number of directors, the individuals
nominated for the Board offer broad based experience in the field of skin care,
as well as expertise in finance, including the purchase and sale of businesses.
Your Board believes that it is in our shareholders' best interest for the
company to consider an aggressive growth strategy. To that end, the company is
seeking to strengthen its research and development capabilities and its
management team.
Enhanced Research and Development
In addition to Charles Fox, the company's eminent cosmetic chemist consultant
and the inventor of the patented Hydron emulsion technology, the company is
currently negotiating a consulting agreement with another distinguished chemist,
Walter Smith, Ph.D. Assuming a successful conclusion to our discussions with Dr.
Smith, the company expects to market a number of proprietary products developed
by Dr. Smith and will work with Dr. Smith to develop future products. Dr.
Smith's professional background includes seven years as the Worldwide Director
of Research for Estee Lauder Companies, Inc.; he also held a position with
Richardson Vicks as Assistant Director of Research. Among his personal
accomplishments, Dr. Smith holds over a dozen U.S. and international patents,
lectures worldwide and has published over 60 technical articles.
New Management
The company recently hired Robert T. Austen as Chief Operating Officer and
Executive Vice President to implement the goals set by the Board. Mr. Austen has
over 20 years of experience in product marketing and finance. His background
includes positions at Chesebrough-Ponds, Bausch & Lomb and most recently as
Director of Marketing for Beiersdorf, Inc. a $4 billion German company whose
brands include Nivea(R), Eucerin(R) and Curad(R). Mr. Austen was directly
responsible for the Eucerin(R) and Aquaphor(R) brands.
In order to be able to begin implementing our agenda, the Board must address a
number of challenges, the most significant of which are outlined below:
Contract Restrictions
The company is currently discussing structural changes in its exclusive
licensing agreement with its electronic retailer. Although there can be no
assurance as to the outcome of these discussions, progress to date has been
constructive, and the Board is hopeful a mutually beneficial resolution can be
achieved that will allow the company a greater degree of flexibility in
distributing its products.
Reverse Split (Proxy Proposal #2)
Driven by changes in NASDAQ listing qualifications, the company now faces de-
listing from the NASDAQ National List. Despite this less than ideal timing, your
Board believes that the reduction of our issued and outstanding shares is
appropriate, and will avert the de-listing issue. Aggressive share issuance by
past management significantly diluted shareholder equity since there was little
real or potential increase in corresponding assets. Dilution caused by the
issuance of too many shares in relation to sales, earnings or assets has made
our shares less interesting as an investment, as well as less useful as a tool
for the acquisition of assets. The Board believes its goal of growth through
acquisition could be easier to
<PAGE>
attain with both continued national listing status and a smaller public float.
This reduction in our issued and outstanding shares will have no affect on your
current percent of ownership as a shareholder or the total value of your shares.
Preferred Share Authorization (Proxy Proposal #3)
The Board believes that an acquisition strategy is a preferred method of
enhancing shareholder value and that a judicious use of equity is the best means
to accomplish this goal. This equity may take the form of common stock or the
proposed Preferred Shares. The Board is aware that, at this time, the company's
common stock is speculative and its ability to be used as currency to acquire
assets may therefore be hindered. Preferred Shares would allow the Board
flexibility in structuring potential acquisitions, or other corporate
opportunities, in relation to their anticipated contribution to overall results.
The company currently has no agreements or understandings with respect to any
potential acquisitions.
Implementation
Although your Board realizes the company must still overcome certain hurdles
before implementing its plans, we believe that it is prudent to begin the
groundwork now. Resolving the outstanding legal issues, improving our electronic
retailing effort, analyzing potential acquisition candidates or strategic
partners, and completing marketing studies are all part of the steps still
ahead. Shareholder approval of the proposals detailed in the accompanying Proxy
Statement will provide some of the tools necessary to accomplish that work, each
piece bringing us one step closer to realizing our goals.
Thank you for your consideration in these matters.
Richard Banakus
Interim President
<PAGE>
HYDRON TECHNOLOGIES, INC.
1001 YAMATO ROAD, SUITE 403
BOCA RATON, FLORIDA 33431
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 1, 1998
-----------------------------
TO THE SHAREHOLDERS:
Notice is hereby given that the annual meeting of shareholders (the "Annual
Meeting") of Hydron Technologies, Inc. (the "Company") has been called for and
will be held at 3:00 P.M., local time, on October 1, 1998, at the Boca Raton
Marriot Crocker Center, 5150 Town Center Circle, Boca Raton, Florida 33486 for
the following purposes:
(1) To elect five (5) directors of the Company to serve as the Board of
Directors (the "Board") to hold office until the next Annual Meeting
of Shareholders;
(2) To consider and vote upon an amendment to the Company's Certificate
of Incorporation to effect a one for five reverse stock split of the
Company's Common Stock, par value $.01 per share;
(3) To consider and vote upon an amendment to the Company's Certificate
of Incorporation to authorize the Company to issue up to 5,000,000
shares of preferred stock to be issued from time to time in such
amounts and designations as authorized by the Board;
(4) To ratify the Board's appointment of Ernst & Young, LLP, independent
certified public accountants, to serve as independent certified
public accountants of the Company for the current fiscal year; and
(5) To consider and transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Board has fixed the close of business on August 24, 1998 as the record
date for the determination of the shareholders entitled to notice of, and
to vote at, the Annual Meeting or any adjournment thereof. The list of
shareholders entitled to vote at the Annual Meeting will be available for
examination by any shareholder at the Company's offices at 1001 Yamato
Road, Suite 403, Boca Raton, Florida 33431, for ten (10) days prior to
October 1, 1998.
By Order of the Board of Directors
CHAUDHURY M. PRASAD SECRETARY
Boca Raton, Florida
Dated: August 25, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE FILL IN, SIGN AND DATE
THE PROXY SUBMITTED HEREWITH AND RETURN IT IN THE ENCLOSED STAMPED ENVELOPE. THE
GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE SUCH PROXY OR TO VOTE
IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE MEETING. THE ENCLOSED PROXY IS
BEING SOLICITED BY THE BOARD OF DIRECTORS.
