<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>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</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
MEDICORE, INC.
2337 WEST 76TH STREET
HIALEAH, FLORIDA 33016
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 5, 1996
---------------------
To Shareholders:
The Annual Meeting of Shareholders of MEDICORE, INC. (the "Company") will
be held at the Don Shula Golf Club, 7601 Miami Lakes Drive, Miami Lakes, Florida
on Wednesday, June 5, 1996 at 2:00 p.m., for the following purposes:
1. To elect one member to the Class 1 members of the Board of
Directors to serve for a three year term until the Annual Meeting of
Shareholders in 1999; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 12, 1996,
as the record date for the determination of the shareholders entitled to notice
of and to vote at the meeting and any adjournment thereof.
Your copy of the Annual Report of the Company for 1995 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
April 25, 1996
<PAGE> 3
MEDICORE, INC.
2337 WEST 76TH STREET
HIALEAH, FLORIDA 33016
---------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
JUNE 5, 1996
---------------------
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement and accompanying form of proxy and the Company's
Annual Report to Shareholders for the year ended December 31, 1995, anticipated
to be mailed on or about May 3, 1996, is solicited by and on behalf of the Board
of Directors of Medicore, Inc., a Florida corporation (the "Company") for the
Annual Meeting of Shareholders of the Company to be held on Wednesday, June 5,
1996, at the Don Shula Golf Club, 7601 Miami Lakes Drive, Miami Lakes, Florida
at 2:00 p.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 for the election of the one member of
Class 1 directors to serve on the Board of Directors for a three year term until
the 1999 Annual Meeting of Shareholders. Abstentions and broker non-votes will
be counted for purposes of a quorum, with abstentions having the legal effect of
a vote "against" the election of the Class 1 director. In instances where
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned a proxy (broker no-votes, which is not the case
with respect to the election of directors), such shares will not be included in
the vote totals and, therefore will have no effect on the vote. The form of
proxy vests in the persons named therein as proxies discretionary authority to
vote on any matter that may properly come before the meeting not presently known
to the Board of Directors.
The cost of preparing and mailing the Notice of Annual Meeting and Proxy
material and soliciting proxies will be paid by the Company. In addition to the
use of the mails, officers, directors or employees of the Company, who will
receive no additional compensation therefore, may solicit proxies by telephone
or personal interview. The Company will request brokers, nominees, fiduciaries
and custodians to forward proxy material to their 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 April 12, 1996,
as the record date for the determination of shareholders entitled to receive
notice of and to vote at the Annual Meeting and any adjournment thereof. Only
shareholders of record on that date are entitled to vote at the meeting.
VOTING SECURITIES
As of April 12, 1996 there were outstanding and entitled to be voted at the
Annual Meeting, 5,454,950 shares of common stock, $.01 par value ("Common
Stock"). Each share of Common Stock is entitled to one vote. A majority of the
outstanding shares is needed for a quorum and a plurality of the votes cast, in
person or by proxy, is necessary to effectuate election of the director for the
Class 1 members of the Board of Directors.
<PAGE> 4
ELECTION OF DIRECTORS
At the Annual Meeting, the shareholders will elect one Class 1 director,
which in accordance with the Company's amended Certificate of Incorporation
("Certificate of Incorporation") provides for two members to serve for three
years, which will be through the 1999 Annual Meeting of Shareholders, and until
each of their successors is elected and qualified. There is currently only one
Class 1 director. The Certificate of Incorporation and By-Laws of the Company
provide that Class 1 directors shall not be more than two persons, and since
less than the maximum number of Class 1 directors are to be elected, which is
permissable pursuant to the Company's By-Laws, proxies cannot be voted for a
greater number of persons than the singular nominee named for the Class 1
directorship. 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 term
of a Class 1 director extending to the next Annual Meeting of Shareholders in
1999, and for a Class 2 director to the 1997 Annual Meeting of Shareholders.
The affirmative vote of a plurality of the shares of Common Stock
represented at the meeting is required to elect the Class 1 director. Cumulative
voting is not permitted in the election of directors. Consequently, each
shareholder is entitled to one vote for each share of Common Stock held in his
name. The persons named as proxies in the form of proxy solicited hereby intend
to vote all valid proxies received in favor of the election of the person named
below as nominee for Class 1 director except where authority is withheld by the
shareholder. The nominee has consented to be named herein and to serve on the
Board of Directors if elected. If the nominee is unable to serve as a director
(which presently is not anticipated), the proxies will be voted for such
substituted nominee as may be designated by the present Board of Directors. The
nominee for Class 1 director is now a director and was elected by the
shareholders at the last Annual Meeting. To apprise shareholders of the
qualifications of all directors, information is provided concerning the nominee
and the three incumbent directors whose terms expire in 1997 and 1998.
There is no nominating committee with nominations for director considered
by the entire Board of Directors.
For additional information concerning the nominee for Class 1 director and
the incumbent directors, including compensation and share ownership, see
"Executive Compensation", "Beneficial Ownership of the Company's Securities" and
"Certain Relationships and Related Transactions."
NOMINEE FOR CLASS 1 DIRECTOR
<TABLE>
<CAPTION>
CURRENT POSITION AND AREAS POSITION HELD
NAME AGE OF RESPONSIBILITY SINCE
- ------------------------------------------------------- --- --------------------------- -------------
<S> <C> <C> <C>
Peter D. Fischbein(1).................................. 56 Director 1984
</TABLE>
Peter D. Fischbein is an attorney who has from time to time represented the
Company, Techdyne, Inc. ("Techdyne"), a 63% owned public subsidiary, Viragen,
Inc. ("Viragen") formerly a public subsidiary of the Company spun-off in 1986,
and 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. 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. Mr. Fischbein is a general partner of several limited
partnerships engaged in real estate development. See "Certain Relationships and
Related Transactions."
2
<PAGE> 5
INCUMBENT DIRECTORS
<TABLE>
<CAPTION>
CURRENT POSITION POSITION HELD
NAME AGE AND AREAS OF RESPONSIBILITY SINCE
- ------------------------------------------- --- ------------------------------------ -------------
<S> <C> <C> <C>
Thomas K. Langbein(2)...................... 50 Chairman of the Board of Directors, 1980
Chief Executive Officer and
President
Seymour Friend(2).......................... 75 Vice President and 1961
Director 1975
Anthony C. D'Amore(1)(3)................... 65 Director 1979
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Class 3 director; term ends in 1998.
(3) Class 2 director; term ends in 1997.
Thomas K. Langbein was appointed as Chairman of the Board of Directors,
Chief Executive Officer and President in 1980, which latter position was
relinquished in January, 1983 and reassumed in April, 1985 upon completion of
Techdyne's public offering. Mr. Langbein is an officer and director of most of
the Company's subsidiaries and was appointed President and Chief Executive
Officer of Techdyne in April, 1990. Barry Pardon succeeded to the Presidency of
Techdyne in November, 1991 at which time Mr. Langbein reassumed the position of
Chairman of the Board. He has been a director of Techdyne since it was acquired
by the Company in 1982. He is also a director of Techdyne's foreign subsidiary,
Techdyne (Scotland). Mr. Langbein was Chairman of the Board and Chief Executive
Officer of Viragen until his resignation in April, 1993. Mr. Langbein is
President, sole shareholder and director of Todd. Mr. Langbein devotes most of
his time to the affairs of the Company and Techdyne.
