PRELIMINARY COPY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION JUNE 3, 1996
GREENBRIAR CORPORATION
4265 Kellway Circle
Addison, Texas 75244
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held July 12, 1996
Dear Stockholders of Greenbriar Corporation:
You are cordially invited to attend a Special Meeting of Stockholders of
Greenbriar Corporation (the "Company") to be held at 10:00 a.m., local time on
July 12, 1996, at 4265 Kellway Circle, Addison, Texas 75244, to consider and
vote upon a proposal (the "Proposal") to approve the right to convert all
outstanding shares of Series D and Series E Preferred Stock into 1,962,458
shares (the "Conversion Shares") of the Company.
The accompanying Proxy Statement forms a part of this Notice. You are not
being asked to approve anything at the Special Meeting other than the Proposal.
Pursuant to rules of the American Stock Exchange (the "Exchange"), stockholder
approval of any increase in outstanding Common Stock of 20% or more is required,
and you are being asked to approve the Proposal with regard to the Conversion
Shares. See "Approval of Conversion Shares" in the accompanying Proxy Statement
for a discussion of the effect of such approval.
Only stockholders of record at the close of business on June 14, 1996 who
own Common Stock or Series B or Series C Preferred Stock will be entitled to
vote at the Special Meeting or any adjournments thereof. The affirmative vote of
the holders of more than 50% of the outstanding shares of Common Stock and
Series B and C Preferred Stock of the Company, voting as one class (these being
the only securities of the Company entitled to vote at the Special Meeting),
present and voting at the Special Meeting on such date is necessary to approve
the Proposal. Although the Series D and Series E Preferred Shares are entitled
to voting rights in general, such rights do not apply to the vote to be taken at
the Special Meeting.
All holders of Common Stock and Series B and C Preferred Stock, whether or
not they expect to attend the Special Meeting in person, are requested to
complete, sign, date and return the enclosed form of proxy in the accompanying
envelope (which requires no additional postage if mailed in the United States).
Your proxy will be revocable, either in writing or by voting in person at the
Special Meeting, at any time prior to its exercise.
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT WITHOUT DELAY IN
THE ENCLOSED ENVELOPE. ANY HOLDER OF COMMON STOCK OR SERIES B OR SERIES C
PREFERRED STOCK ATTENDING THE MEETING MAY VOTE IN PERSON EVEN IF A PROXY HAS
BEEN RETURNED.
By Order of the Board of Directors
James R. Gilley, President
June 21, 1996
<PAGE>
GREENBRIAR CORPORATION
4265 Kellway Circle
Addison, Texas 75244
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
To Be Held July 12, 1996
This Proxy Statement (the "Proxy Statement") and the accompanying proxy
cards are being furnished to the holders of common stock, par value $.01 per
share ("Common Stock"), and Series B and Series C Preferred Stock, par value
$0.10 per share ("Series B and C Preferred Stock") (collectively, the
"Stockholders"), of Greenbriar Corporation, a Nevada corporation ("Greenbriar"
or the "Company"), in connection with the solicitation of proxies by the Board
of Directors of the Company from the Stockholders for use at a special meeting
of Stockholders of the Company (the "Special Meeting"). At the Special Meeting,
the Stockholders of the Company will be asked to consider and vote upon a
proposal (the "Proposal") to approve the right to convert all outstanding shares
of Series D and Series E Preferred Stock into 1,962,458 shares (the "Conversion
Shares") of Common Stock of the Company. Neither Nevada law nor the Company's
Articles of Incorporation or Bylaws require stockholder approval of the
Proposal; however, the rules of the American Stock Exchange (the "Exchange")
require prior stockholder approval for the issuance of shares which will result
in an increase in outstanding common stock of 20% or more. Consequently, you are
being asked to approve the Proposal at the Special Meeting. See "Approval of
Conversion Shares" for a discussion of the effect of such approval. This Proxy
Statement and the enclosed forms of proxy are being mailed on or about June 21,
1996.