<PAGE>
HYDRON TECHNOLOGIES, INC.
1001 YAMATO ROAD, SUITE 403
BOCA RATON, FLORIDA 33431
PROXY STATEMENT
Annual Meeting of Shareholders to be held October 1, 1998
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of Hydron Technologies, Inc. (the "Company"), a
New York corporation with offices located at 1001 Yamato Road, Suite 403, Boca
Raton, Florida 33431, of proxies to be voted at the annual meeting of
shareholders of the Company to be held on October 1, 1998, and at any
adjournments thereof (the "Annual Meeting"). Any proxy may be revoked by a
shareholder prior to its exercise upon written notice to the Secretary of the
Company, or by a shareholder voting in person at the Annual Meeting. All
properly executed proxies received prior to the Annual Meeting will be voted at
the Annual Meeting in accordance with the instructions marked thereon or
otherwise as provided therein. Unless instructions to the contrary are
indicated, proxies will be voted FOR the election of the five (5) directors
specified herein; FOR the approval of the one for five reverse stock split; FOR
the approval of the authorization of preferred stock; and FOR the ratification
of the Board's selection of Ernst & Young, LLP as the independent certified
public accountants of the Company.
A form of proxy is enclosed for use at the Annual Meeting.
The cost of preparing, assembling and mailing the Notice of Annual Meeting of
Shareholders, this Proxy Statement and the accompanying Proxy will be borne by
the Company. In addition to solicitation of the proxies by use of the mails,
some of the officers and regular employees of the Company, without extra
remuneration, may solicit proxies personally or by telephone, telegraph or
cable. The Company may also request brokerage houses, nominees, custodians and
fiduciaries to forward soliciting material to the beneficial owners of the
Common Stock (as defined below). The Company will reimburse such persons for
their expenses in forwarding soliciting material. This Proxy Statement, the
accompanying Notice of Meeting of Shareholders, the Proxy and the Annual Report
to Shareholders are expected to be mailed to shareholders beginning
approximately August 25, 1998.
All votes will be tabulated by the inspectors of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on matters presented to the Shareholders and will have
the same effect as negative votes. Broker non-votes are counted towards a quorum
but are not counted for any purpose in determining whether a matter has been
approved.
The Board has fixed the close of business on August 24, 1998 as the record date
(the "Record Date") for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting. Only holders of the shares of the Company's
common stock, par value $.01 per share ("Common Stock"), on the Record Date will
be able to vote at the Annual Meeting, and will be entitled to one (1) vote for
each share held. No shares of Common Stock have cumulative voting rights. On the
Record Date, there were 24,545,816 outstanding shares of Common Stock. There was
no other class of voting securities outstanding at that date. The presence at
the Annual Meeting in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote shall constitute a quorum
for the transaction of business. If a quorum is present, the affirmative vote of
the holders of a plurality of the shares of Common Stock cast and entitled to
vote at the Annual Meeting will be required to act on the election of director.
The affirmative vote of the holders of a majority of the shares of outstanding
Common Stock is required for the approval of the amendments to the Company's
Certificate of Incorporation, and the affirmative vote of the holders of a
majority of the shares cast and entitled to vote at the Annual Meeting will be
required to act on all other matters to come before the Annual Meeting.
<PAGE>
PROPOSAL NO. 1:
NOMINATION AND ELECTION OF DIRECTORS
The number of directors of the Company has been set by a resolution adopted by a
majority of the entire Board. The Board has reduced the number of directors to
be elected at the Annual Meeting to constitute the Board, from nine (9) to five
(5), as it is of the opinion that a smaller board can operate more efficiently
for the benefit of the shareholders of the Company. The directors are to be
elected to serve until the Company's next Annual Meeting of Shareholders or
until their respective successors shall be duly elected and qualified. The Board
has nominated Richard Banakus, Mark Egide, Karen Gray, Charles Johnston and
Richard Tauman (each of whom is a member of the present Board) to serve as
directors of the Company until the Company's 1999 Annual Meeting of Shareholders
or until their respective successors shall be duly elected and qualified. Unless
otherwise specified, all proxies will be voted in favor of the five (5) nominees
listed above as directors of the Company.
If any nominee should subsequently become unavailable for election, the persons
voting the accompanying proxy may in their discretion vote for a substitute.
Directors are elected by a plurality of the votes cast.
YOUR BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL. THE ENCLOSED PROXY WILL BE VOTED
FOR THE PROPOSAL UNLESS A CONTRARY SPECIFICATION IS MADE.
CERTAIN INFORMATION REGARDING DIRECTOR NOMINEES
Nominee Age Office Director Since
------- --- ------ --------------
Richard Banakus 52 Interim President and Director June 1995
Mark Egide 42 Director September 1997
Karen Gray 40 Director December 1997
Charles Johnston 63 Director December 1997
Richard Tauman 31 Executive VP and Director March 1994
RICHARD BANAKUS has served as a director of the Company since June 1995 and as
Interim President of the Company since September 19, 1997. From April 1991 to
the present, Mr. Banakus has been a private investor with interests in a number
of privately and publicly held companies. From July 1988 through March 1991, he
was the managing partner of Banyan Securities, Larkspur, California, a
securities brokerage firm which he founded.
MARK EGIDE has served as a director of the Company since September 1997. Since
September 1989, Mr. Egide has served as President of Avalon Natural Products,
Inc., a cosmetics manufacturing and importing company which he founded.
KAREN GRAY has served as a director of the Company since December 1997, and has
been a consultant to the Company on marketing and communications matters since
November 1996. Ms. Gray has over 15 years of management experience in marketing
communications in various capacities with various companies. From 1993 to
November 1996, Ms. Gray served as Vice President, Corporate Communications, of
the Company. From June 1992 to November 1993, Ms. Gray served as President of
MarComm Associates, Inc., a marketing communications company which she founded.
CHARLES JOHNSTON has served as a director of the Company since December 1997.