Seymour Friend is a real estate investor and devotes a portion of his time
to the affairs of the Company. He resigned as a director of Viragen in May,
1993.
Anthony C. D'Amore is a director of Techdyne and is registered as a
part-time account executive with Todd, but has not been active in the brokerage
business for many years. Mr. D'Amore was the owner of an insurance agency, the
A.C. D'Amore Agency, Inc., which he sold in 1992, and from whom the Company,
Techdyne and their subsidiaries purchase much of their insurance at rates
competitive with unaffiliated parties. Mr. D'Amore continues to receive
commissions with respect to insurance placed with the Company and Techdyne.
There is no family relationship between any officer or director of the
Company.
Since the last Annual Meeting in September, 1995, there were three meetings
of the Board of Directors, including actions by unanimous written consent. All
directors participated at all the meetings.
The only committee the Company has is an Audit Committee consisting of
Peter D. Fischbein and Anthony C. D'Amore. The Audit Committee, which meets
informally, usually on a monthly basis, is responsible for recommending to the
Board of Directors the firm of independent accountants to serve the Company,
reviewing fees, services and results of the audit by such independent
accountants, reviewing the accounting books and records of the Company and
reviewing the scope, results and adequacy of the internal audit control
procedures of the Company. No member of the Audit Committee receives a fee for
services rendered as a participant of such committee. The By-Laws provide for
and the Company has made payment of reasonable expenses for directors'
attendance at meetings. In lieu of any cash compensation or per meeting fees to
directors for acting as such, the Company has provided directors, among others,
with options to purchase Common Stock of the Company at fair market value as of
the date of grant. See "Executive Compensation -- Options, Warrants or Rights"
and "Beneficial Ownership of the Company's Securities."
3
<PAGE> 6
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES
MANAGEMENT
The following table sets forth as of April 12, 1996, the names and
beneficial ownership of the equity securities of the Company and its
subsidiaries for directors, individually itemized, and for directors and
officers as a group, without naming them, and for each of the named executive
officers disclosed in the Summary Compensation Table. See "Executive
Compensation."
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
--------------------------------------------------------------------------
MEDICORE TECHDYNE DCA
COMMON COMMON COMMON
NAME STOCK(1) %(2)(3) STOCK(4) %(3)(5) STOCK(3)(6) %(7)
- --------------------------- --------- ------- --------- ------- ----------- ----
<S> <C> <C> <C> <C> <C> <C>
Thomas K. Langbein(8)...... 949,814(9) 17.0 4,142,654(10) 73.2 50,000 2.0
Seymour Friend(8).......... 395,205(11) 7.2 28,333(12) * --
Peter D. Fischbein(13)..... 138,719(14) 2.5 40,000(15) * -- --
Anthony C. D'Amore(16)..... 236,390(17) 4.3 29,000(18) * -- --
Dennis W. Healey........... 87,500(17) 1.6 20,000(19) * 5,000 *
Barry Pardon............... 109,500(20) 1.9 84,833(21) 2.1 -- --
All directors and executive
officers as a group (6)
persons)................. 1,863,678(22) 32.4 4,269,987(4)(5)(10) 75.2 62,500 2.5
</TABLE>
- ---------------
* less than 1%
(1) Based upon information furnished to the Company by either the directors and
officers or obtained from the stock transfer books of the Company. The
Company is informed that these persons hold sole voting and dispositive
power with respect to the shares of Common Stock except as noted herein.
(2) Based on 5,454,940 shares outstanding. Includes (i) 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; and (ii) 404,500 shares of Common Stock of 809,000
shares of Common Stock underlying Options granted in April, 1995 under the
Company's 1989 Stock 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) For purposes of computing the percentage of outstanding shares held by each
person or group of persons named above, any security which such person or
group of persons has the right to acquire within 60 days of April 12, 1996
is deemed to be outstanding for purposes of computing the percentage
ownership of such person or persons, but is not deemed to be outstanding
for the purpose of computing the percentage ownership of any other person.
(4) The Company owns 4,062,654 shares (72.8%) of the common stock of Techdyne.
Includes 1,534,857 shares which the Company may acquire upon conversion of
its demand promissory note from Techdyne in the amount of approximately
$2,686,000 at December 31, 1995 convertible at $1.75 per share. Officers
and directors of the Company, including those directors of the Company and
Techdyne who may be shareholders of each company, except Thomas K. Langbein
(see Note (10)), disclaim any indirect beneficial ownership of Techdyne
common shares through the Company's 72.8% ownership of Techdyne. See Notes
(12), (15), (18), (19) and (21).
(5) Based on 4,043,319 Techdyne common shares outstanding. Does not include (i)
shares obtainable under the Company's convertible note, except as to Thomas
K. Langbein (see Note (4)) or (ii) options for 380,000 shares of Techdyne
common stock. See "Executive Compensation -- Options, Warrants or Rights."
4
<PAGE> 7
(6) Options for common stock of DCA, a 99.1% owned subsidiary of the Company.
The options are exercisable at $1.50 per share through November 9, 2000.
See "Executive Compensation -- Options, Warrants or Rights." DCA completed
a public offering on April 23, 1996 of 1,000,000 Units consisting of
1,000,000 shares of DCA common stock and 2,000,000 redeemable common stock
purchase warrants, which securities are not included in these computations.
Based on the additional securities, the Company owns 70% of DCA.
(7) Based on 2,432,844 DCA shares outstanding of which the Company owns
2,410,622 (99.1%). Officers and directors of the Company disclaim indirect
beneficial ownership of DCA common stock through the Company's ownership.
As a result of DCA's recent public offering of Units there are 3,432,844
shares of common stock outstanding and the Company currently owns 70% of
DCA. See Note (6).
(8) Class 3 director; term to 1998 Annual Meeting of Shareholders.
(9) 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"); (ii) 3,000 shares each held in the names of
Mr. Langbein's two children; and (iii) 125,000 shares of Common Stock
underlying Options to purchase 250,000 shares of Common Stock granted in
April, 1995, exercisable 50% on April 18, 1996 with the balance on April
18, 1997 at an exercise price of $3.00 per share through April 17, 2005.
Does not include (i) 29,250 shares of Common Stock held in the name of his
wife who is independent of her husband; or (ii) an option to acquire up to
400,000 shares of Common Stock in lieu of a lump sum payment, which option
is not presently exercisable except in the event of a change in control of
the Company. See Note (2) and "Employment Contracts and Termination of
Employment and Change-In-Control Arrangements" and "Options, Warrants or
Rights" under the caption "Executive Compensation."
