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 the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement (PRER14A)
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
HYDROMER, INC.
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(Name of Registrant as Specified In Its Charter)
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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: 4,597,987
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[LOGO] HYDROMER, INC.
HYDROMER, INC.
35 INDUSTRIAL PARKWAY
BRANCHBURG, NJ 08876-3424
NOTICE OF 2004 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 17, 2004
----------------------------------------------------
The Annual Meeting of the Shareholders of HYDROMER, Inc. (the "Company") will be
held on Wednesday, November 17, 2004, at 35 Industrial Parkway, Branchburg, New
Jersey at 10 a.m., for the following purpose, as more fully described in the
accompanying Proxy Statement:
1. To elect eight directors of the Company for the ensuing year.
2. To ratify the selection by the Board of Directors of Rosenberg
Rich Baker Berman & Company as the Company's independent
accountants for fiscal 2004/2005.
3. Transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 1, 2004 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 15, 2004
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.
TABLE OF CONTENTS
Questions And Answers..........................................................1
Proxy Statement................................................................3
I. Election of Directors (Proposal I).....................................3
Name of Nominee and Certain Biographical Information...................3
Directors' Stock Holdings..............................................4
Meetings and Director's Compensation...................................5
Nominating Committee...................................................5
Compensation Committee.................................................5
Audit Committee........................................................5
Audit Committee Report.................................................5
Corporate Policy on Business Practices.................................6
Code of Ethics for the CEO and CFO.....................................6
Shareholder Communications.............................................6
Executive Officers.....................................................6
Compensation of Executive Officers.....................................7
Stock Options..........................................................7
Stock Option Information Table.........................................8
Certain Arrangements with Directors and Executive Officers.............8
Information Concerning Certain Shareholders............................8
Other Information......................................................9
II. Ratification of Selection of Independent Public Accountants
(Proposal II)..........................................................9
III. Other Matters.........................................................10
IV. Miscellaneous.........................................................10
V. Exchange Act Compliance...............................................10
VI. Shareholder Proposals.................................................10
VII. Internet Web Site.....................................................10
ii
HYDROMER, INC.
35 INDUSTRIAL PARKWAY
BRANCHBURG, NJ 08876
QUESTIONS AND ANSWERS
ABOUT HYDROMER'S ANNUAL MEETING AND VOTING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the annual meeting, the stockholders will elect 8 directors; ratify the
Company's choice of independent public accountants and act upon anything else
that properly comes before the meeting. In addition, the management will give a
report on the Company's performance during the fiscal year beginning July 1,
2003 and ending June 30, 2004.
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 November 17, 2004, at 10:00 a.m. (EST), at 35 Industrial
Parkway, Branchburg, NJ 08876, or at any adjournment of the meeting. This proxy
statement discloses the information you need to know to vote on an informed
basis. We are first mailing this proxy statement and the enclosed proxy card to
stockholders on or about September 15, 2004.
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, 2004. Each share of Hydromer
common stock that you own, entitles you to one vote.
WHO CAN ATTEND THE MEETING?
Only stockholders of record on the close of business on the record date, or
their duly appointed proxies, may attend the meeting. Registration begins at
9:30 a.m.
HOW MANY SHARES OF VOTING STOCK ARE OUTSTANDING?
On the record date, there were 4,597,987 shares of Hydromer common stock
outstanding. Hydromer common stock is our only class of voting stock.
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 i.e. 2,298,994 shares. 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 also included in
determining the presence of a quorum.
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 Michael F. Ryan, Ph.D.
2. The ratification of the selection of Rosenberg Rich Baker Berman
& Company as our independent public accountants for the fiscal
year beginning July 1, 2004.
1
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 and
FOR the appointment of Rosenberg Rich Baker Berman & Company as our independent
public accountants for fiscal 2004/2005.
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 with this proxy statement.
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. 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 2 if it does not receive 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:
o "FOR" the election of all nominees for director,
o "FOR" ratification of the selection of independent accountants
for 2004/2005
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.
