NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
November 6, 2000
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Kent
Financial Services, Inc. (the "Company"), will be held on Monday, November 6,
2000, at 8:30 a.m., local time, at our offices, 376 Main Street, Bedminster, New
Jersey 07921 for the purpose of considering and acting upon the following
matters:
(1) To elect five directors to serve until the next Annual Meeting
or until their respective successors are duly elected and
qualified;
(2) To transact such other business as may properly come before
the Annual Meeting or any adjournment(s), postponement(s) or
continuation(s) thereof.
Only stockholders of record at the close of business on October 2, 2000 are
entitled to notice of and to vote at the Annual Meeting and at any and all
adjournments, postponements or continuations thereof. A list of stockholders
entitled to vote at the Annual Meeting will be available for inspection during
ordinary business hours by any stockholder for any purposes germane to the
meeting, at the Company's offices at 376 Main Street, Bedminster, New Jersey
07921, for a period of at least ten days prior to the Annual Meeting and will
also be available for inspection at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person.
THE BOARD OF DIRECTORS IS NOT SOLICITING PROXIES AND YOU ARE REQUESTED NOT
TO SEND A PROXY.
By Order of the Board of Directors
/s/ Paul O. Koether
----------------------------------
Paul O. Koether
Chairman and President
Date: October 4, 2000
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KENT FINANCIAL SERVICES, INC.
376 MAIN STREET
P.O. BOX 74
BEDMINSTER, NEW JERSEY 07921
(908) 234-0078
----------------
INFORMATION STATEMENT FOR THE ANNUAL MEETING
November 6, 2000
General
This Information Statement is being furnished to the stockholders of Kent
Financial Services, Inc., a Delaware corporation (the "Company") pursuant to
Regulation 14(c) of the Securities Exchange Act of 1934 in connection with the
forthcoming Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Monday, November 6, 2000, at 8:30 a.m., at our offices, 376 Main Street,
Bedminster, New Jersey 07921, and at any and all adjournments, postponements or
continuations thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Company's telephone number is
(908) 234-0078.
This Information Statement and accompanying Notice of Annual Meeting of
Stockholders are first being mailed on or about October 4, 2000 to all
stockholders entitled to vote at the meeting.
Voting Securities
Only stockholders of record at the close of business on October 2, 2000
(the "Record Date"), are entitled to notice of and to vote at the Annual
Meeting. On the Record Date, 1,834,672 shares of the Company's common stock,
$.10 par value per share (the "Common Stock"), were issued and outstanding. The
presence, either in person or by proxy, of the holders of a majority of the
total number of shares of Common Stock outstanding on the Record Date is
necessary to constitute a quorum and to transact such matters as come before the
Annual Meeting.
As of the Record Date, management and its affiliates ("Principal
Stockholders") collectively owned greater than 50% of the Company's outstanding
Common Stock and will vote such shares to elect as directors the five nominees
listed under the caption "Election of Directors". Since the Common Stock owned
by the Principal Stockholders constitute a majority of the Company's outstanding
Common Stock, the Board of Directors determined not to solicit proxies. Any
stockholder of record on the Record Date, is entitled to attend the meeting and
vote their shares personally or through such stockholder's own legally
constituted proxy.
THE BOARD OF DIRECTORS IS NOT SOLICITING PROXIES AND YOU ARE REQUESTED NOT
TO SEND A PROXY.
<PAGE>
The Company will reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding the Information
Statement and Notice of Annual Meeting of Stockholders to such beneficial
owners.
ELECTION OF DIRECTORS
Nominees
At the Annual Meeting, five directors are to be elected to hold office
until the next annual meeting of stockholders or until their respective
successors are duly elected and qualified. The Principal Stockholders will vote
FOR the election of each nominee named below ("Nominee"). Each Nominee has
consented to serve as a director if elected. It is not expected that any Nominee
will be unable to serve, but, in the event that any Nominee should be unable to
serve, the Principal Stockholders will vote for a substitute candidate selected
by the Board of Directors.
