<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:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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):
/X/ $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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
PRELIMINARY COPIES
MEDICORE, INC.
-------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 27, 1995
-------------
To Shareholders:
The Annual Meeting of Shareholders of MEDICORE, INC. (the "Company")
will be held at the American Stock Exchange, New York, New York, on Tuesday,
June 27, 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 of 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 May 9, 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.
<PAGE> 3
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
May 19, 1995
<PAGE> 4
PRELIMINARY COPIES
MEDICORE, INC.
2337 West 76th Street
Hialeah, Florida 33016
---------------
Proxy Statement for Annual Meeting of Shareholders
June 27, 1995
---------------
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement and accompanying form of proxy, anticipated to be
mailed on or about May 22, 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 Tuesday, June 27,
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; (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 will be counted for purposes of a
quorum, but will have the legal effect of a vote "against" any matter proposed.
Broker non-votes will also be counted for purposes of the existence of a
quorum, but will not be counted for any purpose in determining whether a matter
has been approved. 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
<PAGE> 5
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 May 9, 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 May 9, 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 majority of those shares,
in person or by proxy, is necessary to effectuate election of the directors,
and for approval of each proposal described in this Proxy Statement.
PRINCIPAL SECURITY HOLDERS
The following table sets forth as of May 9, 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 Amount and Nature Percent
of Name and Address of of Beneficial of
Class Beneficial Owner Ownership(1) 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
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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 Options to purchase 250,000 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, Warrant or Rights."
(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 and 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."
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 majority 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
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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.
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)
- - ----------------------------------------------------------------
Anthony C. D'Amore
Class 2 (To serve until the 1997 Annual Meeting of Shareholders)
- - ----------------------------------------------------------------
Peter D. Fischbein
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 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 -
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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.
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>
POSITION
CURRENT POSITION AND HELD
NAME AGE AREAS OF RESPONSIBILITY SINCE
- - ---- --- ----------------------- ------
<S> <C> <C> <C>
(1)(2)
Thomas K. Langbein 49 Chairman of the Board 1980
of Directors, Chief
Executive Officer and
President
Seymour Friend (2) 74 Vice-President 1981
Director 1975
(1)
Anthony C. D'Amore 64 Director 1979
(1)
Peter D. Fischbein 55 Director 1984
</TABLE>
- - -----------------
(1) Member of the Audit Committee.
(2) Officers are elected annually at the first Board of Directors' meeting
following the Annual Meeting of Shareholders.
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
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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
99.5% 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 "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 the meetings.
The only committee the Company has is an Audit Committee consisting of
Thomas K. Langbein, Dennis W. Healey, Daniel R. Ouzts, 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
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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. If 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 $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------
Annual Compensation Awards Payouts
------------------- -------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name Other
and Annual Restricted All Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus sation Award(s) SARs Payouts sation
($) ($) ($) ($) (#) ($) ($)
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <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(5) 1994 91,600 - - (2) 11,250(3)
----
Pardon 1993 86,900 -
----
1992 128,630 - 30,000(4)
----
</TABLE>
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- - --------------
(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. 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.
(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, respectfully 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.
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 agreement provides
upon his death three years full salary to this 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 and Todd. See "Certain Relationships and
Related Transactions."
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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 the shares Mr.
Langbein may obtain upon any wrongful termination with or change in control of
the Company in lieu of any lump sum payment as provided in the employment
agreement. 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 (2) year non-competition
provision within a 20 mile radius of the Company's primary operations. 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, director and Chief Executive
Officer, Executive Vice President, Chief Financial Officer and Controller 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, personnel and administrative facilities of the
Company and Techdyne were common for fiscal 1994, and, to that extent, certain
executive salaries and corporate overhead of these companies were shared
equitably. Mr. Langbein, as an officer and director of the Company and
Techdyne, and Messrs. Healey and Daniel
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<PAGE> 13
Ouzts, as officers of the Company and Techdyne, divide a portion of their time
and efforts, and their compensation was allocated proportionately to each
company. 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.
OPTIONS, WARRANTS OR RIGHTS
In May, 1989, the Board of Directors adopted a 1989 Stock Option Plan
(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 includes 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
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<PAGE> 14
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 $3.00 per share, the closing
price for the stock on the date of grant. See charts below and "Security
Ownership of Management."
