SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
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
- ---
X Definitive Proxy Statement
- ---
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
- ---
HYDROMER 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.
- ---
<PAGE>
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:
________________________________________________________________________________
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>
HYDROMER, INC.
35 Columbia Road
Branchburg, NJ 08876-3518
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 21, 1998
The Annual Meeting of the Shareholders of HYDROMER, Inc. (the "Company")
will be held on Wednesday, October 21, 1998, at the Corporate Headquarters of
Hydromer, 35 Columbia Road, Branchburg, New Jersey at 10 o'clock a.m. for the
following purpose, as more fully described in the accompanying Proxy Statement:
1. To elect directors of the Company for the ensuing year.
2. To ratify the selection by the Board of Directors of Rosenberg Rich
Baker Berman & Company as the Company's independent accountants for fiscal
1999.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on September 1, 1998 has been fixed by the Board of
Directors as the record date for the determination of shareholders entitled to
notice of, and to vote at the Meeting.
By Order of the Board of Directors
/s/ ROBERT D. FRAWLEY
----------------------------------
Robert D. Frawley, Secretary
Branchburg, New Jersey
September 11, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
- ---------------
This Proxy Statement, which will be mailed commencing on or about September 15,
1998 to the persons entitled to receive the accompanying Notice of Annual
Meeting of Shareholders, is provided in connection with the solicitation of
Proxies on behalf of the Board of Directors of HYDROMER, INC. for use at the
Annual Meeting of Shareholders to be held at the Corporate Headquarters of
Hydromer, 35 Columbia Road, Branchburg, New Jersey at 10 o'clock a.m. on October
21, 1998 and at any adjournment thereof, for the purposes set forth in such
Notice. The Company's executive office is located at 35 Columbia Road,
Branchburg, New Jersey 08876-3518.
At the close of business on September 1, 1998, the record date stated in the
accompanying Notice, the Company had 4,367,987 outstanding shares of Common
Stock without par value ("Common Stock"), each of which is entitled to one vote
with respect to each matter to come before the Meeting. The Company has 10,917
shares of Common Stock, which are Treasury Stock and not entitled to vote. The
Company has no class or series of stock outstanding other than the Common Stock.
As of September 1, 1998, Manfred F. Dyck, Chairman of the Board and a director
of the Company, beneficially owned approximately 38.51% of the outstanding
Common Stock of the Company, and his wife Ursula M. Dyck, a director of the
Company, beneficially owned an additional 3.62% of the Common Stock. Such
ownership may enable such shareholders to exercise a controlling influence over
the Company's affairs.
I. ELECTION OF DIRECTORS
- ------------------------
Five directors will be elected at the Annual Meeting of Shareholders, each to
serve for one year and until a successor shall have been duly chosen and
qualified. Each director is elected by a plurality of votes cast. It is the
intention of each of the persons named in the accompanying form of Proxy to vote
the shares represented thereby in favor of the five nominees listed in the
following table, unless otherwise instructed in the Proxy. In case any of the
nominees is unable or declines to serve, such persons reserve the right to vote
the shares represented by such Proxy for another person duly nominated by the
Board of Directors in his or her stead or, if no other person is so nominated,
to vote such shares only for the remaining nominees. The Board of Directors has
no reason to believe that any person named will be unable or will decline to
serve. Certain information concerning the nominees for election as directors is
set forth below. Such information was furnished by them to the Company.
Name of Nominee and Certain
Biographical Information
- ----------------------------
MANFRED F. DYCK, age 63; Chief Executive Officer of Biosearch Medical Products,
Inc. (manufacturer and distributor of enteral feeding systems) since 1975;
Chairman of the Board of the Company since June 1983 and Chief Executive of the
Company since July of 1989; President from 1980 to June 1983; Director of
Biosearch Medical Products Inc. since 1975; Director of the Company since 1980.
Manfred and Ursula Dyck are husband and wife.
MAXWELL BOROW, M.D., age 72, Medical Doctor, retired Chief of Surgery at
Somerset Medical Center (hospital) from 1985-1994, Chief of Vascular Surgery at
Somerset Medical Center from 1978-1985; Director of the Company since 1990.
URSULA M. DYCK, age 64; Director of the Company since 1980. Ursula and Manfred
Dyck are wife and husband.