(10) Includes (i) the Company's 4,062,654 share ownership, including 1,534,857
shares which the Company may obtain upon conversion of its demand
promissory note from Techdyne (see Note (4) above), by virtue of his
position with the Company and Techdyne and stock ownership of the Company,
which may deem Mr. Langbein to have beneficial ownership of such shares
through shared voting and investment power with respect to the Company's
ownership of Techdyne; Mr. Langbein disclaims such entire beneficial
ownership, but for his proportionate interest, approximately 691,000 shares
of Techdyne (12.4%); and (ii) Techdyne options for 80,000 shares. See
"Executive Compensation -- Options, Warrants or Rights."
(11) Includes (i) 50,000 shares held in escrow securing a promissory note of
$34,000 for a substantial portion of the purchase price of such shares; and
(ii) 37,500 shares of Common Stock underlying an Option to purchase 75,000
shares of Common Stock granted in April, 1995 exercisable 50% on April 18,
1996 with the balance exercisable on April 18, 1997 at an exercise price of
$3.00 per share through April 17, 2005, which becomes fully exercisable in
the event of a change in control of the Company. See Note (2) and
"Executive Compensation -- Option, Warrants or Rights."
(12) Includes Techdyne options for 10,000 shares. See "Executive Compensation."
Excludes approximately 293,000 (5.3%) shares that may be deemed indirectly
beneficially owned through the Company's ownership of Techdyne, which
indirect beneficial ownership is disclaimed. See Note (4).
(13) Class 1 director. See "Election of Directors."
(14) Includes (i) 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; and (ii) 37,500 shares of Common Stock
underlying an Option to purchase 75,000 shares of Common Stock granted in
April, 1995 exercisable 50% on April 18, 1996 with the balance exercisable
on April 18, 1997 at $3.00 per share through April 17, 2005, which becomes
fully exercisable in the event of a change in control of the Company. See
Note (2) and "Executive Compensation-Options, Warrants, or Rights."
(15) Includes Techdyne options for 40,000 shares. See "Executive Compensation."
Excludes approximately 102,000 (1.8%) shares that may be deemed indirectly
beneficially owned through the Company's ownership of Techdyne, which
indirect beneficial ownership is disclaimed. See Note (4).
(16) Class 2 director; term to 1997 Annual Meeting of Shareholders.
5
<PAGE> 8
(17) Includes (i) 50,000 shares held in escrow securing a promissory note of
$34,000 for a substantial portion of the purchase price of such shares; and
(ii) 37,500 shares of Common Stock underlying an Option for 75,000 shares
of Common Stock granted in April, 1995 exercisable 50% on April 18, 1996
with the balance exercisable on April 18, 1997 at $3.00 per share through
April 17, 2005, which becomes fully exercisable in the event of a change in
control of the Company. See Note (2) and "Executive
Compensation -- Options, Warrants, or Rights."
(18) Includes (i) Techdyne options for 20,000 shares (see "Executive
Compensation"); (ii) Techdyne warrants for 4,000 shares of Common Stock
exercisable at $5.00 per share through September 12, 1998 held in his
retirement plan; and (iii) 5,000 shares of Common Stock held in his
retirement plan. Excludes approximately 175,000 (3.1%) shares that may be
deemed indirectly beneficially owned through the Company's ownership of
Techdyne, which indirect beneficial ownership is disclaimed. See Note (4).
(19) Includes Techdyne options for 20,000 shares. See "Executive Compensation."
Excludes approximately 65,000 (1.2%) shares that may be deemed indirectly
beneficially owned through the Company's ownership of Techdyne, which
indirect beneficial ownership is disclaimed. See Note (4).
(20) Includes (i) 30,000 shares held in escrow securing a promissory note of
$20,400 for a substantial portion of the purchase price of such shares; and
(ii) 37,500 shares of Common Stock underlying an Option for 75,000 shares
of Common Stock granted in April, 1995 exercisable 50% on April 18, 1996
with the balance exercisable on April 18, 1997 at $3.00 per share through
April 17, 2005, which becomes fully exercisable in the event of a change in
control of the Company. See Note (2) and "Executive
Compensation -- Options, Warrants, or Rights."
(21) Includes (i) Techdyne options for 80,000 shares (see "Executive
Compensation"); (ii) Techdyne warrants for 1,000 shares of Common Stock
exercisable at $5.00 per share through September 12, 1998; and (iii) 2,833
shares held in his wife's name. Excludes approximately 77,000 (1.9%) shares
that may be deemed indirectly beneficially owned through the Company's
ownership of Techdyne, which indirect beneficial ownership is disclaimed.
See Note (4).
(22) 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. Includes 404,500 shares of
Common Stock of the 809,000 shares underlying the Options granted in April,
1995, 50% which becomes exercisable on April 18, 1996. See Note (2) and
"Executive Compensation -- Options, Warrants, or Rights."
OTHER PRINCIPAL SECURITY HOLDERS
Other than for Messrs. Langbein and Friend, officers and directors of the
Company, no other shareholder is known by the Company, nor has it received any
Schedule 13D reflecting the same, to own beneficially more than 5% of its voting
securities. See "Beneficial Ownership of the Company's
Securities -- Management."
6
<PAGE> 9
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,
1995 for services in all capacities for its Chief Executive Officer and each of
its principal executive officers whose total annual salary and bonus exceeded
$100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------
AWARDS PAYOUTS
---------- ----------------
ANNUAL COMPENSATION
-------------------------------- (F) (G)
(E) RESTRICTED SECURITIES
(A) (B) (C) OTHER ANNUAL STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) COMPENSATION ($) AWARDS($) OPTIONS/SARS (#)
- -------------------------------- ----- ---------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
CEO
Thomas K. Langbein.............. 1995 230,100 26,100(1) 250,000(4)
1994 220,000 25,000(1)(2) 112,500(3)
1993 220,000 24,800(1)
Dennis W. Healey................ 1995 60,600(5) 75,000(4)
1994 60,100(5)
1993 88,400
Barry Pardon(6)................. 1995 113,000 (2) 11,250(3) 75,000(4)
1994 91,600
1993 86,900
</TABLE>
- ---------------
(1) Includes automobile allowance and related expenses, life and disability
insurance premiums, and compensation received as a director to Techdyne
(Scotland).
(2) Does not include 150,000 shares and 15,000 shares of Common Stock granted to
Messrs. Langbein and Pardon, respectively, on January 17, 1994 as part of
410,000 shares granted to officers, directors and key employees of the
Company and certain subsidiaries as incentive awards, with a fair market
value on the date of grant of $.75 per share. Included in Restricted Stock
Awards, column (f) of the Summary Compensation Table. See Note (3).
(3) Incentive awards granted in January, 1994. The Common Stock vested in equal
amounts of 1/12th per month and at December 31, 1994 was fully vested. See
Note (2). An aggregate of 150,000 and 15,000 shares of restricted Common
Stock, respectively are held by Messrs. Langbein and Pardon with a value at
December 31, 1994 of $375,000 and $37,500, respectively. Should the Company
pay dividends, which it has not in many years, dividends would be paid on
such restricted securities.
(4) In April, 1995, the Company granted non-qualified stock options under its
1989 Stock Option Plan to officers, directors, employees and consultants
for 809,000 shares of Common Stock, 50% of the Options being exercisable on
April 18, 1996 with the balance being exercisable on April 18, 1997, all at
an exercise price of $3.00 per share. See Note (2) to "Beneficial Ownership
of the Company's Securities" and below under "Options, Warrants or Rights."