During the past 10 years he has served on various boards. Mr Johnston is
currently Chairman of Ventex Technology, Inc. an electronic transformer company
in Riviera Beach, Florida, AFD Technologies, LLC a chemical company in Jupiter,
Florida. He was previously founder, Chairman and CEO of ISI Systems, a computer
software company listed on the American Stock Exchange prior to its sale in
November 1989 to Teleglobe Corporation of Montreal, Canada. Mr. Johnston also
serves as a Trustee of Worcester Polytechnic Institute in Worcester and of the
Institute of Psychiatric Research at the University of Pennsylvania. In
addition, he serves a director of the following companies: Infosafe Systems, an
internet company in New York City; Kideo Productions, an educational software
company in New York City; Spectrum Signal Processing, a digital signal
processing computer hardware and software company in Vancouver, Canada; and
Waste Systems International, a landfill remodeling company in Cambridge,
Massachusetts.
RICHARD TAUMAN has served as a director of the Company since March 1994,
Executive Vice President since April 1995 and Chief Operating Officer from
January 1996 to August 1998. Mr. Tauman served as Vice President, Production of
the Company from March 1994 to April 1995 and in various production capacities
since 1989.
2
<PAGE>
CERTAIN INFORMATION ABOUT THE BOARD AND COMMITTEES
The Board has three (3) standing committees: the Stock Option Committee, which
has the function of administering the Company's stock option plans; the Audit
Committee, which has the function of recommending to the Board the appointment
of independent auditors and of reviewing the performance and scope of audit and
nonaudit services to be performed by the independent auditors; and the Executive
Compensation Committee, which oversees the compensation of the executive
officers of the Company.
The members of the Stock Option Committee as of December 31, 1997 were Messrs.
Egide, Johnston and Dr. Samuel Leb. Such committee did not meet during the
fiscal year ended December 31, 1997. Due to the reduction in the number of
directors, the Board will reconstitute the Stock Option Committee following the
Annual Meeting.
The members of the Audit Committee as of December 31, 1997 were Mr. Mark Egide,
Mr. Frank Fiur and Mr. Hughes Lamotte. Such committee did not meet during the
fiscal year ended December 31, 1997. Due to the reduction in the number of
directors, the Board will reconstitute the Audit Committee following the Annual
Meeting.
The members of the Executive Compensation Committee (the "Compensation
Committee") as of December 31, 1997, were Messrs. Egide, Johnston and Leb. Such
committee did not meet during the fiscal year ended December 31, 1997. Due to
the reduction in the number of directors, the Board will reconstitute the
Compensation Committee following the Annual Meeting.
The Board held five meetings during the fiscal year ended December 31, 1997. All
of the directors attended at least 75% of such meetings.
3
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information as of July 31, 1998 regarding
(i) the share ownership of the Company by each person who is known to the
Company to be the record or beneficial owner of more than five percent (5%) of
the Common Stock, (ii) the share ownership of each director of the Company
during the year ended December 31, 1997, each person nominated herein to serve
as a director of the Company, the Chief Executive Officer of the Company and
each other most highly paid executive officer of the Company who earned in
excess of $100,000 during the Company's last fiscal year (collectively, the
"Named Executive Officers") and (iii) the share ownership of the Company of all
directors, director nominees and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP APPROXIMATE PERCENT OF CLASS
------------------------------------ -------------------- ----------------------------
<S> <C> <C>
Richard Banakus 1,720,000(1) 7.0%
82 Verissimo Drive
Novato, CA 94947
Mark Egide 25,000(2) Less than 1%
2505 Vineyard Road
Novato, Ca 94952
Frank Fiur 284,000(3) 1.2%
469 W. 83rd Street
Hialeah, FL 33041
Charles Fox 60,000(4) Less than 1%
39-08 Tierny Place
Fair Lawn, NJ 07410
Karen Gray 75,000(5) Less than 1%
1001 Yamato Road #403
Boca Raton, FL 33431
Charles Johnston 400,000(6) 1.6%
706 Ocean Drive
Juno Beach, Fl 33408
Hugues Lamotte 320,000(7) 1.3%
Atlas Research and Consulting Ltd.
41-46 Piccadilly
Nuffield House
London, England W1V0HB
Samuel Leb, M.D. 316,252(8) 1.3%
1905 So. Oak Haven Circle
No. Miami Beach, FL 33179
Richard Tauman 85,000(9) Less than 1%
Hydron Technologies, Inc.
1001 Yamato Road, Suite 403
Boca Raton, FL 33431
All officers, directors and director 3,285,252(10) 13.3%
nominees as a group (9 persons)
</TABLE>
- ----------
(1) Consists of 1,700,000 shares held directly and 20,000 shares
issuable upon exercise of options. Does not include 10,000 shares of
Common Stock underlying options not currently exercisable.
(2) Consists of 25,000 shares held directly. Does not include 15,000
shares of Common Stock underlying options not currently exercisable.
(3) Consists of 140,000 shares held directly, 114,000 shares held by
his spouse and 30,000 shares of Common Stock issuable upon exercise of
options. Does not include 12,500 shares of Common Stock underlying options
not currently exercisable. Mr. Fiur disclaims beneficial ownership of
114,000 shares held by his spouse.
(4) Consists of 60,000 shares held directly. Does not include 10,000
shares of Common Stock underlying options not currently exercisable.
4
<PAGE>
(5) Consists of 15,000 shares held directly and 60,000 shares
issuable upon exercise of options. Does not include 10,000 shares of
Common Stock underlying options not currently exercisable.
(6) Consists of 400,000 shares held directly. Does not include
12,500 shares of Common Stock underlying options not currently
exercisable.
(7) Consists of 300,000 shares held directly and 20,000 shares
issuable upon exercise of options. Does not include 12,500 shares of
Common Stock underlying options not currently exercisable.
(8) Consists of 151,152 held as an IRA beneficiary, 80,000 shares
held as a co-trustee, 45,100 shares held as a co-trustee and a beneficiary
and 40,000 shares issuable upon exercise of options. Does not include
12,500 shares of Common Stock underlying options not currently
exercisable.
(9) Consists of 25,000 shares held directly and 60,000 shares
issuable upon exercise of options.
(10) Consists of 3,055,252 shares held directly and 230,000 shares
issuable upon exercise of options. Does not include 95,000 shares of
Common Stock underlying options not currently exercisable.
Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the
Company's directors and certain of its officers and persons holding more than
ten percent of the Common Stock are required to report their ownership of the
Common Stock and any changes in such ownership to the Securities and Exchange
Commission and the Company. Specific due dates for these reports have been
established and the Company is required to report in this Proxy Statement any
failure to file by these dates during the fiscal year ended December 31, 1997.
Based on the Company's review of copies of such reports, the Company believes
that during the fiscal year ended December 31, 1997, all such reporting
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
EXECUTIVE COMPENSATION
The following table sets forth information for the years ended December 31,
1997, 1996 and 1995 with respect to all compensation awarded to, earned by or
paid 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 $100,000
during the year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------- ----------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS COMPENSATION
- --------------------------- ---- ---------- --------- ---------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard Banakus,
Interim President 1997 32,312 -0- -0- -0- -0-
Richard Tauman, 1997 105,040 -0- 3,232 -0- -0-
Chief Operating Officer and 1996 102,496 15,000 2,860 -0- -0-
Executive Vice President 1995 74,360 12,500 -0- 60,000 -0-
Harvey Tauman, 1997 332,826 -0- 51,204(1) -0- -0-
Former Chief
Executive Officer, 1996 422,604 100,000 53,702(2) -0- -0-
President and Treasurer(3) 1995 402,480 100,000 35,900(4) 100,000 -0-
</TABLE>
- ----------
(1) Consists of $51,204 of salary for vacation time not taken.
(2) Consists of $48,762 of salary for vacation time not taken and
$4,940 for insurance premiums.
(3) On September 19, 1997, the Board terminated the employment of
Mr. Tauman as Chief Executive Officer, President and Treasurer of the
Company.
(4) Consists of $30,960 of salary for vacation time not taken and
$4,940 for insurance premiums.
During the year ended December 31, 1997 no stock option grants were made to the
Company's former Chief Executive Officer or any persons who were executive
officers of the Company and its subsidiaries during the year ended December 31,
1997.
5
<PAGE>
The following table sets forth certain information relating to option exercises
effected during the year ended December 31, 1997, and the value of options held
as of such date by the Company's former Chief Executive Officer and all other
persons who were executive officers of the Company and its subsidiaries for the
year ended December 31, 1997. The Company does not have any outstanding stock
appreciation rights.
AGGREGATE OPTION EXERCISES FOR THE YEAR ENDED DECEMBER 31, 1997
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE(1) OF
UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1997(#) AT DECEMBER 31, 1997($)
---------------------- -----------------------
SHARES ACQUIRED ON VALUE ($) EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($)(2) UNEXERCISABLE UNEXERCISABLE
---- ---------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Richard Banakus................ -0- -0- 20,000/-0- -0-/-0-
Richard Tauman................. -0- -0- 60,000/-0- -0-/-0-
Harvey Tauman.................. -0- -0- -0-/-0- -0-/-0-
</TABLE>
- ----------
(1) Total value of unexercised options is based upon the closing
price ($.4375) of the Common Stock as reported by NASDAQ on December 31,
1997.
(2) Value realized in dollars is the amount that the shareholder is
deemed to have received as the result of the exercise of options, based
upon the difference between the fair market value of the Common Stock as
reported by NASDAQ on the date of exercise and the exercise price of the
options.
EMPLOYMENT AGREEMENTS
Richard Tauman has an employment agreement with the Company pursuant to which he
serves as Executive Vice President of the Company for a term extending through
August 31, 2004 at a current annual salary of $110,292. His salary will increase
annually by an amount equal to the greater of (i) five percent (5%) of his base
salary for the immediately preceding employment year or (ii) an amount
calculated on the basis of the increase, if any, in the Consumer Price Index for
such immediately preceding year over the prior year and may also be increased at
any time at the discretion of the Board.
Chaudhury M. Prasad has an employment agreement with the Company pursuant to
which he serves as Secretary of the Company for a term extending through April
30, 2003 at a current annual salary of $84,344. His annual salary may be
increased at any time at the discretion of the Board.
Each of the above employment agreements provides that if (i) a change in control
of the Company has occurred and thereafter such employee shall terminate his
employment with the Company, or (ii) the employment of such employee is
terminated by the Company for any reason other than death, disability or cause,
then such employee shall be entitled to receive (A) his regular compensation,
including all awards, perquisites and benefits, through the date on which his
employment terminated and (B) either (1) a lump sum payment in an amount equal
to 2.99 times his "base amount" (as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended) or (2) his base salary in such
periodic installments throughout the balance of the term of such employment
agreement as would have been payable if the employee's employment had not been
terminated.
Prior to his termination on September 19, 1997, Harvey Tauman had an employment
agreement with the Company. On September 19, 1997, his employment agreement was
canceled for cause.
On September 19, 1997, the Board appointed Richard Banakus to serve as President
of the Company on an interim basis. The Board has agreed to pay Mr. Banakus a
monthly salary of $10,000 and to reimburse him for his lodging expenses in Boca
Raton, Florida and travel expenses to and from California, where Mr. Banakus
resides.
The Company recently hired Robert T. Austen as chief operating officer and
executive vice president. The Company is finalizing the terms of an employment
agreement for a term extending through December 1999. Under this proposed
agreement, his current salary, payable at a rate of $135,000 for the year ending
December 31, 1998 would increase to $140,000 for the year ending December 31,
1999. This agreement would also provide for guaranteed bonuses of $25,000 in
each of 1998 and 1999 as well as additional bonuses based on performance
standards and the granting of options based on performance standards.
6
<PAGE>
COMPENSATION OF DIRECTORS
Employees of the Company who also serve as directors are entitled to no
additional compensation for such service.
Nonemployee directors receive an annual fee of $5,000, paid quarterly, and
during the fiscal year ended December 31, 1997 (1) each of Messrs. Richard
Banakus, Frank Fiur, Hugues Lamotte and Samuel Leb was paid $5,000 for his
service as a director; (2) Mr. Joseph A. Caccamo was paid $3,750 for his service
as a director; (3) Mr. Nestor Cardero was paid $2,500 for his service as a
director and (4) each of Messrs. Mark Egide and Charles Fox was paid $1,250 for
his service as a director.