AVAILABLE INFORMATION
Greenbriar is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and copies of such materials are available for
inspection and reproduction at the public reference facilities of the Commission
at its New York regional office, 75 Park Place, New York, New York 10007, and at
its Chicago regional office, Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials also can
be obtained by mail from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
material filed by the Company can be inspected at the offices of the Exchange,
86 Trinity Place, New York, New York 10006-1881.
VOTING AND PROXY INFORMATION
The Board of Directors of the Company has fixed the close of business on
June 14, 1996, as the record date (the "Record Date") for determining the
holders of Common Stock and Series B and Series C Preferred Stock entitled to
receive notice of and to vote at the Special Meeting. At the close of business
on the Record Date, there were outstanding 3,479,428 shares of Common Stock,
3,533 shares of Series B Preferred Stock and 20,000 shares of Series C Preferred
Stock, the only outstanding securities of the Company entitled to vote at the
Special Meeting. The 675,000 shares of Series D Preferred Stock and 1,949,949
shares of Series E Preferred Stock, although normally entitled to vote on all
matters to come before a vote of the stockholders, are precluded by the
Designations of Rights and Preferences governing the Series D and E Preferred
Stock from voting on the Proposal at the Special Meeting to add the right to
convert such shares into the Conversion Shares. The Common Stock, Series B and
Series C Preferred Stock were held by
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approximately 3,900, 19 and 2 stockholders of record, respectively. All share
numbers in this Proxy Statement have been adjusted to reflect the one-for-five
reverse split of the Common Stock on December 1, 1995. Stockholders still
holding certificates representing pre-split shares should contact the Company's
transfer agent, American Stock Transfer Trust Company, at 40 Wall Street, New
York, New York 10005, to obtain a Letter of Transmittal for the exchange of
their shares.
For each share held on the Record Date, a holder of Common Stock or Series
B or Series C Preferred Stock is entitled to one vote on all matters properly
brought before the Stockholders at the Special Meeting. Such votes may be cast
in person or by proxy. Abstentions may be specified as to the approval of the
Proposal. Under the rules of the Exchange, brokers holding shares for customers
have authority to vote on certain matters when they have not received
instructions from the beneficial owners, and do not have such authority as to
certain other matters (so-called "broker nonvotes"). The Exchange rules prohibit
member firms of the Exchange from voting on the Proposal without specific
instructions from beneficial owners. The affirmative vote, either in person or
by proxy, of the holders of more than 50% of the shares of Common Stock and
Series B and Series C Preferred Stock outstanding as of the Record Date, voting
as one class, is necessary to approve the Proposal. Accordingly, if a
Stockholder abstains from voting certain shares on the approval of the Proposal,
it will have the effect of a negative vote, but if a broker indicates that it
does not have authority to vote certain shares, those shares will not be
considered as shares present and entitled to vote with respect to the approval
of the Proposal and therefore will have no effect on the outcome of the vote.
On the Record Date, 1,210,000 shares of Common Stock, representing
approximately 34.5% of shares entitled to vote, were held through a wholly owned
corporation by James R. Gilley, President and Chief Executive Officer of the
Company. An additional 1,195,000 shares (approximately 34.1% of shares entitled
to vote) were held of record by Mr. Gilley, Mr. Gilley's spouse and adult
children, both as individuals and as trustees for various family trusts. All
such persons have indicated they will vote their shares outstanding for the
approval of the Proposal, which will insure such approval by the Stockholders.
All shares of Common Stock and Series B and Series C Preferred Stock that
are represented at the Special Meeting by properly executed proxies received by
the Company prior to or at the Special Meeting and not revoked will be voted at
the Special Meeting in accordance with the instructions indicated in such
proxies. Unless instructions to the contrary are specified in the proxy, each
such proxy will be voted FOR the proposal to approve the issuance of the
Conversion Shares.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, before the vote is taken at the Special
Meeting, a written notice of revocation bearing a date later than the date of
the proxy, (ii) duly executing and delivering a subsequent proxy relating to the
same shares, or (iii) attending the Special Meeting and voting in person
(although attendance at the Special Meeting will not in and of itself constitute
a revocation of a proxy). Any written notice of revocation should be sent to:
Corporate Secretary, Greenbriar Corporation, 4265 Kellway Circle, Addison, Texas
75244.