(5) In addition to his compensation from the Company, Mr. Healey received an
annual salary of $75,000 from Viragen, a former subsidiary of and spun-off
by the Company in 1986, which Viragen salary commenced in April, 1994 and
increased to $80,000 in October, 1995 upon a two year renewal of his
employment agreement. See "Employment Contracts and Termination of
Employment and Change-In-Control Arrangements" below.
(6) President and director of Techdyne.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Langbein has an employment agreement with the Company through May 31,
1999 at an annual salary of $220,000 with yearly increases in increments of no
less than $10,000 which increases Mr. Langbein had waived for the last three
years. The first $10,000 increment became effective June 1, 1995. The Company's
subsidiary, DCA, completed a public offering of securities on April 23, 1996.
See Note (6) to
7
<PAGE> 10
"Beneficial Ownership of the Company's Securities -- Management." Mr. Langbein
will receive $75,000 per annum of his overall compensation from DCA, which sum
shall reduce his base compensation from the Company. Mr. Langbein's employment
agreement further 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
as an independent sales representative. See "Certain Relationships and Related
Transactions."
Based upon any wrongful termination of his employment agreement, which
includes changes in control of the Company through an acquiring person (any
person who has acquired or announces a tender offer or exchange for 25% of the
Company), a sale of substantially all of the assets or merger, acquisition of
the Company or its consolidation with another, or certain types of Board
changes, the Company shall pay Mr. Langbein a lump sum payment, based upon his
then compensation, including benefits and perquisites for the next three years
from such termination. At Mr. Langbein's option, he may elect, in lieu of any
such lump sum payment, to take Common Stock of the Company equivalent to such
lump sum payment based upon the lowest closing price of the stock as reported by
the principal stock exchange upon which the shares are then trading, presently
the American Stock Exchange (or if the trading is then in the over-the-counter
market, then as reported by Nasdaq or other inter-dealer quotation medium)
within 30 days of such wrongful termination or change in control. The Company
has reserved up to 800,000 shares of its Common Stock for such option to Mr.
Langbein, of which 400,000 shares have subsequently been set aside and reserved
for options granted by the Company to a financial public relations consulting
firm in September, 1994. The Company has granted Mr. Langbein one time demand
and five year "piggy-back" registration rights with respect to such shares. Such
registration of the stock would be at the sole cost and expense of the Company
except with respect to Mr. Langbein's legal fees and commissions or discounts
upon sale of such stock.
The employment agreement also contains a two year non-competition provision
within a 20 mile radius of the Company's primary operations in Florida. The
Company has the right, upon Mr. Langbein's termination, to request further
non-competition by Mr. Langbein in the United States for consideration of $4,000
per month, increasing 5% in any twelve-month period. The Company also provides
Mr. Langbein with an automobile allowance of $850 per month.
Dennis W. Healey, age 47, is Senior Vice President, Principal Financial
Officer and Treasurer of the Company, director and Executive Vice President,
Chief Financial Officer, Treasurer, Secretary and director of Viragen, Vice
President and Treasurer 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 October 5, 1997 under which he
receives an annual salary of $80,000 including business expenses and medical and
life insurance and option plans available to other executive officers of
Viragen. His employment agreement with Viragen was originally at an annual
salary of $75,000 which increased when the agreement was renewed in October,
1995.
Certain executive and accounting, personnel and administrative facilities
of the Company and its subsidiaries, including Techdyne and DCA, were common for
fiscal 1995. The costs of executive and accounting salaries and other shared
corporate overhead for these companies were charged on the basis of direct usage
when identifiable with the remainder allocated on the basis of time spent. Mr.
Langbein, as an officer and director of the Company, Techdyne and DCA, and
Messrs. Healey and Daniel Ouzts, as officers of the Company, Techdyne and DCA,
divide their time and efforts to each company. Mr. Healey also devotes a portion
of his time to Viragen. See "Certain Relationships and Related Transactions."
Barry Pardon, director and President of Techdyne, has a five-year
employment agreement with Techdyne through December 31, 2000, which provides him
with a base annual salary of $120,000, plus an over-ride
8
<PAGE> 11
commission of .5% of net sales of Techdyne in excess of $20,000,000 the first
year of the agreement, increasing $1,000,000 each successive year of the term.
In January, 1993, as part of 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 nine months salary if he
dies or is terminated without cause during the term. Mr. Pardon is furnished
with an automobile, travel and entertainment expenses incurred relating to
Techdyne's business, which sums did not exceed 10% of his reported cash
compensation. The agreement provides for non-competition for one year following
termination and for restrictions upon Mr. Pardon calling upon any customers or
suppliers of Techdyne, diverting any customers, services, items or products of
Techdyne or disclosing any trade secrets of Techdyne.
COMPENSATION OF DIRECTORS
Standard Arrangements
There are no standard arrangements for compensating directors for services
as directors or for acting on any committee. The Company does reimburse
directors for expenses for attending meetings.
Non-Standard Arrangements
For the year ended December 31, 1995, the Company obtained its property,
casualty and general liability insurance, as did its subsidiaries, through the
efforts of one of its directors, Anthony C. D'Amore, who received $9,700 in
commissions in 1995 with respect to this insurance. See "Certain Relationships
and Related Transactions."
The Company has provided options to its directors, among other executives
and consultants. Its public subsidiaries, Techdyne and DCA, have also issued
options to their respective officers, directors and advisors. Three of the
directors of the Company are directors of Techdyne and have received Techdyne
options, and Mr. Langbein, also Chairman of the Board of Directors of DCA,
received options from that subsidiary. See below "Options, Warrants or Rights",
"Beneficial Ownership of the Company's Securities" and "Certain Relationships
and Related Transactions." The table below reflects the Company, Techdyne and
DCA options granted during 1995 through the present to directors of the Company.
<TABLE>
<CAPTION>
OPTIONS GRANTED
------------------------------------------------------
NAME OF DIRECTOR COMPANY(1) % TECHDYNE(2) % DCA(3) %
- ---------------------------------------------- ---------- ---- ----------- ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Thomas K. Langbein............................ 250,000 30.9 40,000 26.2 50,000 24.2
Seymour Friend................................ 75,000 9.3 -- -- --
Peter D. Fischbein............................ 75,000 9.3 20,000 13.1 -- --
Anthony C. D'Amore............................ 75,000 9.3 10,000 6.6 -- --
</TABLE>
- ---------------
(1) In April, 1995 Options for 809,000 shares were granted under the Company's
1989 Stock Option Plan (the "Option Plan") exercisable into Common Stock at
$3.00 per share, 50% on or after April 18, 1996, the first anniversary date
of grant, and in full on or after the second anniversary date of grant.
Options were granted to officers, directors, consultants and certain
employees of the Company and its subsidiaries. The exercise price of all
options is 100% of the fair market value of the Common Stock on the date of
grant. See Note (2) to "Beneficial Ownership of the Company's
Securities -- Management" and "Executive Compensation -- Options, Warrants
or Rights."
