SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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INFORMATION STATEMENT PURSUANT TO
SECTION 14F-1 OF THE
SECURITIES EXCHANGE ACT OF 1934
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UNITED DIAGNOSTIC, INC.
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(Name of Subject Company)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
910192202
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(CUSIP Number of Class of Securities)
Darren Ofsink, Esq.
Guzov Ofsink, LLC
600 Madison Avenue, 14th Floor
New York, New York 10022
(212) 371-8008
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(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement)
UNITED DIAGNOSTIC, INC.
124 West 60th Street #33L
New York, New York 10023
Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and
Securities and Exchange Commission Rule 14f-1
Notice of Change in the
Majority of the Board of Directors
March 29, 2005
INTRODUCTION
The information contained in this Information Statement is being furnished
to all holders of record of common stock of United Diagnostic, Inc. (the
"Company") at the close of business on March 25, 2005 in accordance with the
requirements of Section 14(f) of the Securities Exchange Act of 1934 and Rule
14f-1 under that Act in order to effect a change in majority control of the
Company's Board of Directors other than by a meeting of stockholders. This
Information Statement is being distributed on or about March 29, 2005.
NO VOTE OR OTHER ACTION BY THE COMPANY'S STOCKHOLDERS IS REQUIRED IN
RESPONSE TO THIS INFORMATION STATEMENT. PROXIES ARE NOT BEING SOLICITED.
Effective February 28, 2005, the Company entered into a Capital Stock
Exchange Agreement (the "Exchange Agreement") to acquire all the of the issued
and outstanding equity capital of SPO Medical Equipment, Ltd. ("SPO"), a
privately-held company organized under the laws of the State of Israel (the
"Proposed Transaction"). The Proposed Transaction is required to occur on or
before April 30, 2005, and is subject to various closing conditions. If the
Proposed Transaction closes as contemplated, SPO will become a wholly-owned
subsidiary of the Company and there would be a complete change in the
composition of the Board of Directors of the Company and the Company's
management. At the closing of the Proposed Transaction Michael Braunold, Pauline
Dorfman and Sidney Braun, each of whom is a designee of SPO, shall be appointed
to the Board of Directors of the Company and Marvin Feigenbaum, who is currently
the sole director of the Company, shall resign as a director. Subsequent to
closing the board shall consist of three people.
The Boards of Directors of each of the Company and SPO have approved the
Proposed Transaction. As a result of the transactions contemplated by the
Agreement, control of the Company will pass to the stockholders of SPO.
As of the date of this Information Statement, the authorized capital stock
of the Company consisted of 50,000,000 shares of common stock, par value $.01
per share, of which 659,709 shares are issued and outstanding and 2,000,000
shares of Series A Convertible Preferred Stock, $.01 par value, none of which
shares are outstanding. Each share of common stock is entitled to one vote with
respect to all matters to be acted on by the stockholders.
DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth information regarding the Company's current sole
executive officer and director of the Company and the proposed directors of the
Company.
J. Marvin Feigenbaum, Director, President and Chief Executive Officer, Age 54
Mr. J. Marvin Feigenbaum has been the Chief Executive Officer of Acolyte
Technologies Corp., a specialty LED lighting firm, since December 2002. He is
also a private business consultant. Mr Feigenbaum was first elected to the Board
of Directors of the Company in June 1994, at which time he was also elected to
the Board of Directors of Analytical Biosystems Corp. ("ABC") and appointed
Chief Executive Officer of the Company and Chief Executive and Chief Financial
Officer of ABC. Mr. Feigenbaum has served as President of the Company since June
1, 1994, and as Chairman of the Board, President and Chief Executive Officer of
Physicians Clinical Laboratory, Inc. ("PCL") from October 3, 1997 until May 12,
1999.
SPO has proposed that the following persons be appointed as directors of
the Company upon closing of the Proposed Transaction:
Name Age
Michael Braunold 45
Pauline Dorfman 40
Sidney Braun 44
Michael Braunold, Director Nominee, Age 45
Since March 1998, Mr. Braunold has been Chief Executive Officer of SPO. Prior to
March 1998, Mr. Braunold was Senior Director of Business Development at Scitex
Corporation Ltd., a multinational corporation specializing in visual information
communication. In such capacity, Mr. Braunold played a strategic role in
managing a team of professionals assigned to M&A activities. During his 12-year
tenure at Scitex, he held various positions within the worldwide organization,
including a period in the United States as Vice President of an American
subsidiary of Scitex specializing in medical imaging. From March 2000 through
September 2000, Mr. Braunold was also the Chief Executive Officer and Chairman
of Ambient Corporation, a Delaware company, that specializes in the
implementation of a proposed comprehensive high-speed communication
infrastructure that is designed to utilize existing electrical power
distribution lines as a high-speed communication medium. Mr. Braunold served as
director of Amedia Networks, Inc. (formerly TTR Technologies, Inc.) from
February 2000 through August 2002. Mr. Braunold originates from the United
Kingdom. He obtained a Bachelor of Science degree with honors in Engineering and
Management Sciences from Imperial College Business School, London.
