SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
STRATEGIC DIAGNOSTICS INC.
- --------------------------------------------------------------------------------
(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):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it 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:
(SC14A-07/98)
<PAGE>
STRATEGIC DIAGNOSTICS INC.
111 Pencader Drive
Newark, Delaware 19702
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, APRIL 27, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Strategic Diagnostics Inc. (the "Company") will be held at the
Christiana Hilton, 100 Continental Drive, Newark, Delaware 19713, on Tuesday,
April 27, 1999 at 10:00 a.m. for the following purposes:
1. To elect four Class I directors of the Company to serve for a two-year
term until the 2001 Annual Meeting of Stockholders and until their respective
successors are duly elected and qualified; and
2. To approve amendments to the Company's 1995 Stock Incentive Plan (to be
renamed the Strategic Diagnostics Inc. 2000 Stock Incentive Plan) to increase
the number of shares authorized for issuance from 1,700,000 to 2,500,000 (an
increase of 500,000 shares after the cancellation of the 1993 Stock Incentive
Plan).
3. To approve the Company's Employee Stock Purchase Plan;
4. To consider and act upon any other matters which may properly be brought
before the Meeting and at any adjournments or postponements thereof.
Any action may be taken on the foregoing matters at the Meeting on the date
specified above, or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned, or to which the Meeting may be
postponed.
The Board of Directors has fixed the close of business on March 12, 1999 as
the record date for determining the stockholders entitled to notice of and to
vote at the Meeting and at any adjournments or postponements thereof. Only
stockholders of record of the Company's Common Stock and Series A Preferred
Stock at the close of business on that date will be entitled to notice of and to
vote at the Meeting and at any adjournments or postponements thereof.
You are requested to fill in and sign the enclosed form of proxy which is
being solicited by the Board of Directors and to mail it promptly in the
enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Meeting may vote in
person, even if they have previously delivered a signed proxy.
BY ORDER OF THE BOARD OF DIRECTORS,
Martha C. Reider
Secretary
Newark, Delaware
March 30, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
STRATEGIC DIAGNOSTICS INC.
111 Pencader Drive
Newark, Delaware 19702
----------
PROXY STATEMENT
----------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Strategic Diagnostics Inc.
(the "Company") for use at the Annual Meeting of Stockholders of the Company to
be held on Tuesday, April 27, 1999, and at any adjournments or postponements
thereof (the "Meeting"). At the Meeting, stockholders will be asked to vote upon
(i) the election of four Class I directors of the Company (ii) the approval of
amendments to the Company's 1995 Stock Incentive Plan (to be renamed the
Strategic Diagnostics Inc. 2000 Stock Incentive Plan) (iii) the approval of the
Company's Employee Stock Purchase Plan and (iv) any other matters properly
brought before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about March 30, 1999. The
Board has fixed the close of business on March 12, 1999 as the record date for
the determination of stockholders entitled to notice of and to vote at the
Meeting (the "Record Date"). Only stockholders of record of the Company's Common
Stock and Series A Preferred Stock (collectively, the "Stock") at the close of
business on the Record Date will be entitled to notice of and to vote at the
Meeting. As of the Record Date, there were 13,262,157 shares of Common Stock and
2,164,362 shares of Series A Preferred Stock outstanding and entitled to vote at
the Meeting. Holders of the Stock outstanding as of the close of business on the
Record Date will be entitled to one vote for each share held by them.
The presence, in person or by proxy, of holders of at least a majority of
the total number of outstanding shares of the Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Meeting.
Abstentions and broker non-votes are each included in the number of shares
present at the Meeting for purposes of establishing a quorum. The affirmative
vote of the holders of a plurality of the shares of the Stock present or
represented at the Meeting is required for the election of Class I directors and
thus, abstentions and broker non-votes have no effect on the outcome of the
election of directors. All other proposals require the affirmative vote of the
majority of shares present in person or represented by proxy at the meeting and
entitled to vote thereon.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO THE
VOTE AT THE MEETING AND NOT REVOKED WILL BE VOTED AT THE MEETING AS DIRECTED ON
THE PROXY. IF A PROPERLY EXECUTED PROXY IS SUBMITTED AND NO INSTRUCTIONS ARE
GIVEN, THE PROXY WILL BE VOTED FOR THE ELECTION OF THE FOUR NOMINEES FOR CLASS I
DIRECTORS OF THE COMPANY NAMED IN THIS PROXY STATEMENT, FOR THE APPROVAL OF THE
AMENDMENTS TO THE 1995 STOCK INCENTIVE PLAN AND FOR THE APPROVAL OF THE EMPLOYEE
STOCK PURCHASE PLAN. IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THOSE SET
FORTH IN THIS PROXY STATEMENT WILL BE PRESENTED AT THE MEETING. IF OTHER MATTERS
ARE PRESENTED, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE DISCRETION OF THE
PROXY HOLDERS.
A stockholder of record as of the Record Date may revoke a proxy at any
time before it has been exercised by filing a written revocation with the
Secretary of the Company at the address of the Company set forth above; by
filing a duly executed proxy bearing a later date; or by appearing in person and
voting by ballot at the Meeting. Any stockholder of record as of the Record Date
attending the Meeting may vote in person whether or not a proxy has been
previously given, but the presence (without further action) of a stockholder at
the Meeting will not constitute revocation of a previously given proxy.
<PAGE>
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table presents, as of March 12, 1999, information as to (i)
the persons or entities known to the Company to be beneficial owners of more
than 5% of the Company's Common Stock and the Series A Preferred Stock, each as
a class, on March 12, 1999, (ii) each director, (iii) each of the named officers
appearing in the Summary Compensation Table under "Executive Compensation"
below, and (iv) all directors and officers of the Company as a group, based on
representations of officers and directors of the Company and filings received by
the Company on Schedule 13D and Schedule 13G under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). As of such date, the Company had
13,262,157 shares of Common Stock issued and outstanding and 2,164,362 shares of
Series A Preferred Stock issued and outstanding. Shares of Series A Preferred
Stock are convertible into an equal number of shares of Common Stock. The number
of shares and the percentage beneficially owned by the persons or entities named
in the table and by all officers and directors as a group is presented in
accordance with Rule 13d-3 of the Exchange Act and includes, in addition to
shares issued and outstanding, unissued shares which are subject to issuance
upon exercise of options or warrants within 60 days of March 12, 1999. The
address of the individual beneficial owners is in care of the Company at its
address listed on the first page of this Proxy Statement.
<TABLE>
<CAPTION>
No. of Shares Percent of
Beneficially Owned(1) Class
-------------------------- ----------------------
Series A Series A
Name and Address of Beneficial Owner Common Preferred Common Preferred
- ------------------------------------ -------- --------- ------- ---------
<S> <C> <C> <C> <C>
Palo Alto Investors, Inc.
431 Florence Street, Suite 200
Palo Alto, California 94302 .............. 2,535,500(2) -- 19.2% --
The Perkin-Elmer Corporation
761 Main Avenue
Norwalk, Connecticut 06859 ............... 1,308,724(3) -- 9.9% --
DSV Partners IV
221 Nassau Street
Princeton, New Jersey 08542(4) ........... 182,157(5) 1,082,181 1.4% 50.0%
Edison Venture Fund II, L.P.
1009 Lenox Drive #4
Lawrenceville, New Jersey 08648(4) ....... 156,500(6) 907,636 1.2% 41.9%
Edison Venture Fund II-PA, L.P.
1009 Lenox Drive #4
Lawrenceville, New Jersey 08648(4) ....... 30,095(7) 174,545 * 8.1%
Grover C. Wrenn ............................ 479,000(8) -- 3.6% --
Richard C. Birkmeyer ....................... 1,996,906(9) -- 14.9% --
Richard J. Defieux ......................... 211,595(10) 1,082,181 1.6% 50.0%
Robert E. Finnigan ......................... 66,600(11) -- * --
Stephen O. Jaeger .......................... 1,334,924(12) -- 10.1% --
Kathleen E. Lamb ........................... 581,931(13) -- 4.4% --
Curtis Lee Smith ........................... 51,000(14) -- * --
Arthur A. Koch, Jr. ........................ 75,000(14) -- * --
Martha C. Reider ........................... 556,470(15) -- 4.2% --
James W. Stave ............................. 119,907(14) -- * --
Kelly J. Cullum ............................ 50,000(14) -- * --
All Officers and Directors
as a group (11 persons) .................... 5,523,333(16) 1,082,181 39.0% 50.0%
</TABLE>
- ----------
* Represents less than 1%.
(1) Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the securities shown to be owned by such
stockholder. The inclusion herein of securities listed as beneficially
owned does not constitute an admission of beneficial ownership.
(2) Ownership of these shares was reported to the Company on Schedule 13G dated
February 4, 1999.
(3) Ownership of these shares was reported to the Company on Schedule 13D dated
January 9, 1997.
2
<PAGE>
(4) Ownership of these shares was reported to the Company on Schedule 13D dated
January 9, 1997.
(5) Includes 156,358 shares underlying exercisable warrants.
