SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No.)
Check the appropriate box:
[ ] Preliminary Information Statement [ ] Confidential, for Use of the
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by Rule 14c-5(d) (2))
DIALYSIS CORPORATION OF AMERICA
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(Name of Registrant as Specified In Its Charter)
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April 12, 2002
To: Our Shareholders
From: Thomas K. Langbein
Subject: Invitation to the Dialysis Corporation of America 2002 Annual Meeting
of Shareholders
Management is extending its invitation to you to attend our annual
meeting on Wednesday, May 29, 2002. The annual meeting is being held at the New
Jersey executive offices of our parent, Medicore, Inc., 777 Terrace Avenue,
Hasbrouck Heights, New Jersey 07604 at 11:00 a.m. In addition to the formal
items of business, our President, Stephen W. Everett, will review the major
developments of 2001 to the present and answer your questions.
This booklet includes the Notice of Annual Meeting and the Information
Statement. Proxies are not being solicited since a quorum exists for the meeting
through Medicore's 62% ownership of Dialysis Corporation of America. The
Information Statement also describes the business we will conduct at the
meeting, basically the election of six directors, and provides information about
Dialysis Corporation of America.
We look forward to seeing you at the annual meeting.
/s/ THOMAS K. LANGBEIN
-----------------------------------------
Thomas K. Langbein
Chairman of the Board and
Chief Executive Officer
DIALYSIS CORPORATION OF AMERICA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
-------------------------------------------------
Date: Wednesday, May 29, 2002
Time: 11:00 a.m.
Place: Executive Offices of our Parent
Medicore, Inc.
777 Terrace Avenue, 5th Floor
Hasbrouck Heights, New Jersey 07604
(201) 288-8222
-------------------------------------------------
Dear Shareholder:
You are cordially invited to attend the 2002 Dialysis Corporation of
America Annual Meeting of Shareholders to:
1. Elect six directors; and
2. Transact any other business that may properly be presented
at the annual meeting.
If you were a shareholder of record at the close of business on April
11, 2002, you are entitled to vote at the annual meeting.
Your copy of the Annual Report on Form 10-K of Dialysis Corporation of
America for 2001 is enclosed.
By order of the Board of Directors
/s/ LAWRENCE E. JAFFEE
-----------------------------------------
Lawrence E. Jaffe
Counsel and Corporate Secretary
April 12, 2002
TABLE OF CONTENTS
Page
----
Information About the Annual Meeting and Voting............................ 2
Proposals.................................................................. 4
Information About Directors and Executive Officers......................... 5
Executive Compensation..................................................... 9
Board Executive Compensation Report........................................ 14
Performance Graph.......................................................... 16
Certain Relationships and Related Transactions............................. 16
Beneficial Ownership of the Company's Securities........................... 20
Available Information...................................................... 22
INFORMATION STATEMENT FOR
DIALYSIS CORPORATION OF AMERICA
2002 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Q: Why did you send me an Information Statement?
A: Management of Dialysis Corporation of America is inviting you to attend
and vote at the 2002 annual meeting. This Information Statement
summarizes the information you need to know to vote intelligently.
Q: Why did you not send me a proxy?
A: This is because a quorum already exists based upon the 62% ownership of
the company's voting securities by Medicore, Inc., our parent company.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
Q: What does a quorum mean?
A: A quorum means a majority of the outstanding shares. The annual meeting
may only proceed if a quorum is present at the meeting. A majority of the
outstanding shares will be present at the meeting through Medicore. At
April 11, 2002, the record date, there were 3,887,344 shares of Dialysis
Corporation of America common stock outstanding. Medicore owns 2,410,622
shares of Dialysis Corporation of America common stock or approximately
62% of the votes. A shareholder list will be available at the executive
offices of our parent in Hasbrouck Heights, New Jersey at the meeting and
for 10 days prior to the meeting for your review.
Q: Who is entitled to vote?
A: Shareholders who owned Dialysis Corporation of America common stock at
the close of business on April 11, 2002, the record date. Dialysis
Corporation of America intends to send this Information Statement, the
attached Notice of Annual Meeting, and its 2001 Annual Report on Form
10-K, which includes financial statements, on April 25, 2002 to all
shareholders entitled to vote.
Q: How many votes do I have?
A: Each share of common stock is entitled to one vote.
Q: What am I voting on?
A: The election of six directors, Messrs. Thomas K. Langbein, Stephen W.
Everett, Bart Pelstring, Robert W. Trause, Alexander Bienenstock and Dr.
David L. Blecker, for a one year term. There is nothing else that we are
aware of that is presently the subject of consideration at the meeting.
Q: How do I vote?
A: By attending the annual meeting. At that time you will be given a ballot
and you may vote your shares. If your shares of Dialysis Corporation of
America common stock are held in the name of a broker, bank or other
nominee, you must bring an account statement or letter from the nominee
showing you were the beneficial owner of the shares on April 11, 2002,
the record date.
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Q: Is my vote confidential?
A: Yes. Only the inspectors of election and other employees of Dialysis
Corporation of America assisting in tallying the vote will have access to
your vote and comments.
Q: Who counts the votes?
A: We appoint two persons to act as inspectors of election, who each take an
oath to accept that responsibility and certify the voting to the board.
Q: What does it mean if I receive more than one Information Statement?
A: Your shares of Dialysis Corporation of America common stock are probably
registered in more than one name or account. It would be appreciated if
you would contact our transfer agent, Continental Stock Transfer & Trust
Company, 17 Battery Place, New York, New York 10004 (Attention: Proxy
Department) and tell them to put all your accounts registered in the same
name at the same address.
Q: How much common stock do officers and directors own?
A: Approximately 1.5% of our common stock as of the record date, and with
the officers and directors of Medicore, ownership of Dialysis Corporation
of America would be approximately 8%. This does not include Medicore's
62% (2,410,622 shares) of Dialysis Corporation of America common stock
ownership.
Q: Who are the largest principal shareholders?
A: As of the record date, other than Medicore's 62% ownership, no other
shareholder to our knowledge owns in excess of 5% of our common stock.
However, based on beneficial ownership, which includes shares of common
stock a person is entitled to acquire within the next 60 days, Thomas K.
Langbein, Chairman of the Board and Chief Executive Officer, beneficially
owns 6.3% represented by an option to purchase 260,000 shares of the
company's common stock. See "Information About Directors and Executive
Officers" and "Beneficial Ownership of the Company's Securities."