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
PROXY STATEMENT
This Proxy Statement, which will be mailed commencing on or about September 15,
2004 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 Industrial Parkway, Branchburg,
New Jersey 08876-3424 at 10 a.m., on November 17, 2004 and at any adjournment
thereof, for the purposes set forth in this Notice. The Company's executive
office is also located at 35 Industrial Parkway, Branchburg, New Jersey
08876-3424.
At the close of business on September 1, 2004, the record date stated in the
accompanying Notice, the Company had 4,597,987 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 plus 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, 2004, Manfred F. Dyck, Chairman of the Board and a Director
of the Company, beneficially owned approximately 34.7% of the outstanding Common
Stock of the Company, and his wife Ursula M. Dyck, a Director of the Company,
beneficially owned 4.3% of the Common Stock. In addition, Mr. Dieter Heinemann,
a Director of the Company owned 14.4% of the outstanding Common Stock of the
Company. Such ownership totaling 53.4% enables these three shareholders to
control the outcome of any election regarding 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, the proxy holders 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. They furnished such information to the Company.
NAME OF NOMINEE AND CERTAIN BIOGRAPHICAL INFORMATION
MANFRED F. DYCK, age 69; Chairman of the Board of the Company since June 1983
and Chief Executive Officer of the Company since August of 1989; Director of
Biosearch Medical Products Inc., from 1975 until 2000; Director of the Company
since 1980. Manfred and Ursula Dyck are husband and wife.
MAXWELL BOROW, M.D., age 78, 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 70; Director of the Company since 1980. Ursula and Manfred
Dyck are wife and husband.
DIETER HEINEMANN, age 66; Specialist, Frankfurt, [Germany] Stock Exchange until
October 31, 2003. Director of the Company since 1991.
ROBERT H. BEA, age 51; Vice President, Regulatory and Quality Assurance, Siemens
Medical Solutions USA, Inc. since 1994; Vice President of Quality Assurance and
Regulatory Affairs of Biosearch Medical Products, Inc., from 1992-1994. He
previously worked at Johnson & Johnson where he held positions of increasing
responsibility in Quality/Regulatory affairs from 1973-1991. Director of the
Company since 1996.
3
FREDERICK A. PERL, M.D., age 76, 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 from December 1996 until February 2000 when appointed
to the Board of the Company.
KLAUS J.H. MECKELER, M.D., age 70; 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 from January
1984 to February 2000. Appointed to the Board of the Company in February 2000.
MICHAEL F. RYAN, Ph.D., age 61; President e-ClinicalMentor since 2000 and
Consultant-Medical Marketing Decisions since 2000; Vice-President Internal
Medicine, Quintiles Americas 1997-1999. Member of the Company's Board of
Directors since August 2003.
DIRECTORS' STOCK HOLDINGS
Stock Owned (1)
Name On Record Date %
---- -------------- ---
MANFRED F. DYCK 1,593,189 (2) 34.7%
MAXWELL BOROW, M.D. 14,000 (5) Less than 1%
URSULA M. DYCK 195,000 (3) 4.3%
DIETER HEINEMANN 661,000 (4) 14.4%
ROBERT H. BEA - 0 - (6) -
KLAUS J.H. MECKELER, M.D. - 0 - (7) -
FREDERICK L. PERL, M.D. - 0 - (8) -
MICHAEL F. RYAN, Ph.D. - 0 - -
(1) As of September 1, 2004, 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 106,452 shares held by Mr. Dyck as
custodian/trustee for certain of his children/grandchildren and does not
include 182,156 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 102,314 options held by Mr. Dyck.
(3) Does not include 136,004 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 60,000 shares held by Mrs. Dyck
as custodian for her grandchildren. Excludes 39,000 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 37,000
options held by Mr. Heinemann.
(5) Excludes 35,000 options held by Dr. Borow
(6) Excludes 37,000 options held by Mr. Bea
(7) Excludes 34,000 options held by Dr. Meckeler.
(8) Excludes 32,000 options held by Dr. Perl
4
MEETINGS AND DIRECTOR'S COMPENSATION
During the past fiscal year, the Board of Directors of the Company met four
times. All Directors attended at least 75% of the meetings except Dr. Ryan who
was nominated to the Board in August 2003.