In 1990, the By-Laws were amended to opt-out of the control share
acquisition section of the Florida Business Corporation Act only to the extent
such might relate to the issuance of any securities to directors, management,
key employees, advisors or consultants, whether under a stock option plan,
benefit, bonus, awards, retirement program or similar plan.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs
Options/SARs at FY-End
at FY-End (#) ($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable
- - ----------- --------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
CEO
Thomas K. 130,000 57,200 -0- (exer.) -
Langbein -0- (unex.) -
Dennis W. 50,000 22,000 -0- (exer.) -
Healey -0- (unex.) -
Barry Pardon(1) 30,000 13,200 -0- (exer.) -
-0- (unex.) -
</TABLE>
- - -------------
(1) 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, Inc. Stock Option Plan (the "Techdyne 1994 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
11
<PAGE> 15
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 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 227,000 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 $1.75 per share for five years. These options may
be exercised for cash or, subject to Board approval, in part by cash,(minimum
par value for the shares purchased) and the balance by a three-year recourse
promissory note, secured by the shares purchased (to be held in escrow with no
transfer rights pending full payment) at interest based on the coupon rate
yield of a 52-week U.S. Treasury Bill immediately preceding the execution and
issuance of the promissory note, with voting rights with the shareholder until
a default, if any, on the note.
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<PAGE> 16
TECHDYNE OPTION/SAR GRANTS IN 1994
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of % of Total Exercise Expiration
Shares Un- Options Price Date
derlying Granted to ($/Sh)
Options Employees in
Name Granted (#) 1994
- - ---- ----------- ------------ -------- ---------
<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>
AGGREGATED TECHDYNE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END TECHDYNE OPTION SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of
Securities Unex.
Underlying In-the-
Unexercised Money
Options/SARs Options/SARs
FY-End (#) at FY-End
($)
Shares
Acquired Value
on Exercise Realized Exercisable Exercisable
Name (#) ($) Unexercisable Unexercisable
- - ---------------- ----------- --------- ------------- -------------
<S> <C> <C> <C> <C>
CEO -0- -0- 40,000 (exer) $10,000
Thomas K. Langbein -0- (unex) (exer)
Dennis W. Healey -0- -0- 20,000 (exer) 5,000
-0- (unex) (exer)
Barry Pardon -0- -0- 40,000 (exer) 10,000
-0- (unex) (exer)
</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 May 9, 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."
13
<PAGE> 17
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership(1)
----------------------------------------------
Medicore Techdyne
Common Common
Name Stock(1) %(2) Stock(5) %(6)
- - ---- -------- ----- -------- ------
<S> <C> <C> <C> <C>
Thomas K. Langbein 854,064(3) 15.7% 2,527,797(7) 83.1%(7)
Seymour Friend 360,705(4) 6.6% 30,000(8) less than 1%
Peter D. Fischbein 101,219(9) 1.9% -0-(10) -0-
Anthony C. D'Amore 198,890(11) 3.7% -0-(12) -0-
Dennis W. Healey 54,351(11) 1.0% -0-(13) -0-
Barry Pardon 62,550(14) 1.2% 833(15) less than 1%
All directors and
executive officers
as a group (6
persons) 1,616,279(16) 32.4% 2,557,797(5)-(7) 84.1%
</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 outstanding. Includes 480,000 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
"Executive Compensation - Options, Warrants or Rights."
(3) See Note (3) to "Principal Security Holders."
(4) See Note (4) to "Principal Security Holders."
(5) The Company owns 2,527,797 shares (83.1%) of the common stock of
Techdyne. Officers and directors of the Company including those
directors of the Company and Techdyne who may be
14
<PAGE> 18
shareholders of each company disclaim any indirect beneficial
ownership of Techdyne common shares through the Company's 83.1%
ownership of Techdyne.
(6) Based on 3,042,910 Techdyne common shares outstanding, including the
2,527,797 shares (83.1%) held by the Company. See Note (5).
(7) 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 Company's entire ownership of Techdyne,
which entire beneficial ownership Mr. Langbein disclaims, but for his
proportionate interest, approximately 397,000 shares of Techdyne
(13.1%). See Note (5).