Q: Who sends out the Information Statements and Annual Reports and what are
the costs?
A: The company is sending out the Information Statement and Annual Report to
shareholders.
We will ask banks, brokers and other institutions, nominees and
fiduciaries to forward these materials to their principals and we will
reimburse them for their reasonable expenses in forwarding the materials.
The company pays all expenses of preparing and delivering the Information
Statements and Annual Reports, including printing, envelopes, mailing and
similar out-of-pocket expenses.
Q: Who is eligible to submit a proposal?
A: To be eligible, you must have continuously held at least $2,000 in market
value, or 1%, of Dialysis Corporation of America's common stock for at
least one year by the date you submit the proposal. You must continue to
hold your Dialysis Corporation of America shares through the date of the
meeting. However, please remember that Medicore's 62% ownership will
determine the outcome of any proposal.
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Q: When are the year 2003 shareholder proposals due?
A: Shareholder proposals must be submitted in writing by December 12, 2002
to Lawrence E. Jaffe, corporate Secretary, Dialysis Corporation of
America, 777 Terrace Avenue, Hasbrouck Heights, New Jersey 07604. Any
proposal should provide the reasons for it, the text of any resolution,
and must comply with Rule 14a-8 of Regulation 14A of the proxy rules of
the SEC.
Q: Where can I find more information about the Company?
A: You can obtain information about Dialysis Corporation of America on our
website, www.dialysiscorporation.com. We would appreciate your providing
us with your e-mail address, so we can more efficiently communicate with
you. We will only use your e-mail address for communications from the
company to you, and will not provide your e-mail address to any other
person, other than as necessary for us to communicate with you. Also see
"Available Information" at the end of this Information Statement.
PROPOSALS
Proposal No. 1 - Election of Directors
Nominees for election for a one year term are:
Position
Name Age Current Position Held Since
---- --- ---------------- ----------
Thomas K. Langbein 56 Chairman of the Board 1980
Chief Executive Officer 1986
Stephen W. Everett 45 President and director 2000
Bart Pelstring 61 Director 1985
Robert W. Trause* 59 Director 1998
Alexander Bienenstock* 64 Director 2001
Dr. David L. Blecker* 54 Director 2001
* Member of audit committee.
Our by-laws provide that the board shall not be less than two nor more
than six persons. A majority of directors, although less than a quorum, or a
sole remaining director, have the right to appoint candidates to fill any
vacancies on the board. When appointed, such director shall then serve for the
remainder of the term.
There is no nominating committee. Nominations for directors are
considered by the entire board.
The affirmative vote of a plurality of the shares of common stock
represented at the meeting is required to elect the nominees as directors.
Abstentions and votes withheld for any nominee will have the same effect as a
vote against his election.
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Medicore owns 2,410,622 shares or 62% of the voting stock of the
company, and intends to vote all of its shares in favor of the election of the
six nominees of management for directors, thereby assuring their election as
directors.
The nominees have consented to serve on the board. If any nominee is
unable to serve for any reason, the parent's controlling block of company common
stock will be voted for any substitute nominee as designated by the board.
For more information about the directors and executive officers see
"Information About Directors and Executive officers."
Other Matters to be Presented to Shareholders
Management is not currently aware of any other matter to be presented
for action at the annual meeting other than the election of the six directors,
and management does not presently intend to bring any other matter before the
meeting.
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors
The board of directors oversees the business and affairs of the company
and monitors the performance of management. In accordance with corporate
governance principles, the board does not involve itself in day-to-day
operations. The board is kept knowledgeable and informed through discussions
with the Chairman, other directors, executives and advisors (counsel, outside
auditors, investment bankers and other consultants), by reading reports,
contracts and other materials sent to them and by participating in board and
committee meetings.
The board met nine times during 2001, including unanimous written
consents. Except for one meeting, all directors participated at the meetings,
either present in person or by telephone conference call.
Directors Standing For Election
Thomas K. Langbein has been affiliated with the company since 1980. He
is Chairman of the Board and Chief Executive Officer of each of the company's
subsidiaries. Mr. Langbein is the Chairman of the Board, Chief Executive Officer
and President of Medicore, our parent. Mr. Langbein is President, sole
shareholder and director of Todd & Company, Inc., a broker-dealer registered
with the SEC and a member of the NASD. Mr. Langbein was appointed as a director
of Linux Global Partners, Inc. a private Linux software company in which
Medicore, in January, 2000, acquired an ownership interest and to which company
our parent provided loans, with funding from our company. Mr. Langbein devotes
most of his time to the affairs of the company, Medicore, and Linux Global
Partners. See "Certain Relationships and Related Transactions."
5
Stephen W. Everett has been involved in the healthcare industry for
over 22 years. From 1993 to 1997, Mr. Everett was responsible for oversight,
deal structuring, physician recruitment and practice management for the renal
care division of Vivra, Inc., the second largest provider of dialysis services
in the United States. Mr. Everett held positions of similar responsibility in
1998 through his affiliation with Physicians Practice Management, engaged in
consulting and management in the renal healthcare field. He joined the company
in November, 1998 as Vice President, became Executive Vice President in June,
1999, and President on March 1, 2000.
Bart Pelstring has been affiliated with the company since 1976. Mr.
Pelstring was appointed as President in 1986, which position he relinquished on
March 1, 2000. Mr. Pelstring is a founding member of the National Renal
Administrators Association and was the founder and president of the Florida
Renal Administrators Association.
Robert W. Trause is a senior commercial account specialist engaged in
the marketing of commercial insurance specializing in property and casualty
insurance sales to mid-to-large range companies. He has been affiliated with an
insurance agency in New Jersey since 1991.
Alexander Bienenstock is a practicing attorney, specializing in
securities and corporate work. From September, 2000 through October, 2001 he was
a legal consultant with IDT Corp., a NYSE telecommunications company. He was
affiliated with several law firms, the most recent, Gusrae, Kaplan & Bruno (1997
to 1998), and was counsel from 1998 to February, 2000, to a small brokerage firm
no longer in business. Mr. Bienenstock's background includes having been an
adjunct assistant professor in accounting and management, and Chief Attorney,
Branch of Small Issues of the New York Regional Office of the SEC.