DIETER HEINEMANN, age 60; Specialist, Frankfurt, Germany Stock Exchange since
prior to 1987. Director of the Company since 1991.
ROBERT H. BEA, age 45; Vice President of Quality Assurance & Regulatory Affairs
of Siemens Hearing Instruments, Inc. since 1994; Vice President of Quality
Assurance and Regulatory Affairs of Biosearch Medical
1
<PAGE>
Products, Inc. from 1992- 1994; Previously, he worked at Johnson & Johnson where
he held positions of increasing responsibility in Quality/Regulatory affairs
from 1973-1991. Director of the Company since 1996.
Stock Owned
September 1, 1998 (1) Beneficially as of Percent of Class
- --------------------- -------------------- -----------------
MANFRED F. DYCK, .............. 1,682,173 (2) 38.51%
MAXWELL BOROW, M.D., .......... 6,000 Less than 1%
URSULA M. DYCK, ............... 158,076 (3) 3.62%
DIETER HEINEMANN, ............ 565,125 (4) 12.94%
ROBERT H. BEA ................ -0- --
- ------------
(1) As of September 1, 1998, except as otherwise indicated below, each nominee
has sole voting and investment power with respect to all shares shown in
the table as beneficially owned by such nominee.
(2) Includes an aggregate of 23,676 shares held by Mr. Dyck as custodian for
certain of his children and does not include 186,908 shares held with sole
voting investment power by Mr. Dyck's children and relatives of Mr. Dyck's,
as to which Mr. Dyck disclaims beneficial ownership, or shares held by
Ursula M. Dyck, his wife.
(3) Includes an aggregate of 23,076 shares held by Mrs. Dyck as custodian for
certain of her children and does not include 140,756 shares held with sole
voting and investment power by Mrs. Dyck's children, as to which Mrs. Dyck
disclaims beneficial ownership, or shares held by Manfred F. Dyck, her
husband, individually or as custodian.
(4) Does not include 135,000 shares held by the wife and children of Mr.
Heinemann as to which he disclaims beneficial ownership.
During the past year, the Board of Directors of the Company met four times. Dr.
Borow attended 75% of the meetings and all other Directors attended 100% of the
meetings.
Since May of 1990, directors have been compensated at the rate of $750 per
meeting for directors meetings attended in person, and $200 per meeting for
telephone conference meetings. In addition, directors may attend operational
meetings with Company management, and will be compensated at the rate of $500
per meeting for attendance at such meetings. No such operational meetings were
held in the fiscal year 1998.
The Board of Directors of the Company does not have a separate Nominating
Committee, Audit Committee or Compensation Committee. These functions are
performed by the Board at its meetings.
Five Directors are standing for election at the annual meeting.
EXECUTIVE OFFICERS
- ------------------
Manfred F. Dyck has been Chairman of the Board of the Company since June 1983
and a Director of the Company since its inception. Mr. Dyck served as Chief
Executive Officer of the Company from its inception until October 1986, and as
of August 1989, reassumed the duties of Chief Executive Officer. Mr. Dyck has
been Chief Executive Officer and a Director of Biosearch Medical Products Inc.
since 1975.
2
<PAGE>
Kenneth P. Brice has been Vice-President, Chief Financial Officer since
September 1997. Prior to joining Hydromer, Mr. Brice was President of CFO
Resources, Inc., a company that provides financial resources to other companies.
Mr. Brice previously was Vice-President and Chief Financial Officer of Digital
Solutions, Inc., a NJ based Professional Employer Organization. From September
1992 to February 1995, he was Vice-President and Corporate Controller for
Interim Services, Inc., a large international temporary help firm located in Ft.
Lauderdale, Fl.
Joseph A. Ehrhard has been Vice-President of New Business and R&D since February
1998. Prior to joining Hydromer, Mr. Ehrhard was Director of R&D for the Golden
Cat Division of Ralston-Purina in St. Louis, Mo. Mr. Ehrhard was previously
Director of R&D in Worldwide Absorbent Products and Materials Research for
Johnson & Johnson in New Jersey. From June 1987 through January 1995, he was in
R&D at Procter & Gamble Company, most recently as Section Head of Global New
Technology Development in Personal Cleansing in Cincinnati, OH.