APPROVAL OF CONVERSION SHARES
Neither Nevada law nor the Company's Articles of Incorporation or Bylaws
require Stockholder approval of the Proposal to add the right to convert Series
D and E Preferred Stock into Common Stock. However, the rules of the American
Stock Exchange (the "Exchange") require prior Stockholder approval for the
issuance of shares which will result in an increase in outstanding Common Stock
of 20% or more. Consequently, the Stockholders are being asked to approve the
Proposal at the Special Meeting. Under Nevada law, any Stockholder voting in
favor of the Proposal may be deemed to have waived any rights to challenge such
transactions, while Stockholders voting against such transactions or abstaining
from voting may continue to retain those rights. It should be noted, however,
that under Nevada law Stockholders do not have dissenters' appraisal rights in
connection with the Proposal, nor do Stockholders have preemptive rights to
acquire any of the Conversion Shares.
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<PAGE>
Conversion of Preferred Stock
In April 1996, the Company issued 675,000 shares of Series D preferred
stock and 1,949,949 shares of Series E preferred stock, valued at approximately
$14 million.
At the time of the issuance of the Series D and E Preferred Stock, the
Company agreed that it would submit to its Stockholders at a subsequent meeting
a proposal to approve the conversion feature contained in the Designations of
Rights and Preferences governing the Series D and E Preferred Stock, in order to
permit conversion of two shares of Series D Preferred Stock into one share of
Common Stock, and 1.2 shares of Series E Preferred Stock into one share of
Common Stock.
The adoption of the Designations of Rights and Preferences is a power
granted to the Board of Directors of the Company by its Articles of
Incorporation and by Nevada law. Approval of a conversion features contained in
such Designations is required by a rule of the American Stock Exchange, and the
Special Meeting is hereby held for the sole purpose of submitting the Proposal
to add such conversion features, in accordance with the rules of the Exchange.
Prior to conversion of the Series D and E Preferred Stock, there are a
total of 6,127,910 shares having voting rights, of which 3,479,428 shares
(56.8%) are Common Stock, 675,000 shares (11.1%) are Series D Preferred Stock,
and 1,949,949 shares (31.8%) are Series E Preferred Stock. Following full
conversion of the Series D and E Preferred Stock, there will be 5,465,518 shares
having voting rights, and the voting percentage of the current holders of Common
Stock will increase to 63.7%, while the voting percentage of the prior holders
of Series D and E Preferred Stock owning shares of Common Stock after conversion
will decrease to 6.2% and 29.6%, respectively.
Description of Capital Stock
The authorized capital stock of Greenbriar consists of 100,000,000 shares
of Common Stock, par value $.01 per share ("Common Stock"), and 10,000,000
shares of Preferred Stock, par value $.10 per share (the "Authorized Preferred
Stock"). The Authorized Preferred Stock may be designated in series, and five
series of Preferred Stock have been designated, four of which are outstanding.
Common Stock. The holders of Common Stock have no preemptive, conversion or
redemption rights. The outstanding shares of Common Stock are fully paid and
nonassessable. The holders of Common Stock are entitled to receive such
dividends as may be declared from time to time by the Board of Directors out of
funds legally available therefor. The Company has not paid cash dividends on the
Common Stock during the last two fiscal years, and the Board of Directors
currently intends to retain earnings for further development of its business and
not to pay cash dividends on the Common Stock in the foreseeable future. No
dividends can be paid on the Common Stock while dividends are in arrears on any
Series of Preferred Stock. The Company is not currently in arrears on any
dividends payable on the Preferred Stock. The holders of Common Stock are
entitled to one vote per share on all matters submitted to a vote of
Stockholders and do not possess cumulative voting rights. The registrar and
transfer agent for the Common Stock is American Stock Transfer and Trust
Company, New York, New York.