Dr. David L. Blecker, M.P.H., is board certified in internal medicine
and nephrology by the American Board of Internal Medicine, and also holds board
certifications from the American Board of Preventative Medicine and the American
Board of Medical Management. Dr. Blecker is Chief in Nephrology and Director of
Dialysis at Kessler Memorial Hospital in Hammonton, New Jersey (since 1984),
Chief of Nephrology and Internal Medicine at Atlantic City Medical Center,
Atlantic City, New Jersey (since 1984), and is Assistant Clinical Professor of
Medicine at the University of Medicine and Dentistry of New Jersey (since 1992).
He is affiliated with four other hospitals in southern New Jersey, is a member
of many medical associations, and has published over 30 medical articles. Dr.
Blecker is the medical director of two of our dialysis facilities in New Jersey.
See "Certain Relationships and Related Transactions."
Executive Officers
Name Age Position Held Since
---- --- -------- ----------
Thomas K. Langbein* 56 Chief Executive Officer 1986
(Chairman of the Board) 1980
Stephen W. Everett* 45 President 2000
Tim Rumrill 41 Vice President (Finance)
and Chief Financial Officer 2002
Daniel R. Ouzts 54 Vice President and Treasurer 1996
6
* For information concerning Messrs. Langbein and Everett, see
"Information About Directors and Executive Officers."
Tim Rumrill became affiliated with the company on January 28, 2002. He
has been involved in the healthcare industry for the last eight years, recently,
from August, 1998 to December, 2001, as Chief Financial Officer of Flagship
Health, P.A., a physician practice management company. From 1994 to July 1998,
he was Vice President of Finance for Better Health Plan, a subsidiary of Coastal
Physician Group, at that time a NYSE company.
Daniel R. Ouzts served as controller of the company from 1983 through
January, 2002, and Vice President from 1996 through January, 2002. He serves as
Vice President of Finance and Controller of Medicore. Mr. Ouzts is a certified
public accountant. See "Certain Relationships and Related Transactions."
There are no family relationships among any of the officers or
directors of the Company.
Board Committees
The only board committee is the audit committee, consisting of Robert
W. Trause, Alexander Bienenstock and Dr. David L. Blecker. The audit committee
met four times in 2001, sometimes alone, with management, and with our
independent auditors. The audit committee 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 our internal audit control
procedures. The audit committee reviewed our annual and quarterly results, the
Audit Committee Report, provided below, and company disclosure filings, before
filing.
Compensation of Directors
No standard arrangements for compensating directors for services as
directors or for participating on any committee exists. We reimburse directors
for travel and related out-of-pocket expenses incurred in attending shareholder,
board and committee meetings, which expenses have been minimal. In lieu of any
cash compensation or per meeting fees to directors for acting as such, we have
provided directors, among others, with options to purchase common stock of the
company at exercise prices no less than the fair market value as of the date of
grant. See "Executive Compensation - Options, Warrants or Rights," and
"Beneficial Ownership of the Company's Securities" below.
Report of the Audit Committee
Under the guidance of its written Audit Committee Charter, which was
adopted in June, 2000, the audit committee is charged with overseeing the
accounting, reporting practices, and the quality and integrity of financial
reports of our company.
Management has the primary responsibility for the system of internal
controls and the financial reporting process. Our independent accountants have
the responsibility to express an opinion on the
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financial statements based on an audit conducted in accordance with generally
accepted auditing standards. The audit committee has the responsibility to
monitor and oversee these processes.
In fulfilling its responsibilities, the audit committee recommended to
the board the selection of the company's independent accountants, Wiss &
Company, LLP for 2002. That firm has discussed with the audit committee and
provided written disclosures to the audit committee relating to that firm's
independence, as required by the Independence Standards Board for auditors of
public companies. The discussions and disclosure informed the audit committee of
Wiss & Company's independence, and assisted the audit committee in evaluating
such independence. The committee also considered whether Wiss & Company's
provision of non-audit services to the company was compatible with the auditor's
independence. Wiss & Company did not provide non-audit services which would
impact its independence with respect to the company. The audit committee also
discussed with the independent auditors other matters required to be
communicated under generally accepted auditing standards.
The audit committee reviewed with our Vice President and Chief
Financial Officer and with our independent auditors the overall scope and
specific plans for their audit. They also discussed with the independent
accountants the result of their examinations, their evaluation of the company's
internal controls, and the overall quality of Dialysis Corporation of America's
accounting and financial reporting. The audit committee also reviewed all fees
paid or payable to the independent auditors, which fees are discussed at the end
of this report.
The committee reviewed and discussed with management and the
independent accountants the company's audited financial statements.
Following these actions, the audit committee recommended to the board
that the audited financial statements be included in the company's Annual Report
on Form 10-K for the year ended December 31, 2001 for filing with the SEC.
Independent Public Accountants
1. Audit Fees. The aggregate fees billed or expected to be billed
for professional services rendered for the audit of the company's annual
financial statements and those of its subsidiaries for the most recent fiscal
year 2001, and the reviews of the financial statements included in the company's
Forms 10-Q for that fiscal year, are $37,000.
2. Financial Information Systems Design and Implementation Fees. $0.
3. All Other Fees. Fees billed or expected to be billed for services
rendered for the most recent fiscal year 2001 for tax return preparation
services are $11,000.
The audit committee has considered the compatibility of these services
with the auditor's independence.
The Audit Committee
Alexander Bienenstock, Chairman
Robert Trause
Dr. David L. Blecker
March 26, 2002
8
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, 2001 for services in all capacities for its Chief Executive Officer and its
President. No other executive officer received a total annual salary, bonus or
other compensation which exceeded $100,000 for the year ended December 31, 2001.
Summary Compensation Table
Long Term
Annual Compensation Compensation Awards
------------------------------------------------- --------------------
(a) (b) (c) (d) (e) (g) (i)
Securities
Underlying
Other Annual Options/SARs (#) All Other
Name and Salary Bonus Compensation -------------------- Compensation
Principal Position Year ($) ($) ($) Company Medicore $
- ------------------------- ---- --------- --------- ------------ ------- -------- ------------
Thomas K. Langbein, CEO 2001 57,000(1) 170,000(2) 6,000(3) 500,000(4)
2000 69,000(1) 7,100(3) ------ 550,000
1999 67,000(1) 8,100(3) 260,000 ------
Stephen W. Everett, Pres. 2001 115,000(5) 50,000(6) 14,600(7)
2000 114,100(5) 474(7) ------ 25,000
1999 35,000 ------
- ---------------
(1) Annual compensation paid by Medicore, which was $285,000, $278,000 and
$268,000 respectively, for fiscal 2001, 2000 and 1999. Amounts included
in the Summary Compensation Table reflect the compensation allocated to
the company in proportion to the time spent on its behalf.