Certain information regarding each Nominee is set forth below.
Position and Office Director
Name of Nominee Age Presently Held with Company Since
--------------- --- --------------------------- --------
Paul O. Koether 64 Chairman, President and 1987
Director
Mathew E. Hoffman 46 Director 1994
Casey K. Tjang 62 Director 1992
M. Michael Witte 74 Director 1986
Qun Yi Zheng, Ph.D. 43 Nominee for Director -
------------------------------------
There are no family relationships between any Nominee and/or any executive
officers of the Company. Information concerning each Nominee's business history
and experience is set forth below.
Paul O. Koether is principally engaged in the following businesses: (i)
Chairman and director since July 1987 and President since October 1990 of the
Company and the general partner since 1990 of Shamrock Associates, ("Shamrock")
an investment partnership which is the principal stockholder of the Company (ii)
various positions with affiliates of the Company, including Chairman since 1990
and a registered representative since 1989 of T. R. Winston & Company, Inc.
("Winston"); and (iii) Chairman since April 1988, President from April 1989 to
February 1997 and director since March 1988 of Pure World, Inc., ("Pure World")
and since December 1994 has been a director and since January 1995 has been
Chairman of Pure World's wholly-owned subsidiary, Pure World Botanicals, Inc.,
a manufacturer and distributor of natural products.
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He is also Chairman and a director of Pure World's principal stockholder, Sun
Equities Corporation, ("Sun") a private company. In September 1998, Mr. Koether
was elected a director and Chairman of Cortech, Inc., ("Cortech") a
biopharmaceutical company seeking to redeploy its' assets. Mr. Koether was a
director of Golf Rounds.com, Inc., ("Golf Rounds") an internet content provider
from July 1992 to January 2000.
Mathew E. Hoffman. Since January 1997, he has been head of the litigation
department of Todtman, Nachamie, Spizz & Johns, P.C. From May 1994 until January
1997 Mr. Hoffman was head of the litigation department of the law firm of Rosen
& Reade. His articles have been published in the United States, Europe and
Japan.
Casey K. Tjang. Since August 2000, he has been Executive Vice President
Finance with Knowledgewindow, Inc., an e-learning provider of internet training.
From December 1995, until August 2000 with Leading Edge Packaging, Inc., a
marketing, wholesaler and distribution company of consumer product packagings in
the following capacities: director and secretary since December 1995; Chief
Financial Officer since September 1996 and President since September 1998. On
August 16, 2000 Leading Edge Packaging, Inc., filed a Chapter XI petition under
the United States Bankruptcy Code. From 1991 to 1995, Mr. Tjang served as
President and Chief Executive Officer of First Merchant Bankers, Inc., a
privately-owned investment company, whose business is focused in the Asia
Pacific rim, and from 1993 to 1995, was an Executive Director of Starlite
Holdings Limited, a printer and manufacturer of packaging materials. From March
1991 until February 1995, Mr. Tjang was a director of Concord Camera Corp.,
which manufactures and distributes camera equipment.
M. Michael Witte. Since August 1980, he has been President of M. M. Witte &
Associates, Inc., a private corporation which is engaged in oil and gas
consulting and investment management. In November 1995 Mr. Witte was elected
Co-Chairman of The American Drilling Company, L.L.C., a position he subsequently
relinquished after his election on August 1, 1996 as President and Chief
Executive Officer of South Coast Oil Corporation, a Los Angeles based oil
company founded in 1921. From April 1991 to June 1995 Mr. Witte was a director
of Search Exploration, Inc., a publicly held corporation until it was acquired
by Harken Energy Corporation, which, through its wholly-owned subsidiary,
McCulloch Energy, Inc. ("McCulloch") was engaged in the acquisition,
exploration, development and production of oil and natural gas properties in the
United States. Mr. Witte was Chairman of McCulloch from April 1991 through June
1995.
