<PAGE> 1
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
by Rule 14c- 5(d) (2))
</TABLE>
TECHDYNE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C>
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
</TABLE>
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] 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
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<PAGE> 2
TECHDYNE, INC.
________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 11, 1997
________________
To Shareholders:
The Annual Meeting of Shareholders of TECHDYNE, INC. (the "Company") will
be held at the Don Shula Hotel, 15255 Bull Run Road, Miami Lakes, Florida on
Wednesday, June 11, 1997 at 3:00 p.m., for the following purposes:
1. To elect five members to the Board of Directors to serve until the next
Annual Meeting of Shareholders; and
2. To 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 April 18, 1997,
as the record date for the determination of the shareholders entitled to notice
of and to vote at the meeting and any adjournment thereof.
Your copy of the Annual Report of the Company for 1996 is enclosed.
You are cordially invited to attend the Annual Meeting of Shareholders.
By Order of the Board of Directors
JOSEPH VERGA
Secretary
Hialeah, Florida
May 2, 1997
<PAGE> 3
TECHDYNE, INC.
2230 West 77th Street
Hialeah, Florida 33016
__________________
Information Statement for Annual Meeting of Shareholders
June 11, 1997
__________________
MATTERS TO BE CONSIDERED AT THE MEETING
This Information Statement and the Company's Annual Report to Shareholders
for the year ended December 31, 1996, anticipated to be mailed on or about May
2, 1997, is solicited by and on behalf of the Board of Directors of Techdyne,
Inc., a Florida corporation (the "Company") for the Annual Meeting of
Shareholders of the Company to be held on Wednesday, June 11, 1997, at the Don
Shula Hotel, 15255 Bull Run Road, Miami Lakes, Florida at 3:00 p.m., including
any adjournment thereof, for the purposes set forth in the Notice of Annual
Meeting.
The Company will request brokers, nominees, fiduciaries and custodians to
forward this Information Statement and the Company's Annual Report to their
principals and beneficial owners, and will reimburse such persons for
reasonable expenses incurred by them in forwarding such materials.
RECORD DATE
The Board of Directors has fixed the close of business on April 18, 1997,
as the record date for the determination of shareholders entitled to receive
notice of and to vote at the Annual Meeting and any adjournment thereof. Only
shareholders of record on that date are entitled to vote at the meeting.
VOTING SECURITIES
As of April 18, 1997 there were outstanding and entitled to be voted at
the Annual Meeting, 4,311,819 shares of common stock, $.01 par value ("Common
Stock"). Each share of Common Stock is entitled to one vote. A majority of the
outstanding shares is needed for a quorum and a plurality of the votes cast is
necessary to effectuate election of the directors. A majority of shares
represented at the meeting is sufficient to effectuate any other matter that
may properly come before the meeting, except as otherwise required by
applicable law. The Company's parent, Medicore, Inc. ("Medicore" or the
"Parent"), intends to vote its 2,727,797 shares of the Company's Common Stock,
or 63% voting equity of the Company, in favor of election of each of the five
(5) nominees for directors (see "Election of Directors"), thereby assuring the
election of the five nominees. See "Security Ownership of Certain Beneficial
Owners and Management."
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 18, 1997, the names and
beneficial ownership of the equity securities of the Company and its
subsidiaries and of Medicore, the Parent, for directors, individually itemized,
and for directors and officers as a group, without naming them, and for each of
the named executive officers disclosed in the Summary Compensation Table (see
"Executive Compensation") and for shareholders known to the Company to
beneficially own more than 5% of its voting securities.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership(1)
-----------------------------------------------------------
Techdyne Medicore
Common Common
Name Stock %(2)(3) Stock %(2)(4)
- ---- --------- ------- -------- -------
<S> <C> <C> <C> <C>
Medicore, Inc. 4,440,940 73.7%(5) -- --
2337 W. 76th St.
Hialeah, FL 33016
Thomas K. Langbein ** 4,520,940(6) 74.1% 1,074,014(7) 18.8%
Barry Pardon+ 84,333(8) 1.9% 135,750(9) 2.5%
Joseph Verga+ 53,834(10) 1.2% 79,075(11) 1.4%
Peter D. Fischbein** 40,000(12) * 176,229(13) 3.2%
Anthony C. D'Amore** 29,000(14) * 273,890(15) 4.9%
All directors and
executive officers
as a group (6 persons) 4,738,107(5)(6) 75.2% 1,810,408(16) 30.2%
</TABLE>
* less than 1 %
** c/o Medicore, Inc., 777 Terrace Avenue, Hasbrouck Heights, New Jersey
07604.
+ c/o the Company, 2230 W. 77th Street, Hialeah, Florida 33016
__________
(1) Based upon information furnished to the Company by either the directors
and officers or obtained from the stock transfer books of the Company.
The Company is informed that these persons hold sole voting and
dispositive power with respect to the shares of Common Stock except as
noted herein.
(2) For purposes of computing the percentage of outstanding shares held by
each person or group of persons named in this table, any security which
such person or group of persons has the right to acquire within 60 days of
April 18, 1997 is deemed to be outstanding for purposes of computing the
percentage ownership of such person or persons, but is not deemed to be
outstanding for the purpose of computing the percentage ownership of any
other person.
(3) Based on 4,311,819 shares of Common Stock outstanding. Does not include
(i) shares obtainable under Medicore's convertible note, except as to
Thomas K. Langbein (see Note (5)) or (ii) options for 173,700 shares of
the Company's Common Stock. See Note (2) and "Executive Compensation -
Options, Warrants or Rights."
(4) Based on 5,456,940 shares outstanding. Does not include 807,000 shares
of Medicore's common stock underlying options granted in April, 1995
under Medicore's 1989 Stock Option Plan, which options are
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<PAGE> 5
not transferable and are exercisable for 50% of the option on or after
April 18, 1996 and the balance one year thereafter. See Note (2) and
"Executive Compensation - Options, Warrants or Rights."