Terms of Series D Preferred Stock. The Board of Directors has approved the
designation of the Series D Preferred Stock consisting of 675,000 shares and
having the rights and preferences summarized below. The Series D Preferred Stock
is a separate series of Preferred Stock within the 10,000,000 shares of
authorized Preferred Stock of the Company. Following is a brief summary of
certain provisions of the Series D Preferred Stock.
Dividends. Series D Preferred Stock bear dividends at the rate of 10.3% per
annum on the Issue Price (defined below) thereof, payable quarterly. At the
election of the Board, dividends may be accumulated and will be payable in cash
when and as declared by the Board. No dividends may be paid or declared (other
than a dividend payable in Common Stock), and no distribution (of other
securities or any other property) may be made, on Common Stock or any other
class or series of stock ranking junior to the Series D Preferred Stock while
any dividends on Series D Preferred Stock remains accumulated and unpaid. No
Common Stock or any other class or series of stock ranking junior to the Series
D Preferred Stock may be redeemed or purchased by the Company while any
dividends on Series D Preferred Stock remains accumulated and unpaid.
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<PAGE>
Liquidation Rights. In the event of any liquidation, dissolution or winding
up of the Company, the holder of each share of Series D Preferred Stock then
outstanding will be entitled to be paid, along with and pari passu with the
holders of Series A, B, C and E Preferred Stock an amount in cash equal to $5.00
(the "Issue Price") for each share of such Series D Preferred Stock, together
with any accumulated and unpaid dividends thereon, before any distribution or
payment on Common Stock. Thereafter, the holders of Common Stock then
outstanding will together be entitled to receive ratably all the remaining
assets of the Company.
Redemption. Provided there are no accumulated and unpaid dividends on
Series D Preferred Stock, the Series D Preferred Stock may be redeemed at the
Issue Price at any time by the Company upon written notice to the record holders
thereof.
Conversion. The Designation of Rights and Preferences governing the Series
D Preferred Stock provides that following approval at the Special Meeting, each
two shares of Series D Preferred Stock will be convertible, at the option of the
holder thereof at any time commencing one year following the date of issuance
thereof, into one share of Common Stock. Such initial conversion rate will be
subject to certain anti-dilution adjustments from time to time for stock splits,
stock dividends, reclassifications and similar items affecting the number of
outstanding shares of Common Stock so as to fairly and equitably preserve as
reasonably as possible the original conversion rights of the Series D Preferred
Stock. The 675,000 shares of D Preferred Stock will initially be convertible
into 337,500 shares of Common Stock.
Voting Rights. Holders of Series D Preferred Stock have the right to vote
together with the holders of Common Stock, and not as a separate class (except
as hereafter described), on any matters to come before the vote of stockholders,
and each share of Series D Preferred Stock is entitled to one vote, or an
aggregate of 675,000 votes, whereas if the Series D Preferred Stock is converted
at the initial conversion rate into 337,500 shares of Common Stock, the former
holders of Series D Preferred Stock will have an aggregate of only 337,500
votes. In addition, holders of Series D Preferred Stock, voting as a separate
class by majority vote, must approve any amendment to the Designation of Rights
and Preferences of Series D Preferred Stock, to (i) increase or decrease the
number of authorized shares of Series D Preferred Stock, (ii) increase or
decrease the Issue Price, (iii) effect an exchange, reclassification or
cancellation of all or part of the shares of Series D Preferred Stock, (iv)
effect an exchange, or create a right of exchange, of all or any part of the
shares of another class into shares of Series D Preferred Stock, (v) change the
designations, preferences, limitations, or relative rights of the Series D
Preferred Stock, (vi) change the shares of Series D Preferred Stock into the
shares of another class, or (viii) cancel or otherwise affect accumulated but
undeclared dividends on the Series D Preferred Stock. Holders of Series D
Preferred Stock do not have the right to vote at the Special Meeting for
approval of the Proposal, but will be asked to consent to the action of the
Stockholders at the Special Meeting, if approved.