(2) 142,500 options were granted in February, 1995 to directors of Techdyne and
Techdyne (Scotland), and an option for 10,000 shares granted in April, 1995
to counsel, all 152,500 options being identical, exercisable for five years
at $1.75 per share. For information as to the Techdyne grant of options in
1994 under its 1994 Stock Option Plan see "Executive
Compensation -- Options, Warrants or Rights."
(3) There are an aggregate of 206,500 options outstanding under DCA's 1995 Stock
Option Plan pursuant to which 250,000 shares of DCA common stock are
reserved for issuance. The options were granted in November, 1995 to 34
officers, directors, employees and advisors of DCA and its subsidiaries,
and are exercisable at $1.50 per share through November 9, 2000. See
"Executive Compensation -- Options,
9
<PAGE> 12
Warrants or Rights." Does not include the recent public issuance of
2,000,000 redeemable common stock purchase warrants. See Note (6) to
"Beneficial Ownership of the Company's Securities -- Management."
OPTIONS, WARRANTS OR RIGHTS
In May, 1989, the Board of Directors adopted the 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 Option Plan are
non-transferable and are exercisable for ten years (no vesting schedule) from
date of grant, but may expire at the earlier of two years from retirement,
permanent disability or death. The Options are exercisable 50% on or after the
first anniversary date of grant and in full on or after the second anniversary
date of grant, provided acceleration of full exercise will be permitted upon
changes in control or death. Changes in control include the sale of
substantially all of the assets of the Company or its merger or consolidation
with another, or a majority of the Board of Directors changes other than by
election by shareholders pursuant to Board solicitation, or by vacancies filled
by the Board caused by death or resignation, or a person or group acquires 25%
or makes a tender for 25% of the Company's outstanding shares.
Options under the Option Plan may be exercised either with cash or Company
stock or both. If exercised with stock, the shares are valued at the current
market price and the optionee obtains an additional non-qualified stock option
for the stock used for the exercise. This new Option is exercisable at the then
current market price for the remainder of the original Option period under the
same terms of the original Option. Stock for stock exercises of Options allow
for the withholding of shares to cover tax liability upon exercise.
On April 18, 1995, the Board granted Options for 809,000 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 "Beneficial Ownership of the Company's
Securities" and "Executive Compensation -- Compensation of Directors --
Non-Standard Arrangements."
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.
In May, 1994, the Board of Directors and shareholders of Techdyne adopted
the 1994 Techdyne, Inc. Stock Option Plan (the "Techdyne 1994 Plan"). In
November, 1995, the Board of Directors and shareholders of DCA adopted the 1995
Dialysis Corporation of America Stock Option Plan (the "DCA 1995 Plan"). The
Techdyne 1994 and the DCA 1995 Plans are substantially similar and the following
description applies to each, unless otherwise indicated.
250,000 shares of common stock are reserved for issuance at 100% of the
fair market value on the date of grant. Since DCA common stock is not trading,
the exercise price was based on a price slightly in excess of book value. The
Techdyne 1994 Plan expires May 24, 1999 and the DCA 1995 Plan expires November
9, 2000. Options may be and have been granted to officers, directors,
consultants, key employees, advisors and similar parties, may be exercisable for
up to five years, may require vesting, are non-transferable except by the laws
of descent and distribution or a change in control of the Company, and are
exercisable only by the participant during his lifetime.
Change in control includes (i) the sale of substantially all of the assets
of the company or its merger or consolidation with another, or (ii) a majority
of the Board changes other than by election by shareholders pursuant to Board
solicitation or by vacancies filled by the Board caused by death or resignation,
or (iii) a person or group acquires 25% or makes a tender for 25% of the
company's outstanding shares.
If a participant ceases affiliation with the company by reason of death,
permanent disability or retirement at or after age 65, the option remains
exercisable for nine (9) months from such occurrence but not beyond
10
<PAGE> 13
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 and the DCA 1995 Plan, at the
discretion of the Board, may be exercised either with cash, common stock having
a fair market equal to the cash exercise price, the participant's personal
recourse note, or with an assignment to the company of sufficient proceeds form
the sale of the common stock acquired upon exercise of the option with an
authorization to the broker or selling agent to pay that amount to the company,
or any combination of the above.
There are presently outstanding under the Techdyne 1994 Plan options to 84
officers, employees and advisors of Techdyne and its subsidiary for 227,500
shares of Techdyne common stock exercisable at $1.00 per share through May 24,
1999. Under the DCA 1995 Plan, there are options to 34 persons affiliated with
DCA and its subsidiaries for 206,500 shares of DCA common stock exercisable at
$1.50 per share through November 9, 2000.
To date, 400 shares have been exercised under the Techdyne options and none
under the DCA options.
On February 27, 1995, Techdyne granted non-qualified stock options, not
part of the Techdyne 1994 Plan, to directors of Techdyne and its subsidiary for
142,500 shares of common stock exercisable at $1.75 per share for five years. In
April, 1995 an option for 10,000 shares of Techdyne common stock was granted to
counsel as part of his compensation for assisting in the preparation of
Techdyne's registration statement for a public offering of its common stock and
warrants completed in October, 1995. The exercise price of all options is 100%
of the fair market value of the common stock on the date of grant.
COMPANY OPTIONS/SAR GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G)
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS/SARS EXERCISE PRICE APPRECIATION
UNDERLYING GRANTED TO OR FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -------------------
NAME GRANTED (#) 1995 ($/SH) DATE 5% ($) 10% ($)
- ------------------------------ ------------ ------------ ---------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CEO
Thomas K. Langbein............ 250,000 30.9 3.00 4-17-20 207,500 457,500
Dennis W. Healey.............. 75,000 9.3 3.00 4-17-20 62,250 137,250
Barry Pardon.................. 30,000 3.7 3.00 4-17-20 24,900 45,567
</TABLE>
TECHDYNE AND DCA OPTIONS/SAR GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
(C)
(B) % OF TOTAL
NUMBER OF SECURITIES OPTIONS/SARS (D)
UNDERLYING GRANTED TO EXERCISE OR (E)
(A) OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) 1995 ($/SH) DATE
- --------------------------------------------- --------------------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
CEO
Thomas K. Langbein
Techdyne................................... 40,000 26.2 1.75 2-26-20
DCA........................................ 50,000 24.2 1.50 11-9-20
Dennis W. Healey
Techdyne................................... 20,000 13.1 1.75 2-26-20
DCA........................................ 5,000 2.4 1.50 11-9-20
Barry Pardon
Techdyne................................... 40,000 26.2 1.75 2-26-20
DCA........................................ -- -- -- --
</TABLE>
11
<PAGE> 14
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(D)
NUMBER OF SECURITIES (E)
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
(B) OPTIONS/SARS IN-THE-MONEY OPTIONS/
(A) SHARES ACQUIRED (C) AT FY-END (#) SARS AT FY-END ($)
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------ --------------- ------------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
CEO
Thomas K. Langbein
Company Options....... -0- -0- 250,000 (unexer)(1) 437,500(unexer)(2)
Techdyne Options...... -0- -0- 80,000 (exer)(3) 385,200(exer)(4)
DCA Options........... -0- -0- 50,000 (exer)(5) 112,500(exer)(6)
Dennis W. Healey
Company Options....... -0- -0- 75,000 (unexer)(1) 131,250(unexer)(2)
Techdyne Options...... -0- -0- 20,000 (exer)(7) 103,800(exer)(4)
DCA Options........... -0- -0- 5,000 (exer)(5) 11,250(exer)(6)
Barry Pardon(8)
Company Options....... -0- -0- 75,000 (unexer)(1) 131,250(unexer)(2)
Techdyne Options...... -0- -0- 80,000 (exer)(3) 385,200(exer)(4)
DCA Options........... -0- -0- -0- -0-
</TABLE>
- ---------------
(1) 50% become exercisable on April 18, 1996 with the balance exercisable on
April 18, 1997. See Note (2) to "Beneficial Ownership of the Company's
Securities."
