SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
GREENBRIAR CORPORATION
(Name of Registrant As Specified in Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box): [X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.......................................................................
2) Form, Schedule or Registration Statement No.:
.......................................................................
3) Filing Party:
.......................................................................
4) Date Filed:
.......................................................................
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GREENBRIAR CORPORATION
4265 Kellway Circle
Addison, Texas 75001
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 2, 2000
Dear Stockholders of Greenbriar Corporation:
You are cordially invited to attend the annual meeting of stockholders of
Greenbriar Corporation to be held at 10:00 AM, local time on June 2, 2000, at
4265 Kellway Circle, Addison, Texas 75001, to consider and vote upon the
following matters:
Proposal 1. Election of two Class III directors to hold office in
accordance with the Articles of Incorporation and
Bylaws of the company;
Proposal 2. To consider and act upon a proposal to approve and
adopt the Company's 2000 Stock Option Plan under
which 500,000 shares of Common Stock will be reserved
for issuance to key employees, directors and
consultants of the Company ("Proposal 2");
Proposal 3. Ratification of the selection of Grant Thornton, LLP
as the company's auditors and the transaction of such
other business that may properly come before the
meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on April 21, 2000 can
vote at the meeting.
You are cordially invited to attend the annual meeting in person. Even if
you plan to attend the meeting, you are still requested to sign, date and return
the accompanying proxy in the enclosed addressed envelope. If you attend, you
may vote in person if you wish, even though you have sent your proxy.
By Order of the Board of Directors
Robert L. Griffis, Secretary
April 21, 2000
<PAGE>
GREENBRIAR CORPORATION
4265 Kellway Circle
Addison, Texas 75001
(972)407-8400
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 2, 2000
The company is sending this proxy statement and the accompanying proxy card
to the holders of common stock, and Series B and Series D preferred stock, of
Greenbriar Corporation, in connection with a solicitation of proxies by the
board of directors of the company from the stockholders for use at the annual
meeting of stockholders of the company. We are mailing this proxy statement and
the enclosed form of proxy beginning on or about April 28, 2000.
VOTING AND PROXY INFORMATION
Who May Vote
Holders of record of common stock and Series B and D preferred stock at the
close of business on April 21, 2000 are entitled to receive notice of and to
vote at the annual meeting. At the close of business on the record date there
were outstanding 7,010,598 shares of common stock, 615 shares of Series B
preferred Stock, and 675,000 shares of Series D preferred stock, the only
outstanding securities of the company entitled to vote at the annual meeting.
The common stock is held by approximately 2,750 stockholders of record, and all
series of preferred stock are closely held.
Required Votes
Each stockholder is entitled to one vote per share on all matters properly
brought before the stockholders at the annual meeting. Such votes may be cast in
person or by proxy. Abstentions may be specified as to the approval of any of
the Proposals and will have the effect of a vote against the Proposals. Under
the rules of the American Stock 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. The Exchange rules allow member firms of the Exchange to
vote on all Proposals without specific instructions from beneficial owners.
The directors will be elected by a plurality of the votes cast in person or
by proxy. The Proposal to ratify the selection of independent accountants will
require the affirmative vote of the holders of a majority of the voters present
in person and by proxy at the meeting and entitled to vote.
How to Vote
Votes may be cast in person at the annual meeting or by proxy using the
enclosed proxy card. A facsimile of the proxy will be accepted. All shares of
common stock and preferred stock that are represented at the annual meeting by
properly executed proxies received by the company prior to or at the annual
meeting and not revoked will be voted at the annual meeting in accordance with
the instructions indicated in their proxies. Unless instructions to the contrary
are specified in the proxy, each such proxy will be voted FOR the election as a
director of the nominees listed herein and for approval of the other Proposals.
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Proxies Can Be Revoked
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 filing with
the Secretary of the company, before the vote is taken at the annual meeting, a
written notice of revocation bearing a date later than the date of the proxy,
duly executing and delivering a subsequent proxy relating to the same shares or
attending the annual meeting and voting in person (although attendance at the
annual 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 75001.
