UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT
(PURSUANT TO SECTION 14(a) OF SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO.__ )
FILED BY REGISTRANT _XX_
FILED BY A PARTY OTHER THEN REGISTRANT
CHECK THE APPROPRIATE BOX:
_X_PRELIMINARY PROXY STATEMENT (PRER14A)
___CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14a-6(e)(2)
___DEFINITIVE PROXY STATEMENT
___DEFINITIVE ADDITIONAL MATERIALS
___SOLICITING MATERIAL PURSUANT TO SECTION 240.14a-11(c) OR SECTION 240.14a-12
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HYDROMER, INC.
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THEN REGISTRANT)
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PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
_X_ NO FEE REQUIRED
___ FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14a-6(i)(1) AND 0-11.
1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
COMMON STOCK
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2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES: 4,587,987
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3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON WHICH
FILING FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
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4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
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5) TOTAL PAID:
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___ FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIAL:-
___ CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY THE 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 FORM OR SCHEDULE AND THE DATE OF ITS FILING.
1) AMOUNT PREVIOUSLY PAID:
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2) FORM, SCHEDULE OR REGISTRATION NO.:
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3) FILING PARTY:
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4) DATE FILED:
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<PAGE>
HYDROMER, INC.
35 Industrial Parkway
Branchburg, NJ 08876-3518
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 24, 2000
The Annual Meeting of the Shareholders of HYDROMER, Inc. (the "Company") will be
held on Tuesday, October 24, 2000, at 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 approve increasing the number of authorized shares from 6,000,000
to 15,000,000.
3. To ratify the selection by the Board of Directors of Rosenberg Rich
Baker Berman & Company as the Company's independent accountants for
fiscal 2000.
4. Transact such other business as may properly come before the meeting
or any adjournment thereof.
The close of business on September 1, 2000 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 J. MORAVSIK
-----------------------------
Robert J. Moravsik, Secretary
Branchburg, New Jersey
September 8, 2000
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>
TABLE OF CONTENTS
QUESTIONS AND ANSWERS........................................................ 1
PROXY STATEMENT.............................................................. 3
I. ELECTION OF DIRECTORS.................................................. 3
Name of Nominee..................................................... 3
Executive Officers.................................................. 5
Compensation of Executive Officers.................................. 6
Stock Options....................................................... 7
Certain Arrangements with Directors and Executive Officers.......... 7
Information Concerning Certain Shareholders......................... 8
Other Information................................................... 8
II. AMENDMENT TO CERTIFICATE OF INCORPORATION.............................. 9
EXPLANATION OF AMENDMENT:........................................... 9
Description of EXISTING STOCK....................................... 9
PREFERRED SHARES........................................... 9
Dividend Rights............................................ 9
Dividend Policy............................................ 10
Liquidation Rights......................................... 10
Redemption Provisions...................................... 10
Conversion Privileges...................................... 10
Voting Rights.............................................. 10
Miscellaneous.............................................. 10
III. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS............ 10
IV. OTHER MATTERS.......................................................... 10
V. MISCELLANEOUS.......................................................... 10
V. EXCHANGE ACT COMPLIANCE................................................ 10
VI. SHAREHOLDER PROPOSALS.................................................. 11
i
<PAGE>
HYDROMER, Inc.
35 Columbia Road
Branchburg, NJ 08876
PROXY STATEMENT
QUESTIONS AND ANSWERS ABOUT HYDROMER ANNUAL
MEETING AND VOTING.
WHY DID I RECEIVE THIS PROXY STATEMENT?
We sent you this proxy statement and the enclosed proxy card because Hydromer's
Board of Directors is soliciting your proxy to be used at the annual meeting of
stockholders on October 24, 2000, at 10:00 a.m. (EST), at 35 Columbia Road,
Branchburg, NJ 08876, or at any adjournment of the meeting. This proxy
summarizes the information you need to know to vote on an informed basis. We are
first mailing this proxy statement in the enclosed proxy card to stockholders on
or September 8, 2000.
WHO CAN VOTE?
You are entitled to vote if you owned Hydromer common stock on the record date,
which is the close of business on September 1, 2000. Each share of Hydromer
common stock that you own entities you to one vote,
HOW MANY SHARES OF VOTING STOCK ARE OUTSTANDING?
On the record date, there were 4,587,987 shares of Hydromer common stock
outstanding. Hydromer common stock is our only class of voting stock.
