<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the 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 / / 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 Rule 14a-11(c) or Rule 14a-12
MEDICORE, INC
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11 (c)(1)(ii), 14A-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/X / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
MEDICORE, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------
SEPTEMBER 13, 1995
To Shareholders:
The Annual Meeting of Shareholders of MEDICORE, INC. (the "Company") will be
held at the American Stock Exchange, 86 Trinity Place, New York, New York, on
Wednesday, September 13, 1995 at 11:00 a.m., for the following purposes:
1. To consider and vote upon a proposal recommended by the Board of
Directors to amend the Company's Restated Certificate of Incorporation to
classify the Board of Directors of the Company into three classes;
2. To elect four members to the Company's Board of Directors (who will
be divided into three classes if the proposal in Item 1 above is approved by
shareholders);
3. To consider and vote upon a proposal recommended by the Board of
Directors to amend the Company's Restated Certificate of Incorporation to add a
provision concerning the manner in which shareholders may take action;
4. To consider and vote upon a proposal recommended by the Board of
Directors to amend the Company's Restated Certificate of Incorporation to add a
provision concerning the increased percentage of shareholder vote required to
amend, repeal or otherwise modify certain portions of the Company's Restated
Certificate of Incorporation, specifically the proposed amendments to the
Restated Certificate of Incorporation; and
5. 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 July 14, 1995, 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 1994 is enclosed.
- - --------------------------------------------------------------------------------
It is important that your shares be represented at the Annual Meeting in order
that the presence of a quorum be assured and to avoid added proxy solicitation
costs. THEREFORE, YOUR PERSONAL ATTENDANCE OR PROXY IS IMPORTANT. Whether or not
you plan to attend, please sign and date the accompanying proxy and return it
promptly in the enclosed self-addressed envelope. All shareholders are cordially
invited to attend the meeting. If you attend the meeting and decide to vote in
person, you may revoke your proxy.
- - --------------------------------------------------------------------------------
By Order of the Board of Directors
LAWRENCE E. JAFFE
Secretary and Counsel
Hasbrouck Heights, New Jersey
July 19, 1995
<PAGE> 3
MEDICORE, INC.
2337 WEST 76TH STREET
HIALEAH, FLORIDA 33016
----------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 13, 1995
----------------------
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement and accompanying form of proxy, anticipated to be
mailed on or about July 19, 1995, is solicited by and on behalf of the Board of
Directors of Medicore, Inc., a Florida corporation (the "Company") for the
Annual Meeting of Shareholders of the Company to be held on Wednesday, September
13, 1995, at the American Stock Exchange, 86 Trinity Place, New York, New York
at 11:00 a.m., including any adjournment thereof, for the purposes set forth in
the Notice of Annual Meeting and Proxy Statement.
If the enclosed form of proxy is executed and returned, it will be
voted as directed, but may be revoked at any time insofar as it has not been
exercised, either by a written notice of the revocation received by the persons
named therein, or by voting the shares covered thereby in person or by another
proxy dated subsequent to the date thereof. In the absence of specific
instructions by the shareholders, proxies will be voted in favor of each of the
following proposals: (i) to amend the Company's Restated Certificate of
Incorporation, as amended (hereinafter "Certificate of Incorporation") to
authorize a classified Board of Directors; (ii) to elect each of the four
nominees for director whose names are set forth on the proxy card; and (iii) to
amend the Company's Certificate of Incorporation to add provisions concerning
certain corporate governance matters, including (a) the manner in which
shareholders may take action, and (b) the necessary shareholders vote to modify
or otherwise amend certain provisions of the Certificate of Incorporation,
particularly the classified Board of Directors and the proposed corporate
governance matters. Abstentions and broker non-votes will be counted for
purposes of a quorum, but will have the legal effect of a vote "against" the
election of directors and to amend the Company's Certificate of Incorporation
with respect to the corporate governance matters, but not as to the amendment of
the Certificate of Incorporation to authorize a classified Board for which such
abstentions or non-votes will not be counted. The form of proxy vests in the
persons named therein as proxies discretionary authority to vote on any matter
that may properly come before the meeting not presently known to the Board of
Directors.
The cost of preparing and mailing the Notice of Annual Meeting and
Proxy material and soliciting proxies will be paid by the Company. In addition
to the use of the mails, officers, directors or employees of the Company, who
will receive no additional compensation therefore, may solicit proxies by
telephone or personal interview. The Company will request brokers, nominees,
fiduciaries and custodians to forward proxy material to their principals and
beneficial owners, and will reimburse such persons for reasonable expenses
incurred by them in forwarding the proxy materials.
RECORD DATE
The Board of Directors has fixed the close of business on July 14,1995,
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 AND PRINCIPAL HOLDERS
As of July 14, 1995 there were outstanding and entitled to be voted at
the Annual Meeting, 5,454,950 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, in
person or by proxy, is necessary to effectuate election of the directors. For
approval of the classified board proposal, affirmative votes must exceed
opposing votes. Approval of proposal 3 relating to the manner in which
shareholders take action, and proposal 4 concerning increased percentage of
shareholder approval to modify or repeal the Certificate of Incorporation, must
meet the same quorum and be adopted by the same vote being so proposed, to wit
66 2/3% of the outstanding shares.
2
<PAGE> 4
PRINCIPAL SECURITY HOLDERS
The following table sets forth as of July 14, 1995, the name and
holdings of each person who is known by the Company to own beneficially more
than 5% of its voting securities.
<TABLE>
<CAPTION>
Title Name and Address of Amount and Nature Percent
of Class of Beneficial Owner of Beneficial Ownership(1) of Class(2)
- - -------- ------------------- -------------------------- -----------
<S> <C> <C> <C>
Common Thomas K. Langbein 854,064(3) 15.7%
777 Terrace Avenue
Hasbrouck Heights, NJ
Common Seymour Friend 360,705(4) 6.6%
3804 Monserrate Street
Coral Gables, FL
</TABLE>
_____________________
(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) Based on 5,454,940 shares of Common Stock outstanding. Includes 480,000
shares of Common Stock held in escrow by the Company as security for
the payment of $326,000 of promissory notes from optionees (officers
and directors of the Company and/or its subsidiaries - 10 persons) who
exercised 1992 options at $.69 per share by paying par value in cash
and the balance in three-year notes due September 11, 1997 with
interest at 5.36% per annum payable semi-annually. The notes are
secured by the Common Stock purchased with voting rights with the
shareholder until default, if any. Does not include 808,000 shares of
Common Stock underlying non-qualified stock options ("Options") granted
on April 18, 1995 as a service award to officers, directors,
consultants, and certain employees of the Company and certain of its
subsidiaries under the Company's 1989 Qualified Stock Option Plan (the
"1989 Plan"). The Options are exercisable at $3.00 per share for 10
years (no vesting schedule) but may expire two years from retirement,
permanent disability or death. The Options are exercisable 50% on or
after the first anniversary date of grant, April 18, 1996, and in full
on or after the second anniversary date of grant, provided acceleration
of full exercise is permitted upon changes in control of the Company or
death of the optionee. Termination of the optionee's affiliation with
the Company other than through death, disability, retirement or change
in control, immediately terminates the Option. See "Executive
Compensation - Options, Warrants or Rights."
(3) Includes (i) 818,814 shares of Common Stock in Mr. Langbein's name of
which 130,000 shares are held in escrow securing a promissory note of
$88,400 for a substantial portion of the purchase price of such shares
(see Note (2) and "Executive Compensation - Options, Warrants or
Rights"); (ii) 3,000 shares each held in the names of Mr. Langbein's
two children; and (iii) 29,250 shares held in the name of his wife.
Does not include (i) Options to purchase 250,000 shares of Common Stock
granted in April, 1995, exercisable at $3.00 per share through April
17, 2005, or (ii) an option to acquire up to 400,000 shares of Common
Stock in lieu of a lump sum payment, neither of the options in
subparagraphs (i) and (ii) are presently exercisable except in the
event of a change in control of the Company. See Note (2) and
"Employment Contracts and Termination of Employment and
Change-In-Control Arrangements" and "Options, Warrants or Rights" under
the caption "Executive Compensation."
(4) Includes 50,000 shares of Common Stock held in escrow securing a
promissory note of $34,000 for a substantial portion of the purchase
price of such shares. See Note (2) and "Executive Compensation -
Options, Warrants or Rights." Does not include Options to purchase
75,000 shares of Common Stock granted in April, 1995 exercisable at
$3.00 per share through April 17, 2005, presently not exercisable
except in the event of a change in control of the Company. See Note (2)
and "Executive Compensation - Options, Warrants or Rights."
3
<PAGE> 5
ELECTION OF DIRECTORS
At the Annual Meeting, the shareholders will elect four members to the
Board of Directors of the Company. If the proposal to authorize a classified
Board of Directors is adopted, the directors will be elected to the respective
Classes of the Board specified below. Each director will hold office until the
next Annual Meeting of Shareholders and thereafter as designated by the Classes
of directors and until his successor is elected and has qualified. The
affirmative vote of a plurality of the shares of Common Stock represented at the
meeting is required to elect each director. 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.
The persons named as proxies in the form of proxy solicited hereby
intend to vote all valid proxies received in favor of the election of each of
the persons named below as nominees for directors except where authority is
withheld by the shareholder. Each nominee has consented to be named herein and
to serve on the Board of Directors if elected. If any nominee is unable to serve
as a director (which presently is not anticipated), the proxies will be voted
for the other nominees and for such substituted nominees(s) as may be designated
by the present Board of Directors. All of the nominees are now directors and
were elected by the shareholders at the last Annual Meeting.
There is no nominating committee with nominations for director
considered by the entire Board of Directors. See "Provisions of the Company's
By-laws Amended to be Consistent with Proposals to Amend the Company's
Certificate of Incorporation."