(6) Includes 131,140 shares underlying exercisable warrants.
(7) Includes 25,218 shares underlying exercisable warrants.
(8) Includes 225,000 shares of Common Stock underlying exercisable options.
(9) Includes 125,661 shares underlying exercisable options.
(10) Shares of Common Stock represent shares owned and 181,358 shares of Common
Stock underlying exercisable warrants and options. Of such amount, 25,000
shares of Common Stock underlie exercisable options owned by Mr. Defieux
individually. Mr. Defieux is a General Partner of Edison Partners II, L.P.,
the General Partner of Edison Venture Fund II, L.P. and Edison Venture Fund
II-PA, L.P. Mr. Defieux shares voting and investment powers with the other
general partners of Edison Partners II, L.P. with respect to the shares
owned by such funds. Mr. Defieux disclaims beneficial ownership of shares
held by such funds except as to his proportionate partnership interest
therein.
(11) Includes 61,000 shares subject to exercisable options and 5,600 shares
owned jointly with Dr. Finnigan's wife.
(12) Includes 1,308,724 shares held by The Perkin-Elmer Corporation
("Perkin-Elmer") and 25,000 shares subject to exercisable options. Mr.
Jaeger, the Perkin-Elmer designee to the Company's Board of Directors, is
the Executive Vice President and Chief Operating Officer of Pharmacom Group
Inc. and has agreed to advise Perkin-Elmer on matters concerning the
Company, including matters requiring a vote of the shares. Mr. Jaeger
disclaims beneficial ownership of the shares owned by Perkin-Elmer.
(13) Ms. Lamb is the Vice President of Finance of EM Science, Inc., a division
of EM Industries, Inc. As such, she is deemed to share voting and
dispositive control, and therefore to have beneficial ownership of the
Company's Common Stock held by EM Industries, Inc. Ms. Lamb owns
exercisable options to purchase 25,000 shares of Common Stock. Ms. Lamb
disclaims beneficial ownership of the shares held by EM Industries, Inc.
(14) Consists of shares underlying exercisable options.
(15) Includes 45,362 shares underlying exercisable options.
(16) Includes 827,930 shares subject to exercisable options, 5,600 shares owned
jointly by Dr. Finnigan and his wife and 156,358 shares underlying
exercisable warrants.
3
<PAGE>
PROPOSAL 1
ELECTION OF A CLASS OF DIRECTORS
The Company is the entity resulting from the merger (the "Merger") of EnSys
Environmental Products, Inc. ("EnSys"), and Strategic Diagnostics Inc., a
privately held company ("SDI"), which occurred on December 30, 1996 pursuant to
an Agreement and Plan of Merger between such parties (the "Merger Agreement").
EnSys was the surviving entity and changed its name to Strategic Diagnostics
Inc. Upon consummation of the Merger, Mr.Birkmeyer and the other officers of SDI
became officers of the Company and Mr. Wrenn became its Chairman. The Company's
Fourth Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") which was effective concurrently with the consummation of the
Merger on December 30, 1996, provides that the Board will consist of seven
members, three initially selected by EnSys (Messrs. Wrenn, Finnigan and Smith),
three initially selected by SDI (Messrs. Birkmeyer and Defieux and Ms. Lamb) and
the remaining member (Mr. Jaeger) initially selected by Perkin-Elmer. The Merger
Agreement and the Company's By-Laws require the Company to nominate the Class I
directors identified below for election at the Meeting. The Board is divided
into two classes of directors with each director serving a two-year term. Each
year only one class of directors is subject to a stockholder vote. Four Class I
directors will be elected each to a two-year term at the Meeting. The members of
Class I are Grover C. Wrenn, Richard C. Birkmeyer, Kathleen E. Lamb and Curtis
Lee Smith, Jr.; and of Class II are Richard J. Defieux, Robert E. Finnigan and
Stephen O. Jaeger. The Class II members of the Board are not standing for
election and their terms expire in 2000. Grover C. Wrenn, Richard C. Birkmeyer,
Kathleen E. Lamb and Curtis Lee Smith Jr. are the Class I nominees for election
to the Board at the Meeting. Such nominees if elected, will hold office until
the annual meeting in 2001 and until their successor is duly elected and
qualified. The affirmative votes of a plurality of the shares of the Stock
present or represented at the Meeting and entitled to vote is required for the
election of the Class I Directors. Unless otherwise instructed, the persons
named in the accompanying proxy will vote "FOR" the election of Grover C. Wrenn,
Richard C. Birkmeyer, Kathleen E. Lamb and Curtis Lee Smith Jr. as Class I
Directors. The following table sets forth the name, age and principal occupation
of each director, including the nominees, and the year in which he or she became
a director.
Director
Name And Principal Occupation Age Since
- --------------------------------------------------------------------------------
Grover C. Wrenn (1) ..................................... 56 1992
Chairman of the Board SDI,
Chief Executive Officer Accent Health Inc.
Richard C. Birkmeyer (1) ................................ 45 1996
President and Chief Executive Officer of the Company
Richard J. Defieux ...................................... 47 1996
General Partner of Edison Partners, L.P.
Robert E. Finnigan, Ph.D. ............................... 71 1991
Consultant
Kathleen E. Lamb (1) .................................... 53 1996
Vice President of Finance of EM Science, Inc.
Curtis Lee Smith, Jr. (1) ............................... 71 1991
Chief Executive Officer of New Horizons Worldwide, Inc.
Stephen O. Jaeger ....................................... 54 1996
Executive Vice President and Chief Operating Officer
Pharmacom Group Inc.
- ----------
(1) A nominee for election to the Board of Directors.
4
<PAGE>
BACKGROUND OF DIRECTORS
Grover C. Wrenn, age 56, has served as Chairman of the Board since December
1996. Mr. Wrenn has served as President and Chief Executive Officer of
AccentHealth Inc., a privately held communications and marketing firm, since
November 1996. Prior thereto, Mr. Wrenn served as President and Chief Executive
Officer of EnSys from April 1995. Prior to being appointed its President and
CEO, Mr. Wrenn had served as a director of EnSys since 1992. From 1993 until
February 1995, Mr. Wrenn served as President, Chief Executive Officer and a
director of Applied Bioscience International, Inc. Mr. Wrenn is a director of
Safety Kleen Corp., a publicly held provider of hazardous and industrial waste
management services to industry and government. Mr. Wrenn is also a director of
Pharmakinetics Laboratories, Inc., a publicly held contract research
organization. Mr. Wrenn also serves as a Trustee of Eckerd College.
Richard C. Birkmeyer, age 45, co-founded SDI in 1990 and served as its
President and Chief Executive Officer and as a director since inception. On
December 30, 1996, Mr. Birkmeyer was appointed a director of the Company and
became its President and Chief Executive Officer. Prior to founding SDI, Mr.
Birkmeyer was employed by E.I. duPont de Nemours from 1983 to 1990, where he had
most recently served as a product manager. Mr. Birkmeyer received a Ph.D. in
Biochemistry/Immunology from the State University of New York at Binghamton and
his B.S. in Biology from the State University of New York at Plattsburgh. In
addition, Mr.Birkmeyer completed post-doctoral research in immunogenetics at
Iowa State University.
Richard J. Defieux, age 47, served as a director of SDI since 1993 and was
appointed as a director of the Company on December 30, 1996. Mr. Defieux is a
General Partner of Edison Partners, L.P., which is the general partner of Edison
Venture Fund, L.P., a private venture capital fund. Since 1990, Mr. Defieux has
also been a general partner of Edison Partners II, L.P., which is the general
partner of Edison Venture Fund II, L.P., and Edison Venture Fund II-PA, L.P.,
and since 1994, a general partner of Edison Partners III, L.P., which is the
general partner of Edison Venture Fund III, L.P. Prior to joining Edison in
1987, Mr. Defieux was a General Partner of Princeton/Montrose Partners, a
venture capital firm. Mr. Defieux received his B.A. and M.A. degrees in Geology
from Boston University and his M.B.A. from Columbia University.
Robert E. Finnigan, age 71, has served as a director of EnSys since 1991.
Dr. Finnigan was a member of the Scientific Advisory Board of EnSys and is a
consultant to several analytical instrument manufacturers. From 1967 to 1990,
Dr. Finnigan served in various executive roles and as a director at Finnigan
Corporation, an analytical instrument manufacturer. He is a director of
ThermoSpectra Corporation, a publicly owned subsidiary of Thermo Instrument
Systems, Inc. and is an advisor to Hambrecht & Quist's Environmental Technology
Fund.
Kathleen E. Lamb, age 53, served as a director of SDI since 1996 and was
appointed as a director of the Company on December 30, 1996. Since 1991, Ms.
Lamb has been Vice President of Finance of EM Science, Inc. and, from May 1996
through 1997, served as General Manager of OEM Marketing for EM Science, Inc., a
division of EM Industries, Inc. which is an affiliate of Merck KGaA, Darmstadt,
Germany. Prior to joining EM Science, Inc., Ms. Lamb was the Vice President of
Finance for EM Diagnostics Systems. She is also a member of the Board of
Directors of M.E. Gordon & Associates and has taught finance courses at Rowan
College in New Jersey. Ms. Lamb received her B.S. in Accounting and M.B.A from
Drexel University.