WHAT AM I VOTING ON?
1. The election of eight individuals to serve on our Board of
Directors:
Manfred F. Dyck, Ursula M. Dyck, Dieter Heinemann, Robert Bea,
Dr. Maxwell Borow, Dr. Klaus J.H. Meckeler, Dr. Frederick Perl
and Dr. Gaylord McKissick.
2. The amendment to Hydromer's Certificate of Incorporation to
increase the number of shares the Company is authorized to issue
from 6,000,000 common shares to 15,000,000 common shares. 3. To
ratify the selection of Rosenberg Rich Baker Berman & Company as
our auditors for the fiscal year beginning July 1, 2000.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND I VOTE ON THE PROPOSALS?
The Board of Directors, recommends a vote FOR each of the Board's nominees, FOR
approval of the amendment to the Certificate of Incorporation and FOR the
appointment of Rosenberg Rich Baker Berman & Company as our independent auditors
for 2000/2001.
HOW DO I VOTE?
To vote by proxy you should complete, sign and date the enclosed proxy card and
return it promptly in the prepaid envelope provided;
To vote in person, you may attend the meeting and cast your vote in person.
MAY I REVOKE MY PROXY?
You may revoke your proxy at any time before it is voted in either of the
following ways:
1
<PAGE>
1. You May Submit another proxy card with a later date.
2. You may notify Hydromer's Secretary in writing before your proxy
is voted that you have revoked your proxy.
IF I PLAN TO ATTEND THE MEETING, SHOULD I STILL VOTE BY PROXY?
Whether you plan to attend the meeting or not, we urge you to vote by proxy.
Returning the proxy card will not affect your right to attend the meeting, and
your proxy will not be used if you are personally present at the meeting and
inform the Secretary in writing prior to the voting that you wish to vote your
shares in person. The Secretary will have proxy revocation forms at the meeting
in case you want to revoke your proxy and vote in person.
HOW WILL MY PROXY BE VOTED?
If you properly fill in your proxy card and send it to us, your proxy holder
(one of the individuals named on your proxy card) will vote your shares as you
have directed. Under the rules of the various exchanges, if your broker is a
member of the exchange and holds your shares in its name, the broker may vote
your shares on Proposals 1 and 3 if it does not receive instructions from you,
but the broker may vote your shares on Proposal 2 only if it receives
instructions from you. IF YOU SIGN THE PROXY CARD BUT DO NOT MAKE SPECIFIC
CHOICES, THE PROXY HOLDER WILL VOTE YOUR SHARES AS RECOMMENDED BY THE BOARD OF
DIRECTORS AS FOLLOWS:
"FOR" the election of all nominees for director,
"FOR" approval of the amendment to Certificate of Incorporation
"FOR" ratification of the selection of independent auditors for 2000/2001
WHAT CONSTITUTES A QUORUM?
A quorum is a majority of the outstanding shares entitled to vote which are
present or represented by proxy at the meeting. There must be a quorum for the
transaction of business at the annual meeting. If you submit a properly executed
proxy card, even if you abstain from voting, your shares will be considered part
of the quorum. Broker non-votes (shares held by a broker or nominee that are
represented at the meeting, but with respect to which the broker or nominee is
not empowered to vote on a proposal) are included in determining the presence of
a quorum.
WHAT VOTE IS REQUIRED TO APPROVE PROPOSALS?
Directors are elected by a plurality of the shares voting at the meeting. If you
do not vote for a particular nominee, or you indicate "withhold authority to
vote" for a particular nominee on your proxy, your vote will not count either
"for" or "against" the nominee. A "broker non-vote" will also have no effect on
the outcome.
The affirmative vote of a majority of the shares present in person or
represented by proxy and entitled to vote at the meeting is required to approve
the amendment to the Certificate of Incorporation and ratify the selection of
independent auditors and for any other action. Abstentions and "broker
non-votes" will have the same effect as a vote "against" these proposals.
HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
Although we do not know of any business to be considered at the meeting other
than the proposals described in this proxy statement, if any other business is
presented at the meeting, your returned proxy gives authority to proxy holders
to vote on these matters in their discretion.
2
<PAGE>
PROXY STATEMENT
This Proxy Statement, which will be mailed commencing on or about September 8,
2000 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 35 Columbia Road, Branchburg, New
Jersey at 10 o'clock a.m. on October 24, 2000 and at any adjournment thereof,
for the purposes set forth in such Notice. The Company's executive office is
located at 35 Industrial Parkway, Branchburg, New Jersey 08876- 3518.