Pauline Dorfman, Director Nominee, Age 40
Since January 2001 Mrs. Dorfman, a qualified chartered accountant, has been a
consultant with Berenblut Consulting, an Ontario firm that assists commercial
business, law firms and governments across North America and Europe in several
areas covering economics, finance, accounting, valuation and strategy. Mrs.
Dorfman specializes in conducting analysis and financial investigations in
connection with international development disputes and economic damage
quantification for breach of contract and personal medical malpractice cases.
Prior to this assignment, Mrs. Dorfman worked for 10 years with the Toronto
Dominion Bank in the finance and commercial lending areas analyzing the
financial risk of various bank investments and strategies, assisting in the
development of new bank products and meeting the external and internal financial
reporting requirements of the bank.
Sidney Braun, Director Nominee, Age 44
Since June 2004 Mr. Braun has served as the President and COO for Med-Emerg
International Inc. (MEII), a company incorporated in the Province of Ontario.
MEII is a publicly listed healthcare services company specializing in the
coordination and delivery of emergency and primary health care related services
in Canada such as physician and nurse staffing and recruitment, clinical
management services, a national drug infusion service and a comprehensive
physician practice management program. Mr. Braun has extensive experience in
commerce both in North America and Europe, including manufacturing, distribution
and trading. Prior to his current position at MEII, Mr. Braun worked for 7 years
as an independent consultant to several large state-owned corporations from the
former Eastern European block on developing business strategies and adapting to
new working conditions in western markets. In addition, Mr. Braun developed
expertise in emerging financial markets in Europe and introduced several
companies to the UK and German capital markets.
FAMILY RELATIONSHIPS
There are no family relationships among any of the Company's directors and
officers or those proposed to be directors and officers.
VOTING CONTROL AND MANAGEMENT
The following table sets forth certain information as of March 25, 2005,
with respect to the ownership of Common Stock by J. Marvin Feigenbaum, who is
the sole director and executive officer of the Company, and each person known by
the Company to be the owner of more than five percent of any class of the
Company's voting securities. None of the designees of SPO for election as a
director at the closing of the Proposed Transaction owns any shares of the
Company's Common Stock as of March 25, 2005.
NAME AND ADDRESS AMOUNT OF AND NATURE PERCENTAGE
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
J. Marvin Feigenbaum 315,964 (1) 47.9%
124 W. 60th Street, #33L
New York, New York 10023
David Sterling
33 Windsor Drive 85,000 12.9%
Muttontown, New York 11753
Milton Partners
165 Mason Street 48,632 7.4%
Greenwich, Connecticut 06830
Agudath Shalom Banaich
1621 58th Street 43,253 6.6%
Brooklyn, New York 11204
Barras
Marta Street #137 37,875 5.7%
Zurich 8003
Switzerland
(1) Includes 32 shares of Common Stock held in a trust for the benefit of a
minor child of Mr. Feigenbaum, as to which shares Mr. Feigenbaum disclaims
beneficial ownership.
SECTION 16 REPORTING
No person who, during the year ended December 31, 2004, was a director,
officer or beneficial owner of more than ten percent of the Company's Common
Stock (which is the only class of securities of the Company registered under
Section 12 of the Securities Exchange Act of 1934 (the "Act") (a "Reporting
Person") failed to file on a timely basis, reports required by Section 16 of the
Act during the most recent fiscal year or prior years. The foregoing is based
solely upon a review by the Company of Forms 3 and 4 during such fiscal year as
furnished to the Company under Rule 16a-3(d) under the Act, and Forms 5 and
amendments thereto furnished to the Company with respect to such fiscal year,
and any representation received by the Company from any reporting person that no
Form 5 is required.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive any fee in
addition to their regular salary for serving on the Board of Directors.
Directors who are not employees of the Company receive a directors fee of $6,000
per annum, paid quarterly, and an attendance fee of $500 per meeting attended.
In addition, Directors are reimbursed for travel expenses for attendance at
board meetings. Non-employee directors are also eligible for an initial and
annual grant of stock options under the Company's Non-Employee Director Stock
Option Plan (see "Non-Employee Director Stock Option Plan" below).