Curtis Lee Smith, Jr., age 71, has served as a director of EnSys since
1991. Mr. Smith served as Chairman of the Board and Chief Executive Officer of
Handex Corp., an environmental consulting and remediation company, from 1986 to
1996. He is now Chairman of the Board and Chief Executive Officer of New
Horizons Worldwide, Inc., an owner and franchisor of computer training centers.
Stephen O. Jaeger, age 54, served as a director of SDI since August 1996
and was appointed as a director of the Company on December 30, 1996. Mr. Jaeger
has been Executive Vice President, Chief Operating Officer and a Director of
Pharmacon Group Inc., since February 1999. From January through October 1998,
Mr. Jaeger was the Executive Vice President and Chief Financial Officer of
Clinical Communications Group Inc., a privately-held provider of outsourced
educational marketing services to the pharmaceutical industry. Prior thereto Mr.
Jaeger had been Vice President and Chief Financial Officer of Perkin-Elmer since
1995, and since 1996 had also been its Treasurer. From 1987 to 1995, Mr. Jaeger
was employed by Houghton Mifflin and Company, most recently as Executive Vice
President, Chief Financial Officer and Treasurer, and served on its board of
directors. Mr. Jaeger is also Chairman of the Board and a director of Inso
Corporation.
5
<PAGE>
Compensation of Directors
Directors are entitled to receive compensation for their services as
determined by a majority of the Board. However, directors that are employees,
and who receive compensation for their services as such, are not entitled to
receive any compensation for their services as a director of the Company. Board
members are entitled to reimbursement for travel related expenses incurred in
attending meetings of the Board and its committees. Under an agreement
terminated effective June 1, 1998, Mr. Wrenn, in his capacity as Chairman,
received compensation of $33,333 and participated in the Company's employee
benefit plans during 1998 until such date.
Meetings of the Board of Directors and Committees
The board of directors of the Company held six meetings during the fiscal
year ended December 31, 1998. Each of the directors attended at least 75% of the
aggregate of the total number of meetings of the board of directors of the
Company and of the committees of which he or she was a member which were held
during the period he or she was a director or committee member. The Audit
Committee of the Company's board of directors held three meetings in 1998. The
members of the Audit Committee were Mr. Jaeger, Ms. Lamb and Mr. Smith. The
Audit Committee reviews the selection of outside accountants, reviews the
results and scope of the annual audit and the services provided by the Company's
independent auditors and the recommendations of the auditors with respect to the
accounting systems and controls. The Compensation Committee of the Company's
board of directors met once in 1998. The members of the Compensation Committee
were Mr. Wrenn, Mr. Defieux and Dr.Finnigan. The Compensation Committee reviews
and approves salaries for all corporate officers, reviews and approves all
incentive and special compensation plans and programs, including stock options
and related longer term incentive compensation programs, reviews and approves
management succession planning, conducts special competitive studies, retains
compensation consultants as necessary and appropriate, and recommends
appropriate programs and action on any of the above matters to the Board. The
Board selects nominees for election as directors of the Company. The Board will
consider a nominee for election to the Board recommended by a stockholder of
record if such recommendation is timely, in accordance with, and accompanied by
the information required by, the Company's By-Laws. The Company does not
maintain a standing nominating committee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors to file initial reports of ownership and reports of change of
ownership with the Securities and Exchange Commission (the "SEC"). The Company
has a program to assist its officers and directors in complying with the filing
requirements of Section 16(a). Executive officers and directors are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. Based on a review of the copies of such forms furnished to the
Company and other information gathered by the Company, the Company believes that
during the preceding year the executive officers and directors then subject to
Section 16(a) complied with all Section 16(a) filing requirements.
PROPOSAL 2
TO AMEND AND RENAME THE 1995 STOCK INCENTIVE PLAN
The Board of Directors believes that attracting, motivating and retaining
key personnel of the Company is essential to the Company's growth and success.
The Board also believes that important advantages to the Company are gained by a
comprehensive compensation program that includes different types of incentives
for motivating key personnel of the Company and rewards for outstanding service.
Accordingly, on March 24, 1999, the Board adopted, subject to stockholder
approval, the below-described amendments to the Company's 1995 Stock Incentive
Plan. The amendments are designed to enhance the Company's ability to closely
link compensation to performance and to reward key personnel for outstanding
service.
The 1995 Stock Incentive Plan provides for the issuance of stock options,
stock awards and performance share awards. The Board has the authority to select
recipients of awards, who may be officers, employees, directors, consultants or
advisors of the Company. Presently the Company has approximately 100 employees
(including officers) and seven directors. The 1995 Stock Incentive Plan provides
for the issuance of Incentive Stock Options, for which the exercise price must
be equal to the fair market value of the underlying shares on the date the
option is granted, and non-statutory (or "nonqualified") stock options. Options
are subject to such
6
<PAGE>
limitations and conditions on exercise as the Board determines, including the
time and manner in which options are exercisable. In the case of a merger or
consolidation with another corporation, the Board may (but is not required to)
provide for the substitution of options in such other corporation's shares as a
replacement for options granted under the 1995 Stock Incentive Plan. As a
general matter, options terminate three months following termination of
employment or other relationship with the Company (unless the Board provides
otherwise) or on the expiration of the stated term of the option, if earlier.
Options terminate at other times in the case of the optionee's death, disability
or termination for cause.
The 1995 Stock Incentive Plan also provides for the outright grant of
shares to an eligible individual at no cost to that individual. Shares may be
awarded subject to such conditions and limitations as the Board may determine or
may be issued without restriction. The plan also provides for the issuance of
Performance Share Awards, which entitle the recipients to acquire shares of
Company stock upon the attainment of specified performance goals. Performance
Share Awards may be made independent of the granting of any other awards under
the plan. The Board sets performance goals applicable to each award, which may
vary among participants.
The Company proposes and recommends the adoption of changes to the 1995
Stock Incentive Plan and authorization of additional shares for award under the
revised plan. The 1995 Stock Incentive Plan would be renamed the Strategic
Diagnostics Inc. 2000 Stock Incentive Plan. An additional 800,000 shares would
be authorized for issuance under the plan, reflecting the ongoing nature of the
plan and the fact that only 85,772 shares of common stock remain available for
award under the plan out of the 1,700,000 originally reserved for issuance.
Subject to the receipt of stockholder approval of the amendments to the 1995
Stock Incentive Plan, the Company intends to cancel its 1993 Stock Incentive
Plan which will liberate 300,000 shares reserved for issuance thereunder.
Accordingly, the proposed increase in the shares reserved under the 1995 Stock
Incentive Plan will result in a net increase in reserved shares of 500,000. Upon
shareholder approval of these changes, the plan will be modified to reflect
these and any other changes made by the Board to the plan.
Prior to the date of this proxy statement, option grants have been made
under the 1995 Stock Incentive Plan to the following persons and groups (with
the underlying share amounts immediately following each person or group):
Richard J. Birkmeyer (150,661); Grover C. Wrenn (250,000); Kathleen E. Lamb
(45,000); Curtis Lee Smith, Jr. (45,000); all current executive officers as a
group (1,025,930); all current directors who are not executive officers as a
group (225,000); all other employees as a group (243,060). As of March 23, 1999,
the market value of a share of common stock of the Company was $2.25.
With respect to non-qualified option awards under the 1995 Stock Incentive
Plan, participants will recognize no taxable income at the time of grant. Upon
exercise of a non-qualified stock option, the participant will recognize
ordinary income equal to the excess, if any, of the fair market value of the
shares on the date of exercise over the exercise price. The participant will
recognize as a capital gain or loss any profit or loss realized on the sale or
exchange of any share disposed of or sold. The Company will be entitled to
deduct an amount equal to the difference between the exercise price and the fair
market value of the shares on the date of exercise.
With respect to incentive stock options, generally, the participant will
recognize no taxable gain or loss when the incentive stock option is granted or
exercised. Upon exercise, the excess, if any, of the fair market value over the
exercise price will be an item of tax preference for purposes of the
participant's alternative minimum tax.
If the shares acquired upon the exercise of an incentive stock option are
held for two years after the date of grant and one year from the date the shares
are transferred following the exercise of the incentive stock option, then the
participant will recognize any gain or loss realized upon a sale of the shares
as long-term capital gain or loss. The Company will not be entitled to a
deduction. If the shares are not held for the holding periods, the participant
will recognize ordinary income in an amount equal to the difference between the
exercise price and the fair market value of Common Stock on the date the option
is exercised, or the amount of gain recognized on the sale if less. The Company
will be entitled to a deduction equal to the amount of any ordinary income so
recognized. If the shares are not held for the holding periods and the amount
realized upon sale is less than the grant price, such difference will be a
capital loss to the participant.