If the proposal to authorize a classified Board of Directors described
in this Proxy Statement is adopted by shareholders, the directors will be
divided among the Classes as follows:
Class 1 (To Serve until the 1996 Annual Meeting of Shareholders)
Peter D. Fischbein
Class 2 (To serve until the 1997 Annual Meeting of Shareholders)
Anthony C. D'Amore
Class 3 (To serve until the 1998 Annual Meeting of Shareholders)
Thomas K. Langbein
Seymour Friend
Pursuant to the first proposal of management to amend the Company's
Certificate of Incorporation to classify the Board of Directors of the Company
into three Classes, it has also provided for the Board of Directors to be no
less than four nor more than six members. The By-laws presently provide for no
more than seven directors. Over the last several years the Company has had four
directors, several years prior thereto there were five directors; and the last
time the Board consisted of six directors was in 1985. 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 singular
vacancies now existing each in Class 1 and 2 directors. When appointed, such
Class 1 and 2 directors shall then serve for the remainder of the term provided
for that particular Class of directors, the initial term of a Class 1 director
extending to the next (1996) Annual Meeting of Shareholders, and for a Class 2
director to the 1997 Annual Meeting of Shareholders. See below "Proposals to
Amend the Company's Certificate of Incorporation - Proposal to Amend the
Certificate of Incorporation to Provide for the Classification of Directors."
Upon the expiration of the term of a Class of directors, an election of
directors will occur for that same Class for directors to serve a new three-year
term. See below "Proposals to Amend the Company's Certificate of Incorporation -
Proposal to Amend the Certificate of Incorporation to Provide for the
Classification of Directors."
If the proposal for the classification of directors is not approved by
the shareholders, each director listed above as a nominee for a director of the
Company shall serve until the next Annual Meeting of Shareholders and thereafter
until his successor is elected and qualified.
4
<PAGE> 6
For additional information concerning the nominees for director,
including compensation and share ownership, see "Executive Compensation,"
"Security Ownership of Management" and "Certain Relationships and Related
Transactions."
<TABLE>
<CAPTION>
CURRENT POSITION AND
NAME AGE AREAS OF RESPONSIBILITY POSITION HELD SINCE
- - ---- --- ----------------------- -------------------
<S> <C> <C> <C>
Thomas K. Langbein(1) 49 Chairman of the Board 1980
of Directors, Chief Executive
Officer and President
Seymour Friend(1) 74 Vice-President 1981
Director 1975
Anthony C. D'Amore(2) 64 Director 1979
Peter D. Fischbein(2) 55 Director 1984
______________
</TABLE>
(1) Officers are elected annually at the Board of Directors' meeting
following the Annual Meeting of Shareholders.
(2) Member of the Audit Committee.
Thomas K. Langbein was financial consultant to the Company until March,
1980 when he was appointed as Chairman of the Board of Directors, Chief
Executive Officer and President, which latter position was relinquished in
January, 1983 and reassumed in April, 1985 upon completion of a public offering
by Techdyne, Inc. ("Techdyne"), an 83.1% owned subsidiary of the Company. Mr.
Langbein is an officer and director of most of the Company's subsidiaries. Mr.
Langbein was appointed President and Chief Executive Officer of Techdyne in
April, 1990, upon the resignation of its former officer from those positions.
Barry Pardon succeeded to the Presidency of Techdyne in November, 1991, at which
time Mr. Langbein reassumed the position of Chairman of the Board. He has been a
director of Techdyne since it was acquired by the Company in 1982. He is also a
director of Techdyne's foreign subsidiary, Techdyne (Scotland) Ltd., ("Techdyne
(Scotland)"). Mr. Langbein was Chairman of the Board and Chief Executive Officer
of Viragen, Inc. ("Viragen"), a public company and former subsidiary of the
Company, until his resignation from Viragen in April, 1993. Mr. Langbein is
President, sole shareholder and director of Todd & Company, Inc. ("Todd") a
broker-dealer registered with the Securities and Exchange Commission and a
member of the National Association of Securities Dealers, Inc. Mr. Langbein
devotes most of his time to the affairs of the Company and Techdyne. See
"Executive Compensation" and "Certain Relationships and Related Transactions."
Seymour Friend is a director of Dialysis Corporation of America, a
99.1% owned subsidiary of the Company ("DCA"). He resigned as a director of
Viragen in May, 1993. He is a real estate investor and devotes a portion of his
time to the affairs of the Company.
Anthony C. D'Amore is a director of Techdyne. Mr. D'Amore was
affiliated from 1971 to 1974 with Todd, with which firm he is registered as a
part-time account executive, but he has not been active in the securities
industry. Mr. D'Amore sold his insurance agency in 1992 and acts as a consultant
to an insurance agency that provides the Company and Techdyne with its
insurance. Mr. D'Amore continues to receive commissions with respect to
insurance placed with the Company and Techdyne. See "Executive Compensation -
Compensation of Directors" and "Certain Relationships and Related Transactions."
Peter D. Fischbein is an attorney whose previous firm represented the
Company, Viragen and Todd from time to time. Mr. Fischbein is a director of
Viragen (since 1981) and Techdyne (since 1985). He was Chairman of the Board of
Techdyne from April, 1990 to November, 1991 when Thomas K. Langbein reassumed
that position. Mr. Fischbein is a general partner of several limited
partnerships engaged in real estate development. See "Certain Relationships and
Related Transactions."
There is no family relationship between any of the above named officers
or directors.
Since the last Annual Meeting in July, 1994, there were six meetings of
the Board of Directors, including actions by unanimous written consent. All
directors participated at all the meetings.
5
<PAGE> 7
The only committee the Company has is an Audit Committee consisting of
Peter D. Fischbein and Anthony C. D'Amore. The Audit Committee, which meets
informally usually on a monthly basis, 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 of the Company. No member of the Audit Committee receives a fee for
services rendered as a participant of such committee. 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, 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 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, 1994 for services in all capacities for its Chief Executive Officer and each
of its principal executive officers whose total annual salary and bonus exceeded
$100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------
Annual Compensation Awards
------------------- ------
(a) (b) (c) (e) (f) (g)
Name and Salary Other Annual Restricted Stock Securities Underlying
Principal Position Year ($) Compensation ($) Awards ($) Options/SARs (#)
- - ------------------ ---- ------ ---------------- ----------------- ---------------------
<S> <C> <C> <C> <C> <C>
CEO 1994 220,000 25,000(1)(2) 112,500(3)
Thomas K. 1993 220,000 24,800(1)
Langbein 1992 220,000 24,900(1) 130,000(4)
Dennis W. 1994 60,100
Healey 1993 88,400
1992 120,000 50,000(4)
Barry 1994 91,600 11,250(3)
Pardon(5) 1993 86,900
1992 128,630 30,000(4)
</TABLE>
_____________________
(1) Includes automobile allowance and related expenses and life and
disability insurance premiums.
(2) Does not include 150,000 shares and 15,000 shares of 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 (3). The issuance of these shares was
subject to approval of an additional listing agreement filed with the
American Stock Exchange ("Amex") which was approved in April, 1994.
(3) Incentive awards granted in January, 1994. The Common Stock vested in
equal amounts of 1/12th per month and at December 31, 1994 was fully
vested. See Note (2). 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. Should the Company pay dividends, which it has not in
many years, dividends would be paid on such restricted securities.
6
<PAGE> 8
(4) In September, 1992, the Company granted options for an aggregate of
480,000 shares of Common Stock to officers, directors and key employees
of the Company and certain of its subsidiaries. The options were
limited in their exercisability until the Company filed and obtained
approval from the Amex for an additional listing agreement with respect
to the shares of Common Stock underlying the options. The Amex approved
the listing of additional shares in August, 1994. Not included is the
April 18, 1995 grant of options under the Company's 1989 Stock Option
Plan to employees, officers, directors and advisors of the Company, of
which options for 250,000 shares, 75,000 shares, and 30,000 shares,
respectively, were granted to Messrs. Langbein, Healey and Pardon. See
below under "Options, Warrants or Rights" and "Security Ownership of
Management."
(5) President and director of Techdyne.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Langbein has an employment agreement with the Company 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. The first $10,000 increment became effective June 1, 1995. The agreement
provides upon his death three years full salary to his wife 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. The Company maintains an income
disability insurance policy for Mr. Langbein. The agreement also provides for
life insurance, of which the Company owns and is beneficiary of a $500,000
policy. The Company 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 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 affiliated with Techdyne as an independent sales
representative and Todd as a part-time sales representative, although not active
in the securities business. See "Certain Relationships and Related
Transactions."
Based upon any wrongful termination of his employment agreement, which
includes changes in control of the Company through an acquiring person (any
person who has acquired or announces a tender offer or exchange for 25% of the
Company), a sale of substantially all of the assets or merger, acquisition of
the Company or its consolidation with another, or certain types of Board
changes, the Company 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 the Company 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, presently
the Amex (or if the trading is then in the over-the-counter market, then as
reported by NASDAQ or other inter-dealer quotation medium) within 30 days of
such wrongful termination or change in control. The Company has reserved up to
800,000 shares of its Common Stock for such option to Mr. Langbein, of which
400,000 shares have subsequently been set aside and reserved for options granted
by the Company to a financial public relations consulting firm in September,
1994. The Company has granted Mr. Langbein one time demand and five year
"piggy-back" registration rights with respect to such shares. Such registration
of the stock would be at the sole cost and expense of the Company 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 year non-competition
provision within a 20 mile radius of the Company's primary operations in
Florida. The Company 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. The Company also
provides Mr. Langbein with an automobile allowance of $850 per month.