(2) Medicore bonus accrued in 2001 and paid in April, 2002.
(3) Automobile allowance and related expenses, and life and disability
insurance premiums paid by Medicore amounted to $29,800, $28,500 and
$32,400, respectively for 2001, 2000 and 1999. As part of the general
corporate overhead allocation, the amounts in the Summary Compensation
Table reflect the portion of such payment which is allocated to the
company.
(4) Medicore grant of restricted common stock award.
(5) All compensation paid by the company.
(6) Accrued in 2001 and paid in January, 2002.
(7) Includes automobile allowance and related expenses of $9,600 for 2001
and $474 for 2000, and moving expenses of $5,000 for 2001, all of which
were paid by the company.
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements
Stephen W. Everett, President and director of the company, has a
five-year employment contract through December 31, 2005, providing him with a
first year salary of $120,000, increasing a minimum of
9
$10,000 per annum the second and third years, and for each of the two remaining
years, the prior year's adjusted compensation increased by an amount equal to
the lesser of 3% of pre-tax profits or $10,000. Mr. Everett's employment
agreement also provides:
o employee and fringe benefits to the extent available by the
company to other similarly situated executive employees
o reimbursement for reasonable out-of-pocket expenses incurred in
connection with his duties
o vacations normally taken by senior management; compensated for
annual vacation
o termination
- death; three months' severance pay
- for cause; salary and expenses to date of termination
("cause" includes conviction for fraud or criminal
conduct, habitual drunkenness or drug addition,
embezzlement, regulatory agency sanctions against Mr.
Everett or the company due to his wrongful acts, material
breach of the agreement, dishonesty, or resignation,
except if due to breach by the company)
- by the company after 13 weeks of disability; three months'
severance pay
- by Mr. Everett upon breach by the company; severance pay
equal to the greater of six months of his then
compensation or his remaining compensation under the
agreement
o confidentiality restrictions two years from termination
o non-competition for one year from termination within the United
States; provided, non-competition eliminated if the company
terminates Mr. Everett without cause or due to the company's
material breach of the agreement
o Mr. Everett to assign any patents, property rights, discovery or
idea to the company
Thomas K. Langbein has an employment agreement with Medicore through
August 31, 2003 at an annual salary, presently $291,500 with yearly increases in
increments of no less than $10,000. The Medicore employment agreement also
provides:
o monthly automobile allowance
o benefit plans and other fringe benefits available to Medicore
employees generally and executives
o reimbursement for business expenses
o payment of universal and term life insurance owned by Mr.
Langbein
o indemnification for acting as an officer and/or director of the
company and Medicore, and its subsidiaries
o non-competition for two years from termination within 20 miles of
Medicore's primary operations; Medicore option to request
non-competition within the United States at $4,000 per month for
each 12 month period, with escalation thereafter
o full compensation first 90 days of disability with the option to
Medicore to continue the employment with full compensation less
disability payments, or terminate
The Medicore employment agreement also contains different termination
provisions as follows:
o upon death, wrongful termination (defined below), disability
termination or change in control (defined below), a lump sum
payment equal to Mr. Langbein's salary, including expenses and
benefits, for three years from termination
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o Mr. Langbein has option to take 400,000 shares of Medicore common
stock instead of the lump sum payment; two year right to demand
registration of the Medicore shares and for three years to
include the Medicore shares in any registration statement filed
by Medicore; registration to be at the sole cost of Medicore
o full vesting of any warrants, options or similar rights, Mr.
Langbein has choice to keep those options , otherwise Medicore
has to repurchase them at a certain repurchase formula
o for cause by Medicore - no benefits or salary
o for good reason (defined below) by Mr. Langbein - Medicore
continues to pay salary, benefits and expenses, and all options
and other securities shall be fully vested and exercisable; or
provide Mr. Langbein with the lump sum payment or, at Mr.
Langbein's option, Medicore to acquire the shares
o expiration if Medicore does not renew or enter into new
employment agreement, there is a severance allowance which is the
lump sum payment or Mr. Langbein's option to take the Medicore
shares.
Definitions
o "cause" - willful failure to perform duties under the employment
agreement, and illegal or gross misconduct which damages the
business or reputation of Medicore
o "good reason" - assigning Mr. Langbein duties inconsistent with
his position or any action that results in reducing Mr.
Langbein's authority, duty or responsibilities; reduction of
salary, expenses or benefits; or other substantial breach of the
agreement
o "change in control" includes (a) the announcement for and/or
acquisition by any person not affiliated with Mr. Langbein of 25%
or more of the outstanding common stock, or (b) a sale of
substantially all of the assets, or a merger or acquisition of
Medicore, or (c) certain changes in the board other than through
shareholder elections of members nominated by the existing board.
Certain executive and accounting personnel and administrative
facilities of the company, Medicore, and Techdyne, Inc., a public subsidiary of
Medicore up through June 27, 2001, when Medicore sold it, were common for fiscal
2001. 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 any balance allocated on the basis of time spent. Mr.
Langbein, as an officer and director, and Mr. Ouzts, as an officer, of the
company, Medicore and Techdyne, divided their time and efforts among these
companies. See "Certain Relationships and Related Transactions."