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 2003/2004.
NOMINATING COMMITTEE
The Company does not have a Nominating Committee as the Company's Board of
Directors is of the opinion that its current practice of informal networking to
seek out potential candidates results in Board of Director candidates who have a
scientific or business background and can adequately represent the interests of
the stockholders. All Directors have been re-nominated to stand for election.
COMPENSATION COMMITTEE
The Company does not have a Compensation Committee. Since the majority of the
Board is composed of independent directors, the Company is of the opinion that
the full Board can perform this function.
AUDIT COMMITTEE
On November 19, 2003 the Board ratified the then existing membership of the
audit committee consisting of the outside directors, Robert Bea (Chairman), Dr.
Klaus Meckeler & Dr. Frederick Perl and added Director Michael F. Ryan. None of
these members are "financial experts" as the Company is of the opinion that the
financial aspects of the Company are not complex and are within the scope of the
collective experience of the Audit Committee. In the event any financially
complex issues arise, the Audit Committee is empowered by its charter to retain
or hire such independent expertise, as it deems necessary. The Audit Committee
Charter is posted on the Company's Web site at HTTP://WWW.HYDROMER.COM. The
Audit committee met twice; once before the normal regular board meeting and the
second time during a recess in the regular Board meeting, to review the fiscal
year ending June 30, 2004. It issued the following report:
AUDIT COMMITTEE REPORT
The following is the audit committee's report submitted to the Board of
Directors for the year ended June 30, 2004.
The Audit Committee of the Board of Directors has:
a. reviewed and discussed the Company's audited financial
statements for the year ended June 30, 2004 with the Company's
management;
b. discussed with Rosenberg Rich Baker Berman & Company ("RRBB")
the Company's independent accountants, the materials required to
be discussed by Statement of Auditing Standard 61;
c. reviewed the written disclosures and the letter from RRBB
required by Independent Standards Board No. 1 and has discussed
with RRBB its independence; and
Based on the foregoing review and discussion, the Audit Committee
recommends to the Board of Directors that the audited financial
statements be included in the Company's 2003/2004 Annual Report on Form
10-KSB.
THE AUDIT COMMITTEE
Robert H. Bea
Fredrick L. Perl
Klaus H. Meckeler
Michael F. Ryan
5
CORPORATE POLICY ON BUSINESS PRACTICES
On June 22, 2000 the Board adopted a set of policies applicable to Directors,
Officers and employees of the Corporation covering subjects: 1. Loyalty to
Corporation; 2. Conflict of Interest; 3. Anti-Trust Compliance; 4. Inside
Information and Trading in Company's Securities; 5. Prohibition on Political
Contributions; 6. Equal Opportunity Employment; 7. Environmental Health and 8.
Legal Compliance. The present Policy, as revised, is posted on the Company's web
site at HTTP://WWW.HYDROMER.COM.
CODE OF ETHICS FOR THE CEO AND CFO
On May 12, 2004 the Company adopted a code of ethics for the CEO and CFO. This
Code is posted on the Company's Web site at HTTP://WWW.HYDROMER.COM. The Charter
indicates the procedure to use to report a violation.
SHAREHOLDER COMMUNICATIONS
The Company has a past practice of bringing all reasonable communications from
shareholders to the attention of the Board members at Board meetings, which are
held four to five times per year. The volume of such communications has been
minimal; hence the Company feels that the current practice is adequate. Address
all communications via mail to: Corporate Secretary, Hydromer, Inc. 35
Industrial Parkway, Branchburg, NJ 08876.
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.
from 1975 to 2000. He holds a B.S. in Chemical Engineering.
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 this 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. He holds a B.S. in Aerospace Engineering, an M.S.
in Computer Science and a J.D. in Law.
MARTIN C. DYCK has been Vice President of Operations of the Company since
February 2000 and Executive Vice President since June 2001. 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 Operations. Martin
C. Dyck is the son of Mr. Manfred F. Dyck and Mrs. Ursula M. Dyck. He holds a
B.S. in Finance with a minor in Mechanical Engineering.