The Board has the right to amend, modify or terminate the 1995 Stock
Incentive Plan at any time without notice, provided that no participant's then
existing rights are adversely affected without his or her consent, and provided
further, that upon any amendment of the plan, stockholder approval will be
obtained if required by law.
7
<PAGE>
The above description is a partial summary of material provisions of the 1995
Stock Incentive Plan, including amendments to the plan adopted by the Board on
March 24, 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL TO
APPROVE THE AMENDMENT AND RENAMING OF THE 1995 STOCK INCENTIVE PLAN. If no
instructions are given on a properly executed and returned proxy, the shares of
Common Stock represented thereby will be voted IN FAVOR OF the adoption of the
amendment and renaming of the 1995 Stock Incentive Plan.
PROPOSAL 3
TO APPROVE THE ADOPTION OF THE EMPLOYEE STOCK PURCHASE PLAN
On November 3, 1998, the Board adopted, subject to stockholder approval as
described herein, the Company's Employee Stock Purchase Plan (the "ESP Plan").
The ESP Plan is an employee stock purchase plan under Internal Revenue Code
("IRC") Section 423. The ESP Plan allows employees to purchase the Company's
Common Stock from the Company at a discount, without being subject to tax until
they sell the stock, and without having to pay any brokerage commissions with
respect to the purchases. The effective date of the ESP Plan was January 1,
1999. The purpose of the ESP Plan is to encourage and facilitate the purchase of
Common Stock by employees of the Company and any subsidiaries approved by the
Board of Directors (collectively, the "Participating Companies"), thereby
providing employees of the Company and Participating Companies with a personal
stake in the Company and a long range inducement to remain in the employ of the
Company and the Participating Companies. The ESP Plan is administered by the
Board of Directors or by a committee appointed by the Board of Directors.
Summary of the ESP Plan
The ESP Plan provides employees with the right to purchase shares of Common
Stock through payroll deduction. A total of 661,157 shares of Common Stock are
available for purchase under the ESP Plan, subject to adjustment in the number
and price of shares of Common Stock available for purchase in the event the
outstanding shares of Common Stock are increased or decreased through stock
dividends, recapitalizations, reorganizations or similar changes. The ESP Plan
is to be administered by the Board, which may delegate responsibility for such
administration to a committee of the Board (the "Committee"). Subject to the
terms of the ESP Plan, the Board or the Committee shall have authority to
interpret the ESP Plan, to prescribe, amend and rescind rules and regulations
relating to it, and to make all other determinations deemed necessary or
advisable in administering the ESP Plan.
An employee of the Company or a Participating Company is eligible to
participate in the ESP Plan if the employee, as of the last day of the month
immediately preceding the effective date of an election to purchase shares of
Common Stock pursuant to the ESP Plan: (1) has been employed on a full-time
basis for at least six consecutive months; or (2) has been employed on a
part-time basis for at least 24 consecutive months. An employee is considered to
be a part-time employee if the employee is scheduled to work at least 20 hours
per week. Approximately 100 employees, including the chief executive officer and
the other executive officers of the Company, are eligible to participate in the
ESP Plan.
Notwithstanding the foregoing, any employee who, after purchasing Common
Stock under the ESP Plan, would own five percent or more of the total combined
voting power or value of all classes of stock of the Company or any parent
corporation or subsidiary corporation thereof is not eligible to participate.
Ownership of stock is determined in accordance with the provisions of IRC
Section 424(d). Further, an employee is not eligible to participate if such
participation would permit such employee's rights to purchase stock under all
employee stock purchase plans of the Participating Companies which meet the
requirements of IRC Section 423(b) to accrue at a rate which exceeds $25,000 in
fair market value for each calendar year in which such option is outstanding.
Eligible employees may elect to participate in the ESP Plan during an
Offering which starts on the first day of each calendar quarter beginning on or
after adoption of the ESP Plan by the Board (the "Offering Commencement Date")
and ends on the last day of each calendar quarter (the "Offering Termination
Date"). Shares will be deemed to have been purchased on the Offering Termination
Date. The purchase price per share offered under the ESP Plan will be 90 percent
of the lesser of: (1) the fair market value per share on the Offering
Commencement Date, or if such date is not a trading day, then on the next
trading day thereafter; or (2) the fair
8
<PAGE>
market value per share on the Offering Termination Date, or if such date is not
a trading day, then on the next trading day thereafter.
If the total number of shares of Common Stock for which purchase rights are
exercised on any Offering Termination Date exceeds the maximum number of shares
of Common Stock available, the Board or Committee shall make a pro rata
allocation of shares available for delivery and distribution in as nearly a
uniform manner as practicable, and as it shall determine to be fair and
equitable, and the unapplied account balances shall be returned to participants
as soon as practicable following the Offering Termination Date.
A participant may discontinue his participation in the ESP Plan at any
time. A participant may change the amount of payroll deductions for subsequent
Offerings by giving written notice of such change to the Board or Committee on
or before the 15th day of the month immediately preceding the Offering
Commencement Date for the Offering for which such change is effective.
A participant may elect to withdraw the balance credited to the
participant's account by providing a termination form to the Board or the
Committee at any time before the Offering Termination Date applicable to any
Offering. A participant may withdraw all, but not less than all, of the amounts
credited to the participant's account. A participant who elects to withdraw from
an Offering shall be deemed to have elected not to participate in each of the
two succeeding Offerings following the date on which the participant gives a
termination form to the Committee.
Generally, upon termination of a participant's employment for any reason
other than death, all amounts credited to such participant's account shall be
returned to the participant. In the event of a participant's (1) termination of
employment due to death or (2) death after termination of employment but before
the participant's account has been returned, all amounts credited to such
participant's account shall be returned to the participant's
successor-in-interest.
All funds held or received by the Company under this ESP Plan may be used
for any corporate purpose until applied to the purchase of shares of Common
Stock or refunded to employees and shall not be segregated from the general
assets of the Company. Shares of Common Stock purchased under the ESP Plan will
be issued from the Company's treasury stock or from the Company's authorized but
unissued shares. The Participating Companies shall pay all fees and expenses
incurred (excluding individual Federal, state, local or other taxes) in
connection with the ESP Plan.
The ESP Plan is not qualified under Section 401(a) of the Internal Revenue
Code. The Company generally will not be entitled to a deduction with respect to
stock purchased under the ESP Plan, unless the stock is disposed of less than
one year after the Common Stock is purchased by the employee, or less than two
years after each Offering Commencement Date.
Generally, no tax consequences arise at the time the participant purchases
shares of Common Stock. If a participant does not dispose of shares of Common
Stock purchased under the ESP Plan for at least one year after the date of
purchase and at least two years after the grant of the purchase right, he will
be deemed to have received compensation taxable as ordinary income for the
taxable year in which the disposition occurs in an amount equal to the lesser of
(a) the 10% discount originally allowed, or (b) the excess over the purchase
price of (i) the amount actually received for the shares if sold or exchanged or
(ii) the fair market value of the shares on the date of any other termination of
his ownership (such as by gift). The amount of such ordinary income is then
added to the participant's basis in his shares for purposes of determining
capital gain or loss.
If a participant disposes of shares of Common Stock purchased under the ESP
Plan less than one year after the date of purchase, or more than one year after
the date of purchase but within two years after the grant of the purchase right,
he will be deemed to have received compensation taxable as ordinary income in
the amount of the difference between the amount paid for the shares and the
value of the shares at the time of purchase. If the shares are sold or
exchanged, the amount of such ordinary income is added to the participant's
basis in his shares for purposes of determining capital gain or loss. If a
participant dies before disposing of the shares purchased under the ESP Plan, he
will be deemed to have realized compensation income taxable as ordinary income
in the taxable year closing with his death in an amount equal to the lesser of
clauses (a) and (b)(ii) as set forth in the immediately preceding paragraph. He
is deemed not to have realized any capital gain or loss because of death.
9
<PAGE>
The Board or the Committee shall have the right to amend, modify or
terminate the ESP Plan at any time without notice, provided that no employee's
then existing rights are adversely affected without his or her consent, and
provided further, that upon any amendment of the ESP Plan, stockholder approval
will be obtained if required by law.
The above description is a partial summary of material provisions of the
Company's ESP Plan. This summary is qualified in its entirety by reference to
the full text of the plan which appears as Exhibit A attached to this proxy
statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL TO
APPROVE THE ADOPTION OF THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN. If no
instructions are given on a properly executed and returned proxy, the shares of
Common Stock represented thereby will be voted IN FAVOR OF the adoption of the
ESP Plan.