(2) The value of the in-the-money options was determined by the difference
between the exercise price and the closing price of the Common Stock as
reported by the American Stock Exchange on December 29, 1995, which is
$4.75.
(3) 40,000 options exercisable at $1.00 and 40,000 options exercisable at $1.75.
(4) The value of the in-the-money options was determined by the difference
between the exercise price and the average of the bid and asked prices of
the common stock as reported by Nasdaq on December 29, 1995, which was
$6.19.
(5) Exercisable at $1.50 per share through November 9, 2000.
(6) There is no current market for the DCA common stock, and therefore, there is
no fair market value for the DCA common stock. The value of the
in-the-money options was determined by the difference between the exercise
price and the $3.75 per Unit offering price of DCA's recent Unit offering
without allocating any value to the warrants that were included in the
Units. See Note (6) to "Beneficial Ownership of the Company's
Securities -- Management" and "Executive Compensation -- Employment
Contracts and Termination of Employment and Change-in-Control
Arrangements."
(7) All exercisable at $1.00.
(8) President and director of Techdyne.
BOARD EXECUTIVE COMPENSATION REPORT
The Company has no executive compensation committee. Compensation of its
executive officers is considered by the entire Board of Directors, presently
four members, one of whom, Thomas K. Langbein, is the Chairman of the Board and
Chief Executive Officer of the Company and its subsidiaries. Mr. Langbein is the
only executive officer of the Company that has an employment agreement. The only
other executive of the Company's subsidiaries that has an employment agreement
is Barry Pardon, President and director of Techdyne, a 63% owned public
subsidiary. These are the only two individuals who receive in excess of $100,000
from the Company and/or its subsidiaries. Dennis W. Healey, an executive officer
of the Company and its subsidiaries, receives an aggregate compensation payable
in excess of $100,000, but a substantial portion is derived from an unaffiliated
public company, Viragen, a former subsidiary of the Company spun-off in 1986.
See "Executive Compensation" and "Certain Relationships and Related
Transactions."
Mr. Langbein's employment contract has provided him with the same salary
over the last five years. His agreement was renewed for another five years in
1994 at the same base salary with $10,000 incremental
12
<PAGE> 15
increases each year. Mr. Langbein has the most responsibility for the Company's
performance, particularly sales growth in marketing and in each segment of
operations, expense control, profit margins, structuring and implementing
efficiency programs, asset management, inventory control, and assessment of
plans for existing and new products and services. It took several years of
extensive effort in these areas with attempts to develop the right mix of
management, to turn the Company from losses to a break-even in 1993, to
profitability in 1994 and 1995. During those years, Mr. Langbein waived the
$10,000 per year salary increase to which he was entitled under his employment
agreement. It was only in June, 1995 that the $10,000 increment was effected.
The Board considered Mr. Langbein's effectively directing the Company's
operations, providing capital for the Company and its subsidiaries operations,
and motivating key executive management toward greater efficiences in labor,
cost control, increased sales and new business.
The turnaround strategy, including a return to profitability and a stronger
financial condition has enabled the Board to also reward the officers,
directors, key employees and advisors with options under the Company's 1989
Option Plan. Options are the only other significant component of compensation.
No director receives any cash compensation for acting as such, as in the case
with most other public companies, nor does any officer or director receive fees
for participating on any committee, the only active committees being the audit
committee, consisting of two independent directors, Peter F. Fischbein and
Anthony C. D'Amore, and the stock option committee, consisting of Thomas K.
Langbein, Peter D. Fischbein and Lawrence E. Jaffe, Secretary and counsel to the
Company and DCA, and counsel to Techdyne. See "Certain Relationships and Related
Transactions." Based upon the turnaround of the Company, the efforts of
management and their respective levels of responsibility and performance,
non-qualified stock options were granted to officers, directors, key employees
and advisors in April, 1995 under the 1989 Option Plan. The Board believes that
managements' and employees' ownership of equity in the Company is a significant
incentive in building shareholder wealth and aligning the long-term interest of
management and key employees with stockholders. Options granted are at prices
not less than the fair market value of the Company's common stock on the date of
grant. Sometimes there may be vesting schedules. The options granted in 1995 are
exercisable 50% on April 18, 1996, and the balance on April 18, 1997. Therefore,
the options have no value unless the share price of the common stock increases
over the fair market value on the date of grant.
The Board also looks to historical option grants as well as the officer's,
director's and/or key employee's past and prospective contributions to the
success of the Company to determine the appropriate range of awards. The Board
considers option grants more as incentives than as compensation.
SUBMITTED BY THE BOARD OF DIRECTORS
Thomas K. Langbein Seymour Friend
Anthony C. D'Amore Peter D. Fischbein
COMPANY STOCK PRICE PERFORMANCE
The following graph shows a five-year comparison of cumulative total
stockholder returns for the Company, the American Stock Exchange Market Value
Index and the Electronics Industry Index from December 31, 1990 through December
31, 1995. The cumulative total stockholder returns on the Company's Common Stock
was measured by dividing the difference between the Company's share price at the
end and the beginning of the measurement period by the share price at the
beginning of the measurement period. The total stockholder return assumes $100
invested at the beginning of the period in the Company's Common Stock, and the
American Stock Exchange Market Value Index and the Electronics Industry Index.
The Company did not pay dividends on its Common Stock during the measurement
period and the calculations of cumulative total stockholders return on the
Common Stock did not include dividends.
13
<PAGE> 16
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG MEDICORE, AMEX MARKET
VALUE INDEX AND ELECTRONICS INDUSTRY INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD ELECTRONIC
- ------------------------------------------------------------ INDUSTRY
(FISCAL YEAR COVERED) MEDICORE, INC. AMEX INDEX INDEX
-------------- ---------- ----------
<S> <C> <C> <C>
Measurement Pt-12/31/90 $ 100 $ 100 $ 100
FYE 12/31/91................................................ 83.33 123.17 123.78
FYE 12/31/92................................................ 125.00 124.86 161.54
FYE 12/31/93................................................ 116.67 148.34 220.67
FYE 12/31/94................................................ 325.00 131.04 266.25
FYE 12/31/95................................................ 633.33 168.90 411.33
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain of the officers and directors of the Company are officers and/or
directors of Techdyne and DCA, 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 and DCA; Mr. Langbein is also
the President, sole shareholder and director of Todd, a broker-dealer; Dennis W.
