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 (S)240.14a-11(c) or (S)240.14a-12
SCIENCE DYNAMICS CORPORAION
----------------------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than The Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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>
__________________________
SCIENCE DYNAMICS CORPORATION
1919 Springdale Road
Cherry Hill, NJ 08003
(856) 424-0068
______________________
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AT 10:30 AM,
ON NOVEMBER 17, 1999
To the Stockholders of Science Dynamics Corporation:
You are cordially invited to attend the Annual Meeting of the Stockholders of
Science Dynamics Corporation (the "Company"), a Delaware corporation, will be
held at the executive offices of the Company located at 1919 Springdale Road,
Cherry Hill, New Jersey, 08003 on November 17, 1999 at 10:30 A.M. for
consideration of and action upon the following matters:
I. Election of six (6) Directors to hold office for the ensuing year and
until their successors have been duly elected and qualified; and
II. Ratification of appointment of Independent Accountants; and
III. Approval of Amendments of the 1992 incentive stock option plan.
The Board of Directors has fixed the close of business on October 5, 1999,
as the record date for determination of holders of Common Stock of the
Company entitled to notice of, and to vote at, the Annual Meeting and any
adjournments thereof. A list of stockholders and their stockholdings as of
such record date will be available to all stockholders at the time and place
of this meeting.
THE ACCOMPANYING FORM OF PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY.
STOCKHOLDERS (WHETHER THEY OWN ONE OR MANY SHARES AND WHETHER THEY EXPECT TO
ATTEND THE ANNUAL MEETING OR NOT) ARE REQUESTED TO VOTE, SIGN, DATE AND
RETURN PROMPTLY THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. A PROXY MAY BE REVOKED
AT ANY TIME PRIOR TO ITS EXERCISE (a) BY NOTIFYING THE SECRETARY OF THE
COMPANY IN WRITING, (b) BY DELIVERING A DULY EXECUTED PROXY BEARING A LATER
DATE, OR (c) BY ATTENDING THE ANNUAL MEETING AND VOTING IN PERSON.
By Order of the Board of Directors:
-----------------------------------
Joy C. Hartman, Corporate Secretary
October 20, 1999
Cherry Hill, New Jersey
<PAGE>
__________________________
SCIENCE DYNAMICS CORPORATION
1919 Springdale Road
Cherry Hill, NJ 08003
(856) 424-0068
DATED October 20, 1999
PROXY STATEMENT
This Proxy Statement is furnished with the attached Notice of Annual Meeting
and with accompanying proxy on or about October 20, 1999, to each stockholder
of record of Science Dynamics Corporation (the "Company") at the close of
business on October 5, 1999 ("Record Date"), in connection with the
solicitation of proxies by the Board of Directors to be voted at the Annual
Meeting of Stockholders of the Company to be held on November 17, 1999 at
10:30 A.M. at the executive offices of the Company, 1919 Springdale Road,
Cherry Hill, New Jersey 08003, and at any adjournment or adjournments thereof
for the purposes stated below. The Proxy form is enclosed.
REVOCABILITY OF PROXY
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors. The Board's recommendation is set
forth together with the description of each item in this proxy statement.
In summary, the Board recommends a vote:
- Election of Six (6) directors to hold office for the ensuing year and
until their successors have been duly elected and qualified; and
- Ratification of appointment of Independent Accountants; and
- Approval of Amendments of the 1992 incentive stock option plan
With respect to any other matters that properly come before the meeting,
the proxy holders will vote as recommended by the Board of Directors or,
if no recommendation is given, in their own discretion.
What vote is required to approve each item?
- Election of Directors. The affirmative vote of a plurality of the votes
cast at the meeting is required for the election of directors. A
properly executed proxy marked "WITHHOLD AUTHORITY" with respect to the
election of one or more directors will not be voted with respect to the
director or directors indicated, although it will be counted for
purposes of determining whether there is a quorum.
- Ratification of the Company's Independent Public Auditors. The
affirmative vote of a majority of the votes cast at the meeting is
required for the ratification of the auditors.
- Approval of Amendments of the 1992 incentive stock option plan.
The affirmative vote of a majority of the votes cast at the meeting is
required for the Amendment of the 1992 Stock Option Plan.