Dennis W. Healey, age 47, is Senior Vice President, Principal Financial
Officer and Treasurer of the Company, Executive Vice President, Chief Financial
Officer, Treasurer, Controller, Secretary and director of Viragen, Vice
President of DCA, and Treasurer and Secretary of most of DCA's subsidiaries. He
was appointed Executive Vice President of Techdyne in 1991. Mr. Healey has no
employment agreement with the Company. He has a two year employment agreement
with Viragen through April 7, 1996 under which he receives an annual salary of
$75,000 including business expenses and medical and life insurance and option
plans available to other executive officers of Viragen.
Certain executive and accounting personnel and administrative
facilities of the Company and its subsidiaries, including Techdyne, were common
for fiscal 1994. The costs of executive and accounting salaries and other shared
corporate overhead for these companies were charged on the basis of direct usage
when identifiable with the remainder allocated on the basis of time spent. Mr.
Langbein, as an officer and director of the Company and Techdyne, and Messrs.
Healey and Daniel Ouzts, as officers
7
<PAGE> 9
of the Company and Techdyne, divide their time and efforts to each company.
Mr. Healey also devotes a portion of his time to Viragen. See "Certain
Relationships and Related Transactions."
Barry Pardon, director and President of Techdyne, has a five-year
employment agreement with Techdyne through December 31, 1995, 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 Techdyne in excess of $20,000,000
for this last year of the agreement. In January, 1993, as part of Techdyne'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 six 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 Techdyne'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 Techdyne, diverting any
customers, services, items or products of Techdyne or disclosing any trade
secrets of Techdyne.
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. See "Election of Directors."
Non-Standard Arrangements
During the year ended December 31, 1994, the Company obtained its
property, casualty and general liability insurance, as did its subsidiaries,
through the efforts of one of its directors, Anthony C. D'Amore, through his
insurance agency, and now through an agency to which Mr. D'Amore acts as a
consultant. Mr. D'Amore received $12,575 in commissions in 1994 with respect to
this insurance. See "Certain Relationships and Related Transactions."
The Company has provided options to its directors, among other
executives and consultants. Its public subsidiary, Techdyne, has done the same.
Three of the directors of the Company are directors of Techdyne and have
received Techdyne options. See below "Options, Warrants or Rights," "Security
Ownership of Management" and "Certain Relationships and Related Transactions."
The table below reflects the Company and Techdyne options granted during 1994
through the present to directors of the Company.
<TABLE>
<CAPTION>
Options Granted
------------------------------------------------------------------------------
Name of Director Company(1) % Techdyne(2) %
- - ---------------- ---------- - -----------
<S> <C> <C> <C> <C>
Thomas K. Langbein 250,000 31.0% 80,000(3) 21.0%
Seymour Friend 75,000 9.3% 10,000(4) 2.6%
Peter D. Fischbein 75,000 9.3% 40,000(5) 10.5%
Anthony C. D'Amore 75,000 9.3% 20,000(6) 5.3%
</TABLE>
_________________
(1) In April, 1995 Options for 808,000 were granted under the Company's
1989 Stock Option Plan (the "Option Plan") exercisable into Common
Stock at $3.00 per share, 50% on or after the first anniversary date of
grant, and in full on or after the second anniversary date of grant.
Options were granted to officers, directors, consultants and certain
employees of the Company and its subsidiaries. See Note (2) to
"Principal Security Holders," "Executive Compensation - Options,
Warrants or Rights" and "Security Ownership of Management."
8
<PAGE> 10
(2) There are an aggregate of 380,000 options outstanding, including
options for (i) 227,500 shares granted in May, 1994, to 84 persons,
including officers, directors, employees and advisors of Techdyne and
its subsidiary, Techdyne (Scotland), under the 1994 Techdyne, Inc.
Stock Option Plan (the "Techdyne 1994 Plan") pursuant to which 250,000
shares of Techdyne common stock are reserved for issuance; these
options are exercisable at $1.00 per share through May 24, 1999 (the
"1994 Techdyne Options"); and (ii) 152,500 shares (not part of the
Techdyne 1994 Plan), of which 142,500 options were granted in February,
1995 to directors of Techdyne and Techdyne (Scotland), and an option
for 10,000 shares granted in April, 1995 to counsel, all options being
identical, exercisable for five years at $1.75 per share (the "1995
Techdyne Options"). See "Executive Compensation - Options, Warrants or
Rights."
(3) Includes (i) 40,000 1994 Techdyne Options and (ii) 40,000 1995 Techdyne
Options.
(4) 1994 Techdyne Options.
(5) Includes (i) 20,000 1994 Techdyne Options and (ii) 20,000 1995 Techdyne
Options.
(6) Includes (i) 10,000 1994 Techdyne Options and (ii) 10,000 1995 Techdyne
Options.
OPTIONS, WARRANTS OR RIGHTS
In May, 1989, the Board of Directors adopted the Option Plan, approved
by shareholders in July, 1994, pursuant to which 1,000,000 shares of Common
Stock are reserved for issuance under Options at fair market value on the date
of grant. The Option Plan is for a period of 20 years, terminating May 18, 2009.
Options may be granted to employees, officers, directors, attorneys, consultants
and similar parties who provide their skills and expertise to the Company.
Options granted under the Plan are non-transferable and are exercisable for ten
years (no vesting schedule) from date of grant, but may expire at the earlier of
two years from retirement, permanent disability or death. The Options are
exercisable 50% on or after the first anniversary date of grant and in full on
or after the second anniversary date of grant, provided acceleration of full
exercise will be permitted upon changes in control or death. Changes in control
include the sale of substantially all of the assets of the Company or its merger
or consolidation with another, or a majority of the Board of Directors changes
other than by election by shareholders pursuant to Board solicitation, or by
vacancies filled by the Board caused by death or resignation, or a person or
group acquires 25% or makes a tender for 25% of the Company's outstanding
shares.
Options under the Option Plan may be exercised either with cash or
Company stock or both. If exercised with stock the shares are valued at the
current market price and the optionee obtains an additional non-qualified stock
option for the stock used for the exercise. This new Option is exercisable at
the then current market price for the remainder of the original Option period
under the same terms of the original Option. Stock for stock exercises of
Options allow for the withholding of shares to cover tax liability upon
exercise.
On April 18, 1995, the Board granted Options for 808,000 shares of
Common Stock under the Option Plan exercisable at $3.00 per share, the closing
price for the stock on the date of grant. See "Executive Compensation -
Compensation of Directors - Non-Standard Arrangements" and "Security Ownership
of Management."
In 1990, the By-Laws were amended to opt-out of the control share
acquisition section of the Florida Business Corporation Act only to the extent
such might relate to the issuance of any securities to directors, management,
key employees, advisors or consultants, whether under a stock option plan,
benefit, bonus, awards, retirement program or similar plan.
9
<PAGE> 11
<TABLE>
<CAPTION>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS/SAR VALUES
(a) (b) (c) (d) (e)
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs
Options/SARs at FY-End
at FY-End (#) ($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise(#) ($) Unexercisable Unexercisable
- - ----- ----------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
CEO
Thomas K 130,000(1) 57,200 -0- -0-
Langbein -0- -0-
-0- -0- 40,000 (exer.)(2) 10,000(exer.)
-0- -0-
Dennis W. 50,000(1) 22,000 -0- -0-
Healey -0- -0-
-0- -0- 20,000 (exer.)(2) 5,000 (exer.)
-0- -0-
Barry Pardon(3) 30,000(1) 13,200 -0- -0-
-0- -0-
-0- -0- 40,000 (exer.)(2) 10,000 (exer.)
-0- -0-
</TABLE>
_______________
(1) Company options exercised at $.69 per share in September, 1994, part in
cash (par value) and part with three-year notes, with shares held in
escrow securing the notes. See "Principal Security Holders" and the
Notes thereto.
(2) Techdyne options granted in May, 1994 under the Techdyne 1994 Plan,
exercisable at $1.00 per share through May 24, 1999. See discussion
below and "Security Ownership of Management."
(3) President and director of Techdyne.
Techdyne established a 1985 Stock Option Plan for Incentive and
Non-Qualified Stock Options which expired on January 16, 1995 with no options
outstanding.
In May, 1994, the Techdyne Board and shareholders adopted the 1994
Techdyne Plan pursuant to which 250,000 shares of Techdyne common stock were
reserved for issuance at fair market value on the date of grant of options. The
Techdyne 1994 Plan expires 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 Techdyne. Options are non-transferable except by
the laws of descent and distribution or a change in control of Techdyne as
defined in the Techdyne 1994 Plan, and are exercisable only by the participant
during his lifetime. Change in control is defined similarly to that in the
Company's Option Plan.
If a participant ceases affiliation with Techdyne by reason of death,
permanent disability or retirement at or after age 65, the option remains
exercisable for nine (9) 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 Techdyne 1994 Plan, at the discretion of the
Board, may be exercised either with cash, shares having a fair market equal to
the cash exercise price, the participant's personal recourse note, or with an
assignment to
10
<PAGE> 12
Techdyne of sufficient proceeds from the sale of the shares acquired upon
exercise of the options with an authorization to the broker or selling agent to
pay that amount to Techdyne, or any combination of the above.
There are presently options for 227,500 shares of Techdyne stock
outstanding under the Techdyne 1994 Plan granted in May, 1994 to 84 officers,
directors, employees, and advisors of Techdyne (certain of whom are officers
and/or directors of the Company) and its subsidiary, which options are
exercisable at $1.00 per share through May 24, 1999.
On February 27, 1995, Techdyne granted non-qualified stock options, not
part of the Techdyne 1994 Plan, to directors of Techdyne (five of seven of whom
are officers and/or directors of the Company) and its subsidiary for 142,500
shares exercisable at $1.75 per share for five years. These options may be
exercised for cash or, subject to Board approval, in part by cash, (minimum par
value for the shares purchased) and the balance by a three-year recourse
promissory note, secured by the shares purchased (to be held in escrow with no
transfer rights pending full payment) at interest based on the coupon rate yield
of a 52-week U.S. Treasury Bill immediately preceding the execution and issuance
of the promissory note, with voting rights with the shareholder until a default,
if any, on the note.