RAINER GRUENING, PHD has been Vice President of R&D since June 2001. Prior to
this he held the position of Manager of Regulatory Affairs in AM Cosmetics. Dr.
Gruening has his PhD in Chemistry from the University of Marburg in Germany. He
is listed as an inventor on 16 patents and has authored or co-authored 35
publications on the synthesis and formulations of antimicrobial polymeric
coatings, cosmetics, adhesives and marine anti-fouling products.
ROBERT Y. LEE, CPA, MBA, Vice President of Finance and Chief Financial Officer
since June 1, 2001. He earned a MBA in Finance and International Business, and a
Bachelors of Science in Accounting and Information Systems, both from New York
University's Stern School of Business. His professional experience includes
tenure with the New York office of Coopers and Lybrand (currently
PricewaterhouseCoopers) in their Emerging Business Group, the Bristol Myers
Squibb Internal Auditing group, ASARCO's Southern Peru Copper Corporation and
Citigroup.
6
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, 2004, to the CEO
and for each of the executive officers of the Company whose total cash
compensation exceeded $100,000.
Annual Compensation Long-Term Compensation
Name and Other Restricted
Principal Annual Stock Options LTIP All other
Position Year Salary Bonus Compensation(1) Awards /SAR Payouts Compensation
-------- ---- ------ ----- --------------- ------ ---- ------- ------------
Manfred F. Dyck 2004 $ 252,277 $ 78,481 $ 5,000 - 8,000(2) - -
Chairman 2003 235,962 - 5,000 - 10,000 - -
President, CEO 2002 225,000 - 5,000 - 8,000 - -
Martin C. Dyck 2004 $ 147,615 $ 45,098 5,000 - - - -
Exec. VP 2003 136,231 5,000 5,000 - - - -
2002 122,769 - 5,000 - 50,000 - -
Robert J. Moravsik 2004 $ 125,808 $ 11,911 5,000 - - - -
Senior VP, Secy 2003 120,423 - 5,000 - - - -
2002 115,000 - 5,000 - - - -
Robert Y. Lee 2004 $ 130,846 $ 31,763 3,077 - - - -
VP, CFO 2003 124,769 - 3,000 - - - -
2002 120,000 - 3,000 - 9,000 - -
Dr. Rainer Gruening 2004 $ 127,000 $ 22,691 5,000 - - - -
VP, R&D 2003 121,923 - 5,000 - - - -
2002 115,000 - 5,000 - 9,000 - -
The aggregate value of restricted shares of the Company held by Manfred F. Dyck
as of June 30, 2004 was approximately $2,389,784 (based on a market price of
$1.50/share and includes only shares held directly, does not include options or
shares held as custodian.)
Notes:
(1) Amount of Automobile Allowance, which was paid in the year shown
(2) As part of a stock option plan covering active Directors
STOCK OPTIONS:
It has been the practice and opinion of the Board of Directors that stock option
awards are needed to attract and retain talented executive management/scientific
employees. All plans which award employees stock options provide that the
options are lost when employment ends. In the specific case the employment
relationship is terminated by the Company, the stock options that are vested
must be exercised in 30 days after the employment relationship ends. In the case
of awards to Directors, the options vest on the date of grant and may be
exercised at anytime within the option period, which is generally five years.
From time to time the Board awards options to employees for outstanding
accomplishments or as part of an employment agreement. These awards are based on
factors, which the Board considers important, and of benefit to the Company. The
option price has traditionally been set at the 5 day weighted average of the
market price prior to the date of the award, hence in the opinion of the Company
the option have no value on the award date. None of these plans or discretionary
awards has been submitted or are subject to the approval of stockholders.
In 1984, the Board of Directors conferred upon Manfred F. Dyck, Chairman of the
Board of the Company, the authority to grant to 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 2003/2004 fiscal year under this plan.