Options, Warrants or Rights
1995 Dialysis Corporation of America Stock Option Plan
o expired November 9, 2000
o terms were similar to the 1999 Plan (see below)
o 5,000 outstanding to a director exercisable at $2.25 per share
through June 9, 2003
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1999 Dialysis Corporation of America Stock Option Plan
o expires April 20, 2009
o grants available to officers, directors, consultants, key
employees, advisors and similar parties
o options (non-qualified and incentive) may be up to five years,
may require vesting, exercise price determined by board of
directors
o options may, at discretion of board, be exercised either with
cash, common stock with fair market value equal to cash exercise
price, optionee's personal non-recourse or recourse note, at the
discretion of the board, or assignment to the company if
sufficient proceeds from the sale of common stock acquired upon
exercise of the option with an authorization to the broker to pay
that amount to the company, or any combination of such payments
o termination of optionee's affiliation with the company by
- death, disability or retirement after age 65, exercisable
for nine months but not beyond option expiration date
- termination for cause, right to exercise terminates
immediately
- any other termination, 30 day exercise
o options are non-transferable
o forced redemption at formulated prices upon change in control of
the company which includes (i) sale of substantially all of the
assets of the company or its merger or consolidation; (ii)
majority of the board changes other than by election of
shareholders pursuant to board solicitations or vacancies filled
by board caused by death or resignation; or (iii) a person or
group acquires or makes a tender offer for at least 25% of the
company's common stock
o 1999 Plan history to April 11, 2002
- 1,500,000 shares reserved for issuance
- options for 800,000 shares granted in 1999
435,000 non-qualified options (only remaining
option for 35,000 shares, expires April 20, 2004)
365,000 incentive options expiring April 20, 2004
exercisable at $1.25 per share
- options for 240,000 shares granted in 2001
15,000 non-qualified options; five years at $1.50
per share
165,000 incentive options; five years at $1.25;
66,000 vested (33,000 vest each January 1)
60,000 incentive options; five years at $1.50
50,000 vest at 12,500 each September 5
commencing 2002
10,000 vest at 2,500 each September 5
commencing 2002
- 60,000 options cancelled due to termination of affiliation
with the company
- 340,000 options exercised; payment of par value and three
year non-recourse promissory notes for the balance; stock
held by the company as collateral to secure notes
- 481,000 options outstanding, all incentive options except
for 35,000 options, and 159,000 non-vested
The exercise price of options is no less than 100% of the fair market
value of the common stock on the date of grant.
12
Option/SAR Grants In Last Fiscal Year
Individual Grants
- ------------------------------------------------------------------------------- Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options/SARs Price Appreciation
Underlying Granted to Exercise For Option Term
Options/SARs Employees in Price Expiration -----------------------
Name Granted (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
(a) (b) (c) (d) (e) (f) (g)
- ---- ------------ ------------ -------- ---------- ----------- ----------
Stephen W. Everett 165,000(1) 68.8 $1.25 1/1/06 $ -0- $11,220
- ---------------
(1) Option for 33,000 shares vest each January 1, which vesting commenced
in 2001; accordingly, options for 99,000 shares are not vested. Options
are exercisable for five years.
Aggregated Option/SAR Exercises In Last Fiscal Year and FY-End Option/SAR Values
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
at FY-End (#) Fiscal Year End($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable($)
- ----- ---------------- -------------- --------------- ------------------
CEO
Thomas K. Langbein
Company Options -0- -0- 260,000 (exer.) 572,000(1)
Medicore Options -0- -0- 550,000 (exer.) 57,000(2)
Stephen W. Everett
Company Options -0- -0- 101,000 (exer.) 222,200(3)
99,000 (unexer.) --(4)
Medicore Options -0- -0- 25,000 (exer.) 4,750(5)
- ----------
(1) The options are exercisable at $1.25 per share through April 20, 2004,
and the closing price of the company's common stock as reported by
Nasdaq at December 31, 2001, was $3.45.
(2) The Medicore options are exercisable for 250,000 shares through
February 16, 2003 at $3.25 per share, and for 300,000 shares through
July 26, 2005 at $1.38 per share. The closing price of the Medicore
common stock as reported by Nasdaq as of December 31, 2001 was $1.57.
(3) Options for 35,000 shares exercisable at $1.25 per share through April
20, 2004; and options for 66,000 shares exercisable at $1.25 per share
through January 1, 2006. See note (1) for closing price of the common
stock.
13
(4) Non-vested options. Options vest 33,000 each January 1.
(5) The options are exercisable through July 26, 2005 at $1.38 per share.
See note (2) for the closing price of the Medicore common stock.
BOARD EXECUTIVE COMPENSATION REPORT
We are a small company engaged in developing and operating outpatient
dialysis facilities and providing inpatient dialysis services. Therefore we have
no executive compensation committee. Compensation of our executive officers is
considered by all members of the board of directors. We have one employment
agreement with our President. See "Executive Compensation - Employment Contracts
and Termination of Employment and Change-in-Control Arrangements." Our
philosophy is to align compensation of management with the long-term interests
of shareholders. Executive compensation is structured to motivate management to
create and sustain shareholder value. The board attempts to accomplish this goal
by:
(i) aligning the interests of management and shareholders through
stock ownership; and
(ii) seeking growth and performance of our company by attracting,
retaining and motivating talented executives and employees
through competitive compensation.
What is the structure of executive compensation?
The elements of executive compensation include:
o base pay
o long-term incentives
o special awards in recognition of extraordinary efforts and
achievements
How is base pay determined?
Base pay is determined by individual performance and position with and
responsibilities to the company. We also try, although it is more difficult for
us since we are not a significant participant in the dialysis industry, to be
competitive with salaries in an attempt to be able to maintain quality
executives. Base salaries for management are below major competitors, which
competitors are much larger than the company.
Responsibilities of the Chairman of the Board, Chief Executive Officer and
President
Thomas K. Langbein, Chairman of the Board and Chief Executive Officer,
has been affiliated with the company for 22 years. Stephen W. Everett, although
affiliated with the company for three and one-half years, and as its President
since March, 2000, has been involved in the health care industry for over 22
years, and in recent years, affiliated with a major healthcare company. See
"Information About Directors and Executive Officers - Directors Standing for
Election." Messrs. Langbein and Everett have
14
been most responsible for the company's performance and recent growth. The
President seeks new areas and physician and hospital alliances and, with Mr.
Langbein, evaluates the potential for growth and expansion of our operations,
facilities and patient base. In evaluating the performance and setting Mr.
Langbein's and Mr. Everett's compensation, the board took into account their
efforts in directing our operations, seeking new sources of capital for us and
our dialysis operations, pursuing new areas to develop or acquire dialysis
facilities, and motivating key executive management toward greater overall
efficiencies in labor, cost control and increased business. Mr. Langbein and Mr.
Everett did not participate in decisions affecting their own compensation.
What are long-term incentives?
Long-term incentive awards for executives usually take the form of
granting stock options under the company's option plans or granting restricted
stock awards, meaning shares which cannot be publicly sold for a certain period
of time, usually from one to two years. We believe the granting of stock options
or restricted shares helps align the interests of our executives with our
shareholders. This is premised on the basic principle that the executives will
receive value only if the market value of our common stock increases over time.