(5) Medicore owns 4,440,940 shares (73.7%) of the Common Stock of the
Company, which includes 1,713,143 shares which Medicore may acquire upon
conversion of its demand promissory note from the Company in the amount of
approximately $2,998,000 at December 31, 1996 convertible at $1.75 per
share. Officers and directors of Medicore, including those directors of
the Company and Medicore who may be shareholders of each company, except
Thomas K. Langbein (see Note (6)), disclaim any indirect beneficial
ownership of the Company's Common Stock through Medicore's 73.7% ownership
of the Company.
(6) Includes (i) Medicore's 4,440,940 share ownership, including 1,713,143
shares which Medicore may obtain upon conversion of its demand promissory
note from the Company (see Note (5) above), by virtue of his position with
the Company and Medicore and his stock ownership of Medicore, which may
deem Mr. Langbein to have beneficial ownership of such shares through
shared voting and investment power with respect to Medicore's ownership of
the Company; Mr. Langbein disclaims such entire beneficial ownership, but
for his proportionate interest, approximately 835,000 shares of the
Company (13.9%); and (ii) Company options for 80,000 shares. See Note (2)
and "Executive Compensation - Options, Warrants or Rights."
(7) Includes (i) 15,700 shares each held in the names of Mr. Langbein's two
children who are of majority age but live in the same household, to which
Mr. Langbein disclaims beneficial ownership; and (ii) 250,000 shares
underlying options granted in April, 1995, exercisable 50% on April 18,
1996 with the balance on April 18, 1997 at an exercise price of $2.38 per
share through April 17, 2000. Does not include an option to acquire up to
400,000 shares of common stock in lieu of a lump sum payment, which option
is not presently exercisable except in the event of a change in control of
Medicore. See Note (4) and "Employment Contracts and Termination of
Employment and Change-In-Control Arrangements" and "Options, Warrants or
Rights" under the caption "Executive Compensation."
(8) Includes (i) options for 80,000 shares of the Company's Common Stock (see
Note (2) and "Executive Compensation - Options, Warrants or Rights"); (ii)
Company warrants for 1,000 shares of Common Stock exercisable at $5.00 per
share through September 12, 1998; and (iii) 2,333 shares held in his
wife's name. Excludes approximately 111,000 (1.8%) shares that may be
deemed indirectly beneficially owned through Medicore's ownership of the
Company, which indirect beneficial ownership is disclaimed. See Note (5).
(9) Includes 75,000 shares of Medicore's common stock underlying an option
granted in April, 1995 exercisable 50% on April 18, 1996 with the balance
exercisable on April 18, 1997 at $2.38 per share through April 17, 2000,
which becomes fully exercisable in the event of a change in control of
Medicore. See Note (4) and "Executive Compensation-Options, Warrants, or
Rights."
(10) Includes (i) options for 50,000 shares of the Company's Common Stock (see
Note (2) and "Executive Compensation - Options, Warrants or Rights"); and
(ii) Company warrants for 500 shares of Common Stock exercisable at $5.00
per share through September 12, 1998. Excludes approximately 62,000 (1%)
shares that may be deemed indirectly beneficially owned through Medicore's
ownership of the Company, which indirect beneficial ownership is
disclaimed. See Note (5).
(11) Includes 30,000 shares of common stock underlying an option granted in
April, 1995 exercisable 50% on April 18, 1996 with the balance exercisable
on April 18, 1997 at $2.38 per share through April 17, 2000, which becomes
fully exercisable in the event of a change in control of Medicore. See
Note (4) and "Executive Compensation - Options, Warrants or Rights."
(12) Includes options for 40,000 shares of the Company's Common Stock. See
Note (2) and "Executive Compensation - Options, Warrants or Rights."
Excludes approximately 142,000 (2.4%) shares that may be deemed indirectly
beneficially owned through Medicore's ownership of the Company, which
indirect beneficial ownership is disclaimed. See Note (5).
(13) Includes (i) 100,000 shares held in trust for his infant son; Mr.
Fischbein's wife is trustee; Mr. Fischbein disclaims beneficial interest
in the 100,000 shares held in trust for his son; and (ii) 75,000 shares of
3
<PAGE> 6
Medicore common stock underlying an option granted in April, 1995
exercisable 50% on April 18, 1996 with the balance exercisable on April
18, 1997 at $2.38 per share through April 17, 2000, which becomes fully
exercisable in the event of a change in control of Medicore. See Note
(4) and "Executive Compensation-Options, Warrants, or Rights." Does not
include 196, 382 shares of common stock owned by his wife in which
shares, based on her financial independence, Mr. Fischbein disclaims
beneficial interest.
(14) Includes (i) options for 10,000 shares of the Company's Common Stock (see
Note (2) and "Executive Compensation - Options, Warrants or Rights"); (ii)
Company warrants for 4,000 shares of Common Stock exercisable at $5.00 per
share through September 12, 1998 held in his retirement plan; and (iii)
15,000 shares of the Company's Common Stock held in his retirement plan.
Excludes approximately 218,000 (3.6%) shares that may be deemed indirectly
beneficially owned through Medicore's ownership of the Company, which
indirect beneficial ownership is disclaimed. See Note (5).
(15) Includes 75,000 shares of Medicore common stock underlying an option
granted in April, 1995 exercisable 50% on April 18, 1996 with the balance
exercisable on April 18, 1997 at $2.38 per share through April 17, 2000,
which becomes fully exercisable in the event of a change in control of
Medicore. See Note (4) and "Executive Compensation-Options, Warrants, or
Rights."
(16) Includes 535,000 shares of Medicore's common stock of the 807,000 shares
underlying the options granted in April, 1995. See Notes (2) and (4) and
"Executive Compensation-Options, Warrants, or Rights."
ELECTION OF DIRECTORS
At the Annual Meeting, shareholders will elect five directors to serve for
a one year term and until each of their successors is elected and qualified.