Robert J. Moravsik has been Vice-President and General Counsel since April 1998.
He also serves in the same capacity for Biosearch Medical Products, Inc. and
affiliated company since 1987. Prior to that he was Vice-President and General
Counsel to Fisher Stevens, Inc., a subsidiary of the Bureau of National Affairs.
Robert D. Frawley has been Secretary of the Company since January 1984. Mr.
Frawley has been an attorney in private practice since December 1985. He is
employed by the law firm of Smith, Stratton, Wise, Heher and Brennan, Princeton,
New Jersey since February 1994. From December 1983 to December 1985, Mr. Frawley
was Vice President - Corporate Counsel and Secretary of Biosearch Medical
Products Inc.
COMPENSATION OF EXECUTIVE OFFICERS
- -----------------------------------
The following table sets forth information concerning cash compensation paid or
accrued by the Company during the fiscal year ended June 30, 1998, to the CEO
and for each of the executive officers of the Company whose total cash
compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
- ---------------------------
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
---------------------------------------- ------------------------------------------------
Name
and Other Annual Restricted
Principle Compensation ($) Stock Options LTIP All Other
Position Year Salary($) Bonus($) (1) Awards /SARs($) Payouts Compensation
- --------------- ---- -------- -------- --------------- ----------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Manfred F. Dyck, .... 1995 50,000 -- -- -- -- -- --
Chairman, ........... 1996 52,500 -- 5,000
President, CEO ...... 1997 64,257 25,687 6,250
1998 82,500 23,660 5,000
</TABLE>
The aggregate value of restricted shares of the Company held by Manfred F. Dyck
as of June 30, 1998 was approximately $1,997,580 (includes only shares held
directly, does not include option or shares held as custodian.)
(1) Amount of Automobile Allowance, which was paid in the year shown.
3
<PAGE>
STOCK OPTIONS
- -------------
In 1984 the Board of Directors conferred upon Manfred F. Dyck, Chairman of the
Board of the Company, the authority to grant to, among others, employees of the
Company including executive officers, options to purchase up to 15,000 shares of
the Common Stock of the Company at an exercise price of $1.00 per share, and
upon such other terms and conditions as the Chairman may determine. No such
options were granted during the 1998 fiscal year.
On January 22, 1998 the Board of Directors authorized a stock option plan for
senior management. Under the plan, senior management would be issued stock
options in an amount equal to 3% of the incremental market cap of the Company
(defined as # of outstanding shares times share price) divided by the stock
price at June 3oth in each of the next three years. These options would be
equally divided but the number of participants in the plan. As of June 30, 1998,
there were three participants. The plan was effective July 1, 1998. The market
cap of the company on July 1, 1998 was $3,010,496. The first options will be
issued under this plan as of June 30, 1999.
On January 22, 1998 the company issued 25,000 stock options to a senior
executive as part of his employment agreement. These options vest 100% in 6
months and are priced at $0.875 per share. The Company also issued 60,000 stock
options to the same executive that will vest once the company gets listed on a
regional or national exchange. The vesting will be at the rate of 20,000 shares
will vest immediately upon listing. 5,000 shares will vest at the end of each of
the next 8 quarters from listing date. The price of the options will be the
listing price or $2.00, whichever is higher.
On January 22, 1998 the Board of Directors approved an option plan for active
directors that would give each active director of the Company 5,000 options with
a strike price on September 1, 1998, the date of record and each subsequent year
on the record date.
On August 12, 1998 the Board of Directors authorized a stock option plan for
Manfred Dyck, Chairman and CEO. Under the plan, he would be issued stock options
in an amount equal to 3% of the incremental market cap of the Company (defined
as # of outstanding shares times share price) divided by the stock price at June
3oth in each of the next three years. The plan was effective July 1, 1998. The
market cap of the company on July 1, 1998 was $3,010,496. The first options will
be issued under this plan as of June 30, 1999.
CERTAIN AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------------------
Manfred F. Dyck has served as Chairman, Chief Executive Officer and President of
the Company since July of 1989. He serves the Company approximately 5 days per
month, not to exceed 20% of his time. He is compensated by a salary of $100,000
per annum effective August 12, 1998 and a car allowance of $5,000 per annum. He
also participates in a management bonus program based upon Company
profitability.