Our market price has increased during 2001 and in recent months, in spite of the
adverse economy and market conditions. This was primarily due to executive
management's efforts in improving our operations, providing growth, and for the
first year in many years, generating profitability. See "Growth And
Profitability" below, and Item 5, "Market for the Registrant's Common Equity and
Related Stockholder Matters" of our Annual Report on Form 10-K for the year
ended December 31, 2001 accompanying this Information Statement.
Special Awards
Special awards may be granted from time to time in recognition of
extraordinary efforts and achievements. Such may arise based upon an executive's
extraordinary efforts in accomplishing expansion, acquisitions, increasing
market share and similar events. These situations and extent of awards are
evaluated on a case by case basis.
Growth And Profitability
Over the years we have developed and sold certain of our dialysis
centers. By 1989, we had sold all but one center, but we made an effort to grow,
and in 2001 we had expanded to ten dialysis centers and nine acute inpatient
hospital service agreements, and in our first quarter of 2002, we have grown to
11 dialysis facilities, nine acute inpatient hospital service agreements, have
executed agreements for the acquisition of a dialysis unit in Georgia, and have
two additional facilities in the development stage ready for construction, one
in Ohio and the other in Maryland. Our medical services revenues have more than
doubled since last year, climbing to approximately $18,920,000 from $8,769,000
in 2000. But most significant is that we reflected net income of $784,000
compared to a loss in 2000 of $356,000. This is the first year in approximately
12 years that our company has reflected net income from operations. See Item 6,
"Selected Financial Data" and Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" of our Annual Report on Form 10-K
for the year ended December 31, 2001 accompanying this Information Statement. We
are proud of our management and employees, who are dedicated to our operations
and the growth of our company. We continue to be motivated, and
15
have every reason to expect that our growth and profitability will continue in
2002. We are involved in a variety of negotiations for additional dialysis
centers and acute inpatient services agreements. We look forward to 2002 as a
year of expansion for our company, sustained profitability, and enhanced
shareholder value.
Submitted by the Board of Directors
Thomas K. Langbein Bart Pelstring
Stephen W. Everett Alexander Bienenstock
Robert W. Trause Dr. David L. Blecker
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
shareholder returns for the company, the Nasdaq Market Index and the Dialysis
Center Industry Index from December 31, 1996, through December 31, 2001. The
cumulative total shareholder returns on our common stock was measured by
dividing the difference between our 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 shareholder return assumes $100 invested at the beginning of
the period in our common stock, in the Nasdaq Market Index and the Dialysis
Center Industry Index. We did not pay dividends on our common stock during the
measurement period and the calculations of cumulative total shareholders return
on the common stock did not include dividends. This graph is presented in
accordance with SEC requirements. You are cautioned against drawing any
conclusions from this information, as past results are not necessarily
indicative of future performance. This graph in no way reflects a forecast of
future financial performance.
Comparison Of Five Year Cumulative Total Returns Among DCA, Nasdaq Market Index
and Dialysis Center Industry Index
Measurement Period
- ------------------ Dialysis Center
(Fiscal Year Covered) DCA Nasdaq Index Industry Index
--- -------------- --------------
December 31, 1996 $ 100.00 $ 100.00 $ 100.00
December 31, 1997 81.25 122.32 133.97
December 31, 1998 27.08 172.52 157.28
December 31, 1999 228.13 304.29 69.10
December 31, 2000 20.83 191.25 111.91
December 31, 2001 115.00 152.46 146.44
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our parent, Medicore, owns approximately 62% of our common stock. See
"Beneficial Ownership of the Company's Securities" below.
In 1977, we became a public company through a merger with Premium
Acceptance Corporation, a licensed insurance premium and second mortgage
company, underwritten by Todd & Company, Inc., a
16
securities brokerage firm solely owned by Thomas K. Langbein, Chairman and Chief
Executive Officer of the company. The Chairman of the Board and President of
Premium Acceptance Corporation was Anthony C. D'Amore, a current director of
Medicore. Mr. D'Amore acts as an insurance consultant and receives nominal
commissions for insurance provided to the company and Medicore. In addition, the
company and Medicore obtain group health insurance coverage for all of their
employees as well as personal life insurance policies for several executives and
key employees through George Langbein, brother of Thomas K. Langbein, formerly
an employee of Medicore. These insurance policies include $100,000 term life
insurance covering and owned by Bart Pelstring, director and former President of
the company. Medicore also pays for the $1,600,000 of life insurance owned by
Thomas K. Langbein. See "Executive Compensation" above. For 2001, the aggregate
for premiums on these coverages were approximately $133,000, of which $18,000
was paid by the company. We are of the opinion that the cost and coverage of the
insurance are as favorable as can be obtained from unaffiliated parties.
Certain of the officers and directors of the company are officers
and/or directors of Medicore and its affiliates. Thomas K. Langbein is Chairman
of the Board and Chief Executive Officer of the company and Medicore and
President of the latter. He is also a director of Linux Global Partners, Inc., a
private company attempting to produce a Linux desktop system and investing in
developing Linux software companies. See discussion below as to our loans to
Medicore for its investment in and financing of Linux Global Partners. Daniel R.
Ouzts is Vice President and Treasurer of the company, and Vice President, Chief
Financial Officer and Controller of Medicore. Mr. Langbein is the beneficial
owner of 6.3% of our company based on an option for 260,000 Dialysis Corporation
of America shares, and 24.8% of our parent, which includes options for 550,000
Medicore shares. See "Information About Directors and Executive Officers" above
and "Beneficial Ownership of the Company's Securities" below. Mr. Ouzts has a
less than 1% interest in our company, which includes an option for 25,000
shares, and 2.4% of Medicore, which includes options for 70,000 shares. Lawrence
E. Jaffe is Secretary and counsel to our company and our parent, of which
company he is a director. Mr. Jaffe has a 4.1% interest in our company, and a
4.3% beneficial interest in our parent, which includes options for 175,000
Medicore shares. Mr. Jaffe also receives a substantial portion of his
professional fees from our company and our parent, which for fiscal 2001
aggregated $271,000, of which $144,000 was for our company.