<TABLE>
<CAPTION>
TECHDYNE OPTIONS/SAR GRANTS IN 1994
(a) (b) (c) (d) (e)
Number of % of Total Exercise
Shares Underlying Options Granted to Price Expiration
Name Options Granted(#) Employees in 1994 ($/sh) Date
- - ------- ------------------ ----------------- ------ ----
<S> <C> <C> <C> <C>
CEO
Thomas K. Langbein 40,000 18 1.00 5-24-99
Dennis W. Healey 20,000 9 1.00 5-24-99
Barry Pardon 40,000 18 1.00 5-24-99
</TABLE>
PROFIT SHARING AND RETIREMENT PLAN
In January, 1989 the Company implemented a Profit Sharing Plan under
Section 401(k) of the Internal Revenue Code which was terminated in 1992.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of July 14, 1995 the names and
beneficial ownership of the equity securities of the Company and its
subsidiaries 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."
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
Medicore Techdyne
Common Common
Name Stock(1) %(2) and (3) Stock(4) %(3) and (5)
- - ---- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Thomas K. Langbein 854,064(6) 15.7% 2,607,797(7) 83.5%(7)
Seymour Friend 360,705(8) 6.6% 28,333(9) *
Peter D. Fischbein 101,219(10) 1.9% 40,000(11) 1.3%
Anthony C. D'Amore 198,890(12) 3.7% 20,000(13) *
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
Medicore Techdyne
Common Common
Name Stock(1) %(2) and (3) Stock(4) %(3) and (5)
- - ---- -------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Dennis W. Healey 50,000(12) * 20,000(14) *
Barry Pardon 62,550(15) 1.2% 2,833(16) *
All directors and
executive officers
as a group(6 persons) 1,611,928(17) 29.6% 2,728,130(4),(5)and (7) 84.3%
</TABLE>
* less than 1%
_______________
(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) Based on 5,454,940 shares outstanding. Includes 480,000 shares held in
escrow by the Company as security for the payment of $326,000 of
promissory notes from optionees (officers and directors of the Company
and/or its subsidiaries - 10 persons) who exercised 1992 options at
$.69 per share by paying par value in cash and the balance in
three-year notes due September 11, 1997 with interest at 5.36% per
annum payable semi-annually. The notes are secured by the shares
purchased with voting rights with the shareholder until default, if
any. Does not include 808,000 shares of Common Stock underlying Options
granted in April, 1995 under the Company's Option Plan, which Options
are not transferable and are exercisable for 50% of the Option on or
after April 18, 1996 and the balance one year thereafter. See Note (3)
and "Executive Compensation - Options, Warrants or Rights."
(3) For purposes of computing the percentage of outstanding shares held by
each person or group of persons named above, any security which such
person or group of persons has the right to acquire within 60 days of
July 14, 1995 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.
(4) The Company owns 2,527,797 shares (83.1%) of the common stock of
Techdyne. Does not include 2,573,238 shares which the Company may
acquire upon conversion of its demand promissory note from Techdyne in
the amount of $4,503,166 convertible at $1.75 per share since, although
the note is immediately convertible, the Company has agreed not to
exercise the note until the earlier of completion of Techdyne's
proposed public offering (a portion of the net proceeds is intended to
partially reduce the note), or December 31, 1995. Officers and
directors of the Company, including those directors of the Company and
Techdyne who may be shareholders of each company, except Thomas K.
Langbein (see Note (7)), disclaim any indirect beneficial ownership of
Techdyne common shares through the Company's 83.1% ownership of
Techdyne. See Notes (9), (11), (13), (14), and (16).
(5) Based on 3,042,919 Techdyne common shares outstanding. Does not include
(i) shares obtainable under the Company's convertible note (see Note
(4)) or (ii) options for 380,000 shares of Techdyne common stock. See
"Executive Compensation - Options, Warrants or Rights."
(6) See Note (3) to "Principal Security Holders."
(7) Includes Techdyne options for 80,000 shares. See "Executive
Compensation." By virtue of his positions with the Company and Techdyne
and stock ownership of the Company, Mr. Langbein may be deemed to have
shared voting and investment power with respect to and therefore be
deemed the beneficial owner of the
12
<PAGE> 14
Company's entire ownership of Techdyne, which entire beneficial
ownership Mr. Langbein disclaims, but for his proportionate interest,
approximately 397,000 shares of Techdyne (13%). See Note (4).
(8) See Note (4) to "Principal Security Holders."
(9) Includes Techdyne options for 10,000 shares. See
"Executive Compensation." Excludes approximately 167,000 (5.5%) shares
that may be deemed indirectly beneficially owned through the Company's
ownership of Techdyne, which indirect beneficial ownership is
disclaimed. See Note (4).
(10) Includes 100,000 shares held in trust for his infant son of which
50,000 shares are held in escrow securing a promissory note of $34,000
for a substantial portion of the purchase price of such shares. Mr.
Fischbein's wife is trustee. Mr. Fischbein disclaims beneficial
interest in the 100,000 shares held in trust for his son. Does not
include an Option for 75,000 shares of Common Stock granted in April,
1995, presently not exercisable. See Note (2) and "Executive
Compensation-Options, Warrants, or Rights."
(11) Includes Techdyne options for 40,000 shares. See "Executive
Compensation." Excludes approximately 48,000 (1.6%) shares that may be
deemed indirectly beneficially owned through the Company's ownership of
Techdyne, which indirect beneficial ownership is disclaimed. See Note
(4).
(12) Includes 50,000 shares held in escrow securing a promissory note of
$34,000 for a substantial portion of the purchase price of such shares.
Does not include an Option for 75,000 shares of Common Stock granted in
April, 1995, presently not exercisable. See Note (2) above and
"Executive Compensation-Options, Warrants, or Rights."
(13) Includes Techdyne options for 20,000 shares. See "Executive
Compensation." Excludes approximately 94,000 (3.1%) shares that may be
deemed indirectly beneficially owned through the Company's ownership of
Techdyne, which indirect beneficial ownership is disclaimed. See Note
(4).
(14) Includes Techdyne options for 20,000 shares. See "Executive
Compensation." Excludes approximately 23,000 (.008%) shares that may be
deemed indirectly beneficially owned through the Company's ownership of
Techdyne, which indirect beneficial ownership is disclaimed. See Note
(4).
(15) Includes 30,000 shares held in escrow securing a promissory note of
$20,400 for a substantial portion of the purchase price of such shares.
Does not include an Option for 30,000 shares of Common Stock granted in
April, 1995, presently not exercisable. See Note (2) above and
"Executive Compensation-Options, Warrants, or Rights."
(16) Shares held in his wife's name. Excludes approximately 30,000 (1.0%)
shares that may be deemed indirectly beneficially owned through the
Company's ownership of Techdyne, which indirect beneficial ownership is
disclaimed. See Note (4).
(17) Does not include Barry Pardon's interest. Includes 340,000 shares held
in escrow securing promissory notes aggregating $231,200 for a
substantial portion of the purchase price of such shares. Does not
include the 808,000 shares underlying the Options granted in April,
1995. See Note (2) and "Executive Compensation-Options, Warrants, or
Rights."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain of the officers and directors of the Company are officers
and/or directors of Techdyne and Viragen, including Thomas K. Langbein, Chairman
of the Board of Directors, President and Chief Executive Officer of the Company
and an officer and director of the Company's subsidiaries, and Chairman of the
Board of Directors and Chief Executive Officer of Techdyne; Dennis W. Healey,
Senior Vice President and Treasurer of the Company, Executive Vice President of
Techdyne and officer and/or director of their subsidiaries; and Executive Vice
President, Treasurer, Controller, Chief Financial Officer, Secretary and
director of Viragen; Daniel R. Ouzts, Vice President of Finance and Controller
of the Company and Techdyne; Peter D. Fischbein and Anthony C. D'Amore each a
director of the Company and Techdyne; Mr. Fischbein is also a director of
Viragen; and Lawrence E. Jaffe, Secretary and corporate counsel to the Company
and counsel to Techdyne. See "Election of Directors."
13
<PAGE> 15
In addition, certain of the accounting personnel and administrative
facilities of the Company and its subsidiaries, including Techdyne, are common.
The costs of executive and 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 the time spent. Since
the shared expenses are allocated on a cost basis, there is no intercompany
profit involved. Utilization of personnel and administrative facilities in this
manner enables the Company to share the cost of qualified individuals with its
subsidiaries rather than duplicating the cost for various entities. It is the
opinion of management that these services are on terms as favorable as
obtainable from unaffiliated parties.
Since the Company's acquisition of Techdyne in 1982, through Techdyne's
public offering in April, 1985, the Company had been advancing funds to finance
that subsidiary's business. $900,000 of the resulting intercompany indebtedness
was repaid from the proceeds of Techdyne's public offering in 1985. There is no
schedule for the repayment of the balance of such indebtedness, which at March
31, 1995 aggregated approximately $4,503,166 at an annual interest rate based on
the average short-term Treasury Bill rate. The Company does not intend to
require repayment of these advances prior to January 1, 1996, except to the
extent of a portion of the net proceeds that may be derived from a proposed
financing by Techdyne anticipated to be accomplished in 1995. There is no firm
amount or structure to such financing at this time, and no assurance can be
given that such financing will be completed. Techdyne issued an unsecured demand
promissory note to the Company for this indebtedness convertible into common
stock of Techdyne. See Note (4) to "Security Ownership of Management."