The By-Laws of the Company provide that the Board of Directors shall not be
less than two nor more than six persons, and since less than the maximum number
of directors are to be elected, which is permissible pursuant to the Company's
By-Laws, shareholders cannot vote for a greater number of persons than the
number of nominees named. The Certificate of Incorporation and By-Laws, as
presently constituted, provide that the majority of directors have the right to
appoint candidates to fill any vacancies on the Board, whether through death,
retirement or other termination of a director, or through an increase in the
Board. At such time that qualified candidates are available to serve, the
majority of the Board, although less than a quorum, or by a sole remaining
director, may appoint such person(s) to fill the vacancy now existing. When
appointed, such director shall then serve for the remainder of the term.
The affirmative vote of a plurality of the shares of Common Stock
represented at the meeting is required to elect the five directors. Cumulative
voting is not permitted in the election of directors. Consequently, each
shareholder is entitled to one vote for each share of Common Stock held in his
name. Medicore owns 63% of the voting stock of the Company and intends to vote
all of its Common Stock in favor of the election of the persons named below as
nominees for directors, thereby assuring the election of the five nominees. The
nominees have consented to be named herein and to serve on the Board of
Directors. If any nominee is unable to serve as a director (which presently is
not anticipated), the Common Stock will be voted for such substituted nominee
as may be designated by the present Board of Directors. The five nominees for
directors are now directors and were elected by the shareholders at the last
annual meeting, and have been directors of the Company for at least the last
five years. There is no nominating committee with nominations for director
considered by the entire Board of Directors.
For additional information concerning the nominees for the Board of
Directors, including compensation and share ownership, see "Security Ownership
of Certain Beneficial Owners and Management," "Executive Compensation" and
"Certain Relationships and Related Transactions."
4
<PAGE> 7
<TABLE>
<CAPTION>
CURRENT POSITION
NAME AGE AND AREAS OF RESPONSIBILITY POSITION HELD SINCE
- ---- --- --------------------------- -------------------
<S> <C> <C> <C>
Thomas K. Langbein 51 Chairman of the Board and 1982
Chief Executive Officer 1990
Barry Pardon 45 President 1991
and Director 1990
Joseph Verga 45 Senior Vice President, Secretary, 1988
Treasurer and Director 1990
Peter D. Fischbein(1) 57 Director 1984
Anthony C. D'Amore(1) 66 Director 1984
</TABLE>
__________
(1) Member of the Audit Committee.
Thomas K. Langbein was financial consultant to Medicore until 1980 when he
became Chairman of the Board of Directors, Chief Executive Officer and
President of Medicore. Mr. Langbein is also an officer and director of most of
Medicore's subsidiaries. Mr. Langbein was Chairman of the Board of Directors
of the Company in 1985, formerly having been Vice President and Treasurer. He
has been a director of the Company since it was acquired by Medicore in 1982.
Peter D. Fischbein was appointed Chairman of the Board in 1990 until 1991, when
Mr. Langbein reassumed that position. In 1990, Mr. Langbein was appointed as
President and Chief Executive Officer and Mr. Langbein relinquished the
Presidency to Barry Pardon in November, 1991. Mr. Langbein is also a Director
of Techdyne (Scotland). Mr. Langbein is Chairman of the Board and Chief
Executive Officer of Dialysis Corporation of America ("DCA") a 67% owned public
subsidiary of Medicore. In 1971, Mr. Langbein organized and currently is the
President, sole director and owner of Todd & Company, Inc. ("Todd"), a broker
dealer registered with the Commission and the NASD. Mr. Langbein, devotes most
of his time to the affairs of the Company, Medicore and DCA. See "Certain
Relationships and Related Transactions."
Barry Pardon joined the Company in November, 1980 as national sales
manager and initiated the independent manufacturer representatives sales force.
Mr. Pardon became Vice President of Marketing in 1981, was appointed Executive
Vice President (Marketing) in 1988, and was appointed President in November,
1991. Mr. Pardon is a director of Techdyne (Scotland).
Joseph Verga joined the Company in 1979 as purchasing agent. In 1980 he
became production control manager and Vice President, in 1981 the operations
manager, and in 1983 was elected a director and appointed Secretary of the
Company. In 1985 he was appointed Treasurer and in 1988 was made Senior Vice
President of Operations.
Peter D. Fischbein is an attorney whose has from time to time represented
the Company, Medicore, Viragen, Inc. ("Viragen"), formerly a public subsidiary
of Medicore spun-off in 1986, and Todd. Mr. Fischbein is a director of
Viragen (since 1981) and Medicore (since 1984). He was Chairman of the Board
of the Company from April, 1990 to November, 1991. Mr. Fischbein is a general
partner of several limited partnerships engaged in real estate development. See
"Certain Relationships and Related Transactions."
Anthony C. D'Amore is director of Medicore and is registered as a
part-time account executive with Todd, but has not been active in the brokerage
business for many years. Mr. D'Amore was the owner of an insurance agency, the
A.C. D'Amore Agency, Inc., which he sold in 1992, and from whom the Company,
Medicore and their subsidiaries purchase much of their insurance at rates
competitive with unaffiliated parties. Mr. D'Amore continues to receive
commissions with respect to insurance placed with the Company and Medicore.
See "Certain Relationships and Related Transactions".
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<PAGE> 8
There is no family relationship between and any officer or director of the
Company.
Since the last Annual Meeting in June, 1996, there were three meetings of
the Board of Directors, including actions by unanimous written consent. All
directors participated at all the meetings.
The Company has an Audit Committee, recently formed, consisting of Peter
D. Fischbein and Anthony C. D'Amore, who are also on the Audit Committee of
Medicore. The Audit Committee meets quarterly, and is responsible for
recommending to the Board of Directors the firm of independent accountants to
serve the Company, reviewing fees, services and results of the audit by such
independent accountants, reviewing the accounting books and records of the
Company and reviewing the scope, results and adequacy of the internal audit
control procedures. No member of the Audit Committee receives a fee for
services rendered as a participant of such committee. The Company also has a
stock option committee consisting of Messrs. Langbein, Fischbein and Verga.