- -1-
<PAGE>
- Other Items. If you hold your shares in "street name", through a broker
or other nominee, your broker or nominee may not be permitted to
exercise voting discretion with respect to some of the matters to be
acted upon. Thus, if you do not give your broker or nominee specific
instructions, your shares may not be voted on those matters and will not
be counted in determining the number of shares necessary for approval.
Shares represented by such "broker non-votes" will, however, be
counted in determining whether there is a quorum.
DISSENTER'S RIGHT OF APPRAISAL
The matters submitted to the stockholders for their approval will not give
rise to dissenter's appraisal rights under Delaware law.
PERSONS MAKING THE SOLICITATION
The accompanying Proxy is being solicited on behalf of the Board of
Directors of the Company. In addition to mailing the proxy materials,
solicitation may be made in person or by telephone or telegraph by
directors, officers or regular employees of the Company, none of whom will
receive any additional compensation in connection with such solicitation.
The expense of the solicitation of the Proxies for the Annual Meeting will be
borne by the Company. The Company will request banks, brokers and other
nominees to forward proxy materials to beneficial owners of stock held by
them and will reimburse such banks, brokers and other nominees for their
reasonable out-of-pocket expenses in doing so.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only stockholders of record at the close of business on the record date,
October 5, 1999, are entitled to receive notice of the annual meeting and to
vote the shares of common stock that they held on that date at the meeting,
or any postponement or adjournment of the meeting. Each outstanding share
entitles its holder to cast one vote on each matter to be voted upon.
All Stockholders as of the record date, or their duly appointed proxies, may
attend the meeting. Please note that if you hold your shares in
"street name" (that is, through a broker or other nominee), you will need to
bring a copy of a brokerage statement reflecting your stock ownership as of
the record date.
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the meeting to conduct its business. As of
the record date, 16,833,478 shares of common stock of the Company were
outstanding. Proxies received but marked as abstentions and broker non-votes
will be included in the calculation of the number of shares considered to be
present at the meeting.
- -2-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, certain information
with respect to the Common Stock beneficially owned by the beneficial owners,
directors and executive officers of the Company and by all directors and
executive officers as a group.
Name and Address of Percent of
Outstanding Beneficial Outstanding
Owner Number of Shares Shares(1)
- ---------------------- ---------------- -----------
Lyndon A. Keele 775,534(2) 4.61%
Innovative Communications 1,500,000(4) 8.91%
Technology, LTD. (ICT)
(Alan C. Bashforth, President
of the Company controls ICT)
Golden Phoenix, LTD. 2,969,121(5) 17.64%
Russell R. Angely 11,000 0.24%
(Vice President)
Joy C. Hartman 1,000(2) 0.51%
(CFO, Exec. Vice President,
Secretary, Treasurer and
Director)
Kenneth P. Ray 6,000(3) 0.21%
(Director)
All Directors and 5,262,655 32.12%
Officers as a Group(6)
1 Based upon a total number of 16,833,478 shares outstanding as of
October 5, 1999.
2 Includes 1,700 shares owned by Mr. Keele's daughter and 300 shares owned by
Ms. Hartman's children. The daughter of Mr. Keele has sole voting and
investment power with respect to her shares and Mr. Keele has sole voting
and investment power with respect to all other shares in this total.
3 Has sole voting power and sole investment power with respect to the shares
owned by such person.
4 Shares in the name of Innovative Communications Technology, LTD., a
corporation, controlled by Mr. Bashforth.
5 The total includes 2,831,721 shares owned by Golden Phoenix, LTD., of which
Mr. Sheldon Hofferman is General Partner.
6 In addition to the 6,000 shares owned by K. Ray, an outside Company
Director, Mr. Ray holds incentive options to acquire 30,000 shares.
Mr. Angely holds incentive options to acquire 30,000 shares in
addition to the 11,000 shares owned. In addition to the 1,000 shares in
Ms. Hartman's name, incentive options to acquire 65,000 shares are held
by Ms. Hartman.
- -3-
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Six (6) directors will be elected to hold office subject to the provisions of
the Company's by-laws until the next Annual Meeting of Stockholders, and
until their respective successors are duly elected and qualified. The vote
of a majority of the votes entitled to be cast by stockholders present in
person or by proxy, is required to elect members of the Board of Directors.