In 1990 the Company acquired Techdyne's real property in Hialeah,
Florida consisting of the land and two buildings and a parking lot. Payment to
Techdyne was made through a reduction in the Company's advance account balance
with Techdyne less approximately $256,000 in existing mortgages on the property,
and during 1994 refinanced the mortgages with a $230,000 mortgage. At March 31,
1995, the principal balance under this mortgage amounted to $145,000. The
Company is leasing the buildings and the parking lot to Techdyne under a five
year net lease expiring March 31, 2000 at $130,000 per year plus applicable
taxes. Management is of the opinion that the rentals are on terms as favorable
as obtainable from unaffiliated parties.
Techdyne has a credit facility with Consolidated Bank, N.A., now
NationsBank of Florida, which it has amended over the years. Effective June 30,
1992 the loan, which at that date amounted to $1,415,507, was restructured. The
loan at March 31, 1995 aggregated $755,000, carries an interest rate of 1% over
prime and was being paid in monthly principal installments of $10,000 plus
interest through June 30, 1993, and thereafter in 35 monthly principal payments
of $17,300 plus interest through June 30, 1996, at which time any unpaid
principal will be due. The loan is secured by Techdyne's receivables,
inventories and fixed assets, other than those held by Techdyne (Scotland), and
mortgages on Company properties under lease to Techdyne, which security
aggregated $5,371,000 at March 31, 1995. The loan agreements also provide that
should Techdyne (Scotland) be sold, which is not presently contemplated, or that
subsidiary repays Techdyne any intercompany advances, the bank will be paid 50%
of the proceeds. Techdyne has also agreed not to provide future funding to
Techdyne (Scotland) without prior permission from the bank. On December 31,
1992, the Company executed a guaranty of the restructured bank loan and gave the
bank a mortgage on its properties in Florida which consist of first mortgages on
a warehouse and a lot, and a third mortgage on office and manufacturing
facilities presently under lease to Techdyne. The guaranty relates to the
indebtedness and interest thereon under the restructured loan and any costs
relating to a default of the payment of the principal and interest due under the
loan, but no other obligations of Techdyne to NationsBank. The Company has
reconfirmed its subordination to the bank of $1,500,000 of Techdyne's
indebtedness to it, has subordinated Techdyne's $11,500 per month lease payments
in the event Techdyne defaults under the restructured loan, and has assigned its
lease and rents to the bank as further security; provided the Company has the
right to collect rents until occurrence of a default, if any, under the loan.
The Company has also agreed not to accept any further advances on the
properties. Techdyne has entered into a commitment letter with a Florida bank to
refinance this credit facility. If completed, the new financing would provide
for an approximately one-year $1,000,000 revolving line of credit at interest of
prime plus 1.5% and a $900,000 five-year term loan at an annual interest of 1%
over the bank's prime rate. These loans would be on terms similar to the
financing to be replaced and will be guaranteed by the Company with its
properties leased to Techdyne securing the $900,000 loan.
Techdyne has advanced funds to Techdyne (Scotland) for that
subsidiary's working capital requirements which advances had an outstanding
balance of $650,000 at March 31, 1995. This sum is not evidenced by a note, is
at interest rate of prime plus 1.5% per annum, and is not expected to be repaid
in the near future. Techdyne 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 $324,000.
Property, casualty and general liability insurance coverage for the
Company and similar insurance for subsidiaries had been obtained through the
A.C. D'Amore Agency, Inc., an insurance agency previously owned by Anthony C.
D'Amore, a director of the Company and Techdyne and registered as a part-time
account executive with Todd. See "Election of Directors." Mr. D'Amore is not
active in the securities business. In 1992, Mr. D'Amore sold his insurance
business to Community Insurance Associates with whom he acts as a consultant.
Mr. D'Amore continues to receive commissions for the accounts of the Company and
Techdyne. The aggregate annual premiums for such insurance were approximately
$147,000 in 1994 and Mr. D'Amore's
14
<PAGE> 16
commissions amounted to $12,575. See "Election of Directors - Compensation of
Directors." In addition, the Company and Techdyne obtained group health
insurance coverage and several executive and key employee life insurance
policies through George Langbein, brother of Thomas K. Langbein. This insurance
includes $100,000 term life insurance each covering and owned by Barry Pardon,
President and director of Techdyne, Joseph Verga, Senior Vice President,
Secretary, Treasurer and director of Techdyne (each purchased and paid for by
Techdyne), Dennis W. Healey, Senior Vice President and Treasurer of the Company
and Executive Vice President of Techdyne, and Bonnie Kaplan, a key employee of
the Company (each purchased and paid for by the Company). George Langbein is
affiliated as a sales representative with Techdyne and Todd. The Company also
pays for $750,000 of whole life insurance and $350,000 of term life insurance
owned by Thomas K. Langbein in which his wife and children have certain
beneficial interests. The Company owns a $500,000 life policy on Thomas K.
Langbein. See "Executive Compensation." Premiums on these coverage's totaled
approximately $313,000 during 1994. Management is of the opinion that the cost
and coverage of the insurance obtained through Mr. D'Amore and George Langbein
are as favorable as can be obtained from unaffiliated parties.
Peter D. Fischbein, director of the Company, Techdyne and Viragen, was
a member of a law firm, dissolved several years ago, which acted as counsel from
time to time to the Company, Todd, Viragen and a limited partnership doing
business with Viragen. In December, 1994, Mr. Fischbein resigned as Secretary of
Viragen.
Lawrence E. Jaffe is Secretary and corporate counsel to the Company and
corporate counsel to Techdyne. He is a 2.8% beneficial owner of shares of the
Company. Fees paid to Mr. Jaffe by the Company and Techdyne totaled
approximately $175,000, representing a substantial portion of his aggregate fees
for 1994. Mr. Jaffe resigned as Secretary and counsel to Viragen in May, 1994.
PROPOSALS TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
GENERAL
The Board has unanimously approved and recommended for shareholder
approval three separate proposals concerning amendments to the Company's
Certificate of Incorporation. The Board is recommending these provisions in an
effort to increase shareholder value by encouraging the equal treatment of
shareholders in the event that a party desires to take-over the Company and by
making it more likely that a party desiring to take-over the Company will
negotiate with the Company. However, each of these proposals individually, and
all of them collectively, may have the effect of discouraging a holder of a
large block of the Company's securities from attempting either or both of (i) a
merger, tender offer, proxy contest or other assumption of control with or for
the Company or (ii) the removal of incumbent management. It is possible,
although the Board of Directors does not so believe, that the effect of these
proposals, which do not prohibit take-over bids but rather may delay the ability
to immediately change control of the Company and/or preclude a major shareholder
(but less than 66 2/3% owner) from taking over without notice to the other
shareholders, may discourage potential acquirers from making bids for the
Company. If such were the case, the effect of the proposals could frustrate the
ability of such potential acquirers to consummate acquisitions of the Company at
prices which may reflect premiums, possibly substantial in relation to the then
market price of the Common Stock, even though such acquisition may be favored by
holders of a majority of the Company's shares.
The Company is not aware of any proposed attempt to take-over the
Company or of any attempt to acquire a large block of the Company's Common
Stock, and the proposed amendments to the Certificate of Incorporation are not
in response to any specific effort to do so. The only shareholders known to the
Company who own in excess of 5% of the Company's outstanding shares are Messrs.
Langbein and Friend, officers and directors of the Company. See "Principal
Security Holders," "Election of Directors" and "Security Ownership of
Management." Other than the amendments to the By-laws to conform to the proposed
amendments to the Certificate of Incorporation as set forth in this Proxy
Statement (see "Provisions of the Company's By-laws Amended to be Consistent
With Proposals to Amend the Company's Certificate of Incorporation" below), the
Company has no anti-takeover provisions in its Certificate of Incorporation or
By-laws and has no present plans to propose additional anti-takeover provisions,
other than the proposals set forth in this Proxy Statement, in the immediate
future.
Pursuant to the first proposal described below, the Company's
Certificate of Incorporation would be amended to classify the Board of Directors
of the Company into three classes so that, after a transition period, each Class
will serve for staggered three-year terms, one Class being elected each year.
The second proposal would add a new provision to the Certificate of
Incorporation requiring that actions taken by shareholders be taken at a duly
called annual or special meeting of shareholders or by the consent in writing of
at least 66 2/3%, or any higher percentage required by law or the Certificate of
Incorporation or By-laws, of the outstanding shares entitled to vote on a
matter. The third proposal would add a new provision to the Certificate of
Incorporation requiring, in addition to any provisions of the Florida law, an
affirmative vote of at least 66 2/3% of the voting shares, voting together as a
single class, to amend, alter, change or repeal those provisions relating to
classification of the Board, the manner in which shareholders take action, and a
66 2/3% voting requirement to amend, alter, change or repeal those ARTICLES.
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A description of these proposals is set forth below. The full text of
each proposal is set forth in Appendix A to this Proxy Statement. The text of
each of the proposals in Appendix A is subject to clerical and other
non-material revisions that the Board of Directors may determine are necessary.
ANTI-TAKEOVER PROVISIONS OF THE FLORIDA BUSINESS CORPORATION ACT
Section 607.0901 of the Florida Business Corporation Act (the "Florida
Act") to which the Company (for purposes of this discussion, includes its
subsidiaries) is subject, regulates "affiliated transactions" defined as one
between the Company and any "interested shareholder" (any person who
beneficially owns more than 10% of the Company's outstanding voting shares), and
includes any merger or consolidation of the Company with the interested
shareholder or any corporation which after such merger of consolidation would be
an affiliate or associate of the interested shareholder (which term hereinafter
includes any affiliate or associate of the interested shareholder); any sale,
lease, mortgage, pledge, transfer or other disposition to or with the interested
shareholder of the Company's assets having an aggregate fair market value of 5%
or more of the fair market value of the Company's assets or all the outstanding
shares of the Company, or representing 5% or more of the earning power or net
income of the Company; the issuance or transfer to the interested shareholder of
any Company securities having an aggregate fair market value of 5% or more of
the fair market value of all the Company's shares; adoption of any plan for the
liquidation or dissolution of the Company proposed by or pursuant to any
agreement with the interested shareholder; any reclassification of securities or
other reorganization of the Company or other transactions with the interested
shareholder which has the effect of increasing the interested shareholder's
percentage ownership of the Company by more than 5%; or any receipt by the
interested shareholder of the benefit of any loans, advances, guarantees,
pledges, or other financial assistance or tax advantages provided by the
Company. Section 607.0901 requires, with certain exceptions, that affiliated
transactions be approved, in addition to the affirmative vote required by the
Florida Act, by two-thirds of the voting shares other than the shares
beneficially owned by the interested shareholder. One exception to the
requirement of two-thirds disinterested shareholder approval for an affiliated
transaction, includes but is not limited to consideration being paid equally to
the shareholders within a certain formula and criteria provided in the statute.