Preemptive Rights. Except with respect to the anti-dilution rights
referenced above under "Conversion", no holder of Series D Preferred Stock will
be entitled as a matter of right to subscribe or receive additional shares of
any class of stock of the Company, whether now or hereafter authorized, or any
bonds, debentures or other securities convertible into such stock.
Ownership by Officers and Directors. 100% of the Series D Preferred Stock
is held by James R. Gilley and certain family members and affiliates of James R.
Gilley. See "Principal Stockholders and Security Ownership of Management Before
and After Conversion."
Terms of Series E Preferred Stock. Greenbriar's Board of Directors has
approved the designation of the Series E Preferred Stock consisting of 1,949,949
shares and having the rights and preferences summarized below. The Series E
Preferred Stock is a separate series of preferred stock within the 10,000,000
shares of authorized Preferred Stock of the Company. Following is a brief
summary of certain provisions of the Series E Preferred Stock.
Dividends. Series E Preferred Stock will bear no dividend except that a 12%
cumulative dividend shall commence 27 months following the date of issue if the
conversion right is not approved. No dividends may be paid or declared (other
than a dividend payable in Common Stock), and no distribution (of other
securities or any other property) may be made, on Common Stock or any other
class or series of stock ranking junior to the Series E Preferred Stock while
any dividends on Series E Preferred Stock remains accumulated and unpaid. No
Common Stock or any other class or series of stock ranking junior to the Series
E Preferred Stock may be redeemed or purchased by the Company while any
dividends on Series E Preferred Stock remain accumulated and unpaid.
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<PAGE>
Liquidation Rights. In the event of any liquidation, dissolution or winding
up of the Company, the holder of each share of Series E Preferred Stock then
outstanding will be entitled to be paid, along with and pari passu with the
holders of Series A, B, C and D Preferred Stock an amount in cash equal to
$9.514 (the "Issue Price") for each share of such Series E Preferred Stock,
together with any accumulated and unpaid dividends thereon, before any
distribution or payment on Common Stock. Thereafter, the holders of Common Stock
then outstanding will together be entitled to receive ratably all the remaining
assets of the Company.
Redemption. Provided there are no accumulated and unpaid dividends on
Series E Preferred Stock, the Series E Preferred Stock may be redeemed at the
Issue Price at any time by the Company upon written notice to the record holders
thereof on the Company's books.
Conversion. The Designation of Rights and Preferences governing the Series
E Preferred Stock provides that following approval of the Stockholders at the
Special Meeting, each 1.2 shares of Series E Preferred Stock will be
convertible, at the option of the holder thereof, into one share of Common
Stock. If so converted, the 1,949,949 shares of Series E Preferred Stock will
convert into 1,624,958 shares of Common Stock.
Voting Rights. Holders of Series E Preferred Stock have the right to vote
together with the holders of Common Stock, and not as a separate class (except
as hereafter described), on any matter to come before the vote of stockholders,
and each share of Series E Preferred Stock is entitled to one vote, or an
aggregate of 1,949,949 votes. However, if the Series E Preferred Stock is
converted into 1,624,958 shares of Common Stock, the former holders of Series E
Preferred Stock will hold an aggregate of only 1,624,958 votes. In addition,
Holders of Series E Preferred Stock, voting as a separate class by majority
vote, must approve any amendment to the Designation of Rights and Preferences of
Series E Preferred Stock to (i) increase or decrease the number of authorized
shares of Series E Preferred Stock, (ii) increase or decrease the Issue Price,
(iii) effect an exchange, reclassification or cancellation of all or part of the
shares of Series E Preferred Stock, (iv) effect an exchange, or create a right
of exchange, of all or any part of the shares of another class into shares of
Series E Preferred Stock, (v) change the designations, preferences, limitations,
or relative rights of the Series E Preferred Stock, (vi) change the shares of
Series E Preferred Stock into the shares of another class, or (viii) cancel or
otherwise affect accumulated but undeclared dividends on the Series E Preferred
Stock. Holders of Series E Preferred Stock do not have the right to vote at the
Special Meeting, but will be asked to consent to the action of the Stockholders
at the Special Meeting, if approved.