10
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth certain
compensation information for each of the last three fiscal years with respect to
(i) the Company's Chief Executive Officer and (ii) each of the Company's four
other most highly compensated officers based on salary and bonus paid during
1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term All Other
Annual Compensation Compensation Compensation
------------------------------ ---------- ----------
Securities
Underlying
Name and Principal Position Year Salary($) Bonus($) Options(#) Amount($)
--------------------------- ---- --------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Grover C. Wrenn (1) 1998 33,333 -- -- 1,000
Chairman 1997 80,000 -- -- 216,790
1996 157,500 117,688 100,000 14,834
Richard C. Birkmeyer (2) 1998 174,333 -- -- 10,150
President and CEO 1997 164,000 64,500 -- 10,150
1996 -- -- 100,000 --
Arthur A. Koch, Jr. (3) 1998 158,886 -- 100,000 7,820
Vice President and COO 1997 124,100 43,500 100,000 2,250
1996 -- -- -- --
Martha C. Reider (4) 1998 107,601 -- -- 8,636
Vice President, Quality 1997 101,200 20,000 60,000 8,433
Assurance/Human Resources 1996 -- -- -- -- --
James W. Stave Ph.D.(5) 1998 109,001 -- -- 8,686
Vice President, 1997 99,600 20,000 60,000 8,381
Research and Development 1996 -- -- -- --
Kelly J. Cullum (6) 1998 200,064 35,000 200,000 --
Vice President, 1997 -- -- -- --
Sales & Marketing 1996 -- -- -- --
</TABLE>
(1) Effective December 30, 1996, Mr. Wrenn resigned as President and Chief
Executive Officer and was appointed Chairman. All Other Compensation
consists of $1,000 in Company contributions to Mr. Wrenn's 401(k) account.
Effective June 1, 1998, Mr. Wrenn no longer received a salary or benefits
from the Company for serving as its Chairman.
(2) Mr. Birkmeyer's employment as President and Chief Executive Officer of the
Company commenced on December 30, 1996. All other compensation consists of
$4,750 in Company contributions to Mr. Birkmeyer's 401(k) account and
$5,400 for an automobile allowance.
(3) Mr. Koch's employment commenced April 14, 1997. All other compensation
consists of $2,420 in Company contributions to Mr. Koch's 401(k) account
and $5,400 for an automobile allowance.
(4) Ms. Reider's employment with the Company commenced on December 30, 1996.
All other compensation consists of $5,400 for an automobile allowance and
$3,236 in Company contributions to Ms. Reider's 401(k) account.
(5) Dr. Stave's employment with the Company commenced on December 30, 1996. All
other compensation consists of $5,400 for an automobile allowance and
$3,286 in Company contributions to Dr. Stave's 401(k) account.
(6) Ms. Cullum's employment commenced on February 10, 1998.
Option Grants and Exercises in Fiscal Year 1998. The following tables
summarize option grants and exercises during 1998 to or by the officers named in
the Summary Compensation Table. In accordance with SEC rules, also shown are the
hypothetical gains or "option spreads," on a pre-tax basis, that would exist for
the respective options. These gains are based on assumed rate of annual compound
stock appreciation of 5% and 10% from the date the options were granted over the
full option term.
11
<PAGE>
<TABLE>
OPTION GRANTS IN FISCAL YEAR 1998
<CAPTION>
Potential Realizable Value
Individual Grants Under the Company's at Assumed Annual Rates of
Amended and Restated 1995 Stock Option Plan Stock Price Appreciation
----------------------------------------------------- ---------------------------
Number of
Securities Percent of Total
Underlying Options Granted Exercise 5% for 10 for%
Options to Employees in Price per Expiration Option Term Option Term
Name Granted Fiscal Year (%) Share Date ($) ($)
---- ---------- --------------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Arthur A. Koch, Jr. 100,000(1) 33.3% $2.625 1/26/08 144,724 356,461
Kelly J. Cullum 200,000(1) 66.7% $2.625 1/26/08 289,447 712,923
</TABLE>
(1) Options were granted January 28, 1998 and will become exercisable at a rate
of 25% on January 1, 1999 and 25% annually on each January 1 thereafter.
<TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Shares Year-End (#) at Fiscal Year-End ($) (1)
Acquired on Value -------------------------- ---------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Grover C. Wrenn -- -- 200,000 50,000 -- --
Richard C. Birkmeyer -- -- 100,661 50,000 91,696 --
Arthur A. Koch, Jr. -- -- 25,000 175,000 3,125 9,375
Martha C. Reider -- -- 30,362 45,000 29,680 5,625
James W. Stave -- -- 104,907 45,000 164,607 5,625
Kelly J. Cullum -- -- -- 200,000 -- --
</TABLE>
(1) Value is calculated based on the difference between the option exercise
price and the market price of the Common Stock on December 31, 1998
($2.00), multiplied by the number of shares to which the option relates.
Executive Employment Agreements
The Company maintains an employment agreement dated as of December 30, 1996
with Mr. Birkmeyer, which provides for compensation at an annual rate of
$164,000 with annual increases of not less than 5% of the then current salary as
determined by the Compensation Committee. Additionally, Mr. Birkmeyer is
entitled to an annual bonus as determined by the Compensation Committee not to
exceed 75% of his then current salary. This agreement also granted Mr. Birkmeyer
an option to purchase 100,000 shares of the Company's Common Stock, which option
became exercisable at a rate of 25% immediately and 25% annually thereafter on
the three successive option grant date anniversaries. Such option vests
immediately upon a change of control of the Company (as defined in Section 12 of
the Company's Amended and Restated 1995 Stock Option Plan). This agreement was
for an initial one-year term and is automatically extended for subsequent
one-year terms unless otherwise terminated by Mr. Birkmeyer or the Board by
giving not less than 60 days written notice. Mr.Birkmeyer will be entitled to
receive salary and benefits then in effect for one year after termination of the
agreement by Mr. Birkmeyer for good reason (as defined in the agreement) or by
the Company without cause.
Report of the Compensation Committee
The Compensation Committee of the Board of Directors is comprised of three
directors. The Compensation Committee determines the compensation for the Chief
Executive Officer and reviews the recommendations of the Chief Executive Officer
and approves salaries for all other corporate officers, reviews and approves all
incentive and special compensation plans and programs, including stock options
and related longer term incentive compensation programs, reviews and approves
management succession planning, conducts special competitive studies, retains
compensation consultants as necessary and appropriate, and recommends
appropriate programs and action on any of the above matters to the Board.
12
<PAGE>
Compensation Philosophy
The Company approaches compensation for all its employees, including senior
management, with a consistent philosophy. This philosophy is based on the
premise that the achievements of the Company result from the coordinated efforts
of all individuals working toward common objectives. The Company strives to
achieve those objectives through teamwork that is focused on meeting the
expectations of customers and stockholders.
The goals of the compensation program are to align compensation with
business objectives and performance, and to enable the Company to attract,
retain and reward executive officers whose contributions are critical to the
long-term success of the Company. The Company's compensation program for
executive officers is based on the same four principles applicable to
compensation decisions for all employees of the Company:
o The Company pays competitively.
The Company is committed to maintaining a pay program that helps
attract and retain the best people in the industry. To ensure that pay
is competitive, the Company regularly compares its pay practices with
those of other comparable companies and sets its pay parameters based
on this review.
o The Company pays for sustained performance.
Executive officers are rewarded based upon corporate performance,
business unit performance and individual performance. Corporate
performance and business unit performance are evaluated by reviewing
the extent to which strategic and business plan goals are met,
including such factors as profitability, performance relative to
competitors and timely new product introductions. Individual
performance is evaluated by reviewing organizational and management
development progress against set objectives.
o The Company strives for fairness in the administration of pay.
The Company strives to compensate a particular individual equitably
compared to other executives at similar levels both inside the Company
and at comparable companies.
o The Company strives to provide incentives designed to maximize
stockholder value.
The Company is committed to the use of stock options as a significant
component of total compensation in order to appropriately align
management's compensation with stockholder's interests.
Compensation Vehicles
The Company uses a total compensation program that consists of cash (salary
and bonus) and equity-based compensation. Having a compensation program that
allows the Company to attract and retain key employees permits it to provide
useful products and services to customers, enhance stockholder value, motivate
technological innovation, foster teamwork, and adequately reward employees. The
vehicles are:
Cash-based Compensation
Salary
The Company establishes salary ranges for employees by reviewing the
aggregate of base salary and annual bonus for competitive positions in the
market against that individual's overall performance, which is measured against
his or her individual responsibilities and strategic objectives for the year.
In both setting goals and measuring all executive officers' performance
against those goals, the Company takes into account the performance of its
competitors and general economic and market conditions. None of the factors
included in the Company's strategic and business goals are assigned a specific
weight. Instead, the Company recognizes that these factors may change in order
to adapt to specific business challenges and to changing economic and
marketplace conditions.
Bonus
The Company pays bonuses based upon (a) the Company's financial
performance, measured against established corporate performance for net sales
and profitability and (b) on the Committee's subjective
13
<PAGE>
determination of the executive officer's individual performance goals, measured
against individual management goals established for each executive.
Equity-based Compensation
Stock Incentive Program
The purpose of this program is to provide additional incentives to senior
management to work to maximize stockholder value. The Company also recognizes
that a stock incentive program is a necessary element of a competitive
compensation package for its senior managers. The program utilizes vesting
periods to encourage such employees to continue in the employ of the Company and
thereby acts as a retention device for its senior managers. The Company believes
that the program encourages senior managers to maintain a long-term perspective.