Generally, any person who owns 10% of the Company must obtain, absent
limited exceptions, approval of two-thirds of the outstanding shares of the
Company, exclusive of the interested shareholder's shares, to effect with the
Company any merger, consolidation, sale of assets, issuance of stock,
recapitalization of the Company, or receipt of loans or advances. Therefore, any
person who acquires or makes a tender offer for 10% or more of the Company's
Common Stock and proceeds to engage in one or more of the foregoing transactions
with the Company requires approval of two-thirds of the Company's outstanding
shares exclusive of such interested shareholder's shares.
Another anti-takeover provision of the Florida Act, Section 607.0902,
relates to control-share acquisitions. "Control shares" are defined as those
shares, which when combined with all other shares of the Company owned by the
person in respect to which that person may exercise voting power, would entitle
that person to exercise voting power with respect to an election of directors in
certain ranges of voting power, to wit, one-fifth to less than one-third of all
voting power, one-third to less than a majority of voting power, and a majority
or more of all voting power. The statute provides that control-share
acquisitions require the delivery to the Company of an acquiring person
statement disclosing the identify of the person making the control share
acquisition, the number of shares owned, the range of voting power under which
the control share acquisition was or will be made, and if not yet consummated,
the terms of the acquisition. The control shares acquired are provided no voting
rights unless approved by a majority of outstanding shares entitled to vote on
the matter at a special or annual meeting of shareholders. If authorized by the
corporation's articles of incorporation or by-laws before a control share
acquisition has occurred in an acquisition where the acquirer did not deliver
the acquiring person statement, for a 60 day period from the last acquisition of
control shares, the shares so acquired are subject to redemption by the
corporation at fair value. Even after an acquiring person statement is filed,
the control shares are subject to redemption if the shares are not accorded full
voting rights by the shareholders. Further, in the event control shares are
acquired and are accorded full voting rights and the acquiring person acquired
control shares with a majority or more of the voting power, shareholders of the
corporation are entitled to dissenter's rights to receive full value of their
shares.
The Company had opted out of this Section of the Florida Act in 1990
through an amendment to its By-laws to the limited extent of issuing options or
warrants to officers, directors and key employees under employee stock option
plans and similar such plans and options which might put them in the category of
control-share acquisition. The Company, has in any event, obtained shareholder
approval for its option plans and grants to officers, directors and key
employees, none of whom might be deemed in any control-share acquisition. Other
than this limited exclusion, the control-share acquisition provisions are fully
applicable to the Company and its shares.
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These anti-takeover provisions of the Florida Act will continue to
apply in addition to the proposals set forth herein by the Company.
PURPOSES OF PROPOSED PROVISIONS
The proposed amendments to the Company's Certificate of Incorporation
are designed to make it more difficult to have an immediate change in control
and to encourage any person that might seek to acquire control of the Company to
negotiate with the Company's Board of Directors. The Board believes that,
generally, the interests of the Company's shareholders would be best served if
any change of control results from negotiations with the Company's directors
concerning the terms of the proposed transaction, such as the price to be paid,
the form of consideration, and the equal treatment of shareholders.
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO PROVIDE FOR THE
CLASSIFICATION OF THE BOARD OF DIRECTORS
Description of Classified Board Provision. The Board has unanimously
approved and recommended for shareholder approval an amendment to the Company's
Certificate of Incorporation to provide for the classification of directors
through the amendment to ARTICLE VII (the "Classified Board Provision"). The
By-laws of the Company presently provide for no more than seven directors. The
Company has had four directors for the last six years, five directors from 1986
to 1988, and six directors in 1985. The proposed amendment would provide that
the number of directors for the Company shall not be less than four nor more
than six, and such directors would be divided into three equal or nearly equal
classes, designated Class 1, Class 2 and Class 3. If the Classified Board
Provision is approved by the shareholders, directors will be divided into three
classes. The initial term of Class 1 directors, who would consist of Peter D.
Fischbein and one vacancy, would extend to the 1996 Annual Meeting of
Shareholders, the initial term of the Class 2 directors, consisting of Anthony
C. D'Amore and one vacancy, would extend to the 1997 Annual Meeting of
Shareholders, and the initial term of the Class 3 directors, consisting of
Thomas K. Langbein and Seymour Friend, would extend until the 1998 Annual
Meeting of Shareholders. At each succeeding Annual Meeting of Shareholders,
successors to directors whose terms expired at the Annual Meeting would be of
the same class as the directors they succeed and they shall be elected for
three-year terms. Any vacancy prior to the expiration of a term may be filled by
the vote of the remaining directors, and the director filling that vacancy would
serve until the next election of the Class in which such director may be
appointed and until their successors are elected and qualified. The Company is
seeking qualified candidates to serve for the two vacancies now existing each
one in the Class 1 and 2 directorships, which will add more independent
directors (generally, means not an employee of the Company or affiliated or
associated with an "interested shareholder" - see "Proposals to Amend the
Company's Certificate of Incorporation - Anti-Takeover Provisions of the Florida
Business Corporation Act") to the Board of Directors.
The Classified Board Provision also provides that any director, or the
entire Board of Directors may be removed from office at any time, but only for
cause and only upon the affirmative vote of the holders of at least 75% of the
voting shares of all the shares of the capital stock of the Company then
entitled to vote generally in the election of directors, voting together as a
single class ("Voting Shares").
Purpose and Effects. The Classified Board Provision is intended to
promote continuity and stability of the Company's management and policies
because a majority of the Company's directors at any given time will have prior
experience as directors with the Company. There has not been any difficulty in
the past with continuity of the Board, which has been stable over the years. See
"Election of Directors."
The classification of directors could have the effect of making it more
difficult for shareholders, including any interested shareholder, to change the
composition of the Board in a relatively short period of time because at least
two annual meetings of shareholders, instead of one as is the present situation,
generally would be required to effect a change in the majority of the Board.
Although the delay necessary to effect a change in the majority of the Board of
Directors may discourage certain attempts at take-overs of the Company that may
result in a premium for shareholders, the Classified Board Provision may also
cause a party desiring to take-over the Company to negotiate with the Company
and obtain the specified approval of the directors or shareholders. As discussed
above, the Board believes that the interests of the Company's shareholders would
be best served if any proposed take-over receives specified approval of the
directors or shareholders concerning the terms of the proposed transaction, such
as the price to be paid, the form of consideration, and the equal treatment of
shareholders. The Board believes that the benefits of encouraging stability of
the Board and encouraging negotiations with the Company, which must receive the
specified approval of the directors or the shareholders, outweigh the possible
disadvantages of making it more difficult for shareholders to change the
composition of the Board in a relatively short period of time.
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In accordance with the Florida Act, if, of the shares voting, there are
more affirmative votes then negative votes approving the proposed amendment to
the Certificate of Incorporation to include the Classified Board Provision, then
the proposed amendment will be approved. Any amendment or repeal of any
provision of the Classified Board Provision, once adopted, or the adoption of
any provision inconsistent with any provision of the Classified Board Provision,
will require 66 2/3% of the Voting Shares, based upon the proposed amendment to
increase the voting requirement for any amendment to the Certificate of
Incorporation. See "Proposals to Amend the Company's Certificate of
Incorporation - Proposal to Amend the Certificate of Incorporation to Require
66 2/3% Voting Power of All Shares Voting As A Single Class to Amend ARTICLES
VII, X and XI of the Certificate of Incorporation." The adoption of the
Classified Board Provision is not conditioned upon the approval of any other
proposed amendment to the Certificate of Incorporation.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSAL CONCERNING THE ENACTMENT OF THE
CLASSIFIED BOARD PROVISION.
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION TO INCREASE VOTE REQUIRED TO
OBTAIN SHAREHOLDER APPROVAL WITHOUT A MEETING OF SHAREHOLDERS
Description of Provision. The Board has unanimously approved and
recommended for shareholder approval an amendment to the Company's Certificateof
Incorporation to add a new ARTICLE X (the "Shareholder Action Provision"). The
Shareholder Action Provision requires that any action taken by the shareholders
of the Company be taken at a duly called annual or special meeting of the
shareholders unless it is taken pursuant to a written consent signed by the
holders of at least 66 2/3%, or any higher percentage that may be required by
law or the Certificate of Incorporation or By-laws of the Company, of the Voting
Shares. The current requirement for shareholder action by written consent is by
the minimum number of votes with respect to each voting group necessary to
authorize such action at a meeting at which voting groups and shares entitled to
vote thereat were present. This means, other than election of directors which
requires a plurality of the votes cast, assuming a quorum, current shareholder
action by consent may be taken by a number of shareholders approving the action
exceeding those opposed.