See "Executive Compensation - Options, Warrants or Rights." The By-Laws
provide for and the Company has made payment of reasonable expenses for
directors' attendance at meetings.
In lieu of any cash compensation or per meeting fees to directors for
acting as such (except for a minimal fee paid to directors of Techdyne
(Scotland), see "Executive Compensation"), the Company has provided directors,
among others, with options to purchase Common Stock of the Company at fair
market value as of the date of grant. See "Executive Compensation - Options,
Warrants or Rights" and "Security Ownership of Certain Beneficial Owners and
Management."
EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth compensation paid by the
Company and its subsidiaries for the last three fiscal years ended December 31,
1996 for services in all capacities for its Chief Executive Officer and each of
its principal executive officers whose total annual salary and bonus exceeded
$100,000. The Chief Executive Officer's compensation is primarily derived from
Medicore which company owns 63% of the Company. The only executive officer
whose compensation exceeds $100,000 and is paid directly by the Company is its
President, Barry Pardon.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
----------------------------- -----------------------------------------
(a) (b) (c) (e) (f) (g)
Securities
Restricted Underlying
Stock Awards($) Options/SARs(#)
Other Annual ------------------- ------------------
Name and Principal Position Year Salary($) Compensation($) Company Medicore Company Medcore
- --------------------------- ---- --------- --------------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas K. Langbein, CEO.... 1996 91,700(1) 8,900(2) 250,000(3)
1995 80,500(1) 10,400(2) 40,000 250,000(3)
1994 77,000(1) 8,750(2)(4) 112,500(5) 40,000
Barry Pardon(6)............ 1996 160,600 75,000(3)
1995 113,000 40,000 75,000(3)
1994 91,600 11,250(5) 40,000
</TABLE>
__________
(1) All compensation paid by Medicore, which was $262,000 (including a
$25,000 bonus) for 1996, $230,100 for 1995 and $220,000 per annum for
1994. Does not include (i) $1,000 paid in 1995 by Techdyne(Scotland) to
each director of that subsidiary which includes Mr. Langbein; or (ii) the
June, 1996 Medicore forgiveness of a promissory note in the amount of
$94,200 (including interest) for an option exercise of Medicore common
stock by Mr. Langbein in 1994. See "Options, Warrants or Rights" below and
Note (4) to "Aggregated Option/SAR Exercises In Last Fiscal Year and
FY-End Option/SAR Values." Amounts reflected in the Summary Compensation
Table were the compensation allocated to the Company in proportion to the
time spent on behalf of the Company.
(2) Automobile allowance and related expenses, and life and disability
insurance premiums paid by Medicore amounted to $ 24,800, $26,100, and
$25,000 for the years 1996, 1995 and 1994, respectively,
6
<PAGE> 9
in addition to which, Mr. Langbein received $1,000 as compensation as a
director of Techdyne (Scotland). As part of the general corporate overhead
allocation, the amounts in the Summary Compensation Table reflect that
portion allocated to the Company.
(3) In December, 1996, the $3.00 exercise price of the options for 250,000
shares of Medicore common stock granted in April, 1995 was reduced to
$2.38, the then fair market value of the Medicore common stock, which
repricing is deemed a new grant of options. See "Aggregated Option/SAR
Exercises In Last Fiscal Year and FY-End Option/SAR Values" under the
caption "Options, Warrants or Rights."
(4) Does not include 150,000 shares and 15,000 shares of Medicore common
stock granted to Messrs. Langbein and Pardon, respectively, on January 17,
1994 as part of 410,000 shares granted to officers, directors and key
employees of the Company and certain subsidiaries as incentive awards,
with a fair market value on the date of grant of $.75 per share. Included
in Restricted Stock Awards, column (f) of the Summary Compensation Table.
See Note (5).
(5) Incentive awards granted in January, 1994. The Medicore common stock
vested in equal amounts of 1/12th per month and at December 31, 1994 was
fully vested. An aggregate of 150,000 and 15,000 shares of restricted
common stock, respectively are held by Messrs. Langbein and Pardon with a
value at December 31, 1994 of $375,000 and $37,500, respectively.
(6) All compensation paid by the Company. Does not include (i) $1,000 paid
in 1995 by Techdyne (Scotland) to each director of that subsidiary which
included Mr. Pardon; or (ii) the June, 1996 Medicore forgiveness of a
promissory note in the amount of $21,200 (including interest) for an
option exercise of Medicore common stock by Mr. Pardon in 1994. See
"Options, Warrants or Rights" below and Note (4) to "Aggregated Option/SAR
Exercises In Last Fiscal Year and FY-End Option/SAR Values." In February,
1993, due to an administrative cost reduction program, Mr. Pardon's base
compensation was reduced to $84,000 and increased to $96,000 in April,
1994, and to $108,000 in March, 1995.
7
<PAGE> 10
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Langbein has an employment agreement with Medicore through May 31,
1999 at an annual salary of $220,000 with yearly increases in increments of no
less than $10,000 which increases Mr. Langbein had waived for the last three
years. In June, 1995 the $10,000 yearly increment went into effect. The
Medicore employment agreement provides upon his death three years full salary
to his children or other designee of Mr. Langbein. The employment agreement
provides for reimbursement of reasonable business expenses and full salary for
the remainder of the term of the employment agreement in the event of
disability. Medicore maintains an income disability insurance policy for Mr.
Langbein. The agreement also provides for life insurance, of which Medicore
was the owner and beneficiary of a $500,000 policy recently assigned to Mr.
Langbein. Medicore also maintains a $750,000 whole life insurance policy and a
$350,000 term policy insuring the life of Mr. Langbein with Mr. Langbein as the
owner of the policies. His former wife is beneficiary of the term policy and
of $200,000 of the whole life policy, with his two children beneficiaries to
the balance of the whole life policy. Most life insurance is obtained through
George Langbein, his brother, who is an independent sales representative for
the Company.. See "Certain Relationships and Related Transactions."