Qun Yi Zheng, Ph.D. Since March, 1996 he has been Executive Vice President
and Director of Science and Technology at Pure World Botanicals, Inc. From
January 1995 to March 1996 he was Technical Manager at Hauser Nutraceuticals, a
division of Hauser Chemicals, Inc., a manufacturer and distributor of
nutraceuticals. Dr. Zheng has been a director of Cortech since August 2000.
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<PAGE>
Board Meetings and Committees
The Board held two formal meetings during the year ended December 31, 1999
and otherwise acted by written consent. Each of the Company's directors attended
all of the meetings of the Board of Directors and of all committees of the Board
on which he served. During the year ended December 31, 1999, the Board had an
Audit Committee, which consisted of Messrs. Tjang, Witte, and Hoffman. The Audit
Committee, which reviews the Company's internal controls, accounting practices
and procedures, and results of operations, held two meetings in 1999.
The Board also had a Compensation Committee consisting of Messrs. Witte and
Hoffman. The Compensation Committee, which is responsible for reviewing
Management's compensation, held no meetings in 1999. The Board of Directors does
not have a nominating committee.
BENEFICIAL OWNERSHIP
Security Ownership of Officers, Directors, Nominee
and Certain Stockholders
The following table sets forth the beneficial ownership of Common Stock of
the Company as of August 31, 2000, by each person who was known by the Company
to beneficially own more than 5% of the Common Stock, by each current director,
nominee, Executive Officers and by all current directors, nominee and officers
as a group:
Amount and Nature
Name and Address of Beneficial Percent of
of Beneficial Owner Ownership (1) Class
------------------- ----------------- ----------
Paul O. Koether 928,454 (2) 50.61%
211 Pennbrook Road
Far Hills, NJ 07931
Shamrock Associates 834,940 45.51%
211 Pennbrook Road
Far Hills, NJ 07931
Tweedy, Brown Company, LLC 155,836 (3) 8.49%
52 Vanderbilt Avenue
8th Floor
New York, NY 10017
M. Michael Witte 14,000 *
1120 Granville Avenue
Suite 102
Los Angeles, CA 90049
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Casey K. Tjang 6,000 *
510 Tallwood Lane
Greenbrook, NJ 08812
Mathew E. Hoffman 7,000 *
62 Rosehill Avenue
New Rochelle, NY 10804
Qun Yi Zheng, Ph.D. - -
375 Huyler Street
South Hackensack, NJ 07606
John W. Galuchie, Jr. 48,332 (4) 2.63%
376 Main Street
Bedminster, NJ 07921
All Directors, Nominee and Officers 975,454 53.17%
as a Group (6 persons)
-----------------------------------------
*Less than 1 percent.
(1) The beneficial owner has both sole voting and sole investment powers
with respect to these shares except as set forth in this footnote or in
other footnotes below.
(2) Includes the 834,940 Shares beneficially owned by Shamrock. As
a general partner of Shamrock, Mr. Koether may be deemed to own these
shares beneficially. Includes 28,332 shares owned by Sun, a private
corporation of which Mr. Koether is the Chairman and a principal
stockholder. Includes 10,082 shares held by Mr. Koether's IRA. Mr.
Koether is also a limited partner of Shamrock and may be deemed to own
beneficially that percentage of the shares owned by Shamrock
represented by his partnership percentage. Mr. Koether disclaims
beneficial ownership of such shares.
(3) According to Schedule 13D/A2 filed on May 31, 2000 by Tweedy, Brown
Company, LLC, TBK Partners, L.P. and Vanderbilt Partners, L.P.
(4) Includes 28,332 Shares owned by Sun, a private corporation of which Mr.
Galuchie is a director and officer. Mr. Galuchie disclaims beneficial
ownership of such shares.
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<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission ("SEC") and the National Association of Securities Dealers.
Officers, directors and greater than ten percent stockholders are required by
the SEC regulations to furnish the Company with copies of all Forms 3, 4 and 5
they file.