Purposes and Effects. By requiring that shareholder action without a
shareholder meeting be taken by written consent of at least 66 2/3% of the
Voting Shares, the Shareholder Action Provision increases the probability that
shareholders will be provided with advance notice of proposed actions and/or the
opportunity to discuss proposed actions with the Company and other shareholders
in the setting of a shareholders' meeting. The Board believes that this will
assist in providing shareholders with adequate information and time to consider
proposals that are made by other shareholders. The proposed Shareholder Action
Provision would prevent the holders of a majority (but not 66 2/3% or more) of
the Voting Shares of the Company from taking action while failing to give prior
notice to all shareholders and the Board through the use of a written consent
procedure to take shareholder action without a meeting of shareholders. The
proposed amendment would prevent a takeover bidder holding a majority but less
than 66 2/3% of the Voting Shares from using the written consent procedure to
take shareholder action unilaterally without affording advance notice and the
forum of a shareholders' meeting to the other shareholders. Although the Board
does not believe that the limitation on shareholder action by written consent
will create a significant impediment to a tender offer or other effort to take
control of the Company, it is possible that the effect of this proposal could
make it more difficult to acquire control of the Company and to take other
shareholder action, even though such action might be desired by or be beneficial
to the holders of a majority of the Company's shares. The provision prohibiting
shareholder action by written consent except by consent of the holders of 66
2/3% of the Voting Shares also may have the effect of delaying consideration of
a shareholder proposal until the next Annual Meeting of Shareholders unless a
special meeting is called by the President or by the Board of Directors.
The affirmative vote of 66 2/3% of the Voting Shares is required to
approve the proposed amendment to the Certificate of Incorporation to add the
Shareholder Action Provision. Any amendment or repeal of any provision of the
Shareholder Action Provision, once adopted, or the adoption of any provision
inconsistent with any provision of the Shareholder Action Provision will require
66 2/3% of the Voting Shares, based upon the proposed amendment to increase the
voting requirement for any amendment to the Certificate of Incorporation. See
"Proposals to Amend the Company's Certificate of Incorporation - Proposal to
Amend the Certificate of Incorporation to Require 66 2/3% Voting Power of All
Shares Voting As A Single Class to Amend ARTICLES VII, X and XI of the
Certificate of Incorporation." The adoption of the Shareholder Action Provision
is not conditioned upon the approval of any other proposed amendment to the
Certificate of Incorporation.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSAL CONCERNING THE ENACTMENT OF THE
SHAREHOLDER ACTION PROVISION.
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PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO REQUIRE 66 2/3% VOTING
POWER OF ALL SHARES VOTING AS A SINGLE CLASS TO AMEND ARTICLES VII, X AND XII OF
THE CERTIFICATE OF INCORPORATION
Description of Provision. The Board has unanimously approved and
recommended for shareholder approval an amendment to the Company's Certificate
of Incorporation to add a new ARTICLE XI (the "Voting Power Provision"). The
Voting Power Provision requires that any action to be taken to amend, alter,
change, adopt any provision inconsistent with or repeal ARTICLE VII (Classified
Board Provision), ARTICLE X (Shareholder Action Provision), and this ARTICLE XI,
may only be effected through the vote of holders of at least 66 2/3% of the
Voting Shares of the Company.
Purposes and Effects. The Voting Power Provision is designed to
preclude further amendments to the Company's Certificate of Incorporation as
relates to the proposals set forth in this Proxy Statement by a simple majority
vote, presently the situation. This would undercut the proposals unanimously
adopted by the Board and recommended for submission to shareholders for their
approval as provided in this Proxy Statement. The Voting Power Provision would
require 66 2/3% or more of the Voting Shares of the Company to alter or amend
the Classified Board Provision (ARTICLE VII), the Shareholder Action Provision
(ARTICLE X), and this Voting Power Provision (ARTICLE XI) which are proposed to,
as the Board believes, enhance the interests of the shareholders, encourage any
potential changes in control situations to be negotiated with the Board, and
avoid abusive, unfair or otherwise undesirable transactions affecting the
Company and shareholders. This limitation on amending these particular ARTICLES
of the Company's Certificate of Incorporation may make it more difficult to
amend, alter, or adopt any provision inconsistent with or repeal the
anti-takeover provisions of the Company's Certificate of Incorporation, even
though such tender offer or other effort to take control of the Company might be
desired by the majority but less than 66 2/3% of the Company's Voting Shares.
The affirmative vote of 66 2/3% of the Voting Shares is required to
approve the proposed amendment to the Certificate of Incorporation to include
the Voting Power Provision. The Voting Power Provision proposal is contingent on
approval of either the Classified Board Provision or the Shareholder Action
Provision. If neither of such proposals are approved, the Voting Power Provision
becomes irrelevant and will be withdrawn and will not become part of the
Company's Certificate of Incorporation.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSAL CONCERNING THE ENACTMENT OF THE
VOTING POWER PROVISION.
PROVISIONS OF THE COMPANY'S BY-LAWS AMENDED TO BE CONSISTENT WITH PROPOSALS TO
AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
The Company's By-laws contained certain provisions that would be
inconsistent with the proposals set forth in this Proxy Statement, in
particular, the Classified Board Provision, which includes the minimum and
maximum number of directors for the Company, the classification of the Board,
filling of vacancies and provisions for director removal, the Shareholder Action
Provision which requires action by shareholders at annual or special meetings,
and if by written consent, then at least 66 2/3% of the Voting Shares approve or
consent to such action. In addition, new Section 4.9 to ARTICLE IV was added to
the By-laws to provide advance notice of shareholder nominations for election of
directors prior to any meeting at which said nominees are to be considered for
election.
These By-law provisions, which may have an anti-takeover effect, were
unanimously approved by the Board in April, 1995 at the time the Board
unanimously approved the proposed amendments to the Company's Certificate of
Incorporation. As described throughout this Proxy Statement, the amendments to
the By-laws were adopted in an attempt to increase shareholder value by
encouraging negotiations with the Company by potential acquirers and providing
shareholders with adequate time and information to make decisions. Capitalized
terms used in this section have the same meaning as those capitalized terms
defined above.
The provisions of the By-laws enacted by the Board in April, 1995 are
summarized below, primarily to comport with the proposed amendments to the
Certificate of Incorporation of the Company. Should any one or more of the
proposals relating to the amendment to the Certificate of Incorporation not be
adopted, then to the extent such would render the By-laws inconsistent, the
By-laws will be amended so as to eliminate any such inconsistency and conform to
the vote of the shareholders. Otherwise amendments to the By-laws will remain in
full force and effect.
ARTICLE III relates to meetings of shareholders:
Section 3.2 re: annual meeting was modified to refer to the Classified
Board Provision and administratively to clarify the date of annual meetings and
to change the annual meeting date to June of each year;
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Section 3.3 re: special meetings was modified to comport with the
method of calling annual and special meetings in accordance with proposed
ARTICLE X, Shareholder Action Provision, to the Company's Certificate of
Incorporation;
ARTICLE IV relates to directors:
Section 4.2 re: number and election of directors, has been amended to
be consistent with the Classified Board Provision, the proposed amendment to
ARTICLE VII of the Certificate of Incorporation, including the number of
directors and the classified Board;
Section 4.3 re: term of office has been modified to be consistent with
the Classified Board Provision, particularly the tenure of directors being
subject to the Class to which such director was elected or appointed;
Section 4.4 re: removal of directors was amended to comport with
proposed amendment to ARTICLE VII of the Certificate of Incorporation,
subparagraph (d) director removal, and may only be "for cause," and the required
shareholder vote, being 75% of the Voting Shares;
New Section 4.9 re: advanced notice of nominations for directors was
adopted; a shareholder must provide no less than 60, nor more than 90 days
written notice prior to any meeting called for the election of directors of
nomination of directors by said shareholders; the notice is to provide
information concerning each nominee similar to the background provided for the
director-nominees set forth in this Proxy Statement (see "Election of
Directors") plus security interest in the Company and any affiliation with the
Company, its management, Board of Directors or other shareholders; Section 4.9
may not be amended without the approval of 75% of the directors, or 75% of the
Voting Shares.
The Board believes that advance notice of directors' nominations by
shareholders will provide the Company with an opportunity to consider the
qualifications of such proposed nominees, and to the extent necessary and
desirable by the Board, will provide an opportunity to inform shareholders about
these qualifications.
This notice requirement may have the effect of precluding a nomination
of a director by shareholders for election at a particular meeting due to the
failure to follow the prescribed notice procedures, or may deter a shareholder
proxy solicitation to elect its own slate of directors or otherwise attempt to
gain control of the Company if the shareholder does not wish to provide the
advanced notice required.
ARTICLE XXIV relates to amending the By-laws.
ARTICLE XXIV of the By-laws has been substantially amended to require
written notice be given to the directors of the Company prior to the
effectiveness of any amendment to the By-laws. It also prohibits the amendment
of the By-laws by written consent of shareholders. If the By-laws are to be
amended by the Board, the written notice must be given to all directors not less
than 30 days prior to the meeting at which the proposal is to be considered.
This advance written notice is not required if the proposal is approved by at
least 75% of all directors. In the event that the By-laws are to be amended by
the shareholders of the Company, written notice containing the proposed
amendment must be provided to the Secretary of the Company and all directors of
the Company not more than seven days after the Company gives notice of the
meeting of shareholders at which the proposed amendment is to be considered.
Any amendment or repeal of any provision or all provisions of ARTICLE
XXIV of the By-laws, or the adoption of any provision inconsistent with any
provision or all provisions of ARTICLE XXIV of the By-laws, requires, in
addition to any other vote or approval required by law or by the By-laws or by
the Certificate of Incorporation, the affirmative vote of (a) at least 75% of
all the directors, or (b) (i) at least 75% of the outstanding shares of each
class of Voting Stock and (ii) at least a majority, not including shares owned
by interested persons, of the outstanding shares of each class of Voting Stock.