The 1993 Nonemployee Director Stock Option Plan ("1993 Plan") was adopted by the
Board on December 22, 1993, approved by the shareholders on July 19, 1994 and
approved, as amended, by the shareholders on December 17, 1997. The purpose of
the 1993 Plan was to assist the Company in attracting and retaining key
directors who are responsible for continuing the growth and success of the
Company. In accordance with the 1993 Plan, on September 1, 1997, options to
purchase 8,333 shares of Common Stock were granted to each of Messrs. Richard
Banakus, Joseph A. Caccamo, Nestor Cardero, Frank Fiur, Hugues Lamotte and
Samuel Leb at an exercise price of $2.50 per share (a price above the fair
market value at the time of grant). The options granted to Messrs. Caccamo and
Cardero were canceled in December 1997, as they were not exercised within a
period of three months from the date these individuals resigned from the Board.
The options granted to Messrs. Richard Banakus, Frank Fiur, Hugues Lamotte and
Samuel Leb were canceled upon the approval of the 1997 Nonemployee Director
Stock Option Plan, as discussed below.
On November 10, 1997, the Board adopted the 1997 Nonemployee Stock Option Plan
("1997 Plan"). This plan was approved by the shareholders on December 17, 1997.
The purpose of the 1997 Plan is to assist the Company in attracting and
retaining experienced and knowledgeable nonemployee directors who will continue
to work for the best interests of the Company.
The 1997 Plan provides for the grant to nonemployee directors of nonqualified
stock options to purchase an aggregate of 500,000 shares of Common Stock.
Pursuant to the 1997 Plan each nonemployee director was granted an option to
purchase 10,000 shares of Common Stock. Options to purchase 10,000 shares of
Common Stock will be granted to nonemployee directors on May 1st of each year
beginning May 1, 1998. The options granted under the 1997 Plan are not
exercisable for a one year period and are to be granted at an exercise price
equal to the average fair market value of the Common Stock during the ten
business days preceding the day of the grant of the option. Each of Messrs. Mark
Egide, Frank Fiur, Charles Fox, Hugues Lamotte and Samuel Leb were granted
options to purchase 10,000 shares of Common Stock at the exercise price of
$.70625 per share on November 10, 1997. Ms. Karen Gray and Mr. Charles Johnston
were each granted options to purchase 10,000 shares of Common Stock at the
exercise price of $.6047 per share on December 17, 1997.
The 1997 Plan also provides for the grant of nonqualified stock options to
nonemployee directors who serve on committees of the Board. The options are not
exercisable for a one year period and are to be granted at an exercise price
equal to the average fair market value of the Common Stock during the ten
business days preceding the day of the grant. During December 1997, options to
purchase 2,500 shares of Common Stock at an exercise price of $.6047 per share
were granted to each of Messrs. Mark Egide, Charles Johnston and Samuel Leb for
their participation on the Compensation Committee of the Board. Also, in
December 1997, options to purchase 2,500 shares of Common Stock at an exercise
price of $.6047 per share were granted to each of Messrs. Mark Egide, Frank Fiur
and Hugues Lamotte for their participation on the Audit Committee of the Board.
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PERFORMANCE GRAPH
The following graph compares the performance (for the periods indicated in the
graph) of the Common Stock with the performance of the NASDAQ Market Index and
the average performance of a group of the Company's peer companies consisting
of:
ADRIEN ARPEL INC.; ALBERTO-CULVER CL A; ALBERTO-CULVER CL B; AMERICAN SAFETY
RAZOR CO; APPLEWOODS INC; AVON PRODUCTS INC; AZUREL LTD; BEAUTICONTROL
COSMETICS; BLOCK DRUG COMPANY INC A; BLYTHE INDUSTRIES INC; CARSON INC; CCA
INDUSTRIES INC; COLGATE-PALMOLIVE CO; DEL LABORATORIES INC; DEP CORP; DIAL CORP;
DRANSFIELD CHINA PAPER; DRYPERS CORP; DSG INTERNATIONAL LTD; EROX CORP; ESTEE
LAUDER COS INC; GILLETTE COMPANY; GUEST SUPPLY INC; HYDRON TECHNOLOGIES INC;
ILLINOIS TOOL WORKS INC; JEAN PHILLIPE FRAGRANCES; LAMAUR CORPORATION THE;
MEDICIS PHARMACEUTICAL A; MBHL/BIOPHILE INTERNAT; PARAGON TRADE BRANDS; PARLUX
FRAGRANCES INC; PLAYTEX PRODUCTS INC; REVLON INC; SCOTT'S LIQUID GOLD INC;
STEPMAN CO; STYLING TECHNOLOGY CP; THERMOLASE CORP
The graph assumes that the value of the investment in the Common Stock and each
index was $100 at the beginning of the period indicated in the graph, and that
all dividends were reinvested.
[A GRAPH APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]
1992 1993 1994 1995 1996 1997
----------------------------------------------------------
HYDRON TECHNOLOGIES $ 100.00 $ 165.22 $ 334.78 $ 125.45 $ 142.23 $ 33.54
MG GROUP INDEX 100.00 100.55 124.61 171.83 256.69 319.95
NASDAQ STK MKT 100.00 119.95 125.94 163.35 202.99 248.30
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Until September 1997, Joseph A. Caccamo was a director of and general counsel to
the Company and was paid $68,155 in legal fees and reimbursement of
disbursements incurred on behalf of the Company. From August 1996 through
September 1997, the Company provided office space for Mr. Caccamo. During the
year ended December 31, 1997, Mr. Caccamo was granted options to purchase 8,333
shares of Common Stock at $2.50 (a price above the fair market value at the time
of grant), and received a nonemployee director's fee of $3,750 for his services.
During the year ended December 31, 1997, Charles Fox, a director of the Company
since September 1997, was paid a total of $91,766 in advisory fees and
reimbursement of disbursements incurred on behalf of the Company. Mr. Fox
advises the Company on matters relating to research and development. During the
year ended December 31, 1997, Mr. Fox was granted options to purchase 10,000
shares of Common Stock at $.70625 and received a nonemployee director's fee of
$1,250 for his services.