Based upon any wrongful termination of his employment agreement, which
includes changes in control of Medicore through an acquiring person (any person
who has acquired or announces a tender offer or exchange for 25% of Medicore),
a sale of substantially all of the assets or merger, acquisition of Medicore or
its consolidation with another, or certain types of board changes, Medicore
shall pay Mr. Langbein a lump sum payment, based upon his then compensation,
including benefits and perquisites, for the next three years from such
termination. At Mr. Langbein's option, he may elect, in lieu of any such lump
sum payment, to take common stock of Medicore equivalent to such lump sum
payment based upon the lowest closing price of the stock as reported by the
principal stock exchange upon which the shares are then trading, or if the
trading is then in the over-the-counter market, presently trading on the Nasdaq
National Market, then as reported by Nasdaq or other inter-dealer quotation
medium, within 30 days of such wrongful termination or change in control.
Medicore has reserved up to 400,000 shares of its common stock for such option.
Medicore has granted Mr. Langbein one time demand and five year "piggy-back"
registration rights with respect to the shares Mr. Langbein may obtain upon any
wrongful termination with or change in control of Medicore in lieu of any lump
sum payment as provided in the employment agreement. Such registration of the
stock of Medicore would be at the sole cost and expense of Medicore except with
respect to Mr. Langbein's legal fees and commissions or discounts upon sale of
such stock. The employment agreement also contains a two (2) year
non-competition provision within a 20 mile radius of Medicore's primary
operation in Florida. Medicore has the right, upon Mr. Langbein's termination,
to request further non-competition by Mr. Langbein in the United States for
consideration of $4,000 per month, increasing 5% in any twelve-month period.
Medicore also provides Mr. Langbein with an automobile allowance of $850 per
month.
Certain executive and accounting personnel and administrative facilities
of the Company, Medicore and its subsidiaries, were common for fiscal 1996, and
to that extent, certain corporate overhead of the companies were shared
equitably. Mr. Langbein, as an officer and director of the Company, Medicore
and DCA, and Mr. Daniel Ouzts, as an officer of the Company, Medicore and DCA,
divide their time and efforts to each company and their compensation was
allocated proportionately. See "Executive Compensation" and "Certain
Relationships and Related Transactions."
Barry Pardon, director and President of the Company, has a five-year
employment agreement through December 31, 2000, retaining him as President
which provides him with a base annual salary of $120,000, plus an over-ride
commission of .5% of net sales of the Company in excess of $20,000,000 the
first year of the agreement, increasing $1,000,000 each successive year of the
term. In January, 1993, as part of the Company's administrative cost reduction
program, Mr. Pardon voluntarily reduced his base salary to $84,000, which was
increased to $96,000 in April, 1994, and to $108,000 in March, 1995. Under the
employment agreement, Mr. Pardon is entitled to severance pay of nine months
salary if he dies or is terminated without cause during the term. Mr. Pardon is
furnished with an automobile, travel and entertainment expenses incurred
relating to the Company's business, which sums did not exceed 10% of his
reported cash compensation. The agreement provides for non-competition for one
year following termination and for restrictions upon Mr. Pardon calling upon
any customers or suppliers of the Company, diverting any customers, services,
items or products of the Company or disclosing any trade secrets.
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<PAGE> 11
COMPENSATION OF DIRECTORS
Standard Arrangements
There are no standard arrangements for compensating directors for services
as directors or for acting on any committee. The Company does reimburse
directors for expenses for attending meetings.
Non-Standard Arrangements
During the year ended December 31, 1996, the Company obtained its
property, casualty and general liability insurance, as did Medicore and its
other subsidiaries, through the efforts of one of its directors, Anthony C.
D'Amore, through an agency to which Mr. D'Amore sold his insurance agency and
acts as a consultant. Mr. D'Amore received $9,500 in commissions in 1996 with
respect to this insurance. See "Certain Relationships and Related
Transactions."
Over the years, the Company and Medicore provided options to directors,
among other executives, consultants and employees. The Company did not grant
any options to its officers and directors in 1996. Medicore did however
reprice its 1995 option grant from an exercise price of $3.00 to $2.38 per
share, the fair market value at that time, which is categorized as a new grant.
See "Aggregated Option/SAR Exercises In Last Fiscal Year and FY-End Option/SAR
Values" under the caption, "Options, Warrants or Rights."
OPTIONS, WARRANTS OR RIGHTS
In May, 1994, the Board of Directors and shareholders adopted the 1994
Techdyne, Inc. Stock Option Plan (the "1994 Plan") pursuant to which 250,000
shares of Common Stock are reserved for issuance at fair market value on the
date of grant of the options. The 1994 Plan is for a period of five years,
expiring on May 24, 1999. Options may be granted to officers, directors,
consultants, key employees, advisors and similar parties who provide their
skills and expertise to the Company. Options granted under the 1994 Plan may
be exercisable for up to five years, may require vesting, and shall be at an
exercise price all as determined by the Board or stock option committee.
Options are non-transferable except by the laws of descent and distribution or
a change in control of the Company as defined in the 1994 Plan and are
exercisable only by the participant during his lifetime. Change in control
includes (i) the sale of substantially all the assets of the Company or its
merger or consolidation with another, or (ii) a majority of the Board changes
other than by election of shareholders pursuant to Board solicitation or by
vacancies filled by the Board caused by death or resignation, or (iii) a person
or group acquires 25% or makes a tender offer for 25% of the Company's
outstanding shares.
If a participant ceases affiliation with the Company by reason of death,
permanent disability or retirement at or after age 65, the option remains
exercisable for nine months from such occurrence but not beyond the option's
expiration date. Other termination gives the participant 30 days to exercise
except for termination for cause which results in the option becoming
immediately null and void.