The following table sets forth the name, age, position with the Company and
respective director service dates of each person who has been nominated to
be a director of the Company:
Positions(s)
Name Age With the Company Director Since
- ----- --- ------------------------------ --------------
Lyndon A. Keele 70 Chairman of the Board of Directors 1973
Kenneth P. Ray 65 Incumbent Director 1990
Joy C. Hartman 50 Executive Vice President, Corporate 1991
Secretary, Treasurer, Incumbent
Director
Sheldon C. Hofferman 54 Incumbent Director 1977
Alan C. Bashforth 48 President and Incumbent Director 1996
Anand Kumar 53 Director 1999
Business Experience of the Directors
Lyndon A. Mr. Keele is the founder of the Company and has been active as
Chairman of its Board of Directors and President from June of 1973 until
November 1996. From April of 1973 to August of 1977, Mr. Keele managed his
own investments and served as a consultant to a number of companies involved
in the electronics industry. Prior to 1973, Mr. Keele served for five years
as a founder and Executive Vice President of TeleSciences Incorporated, a
company engaged in design and manufacture of telephone support equipment.
From 1962 to 1968, he served as a Program Manager for multimillion dollar
programs involving data and circuit switching systems at ITT Federal
Laboratories. From 1958 to 1962, he was employed by GTE's Sylvania
Electronics Systems Division in various management positions, including
Program Manager of data processing and cryptographic communications projects
and programs. He was awarded a B.B.A. by the University of Texas in 1951.
Kenneth P. Mr. Ray is President of DelRay, Inc., an active telecommunications
consulting firm. From 1964 to 1987, he was associated with ITT in various
responsible positions and in 1976 became Vice President of ITT
Telecommunications, with responsibility for engineering,marketing and sales
departments. In 1981 he became Vice President and Director of Operations for
the Transmission Division of ITT Space Communications. In January, 1987,
ITT's telecommunications group was acquired by Alcatel and Mr. Ray became
Vice President of Marketing and Development for Alcatel Network Systems.
From 1988 to 1991, he wasVice President for Technology and Business
Development for Alcatel North America, a telecommunications company.
Mr. Ray received a BSEE from Polytechnic Institute of New York in 1954 and a
Masters in Economics from North Carolina State University in 1970.
Joy C. Hartman, Executive Vice President, was employed by the Company in
January 1982, and is responsible for General Corporate Administration
including the functions inherent in comptrollership, personnel, employee
benefits, and insurance activities. Prior experiences included MSA, a
marketing research company, TeleSciences, Incorporated, and Peat
Marwick-Mitchell. Ms. Hartman is a graduate of the Wharton School of
Business of the University of Pennsylvania.
- -4-
<PAGE>
Alan C. Bashforth, President, was the President of Innovative
Communications Technology, LTD. (ICT), a data communications company, located
in Jersey, Channel Islands, until the acquisition of the intellectual
property of ICT by SDC in November, 1996. Prior experience included
ownership of the CSL Group of companies from its inception in 1975. CSL is a
Communications and Computer engineering group and employed over 100 people in
1992 when Mr. Bashforth sold the company. From 1970 to 1975, Mr. Bashforth
was employed by Automaten CI, LTD., an office equipment and
telecommunications company, in various engineering and sales positions
leading to the position of General Manager. Mr. Bashforth was educated in
electronic engineering at Mid Herts Polytechnic College in England and holds
a Higher National Diploma in Electronic Engineering. Mr. Bashforth also
serves as a Director of Satellite Media Services Ltd.
Sheldon Hofferman has been an Attorney and Private Investor since 1971.
Mr. Hofferman graduated from the University of Pennsylvania in 1966 and
Temple University Law School in 1971. He was in private law practice in
Washington, D.C., specializing in communications law, from 1971 to 1974.
He served as Senior Trial Attorney for the Federal Trade Commission from
1974 to 1983, and re-entered private law practice thereafter. Mr. Hofferman
has also served as General Partner of Golden Phoenix Limited Partnership, an
investment concern, since 1983.
Anand Kumar received a Ph.D. Candidacy degree in Communications and a
M.S. degree in Electrical Engineering from the University of Connecticut.