During the year ended December 31, 1997, Karen Gray, a director of the Company
since December 1997, was paid a total of $21,146 in consulting fees and
reimbursement of disbursements incurred on behalf of the Company. Ms. Gray
advises the Company on matters relating to marketing and communications. During
the year ended December 31, 1997, Ms. Gray was granted options to purchase
10,000 shares of Common Stock at $.6047 per share.
8
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PROPOSAL NO. 2
PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE SPLIT OF THE COMMON STOCK
The Common Stock is listed on the National Association of Securities Dealer's
Automated Quotations System (the "NASDAQ System"). Under the NASDAQ rules, to
continue listing on the NASDAQ System, a company must have and maintain, among
other things, a minimum bid price per share of $1.00.
As of the date of this Proxy Statement, the Company is in compliance with all of
the NASDAQ requirements, except the requirement for a minimum bid price of $1.00
per share of Common Stock. The Board has determined that continued listing of
the Common Stock on the NASDAQ System is in the best interests of the holders of
the Common Stock. If the Common Stock were to be disqualified for listing on the
NASDAQ System, the Common Stock would continue to be traded only on the
automated "bulletin board" maintained by the National Quotation Bureau, Inc.,
which is generally considered to be a less efficient market than the NASDAQ
System. In addition, much more stringent initial requirements would have to be
met in the future to relist the Common Stock on the NASDAQ System.
On May 29, 1998, NASDAQ wrote the Company requiring the Company to submit a plan
to comply with the minimum bid price requirement. The Company has been in
contact with NASDAQ since that date, but was turned down in its request for a
temporary exemption from the new listing requirement. As a result of these
discussions, the Board has determined that a reverse stock split of the
Company's Common Stock is necessary to raise the minimum bid price to meet the
NASDAQ listing requirement. The Company has requested a formal oral hearing from
NASDAQ, which should be scheduled for the later part of September 1998, to
propose this plan of complying with the minimum bid price requirement.
Therefore, the Board requests that the Company's shareholders approve a proposal
that would authorize the Board to cause to be filed an amendment to the
Certificate of Incorporation to effect a reverse 1-for-5 stock split ("Reverse
Stock Split"). The Board's resolution effecting the amendment to the Certificate
of Incorporation is set forth in Appendix A to this Proxy Statement.
The Board recognizes that reverse stock splits are sometimes believed to result
in a decrease in the aggregate market value of an issuer's common stock. The
Board believes, however, that this possible negative impact is outweighed by
what it perceives to be a greater negative impact upon aggregate market
valuation of delisting the Common Stock from the NASDAQ System.
CERTAIN EFFECTS OF A REVERSE STOCK SPLIT
The Company is currently authorized to issue 30,000,000 shares of Common Stock,
of which at the close of business on August 11, 1998, 24,796,816 shares were
issued (including 251,000 shares of treasury stock) and 24,545,816 shares were
outstanding. If the Reverse Stock Split is effected, the number of authorized
shares would remain the same, but the number of shares issued and outstanding
would be decreased to approximately 4,960,000 issued shares and approximately
4,910,000 outstanding shares. With the exception of the number of issued and
outstanding shares, the rights and preferences of the shares of Common Stock of
the Company before and after the Reverse Stock Split will remain the same. If
the Reverse Stock Split is effected, it is not anticipated that the financial
condition of the Company, the percentage ownership of management, the number of
shareholders of the Company, or any other aspect of the Company's business would
materially change as a result of the Reverse Stock Split.
The result of any Reverse Stock Split effected due to the proposed amendment
would be that shareholders of the Company who own five (5) or more shares of
Common Stock will receive one share of new common stock ("New Common Stock") for
each five (5) shares of Common Stock held at the time of the Reverse Stock
Split, and one additional share in lieu of the issuance of fractional shares of
New Common Stock. Shareholders of the Company who own fewer than five (5) shares
of Common Stock on the date the Reverse Stock Split is effected will be entitled
to receive one (1) share of New Common Stock in lieu of receiving fractional
shares resulting from the Reverse Stock Split.
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING DISCUSSION SUMMARIZING CERTAIN FEDERAL INCOME TAX AND NEW YORK
STATE TAX CONSEQUENCES IS BASED ON CURRENT LAW AND IS INCLUDED FOR GENERAL
INFORMATION ONLY. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
FEDERAL, STATE, LOCAL AND FOREIGN TAX EFFECTS OF THE REVERSE STOCK SPLIT IN
LIGHT OF THEIR INDIVIDUAL CIRCUMSTANCES.
9
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The receipt of New Common Stock solely in exchange for Common Stock will not
generally result in recognition of gain or loss to the shareholder. The adjusted
tax basis of the shareholder's New Common Stock will be the same as the
shareholder's adjusted tax basis in the exchanged Common Stock. The holding
period of New Common Stock received solely in exchange for Common Stock will
include the shareholder's holding period in the exchanged Common Stock. No gain
or loss will be recognized by the Company upon the Reverse Stock Split.
EXCHANGE OF CERTIFICATES IN THE EVENT OF A REVERSE STOCK SPLIT
If the proposal is approved by the shareholders, the Company will file an
amendment to its Certificate of Incorporation with the New York Secretary of
State. The Reverse Stock Split would become effective on the date of that filing
(the "Effective Date"). The Company intends to use its transfer agent, American
Stock Transfer and Trust Company, as its exchange agent in effecting the
exchange of certificates in the event of a Reverse Stock Split.
As soon as practicable after the Effective Date, shareholders will be notified
and requested to surrender the certificates representing their shares of Common
Stock to the Company in exchange for certificates representing shares of New
Common Stock. Commencing with the Effective Date, each certificate representing
shares of Common Stock will be deemed, for all corporate purposes, to evidence
ownership of shares of New Common Stock. If a shareholder owns fewer than five
(5) shares of Common Stock or holds a number of shares not evenly divisible by
five (5), that shareholder will receive an additional share of New Common Stock
in lieu of receiving fractional shares of New Common Stock.