Options granted under the 1994 Plan, at the discretion of the Board, may
be exercised either with cash, Common Stock having a fair market value equal to
the cash exercise price, the participant's personal recourse note, or with an
assignment to the Company of sufficient proceeds from the sale of the Common
Stock acquired upon exercise of the options with an authorization to the broker
or selling agent to pay that amount to the Company, or any combination of the
above.
There are presently outstanding under the 1994 Plan options to 74
officers, directors, employees, and advisors of the Company and its subsidiary
for 173,700 shares of Common Stock exercisable at $1.00 per share through May
24, 1999. The exercise price of all options is 100% of the fair market value
of the Common Stock on the date of grant. Thirty-eight employees have
exercised their Options for 51,400 shares.
The Company had a 1985 Stock Option Plan for Incentive Stock Options and
Non-Qualified Options which expired January 16, 1995 with no options
outstanding and no options ever exercised under that Plan.
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<PAGE> 12
On February 27, 1995, the Company granted non-qualified stock options, not
part of the 1994 Plan, to directors of the Company and its subsidiary for an
aggregate of 142,500 shares of Common Stock exercisable at $1.75 per share for
five years. In April, 1995 an option for 10,000 shares of Common Stock was
granted to counsel as part of his compensation for assisting in the preparation
of the Company's registration statement for its public offering of Common
Stock and warrants. The exercise price of all options is 100% of the fair
market value of the Common Stock on the date of grant.
The Company did not grant any new options to its executive officers or
directors in 1996. However, options for 807,000 shares of Medicore common
stock had the exercise price modified in December, 1996 from $3.00 per share to
$2.38 per share. Messrs. Langbein and Pardon were included among the optionees
of these shares. This repricing is treated as a new grant of options and is
reflected in the "Aggregated Option/SAR Exercises In Last Fiscal Year and
FY-End Option/SAR Values" table below.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End(#) at FY-End(#)
Shares Acquired Value Realize Exercisable/ Exercisable/
Name on Exercise(#) ($) Unexercisable Unexercisable
- ---- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CEO
Thomas K.
Langbein
Company Options -0- -0- 80,000 (exer.)(1) 340,400 (exer.)(2)
Medicore Options -0- -0- 250,000 (exer.)(3) 30,000 (exer.)(4)
Barry Pardon
Company Options -0- -0- 80,000 (exer.)(1) 340,400 (exer.)(2)
Medicore Options -0- -0- 75,000 (exer.)(3) 9,000 (exer.)(4)
</TABLE>
__________
(1) 40,000 Options exercisable at $1.00 and 40,000 Options exercisable at
$1.75.
(2) The value of the in-the-money options was determined by the difference
between the exercise price and the average of the bid and asked prices of
the Common Stock as reported by Nasdaq on December 31, 1996, which was
$5.63.
(3) 50% become exercisable on April 18, 1996 with the balance exercisable on
April 18, 1997. See Note (4) to "Security Ownership of Certain Beneficial
Owners and Management."
(4) The value of the Medicore in-the-money options was determined by the
difference between the exercise price (reduced from $3.00 per share, which
would have resulted in the options being out-of-the-money, to $2.38 per
share on December 30, 1996) and the closing price of the common stock as
reported by Nasdaq National Market on December 31, 1996 was $2.50.
Medicore issued (i) five year options in April, 1987 for 242,000 shares
exercisable at $3.13 per share, of which Mr. Langbein was a recipient of
options for
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<PAGE> 13
147,000 shares; (ii) five year options in July, 1988 for 178,000 shares
exercisable at $2.88 per share, of which Mr. Langbein was a recipient of
options for 53,000 shares; and (iii) five year options in February, 1989
for 170,000 shares exercisable at $2.75 per share, of which Mr. Langbein
was a recipient of options for 50,000 shares. On May 22, 1989, these
options had their exercise prices reduced to $2.13, the then market price
as reported by the American Stock Exchange where the Medicore common stock
traded; and on December 18, 1990, all of the options were canceled. On
January 4, 1991, Medicore issued restricted common stock vesting equally
1/12th over the year to its and certain of its subsidiaries' executive
officers, including Messrs. Langbein and Pardon in the amounts of 250,000
shares and 7,500 shares, respectively. Termination, other than voluntary or
for cause, gave the grantees the right to purchase the non-vested shares at
$.75 per value, the then market price of the Medicore common stock as
traded on and reported by the American Stock Exchange. In September, 1992,
five year options were granted for 480,000 shares exercisable at $.69 per
share, of which Messrs. Langbein and Pardon were recipients of options for
130,000 shares and 30,000 shares, respectively. These options were
exercised for cash at par value ($.01 per share) and a three year
non-recourse promissory note collateralized by the common stock with
interest at 5.36% per annum which indebtedness was forgiven on June 5,
1996. The options and shares were granted as compensation and incentives,
and it was the opinion of Medicore's board of directors that since
directors (other than those directors who were also executive officers and
received a salary) did not receive any compensation, which is not the norm
for most public corporations, for acting as directors and/or committee
members, it was reasonable and appropriate to so modify the option exercise
prices over the years, which modifications were not deemed material and
were always restructured at the then fair market value of the publicly
traded securities, as to preserve incentive and award benefits of such
securities.
(5) All exercisable at $1.00
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since Medicore's acquisition of the Company in November, 1982, through the
Company's public offering in April, 1985, Medicore had been advancing funds at
no interest to finance the Company's business. $900,000 of the resulting
intercompany indebtedness was repaid from the proceeds of the Company's 1985
public offering. Medicore continued to advance funds to the Company. In
October, 1995, the Company repaid $1,500,000 to Medicore leaving a balance due
to Medicore at December 31, 1995 of approximately $2,686,000 evidenced by an
unsecured demand promissory note convertible into Common Stock of the Company
at a rate of $1.75 per share. The annual interest rate on the note is 5.7%. The
Parent converted $350,000 of the Company's promissory note into 200,000 shares
of the Company's common stock in June, 1996, increasing its ownership interest
in the Company from 62.5% to 63.3% (73.7% including the beneficial ownership of
the convertible note). At December 31, 1996, the Company owed its Parent
approximately $2,998,000. Pursuant to the Company's refinanced credit facility
with a Florida bank, Medicore has not only guaranteed the loans, and secured
them with certain of its properties which it leases to the Company, but has
also agreed to subordinate this indebtedness, provided the Company may make
payments to Medicore on the subordinated debt from funds received from the
Company's 1995 public offering of Common Stock and warrants or from retained
earnings arising subsequent to March 31, 1995, provided that at the time of any
such repayment to Medicore, the Company is in compliance with the financial
covenants of the $712,500 term loan agreement. The Company is advised that
Medicore does not intend to require repayment of its advances prior to January
1, 1998.