Preemptive Rights. Except with respect to the anti-dilution rights
referenced above under "Conversion", no holder of Series E Preferred Stock will
be entitled as a matter of right to subscribe or receive additional shares of
any class of stock of the Company, whether now or hereafter authorized, or any
bonds, debentures or other securities convertible into such stock.
Ownership of Directors and Officers. See "Principal Stockholders and
Security Ownership of Management Before and After Conversion".
Capitalization
The following table presents the capitalization of the Company at March 31,
1996, and as adjusted to show the effect of the full conversion of the Series D
and Series E Preferred Stock. Amounts shown for the four series of Preferred
Stock constitute their liquidation preferences. Proforma for March 31, 1996 full
conversion
Series B Preferred Stock $ 353,000 $ 353,000
Series C Preferred Stock 2,000,000 2,000,000
Series D Preferred Stock 3,375,000 -
Series E Preferred Stock 18,552,000 -
Common Stock 18,243,000 40,170,000
----------- ----------
Total stockholders' equity $42,523,000 $42,523,000
=========== ===========
Per common share $5.24 $7.38
===== =====
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PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP
OF MANAGEMENT BEFORE AND AFTER CONVERSION
Securities Ownership of Certain Beneficial Owners
The following table sets forth as of March 31, 1996, certain information
with respect to all Stockholders known by the Company to own beneficially more
than 5% of the outstanding Common Stock and Series C, D and E Preferred Stock
(which are the only outstanding classes of voting securities of the Company,
except for Series B Preferred Stock), as well as information with respect to the
Company's Common Stock and Series C, D and E Preferred Stock owned beneficially
by each director, by each executive officer whose compensation from the Company
in 1995 exceeded $100,000, and by all directors and executive officers as a
group. Unless otherwise indicated, each of such stockholders has sole voting and
investment power with respect to the shares beneficially owned. The number of
shares of Series B Preferred Stock outstanding and convertible into Common Stock
is immaterial and no information has been provided below regarding Series B
Preferred Stock ownership. All shares of Common Stock have been adjusted for the
1 for 5 reverse split effected in December 1995.
<TABLE>
<CAPTION>
Series C, D and E
Preferred Stock Common Stock
-------------------------------- -------------------------------------------------------------------
Name and Address Number Percent Number Percent Number of Shares- Percent
of Beneficial of Shares of of of Assuming Conversion of
Owner Series Shares Class of Preferred Stock by Class
Holder
- - ---------------------- --------------------- -------- ----------------- -------- ------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
James R. Gilley 480,330<F2><F4><F5> 71.2% 1,810,000<F4><F5> 49.2% 2,050,165 36.2%