The Board believes that advance notice of proposed amendments to the
By-laws will provide the Board with an opportunity to consider the merits of the
proposed amendments and, to the extent deemed necessary or desirable by the
Board with respect to amendments to be made by the shareholders, will provide an
opportunity to inform all shareholders about those proposed amendments. This
provision also may discourage potential acquirers of the Company from attempting
to amend the Company's By-laws to facilitate an acquisition. This may deter an
attempt to obtain control of the Company and could thereby deprive shareholders
of possible opportunities to realize premiums for their shares.
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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 year. That
firm has acted as accountants for the Company 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.
SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder proposal to be considered by the Company for inclusion
in the 1996 Proxy Statement must be received by the Company not later than
February 21, 1996. Any such proposal should be sent to the Secretary of the
Company, 777 Terrace Avenue, Hasbrouck Heights, New Jersey 07604. Any such
proposal should provide the reason for it, the complete text of any resolution
and other specified matters, and must comply with Rule 14a-8 of Regulation 14A
of the proxy rules of the Securities and Exchange Commission.
To nominate a director at the Annual Meeting, a shareholder must
satisfy Florida law and the By-laws of the Company. A shareholder who wishes to
suggest a potential nominee should provide the Secretary of the Company, for
this meeting no later than August 4, 1995, and for the 1996 Annual Meeting
written notice of such nominee and other appropriate information at least 60
days prior to that Annual Meeting, detailing the qualifications of such nominee
for consideration by the Board. Any shareholder requesting a copy of the
Company's By-laws will be furnished one without charge upon written request to
the Company.
ADDITIONAL INFORMATION
Management is not aware of any other matter to be presented for action
at the meeting other than the proposal to amend the Certificate of Incorporation
to classify the Board of Directors, the Election of Directors, the Proposal to
amend the Certificate of Incorporation (a) to add a provision concerning the
manner in which shareholders take action (Shareholder Action Provision), and (b)
to add a provision increasing voting requirements for amending, altering,
changing, adopting inconsistent provisions to or repealing ARTICLES VII, X and
XI of the Company's Certificate of Incorporation (Voting Power Provision), as
set forth in the accompanying Notice of Annual Meeting and in this Proxy
Statement, and management does not intend to bring any other matter before the
meeting. However, if any other matter should be presented at the meeting, it is
the intention of the persons named in the accompanying proxy to vote said proxy
in accordance with their best judgment and in the best interests of the Company.
UPON WRITTEN REQUEST BY ANY SHAREHOLDER OF RECORD (OR ANY SHAREHOLDER
WHO OWNS THE COMMON STOCK LISTED IN THE NAME OF A BANK OR BROKER AS NOMINEE) AT
THE CLOSE OF BUSINESS ON JULY 14, 1995, TO THE SECRETARY OF THE COMPANY,
LAWRENCE E. JAFFE, ESQ., 777 TERRACE AVENUE, HASBROUCK HEIGHTS, NEW JERSEY
07604, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1994 WILL BE PROVIDED WITHOUT CHARGE. Kindly date, sign and return
the enclosed form of proxy. YOUR VOTE IS IMPORTANT.
By Order of the Board of Directors
LAWRENCE E. JAFFE
Secretary and Counsel
July 19, 1995
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APPENDIX A
TEXT OF PROPOSED AMENDMENTS
TO
MEDICORE, INC.'S CERTIFICATE OF INCORPORATION
The text of the proposed amendments to the Company's Certificate of
Incorporation as described at pages 4, and 15 to 19 of this Proxy Statement, is
set forth below, subject to clerical and other non-material revisions which the
Board of Directors may determine are necessary.
Provision Concerning Classification of Board of Directors
"ARTICLE VII - DIRECTORS
(a) The directors shall be divided as evenly as possible into three
classes, designated Class 1, Class 2 and Class 3. At no time shall the entire
Board consist of less than four and no more than six directors, and to the
extent there is less than the maximum number of directors for each initial Class
of directors, Class 3 shall first be filled. At the annual meeting of
shareholders at which this ARTICLE VII is enacted, Class 1 directors shall be
elected for a term expiring at the next subsequent annual meeting of
shareholders, Class 2 directors for a term expiring at the second subsequent
annual meeting of shareholders, and Class 3 directors for a term expiring at the
third annual meeting of shareholders. At each succeeding annual meeting of
shareholders, successors to directors whose terms expired at that annual meeting
shall be of the same Class as the directors they succeed and shall be elected
for three-year terms, except as otherwise provided herein. If the number of
directors is changed, any increase of decrease shall be apportioned among the
Classes so as to maintain or attain, if possible, the equality of the number of
directors in each Class, but in no case will any decrease in the number of
directors shorten the term of any incumbent director. If such equality is not
possible, the increase or decrease shall be apportioned among the Classes in
such a way that the difference in the number of directors in the classes shall
not exceed one, with any remainder positions allocated first to Class 3 and then
to Class 2.
(b) A director shall hold office until the annual meeting for the year
in which his or her term expires and until his or her successor shall be elected
and shall qualify, subject to prior death, resignation, retirement or removal
from office. Any director or directors appointed by the Board to fill a vacancy
in accordance with the By-laws of the Corporation shall hold office until the
next election of the Class for which such director had been chosen and until his
successor is elected and qualified.
(c ) Advanced notice of nomination for the elections of directors,
other than nominations by the Board of Directors or committee thereof, shall be
given to the Corporation in the manner provided from time to time in the
By-laws.
(d) Any director, or the entire Board of Directors may be removed from
office at any time, but only for cause and only by the affirmative vote of the
holders of at least 75% of the voting power of all of the shares of capital
stock of the Corporation then entitled to vote generally in the election of the
directors, voting together as a single class." Provision Concerning Manner In
Which Shareholders May Take Action
"ARTICLE X - ACTION REQUIRED OR PERMITTED TO BE TAKEN BY SHAREHOLDERS
Any action required or permitted to be taken by shareholders of the
Corporation must be effected at a duly called annual or special meeting of
shareholders of the Corporation and may not be effected by any consent in
writing by such shareholders except as provided herein. Special meetings of
shareholders of the Corporation may be called only by (i) the Board of Directors
pursuant to a resolution adopted by a majority of the entire Board of Directors,
either upon motion of a director or upon written request by the holders of at
least 50% of the voting power of all the shares of capital stock of the
Corporation then entitled to vote generally in the election of directors, voting
together as a single class, or (ii) the President of the Corporation.
Any action permitted to be taken by shareholders of the Corporation by
written consent may only be taken by written consent of the holders of at least
66 2/3% or such higher percentage of the outstanding stock entitled to vote
thereon as may be required by law, by this Restated Certificate of
Incorporation, as amended, or by the Corporation's By-laws."
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Provision Concerning Increased Shareholder Vote To Amend, Repeal or Otherwise
Modify ARTICLES VII, X and XI of the Certificate of Incorporation
"ARTICLE XI - VOTE REQUIRED TO AMEND CERTAIN ARTICLES
In addition to any requirements of the provisions of the Florida
Business Corporation Act (and notwithstanding the fact that a lesser percentage
may be specified by the Florida Business Corporation Act), the affirmative vote
of the holders of at least 66 2/3% of the voting power of all shares of capital
stock of the Corporation then entitled to vote generally in the election of
directors, voting together as a single class, shall be required for the
shareholders of the Corporation to amend, alter, change, or adopt provisions
inconsistent with or repeal ARTICLE VII, ARTICLE X, or ARTICLE XI hereof."
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PROXY
For the Annual Meeting of Shareholders
MEDICORE, INC.
The Board of Directors Solicits This Proxy
The undersigned appoints Lawrence E. Jaffe and Thomas K. Langbein, with power of
substitution in each, proxies to vote all the shares of MEDICORE, INC. which the
undersigned may be entitled to vote as a shareholder of record on July 14, 1995
at the Annual Meeting of Shareholders to be held Wednesday, September 13, 1995,
or any adjournment thereof.
This proxy when properly executed and returned in a timely manner will be voted
at the Annual Meeting and any adjournment thereof in the manner directed herein.
If no direction is made, the proxy will be voted FOR all nominees and FOR
Proposals 1, 3 and 4 and in accordance with the judgment of the persons named as
proxies herein or any other matters that may properly come before the Annual
Meeting.
The Board of Directors recommends a vote FOR the following:
1. Proposal to amend the Company's Certificate of Incorporation to
Classify the Board of Directors of the Company into three Classes.
For Against Abstain
---- ---- ----
2. ELECTION OF DIRECTORS (who will be divided into three classes if the
proposal in Item 1 is approved by shareholders)
Nominees: Thomas K. Langbein, Seymour Friend, Anthony C. D'Amore and
Peter D. Fischbein.
FOR all director nominees listed (except as marked to the contrary below)
----
WITHHOLD AUTHORITY To vote for all director nominees listed
----
- - -----------------------------------------------------------------------------
(To withhold authority to vote for any individual nominee, write that nominee's
name on the line above)
3. Proposal to amend the Company's Certificate of Incorporation to add a
provision concerning the manner in which shareholders may take action.
For Against Abstain
---- ---- ----
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4. Proposal to amend the Company's Certificate of Incorporation to add a
provision to require the affirmative vote of the holders of at least
66 2/3% of the Voting Shares of the Company's capital stock to amend,
alter, adopt inconsistent provisions to or repeal ARTICLES VII, X and
XI of the Certificate of Incorporation.
For Against Abstain
----- ----- -----
5. In their discretion, such other business as may properly come before
the meeting.
Dated: , 1995
-----------------------------
-----------------------------
(Signature)
-----------------------------
(Signature)
Signature(s) should be exactly as your name(s) appears on this proxy. If
signing as executor, administrator, trustee, guardian or attorney, please
give full title when signing. If shares are registered in the names of joint
owners, the proxy should be signed by each. If the shareholder is a
corporation, sign full corporate name by a duly authorized officer.
Important: PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED.
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