Expenses of Solicitation
The company will bear the expense of this solicitation, including the
reasonable costs incurred by custodians, nominees, fiduciaries and other agents
in forwarding the proxy material to you. The company will also reimburse
brokerage firms and other custodians and nominees for their expenses in
distributing proxy material to you. In addition to the solicitation made by this
proxy statement, certain directors, officers and employees of the company may
solicit proxies by telephone and personal contact.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
At the annual meeting, two Class III directors will be elected to hold
office until the 2003 annual meeting of stockholders. The company's Articles of
Incorporation provide that the directors are divided into three classes of equal
or approximately equal number and that the number of directors constituting the
board of directors will from time to time be fixed and determined by a vote of a
majority of the company's directors serving at the time of such vote. The board
of directors is now comprised of eight members, with Classes I and II consisting
of three members and Class III consisting of two members.
It is intended that the accompanying proxy, unless contrary instructions
are set forth therein, will be voted for the election of the nominees for
election as directors as set forth in the following table. If the nominees
become unavailable for election to the board of directors, the persons named in
the proxy may act with discretionary authority to vote the proxy for such other
persons as may be designated by the board of directors. However, the board is
not aware of any circumstances likely to render the nominees unavailable for
election. The withholding of authority or abstention will have no effect upon
the election of directors by holders of common stock and Series B and D
preferred stock because under Nevada law directors are elected by a plurality of
the votes cast, assuming a quorum is present. The presence of a majority of the
outstanding shares of common stock and Series B and D preferred stock, voting as
one class, will constitute a quorum. The shares held by each holder of common
stock and Series B and D preferred stock who signs and returns the enclosed form
of proxy will be counted for purposes of determining the presence of a quorum at
the meeting.
The following table sets forth certain information with respect to the
persons who will be the nominees for election at the annual meeting and the
other incumbent directors and executive officers of the company. Included within
the information below is information concerning the business experience of each
such person during the past five years. The number of shares of common stock
beneficially owned by each of the directors as of March 31, 2000 is set forth
below in "Securities Ownership of Certain Beneficial Owners."
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Nominees and Business Experience
Class III
Being elected at Annual Meeting for a term to expire in 2003
- ------------------------------------------------------------
Don C. Benton Mr. Benton has been a director of the
Age 45 company since June 1994. He currently serves
as a consultant to various Twelve Step
ministry programs. He was Director of Twelve
Step Ministries, Lovers Lane United
Methodist Church of Dallas from 1991 until
1997 and has been a consultant for Spiritual
Counseling and Education for the Addiction
Recovery Center since 1993. He also served
in that capacity for the Argyle Specialty
Hospital. Mr. Benton is a Licensed Chemical
Dependency Counselor and a Certified Alcohol
and Drug Abuse Counselor.
William A. Shirley, Jr. Mr. Shirley has been a director of the
Age 56 company since 1998. He was Chairman of the
Board and President of Villa Residential
Care Homes, Inc. from 1989 until its
acquisition by the company on December 31,
1997. Mr. Shirley is President of Pascal
Enterprises, a real estate investment
company wholly owned by Mr. Shirley.
Incumbent Directors and Business Experience
- -------------------------------------------
Class I
Term expires in 2001
- --------------------
James R. Gilley Mr. Gilley has been Chairman of the company
Age 65 since November 1989 and was President and
Chief Executive Officer from November 1989
until December 16, 1996. He was re-elected
as President and Chief Executive Officer on
October 2, 1998.
Gene S. Bertcher Mr. Bertcher has been Executive Vice
Age 51 President, Chief Financial Officer and
Treasurer of the company since November 1989
and was a director from November 1989 until
September 1996. He is a certified public
accountant.
Paul G. Chrysson Mr. Chrysson has been a director of the
Age 45 company since May 1995. He is President of
C.B. Development Co., Inc., a North Carolina
real estate developer, a position he has
held for over five years. Mr. Chrysson is a
member of the boards of directors of
Boddie-Noell Properties, Inc. and Wachovia
Bank-Forsyth County, Winston-Salem, North
Carolina and has served on the boards of
various charitable organizations. He has
been a licensed real estate agent since 1974
and a licensed contractor since 1978.