He also received a B.S. degree in Electrical Engineering (Honors) from
Jadavpur University, India. 1980 to Present Founder and principal of
Communications Strategies Group, a technology consulting firm serving clients
in North America, Europe and Asia. He has thirty years of experience in the
telecommunications and electronics industries including: Executive
Vice President of FaciliCom International; Washington International Teleport
- - Founder and Chief Executive Officer from 1986 - 1992; General Telephone &
Electronics - Manager Marketing Services and Product Development from
1978 - 1980.
General Information
Board of Directors. The Board of Directors is responsible for supervision of
the overall affairs of the Company. To assist it in carrying out of its
duties, the Board has delegated certain authority to several committees.
In the opinion of the Board, each of the three outside directors is
independent of management and free of any relationship with the Company that
would interfere with his or her exercise of independent judgement in
performing the duties of a director.
The Board of Directors held three meetings during 1998. Overall and
individual attendance at the Board and committee meeting was 100 percent.
Following the Annual Meeting, the Board will consist of six directors. In
the interim between Annual Meetings, the Board has the authority under the
By-laws to increase or decrease the size of the Board.
- -5-
<PAGE>
Directors Compensation
Cash Compensation. During the Company's fiscal year ending December 31,
1998 each non-employee director received $250.00 per meeting as standard
compensation for service as directors. Directors who are employees of
the Company received no additional compensation for service as directors.
Options. Nonemployee directors are granted stock options at the discretion
of the Board for services rendered as a director.
BOARD COMMITTEE MEMBERSHIP
NAME AUDIT COMMITTEE STOCK OPTION COMMITTEE
- -------------------------------------------------------------------------
Joy C. Hartman *
Sheldon Hofferman *
Kenneth P. Ray * *
* Member.
Audit Committee
The Audit Committee is responsible for reviewing reports of the Company's
financial results, audits, internal controls, and adherence to its Business
Conduct Guidelines in compliance with federal procurement laws and
regulations. The committee recommends to the Board of Directors the selection
of the Company's outside auditors and reviews their procedures for ensuring
their independence with respect to the services performed for the Company.
The Audit Committee is composed of outside directors who are not officers or
employees of Science Dynamics. In the opinion of the Board, these directors
are independent of management and free of any relationship that would
interfere with their exercise of independent judgment as members of this
committee.
Stock Option Committee
The Stock Option Committee during 1998 consisted of two of the board members,
Ken Ray and Joy Hartman. Its function is to oversee the Company's Incentive
Stock Option Plan. There was one meeting of the Stock Option Committee
during 1998.
Legal Proceedings
The Company is not now a party to any litigation and no action against the
Company has been threatened or is known to be contemplated by any governmental
agency or subdivision or any other entity.
Executive Compensation
The Company does not have a compensation committee, the remuneration for the
Company's Chief Executive Officer and other executive officers and/or
directors is established by the Board of Directors. Base salaries for the
Company's executive officers, as well as changes in such salaries, are
established by the Board of Directors, taking into account such factors as
competitive industry salaries; a subjective assessment of the nature of the
position; the contribution and experience of the officer and the length of
the officer's service.
- -6-
<PAGE>
Periodic grants of stock options. Under the stock option guidelines
adopted by the Board of Directors, stock option grants may be made to
executive officers upon initial employment, and are granted from time to
time for increased responsibility.
Executive Compensation Summary Table
The following table sets forth all information concerning total
compensation earned or paid to the Company's Chief Executive Officer and the
three other most highly compensated executive officers of the Company who
served in such capacities as of December 31, 1998 for services rendered to
the Company during each of the last three fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long term compensation
----------------------- --------------------------
Name and Year Salary Bonus Other Awards All
Principal ($) ($) Annual Restrict- Options/ LTIP Other
Position Compen- ed Stock SARs(#) Pay- Compensa-
sation ($) ($) outs($) tion ($)
- ---------- ---- ------ ----- ---------- --------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alan C. Bashforth, 1998 160,000* -0- -0- -0- -0- -0- -0-
President and CEO 1997 160,000* -0- -0- -0- -0- -0- -0-
1996 24,615* - - - - - -
Lyndon A.Keele 1998 134,085 -0- -0- -0- -0- -0- -0-
1997 134,085 -0- -0- -0- -0- -0- -0-
1996 134,085 -0- -0- -0- -0- -0- -0-
Joy C.Hartman, 1998 111,100 -0- 5,632* -0- -0- -0- -0-
EVP, CFO 1997 101,000 -0- 4,273* -0- 20,000 -0- -0-
1996 101,000 -0- 2,819* -0- 45,000 -0- -0-
Russell R. Angley, 1998 95,000 -0- 470* -0- -0- -0- -0-
VP 1997 95,000 -0- 19,252* -0- -0- -0- -0-
1996 88,200 -0- 6,079* -0- 30,000 -0- -0-
</TABLE>
*Mr. Bashforth's compensation is a contractual management fee, Ms. Hartman's
other compensation resulted from deferred salary payments and accrued
vacations. Mr. Angely's other compensation resulted from sales commissions.