In determining the size of an option award for an executive officer, the
Compensation Committee reviews such individual's performance against the
criteria described above and considers the number of outstanding unvested
options which the officer holds and the size of previous option awards to that
individual. The Compensation Committee does not assign specific weights to these
items.
Corporate Tax Deduction on Compensation in Excess of $1 Million a Year
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation in excess of $1 million paid to
the Company's Chief Executive Officer or any of the four other most highly
compensated executive officers. Certain performance-based compensation, however,
is specifically exempt from the deduction limit. The Company's current policy is
to structure the performance-based portion of compensation of its executive
officers in a manner that complies with this provision.
Chief Executive Officer Compensation
Richard C. Birkmeyer has been President and Chief Executive Officer of the
Company since December 30, 1996. The Compensation Committee used the same
compensation policy described above for all employees to determine Mr.
Birkmeyer's fiscal 1998 compensation.
In setting both the cash-based and equity-based elements of Mr. Birkmeyer's
compensation, the Compensation Committee made an overall assessment of Mr.
Birkmeyer's leadership in achieving the Company's long-term strategic and
business goals. The Compensation Committee assessed the importance of Mr.
Birkmeyer to the continued growth and development of the Company, his increased
responsibility as a result of several recent acquisitions, his expertise in the
industry, his management skills and ability to implement the Company's strategic
plans, his efforts to assemble a highly qualified executive management team for
the Company and the achievement of various strategic milestones. The
Compensation Committee does not assign specific weights to these categories.
Base Salary
Mr. Birkmeyer's base salary for 1998 pursuant to his employment agreement
dated December 30, 1996 was $180,000, which reflects a consideration of
competitive forces. Pursuant to such agreement, Mr. Birkmeyer is entitled to
annual increases of not less than 5% of his then current salary as determined by
the Committee. The Compensation Committee has not made a determination whether
to increase Mr. Birkmeyer's base salary for fiscal year 1999. The Compensation
Committee expects to meet with Mr. Birkmeyer in the near future to review
Mr.Birkmeyer's compensation for 1999.
Bonus
Pursuant to his employment agreement, Mr. Birkmeyer is entitled to an
annual bonus as determined by the Committee, not to exceed 75% of his then
current salary.
The Compensation Committee follows the same policy described above for
other executive officers to determine Mr. Birkmeyer's bonus. The Company did not
meet the established corporate performance goals for net sales and
profitability. Accordingly, the Compensation Committee did not grant Mr.
Birkmeyer a cash-bonus for 1998.
14
<PAGE>
Stock Options
The Compensation Committee follows the same policy described above for
other executive officers to determine Mr. Birkmeyer's stock incentive awards.
Stock options are granted to encourage and facilitate stock ownership by the
executive officers and thus strengthen both their personal commitments to the
Company and a longer-term perspective in their managerial responsibilities. This
component of an executive officer's compensation directly links the officers'
interest with those of the Company's other stockholders.
No additional options were granted to Mr. Birkmeyer during 1998.
COMPENSATION COMMITTEE
Richard J. Defieux
Robert E. Finnigan
Grover C. Wrenn
15
<PAGE>
OTHER MATTERS
Independent Auditors
The accounting firm of KPMG LLP has served as the Company's independent
auditors since September 1998. A representative of KPMG LLP will be present at
the Meeting, and will be given the opportunity to make a statement if he desires
and will be available to respond to appropriate questions. Arthur Andersen LLP
was the Company's principal accounting firm since January 29, 1997, and was
dismissed by the Board in September 1998. KPMG LLP was EnSys' principal
accounting firm and was dismissed by the Board in January 1997. Arthur Andersen
LLP's reports on the financial statements of SDI for 1996, and the Company for
1997, contained no adverse opinion or disclaimer of opinion nor were such
reports qualified or modified as to uncertainty, audit scope, or accounting
principles. Furthermore, during 1996 and 1997, there were no disagreements with
Arthur Andersen LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure. A representative
of Arthur Andersen LLP will not be present at the Meeting.
Stockholder Proposals
The proxy rules of the SEC permit stockholders, after timely notice to
issuers, to present proposals for stockholder action in issuer proxy statements
where such proposals are consistent with applicable law, pertain to matters
appropriate for stockholder action and are not properly omitted by issuer action
in accordance with the proxy rules. Under applicable SEC rules, such proposals
must be received by the Company no later than December 1, 1999 to be considered
for inclusion in the Company's proxy materials relating to the 2000 Annual
Meeting.
General
The Board knows of no matter other than the foregoing to be brought before
the Meeting. However, the enclosed proxy gives discretionary authority in the
event any additional matters should be properly presented.
The Company's 1998 Annual Report, including financial statements for the
fiscal year ended December 31, 1998, accompanies this Proxy Statement. The
Company will provide free of charge to any stockholder from whom a proxy is
solicited pursuant to this Proxy Statement, upon written request from such
stockholder, a copy of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 which was filed with the SEC. Requests for such
report should be directed to Strategic Diagnostics Inc., 111 Pencader Drive,
Newark, Delaware 19702, Attention: Arthur A. Koch, Jr., Vice President and Chief
Operating Officer.
The accompanying proxy is solicited by and on behalf of the Board, whose
notice of meeting is attached to this Proxy Statement. The entire cost of such
solicitation will be borne by the Company. In addition to the use of the mails,
proxies may be solicited by personal interview, telephone or telegram by
directors, officers and other employees of the Company who will not be specially
compensated for these services. Additionally, the Company will request that
brokers, nominees, custodians and other fiduciaries forward soliciting materials
to the beneficial owners of shares held of record by such brokers, nominees,
custodians and other fiduciaries. The Company will reimburse such persons for
their reasonable expenses in connection therewith.
Certain information contained in this Proxy Statement relating to the
occupation and security holdings of the directors and officers of the Company is
based upon information received from the individual directors and officers.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN THE
ENCLOSED RETURN ENVELOPE.
STRATEGIC DIAGNOSTICS INC.
Newark, Delaware
March 30, 1999
16
<PAGE>
STRATEGIC DIAGNOSTICS INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
I. Purpose.
The Strategic Diagnostics Inc. 1998 Employee Stock Purchase Plan (the
"Plan") is broadly based and intended to encourage and facilitate the purchase
of Shares of the Common Stock of Strategic Diagnostics Inc. (the "Company"), by
employees of the Company and any Participating Companies, thereby providing
employees with a personal stake in the Company and a long range inducement to
remain in the employ of the Company and Participating Companies. It is the
intention of the Company that the Plan qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code.
II. Definitions.
"Account" means a bookkeeping account established by the Committee on
behalf of a Participant to hold Payroll Deductions.
"Approved Leave of Absence" means a leave of absence that has been approved
by the applicable Participating Company in such a manner as the Board may
determine from time to time.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Committee appointed pursuant to Section 14 of the
Plan.
"Company" means Strategic Diagnostics Inc. and any successor(s).
"Compensation" means an Employee's cash compensation payable for services
to a Participating Company.
"Election Form" means the form acceptable to the Committee which an
Employee shall use to make an election to purchase Shares through Payroll
Deductions pursuant to the Plan.
"Eligible Employee" means an Employee who meets the requirements for
eligibility under Section 3 of the Plan.
"Employee" means a person who is an employee of a Participating Company.
"Fair Market Value" means the closing price per Share on the principal
national securities exchange on which the shares are listed or admitted to
trading or, if not listed or traded on any such exchange, on the Nasdaq National
Market, or if not listed or traded on any such exchange or market, the fair
market value as reasonably determined by the Board, which determination shall be
conclusive.
"Five Percent Owner" means an Employee who, with respect to a Participating
Company, is described in Section 423(b) of the Code.
"Offering" means an offering of Shares to Eligible Employees pursuant to
the Plan.
"Offering Commencement Date" means the first day of each January, April,
July and October beginning on or after adoption of the Plan by the Board, until
the Plan Termination Date, provided that the first Offering Commencement Date
may be delayed until (i) the first day of the second month after adoption of the
Plan, if necessary to permit Participants to make elections in accordance with
Section 3(e) of the Plan, or (ii) the first day of any calendar quarter
following adoption of the Plan.
"Offering Period" means the period extending from an Offering Commencement
Date through the following Offering Termination Date.
"Offering Termination Date" means the last day of each March, June,
September and December following an Offering Commencement Date.
"Option Price" means ninety percent (90%) of the lesser of: (1) the Fair
Market Value per Share on the Offering Commencement Date, or if such date is not
a trading day, then on the next trading day thereafter or (2) the
<PAGE>
Fair Market Value per Share on the Offering Termination Date, or if such date is
not a trading day, then on the next trading day thereafter.
"Participant" means an Employee who meets the requirements for eligibility
under Section 3 of the Plan and who has timely delivered an Election Form to the
Committee.
"Participating Company" means, as provided in Schedule A, the Company and
subsidiaries of the Company, within the meaning of Section 424(f) of the Code,
if any, that are approved by the Board from time to time and whose employees are
designated as Employees by the Board.