Class II
Term expires in 2002
- --------------------
Michael E. McMurray Mr. McMurray has been a director of the
Age 44 company since May 1991. Since July 1987, Mr.
McMurray has been Vice President of
Investments for Prudential Securities. Prior
to joining Prudential Securities, Mr.
McMurray was a financial consultant for
Shearson Lehman Hutton from 1983 until July
1987.
Matthew G. Gallins Mr. Gallins has been a director of the
Age 43 company since June 1994. Since 1990, Mr.
Gallins has been a director, President and
Chief Operations Officer of Gallins Vending
Company, Inc., a food services vending
company. He is a director of Southern
Community Bank in Winston-Salem, North
Carolina and has served on the boards of
various charitable organizations.
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<TABLE>
<CAPTION>
Victor L. Lund Mr. Lund has been a director of the company
Age 70 since 1996. He founded Wedgwood Retirement
Inns, Inc. ("Wedgwood") in 1977. Wedgwood
became a wholly owned subsidiary of the
company on March 31, 1996. For most of
Wedgwood's existence, Mr. Lund was Chairman
of the Board, President and Chief Executive
Officer, positions he held until Wedgwood
was acquired by the company. He continues to
serve as Chairman of the board of Wedgwood.
Other Executive Officers and Business Experience
Robert L. Griffis Mr. Griffis has been Senior Vice President
Age 64 of the company since November 1992,
Secretary since June 1994 and was a director
from June 1994 until September 1996. For the
nine years prior to becoming an officer of
the company, he was involved in the
healthcare industry, as Senior Vice
President of Retirement Corporation of
America, Senior Vice President of National
Heritage, Inc., President of Health
Resources, Inc., President of the long term
care division of Clinitex Corp. and, from
1991 to 1992, as a consultant to the
company.
Securities Ownership of Certain Beneficial Owners
The following table sets forth as of March 31, 2000, certain information
with respect to all stockholders known by the company to own beneficially more
than 5% of the outstanding common stock and Series D, F and G preferred stock
(which are the only outstanding classes of securities of the company, except for
Series B preferred stock, the ownership of which is immaterial), as well as
information with respect to the company's common stock and Series D, F and G
preferred stock owned beneficially by each director, director nominee, and
current executive officer whose compensation from the company in 1999 exceeded
$100,000, and by all directors and executive officers as a group. Unless
otherwise indicated, each of these stockholders has sole voting and investment
power with respect to the shares beneficially owned.
Preferred Stock Common Stock
--------------------- ------------------------------------------------------------
Number of shares
Assuming Full
Number Percent Number Percent Conversion of Preferred Percent
Name and Address of of of of Stock and of
of Beneficial Owner Shares Series Shares Class Options by Holder Class
- ------------------- ------ ------ ------ ----- ----------------------- -------
Series D Preferred Stock(1)
<S> <C> <C> <C> <C> <C> <C>
James R. Gilley(2 & 3) 675,000 100% 2,340,851 28.8% 2,678,351 31.7%
4265 Kellway Circle
Addison TX 75001
Sylvia M. Gilley(2 & 3) 675,000 100% 2,340,851 28.8% 2,678,351 31.7%
6211 Georgian Court
Dallas TX 75240
Victor L. Lund(4) -- -- 1,234,961 17.6% 1,234,961 17.6%
816 NE 87th Avenue
Vancouver WA 98664
Floyd B. Rhoades(5) -- -- 953,012 13.2% 953,012 13.2%
95 Argonaut Street
Aliso Viego CA 92656
Gene S. Bertcher(6) -- -- 366,000 5.0% 366,000 5.0%
4265 Kellway Circle
Addison TX 75001
Robert L. Griffis(7) -- -- 60,000 * 60,000 *
4265 Kellway Circle
Addison TX 75001
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Preferred Stock Common Stock