7
In August 1998 the Board of Directors authorized a stock option plan effective
July 1, 1998 for senior management. Under the plan, senior management would each
be issued stock options in an amount equal to 1% of the incremental market cap
increase of the Company (defined as # of outstanding shares times share price)
on June 30th in each of the next three years. In August 2001 the Board extended
the stock option plans for Senior Management and the President (see below) for
three more years ending June 30, 2004 under the same terms. The plan for senior
management includes four members in the 2003/2004 fiscal year. The market cap
did not increase over the prior base in 2003/2004 so no awards were made under
this plan.
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) on June 30th in each of the following years. See Compensation of
Executive Officers for the awards under this plan. No awards were made in fiscal
2003/2004.
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, and each subsequent year on the record date. On February 22, 2000
the option plan was amended to grant each director 2,000 options for each
meeting attended with a strike price set just prior to the annual meeting date.
(The price shall be the prior 5 day-weighted average.)
STOCK OPTION INFORMATION TABLE
Total Options (1 option is for 1 share of common stock)
Exercisable on September 1, 2004.................. 467,191
Weighted Exercise Price........................... $0.94
Unvested Options ................................. 34,333
Total Number of Shares Reserved for
All Options actually issued.................... 501,524
Note: none of the options awarded above were awarded subject to plans approved
by stockholders.
CERTAIN ARRANGEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS
There are no loans, credit arrangements or other similar arrangements with
Directors or Officers of the Company. The Company maintains a 401K Retirement
Plan, which is open to all full time employees. It has been the Company's
practice to match 25% of each employee's contribution up to 6% of the employee's
salary. No stock of the Company is maintained in this plan.
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, 2004, 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.
8
Shares of Common
Stock Owned
Name and Address Beneficially (1) Percent of Class
---------------- ----------------
Manfred F. Dyck 1,593,189 (2)(3) 34.7%
255 Holland Road
Far Hills, NJ 07931
Dieter Heinemann 661,000 (4) 14.4%
Goldbergweg 6460599
Frankfurt AM
Federal Republic
of Germany
Ben Posdal 355,361 7.7%
PO Box 23632
Tampa, Fl 22623
All Directors and Officers 2,499,189 (2)(3)(4)(5) 54.3%
As a group (12 persons)
Notes:
(1) As of September 1, 2004, 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 106,452 shares held by Mr. Dyck as custodian for
certain of his children/grandchildren and does not include 182,156 shares
held with sole voting and investment power by Mr. Dyck's children and
relatives of Mr. Dyck's, as to which Mr. Dyck disclaims beneficial
ownership. Excludes 102,314 options held by Mr. Dyck.
(3) Does not include 195,000 shares held by Ursula M. Dyck, Mr. Dyck's wife,
individually and as custodian. Does not include 39,000 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. Also excludes
37,000 options held by Mr. Heinemann.
(5) Excludes, 21,105 stock options held by Mr. Moravsik, 81,105 stock options
held by Mr. Martin C. Dyck, 9,000 stock options held by Robert Y. Lee,
9,000 options held by Dr. Rainer Gruening and 102,314 stock options held by
Mr. Manfred F. Dyck. Excludes all options held by Directors. (See "Stock
Options")
OTHER INFORMATION CONCERNING DIRECTORS, OFFICERS AND SHAREHOLDERS
There is no other information regarding Officers and Shareholders.
II. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS (PROPOSAL II)
Subject to ratification by the stockholders, the Board of Directors has selected
the firm of Rosenberg Rich Baker Berman & Company ("RRBB") as the Company's
independent public accountants for the current year. Payments to RRBB for the
two previous fiscal years were:
Fiscal year ending
June 30, 2004 June 30, 2003
Audit fees $ 28,500 $ 28,500
Audit related fees - -
Tax fees - -
All other fees - -
Representatives of RRBB 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.
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III. OTHER MATTERS
The Board of Directors of the Company does not know of any other matters, which
may be brought before the meeting. However, if any such other matters are
properly presented for action, it is the intention of the persons named in the
accompanying form of Proxy to vote the shares represented thereby in accordance
with their judgment on such matters.