(8) 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
(5).
(9) 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."
(10) 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
(5).
(11) 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."
(12) 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
(5).
(13) Excludes approximately 25,000 (.008%) shares that may be deemed
indirectly beneficially owned through the Company's ownership of
Techdyne, which indirect beneficial ownership is disclaimed. See Note
(5).
15
<PAGE> 19
(14) 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."
(15) 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 (5).
(16) 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, 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.
The Company provides general accounting assistance to Techdyne. These
expenses and other central operating costs are charged first on the basis of
direct usage when identifiable, with the remainder allocated on the basis of
the time spent.
Since the Company's acquisition of Techdyne in 1982, through
Techdyne's public offering in April, 1985, the Company had been advancing funds
at no interest 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 December 31, 1994 aggregated approximately
$4,476,000 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
16
<PAGE> 20
extent of a portion of the net proceeds that may be derived from a proposed
financing by Techdyne 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.
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 with a $230,000 mortgage the first and second
mortgages on the property. At December 31, 1994, the principal balance under
this mortgage amounted to $226,000. 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. 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 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 $5,452,000 at December 31, 1994. 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. The principal balance on the credit
facility at December 31, 1994 amounted to $807,000. 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 Consolidated Bank, N.A. 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 Consolidated Bank, N.A. 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
17
<PAGE> 21
loan. The Company has also agreed with Consolidated Bank not to accept any
further advances on the properties.
Techdyne has advanced funds to Techdyne (Scotland) for that
subsidiary's working capital requirements which advances had an outstanding
balance of $650,000 at December 31, 1994. This sum is not evidenced by a note,
is at interest of 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 $312,000.
In July, 1994, Techdyne (Scotland) purchased the facility housing its
operations in Scotland for approximately $730,000 obtaining a 15-year mortgage
with a U.S. equivalency of approximately $628,000 at December 31, 1994.
In conjunction with the Company's distribution of its 84% ownership
interest in Viragen to its security holders in November, 1986, several
agreements were entered into with that former subsidiary to recognize the
financing the Company had provided to Viragen since its inception and to
administratively deal with the separation of the companies. The service
agreement expired and the employment agreements with Messrs. Langbein and
Healey were terminated in 1992 in consideration for which Messrs. Langbein and
Healey received 400,000 shares and 200,000 shares of Viragen, respectively.
The remaining agreement from the separation of the companies is a fifteen year
royalty agreement, modified in 1989, expiring in November, 2001 pursuant to
which Viragen was to pay the Company a royalty of 12% of Viragen's net sales,
up to $20,000,000, of interferon, transfer factor and products using such
substances, and for sales in excess of $20,000,000, the royalty shall be 7%.
Pursuant to Viragen's agreement with Cytoferon Corp. ("Cytoferon") in February,
1993 under which it received $1,000,000 in capital in May, 1993, for 6,000,000
Viragen shares, the royalty agreement was amended to provide for a maximum cap
on royalties to be paid to the Company of $2,400,000, with a schedule of a
percentage of royalty payments of 5% of the first $7,000,000 of sales of
interferon and related products, 4% of the next $10,000,000 of sales and 3% of
the next $55,000,000 of sales, with no royalties to be paid with respect to
delivery and payment of Viragen's interferon and related products for six (6)
months following May, 1993, the closing date of the Viragen-Cytoferon
agreement. The amendment further provided that royalties of approximately
$108,000 accrued as payable to Medicore prior to the amendment would be the
final payment under the $2,400,000 royalty obligation. As of December 31,
1994, Viragen has paid $33,000 of royalties to the Company.
Also in conjunction with its spin-off of Viragen, the Company
formalized its indebtedness due from Viragen through a subordinated promissory
note which was reduced by payments in 1989 and with all other indebtedness
owing to the Company with related accrued
18
<PAGE> 22
interest, aggregated approximately $2,989,000 and was settled by Viragen in
1989 through the issuance of 1,039,536 shares of Viragen common stock to the
Company plus extension of and increased royalty payments under the royalty
agreement subsequently amended. This issuance of Viragen stock had given the
Company a 1,500,000 share ownership interest in Viragen, currently the Company
owns 1,124,000 shares representing approximately 3.2% of Viragen's outstanding
shares. These shares were stated at a carrying value of $234,375 at December
31, 1990 and were written off in 1991. The Company sold 376,000 shares of its
Viragen common stock in 1994 realizing $524,600.