At the close of business on September 1, 2000, the record date stated in the
accompanying Notice, the Company had 4,587,987 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, 2000, Manfred F. Dyck, Chairman of the Board and a director
of the Company, beneficially owned approximately 35.2% of the outstanding Common
Stock of the Company, and his wife Ursula M. Dyck, a director of the Company,
beneficially owned an additional 2.9% of the Common Stock. Such ownership may
enable such shareholders to exercise a controlling influence over the Company's
affairs.
I. ELECTION OF DIRECTORS (PROPOSAL I)
Eight 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 eight 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 65; Chief Executive Officer of Biosearch Medical Products,
Inc. (manufacturer and distributor of medical devices) 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 74, 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 66; Director of the Company since 1980. Ursula and Manfred
Dyck are wife and husband.
DIETER HEINEMANN, age 62; Specialist, Frankfurt, Germany Stock Exchange since
prior to 1987. Director of the Company since 1991.
3
<PAGE>
ROBERT H. BEA, age 47; Vice President, Regulatory and Quality Assurance, Siemens
Medical Systems, Inc. since 1994; Vice President of Quality Assurance and
Regulatory Affairs of Biosearch Medical 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.
FREDERICK A. PERL, MD, age 72, Attending staff, Somerset Medical Center since
1957; Consulting staff Obstetrics and Gynecology, Carrier Clinic since 1959;
Affiliated with St. Peter's Medical Center, active staff Since 1994, Director of
Biosearch Medical Products since December 1996 and then appointed to the Board
of the Company in February 2000.
KLAUS J.H. MECKELER, M.D. age 66; Clinical Professor of Medicine UMDNJ, Robert
Wood Johnson Medical School, Former Chief of Gastroenterology and Director of
Endoscopic Clinic (a clinic specializing in gastrointestinal disorders) Somerset
Medical Center, since 1966; Director of Biosearch Medical Products since January
1984 and appointed to the Board of the Company in February 2000.
GAYLORD E. McKISSICK, DVM, PhD age 68, Consultant to Merck & Co., St. Joseph's
Hospital, Scotch Plains Zoo, M. White's Deer Farm; prior to 1995 he served as
Senior Investigator for Merck & Co. Since February of 1999 Dr. McKissick has
served as a consultant to the Company in respect to its animal health products,
particularly, T-Hexx(R) cow teat dip and was appointed to the Board of the
Company in February 2000.
Stock Owned (1) %
NAME On Record Date
---- -------------- ------------
MANFRED F. DYCK, 1,634,737 (2) 35.6%
MAXWELL BOROW, M.D 6,000 (5) Less than 1%
URSULA M. DYCK, 155,000 (3) 3.4%
DIETER HEINEMANN, 565,125 (4) 12.3%
ROBERT H. BEA - 0 - (6)
KLAUS J.H. MECKELER - 0 - "
FREDERICK L. PERL - 0 - "
GAYLORD E. McKISSICK - 0 - "
----------
(1) As of September 1, 2000, 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 20,300 shares held by Mr. Dyck as custodian for
certain of his children/grandchildren and does not include 224,260 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. Excludes 66,540 options held by Mr. Dyck.
(3) Does not include 178,108 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.
Includes 20,000 shares held by Mrs. Dyck as custodian for her grandchildren.
Excludes 18,000 options held by Mrs. Dyck.
(4) Does not include 135,000 shares held by the wife and children of Mr.
Heinemann as to which he disclaims beneficial ownership. Excludes 18,000 options
held by Mr. Heinemann.
(5) Excludes 11,000 options held by Dr. Borow
4
<PAGE>
(6) Excludes 18,000 options held by Mr. Bea, Dr. Meckeler, Dr. Perl and Dr.
McKissick
During the past year, the Board of Directors of the Company met seven times. All
Directors except Directors Meckeler, Perl and McKissick who were appointed in
February 2000, attended at least 75% 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 1999.
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.
Eight 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.
Robert J. Moravsik has been Vice-President and General Counsel since April 1998
and Senior Vice President, General Counsel and Secretary since February 2000. He
also serves in the same capacity for Biosearch Medical Products, Inc. (a wholly
owned subsidiary as of February 2000) since 1987. Prior to 1987 he was
Vice-President and General Counsel to Fisher Stevens, Inc., a subsidiary of the
Bureau of National Affairs. Mr. Moravsik is admitted to practice in the states
of New Jersey and New York, the Federal District Court of New Jersey and the
United States Supreme Court.