"Payroll Deductions" means amounts withheld from a Participant's
Compensation pursuant to the Plan, as described in Section 5 of the Plan.
"Plan" means Strategic Diagnostics Inc. 1998 Employee Stock Purchase Plan,
as set forth in this document, and as may be amended from time to time.
"Plan Termination Date" means the earlier of:
The Offering Termination Date for the Offering in which the maximum number
of Shares specified in Section5 of the Plan have been issued pursuant to the
Plan; or
The date as of which the Board chooses to terminate the Plan as provided in
Section 15 of the Plan.
"Shares" means shares of Common Stock of the Company.
"Successor-in-Interest" means the Participant's executor or administrator,
or such other person or entity to whom the Participant's rights under the Plan
shall have passed by will or the laws of descent and distribution.
"Termination Form" means the form acceptable to the Committee which an
Employee shall use to withdraw from an Offering pursuant to Section 8 of the
Plan.
III. Eligibility and Participation.
Initial Eligibility. Except as provided in Section 3(b) of the Plan, each
Employee shall be eligible to participate in the Plan.
Ineligibility. An Employee shall not be eligible to participate in the Plan
if such Employee:
Is a Five Percent Owner;
Is a temporary Employee;
Has been employed by a Participating Company on a full-time basis for less
than a 6-consecutive-month period ending on the last day of the month
immediately preceding the effective date of an election to purchase Shares
pursuant to the Plan;
Has not customarily worked more than 20 hours per week during a
24-consecutive-month period ending on the last day of the month immediately
preceding the effective date of an election to purchase Shares pursuant to the
Plan; or
Is restricted from participating under Section 3(d) of the Plan.
Leave of Absence. For purposes of participation in the Plan, an Employee on
an Approved Leave of Absence shall be deemed to be an Employee for the first 90
days of such Approved Leave of Absence and such Employee's employment shall be
deemed to have terminated for purposes of participation under the Plan at the
close of business on the 90th day of such Approved Leave of Absence unless such
Employee shall have returned to regular non-temporary employment before the
close of business on such 90th day. Termination by the Participating Company of
an Employee's Approved Leave of Absence, other than termination or return to
non-temporary employment, shall terminate an Employee's employment for all
purposes of the Plan and shall terminate such Employee's participation in the
Plan and the right to exercise any option. An Approved Leave of Absence shall be
considered active employment for purposes of Sections 3(b)(3) and 3(b)(4) of the
Plan.
Restrictions on Participation. Notwithstanding any provisions of the Plan
to the contrary, no Employee shall be granted an option to participate in the
Plan if:
A-2
<PAGE>
Immediately after the grant, such Employee would be a Five Percent Owner;
or
Such option would permit such Employee's rights to purchase stock under all
employee stock purchase plans of the Participating Companies which meet the
requirements of Section 423(b) of the Code to accrue at a rate which exceeds
$25,000 in fair market value (as determined pursuant to Section 423(b)(8) of the
Code) for each calendar year in which such option is outstanding.
Commencement of Participation. An Employee who meets the eligibility
requirements of Sections 3(a) and 3(b) of the Plan and whose participation is
not restricted under Section 3(d) of the Plan shall become a Participant by
completing an Election Form and filing it with the Committee on or before the
15th day of the month immediately preceding the Offering Commencement Date for
the first Offering to which such Election Form applies. Payroll Deductions for a
Participant shall commence on the applicable Offering Commencement Date when his
or her authorization for Payroll Deductions becomes effective, and shall end on
the Plan Termination Date, unless sooner terminated by the Participant pursuant
to Section 8 of the Plan.
IV. Shares Per Offering.
The Plan shall be implemented by a series of Offerings that shall terminate
on the Plan Termination Date. Offerings shall be made with respect to
Compensation payable for each calendar month of the Company's fiscal year for
the period commencing with the first day of the month first occurring on or
after adoption of the Plan by the Board and ending with the Plan Termination
Date. Shares available for any Offering shall be the difference between the
maximum number of Shares that may be issued under the Plan, as determined
pursuant to Section 10(a) of the Plan, for all of the Offerings, less the actual
number of Shares purchased by Participants pursuant to prior Offerings. If the
total number of Shares for which options are exercised on any Offering
Termination Date exceeds the maximum number of Shares available, the Committee
shall make a pro rata allocation of Shares available for delivery and
distribution in as nearly a uniform manner as practicable, and as it shall
determine to be fair and equitable, and the unapplied Account balances shall be
returned to Participants as soon as practicable following the Offering
Termination Date.
V. Payroll Deductions.
Amount of Payroll Deductions. An Eligible Employee who wishes to
participate in the Plan shall file an Election Form with the Committee at least
15 days before the Offering Commencement Date for the first Offering for which
such Election Form is effective on which he or she may elect to have Payroll
Deductions of such amounts designated by the Committee on the Election Form from
time to time made from his or her Compensation on each regular payday during the
time he or she is a Participant in the Plan, provided that the rules established
by the Committee shall be consistent with Section 423(b)(5) of the Code.
Participants' Accounts. All Payroll Deductions with respect to a
Participant pursuant to Section 5(a) of the Plan shall be credited to the
Participant's Account under the Plan.
Changes in Payroll Deductions. A Participant may discontinue his or her
participation in the Plan as provided in Section 8(a) of the Plan, but no other
change can be made during an Offering, including, but not limited to, changes in
the amount of Payroll Deductions for such Offering. A Participant may change the
amount of Payroll Deductions for subsequent Offerings by giving written notice
of such change to the Committee on or before the 15th day of the month
immediately preceding the Offering Commencement Date for the Offering for which
such change is effective.
Leave of Absence. A Participant who goes on an Approved Leave of Absence
before the Offering Termination Date after having filed an Election Form with
respect to such Offering may:
Withdraw the balance credited to his or her Account pursuant to Section
8(b) of the Plan;
Discontinue contributions to the Plan but remain a Participant in the Plan
through the Offering Termination Date; or
Remain a Participant in the Plan during such Approved Leave of Absence
through the Offering Termination Date and continue the authorization for the
Participating Company to make Payroll Deductions for each payroll period out of
continuing payments to such Participant, if any.
A-3
<PAGE>
VI. Granting of Options.
On each Offering Termination Date, each Participant shall be deemed to have
been granted an option to purchase a minimum of one (1) Share and a maximum
number of Shares that shall be a number of whole Shares equal to the quotient
obtained by dividing the balance credited to the Participant's Account as of the
Offering Termination Date, by the Option Price.
VII. Exercise of Options.
Automatic Exercise. With respect to each Offering, a Participant's option
for the purchase of Shares granted pursuant to Section 6 of the Plan shall be
deemed to have been exercised automatically on the Offering Termination Date
applicable to such Offering.
Fractional Shares and Minimum Number of Shares. Fractional Shares shall not
be issued under the Plan. Amounts credited to an Account remaining after the
application of such Account to the exercise of options for a minimum of one (1)
full Share shall be credited to the Participant's Account for the next
succeeding Offering, or, at the Participant's election, returned to the
Participant as soon as practicable following the Offering Termination Date,
without interest.
Transferability of Option. No option granted to a Participant pursuant to
the Plan shall be transferable other than by will or by the laws of descent and
distribution, and no such option shall be exercisable during the Participant's
lifetime other than by the Participant.
Delivery of Certificates for Shares. The Company shall deliver certificates
for Shares acquired on the exercise of options during an Offering Period as soon
as practicable following the Offering Termination Date.
VIII. Withdrawals.
Withdrawal of Account. A Participant may elect to withdraw the balance
credited to the Participant's Account by providing a Termination Form to the
Committee at any time before the Offering Termination Date applicable to any
Offering.
Amount of Withdrawal. A Participant may withdraw all, but not less than
all, of the amounts credited to the Participant's Account by giving a
Termination Form to the Committee. All amounts credited to such Participant's
Account shall be paid as soon as practicable following the Committee's receipt
of the Participant's Termination Form, and no further Payroll Deductions will be
made with respect to the Participant.
Effect of Withdrawal on Subsequent Participation. A Participant who elects
to withdraw from an Offering pursuant to Section 8(a) of the Plan shall be
deemed to have elected not to participate in each of the two succeeding
Offerings following the date on which the Participant gives a Termination Form
to the Committee.
Termination of Employment. Upon termination of a Participant's employment
for any reason other than death, including termination due to disability or
continuation of a leave of absence beyond 90 days, all amounts credited to such
Participant's Account shall be returned to the Participant. In the event of a
Participant's (1) termination of employment due to death or (2) death after
termination of employment but before the Participant's Account has been
returned, all amounts credited to such Participant's Account shall be returned
to the Participant's Successor-in-Interest without interest.