In January 1996 the Board of Directors adopted a resolution whereby the then
present officers of the Corporation are protected from termination without
cause should there be a change in control or ownership of the Company by
acquisition or merger.
The employment agreements would entitle each of the three to receive up to
2.99 times their annual salary if there is a change in control of the Company
(as defined) and a termination of their employment. The maximum contingent
liability under these agreements in such event is approximately $980,000.
Options Grants for Fiscal 1998
There were no options granted in 1998.
- -7-
<PAGE>
AGGREGATED OPTION EXERCISES DURING FISCAL 1998
AND OPTION VALUES ON DECEMBER 31, 1998
The table below sets forth information with respect to the number and value
of unexercised options held by the named executive officers of the Company
on December 31, 1998. No stock options were exercised by such persons in
1998 and there are no outstanding stock appreciation rights.
<TABLE>
<CAPTION>
Value of Unexercised
Name Shares Acquired Number Number of Unexercised Options In-The-Money Options
---- on Exercise Realized at December 31, 1998 at December 31, 1998
----------- -------- Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Russel R. Angely 0 - 15,000 15,000 None None
Joy C. Hartman 0 - 27,500 37,500 None None
</TABLE>
The Company presently has no standing plans or formal arrangements for
contingent forms of compensation such as bonuses, commissions, executive
stock options, stock appreciation rights, profit sharing, pension,
retirement plans or other like benefit programs, except for the past and
present Incentive Stock Option Plan as hereafter described. No officer,
director, or other employee consequently received or was entitled to any
form of non-cash compensation under any form of plan described or
included within Regulation S-B, Section 402(b)(1), Reg. 228.402, Section
(b)(1).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED HEREIN
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Company has appointed Peter C. Cosmas Co., CPA's as the Company's
independent accountants for the fiscal year ending December 31, 1999.
Peter C. Cosmas Co., CPA's (formerly Nemiroff, Cosmas, Titus and Cochamiro)
has served as public auditors for the Company during the entire calendar
year 1998, having been re-engaged as Company auditors on December 21, 1990,
succeeding Coopers & Lybrand (which had been the Company auditors from 1985
until December 17, 1990). Peter C. Cosmas Co., CPA's previously served as
public auditors for the Company from 1981 through 1985. Services provided
to the Company and its subsidiary by Peter C. Cosmas Co., CPA's in fiscal
year 1998 included the examination of the Company's consolidated financial
statements, limited reviews of quarterly reports and services related to
filings with the Securities and Exchanges Commission.
Representatives of Peter C. Cosmas Co., CPA's will be present at the annual
meeting to respond to appropriate questions and to make such statements as
they may desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF PETER C. COSMAS CO., CPA'S AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS FOR FISCAL 1999. In the event
stockholders do not ratify the appointment, the appointment will be
reconsidered by the Board of Directors.
- -8-
<PAGE>
PROPOSAL 3
APPROVAL OF AMENDMENTS TO THE 1992 INCENTIVE STOCK OPTION PLAN
The Board of Directors has approved, and recommends that the stockholders
approve, amendments to the Company's 1992 Stock Option Plan
(the "Option Plan") for the purposes described below. Approval of this
proposal requires the affirmative vote of the holders of a majority of the
shares of Common Stock present in person or represented by proxy at the
meeting and entitled to vote. The following is a description of the proposed
amendments to and material features of the Option Plan.