Based solely on the Company's review of the copies of such forms it has
received representations from certain reporting persons that they were not
required to file Forms 5 for specified fiscal years, the Company believes that
all its officers, directors and greater than ten percent beneficial owners
complied with all filing requirements applicable to them with respect to
transactions during fiscal 1999.
EXECUTIVE COMPENSATION
The table below sets forth for the fiscal years ended December 31, 1999,
1998, and 1997, the compensation of any person who, as of December 31, 1999 was
an Executive Officer of the Company with an annual compensation in excess of
$100,000 ("Named Officers").
Summary Compensation Table
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Long-Term
Name of Principal Annual Compensation(1)(2) Compensation Other
------------------------------------------------------ -------
Officer/Position Year Salary Bonus Other(3) Options(#)
Paul O. Koether 1999 $200,000 $ - $200,471 - -
Chairman, Presi- 1998 $200,000 $20,000 $171,161 - -
dent and Chief 1997 $200,000 $65,000 $124,484 - -
Executive Officer
John W. Galuchie, Jr. 1999 $175,833 $ - $ 412 - -
Executive Vice 1998 $166,000 $30,000 $ 194 - -
President 1997 $160,000 $ 8,000 $ 386 - -
and Treasurer
</TABLE>
----------------------------------------------------
(1) The Company has no bonus or deferred compensation plans and pays bonuses at
the discretion of the Board based on performance.
(2) Certain Named Officers received incidental personal benefits during the
fiscal years covered by the table. The value of these incidental benefits did
not exceed the lesser of either $50,000 or 10% of the total annual salary and
bonus reported for any of the Named Officers. Such amounts are excluded from the
table.
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<PAGE>
(3) Represents commissions paid by Winston to these individuals in their
capacity as registered representatives for securities trades made for their
respective customers.
Options Granted in Year Ended December 31, 1999
There were no stock options granted pursuant to the Company's 1987
Non-Qualified Stock Option Plan (the "Plan") during the fiscal year ended
December 31, 1999 to the Named Officers.
Options may be granted by the Board of Directors to officers, directors and
employees of the Company or its subsidiaries or parents. The exercise price for
the shares shall not be less than the fair market value of the Common Stock on
the date of grant. Options will expire five years from date of grant and will be
exercisable as to one-half of the shares on the date of grant and as to the
other half, after the first anniversary of the date of grant, or at such other
time, or in such other installments as may be determined by the Board of
Directors or a committee thereof at the time of grant. The options are
non-transferable (other than by will or by operation of the laws of descent) and
are exercisable generally only while the holder is employed by the Company or by
a subsidiary of the Company or, in the event of the holder's death or permanent
disability while employed by the Company, within one year after such death or
disability.
There were no outstanding options exercised or unexercised by the named
officers at December 31, 1999.
Remuneration of Directors
-------------------------
Directors who are not employees of the Company currently receive a monthly
fee of $1,000 plus $200 for each day of attendance at board and committee
meetings. During 1999, the Company paid directors' fees in the aggregate amount
of approximately $37,000.
Employment Agreements
---------------------
In April, 1990, the Company and Paul O. Koether entered into an employment
agreement ("Agreement") pursuant to which Mr. Koether serves as the Company's
Chairman for an initial three-year term ("Commencement Date") at an annual
salary of $175,000 (changed to $200,000 in December 1993) ("Base Salary"), which
may be increased but not decreased at the discretion of the Board of Directors.
The term is to be automatically extended one day for each day elapsed after the
Commencement Date.
Mr. Koether may terminate his employment under the Agreement at any time
for "good reason" (defined below) within 36 months after the date of a Change in
Control (defined below) of the Company. Upon his termination, he shall be paid
the greater of the (i) Base Salary and any bonuses payable under the Agreement
through the expiration date of the Agreement or (ii) an amount equal to three
times the average annual Base Salary and bonuses paid to him during the
preceding five years.