In 1990, the Company sold to Medicore its real property in Hialeah,
Florida consisting of land, two buildings and a parking lot. Payment was made
through a reduction in Medicore's advance account balance with the Company less
approximately $256,000 in existing mortgages on the property. Medicore
refinanced the first mortgage on this property with a $230,000 mortgage,
recently replaced with the Company's new loans with a Florida bank. See below.
Medicore is leasing the buildings and the parking lot to the Company under a
five year net lease expiring March 31, 2000 at $130,000 per year plus
applicable taxes. The rental was reduced to $94,000 per year plus applicable
taxes for one year commencing on April 1, 1996. Management is of the opinion
that the rentals are on terms as favorable as obtainable from unaffiliated
parties. The Company had a credit facility with Consolidated Bank, N.A., now
NationsBank of Florida, which had been amended over the years, which at
December 31, 1995 amounted to $549,508. The $230,000 mortgage and the
NationsBank credit facility were
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<PAGE> 14
replaced on February 8, 1996 by the Company entering into three loan
arrangements with Barnett Bank of South Florida, NA ("Barnett Bank"). One
credit facility is a $2,000,000 line of credit, due on demand, with a credit
review periodically by the bank in accordance with their agreement, secured by
the Company's accounts receivable, inventory, furniture, fixtures, and
intangible assets and bears interest at Barnett Bank's prime rate plus 1.25%.
The Company has not drawn down any funds on this credit facility.
Barnett Bank has also extended two commercial term loans to the Company,
one for $712,500 for five years expiring on February 7, 2001 at an annual rate
of interest equal to 8.28% with monthly payments of principal and interest of
$6,925 based on a 15-year amortization schedule with the unpaid principal and
accrued interest due on the expiration date. This term loan has a prepayment
penalty and is secured by a mortgage on properties in Hialeah, Florida owned by
Medicore, two of which properties are leased to the Company and one parcel
being vacant land used as a parking lot. Under this term loan the Company is
obligated to adhere to a variety of affirmative and negative covenants,
including but not limited to a debt service ratio of 1:25 to 1:00, maintenance
of capital funds equal to or in excess of $3,500,000, have a capital fund ratio
of total debt to capital funds of 1.5 to 1.0; and the Company may not merge or
acquire businesses, create or transfer any assets to a subsidiary, if the
aggregate annual value of such transactions exceeds $750,000, cannot sell its
interest in its subsidiary Techdyne (Scotland) or allow that Scottish
subsidiary to sell all or substantially all of its assets unless 50% of the
aggregate gross sales price is used to pay this term loan, may not sell any of
its assets or properties, except inventory in the ordinary course of business,
for which the aggregate book value exceeds $500,000; and this term loan further
provides for restrictions and transactions with related persons, restrictions
on dividends except if such does not exceed 30% of the Company's net income in
any year, precludes changes in ownership in the Company which would reduce
Medicore's ownership to less than 51%, and restricts the Company from engaging
in any new unrelated business.
The mortgage issued by Medicore to secure the $712,500 term loan provides
Barnett Bank with reappraisal rights so that should the principal amount
outstanding under the Note exceed 75% of the reappraised value of the mortgaged
property, such excess has to be repaid by the Company and/or Medicore.
Medicore, as lessor to the Company of these mortgaged properties, has assigned
the leases, rents and profits to Barnett Bank as further security for this
$712,500 term loan, provided Medicore may continue to collect the rents until
an event of default, if any. Medicore has also subordinated the $2,500,000 of
indebtedness due to it from the Company. Medicore, as lessor of the properties
mortgaged, has subordinated its interests in the leases to the mortgage held by
Barnett Bank to secure this term loan.
The second commercial term loan is for the principal amount of $200,000
for a period of five years bearing interest at a per annum rate of 1.25% over
Barnett Bank's prime rate and requiring monthly principal payments with accrued
interest of $3,333 through expiration on February 7, 2001. This $200,000 term
loan carries no prepayment penalty and is secured by all of the Company's
tangible personal property, goods and equipment, and all cash or non-cash
proceeds of such collateral.
A default of the $712,500 term loan will be deemed a default of the
$2,000,000 revolving credit line, but only a financial default of the
$2,000,000 revolving line will be deemed a default of the $712,500 term loan.
Medicore has unconditionally guaranteed the payment and performance by the
Company of the $2,000,000 revolving line of credit and the two commercial term
loans.
The Company has a promissory note payable to a local bank for $145,000
with interest payable monthly at prime with the note maturing in April of 1997.
This note is secured by two certificates of deposit of a related company and
one certificate of deposit of the Company.
The Company has advanced funds to Techdyne (Scotland) for that
subsidiary's working capital requirements which advances had an outstanding
balance of $600,000 at December 31, 1996. This sum is not evidenced by a note,
is at an interest rate of prime plus 1.5% per annum, and is not expected to be
repaid in the near future. The Company has guaranteed a line of credit for
Techdyne (Scotland) from The Royal Bank of Scotland Plc which credit line has a
U. S. equivalency of approximately $342,000 at December 31, 1996. This line of
credit operates as an overdraft facility. No amounts were outstanding under
this line of credit as of December 31, 1996.
12
<PAGE> 15
Certain of the officers and directors of the Company are officers and/or
directors of Medicore and its publicly held subsidiary, DCA, including Thomas K.