IV. MISCELLANEOUS
If the accompanying form of Proxy is executed and returned, the shares
represented thereby will be voted in accordance with the terms of the Proxy,
unless the proxy is revoked by written notice addressed to and received by the
Secretary of the Corporation. If no directions are indicated in such Proxy, the
shares represented thereby will be voted in the election of directors in favor
of the nominees proposed by the Board of Directors, and in favor of ratification
of the Independent Certified Public Accountants. Any Proxy may be revoked at any
time before it is exercised. The casting of a ballot at the Meeting by a
shareholder who may theretofore have given a Proxy will not have the effect of
revoking the same unless the shareholder so notifies the Secretary of the
meeting in writing at any time prior to the voting of the shares represented by
the Proxy. Votes that are withheld and broker 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.
V. EXCHANGE ACT COMPLIANCE
Section 16(a) of the Securities Exchange Act requires that certain of the
Company's officers, directors and persons who own more than ten percent of a
registered class of the Company's securities, file reports of ownership and
changes in ownership of the Company's securities with the Securities Exchange
Commission. Officers, directors and greater than ten percent shareholders are
required to provide the Company with copies of the forms they file. Based solely
upon its review of copies of such forms received by the Company, and upon
representations by the Company's officers and directors regarding compliance
with the filing requirements, the company believes that in Fiscal 2003/2004, all
filing requirements applicable to its officers, directors and ten percent
shareholders were complied with in a timely manner.
VI. SHAREHOLDER PROPOSALS
The Company must receive shareholder proposals intended to be presented at the
2005 Annual Meeting of Shareholders of the Company by May 19, 2005 in order to
be considered for inclusion in the Company's Proxy Statement relating to such
meeting.
VII. INTERNET WEB SITE
The Company maintains a WEB site on the Internet with an address of
HTTP://WWW.HYDROMER.COM, which describes the products and services sold by the
Company and contains product brochures, which can be downloaded. The web site
contains links to the Company's Policy on Business Conduct, the Audit Committee
Charter, and the Code of Ethics for the CEO and CFO, which any person can use to
obtain these documents and other documents filed with the Security and Exchange
Commission. Also provided, are links to various financial services, which post
the current stock price and current press releases. Stockholders are invited to
browse this information.
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PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE HYDROMER, INC.
WITH FOR ALL
FOR HOLD EXCEPT
1. Election of Manfred F Dyck;
PROXY SOLICITED ON BEHALF OF Dr. Maxwell Borow; Dieter Heinemann
THE BOARD OF DIRECTORS Ursula M. Dyck; Robert H. Bea;
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON Dr. Klaus Meckeler; Dr. Frederick Perl;
NOVEMBER 17, 2004 and Michael F Ryan, Ph.D.
The undersigned hereby appoints Robert J. Moravsik and INSTRUCTION: To withhold authority to vote for any
Robert Y. Lee and each of them, to represent the undersigned at individual nominee, mark "For All Except" and write that
the Annual Meeting of Stockholders of Hydromer, Inc. to be held nominee's name in the space provided below.
at Hydromer's facility located at 35 Industrial Parkway,
Branchburg, New Jersey, on Wednesday, November 17, 2004 at 10:00
a.m., and at any adjournment thereof, on all matters coming
before such meeting.
For AGAINST ABSTAIN
2. The ratification of the appointment
of Rosenberg, Rich, Baker, Berman &
Company as Company's independent
Accountants for fiscal 2004/2005.
3. In their discretion, the proxies are authorized to vote
upon Such other business as may properly come before the
meeting or any postpone ment or adjournment thereof.
THIS PROXY IS SOLICITED ON 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 I OR 2, 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
Please be sure to sign and date POSTPONEMENT OR ADJOURNMENT THEREOF. THIS PROXY IS REVOCABLE
this Proxy in the box below. AT ANY TIME BEFORE IT IS EXERCISED.
Receipt herewith of the Company's Annual Report and notice
of meeting and proxy statement dated September 15, 2004 is
Stockholder sign above - Co-holder (if any) sign above hereby acknowledged.
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
HYDROMER, INC.
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.
PLEASE SIGN, DATE AND MAIL TODAY
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE
ENVELOPE PROVIDED.
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