Martin C. Dyck has been Vice President of Operations of the Company since
February 2000. He also serves as President of the Company's wholly owned
subsidiary, Biosearch Medical Products, Inc Since 1998. Prior to that he served
as Vice President of Operation from 1993-1998. He joined Biosearch in 1986 as a
Project Manager and has served in various positions since then. Martin C. Dyck
is the son of Mr. Manfred F. Dyck and Mrs. Ursula M. Dyck.
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 Keller has been Principal Accounting Officer since June 28, 1999. Robert
Keller is and has been Vice President and Chief Financial Officer of Biosearch
since 1995. Prior to this he was Vice President and Chief Financial Officer of
Mailing Services.
5
<PAGE>
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, 2000, 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 (2) Awards /SAR Payouts Compensation
-------- ---- -------- ------ --------------- ----------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Manfred F. Dyck 2000 238,846(1) -- 5,000 -- 13,000 -- --
Chairman, 1999 100,000 -- 5,000 53,540
President, CEO 1998 82,500 23,660 5,000
Joseph A. Ehrhard 2000 109,200 0 9,000 15,000
Vice President 1999 104,000 11,424 9,000 16,180
Martin C. Dyck 2000 85,582 23,221 4,200(2) 10,000
Vice President
</TABLE>
The aggregate value of restricted shares of the Company held by Manfred F. Dyck
as of June 30, 2000 was approximately $1,021,711 (based on a market price of
$0.625/share and includes only shares held directly, does not include options or
shares held as custodian.)
(1) Mr. Manfred Dyck's salary at Hydromer was $195,000 for the year ending June
30, 2000. Upon the acquisition of Biosearch Medical Products in February 2000,
Mr. Dyck was owed $43,846 in salary accrued while CEO of Biosearch but not paid.
This liability was paid by Hydromer, Inc. For the fiscal year ending June 30,
1999 Mr. Dyck salary of $100,000 was based on working 5 days per month for
Hydromer. (see "Certain Arrangements with Directors and Executive Officers")
(2) Amount of Automobile Allowance, which was paid in the year shown.
(3) As part of a stock option plan covering active Directors, Mr. Dyck was
awarded 5000 options to purchase stock at $0.75 on October 21, 1998; 5000 at
$0.80 on Nov. 11, 1999 and 8000 on October 24, 2000 (see "Stock Options"). In
addition as part of a stock plan for the C.E.O, 48,540 options were awarded on
August 21, 1999 at a share price of $1.00 (see also "Stock Options") and none
for the fiscal year ending June 30, 2000.
(4) As part of a senior management stock option plan Mr. Ehrhard was awarded
31,180 options in 1999. (see "Stock Options")
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<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 1999 fiscal year.
On January 22, 1998 the Board of Directors authorized a stock option plan
effective July 1, 1998 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 30th 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, 2000, there were four participants. No awards were given for the
fiscal year ending June 30, 2000 as the capitalization declined from June 30,
1999.
These option are in effect for 5 years. 20% vest immediately and the remaining
80% vest over the following 8 quarters. Options issued under the plan were:
Name Date Number of Options Price
---- ---- ----------------- -----
Robert J. Moravsik, VP June 30, 1999 16,180 1.00
Joseph A. Ehrhard, VP June 30, 1999 16,180 1.00
Robert J. Moravsik, VP June 30, 2000 0
Joseph A. Ehrhard, VP June 30, 2000 0
Martin C. Dyck, VP June 30, 2000 0
Robert Keller June 30, 2000 0
On January 22, 1998 the Board of Directors also authorized a similar stock
option plan for Manfred Dyck, Chairman and CEO effective July 1, 1998. 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 30th in each of the following
three years. On August 19, 1999, 48,540 options at $1.00 per share were issued
to Mr. Manfred F. Dyck. No options were issued for the fiscal year ending June
30, 2000.
On January 22, 1998 the Company issued 25,000 stock options and on July 1, 1999
the company issued 15,000 to Mr. Joseph Ehrhard as part of his employment
agreement. These options vest 100% in 6 months and are priced at $0.875 per
share and $1.00 respectively.
On February 3, 2000 the Company issued 10,000 stock options to Mr. Martin C.
Dyck as part of his employment agreement as Vice President of the Company. These
options vest immediately and are priced at $0.89.