Robert Moravsik serves the company 4 days per week in his current capacity as
Vice-President, and General Counsel. He holds the same position at Biosearch
Medical Products for the remaining 20% of his time.
INFORMATION CONCERNING CERTAIN SHAREHOLDERS
- --------------------------------------------
The shareholders (including any "group" as that term is used in Section 13(d)
(3) of the Securities Exchange Act of 1934) who, to the knowledge of the Board
of Directors of the Company, owned beneficially more than 5% of the outstanding
Common Stock as of September 1, 1998, and all directors and officers of the
Company as a group, and their respective shareholdings (according to information
furnished by them to the Company), are set forth in the following table. Except
as indicated in the footnotes to the table, all of such shares are owned with
sole voting and investment power.
4
<PAGE>
SHARES OF COMMON
STOCK OWNED
------------------
Name and Address Beneficially (1) PERCENT OF CLASS
- ----------------- ----------------- -----------------
Manfred F. Dyck .................. 1,682,173(2)(3) 38.52%
255 Holland Road
Far Hills, NJ 07931
Ben A Posdal ..................... 355,361 8.14%
Post Office Box 23632
Tampa, FL 33623
Dieter Heinemann ................. 565,125(4) 12.92%
Goldbergweg 64
60599 Frankfurt AM
Federal Republic of Germany
All Directors and Officers ....... 2,412,374(2)(4)(5) 55.23%
As a group (8 persons)
- ----------------
(1) As of September 1, 1998, except as otherwise indicated below, each nominee
had sole voting and investment power with respect to all shares shown in
the table as beneficially owned by such nominee.
(2) Includes an aggregate of 23,676 shares held by Mr. Dyck as custodian for
certain of his children and does not include 186,908 shares held with sole
voting and investment power by Mr. Dyck's children and relatives of Mr.
Dyck..
(3) Does not include 158,076 shares held by Ursula M. Dyck, Mr. Dyck's wife,
individually and as custodian, and pursuant to exercisable options.
(4) Does not include 135,000 shares held by the wife and children of Mr.
Heinemann as to which he disclaims beneficial ownership.
(5) Includes 250 shares held by an officer as custodian for a child. Includes
an aggregate of 23,076 shares held by Mrs. Dyck as custodian for certain of
her children.
OTHER INFORMATION CONCERNING DIRECTORS, OFFICERS AND SHAREHOLDERS
- -----------------------------------------------------------------
During 1998 and 1997, the Company sold materials and services to Biosearch
Medical Products, Inc., (BMP), its former parent, for $45,019 and $31,257,
respectively. The Company also earned royalty income from BMP of $25,894 and
$43,171 for the years ended June 30, 1998 and 1997, respectively. Total amounts
owed to the Company by BMP were $25,093 and $19,794 at June 30, 1998 and 1997,
respectively. In addition, BMP provides engineering and secretarial services to
Hydromer. These expenses amounted to $17,393 and $10,090 for the years ended
June 30, 1998 and 1997, respectively. Amounts owed to BMP at June 30, 1998 and
1997, respectively, were $3,811 and $597. In 1998 and 1997, the Company
purchased furniture and equipment from BMP for $500 and $46,000, respectively.
Also, during 1998 and 1997, the Company leased equipment and space from
Biosearch Medical Products, Inc., on a week-to-week basis. Total rental expense
paid to BMP was $10,000 for the year ended 1998 and $6,000 for the year ended
June 30,1997.
On June 12, 1998, the Company purchased the Biosearch Medical Products facility
and land for $850,000 in cash and a pre-paid lease of $345,000. The transaction
was funded with a 15-year mortgage at a local bank. The mortgage carries an
interest rate of 200 basis points over the Bank's fully absorbed five-year cost
of funds, adjusted every 5 years. The interest rate for the first 5-year period
is 8.0%. The land and building has an appraised value of $1,370,000. Biosearch
Medical Products will occupy approximately 75% of the building and Hydromer the
remaining 25%. Manfred F. Dyck who is a director and executive officer of the
Company is
5
<PAGE>
also a director and Chief Executive Officer of BMP, and hold approximately 20%
of the Common Stock of BMP on a fully diluted basis. The Company believes that
the terms of the foregoing arrangements are fair and equitable to both parties.