COMMITTEES OF THE COMPANY'S BOARD OF DIRECTORS
The Board of Directors of the Company does not have any standing
committees. The full Board of Directors, currently consisting of only one
person, serves as the Audit Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except for (a) the transactions described below, (b) the ownership of the
Company's securities, and (c) the compensation described herein, none of the
directors, executive officers, holders of ten percent of the Company's
outstanding Common Shares, or any associate or affiliate of such person, have,
to the knowledge of the Company, had a material interest, direct or indirect,
during the two fiscal years ended December 31, 2004 and 2003, in any transaction
or proposed transaction which may materially affect the Company.
It is a condition to the closing of the Exchange Agreement, that each of
Marvin Feigenbaum, who is currently the President and Chief Executive Officer of
the Company, and David Sterling, a former director of the Company, shall deliver
to SPO and SPO's shareholders a waiver of all claims against the Company
including any debt owed to them by the Company. The Company currently owes Mr.
Feigenbaum approximately $260,000 and David Sterling approximately $16,500.
At the closing of the Exchange Agreement the Company intends to enter into
a one year Consulting Agreement with Marvin Feigenbaum under which Mr.
Feigenbaum shall provide financial consulting services in exchange for certain
consideration, including, (i) the Company's agreement not to consummate a
reverse stock split without the prior written consent of Mr. Feigenbau, (ii) the
Company shall cause Mr. Feigenbaum to be covered with respect to any acts or
omissions during the term of the Consulting Agreement on a claims made basis
under an officers and directors errors and omissions liability policy maintained
by the Company, (iii) the grant to Mr. Feigenbaum of piggyback registration
rights with respect to all of the common stock of the Company owned by Mr.
Feigenbaum, and (iv) the payment of cash consideration of $100,000.
No executive officer, present director, proposed director or any member of
these individuals' immediate families or any corporation or organization with
whom any of these individuals is an affiliate is or has been indebted to the
Company since the beginning of its last fiscal year.
LEGAL PROCEEDINGS
The Company is not aware of any legal proceedings in which any director,
officer, or any owner of record or beneficial owner of more than five percent of
any class of voting securities of the Company, SPO, or any affiliate of SPO, or
of any such director, officer, affiliate of the Company, or security holder, is
a party adverse to Company or has a material interest adverse to the Company.
EXECUTIVE COMPENSATION AND CERTAIN OTHER TRANSACTIONS
Summary Compensation Table.
ANNUAL COMPENSATION LONG TERM
------------------------ COMPENSATION AWARDS
RESTRICTED SECURITIES PAYOUTS
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NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY OTHER ANNUAL STOCK OPTIONS COMPENSATION
------------------ ---- ------ ------------ ----- ------- ------------
($) ($) ($)
2004 $ -- $ --
J. Marvin Feigenbaum 2003 $ -- $ -- -- -- $ --
President and Chief 2002 $277,333 (2) $ -- -- -- $916(3)
Executive Officer(1)
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(1) President and Chief Executive Officer commencing June 1, 1994. Chief
Financial Officer from June 1, 1994 until present. President and Chief
Executive Officer of PCL from October 3, 1997 until May 12, 1999. PCL was
a majority-owned subsidiary of the Company from October 3, 1997 until June
12, 1998. Prior to October 3, 1997 and until PCL emerged from its Chapter
11 proceeding, Mr. Feigenbaum served as Chief Operating Officer of PCL.
(2) Includes $208,000 (one year) severance accrual pursuant to the Employment
Agreement which has not been paid and will be waived by Mr. Feigenbaum as
a condition to closing the Exchange Agreement.
(3) Represents automobile garage fees.
Options/SAR Grants in Fiscal Year Ended December 31, 2004
No options or stock appreciation rights were granted to the Company's
Chief Executive officer or any other executive officer during the fiscal year
ended December 31, 2004.
Aggregated Options/SAR Exercises in Most Recent Fiscal Year and Fiscal Year-End
Options/SAR Values.
No options or stock appreciation rights were held by the Company's Chief
Executive officer or any other executive officer during the fiscal year ended
December 31, 2004.
Employment Agreements.