DESCRIPTION OF PROPOSED AMENDMENTS
The Company proposes to amend the Option Plan to implement the following
changes:
- To increase the number of shares of Common Stock available for
option grants by 1,088,000;
- To change the vesting provision of the Option Plan to 100%
immediate vesting upon grant consistent with the performance-based
philosophy of the Company; and
- To make other minor changes to the Option Plan, principally to conform
administrative provisions of the plan to changes in the law.
The Company's continued success depends heavily upon its ability to attract
and retain highly qualified and competent personnel. The Company is operating
in a high growth industry which is experiencing fierce competition for
experienced and talented personnel, and the ability to grant stock options at
competitive levels is essential to the Company's success in its recruiting
and retention efforts. Furthermore, the Company strongly believes that its
officers and other key employees should have a significant stake in the
Company's stock price performance under programs that link their compensation
to stockholder return. Accordingly, stock option grants are an integral part
of the Company's compensation program, enabling the Company to provide its
employees with appropriate equity-linked incentives to advance the interests
of the Company and its stockholders.
The Company currently relies solely on the Option Plan for stock option
grants, and currently there are 245,075 shares of Common Stock remaining
available under the Option Plan for future grants. Rather that adopting a new
stock option plan at the present time, the Company proposes to increase the
number of shares authorized for grant under the Option Plan from 562,000
shares to 1,650,000 shares of Common Stock, an increase of 1,088,000 shares.
The Company believes this increase will be sufficient to meet its needs for
the foreseeable future.
The proposed increases in the number of shares are based on the Company's
belief, reflecting reviews of survey data and recent experiences in the
recruiting marketplace, that the increased amounts are necessary to ensure
that the Company's compensation packages are attractive to the high caliber
individuals it seeks to employ.
DESCRIPTION OF THE OPTION PLAN
The Option Plan, as amended to date, authorizes the Company to issue a
maximum of 562,000 shares of Common Stock upon the exercise of stock options
granted under the plan. As a result of options previously granted, the
Company has issued approximately 238,500 shares of Common Stock through option
exercises and has reserved approximately 562,000 shares of Common Stock for
outstanding options under the Option Plan. There were 245,075 shares of
Common Stock remaining under the plan as of December 31, 1998, for future
option grants, although additional shares may become available if outstanding
options are cancelled or expire unexercised. The amended Option Plan would
increase the maximum number of shares issuable by 1,088,000 shares to a
total of 1,650,000 shares.
- -9-
<PAGE>
The Option Plan is administered by a committee designated by the Board of
Directors. Under the Option Plan, the Committee may grant options to
directors, officers and key employees of the Company and its subsidiaries.
Options to purchase Common Stock of the Company granted under the Option Plan
may be either "incentive stock options" within the meaning of that term as
used in Section 422 of the Internal Revenue Code of 1986, as amended. Under
the Option Plan, the Board may grant options to officers, other key employees,
and consultants of the Company and its subsidiaries, except that incentive
stock options may only be granted to employees of the Company or any of its
subsidiaries.
The purchase price of shares acquired upon exercise of stock options under
the Option Plan must be at least 100% of the fair market value of the shares
on the date the option is granted, except that in the case of incentive stock
options granted to stockholders who own 10% or more of the total combined
voting power of all classes of stock of the Company or any subsidiary of the
Company (a "10% stockholder"), the exercise price must be at least 110% of
such fair market value.
The term of an option cannot exceed ten years. Unless terminated earlier by
reason of expiration of the option term, options under the Option Plan will
generally terminate three months after the optionee terminates employment
with the Company, or 12 months after the termination of employment if the
optionee dies or becomes disabled while an employee of the Company. The
options may contain such other terms, provisions and conditions not
inconsistent with the Option Plan as may be determined by the Board. If any
option granted under the Option Plan terminates or expires unexercised in
whole or in part, the shares released from that option may be made subject
to additional options granted under the Option Plan.
The Board may at any time terminate or amend the plan. Any amendment of the
Option Plan, which increases the number of shares which may be issued
thereunder, or changes the requirements as to eligibility for participation,
must be approved by the stockholders of the Company.