On January 22, 1998 the Board of Directors approved an option plan for active
directors (an active director attends all the meetings of the Board) that would
give each active director of the Company 5,000 options with a strike price on
September 1, 1998, and each subsequent year on the record date. On October 21,
1998, 5000 options at a price of $0.75 were granted to 4 directors and on
November 11, 1999, 5000 options were granted to all 5 directors at a price of
$0.80. On February 22, 2000 the option plan was amended to grant each director
2000 options for each meeting attended to be awarded at the annual meeting. The
price shall be the prior 5 day average.
CERTAIN ARRANGEMENTS 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.
On August 23, 1999 Mr. Dyck began serving the Company 80% of his time at a
salary of $156,000. The Company agreed to pay Mr. Dyck a full time salary of
$195,000 subject to being reimbursed $9,750 on a quarterly basis from Biosearch
Medical Products, Inc. an affiliated company which became a wholly owned
subsidiary of the Company in February 2000. (see "Compensation of Executive
Officers")
Martin C. Dyck holds the position of Vice President of Operations for the
Company. He also holds the position of President of Biosearch Medical Products,
Inc. a wholly owned subsidiary.
Robert Moravsik serves the Company in the current capacity as Senior
Vice-President, and General Counsel. He holds the same position at Biosearch
Medical Products.
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<PAGE>
Joseph Ehrhard serves the Company in the capacity of Vice President of R&D and
New Business. He has an employment agreement with the Company with the terms
pertaining to the sales incentives being changed for subsequent fiscal years.
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, 2000, and all directors and officers of the
Company as a group, and their respective stock holdings (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.
SHARES OF COMMON
STOCK OWNED
NAME AND ADDRESS BENEFICIALLY (1) PERCENT OF CLASS
---------------- ---------------- ----------------
Manfred F. Dyck 1,634,737 (2)(3) 35.6%
255 Holland Road
Far Hills, NJ 07931
Dieter Heinemann 565,125 (4) 12.3%
Goldbergweg 6460599
Frankfurt AM
Federal Republic
of Germany
Ben Posdal 355,361 8.14%
PO Box 23632
Tampa, Fl 22623
All Directors and Officers 2,395,964 2)(3)(4)(5) 52.2%
As a group (12 persons)
(1) As of September 1, 2000, 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 20,300 shares held by Mr. Dyck as custodian for
certain of his children/grandchildren and does not include 224,260 shares held
with sole voting and investment power by Mr. Dyck's children and relatives of
Mr. Dyck. Excludes 66,540 options held by Mr. Dyck
(3) Does not include 155,000 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. Also excludes 18,000
options held by Mr. Heinemann.
(5) Excludes 56,180 stock options held by Mr. Ehrhard, 16,180 stock options held
by Mr. Moravsik, 10,000 stock options held by Mr. Martin C. Dyck and 66,540
stock options held by Mr. Manfred F. Dyck. Excludes all options held by
Directors. (See "Stock Options")
OTHER INFORMATION CONCERNING DIRECTORS,
OFFICERS AND SHAREHOLDERS
During 1999, the Company sold materials and services to Biosearch Medical
Products, Inc., (BMP), then a related party, for $45,019. In addition the
Company allocates occupancy cost to Biosearch for their share of the expenses on
the building owned by Hydromer and 2/3rds occupied by Biosearch. Expenses
charged to Biosearch during the year ending June 30, 1999 totaled approximately
$34,000. Total amounts owed to the Company by BMP were $62,131 at June 30, 1999.
In addition, BMP provides engineering and secretarial services to Hydromer.
These expenses amounted to $59,491 for the year ended June 30, 1999. Amounts
owed to BMP at June 30, 1999 were $6,784.
In the year ending June 30, 1999 the Company purchased furniture and equipment
from BMP for $5,000. On May 10, 1999 the Company made an offer to exchange an
amount of $0.20 for each share of Biosearch (2,202,878 shares were outstanding).
The Board of Directors of Biosearch approved the offer subject to the vote of
the Biosearch stockholders. The Company, Biosearch and four affiliated persons
jointly filed a Form 13E3 and a 14A Proxy with the S.E.C. and on February 3,
2000
8
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formerly closed the transaction. Biosearch then became a wholly owned subsidiary
of the Company.