4265 Kellway Circle
Addison, Texas 75244
Sylvia M. Gilley 275,266<F2><F4><F5> 40.8% 936,000<F4><F5> 26.9% 1,073,633 19.6%
13711 Creekside Place
Dallas, Texas 75248
W. Michael Gilley 37,057<F2><F6> 5.5% 261,000<F6> 7.5% 279,528 5.1%
4265 Kellway Circle
Addison, Texas 74244
Victor L. Lund 1,457,953<F3> 75.8% - - 1,214,961 22.2%
816 N.E. 87th Ave.
Vancouver, WA 98664
Gene S. Bertcher - - 74,000<F7> 2.1% 74,000 1.3%
4265 Kellway Circle
Addison, Texas 75244
Robert L. Griffis - - 30,000<F8> 0.9% 30,000 0.5%
4265 Kellway Circle
Addison, Texas 75244
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<PAGE>
Michael E. McMurray - - - - - -
5330 Merrick Rd.
Massapequa, NY 11758
Matthew G. Gallins - - 24,000<F9> 0.7% 24,000 0.4%
715 Stadium Drive
Winston-Salem, NC 27101
Paul G. Chrysson - - - - - -
1045 Burke Street
Winston-Salem, NC 27101
Richards D. Barger - - 200 - 200 -
945 San Marino Ave.
San Marino, CA 91108
Steven R. Hague - - - - - -
1650 Bank One Tower
221 W. Sixth Street
Austin, Texas 78701
Don C. Benton - - - - - -
9200 Inwood Road
Dallas, Texas 75220
Paul W. Dendy 19,360<F3> 1.0% 10,000<F10> 0.3% 26,133 0.4%
816 N.E. 87th Ave.
Vancouver, WA 98664
Mark W. Hall 84,442<F3> 4.4% 10,000<F10> 0.3% 80,368 1.5%
816 N.E. 87th Ave.
Vancouver, WA 98664
Richard C.W. Mauran 10,000<F1> 50.0% - - 66,667 1.2%
c/o Greenbriar Corporation
4265 Kellway Circle
Addison, Texas 75244
Cove Capital 10,000<F1> 50.0% - - 66,667 1.2%
Corporation
245 East 54th Street
New York, NY 10022
All executive officers 517,387<F2> 76.6% 2,215,200 59.5% 4,034,049 71.2%
and directors (and 1,586,675<F3> 82.5%
nominees) as a group
(13 persons)
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<FN>
<F1> Represents Series C Preferred Stock which votes with Common Stock and
Series B, D and E Preferred Stock as one class. Series C Preferred Stock is
convertible into Common Stock at a rate of 6.67 shares of Common Stock for
each share of Series C Preferred Stock.
<F2> Represents Series D Preferred Stock which votes with Common Stock and
Series B, C and E Preferred Stock as one class. Series D Preferred Stock is
convertible into Common Stock, beginning March 15, 1997, provided holders
of Common Stock and Series B and C Preferred Stock approve the
convertibility feature by a majority vote at the Special Meeting, at a rate
of one share of Common Stock for two shares of Series D Preferred Stock.
<F3> Represents Series E Preferred Stock which votes with Common Stock and
Series B, C and D Preferred Stock as one class. If holders of a majority of
the outstanding Common Stock and Series B and C Preferred Stock approved
the conversion feature for the Series E Preferred Stock at the Special
Meeting, it will be convertible at a rate of one share of Common Stock for
1.2 shares of Series E Preferred Stock.
<F4> Consists of 1,210,000 shares of Common Stock and 355,927 shares of Series D
Preferred Stock owned by JRG Investments, Inc. ("JRG"), a corporation
wholly owned by Mr. Gilley, 400,000 shares of Common Stock and 117,653
shares of Series D Preferred Stock owned by a grantor trust for the benefit
of James R. and Sylvia M. Gilley, options to purchase 200,000 shares of
Common Stock at $10.75 per share, exercisable through December 1, 2000, and
6,750 shares of Series D Preferred Stock owned by Mr. Gilley. Mr. Gilley
and JRG have pledged 1,166,363 shares of Common Stock, and Mr. Gilley has
pledged all of his shares in JRG, to MS Holding Corp., a nonaffiliated
entity, as collateral for repayment of a $5,700,000 promissory note payable
by JRG to MS Holding Corp. The note requires payment of annual interest
only until May 23, 1997, when the principal balance and all accrued
interest is due and payable. Failure to repay such note when due could have
an effect on the control of the Company. Of the shares of Common Stock
owned by the grantor trust, 200,000 shares were acquired by the trust from
the Company in November 1993 in consideration of a $2,250,000 partial
recourse promissory note executed by the grantor trust and Mr. Gilley (as
co-maker). This note bears interest at an annual rate of 5.5% until
November 2003, when the entire principal balance and all accrued interest
is due. The note is collateralized by the 200,000 shares purchased by the
grantor trust, and the grantor trust and Mr. Gilley (as co-maker) have
personal recourse only for the first 20% of the principal balance.
<F5> Mrs. Gilley is the spouse of James R. Gilley. Consists of 400,000 shares of
Common Stock and 117,653 shares of Series D Preferred Stock owned by the
grantor trust for the benefit of Mr. and Mrs. Gilley, and 536,000 shares of
Common Stock and 157,613 shares of Series D Preferred Stock owned of
record. Other than shares owned by the grantor trust, Mrs. Gilley disclaims
any beneficial ownership of the shares owned by Mr. Gilley and JRG. Mr.