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Change in Control is deemed to have occurred if (i) any individual or
entity, other than individuals beneficially owning, directly or indirectly,
common stock of the Company representing 30% or more of the Company's stock
outstanding as of April 1, 1990, is or becomes the beneficial owner, directly or
indirectly, of 30% or more of the Company's outstanding stock or (ii)
individuals constituting the Board of Directors on April 1, 1990 ("Incumbent
Board"), including any person subsequently elected to the Board whose election
or nomination for election was approved by a vote of at least a majority of the
Directors comprising the Incumbent Board, cease to constitute at least a
majority of the Board. "Good reason" means a determination made solely by Mr.
Koether, in good faith, that as a result of a Change in Control he may be
adversely affected (i) in carrying out his duties and powers in the fashion he
previously enjoyed or (ii) in his future prospects with the Company.
Mr. Koether may also terminate his employment if the Company fails to
perform its obligations under the Agreement (including any material change in
Mr. Koether's duties, responsibilities and powers or the removal of his office
to a location more than five miles from its current location) which failure is
not cured within specified time periods.
The Company may terminate Mr. Koether's employment under the Agreement for
"cause" which is defined as (i) Mr. Koether's continued failure to substantially
perform his duties under the Agreement (other than by reason of his mental or
physical incapacity or the removal of his office to a location more than five
miles from its current location) which is not cured within specified time
periods, or (ii) Mr. Koether's conviction of any criminal act or fraud with
respect to the Company. The Company may not terminate Mr. Koether's employment
except by a vote of not less than 75 percent of the entire Board of Directors at
a meeting at which Mr. Koether is given the opportunity to be heard.
In the event of Mr. Koether's death during the term of the Agreement, his
beneficiary shall be paid a death benefit equal to $200,000 per year for three
years payable in equal monthly installments. Should Mr. Koether become
"disabled" (as such term is defined in the Agreement) during the term of the
Agreement and either long-term disability insurance is not provided by the
Company or such policy does not provide an annual benefit to age 70 equal to 80%
or more of Mr. Koether's base salary, he shall be paid an annual disability
payment equal to 80% of his base salary in effect at the time of the disability.
Such payments shall continue until Mr. Koether attains the age of 70.
In September, 1999 the Company and John W. Galuchie, Jr. entered into an
employment agreement pursuant to which Mr. Galuchie serves as the Company's
Executive Vice President for an initial three-year term at an annual salary of
$180,000. All other terms and conditions of Mr. Galuchie's employment agreement
are identical to Mr. Koether's Agreement.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Rosenman & Colin LLP ("R&C") performed legal work for the Company and its
affiliates in 1999 and 1998. Natalie I. Koether, wife of the Chairman and
President of the Company, is of Counsel to R&C and also employed by the Company.
Aggregate fees and expenses billed to the Company and its subsidiaries in 1999
and 1998 were approximately $47,000 and $120,000, respectively. The Company paid
Mrs. Koether $150,000 and $170,000 in 1999 and 1998, respectively, as an
employee and she received no compensation from R&C related to fees charged to
the Company for her time.
The Company reimburses an affiliate for the direct cost of certain group
medical insurance, 401(k) benefits and office supplies. Such reimbursements were
approximately $159,000 and $164,000 during 1999 and 1998, respectively.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP served as the Company's independent public
accountants for the fiscal year ended December 31, 1999. It is not expected that
a representative of Deloitte & Touche LLP will be present at the meeting.
Any stockholder who desires to present proposals to the next annual meeting
and to have such proposals set forth in the information statement mailed in
conjunction with such annual meeting must submit such proposals to the Company
not later than July 9, 2001. All stockholder proposals must comply with Rule
14a-8 promulgated by the Securities and Exchange Commission.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1999 is being mailed to stockholders with this Information
Statement.
By Order of the Board of Directors,
/s/ Paul O. Koether
--------------------------------------
Paul O. Koether
Chairman and President
Date: October 4, 2000
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