Robert J. Moravsik, Senior 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 existed, outside counsel was retained to represent
Hydromer's interests. In the fiscal year ended June 30, 1998, the firm of Robert
D. Frawley represented Hydromer in the purchase of the building from Biosearch
and represented Hydromer in the exchange of $0.20 for each Biosearch common
stock.
Robert D. Frawley, 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. It is expected
that Mr. Frawley will be consulted from time to time on specialized matters.
II. AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES FROM 6,000,000 TO 15,000,000 (PROPOSAL II)
At the annual meeting of Shareholders, action will be taken regarding a
proposal to increase the number of authorized Common Shares by 6,000,000 to a
total of 15,000,000. Approval of the proposal will enable the Company to issue
additional Common stock without any further approval of the stockholders. The
Company has no present plans, understandings or agreements with respect to the
issuance of additional shares. It should be noted that the issuance of shares,
in general, has a dilutive effect on the equity interests of the then existing
Shareholders.
With respect to the proposal, the affirmative vote of not less than a majority
of the then existing Shareholders present at the Annual Meeting in person or by
Proxy is required to adopt it.
The following resolution is proposed to the shareholders:
BE IT RESOLVED THAT THE FIRST SENTENCE OF SECTION 3 OF THE CERTIFICATE
OF INCORPORATION BE AMENDED:
"THE TOTAL NUMBER OF SHARES OF CAPITAL STOCK WHICH THE CORPORATION
SHALL HAVE AUTHORITY TO ISSUE IS 1,000,000 SHARES OF PREFERRED STOCK,
WITHOUT PAR VALUE ("PREFERRED STOCK") AND 15,000,000 SHARES OF COMMON
STOCK, WITHOUT PAR VALUE ("COMMON STOCK").
EXPLANATION OF AMENDMENT:
At the present time the Company is authorized to issue up to 6,000,000
shares of common stock. There is 4,587,987 shares of common stock
actually issued. As of the record date, approximately 660,000 unissued
stock is being held in reserve for the Stock Options either actually
issued, or reserved for issue under the senior management plans,
actually issued to Directors and Officers ("see Stock Options"). Of
the 4,587,987 shares actually issued approximately 2,586,000 shares
are "restricted" stock, either held by Directors or third parties.
While the Company has no present plans for using its common stock as
payment for a future acquisition, it is the opinion of the Company
(hence the reason for the proposal) that the Board of Directors should
have the authorization to issue stock if in the Directors opinion such
issuance would be in the best interests of the stockholders, the
Company's employees, vendors or clients, while taking into
consideration the dilutive effect additional shares may have on the
Company's capitalization and various parameters in the market place
used to value the shares of the Company's stock such as EARNINGS PER
SHARE ("EPS") or PRICE of stock to EARNING ratio. IT IS IMPORTANT TO
NOTE THAT THIS DILUTIVE EFFECT ONLY COMES ABOUT WHEN ADDITIONAL SHARES
ARE ACTUALLY ISSUED.
Hence the directors have asked that the stockholders approve changing
the Company's certificate of Incorporation now filed with the business
records in New Jersey, to allow the Directors to issue up to 9,000,000
additional shares.
DESCRIPTION OF EXISTING STOCK
The following summarizes certain rights with respect to the Common stock:
PREFERRED SHARES: The Company's Certificate of Incorporation
authorizes the Board of Directors to issue up to 1,000,000 shares of
Preferred Shares and further authorizes the Board to set the rate of
dividends, whether dividends are cumulative, whether these shares are
subject to redemption, whether a sinking fund or a fund of similar
nature is to be created and the preference of these shares in respect
to Common shares in liquidation, dissolution or winding up of the
Corporation. The Board may also set any conversion rates of these
shares, the voting rights and the consideration to be paid for
acquiring these Preferred shares. The Company has no present plans to
issue any Preferred shares.
DIVIDEND RIGHTS: Each holder of Common Stock is entitled to such
dividends as may be declared by the Board of Directors out of the
Company assets legally available for such payment.
9
<PAGE>
DIVIDEND POLICY: The Company has paid dividends of $0.03 per share
during the past two years. Any future payment of dividends will depend
on the Company's available earnings, the general financial condition
of the Company, its capital needs, the restrictions in the Company's
various debt instruments, if any and other factors deemed pertinent by
the Board of Directors. The Company has a first mortgage loan being
held by PNC Bank, NA which provides that as long as the Company is not
in default of the loan and its "Debt to Equity Ratio" is no greater
then 2.0 then the Company may declare dividends as it deems prudent.