For the purpose of determining ownership of Common Stock at the Effective Date,
shares will be considered to be held by the person in whose name those shares
are registered on the stock records of the Company, regardless of the beneficial
ownership of those shares. For example, if certain shares are registered
separately in the name of a husband and his wife, those two amounts of shares
will be treated separately and as held by two different shareholders for the
purposes of determining ownership of Common Stock at the Effective Date.
No service charges will be payable by the shareholders in connection with the
exchange of certificates, all expenses of which will be borne by the Company.
SHAREHOLDER APPROVAL
The proposal to authorize the Board to effect the Reverse Stock Split must be
approved by the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Annual Meeting.
Under New York law, shareholders are not entitled to dissenter's rights of
approval with respect to the proposed amendment to the Company's Certificate of
Incorporation to effect a Reverse Stock Split.
The Board has unanimously approved the proposal, and it is believed that all
officers and directors of the Company will vote their respective shares in favor
of the proposal.
YOUR BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL. THE ENCLOSED PROXY WILL BE VOTED
FOR THE PROPOSAL UNLESS A CONTRARY SPECIFICATION IS MADE.
PROPOSAL NO. 3
PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
TO AUTHORIZE UP TO 5,000,000 SHARES OF PREFERRED STOCK
The Board has unanimously adopted and submitted to the shareholders for
approval, an amendment to the Company's Certificate of Incorporation ("Preferred
Stock Amendment") authorizing the issuance by the Company of up to 5,000,000
shares of preferred stock, par value $.01 per share ("Preferred Stock"). The
Board believes that the authorization of the Preferred Stock is in the best
interests of the Company and its shareholders. Although it has no present plans
or commitments to issue any shares of Preferred Stock, the Company believes that
the availability of such a security, among other things, will allow the Company
to consider and, if in the best interests of the shareholders, take advantage of
acquisition opportunities. The authorization will enable the Company to act
promptly if appropriate circumstances arise which require the issuance of such
shares, including any capital needs of the Company, in conjunction with any
acquisition opportunities or other corporate purposes.
The Preferred Stock will have such designations, preferences, dividend,
conversion, cumulative, relative, participating, optional and other rights,
including voting rights, qualifications, limitations and restrictions as are
determined by the Board. Thus, if the Preferred Stock Amendment is approved, the
Board would be entitled to authorize the creation and issuance of
10
<PAGE>
up to 5,000,000 shares of Preferred Stock in one or more series with such
rights, limitations and restrictions as may be determined in the Board's sole
discretion, without the expense and delay of a special shareholders' meeting,
except as may be required by applicable law or stock market or exchange
requirements. Many other public companies have authorized a class of preferred
stock with similar features.
The authorization of the shares of Preferred Stock will not, by itself, have any
effect on the rights of the holders of shares of Common Stock. Nonetheless, the
issuance of one or more series of Preferred Stock could, depending upon the
Board's determination of the rights and preferences of the series of Preferred
Stock (i) restrict the payment of dividends to holders of the Common Stock; (ii)
dilute voting power of the holders of Common Stock to the extent that the
holders of shares of Preferred Stock are given voting rights; (iii) dilute the
equity interest and voting power of the holders of Common Stock if the Preferred
Stock is convertible into Common Stock; and (iv) restrict the distribution of
assets to the holders of the Common Stock upon liquidation or dissolution and
until the satisfaction of any liquidation preference granted to the holders of
Preferred Stock. The Board is required by New York State law to make any
determination to issue shares of Preferred Stock based upon its judgment as to
the best interests of the shareholders of the Company. The terms of the
Preferred Stock subject to issuance upon the adoption of this proposal and the
actual effect of the issuance of Preferred Stock on the rights of holders of
Common Stock cannot be stated or estimated.
The Preferred Stock Amendment is not proposed in order to deter or prevent a
change in control of the Company. However, the Board could issue shares of
Preferred Stock (within the limits imposed by applicable law) that could,
depending on the terms of such series, make more difficult or discourage an
attempt to obtain control of the Company by means of a merger, tender offer,
proxy contest or other means. When in the judgment of the Board such action
would be in the best interests of the shareholders of the Company, the issuance
of shares of Preferred Stock could be used to create voting or other impediments
or to discourage persons seeking to gain control of the Company, for example, by
the sale of Preferred Stock to purchasers favorable to the Board. In addition,
the Board could authorize holders of a series of Preferred Stock to vote, either
separately as a class or with the holders of Common Stock, on any merger, sale
or exchange of assets by the Company or any other extraordinary corporate
transaction. The maintaining of the current level of authorized shares could
also have the effect of discouraging unsolicited takeover attempts, as the
issuance of new shares of Common Stock could also be used to dilute the stock
ownership of a person or entity seeking to obtain control of the Company should
the Board consider the action of such entity or person not to be in the best
interests of the shareholders of the Company.
The Board believes that the availability of the Preferred Stock provides the
Company with the flexibility to address potential future financing needs by
creating Preferred Stock customized to meet the needs of any particular
transaction and market conditions without having to incur possible delays and
expenses associated with obtaining shareholder approval. The Company could also
issue Preferred Stock for other corporate purposes, such as to implement joint
ventures or to make acquisitions. The Company currently has no agreements or
understandings with respect to the issuance of shares of Preferred Stock. The
Board's resolution effecting the amendment to the Certificate of Incorporation
is set forth in Appendix B to this Proxy Statement.
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock entitled to vote at the meeting is required for approval of the
adoption of the Preferred Stock Amendment.
YOUR BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL. THE ENCLOSED PROXY WILL BE VOTED
FOR THE PROPOSAL UNLESS A CONTRARY SPECIFICATION IS MADE.
PROPOSAL NO. 4
RATIFICATION OF SELECTION
OF ERNST & YOUNG, LLP
AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board has approved the engagement of Ernst & Young, LLP as the independent
certified public accountants of the Company for the year ending December 31,
1998. Ernst & Young, LLP has audited the Company's financial statements since
the year ended December 31, 1991.