Langbein, Chairman of the Board of Directors and Chief Executive Officer of the
Company holding the same positions with DCA and Medicore, as well as being
President of Medicore, and an officer and director of Medicore's subsidiaries;
Mr. Langbein is also the President, sole shareholder and director of Todd, a
broker dealer; Daniel R. Ouzts, Vice President of Finance and Controller of the
Company holding the same positions with DCA and Medicore, as well as being their
Treasurer; and Peter D. Fischbein and Anthony C. D'Amore, each a director of the
Company and Medicore. See "Election of Directors." Lawrence E. Jaffe, counsel
to the Company, is Secretary and counsel to Medicore and DCA and is beneficial
owner of approximately 3.6% of Medicore's common stock and received a
substantial portion of his fees from the Company, Medicore and DCA, which for
the year ended December 31, 1996, were approximately $32,000, $107,000, and
$63,000 respectively. Mr. Jaffe holds options to purchase 30,000 shares of
Common Stock of the Company, 20,000 shares exercisable through May 24, 1999 at
$1.00 per share and 10,000 shares exercisable through February 26, 2000 at $1.75
per share. Mr. Jaffe also holds options for 50,000 shares of Common Stock of DCA
exercisable through November 9, 2000, at $1.50 per share.
In addition, certain of the accounting personnel and administrative
facilities of Medicore and its subsidiaries, including the Company, are common.
The costs of executive accounting salaries and other shared corporate overhead
for these companies are charged first on the basis of direct usage when
identifiable, with the remainder allocated on the basis of time spent. Since
the shared expenses are allocated on a cost basis, there is no intercompany
profit involved. The amount of expenses due to Medicore, generally included in
intercompany Medicore advances to the Company, for each of the three years
ended December 31, 1996 was approximately $408,000. Utilization of personnel
and administrative facilities in this manner enables Medicore to share the cost
of qualified individuals with its subsidiaries rather than duplicating the cost
for various entities. It is in the opinion of management that these services
are on terms as favorable as obtainable from unaffiliated parties.
Property, casualty, and general liability insurance coverage for the
Company and similar insurance for Medicore, DCA and their subsidiaries were
obtained through the A.C. D'Amore Agency, Inc., an insurance agency owned by
Anthony C. D'Amore, a director of the Company and Medicore and registered as a
part-time account executive with Todd, although he has not been active in the
securities business. In 1992, Mr. D'Amore sold his insurance business and acts
as a consultant to the purchaser. Mr. D'Amore continues to receive commissions
for the accounts of the Company and Medicore, but not DCA. The aggregate
annual premiums for such insurance were approximately $189,000 in 1996 of which
$130,000 was for the Company, and Mr. D'Amore's commissions amounted to
approximately $9,500, of which approximately $6,500 was for the Company. In
addition, the Company, Medicore and DCA obtained group health insurance
coverage and several executive and key employee life insurance policies through
George Langbein, brother of Thomas K. Langbein. George Langbein is affiliated
as an independent sales representative with the Company. This insurance
includes $100,000 term life insurance each covering and owned by Barry Pardon,
President and director of the Company, Joseph Verga, Senior Vice President,
Secretary, Treasurer and director of the Company (each purchased and paid for
by the Company), and Bonnie Kaplan, a key employee of Medicore (each purchased
and paid for my Medicore). Medicore also pays for $750,000 of whole life
insurance and $350,000 of term life insurance owned by Thomas K. Langbein.
Medicore owns a $500,000 life policy on Thomas K. Langbein. See "Executive
Compensation." Premiums on these coverages totaled approximately $327,000
during 1996 of which $182,000 was for the Company. Management is of the
opinion that the cost and coverage of the insurance are as favorable as can be
obtained from unaffiliated parties.
Peter D. Fischbein, director of the Company, Medicore and Viragen, is an
attorney who, from time to time, represents the Company, Medicore and Todd.
See "Election of Directors."
All transactions and loans between the Company and its officers, directors
and 5% shareholders will be on terms no less favorable than could be obtained
from independent, unaffiliated parties and will be approved by a majority of
the independent, disinterested directors of the Company.
AUDITORS
The Board of Directors pursuant to the recommendation of the Audit
Committee has reappointed Ernst & Young LLP as its independent accountants to
audit the financial statements of the Company for the current fiscal
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<PAGE> 16
year. That firm has acted as accountants for the Company since 1983. The
Company also files consolidated financial statements with Medicore. Ernst &
Young LLP have been Medicore's independent accountants since 1978.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting and will have the opportunity to make a statement if desired to
do so. The representative will also be available to respond to appropriate
questions from any shareholder present at the meeting.
SHAREHOLDER PROPOSALS
Any shareholder proposal to be considered by the Company for inclusion in
the 1998 Information Statement must be received by the Company not later than
February 11, 1998. Any such proposal should be sent to Joseph Verga, the
Secretary of the Company, 2230 West 77th Street, Hialeah, Florida 33016. Any
such proposal should provide the proposer's intention to present the proposal
for action at the meeting, and must comply with Item 4 of Schedule 14C of the
rules of the Securities and Exchange Commission.
ADDITIONAL INFORMATION
Management is not aware of any other matter to be presented for action at
the Annual Meeting other than the election of directors, Item 1 in the
accompanying Notice of Annual Meeting of Shareholders, and management does not
intend to bring any other matter before the Meeting.
UPON WRITTEN REQUEST BY ANY SHAREHOLDER TO THE SECRETARY OF THE COMPANY,
JOSEPH VERGA, 2230 WEST 77TH STREET, HIALEAH, FLORIDA 33016, A COPY OF THE
FINANCIAL SCHEDULES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1996 (COPIES OF WHICH ANNUAL REPORT ARE INCLUDED WITH THIS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND INFORMATION STATEMENT) WILL BE
PROVIDED WITHOUT CHARGE.
By Order of the Board of Directors
JOSEPH VERGA
Secretary
May 2, 1997
14