Healey, Senior Vice President and Treasurer of the Company, Executive Vice
President of Techdyne and officer and/or director of their subsidiaries, Vice
President and Treasurer of DCA, and Executive Vice President, Chief Financial
Officer, Treasurer, Secretary and director of Viragen; Daniel R. Ouzts, Vice
President of Finance and Controller of the Company and Techdyne and Controller
of DCA; Peter D. Fischbein (see "Election of Directors") and Anthony C. D'Amore
each a director of the Company and Techdyne; and Lawrence E. Jaffe, Secretary
and corporate counsel to the Company and DCA and counsel to Techdyne. Mr. Jaffe
is the beneficial owner of approximately 2.5% of the Company's common stock and
received a substantial portion of his fees from the Company, Techdyne and DCA,
which for the year ended December 31, 1995, were approximately $94,000, $90,000
and $33,000, respectively.
In addition, certain of the accounting personnel and administrative
facilities of the Company and its subsidiaries, including Techdyne and DCA, are
common. The costs of executive and accounting salaries and other shared
corporate overhead for these companies are charged first on the basis of direct
usage when identifiable, with the remainder allocated on the basis of time
spent. Since the shared expenses are allocated on a cost basis, there is no
intercompany profit involved. Utilization of personnel and administrative
facilities in this manner enables the Company to share the cost of qualified
individuals with its subsidiaries rather than duplicating the cost for various
entities. It is the opinion of management that these services are on terms as
favorable as obtainable from unaffiliated parties.
The amount of expenses charged by the Company to Techdyne and DCA were
$408,000 and $240,000, respectively for the year ended December 31, 1995. These
were included in the intercompany advances to Techdyne and deducted from the
intercompany receivable from the Company due DCA.
DCA had been advancing funds to the Company for working capital
requirements which advances had an outstanding balance of $4,263,000 at
September 30, 1995. This sum was not evidenced by a note, and bore interest at
the short-term U.S. Treasury bill rate. On October 4, 1995, the Company repaid
$1,000,000 of the intercompany indebtedness, which was further reduced in
November, 1995, when DCA declared a 50% stock dividend and thereafter a $1.30
per share dividend, which was effected by paying the .9% shareholders
approximately $29,000 and effecting a reduction of the Company's debt by
approximately $3,134,000, with no current balance at December 31, 1995 as a
result of expense allocations and cash transfers. All future transactions
between DCA and the Company and their respective officers, directors and 5%
shareholders will be on terms no less favorable than could be obtained from
independent, unaffiliated parties and will be approved by a majority of the
independent, disinterested directors of the Company.
14
<PAGE> 17
Since the Company's acquisition of Techdyne in 1982, through Techdyne's
public offering in April, 1985, the Company had been advancing funds to finance
that subsidiary's business. $900,000 of the resulting intercompany indebtedness
was repaid from the proceeds of Techdyne's public offering in 1985. Upon
completion of Techdyne' public offering in October, 1995, Techdyne repaid
$1,500,000 to the Company leaving a balance due to the Company at December 31,
1995 of $2,686,000 evidenced by an unsecured demand promissory note convertible
into common stock of Techdyne at a rate of $1.75 per share for an aggregate of
approximately 1,534,857 shares. The annual interest rate on the note is 5.7%.
There is no schedule for the repayment of such indebtedness. Pursuant to
Techdyne's refinanced credit facility with a Florida bank, the Company has not
only guaranteed the loans, and secured them with certain of its properties which
it leases to Techdyne, but has also agreed to subordinate this indebtedness,
provided Techdyne may make payments to the Company on the subordinated debt from
funds received in Techdyne's recent 1995 public offering of common stock and
warrants or from retained earnings arising subsequent to March 31, 1995,
provided that at the time of any such repayment to the Company, Techdyne is in
compliance with the financial covenants of the $712,500 term loan agreement. The
Company does not intend to require repayment of these advances prior to January
1, 1997.
In 1990 the Company acquired Techdyne's real property in Hialeah, Florida
consisting of the land and two buildings and a parking lot. Payment to Techdyne
was made through a reduction in the Company's advance account balance with
Techdyne less approximately $256,000 in existing mortgages on the property, and
during 1994 refinanced the mortgages with a $230,000 mortgage which has been
replaced with Techdyne's new loan agreements with a Florida bank. 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 had a credit facility with Consolidated Bank, N.A., now
NationsBank of Florida, which it had amended over the years, which at December
31, 1995 amounted to $549,508.
The $230,000 mortgage and the NationsBank credit facility were replaced on
February 8, 1996 by Techdyne entering into three loan arrangements with Barnett
Bank of South Florida, NA ("Barnett Bank"). One credit facility is a $2,000,000
line of credit, due on demand but in no event after June 30, 1996, secured by
Techdyne's accounts receivable, inventory, furniture, fixtures, and intangible
assets and bears interest at Barnett Bank's prime rate plus 1.25%.
Barnett Bank has also extended two commercial term loans to Techdyne, one
for $712,500 for five years expiring on February 7, 2001 at an annual rate of
interest equal to 8.28% with monthly payments of principal and interest of
$6,925 based on a 15-year amortization schedule with the unpaid principal and
accrued interest due on the expiration date. This term loan has a prepayment
penalty and is secured by a mortgage on properties in Hialeah, Florida owned by
the Company, two of which properties are leased to Techdyne and one parcel being
vacant land used as a parking lot. Under this term loan Techdyne is obligated to
adhere to a variety of affirmative and negative covenants, including but not
limited to a debt service ratio of 1:25 to 1:00, maintenance of capital funds
equal to or in excess of $3,500,000, have a capital fund ratio of total debt to
capital funds of 1.5 to 1.0; and Techdyne may not merge or acquire businesses,
create or transfer any assets to a subsidiary, if the aggregate annual value of
such transactions exceeds $750,000, cannot sell its interest in its subsidiary
Techdyne (Scotland) or allow that Scottish subsidiary to sell all or
substantially all of its assets unless 50% of the aggregate gross sales price is
used to pay this term loan, may not sell any of its assets or properties, except
inventory in the ordinary course of business, for which the aggregate book value
exceeds $500,000; and this term loan further provides for restrictions and
transactions with related persons, restrictions on dividends except if such does
not exceed 30% of Techdyne's net income in any year, precludes changes in
ownership in Techdyne which would reduce the Company's ownership to less than
51%, and restricts Techdyne from engaging in any new unrelated business.
The mortgage issued by the Company to secure the $712,500 term loan
provides Barnett Bank with reappraisal rights so that should the principal
amount outstanding under the Note exceed 75% of the reappraised value of the
mortgaged property, such excess has to be repaid by the Company and/or Techdyne.