Certain of the executive and accounting personnel and administrative
facilities of our company and our parent, are common. The costs of executive,
financial and administrative salaries and other shared corporate overhead for
these companies are charged on the basis of direct usage when identifiable, with
the remainder allocated on the basis of time spent. Since the shared expenses
are allocated on a cost basis, there is no intercompany profit involved. The
amount of expenses charged to us by Medicore amounted to approximately $200,000
for the year ended December 31, 2001. Utilization of personnel and
administrative facilities in this manner enables Medicore to share the cost of
qualified individuals with its subsidiaries rather than duplicating the cost for
various entities. It is our opinion that these services are on terms as
favorable as we could receive from unaffiliated parties. As a net result of cash
transfers and corporate overhead allocations, there was an intercompany
indebtedness due to us from Medicore of approximately $201,000 (including
interest) at December 31, 2001.
In May, 2001, the company loaned its President $95,000 at an annual
interest of prime plus 1% (floating) payable on demand but no later than May 11,
2006. Accrued interest aggregated approximately $4,000 at December 31, 2001. The
demand loan is collateralized by all of the President's options and underlying
common stock of the company, as well as any proceeds from the sale of such
common stock.
Dialysis Services of PA., Inc. - Lemoyne, one of our wholly-owned
dialysis subsidiaries, leases its dialysis facility from us under a five year
net lease expiring December 31, 2003 at $43,088 per annum, plus applicable
taxes, separately metered utilities and insurance, and additional rent of $5,386
per year
17
covering common area maintenance expenses. That subsidiary has two renewal
options for five years each under the agreement. We are of the opinion that the
rental is on terms as favorable as could be obtained from an unaffiliated party.
We own a building with a little over 8,100 square feet of space in
Valdosta, Georgia. We lease approximately 6,000 square feet to DCA of So. Ga.,
LLC, our 100% owned dialysis facility, for $90,600 under a 10-year lease with
two renewal options of five years each.
On July 21, 2000, the company entered into a Loan and Security
Agreement with South Georgia Nephrology, P.C., wholly owned by Dr. Andrew
Queler, a medical director for several of our Georgia dialysis facilities, to
loan South Georgia Nephrology up to $300,000 in periodic advances over an
18-month period to January 20, 2002, at an annual interest rate of 1% over
prime. The loan was to provide South Georgia Nephrology with working capital to
establish and operate a medical practice and to purchase or lease real property
and equipment necessary to operate a medical practice. The loan was secured by
South Georgia Nephrology's accounts receivable, fixtures, intangibles, furniture
and equipment, as well as all of Dr. Queler's 100% equity ownership of South
Georgia Nephrology. Dr. Queler terminated his relationship with South Georgia
Nephrology in August, 2001, which had little assets and no longer has any
operations. In September, 2001, the remaining $63,000 in debt due to the company
plus accrued interest of $4,000 was written off. Dr. Queler continues as Medical
Director of three of our Georgia facilities.
Our subsidiary, DCA of Vineland, LLC, is owned 51.3% by our company,
with the remaining 48.7% owned by two professional associations, one owned by
Dr. Blecker, the medical director of our Vineland facility, and the other in
which Dr. Blecker has an affiliation. See "Proposal No. 1 - Election of
Directors." Another professional association in which Dr. Blecker has an
affiliation owns 20% of Dialysis Services of NJ., Inc. - Manahawkin, the other
80% owned by Dialysis Corporation of America. Dr. Blecker is co-medical director
of the Manahawkin dialysis facility.
In October, 1999, we entered into a merger agreement with
MainStreetIPO.com Inc., which proposed transaction was ultimately terminated in
August, 2000. We had made a loan of $140,000 to MainStreet on July 12, 2000,
with interest at 10% per annum, for working capital purposes. The loan was
secured with 300,000 shares of Linux Global Partners, Inc., which shares were
acquired by our company upon MainStreet's default of the loan in November, 2000.
In 2000, we loaned our parent, Medicore, $2,200,000 at an interest rate
of 10% per annum for Medicore to establish a new division, which invests in
Linux software system companies. Medicore acquired an 8% interest in Linux
Global Partners, and loaned Linux the $2,200,000 on the same terms as it
borrowed the funds from our company. Medicore holds a security interest in all
the equity of the Linux software companies in which Linux Global Partners
invested. Thomas K. Langbein, Chairman of the Board and CEO of our company and
Medicore, of which he is also a major stockholder and President, is a director
of Linux Global Partners. We extended these Linux Global Partners' loans to June
30, 2001 in consideration for an additional 100,000 shares of Linux Global
Partners, bringing our equity ownership of Linux Global Partners to 400,000, or
approximately 2.7%. In May, 2001, Medicore paid us $215,000, of which $200,000
was principal, and in June, 2001, Medicore repaid the $2,000,000 balance of the
debt, together with accrued interest of approximately $279,000.
Certain officers and directors of our parent, Medicore, Messrs. Anthony
C. D'Amore, Peter D. Fischbein, Seymour Friend and Robert Magrann (20,000 shares
each), and Lawrence E. Jaffe, our Secretary and counsel (160,000 shares, plus
100,000 shares obtained by his children of majority age and independent of their
father), in April, 2000, exercised options granted to them under our 1999 Stock
18
Option Plan for 340,000 shares. The exercise was effected with cash for the par
value (aggregate $3,400) and the balance, $421,600, in three-year non-recourse
promissory notes at a rate of interest of 6.2% per annum, due August, 2003.
In September, 2000, we announced plans to repurchase up to
approximately 300,000 shares of our outstanding common stock. During 2001, we
acquired approximately 93,000 shares at a cost of $98,000. Total purchases to
date amount to 170,000 shares at a cost of $163,000.
In August, 2001, we purchased the 30% minority interest in DCA of So.
Ga., LLC for $600,000, with $300,000 paid in cash and $300,000 payable in
August, 2002. The minority interest seller is medical director of another of our
Georgia dialysis subsidiaries, DCA of Fitzgerald, LLC.
The company has management services agreements with each of its
dialysis subsidiaries, including DCA of Toledo, LLC, in which we hold a 40%
interest, pursuant to which it provides administrative and management services,
including, among others, providing capital equipment, preparing budgets,
bookkeeping, accounting, data processing, and other corporate based information
services, materials and human resources management, billing and collection and
accounts receivable and payable processing. These services are provided for a
percentage of net revenues of the particular dialysis subsidiary. We invested
approximately $153,000 in DCA of Toledo in 2001.