The Company entered into an Amended and Restated Employment Agreement (the
"Restated Agreement") with Mr. Feigenbaum, the Company's Chairman, President,
Chief Executive Officer and Chief Financial Officer, dated May 19, 1999. The
Restated Agreement amended and extended Mr. Feigenbaum's original employment
agreement with the Company, dated June 1, 1994, as amended. The Restated
Agreement is effective as of May 1, 1999 and expired April 30, 2002. The
Restated Agreement provided for Mr. Feigenbaum's continued employment as
Chairman of the Board, President, Chief Executive Officer and Chief Financial
Officer of the Company, as well as Mr. Feigenbaum's continued employment as
Chief Executive and Chief Financial Officer of ABC and contemporaneous
employment as Chairman, President and Chief Executive Officer of PCL. Pursuant
to the Restated Agreement, the Company agreed to pay Mr. Feigenbaum a base
salary of $208,000 per year (such amount does not include any compensation from
PCL). The Company further agreed to (a) make a lump sum payment to Mr.
Feigenbaum in an amount equal to that portion of his salary deferred by Mr.
Feigenbaum, as a convenience to the Company, since June, 1998, with simple
interest at a rate of 12%, and (b) pay to Mr. Feigenbaum a one-time bonus in the
amount of $50,000 upon execution of the Restated Agreement. In addition, the
Restated Agreement provided for vacation benefits, life insurance, an automobile
allowance, relocation expenses, and cellular telephone and travel and
entertainment expenses. The Restated Agreement further contained provisions for
termination of the Restated Agreement by mutual consent, for cause, without
cause by the Company, for death or disability of Mr. Feigenbaum and for good
reason by Mr. Feigenbaum, as well as provisions regarding the failure of the
parties to renew the Restated Agreement for an additional term. In addition, the
Restated Agreement provided that in the event of a change in control of the
Company (as defined), Mr. Feigenbaum will be paid for the remainder of the
unexpired term of the Restated Agreement plus an additional sum of $208,000.
On April 30, 2002, the Restated Agreement expired by its terms and was not
renewed. However, Mr. Feigenbaum remains the Chairman of the Board, President,
Chief Executive Officer and Chief Financial Officer of the Company on an at-will
employment basis. Effective May 1, 2002, pursuant to the terms of the Restated
Agreement, the Company accrued a severance payment of $208,000. As of the date
of the filing of this Information Statement, this severance has not been paid.
During the year ended December 31, 2003 and December 31, 2004, Mr.
Feigenbaum did not receive a salary. Mr. Feigenbaum received a salary in the
amount of $277,333 during the year ended December 31, 2002 which includes a
$208,000 one-year severance accrual, pursuant to the then current Employment
Agreement, as amended. Due to the financial condition of the Company, during the
year ended December 31, 1998, approximately $47,667 of cash compensation which
should have been paid to Mr. Feigenbaum in 1998 was voluntarily deferred by Mr.
Feigenbaum until 1999 as a convenience to the Company. On September 26, 2001, J.
Marvin Feigenbaum, relinquished any and all rights to options granted to him
that were voted upon and approved by the holders of shares of Common Stock of
the Company at a Special Meeting of Stockholders of the Company held on
September 25, 2001. The option grant was for 500,000 shares of the Company's
Common Stock at an exercise price of $.66 per share. Accordingly, the options
were never issued.
1994 Incentive Stock Option Plan
In August, 1994, the Board of Directors adopted a 1994 Incentive Stock
Option Plan (the "Plan") which Plan was approved and adopted by the stockholders
of the Company on November 16, 1994. The Plan provides for the issuance of up to
250 shares of the Company's Common Stock upon the exercise of options granted to
officers, directors, full time employees and consultants rendering services to
the Company. Under the terms of the Plan, options granted thereunder will be
designated as options which qualify for incentive stock option treatment
("ISO's") under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or options which do not so qualify ("Non-ISO's"). Unless sooner
terminated, the Plan will expire on August 1, 2004, and options may be granted
at any time or from time to time through such date. The purpose of the Plan is
to promote the interests of the Company and its stockholders by strengthening
the ability of the Company to attract and retain officers, employees and
consultants by furnishing suitable recognition of their ability to contribute to
the success of the Company and to align their interests and efforts with the
long term interest of the Company. The Plan succeeds the Company's 1992
Incentive Stock Option Plan, which has been terminated.
The Plan is administered by the Board of Directors or by a Stock Option
Committee designated by the Board of Directors (the "Plan Administrator"). The
Plan Administrator has the discretion to determine the eligible employees and
consultants to whom, and the times and the prices at which, options will be
granted; whether such options shall be ISO's or Non-ISO's; the periods during
which each option will be granted; and the number of shares subject to each
option. The Plan Administrator shall have full authority to interpret the plan
and to establish and amend rules and regulations relating thereto.