The Company, as lessor to Techdyne of these mortgaged properties, has assigned
the leases, rents and profits
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to Barnett Bank as further security for this $712,500 term loan, provided the
Company may continue to collect the rents until an event of default, if any. The
Company has also subordinated the $2,500,000 of indebtedness due to it from
Techdyne. The Company, as lessor of the properties mortgaged, has subordinated
its interests in the leases to the mortgage held by Barnett Bank to secure this
term loan.
The second commercial term loan is for the principal amount of $200,000 for
a period of five years bearing interest at a per annum rate of 1.25% over
Barnett Bank's prime rate and requiring monthly principal payments with accrued
interest of $3,333 through expiration on February 7, 2001. This $200,000 term
loan carries no prepayment penalty and is secured by all of Techdyne's tangible
personal property, goods and equipment, and all cash or non-cash proceeds of
such collateral.
A default of the $712,500 term loan will be deemed a default of the
$2,000,000 revolving credit line, but only a financial default of the $2,000,000
revolving line will be deemed a default of the $712,500 term loan.
The Company has unconditionally guaranteed the payment and performance by
Techdyne of the $2,000,000 revolving line of credit and the two commercial term
loans.
Techdyne has advanced funds to Techdyne (Scotland) for that subsidiary's
working capital requirements which advances had an outstanding balance of
$600,000 at December 31, 1995. This sum is not evidenced by a note, is at
interest rate of prime plus 1.5% per annum, and is not expected to be repaid in
the near future. Techdyne has guaranteed a line of credit for Techdyne
(Scotland) from The Royal Bank of Scotland Plc which credit line has a U.S.
equivalency of approximately $620,000 at December 31, 1995, which is secured by
the assets of Techdyne (Scotland) and generated by Techdyne. This line of credit
operates as an overdraft facility. No amounts were outstanding under this line
of credit as of December 31, 1995.
As a result of Techdyne's 1995 public offering of common stock and
warrants, the Company's ownership of Techdyne decreased from 83.1% to 62.5%.
Property, casualty and general liability insurance coverage for the Company
and similar insurance for subsidiaries, including Techdyne and DCA, had been
obtained through the A.C. D'Amore Agency, Inc. an insurance agency owned by Mr.
D'Amore, a director of the Company and Techdyne and registered as a part-time
account executive with Todd, although he has not been active in the securities
business. In 1992, Mr. D'Amore sold his insurance business to Community
Insurance Associates to which agency he continues as a consultant. Mr. D'Amore
continues to receive commissions for the account of the Company and Techdyne but
not DCA. The aggregate annual premiums for such insurance were approximately
$179,000 for the year ended December 31, 1995 of which $136,000 and $6,000 were
allocated, respectively to Techdyne and DCA. Mr. D'Amore's commissions amounted
to approximately $9,700. In addition, the Company, Techdyne and DCA obtained
group health insurance coverage and several executive and key life insurance
policies through George Langbein, brother of Thomas K. Langbein. This insurance
includes $100,000 term life insurance covering certain of the executive officers
of the Company, Techdyne and DCA, purchased and paid for by their respective
companies. George Langbein is affiliated as an independent sales representative
with Techdyne. The Company also pays for $750,000 of whole life insurance and
$350,000 of term life insurance owned by Thomas K. Langbein. The Company owns a
$500,000 life policy on Thomas K. Langbein. See "Executive Compensation."
Premiums on these coverage's totaled approximately $311,000 for the year ended
December 31, 1995 of which $181,000 and $67,000, respectively were allocated to
Techdyne and DCA. 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.
Dialysis Services of Pennsylvania, Inc. -- Lemoyne, a wholly-owned
subsidiary of DCA, which commenced dialysis operations in June, 1995, is leasing
its dialysis center from DCA under a five year net lease expiring November 30,
2000 at $60,000 per annum plus applicable taxes, utilities, insurance and its
proportionate share of related operating costs. Management is of the opinion
that the rental is on terms as favorable as can be obtained from unaffiliated
parties.
The Company established Viragen as a research and development bio-medical
company, primarily for production and use of human leukocyte interferon, in
1980. It has advanced and invested substantial funds to that former subsidiary
over the years. In 1986, the Company spun-off Viragen and entered into certain
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<PAGE> 19
agreements with its former subsidiary, the primary existing agreements being a
royalty agreement expiring in November, 2001, pursuant to which Viragen is to
pay a schedule of royalty payments with respect to Viragen's interferon and
related product sales with a maximum cap of $2,400,000. As of December 31, 1995,
Viragen has paid approximately $62,000 of royalties to the Company. Also in
conjunction with the spin-off, certain of Viragen's indebtedness was paid with
Viragen common stock, with the Company at December 31, 1995 owning 951,000
shares, approximately 2.7% of Viragen's outstanding shares. Viragen shares owned
by the Company were stated at a carrying value of $234,375 at December 31, 1990
and were written off in 1991. The Company sold 173,000 shares of Viragen common
stock in 1995 realizing $183,000. The Company also holds a demand promissory
note of $429,400 with interest at 1% over prime, payable quarterly. The note,
which reflects 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. Equitable Bank holds a mortgage in the principal
amount of approximately $468,000 at December 31, 1995. 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 amoritizable in accordance with the amortization of the
Equitable Bank note which is payable in equal monthly installments of principal
of $2,500 plus interest a 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.
The only remaining common director of the Company and Viragen is Peter D.
Fischbein, also a director of Techdyne. Mr. Fischbein is an attorney who had
acted from time to time as counsel to the Company, Techdyne, Todd and Viragen.
In December, 1994 Mr. Fischbein resigned as Secretary of Viragen. See "Election
of Directors" and "Beneficial Ownership of the Company's Securities."
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 1997 Proxy Statement must be received by the Company not later than December
17, 1996. Any such proposal should be sent to the Secretary of the Company, 777
Terrace Avenue, Hasbrouck Heights, New Jersey 07604. Any such proposal should
provide the reason for it, the complete text of any resolution and other
specified matters, and must comply with Rule 14a-8 of Regulation 14A of the
proxy rules of the Securities and Exchange Commission.
To nominate a director at the Annual Meeting, a shareholder must satisfy
Florida law and the By-laws of the Company. A shareholder who wishes to suggest
a potential nominee should provide the Secretary of the Company for the 1997
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
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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.
OTHER MATTERS
Management is not aware of any other matter to be presented for action at
the meeting other than the proposal to elect one member of the Class 1 directors
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 APRIL 12, 1996, 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, 1995
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
April 25, 1996
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APPENDIX A
PROXY
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 stockholder of record on
April 12, 1996 at the Annual Meeting of Shareholders to be held Wednesday, June
5, 1996, 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. DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 1. SHARES WILL BE SO VOTED
UNLESS OTHERWISE INDICATED.
1. Election of Director:
Nominee: Peter D. Fischbein for Class 1 director.
<TABLE>
<S> <C>
/ / FOR director nominee listed; / / WITHHOLD AUTHORITY to vote for
director nominee listed
</TABLE>
2. In their discretion, such other business as may properly come before the
meeting.
Dated: , 1996
------------------
------------------------------
(Signature)
------------------------------
(Signature)
Signatures(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 stock is registered in the
names of joint owners, the
proxy should be signed by
each. If the stockholder 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