19
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth as of April 11, 2002 the names and
beneficial ownership of the equity securities of Dialysis Corporation of America
and Medicore for directors of the company, individually itemized, and for
directors and executive officers of Dialysis Corporation of America as a group,
without naming them, and for each of the named executive officers described in
the Summary Compensation Table (see "Executive Compensation"), and for
shareholders known to Dialysis Corporation of America to beneficially own more
than 5% of our voting securities.
Amount and Nature of Beneficial Ownership
-------------------------------------------------------------------
Dialysis Medicore
Common Common
Name Stock(1) %(2) Stock(3) %(4)
- ---- --------- ---- --------- ----
Medicore 2,410,622 62.0 -- --
2337 W. 76th Street
Hialeah, FL 33016
Thomas K. Langbein 2,670,622(1) 64.4 1,783,009 24.9
c/o Medicore
777 Terrace Avenue
Hasbrouck Heights, NJ 07604
Stephen W. Everett 101,000 2.5 25,000 less than 1%
c/o Dialysis Corporation of America
27 Miller Street
Lemoyne, PA 17043
Bart Pelstring 95,000 2.4 70,000 1.1
c/o Dialysis Corporation of America
27 Miller Street
Lemoyne, PA 17043
Robert W. Trause* 40,000 1.0 -0- -0-
431C Hackensack Street
Carlstadt, NJ 07072
Dr. David L. Blecker* 10,000 less than 1% -0- -0-
510 Jackson Avenue
Northfield, NJ 08225
Alexander Bienenstock* 5,000 less than 1% -0- -0-
70-22 173rd Street
Fresh Meadows, NY 11365
All directors and executive 543,500 12.4 2,039,059 28.1
officers as a group (8 persons)
* Member of the Audit Committee
20
- ----------
(1) Medicore owns 2,410,622 shares (62%) of our common stock. Officers and
directors of Dialysis Corporation of America, who may also be officers
and/or directors of Medicore and shareholders of each company, disclaim
any indirect beneficial ownership of Dialysis Corporation of America
common stock through Medicore's 62% ownership of Dialysis Corporation of
America. Thomas K. Langbein, by virtue of his positions with Dialysis
Corporation of America and Medicore and his stock ownership of Medicore,
may be deemed to have indirect beneficial ownership of such shares
through shared voting and investment power with respect to Medicore's
ownership of Dialysis Corporation of America. Mr. Langbein disclaims such
entire indirect beneficial ownership, but for his proportionate indirect
interest, approximately 600,000 shares of the company (15.4%).
Includes the following shares that may be acquired upon exercise of
Dialysis Corporation of America options (see Note (2)) as of April 11,
2002 or within 60 days after that date:
T. Langbein, 260,000 shares (1999 options); S. Everett, 101,000
shares (1999 and 2000 options); B. Pelstring, 45,000 shares (1999
options); R. Trause, 40,000 shares (1995 and 1999 options); D. Ouzts,
25,000 shares (1999 options); A. Bienenstock, 5,000 shares (2001
options); and D. Blecker, 10,000 shares (2001 options).
If Thomas K. Langbein excluded Medicore's ownership of Dialysis
Corporation of America, then his beneficial ownership would be
260,000 (6.3%), all of which shares are obtainable upon exercise of
options. See indirect beneficial ownership above.
(2) Based on 3,887,344 shares outstanding exclusive of (i) common stock
issuable under 486,000 options exercisable at prices ranging from $1.25
to $2.25 per share.
(3) Includes the following shares that may be acquired by executive officers
and directors of Dialysis Corporation of America upon exercise of
Medicore options as of April 11, 2002 or within 60 days after that date:
Shares obtainable upon exercise of options under the 1989 Stock
Option Plan: Messrs. Langbein 300,000; Everett 25,000; Ouzts 45,000;
and Pelstring 20,000.
Shares obtainable upon exercise of options under the 2000 Stock
Option Plan: Messrs. Langbein 250,000; and Ouzts 25,000.
Does not include: Mr. Langbein 35,700 shares held each by his two
children of majority age, and 400,000 shares in his employment agreement
issuable under certain conditions relating to wrongful termination or
change in control.
(4) Based on 6,600,275 shares outstanding exclusive of (i) 739,000 shares
underlying options granted under Medicore's 1989 Stock Option Plan; (ii)
400,000 shares available for issuance under certain conditions of Thomas
K. Langbein's employment agreement; (iii) 98,000 shares reserved for
issuance under a key employee stock plan; (iv) 475,000 shares underlying
options granted under Medicore's 2000 Stock Option Plan; and (v) 25,000
shares underlying the option granted to the former Vice President of
MainStreetIPO.com. See "Certain Relationships and Related Transactions."
21
Section 16(a) beneficial ownership reporting compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and 10% shareholders to file reports with the SEC,
the Nasdaq Stock Market and our company, indicating their beneficial ownership
of common stock of the company and any changes in their beneficial ownership.
The rules of the SEC require that we disclose failed or late filings of reports
of company stock ownership by our directors and executive officers. To the best
of our knowledge, all beneficial ownership reports by these reporting persons
for the year 2001 were filed on a timely basis, except one late report each by
Thomas K. Langbein, Stephen W. Everett, Daniel R. Ouzts, Robert Trause, Bart
Pelstring, relating to receipt of options, and Alexander Bienenstock and Dr.
David L. Blecker, one late report upon their becoming directors in May, 2001,
and one late report relating to receipt of options.
AVAILABLE INFORMATION
We file reports, information statements and other information with the
SEC and Nasdaq. Those reports, information statements and other information may
be inspected and obtained:
o at the Public Reference Room of the SEC, Room 1024 - Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;
o at the offices of The Nasdaq Stock Market, Inc., Reports Section,
1735 K Street, N.W., Washington, D.C. 20006; or
o from the internet site maintained by the SEC at
http://www.sec.gov, which contains reports, proxy and information
statements and other information regarding issuers that file
electronically with the SEC.
Prescribed rates or modest fees may be charged for copies. For more
information on the public reference room, call the SEC at 1-800-SEC-0330.
We would also be pleased to furnish you with such reports and documents
that you may request. Please forward your inquiry to our Secretary, Lawrence E.
Jaffe, 777 Terrace Avenue, Hasbrouck Heights, New Jersey 07604.
22