Gilley and JRG disclaim beneficial ownership of the shares owned by Mrs.
Gilley.
<F6> Consists of 96,000 shares of Common Stock and 37,057 shares of Series D
Preferred Stock owned of record, 30,000 shares of Common Stock issued for
promissory notes of $237,500, for which the shares are pledged as
collateral, 5,000 shares of Common Stock owned by Bartram Investment
Properties, Inc., a wholly owned corporation, and 130,000 shares of Common
Stock owned by five trusts for which Mr. Gilley acts as co-trustee for the
benefit of the children and grandchildren of James R. and Sylvia M. Gilley.
- 8 -
<PAGE>
<F7> Consists of 43,000 and 11,000 shares of Common Stock issued for promissory
notes of $72,500, for which the shares are pledged as collateral, and
options to purchase 20,000 shares of Common Stock for $11.25 per share
vesting over nine years, of which 2,000 shares vested immediately and the
remainder vest over a nine year period beginning January 1, 1994.
<F8> In November 1992, Mr. Griffis obtained a loan from the Company for $75,000
which was used to exercise options to purchase 30,000 shares of the
Company's Common Stock. The loan is collateralized by the shares purchased
by Mr. Griffis.
<F9> Consists of 20,000 shares of Common Stock owned by a trust for which Mr.
Gallins acts as co-trustee for the benefit of one of the grandchildren of
James R. and Sylvia M. Gilley and 4,000 shares of Common Stock owned by
Matthew G. Gallins LLC.
<F10>Represents options to purchase 10,000 shares of Common Stock, one-third of
which vest on each of March 15, 1997, 1998 and 1999.
</FN>
</TABLE>
MARKET PRICE AND DIVIDEND POLICY
The Company's Common Stock is listed on the American Stock Exchange and
traded under the symbol "GBR".
As of the Record Date, there were approximately 3,900 stockholders of
record of the Common Stock. The following table sets forth the high and low
sales prices on the American Stock Exchange for the periods indicated.
1994* 1995*
-----------------------------------------------------
High Low High Low
First Quarter $12 1/2 $9 1/16 $ 8 3/4 $5
Second Quarter 11 1/4 8 1/4 10 15/16 5 5/16
Third Quarter 10 5/8 5 5/16 13 7/16 9 1/16
Fourth Quarter 7 13/16 4 3/8 13 7/16 7 3/16
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<PAGE>
PROXY SOLICITATION
Proxies are being solicited from the Company's Stockholders by and on
behalf of the Board of Directors of the Company. The cost of solicitation of
proxies will be paid by the Company. In addition to solicitation by use of the
mails, proxies may be solicited by directors, officers, and employees of the
Company in person or by telephone, telegram, or other means of communication.
Such directors, officers, and employees will not be additionally compensated for
such services but may be reimbursed for out-of-pocket expenses incurred by them
in connection with such solicitation. Arrangements will also be made with
custodians, nominees, and fiduciaries for the forwarding of proxy solicitation
materials to beneficial owners of Common Stock held of record by such persons.
OTHER MATTERS
The Board of Directors does not intend to bring any other matters before
the Special Meeting and has not been informed that any other matters are to be
presented to the Special Meeting by others. In the event that other matters
properly come before the Special Meeting or any adjournments thereof it is
intended that the persons named in the accompanying proxy and acting thereunder
will vote in accordance with their best judgement.
DEADLINE FOR SUBMISSION
OF PROPOSALS TO BE PRESENTED
AT THE 1997 ANNUAL MEETING OF STOCKHOLDERS
Any Stockholder who intends to present a proposal at the 1997 Annual
Meeting of Stockholders must file such proposal with the Company by January 3,
1997 for possible inclusion in the Company's proxy statement and form of proxy
relating to the meeting.
By Order of the Board of Directors
James R. Gilley,
President and Chief Executive Officer
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<PAGE>