Leave of Absence. A Participant who is on an Approved Leave of Absence
shall, subject to the Participant's election pursuant to Section 5(d) of the
Plan, continue to be a Participant in the Plan until the end of the first
Offering ending after commencement of such Approved Leave of Absence. A
Participant who has been on an Approved Leave of Absence for more than 90 days
shall not be eligible to participate in any Offering that begins on or after the
commencement of such Approved Leave of Absence so long as such leave of absence
continues.
IX. Interest.
No interest shall be paid or allowed with respect to amounts paid into the
Plan or credited to any Participant's Account.
X. Shares.
Maximum Number of Shares. No more than 661,157 Shares may be issued under
the Plan. Such Shares may be unissued shares or treasury shares of the Company
or may be outstanding shares purchased in the open market
A-4
<PAGE>
or otherwise on behalf of the Plan upon such terms as the Committee may approve
for delivery under the Plan. The number of Shares available for any Offering and
all Offerings shall be adjusted if the number of outstanding Shares of the
Company is increased or reduced by split-up, reclassification, stock dividend or
the like. All Shares issued pursuant to the Plan shall be validly issued, fully
paid and nonassessable.
Participant's Interest in Shares. A Participant shall have no interest in
Shares subject to an option until such option has been exercised.
Registration of Shares. Shares to be delivered to a Participant under the
Plan shall be registered in the name of the Participant.
Restrictions on Exercise. The Board may, in its discretion, require as
conditions to the exercise of any option such conditions as it may deem
necessary to assure that the exercise of options is in compliance with
applicable securities laws.
XI. Expenses.
The Participating Companies shall pay all fees and expenses incurred
(excluding individual Federal, state, local or other taxes) in connection with
the Plan. No charge or deduction for any such expenses will be made to a
Participant upon the termination of his or her participation under the Plan or
upon the distribution of certificates representing Shares purchased with his or
her contributions.
XII. Taxes.
The Participating Companies shall have the right to withhold from each
Participant's Compensation an amount equal to all Federal, state, city or other
taxes as the Participating Companies shall determine are required to be withheld
by them. In connection with such withholding, the Participating Companies may
make any such arrangements as are consistent with the Plan as it may deem
appropriate, including the right to withhold from Compensation paid to a
Participant other than in connection with the Plan.
XIII. Plan and Contributions Not to Affect Employment.
The Plan shall not confer upon any Eligible Employee any right to continue
in the employ of the Participating Companies.
XIV. Administration.
The Plan shall be administered by the Board, which may delegate
responsibility for such administration to a committee of the Board (the
"Committee") or to a third party administrator under Board or Committee
supervision. If the Board fails to appoint the Committee, any references in the
Plan to the Committee shall be treated as references to the Board. The Board, or
the Committee, shall have authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to it, to delegate administrative
functions to a third party administrator and to make all other determinations
deemed necessary or advisable in administering the Plan, with or without the
advice of counsel. The determinations of the Board or the Committee on the
matters referred to in this Section 14 shall be conclusive and binding upon all
persons in interest.
XV. Amendment and Termination.
The Board may terminate the Plan at any time and may amend the Plan from
time to time in any respect; provided, however, that upon any termination of the
Plan, all Shares or Payroll Deductions (to the extent not yet applied to the
purchase of Shares) under the Plan shall be distributed to the Participants,
provided further, that no amendment to the Plan shall affect the right of a
Participant to receive his or her proportionate interest in the Shares or his or
her Payroll Deductions (to the extent not yet applied to the purchase of Shares)
under the Plan, and provided further that the Company may seek stockholder
approval of an amendment to the Plan if such approval is determined to be
required by or advisable under the regulations of the Securities and Exchange
Commission or the Internal Revenue Service, the rules of any stock exchange or
system on which the Shares are listed or other applicable law or regulation.
A-5
<PAGE>
XVI. Effective Date.
The Plan shall be effective on the date it is adopted by the Board. In the
event that the Plan is not approved by the Company's stockholders within one
year of the adoption of the Plan by the Board, the tax treatment of Section 423
of the Code may not apply with respect to Shares transferred to Participants on
the exercise of options pursuant to Section 7 of the Plan.
XVII. Government and Other Regulations.
In General. The purchase of Shares under the Plan shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies as may be required.
Securities Law. The Committee shall have the power to make each grant under
the Plan subject to such conditions as it deems necessary or appropriate to
comply with the then-existing requirements of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, including Rule
16b-3 (or any similar rule) of the Securities and Exchange Commission.
XVIII. Non-Alienation.
No Participant shall be permitted to assign, alienate, sell, transfer,
pledge or otherwise encumber his or her interest under the Plan prior to the
distribution to him or her of Share certificates. Any attempt at assignment,
alienation, sale, transfer, pledge or other encumbrance shall be void and of no
effect.
XIX. Notices.
Any notice required or permitted hereunder shall be sufficiently given only
if delivered personally, telecopied, or sent by first class mail, postage
prepaid, and addressed:
If to the Company:
Strategic Diagnostics Inc.
111 Pencader Drive
Newark, DE 19702
Attn: Chief Financial Officer
Or any other address provided pursuant to written notice.
If to the Participant:
At the address on file with the Company from time to time, or to such other
address as either party may hereafter designate in writing by notice similarly
given by one party to the other.
XX. Successors.
The Plan shall be binding upon and inure to the benefit of any successor,
successors or assigns of the Company.
XXI. Severability.
If any part of this Plan shall be determined to be invalid or void in any
respect, such determination shall not affect, impair, invalidate or nullify the
remaining provisions of this Plan which shall continue in full force and effect.
XXII. Acceptance.
The election by any Eligible Employee to participate in this Plan
constitutes his or her acceptance of the terms of the Plan and his or her
agreement to be bound hereby.
XXIII. Applicable Law.
This Plan shall be construed in accordance with the laws of the state of
Delaware, to the extent not preempted by applicable Federal law.
A-6
<PAGE>
SCHEDULE A
Participating Companies
Strategic Diagnostics Inc.
TSD BioServices, Inc.
HTI Bio-Products, Inc.
Strategic Diagnostics Inc., Europe
A-7
<PAGE>
STRATEGIC DIAGNOSTICS INC.
111 Pencader Drive
Newark, Delaware 19702
Annual Meeting of Stockholders - April 27, 1999
Proxy Solicited on Behalf of the Board of Directors
The Undersigned, revoking all prior proxies, hereby appoints Robert E. Finnegan
and Richard J. Defieux as Proxies, with full power of substitution to each, to
vote for and on behalf of the undersigned at the 1999 Annual Meeting of
Stockholders of STRATEGIC DIAGNOSTICS INC. to be held at the Christiana Hilton,
100 Continental Drive, Newark, Delaware 19713, on Tuesday, April 27, 1999, at
10:00 a.m. local time, and at any adjournment or adjournments thereof. The
undersigned hereby directs the said proxies to vote in accordance with their
judgment on any matters which may properly come before the Annual Meeting, all
as set forth in the Notice of Annual Meeting, receipt of which is hereby
acknowledged, and to act on the following matters set forth in such notice as
specified by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
"FOR" PROPOSALS 1, 2 AND 3.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name(s) appear(s) on the books of the Company. Joint
owners should each sign personally, Trustees, custodians, and other fiduciaries
should indicate the capacity in which they sign, and where more than one name
appears, a majority must sign. If the stockholder is a corporation, the
signature should be that of an authorized officer who should indicate his or her
title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
__________________________________ ____________________________________
__________________________________ ____________________________________
__________________________________ ____________________________________
18
<PAGE>
STRATEGIC DIAGNOSTICS INC. I. Election of Class 1 Directors
For Withheld For All Except
RECORD DATE SHARES: Grover C. Wrenn [ ] [ ] [ ]
Richard C. Birkmeyer [ ] [ ] [ ]
Kathleen E. Lamb [ ] [ ] [ ]
Curtis Lee Smith Jr. [ ] [ ] [ ]
NOTE:If your do not wish your shares voted "For" a
particular nominee, mark the "For All Except" box
and strike a line through the nominee's(s')
name(s). Your shares will be voted for the
remaining nominee(s).
2. To approve amendments to the Company's 1995
Stock Incentive Plan (to be renamed the Strategic
Diagnostics Inc. 2000 Stock Incentive Plan) to
Increase the number of shares authorized for
issuance from 1,700,000 to 2,500,000.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE For Against Abstain
[ ] [ ] [ ]
3. To approve the Company's Employee Stock
Purchase Plan.
For Against Abstain
[ ] [ ] [ ]
Please be sure to sign and In their discretion, the proxies are authorized to
date this Proxy. vote upon any other business that may properly come
before the meeting or at any adjournment thereof.
__________________________ Date__________________
Stockholder sign here
__________________________ Date__________________
Co-owner sign here
Mark box at right if an address change or
comment has been noted on the reverse side [ ]
of this card.
DETACH CARD DETACH CARD
STRATEGIC DIAGONOSTICS INC.
Dear Stockholder,
Please take note of the important information regarding the Company's management
and financial results enclosed with this Proxy Ballot.
Your votes on the election of the Company's directors and the other proposals
are important and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will
be voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders on April
27, 1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Strategic Diagnostics Inc.