The grant of an incentive stock option should have no tax effect on the
Company or the optionee to whom it is granted, and there generally is no tax
to the optionee upon exercise of the option. If an optionee holds shares
acquired upon exercise of an incentive stock option for at least two years
after the date the option is granted and at least one year after the date the
option is exercised, any gain realized by the optionee on the subsequent sale
of such shares is treated as long-term capital gain for federal income tax
purposes. If the shares are sold prior to the expiration of such periods, the
lesser of (a) the difference between the exercise price and the fair market
value of the stock at the date of exercise and (b) the amount realized on
disposition minus the purchase price, is treated as compensation to the
optionee and taxable as ordinary income. The excess gain, if any, is treated
as capital gain (which will be short-term or long-term capital gain depending
upon the length of time the shares were held).
- -10-
<PAGE>
The excess of the fair market value of the shares over the option price at
the time of exercise of an incentive stock option may subject the recipient
to the alternative minimum tax (which, generally speaking, will be applied
only if it produces a tax that is higher than the individual's regular tax
liability). The Company is allowed a deduction for tax purposes only to the
extent, and at the time, that the optionee receives ordinary income by
reason of the optionee's sale of shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENTS
TO THE 1992 STOCK OPTION PLAN.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no business that
will be presented for consideration at the annual meeting other than the
items referred to above. In the event that any other matter is properly
brought before the meeting for action by the stockholders, proxies in the
enclosed form returned to the Company will be voted in accordance with the
recommendation of the Board of Directors or, in the absence of such a
recommendation, in accordance with the judgment of the proxy holder.
ADDITIONAL INFORMATION
Stockholder Proposals for the 2000 Annual Meeting. Stockholders interested
in presenting a proposal for consideration at the Company's Annual Meeting
of Stockholders in 2000 may do so by following the procedures prescribed in
Rule 14a-8 under the Securities Exchange Act of 1934 and the Company's
by-laws. To be eligible for inclusion, stockholder proposals must be
received by the Company's Corporate Secretary no later than 120 days
proceeding the 2000 stockholders meeting that is scheduled for June 8, 2000.
Order of the Board of Directors:
----------------------------
Joy C. Hartman
Corporate Secretary
October 20, 1999
Cherry Hill, New Jersey
- -11-
<PAGE>
SCIENCE DYNAMICS CORPORATION
Annual Meeting of Stockholders - To Be Held November 17, 1999
THE BOARD OF DIRECTORS SOLICITS THIS PROXY
The undersigned hereby appoint(s) Lyndon A. Keele and Joy C. Hartman, and
each of them, attorney, agent and proxy of the undersigned, with full power
of substitution, to vote all shares of common stock of Science Dynamics
Corporation that the undersigned would be entitled to cast if personally
present at the 1999 Annual Meeting of Stockholders of the Company, and at any
postponement or adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED. IF NO CHOICE IS
SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR
DIRECTOR LISTED BELOW, FOR PROPOSAL NUMBERS 2 AND 3 AND ACCORDING TO THE
DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
Please date, sign exactly as your name appears on the form and mail the proxy
promptly. When signing as an attorney, executor, administrator, trustee or
guardian, please give your full title as such. If shares are held jointly,
both owners must sign.
<TABLE>
<CAPTION>
The Board recommends a vote FOR items 1, 2 and 3
------------------------------------------------
(1) ELECTION OF DIRECTORS:
(01) Lyndon A. Keele, (02) Alan C. BAshforth (03) Joy C. Hartman,
(04) Sheldon Hofferman, (05) Anand Kumar (06) Kenneth P. Ray
<C> <C> <C>
FOR WITHHOLD WITHHOLD authority to vote for the
All nominees Authority to vote individual nominee(s) identified
(except as marked for all nominees in the space provided below
to the contrary)
[ ] [ ] _________________________________
<C> <C>
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(2) Ratification of appointment [ ] [ ] [ ] (3) Approval of Amendments of [ ] [ ] [ ]
of Peter C. Cosmas Co., CPA's the 1992 incentive stock
as the Company's independent option plan to increase
public auditors for 1999 options from 562,000 to
1,650,000 shares.
<TABLE\>
PLEASE MARK ALL [X]
CHOICES LIKE THIS
SIGNATURE ____________________________ DATE ___________
SIGNATURE ____________________________ DATE ___________
</TABLE>