The Company is advised that neither that firm nor any of its partners has any
material direct or indirect relationship with the Company. The Board considers
Ernst & Young, LLP to be well qualified for the function of serving as the
Company's independent certified public accountants. The New York Business
Corporation Law does not require the approval of
11
<PAGE>
the selection of auditors by the Company's shareholders, but in view of the
importance of the financial statements to shareholders, the Board deems it
desirable that they pass upon its selection of auditors. In the event the
shareholders disapprove of the selection, the Board will consider the selection
of other auditors.
A representative of Ernst & Young, LLP is expected to be present at the Annual
Meeting with the opportunity to make a statement if he or she desires to do so,
and is expected to be available to respond to appropriate questions.
YOUR BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL. THE ENCLOSED PROXY WILL BE VOTED
FOR THE PROPOSAL UNLESS A CONTRARY SPECIFICATION IS MADE.
SHAREHOLDER PROPOSALS
FOR 1999 ANNUAL MEETING
Shareholders who wish to present proposals at the 1999 Annual Meeting of
Shareholders must do so in writing which must be received in writing by the
Secretary of the Company at the address set forth on the first page of the Proxy
Statement no later than April 26, 1999 in order for such proposals to be
considered for inclusion in the Company's proxy statement relating to that
meeting.
By Order of the Board
CHAUDHURY M. PRASAD
SECRETARY
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR
COOPERATION WILL BE APPRECIATED.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders of the Company for the year ended December 31,
1997, including audited financial statements, has been mailed to the
shareholders concurrently herewith, but such report is not incorporated in this
Proxy Statement and is not deemed a part of the Proxy solicitation materials.
Management of the Company knows of no business other than that specified in
Items 1 through 4 of the Notice of Annual Meeting which will be presented for
consideration at the Annual Meeting. If any other matter is properly presented,
it is the intention of the persons named in the enclosed proxy to vote in
accordance with their best judgment.
August 25, 1998
Boca Raton, FL
12
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APPENDIX A
ARTICLE 3 OF THE COMPANY'S
CERTIFICATE OF INCORPORATION,
AS PROPOSED TO BE AMENDED
The following Resolution would amend Article 3 of the Company's
Certificate of Incorporation, as amended, by inserting a new paragraph to effect
the Reverse Stock Split.
RESOLVED, that Article 3 of the Company's Certificate of Incorporation, as
amended, be revised to insert a new paragraph, as follows:
Upon the date the Certificate of Amendment , including this second
paragraph of Article 3 , is filed with the Secretary of State of New
York, each five (5) shares of issued and outstanding shares of
common stock of this Corporation shall be automatically combined
into one (1) share of common stock of this Corporation (the "Reverse
Stock Split"). In lieu of the issuance of any fractional shares that
would otherwise result from the Reverse Stock Split, the Corporation
shall issue one (1) additional share of the common stock of this
Corporation. The Corporation shall also issue one (1) share of the
common stock of this Corporation to any holders who own fewer than
five (5) shares of common stock of this Corporation on the date of
the Reverse Stock Split. Following the effectiveness of this
Certificate of Amendment, certificates representing shares of common
stock to be outstanding thereafter shall be exchanged for
certificates now outstanding pursuant to procedures adopted by the
Corporation's Board of Directors and communicated to those who are
to receive new certificates.
A-1
<PAGE>
APPENDIX B
ARTICLE 3 OF THE COMPANY'S
CERTIFICATE OF INCORPORATION,
AS PROPOSED TO BE AMENDED
The following Resolution would amend the first paragraph of Article 3 of
the Company's Certificate of Incorporation, as amended, to effect the
authorization of up to 5,000,000 shares of Preferred Stock.
RESOLVED, that the first paragraph of Article 3 of the Company's
Certificate of Incorporation, as amended, be revised to substitute a new
paragraph, as follows:
3. The total number of shares which the Corporation shall have
authority to is issue is 35,000,000, comprised of 30,000,000
shares of common stock of the par value of one cent ($.01) per
share, and 5,000,000 shares of preferred stock of the par
value of one cent ($.01) per share.
B-1
<PAGE>
HYDRON TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard Banakus and Richard Tauman as
proxies (the "Proxies"), each with power of substitution and resubstitution, to
vote all shares of Common Stock, $.01 par value per share, of HYDRON
TECHNOLOGIES, INC. (the "Company") held of record by the undersigned on August
24, 1998 (the "Record Date") at the Annual Meeting of Shareholders to be held at
3:00 P.M., local time, on October 1, 1998, at the Boca Raton Marriot Crocker
Center, 5150 Town Center Circle, Boca Raton, Florida 33486, or at any
adjournment thereof, as directed below, and in their discretion on all other
matters coming before the meeting or any adjournment thereof.
Please mark boxes |_| in blue or black ink.
1. Election of five (5) directors: Richard Banakus, Mark Egide, Karen Gray,
Charles Johnston, and Richard Tauman.
(Mark only one of the two boxes for this item)
|_| VOTE FOR all nominees named above except
those who may be named on this line:
------------------------
(OR)
|_| VOTE WITHHELD as to all nominees named above.
2. Approval of an amendment to the Company's Certificate of Incorporation to
effect a one for five reverse stock split of the Company's Common Stock,
par value $.01 per share.
FOR |_| AGAINST |_| ABSTAIN |_|
3. Approval of an amendment to the Company's Certificate of Incorporation to
authorize the Company to issue up to 5,000,000 shares of preferred stock
to be issued from time to time in such amounts and designations as
authorized by the Board.
FOR |_| AGAINST |_| ABSTAIN |_|
4. Proposal to ratify the Board's selection of Ernst & Young, LLP as the
Company's independent certified public accountants:
FOR |_| AGAINST |_| ABSTAIN |_|
<PAGE>
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
When properly executed, the Proxy will be voted as directed. If no
direction is made, this Proxy will be voted FOR Proposals 1 through 4.
Please mark, date, sign and return this Proxy promptly in the enclosed
envelope.
Dated:________________ 1998
X__________________________
Signature
X__________________________
Print Name(s)
X__________________________
Signature, if held jointly
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney or executor, administrator,
trustee or guardian, please give full title as such. If a Company, please sign
in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