Over many years, the Company effected certain payments on behalf of or
loaned Viragen substantial sums evidenced by a promissory note of $429,400 at
the closing of Cytoferon's investment in May, 1993, with interest at 1% over
prime, payable quarterly. The note, which represents a partial principal
payment of $50,000 by Viragen in May, 1993, is evidenced by a loan agreement,
is secured by a mortgage on Viragen's building and a security interest in
Viragen's equipment, fixtures, accounts receivable and contract rights. The
security interest in the building and equipment which Viragen has granted to
the Company is second to the security interest held by Equitable Bank with whom
Viragen refinanced its bank credit facility and mortgage in August, 1991. The
Equitable Bank holds a mortgage in the principal amount of approximately
$395,000 at December 31, 1994. The Company has guaranteed payments of
principal and interest and any expenses and fees with respect to collection
upon any default by Viragen under its mortgage and note. The Company has the
right to cure any defaults and to assume the note and mortgage and to acquire
Viragen's property. The bank may not make any further loans or advances to
Viragen without the prior written consent of the Company. The Viragen note is
amortizable in accordance with the amortization of the Equitable Bank note in
equal monthly installments of principal of $2,500 plus interest at prime plus
2% with a balloon payment of all the then remaining principal ($450,000) and
accrued interest due on August 1, 1996. The Company leases 2,800 square feet
of office space from Viragen at this property for $19,600 per annum. Thomas K.
Langbein, Chairman of the Board, Chief Executive Officer and President of the
Company and, in 1993 of Viragen, and Seymour Friend, Vice President and
Director of the Company and, in 1993 a director of Viragen, resigned their
positions with Viragen in April and May, 1993, respectively. See "Election of
Directors".
During 1990 and 1991 Viragen borrowed $60,000 from Seymour Friend to
meet then current operating expenses. The borrowing was represented by a
demand promissory note dated May 31, 1991 bearing interest of 11% per annum.
The principal and interest was converted into capital of Viragen in June, 1991,
with Mr. Friend receiving 200,000 shares of Viragen's common stock. From
January, 1992 to April, 1992, Mr. Friend made additional loans to Viragen
19
<PAGE> 23
which Viragen repaid in part, with a balance due to Mr. Friend of $66,700
evidenced by a demand convertible promissory note at 10% interest per annum.
This note with related interest accrued was satisfied in January, 1994 through
the issuance of 260,130 shares of Viragen's common stock. In June, 1994,
Viragen borrowed an additional $25,000 from Mr. Friend which was repaid in
July, 1994, with related interest at 10%.
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 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. In addition, the Company obtained group health insurance coverage and
several executive and key employee life insurance policies through George
Langbein, brother of Thomas K. Langbein. George Langbein is affiliated 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 coverages totalled 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 totalled
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.
In December, 1988, Dialysis Services of Florida, Inc. - Fort Walton
Beach, ("DSF"), a subsidiary of the Company, was formed to operate a dialysis
center in Florida. The two shareholders of DSF are DCA, an 80% owner, and Dr.
Henry M. Haire, a 20% owner. DCA contributed $300,000 and Dr. Haire
contributed contracts for acute dialysis services at several hospitals in
Florida, his agreements
20
<PAGE> 24
and leases for operating the dialysis center at Fort Walton Beach, Florida, and
his patient list. Dr. Haire's professional association ("P.A.") provides
dialysis services to DSF, and the P.A. appointed Dr. Haire as the medical
director of that dialysis center under a contract expiring October 31, 1999
with the option to Dr. Haire to terminate the last two years. The agreement
with the P.A. continues automatically on a year-to-year basis unless either
party notifies the other of its desire to terminate. Dr. Haire is Vice
President and Director of DSF. Due to recent federal legislation that
prohibits physicians with an ownership interest in a facility from referring
patients for dialysis treatments at the hospital, as is the case with Dr. Haire
and DSF, the hospital in-patient dialysis services agreement was terminated
with DSF and was entered into with DCA Medical Services, Inc., a wholly owned
subsidiary of DCA with which Dr. Haire has no affiliation. DCA purchased for
$15,000, Dr. Haire's interest in DSF's hospital in-patient dialysis treatments.