LIQUIDATION RIGHTS: Upon dissolution, liquidation or winding up of the
Company, all assets available for distribution to shareholders will be
distributed among the Shareholders in proportion to their holdings.
REDEMPTION PROVISIONS: The Common Stock is not redeemable and is not
subject to any sinking fund.
CONVERSION PRIVILEGES: Holders of Common Stock have no conversion
privileges.
VOTING RIGHTS: The holders of Common Stock will have the right to vote
for the election of Directors and all other matters submitted to the
shareholders, each holder being entitled to one vote for each Common
Share held. The Common shares do not have Cumulative voting Rights and
accordingly, the holders of a majority of the Common Stock will be
able to elect the entire Board of Directors.
MISCELLANEOUS: All outstanding shares of Common Stock are validly
issued, fully paid and non-assessable. No holder of Common Stock has
any preemptive rights to subscribe for any securities of the Company.
First City Transfer, Iselin, NJ is the transfer agent for the Stock.
The Company furnishes shareholders with annual reports which include
financial statements certified by independent accountants.
III. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS (PROPOSAL III)
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 Rich 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.
IV. 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.
V. 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 non-votes 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.
VI. 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
10
<PAGE>
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 1999, all filing requirements applicable to its officers, directors and
ten percent shareholders were complied within a timely manner.
VII. SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2001 Annual Meeting of
Shareholders of the Company must be received by the Company by May 25, 2001 in
order to be considered for inclusion in the Company's Proxy Statement relating
to such meeting.
11
<PAGE>
HYDROMER, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON OCTOBER 24, 2000
The undersigned hereby appoints Robert J. Moravsik and Robert Keller and each of
them, to represent the undersigned at the Annual Meeting of Stockholders of
Hydromer, Inc. to be held at Hydromer's facility located at 35 Columbia Road,
Branchburg, New Jersey, on Tuesday, October 24, 2000 at 10:00 a.m., and at any
adjournment thereof, on all matters coming before such meeting.
--------------------------------------------------------------------------------
Please mark
your votes as
indicated in
example
<TABLE>
<S> <C> <C> <C>
1. Election of Manfred F. Dyck; FOR all nominees (except as WITHHOLD AUTHORITY 3. The ratification of the
Maxwell Borow, MD; provided to the contrary below) to vote for all nominees appointment of Rosenberg, Rich,
Dieter Heinemann; Ursula M. Dyck; Baker, Berman & Company as
Robert H. Bea, Dr. Klaus Meckeler ____ ____ Company's Independent Accountants
Dr. Frederick Perl and Dr. Gaylord McKissick for fiscal 2000.
INSTRUCTIONS: to withhold authority for any nominee, write FOR AGAINST ABSTAIN
that nominee's name here: ____ ____ ____
________________________________________________________________ 4. In their discretion, the
proxies are authorized to vote
upon such other business as may
properly come before the meeting
or any postponement or
adjournment thereof.
2. Approve increasing authorized shares from 6,000,000 to 15,000,000
THIS PROXY IS SOLICITED ON
FOR _______ AGAINST _______ ABSTAIN _______ BEHALF OF THE BOARD OF
DIRECTORS AND WILL BE VOTED
IN ACCORDANCE WITH THE
SPECIFICATIONS APPEARING ON
THIS SIDE. IF A CHOICE IS
NOT INDICATED WITH RESPECT
TO ITEMS 1,2 or 3, THIS
PROXY WILL BE VOTED "FOR"
SUCH ITEM. THE PROXIES WILL
USE THEIR DISCRETION WITH
RESPECT TO ANY OTHER MATTER
PROPERLY BROUGHT BEFORE THE
MEETING OR POSTPONEMENT OR
ADJOURNMENT THEREOF. THIS
PROXY IS REVOCABLE AT ANY
TIME BEFORE IT IS
EXERCISED.
Receipt herewith of the
Company's Annual Report and
notice of meeting and proxy
statement dated September 8,
2000 is hereby acknowledged.
PLEASE SIGN, DATE AND MAIL TODAY
Signature(s) of Stockholders(s)___________________________________________________________________________ Date__________ 20000
Joint owners must EACH sign. Please sign EXACTLY as your name(s) appear(s) on this card. When signing as attorney, executor,
administrator, trustee, guardian, partner or corporate officer please give FULL title.
^ FOLD AND DETACH HERE ^
</TABLE>