Robert J. Moravsik, Vice-President and General Counsel of the Company also
serves as Vice-President and General Counsel of Biosearch Medical Products, Inc.
In the event a conflict exists outside counsel is retained to represent
Hydromer's interests. In the fiscal year ended June 30, 1998, the firm of Smith,
Stratton, Wise, Heher and Brennan represented Hydromer in the purchase of the
building from Biosearch.
Robert D. Frawley, Secretary of the Company, is of counsel to the law firm of
Smith, Stratton, Wise, Heher and Brennan, Princeton, New Jersey. By agreement
with the Company, Mr. Frawley provides legal counsel to the Company on a
fee-for-service basis. Smith, Stratton, Wise, Heher & Brennan is expected to
render legal services in the future.
II. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
- ----------------------------------------------------------------
Subject to ratification by the stockholders, the Board of Directors, has
selected the firm of Rosenberg Rich Baker Berman & Company as the Company's
independent public accountants for the current year.
Representatives of Rosenberg Rick Baker Berman & Company are expected to be
present at the Annual Meeting. They will have the opportunity to make a
statement if they desire to do so and will also be available to respond to
appropriate questions from stockholders.
III. OTHER MATTERS
- -------------------
The Board of Directors of the Company does not know of any other matters which
may be brought before the meeting. However, if any such other matters are
properly presented for action, it is the intention of the persons named in the
accompanying form of Proxy to vote the shares represented thereby in accordance
with their judgment on such matters.
IV. MISCELLANEOUS
- -----------------
If the accompanying form of Proxy is executed and returned, the shares
represented thereby will be voted in accordance with the terms of the Proxy,
unless the proxy is revoked by written notice addressed to and received by the
Secretary of the Corporation. If no directions are indicated in such Proxy, the
shares represented thereby will be voted in the election of directors in favor
of the nominees proposed by the Board of Directors, and in favor of ratification
of The Independent Certified Public Accountants. Any Proxy may be revoked at any
time before it is exercised. The casting of a ballot at the Meeting by a
shareholder who may theretofore have given a Proxy will not have the effect of
revoking the same unless the shareholder so notifies the Secretary of the
meeting in writing at any time prior to the voting of the shares represented by
the Proxy.
Votes that are withheld and broker nonvotes will be treated as shares that are
present for purposes of determining a quorum. Withheld votes will be excluded in
determining whether a nominee for director or the ratification of independent
certified public accountants, has received a plurality of the votes cast.
All costs relating to the solicitation of Proxies will be borne by the Company.
Proxies may be solicited by mail and the Company may pay brokers and other
persons holding shares of stock in their names or those of their nominees for
their reasonable expenses in sending soliciting materials to their principals.
It is important that Proxies be returned promptly. Shareholders who do not
expect to attend the Meeting in person are urged to mark, sign and date the
accompanying form of Proxy and mail it in the enclosed return envelope, which
requires no postage if mailed in the United States, so that their vote can be
recorded.
6
<PAGE>
V. EXCHANGE ACT COMPLIANCE
- --------------------------
Section 16(a) of the Securities Exchange Act requires that certain of the
Company's officers, directors and persons who own more than ten percent of a
registered class of the Company's securities, file reports of ownership and
changes in ownership of the Company's securities with the Securities Exchange
Commission. Officers, directors and greater than ten percent shareholders are
required to provide the Company with copies of the forms they file.
Based solely upon its review of copies of such forms received by the Company,
and upon representations by the Company's officers and directors regarding
compliance with the filing requirements, the company believes that in Fiscal
1998, all filing requirements applicable to its officers, directors and ten
percent shareholders were complied within a timely manner.
SHAREHOLDER PROPOSALS
- ----------------------
Shareholder proposals intended to be presented at the 1999 Annual Meeting of
Shareholders of the Company must be received by the Company by May 22, 1999 in
order to be considered for inclusion in the Company's Proxy Statement relating
to such meeting.
Branchburg, New Jersey
September 11, 1998
By Order of the Board of Directors
/s/ ROBERT D. FRAWLEY
-----------------------------------
Robert D. Frawley
Secretary
7