Under the Plan, the exercise price of an option designated as an ISO shall
not be less than the fair market value of the Common Stock on the date the
option is granted. However, in the event an option designated as an ISO is
granted to a ten percent stockholder (as defined in the Plan) such exercise
price shall be at least 110% of such fair market value. Exercise prices of
Non-ISO's may not be less than 85% of such fair market value. The aggregate fair
market value of shares subject to an option designated as an ISO for which any
participant may be granted such an option in any calendar year, shall not exceed
$100,000 plus any unused carryovers (as defined in Section 422 of the Code) from
a prior year. The "fair market value" will be the closing Nasdaq bid price or,
if the Company's Common Stock is not quoted by Nasdaq, the low bid as reported
by the National Quotation Bureau, Inc. or a market maker of the Company's Common
Stock or, if the Common Stock is not quoted by any of the above, by the Board of
Directors acting in good faith.
Options may be granted under the Plan for such periods as determined by
the Plan Administrator; provided however that no option designated as an ISO
granted under the Plan shall be exercisable over a period in excess of ten
years, or in the case of a ten percent stockholder, five years. Options may be
exercised in whole at any time or in part from time to time. Options are not
transferable except to the estate of an option holder; provided, however, in the
case of a Non-ISO, and subject to Rule 16b-3 promulgated under Section 16 of the
Securities Exchange Act of 1934 (the "Exchange Act") and prevailing
interpretations thereunder by the staff of the Commission, a recipient of a
Non-ISO may, with the consent of the Plan Administrator, designate a named
beneficiary of the Non-ISO in the event of the death of such recipient, or
assign such Non-ISO.
Except as described below, the Plan Administrator may from time to time
amend the Plan as it deems proper and in the best interests of the Company
without further approval of the stockholders.
The Board of Directors and the Plan Administrator may not amend certain
features of the Plan without the approval of the Company's stockholders to the
extent such approval is required for compliance with Section 422 of the Code
with respect to ISO's, Section 162(m) of the Code with respect to Non-ISO's or
Rule 16b-3 promulgated under Section 16 of the Exchange Act with respect to
awards made to individuals subject to Section 16 of the Exchange Act. Such
amendments would include (a) increasing the maximum number of shares of Common
Stock that may be issued under the Plan, (b) materially modifying the
requirements as to eligibility for participation in the Plan, or (c) otherwise
materially increasing the benefits accruing to participants under the Plan.
As of December 31, 2004, there are no outstanding options granted under
this plan.
Non-Employee Director Stock Option Plan
In August, 1994, the Board of Directors adopted the Non-Employee Director
Stock Option Plan (the "Director Plan") which Director Plan was approved and
adopted by the stockholders of the Company on November 16, 1994, and amended by
the stockholders of the Company on August 27, 1996. The Director Plan provides
for issuance of a maximum of 2,857 shares of Common Stock upon the exercise of
stock options granted under the Director Plan. Options may be granted under the
Director Plan until August 1, 2004, to the Company's non-employee directors (as
defined). The Director Plan provides that each non-employee director will
automatically be granted an option to purchase 71 shares upon joining the Board
of Directors (or, for those persons who are directors on the date of approval of
the Director Plan by the stockholders, on such date), and options to purchase
114 shares on each anniversary of the initial date of service or date of
approval, as the case may be. No options have been granted under the Director
Plan since 1996 because the Company essentially became inactive during 1997 and
a market for the Company's Common Stock has neither been established or
sustained since that time.
Under the terms of the Director Plan, the sum of the number of shares to
be received upon any grant multiplied by the fair market value of each share at
the time of grant may not exceed $75,000. All awards shall be reduced to the
extent they exceed such amount. The exercise price for options granted under the
Director Plan shall be 100% of the fair market value of the Common Stock on the
date of grant. Until otherwise provided in the Director Plan, the exercise price
of options granted under the Director Plan must be paid at the time of exercise,
either in cash, by delivery of shares of Common Stock of the Company or by a
combination of each. The term of each option is five years from the date of
grant, unless terminated sooner as provided in the Director Plan. The Director
Plan is administered by a committee of the Board of Directors composed of not
fewer than two persons who are officers of the Company (the "Committee"). The
Committee has no discretion to determine which non-employee director will
receive options or the number of shares subject to the option, the term of the
option or the exercisability of the option. However, the Committee will make all
determinations of the interpretation of the Director Plan. Options granted under
the Director Plan do not qualify for incentive stock option treatment. As of
December 31, 2004, there are no options outstanding under this plan.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
The Company is subject to the information and reporting requirements of
the Securities Exchange Act of 1934 and, in accordance with that act, files
periodic reports, documents and other information with the SEC relating to its
business, financial statements and other matters. These reports and other
information may be inspected and are available for copying at the offices of the
SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 and are available on the
SEC's website at www.sec.gov.