Dr. Haire received $60,000 from DCA in 1989 for reimbursement of Dr. Haire's
expenses related to the establishment of DSF.
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.
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" and "Election of Directors." 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
21
<PAGE> 25
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 75%, 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 75% 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 75% voting requirement to amend, alter, change or repeal those ARTICLES.
A description of these proposals is set forth below. This description
is a summary only and is qualified in its entirety by reference to the text of
the proposals, which will be substantially as 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.
PURPOSES OF PROPOSED PROVISIONS
The proposed amendments to the Company's Certificate of Incorporation
are designed 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
proposed amendment would provide that the number of directors for the
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<PAGE> 26
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 Anthony C. D'Amore and one vacancy,
would extend to the 1996 Annual Meeting of Shareholders, the initial term of
the Class 2 directors, consisting of Peter D. Fischbein 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 condidates 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"
defined in the Florida Business Corporation Act relating to affiliated
transactions as any person who is the beneficial owner of 10% or more of the
outstanding voting shares of the Company) 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 captial 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 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
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<PAGE> 27
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.
The affirmative vote of a majority of the outstanding shares of the
Common Stock entitled to vote at the Annual Meeting of Shareholders (the
current requirement under the Florida Business Corporation Act) is required to
approve the proposed amendment to the Certificate of Incorporation to include
the Classified Board Provision. 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
75% 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 75% Voting Power of All
Shares Voting As A Single Class to Amend ARTICLES VII, X and XI of 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 Certificate
of 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 75% percent, 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 for a majority of the Company's Voting Shares.
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<PAGE> 28
Purposes and Effects. By requiring that shareholder actions without a
shareholder meeting be taken by written consent of at least 75% percent 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
75% percent 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 75% percent 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 75% percent 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 a majority of the outstanding shares of Common
Stock entitled to vote at the Annual Meeting of Shareholders 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 75% 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 75% Voting Power of All
Shares Voting As A Single Class to Amend ARTICLES VII, X and XI of the
Certificate of Incorporation."
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSAL CONCERNING THE
ENACTMENT OF THE SHAREHOLDER ACTION PROVISION.
25
<PAGE> 29
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO REQUIRE 75% VOTING POWER
OF ALL SHARES VOTING AS A SINGLE CLASS TO AMEND ARTICLES VII, X AND XI 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
(Classification of the Board), ARTICLE X (Shareholder Action Provision), and
this ARTICLE XI, may only be effected through the vote of holders of at least
75% 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
required 75% 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 75% of the Company's Voting
Shares.
The affirmative vote of a majority of the outstanding shares of Common
Stock (the current requirement as opposed to the 75% requirement now proposed)
entitled to vote at the Annual Meeting of Shareholders is required to approve
the proposed amendment to the Certificate of Incorporation to include the
Voting Power Provision.
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
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<PAGE> 30
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 75% of
the Voting Shares approves or consents 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 acquirors 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, with certain administrative
classifications:
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;
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;
27
<PAGE> 31
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, may only be "for cause", and the required
shareholder vote being 75% of the voting shares entitled to vote generally in
the election of directors, voting together as a single class;
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 solicition 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.
28
<PAGE> 32
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 acquirors 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.
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
29
<PAGE> 33
provide the Secretary of the Company, for this meeting no later than June 5,
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 MAY 9, 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
May 19, 1995
30
<PAGE> 34
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 5, 21 to 26 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
Company shall hold office until the next election of the Class
for which such director
<PAGE> 35
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 75% 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."
<PAGE> 36
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 75% 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."
<PAGE> 37
APPENDIX B
PRELIMINARY COPIES
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 May 9,
1995 at the Annual Meeting of Shareholders to be held Tuesday, June 27, 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 ____ WITHHOLD AUTHORITY ____
listed (except as marked to to vote for all director
the contrary below) nominees listed
________________________________________________________________________________
(To withhold authority to vote for any individual nominee, write that nominee's
name on the line above)
<PAGE> 38
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
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
75% 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 share-
holder 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.