--------------------- ------------------------------------------------------------
Number of shares
Assuming Full
Number Percent Number Percent Conversion of Preferred Percent
of of of of Stock and of
Shares Series Shares Class Options by Holder Class
------ ------ ------ ----- ----------------------- -------
Michael E. McMurray(8) -- -- 30,000 * 30,000 *
5330 Merrick Road
Massapequa NY 11758
Matthew G. Gallins(9) -- -- 33,000 * 33,000 *
715 Stadium Drive
Winston-Salem NC 27101
Paul G. Chrysson(8) -- -- 30,000 * 30,000 *
1045 Burke Street
Winston-Salem NC 27101
Don C. Benton(8) -- -- 30,000 * 30,000 *
Arrowhead Ranch
Route 1
Clarksville, TX 75246
William A. Shirley, Jr.(12) -- -- 659,000 8.8% 659,000 8.8%
2621 State Street
Dallas TX 75204
Series F and G Preferred Stock(11 & 12)
Lone Star Opportunity Fund LP(12) 1,933,000 100% -- -- 1,104,572 15.8%
600 N Pearl Street, Suite 1550
Dallas TX 75201
American Realty Trust, Inc.(13) -- -- 97,500 1.4% 97,500 1.4%
10670 North Central Expressway
Suite 300
Dallas TX 75231
Basic Capital Management, Inc.(13) -- -- 141,260 2% 141,260 2%
10670 North Central Expressway
Suite 600
Dallas TX 75231
Nevada Sea Investments, Inc.(13) -- -- 72,800 1% 72,800 1%
10670 North Central Expressway
Suite 501
Dallas TX 75231
International Health Products, Inc.(13) -- -- 249,085 3.6% 249,085 3.6%
10670 North Central Expressway
Suite 410
Dallas TX 75231
Davister Corporation (13) -- -- 251,200 3.6% 251,200 3.6%
10670 North Central Expressway
Suite 410
Dallas TX 75231
Institutional Capital Corporation (13) -- -- 242,500 3.5% 242,500 3.5%
10670 North Central Expressway
Suite 411
Dallas TX 75231
All executive officers, 675,000 100% 4,783,812 52.5% 5,121,312 54.2%
directors and director nominees
as a group(1 & 2)
(nine persons)
</TABLE>
* Less than one percent
(1) Represents Series D preferred stock which votes with common stock and
Series B preferred stock as one class. Series D preferred stock is
convertible into common stock at a rate of one share of common stock for
two shares of Series D preferred stock.
(2) The shares are owned by a grantor trust for the benefit of Mr. and Mrs.
Gilley. Sylvia M. Gilley is the spouse of James R. Gilley.
(3) Consists of 500,000 shares of common stock owned by JRG Investments Co.,
Inc., a corporation wholly owned by James R. Gilley ("JRG"); 732,851 shares
of common stock owned by a grantor trust for the benefit of James R. and
Sylvia M. Gilley; options to James R. Gilley to purchase 200,000 shares of
5
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common stock at $10.75 per share, exercisable through December 1, 2000;
options to James R. Gilley to purchase 200,000 shares of common stock at
$13.275 per share, exercisable through December 31, 2006; options to James
R. Gilley to purchase 200,000 shares of common stock at $17.50 per share,
exercisable through December 31, 2007; options to James R. Gilley to
purchase 200,000 shares of common stock at $2.50 per share, exercisable
through December 31, 2008; options to James R. Gilley to purchase 200,000
shares of common stock at $0.69 per share exercisable through December 31,
2009; a warrant to purchase 108,000 shares at an exercise price of $10.00
per share, exercisable through October 1, 2006, owned by the grantor trust
for the benefit of Mr. and Mrs. Gilley; and 536,000 shares of common stock
owned of record by Mrs. Gilley. 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. Mr. Gilley has pledged all of his shares
in JRG to Institutional Capital Corporation (formerly known as MS Holding
Corp.), a non-affiliated entity, as collateral for repayment of a
promissory note payable by JRG to Institutional Capital Corporation in the
remaining principal amount of $2,996,373. 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.
(4) Consists of 1,214,961 shares of common stock owned by Mr. Lund and options
to Mr. Lund to purchase 10,000 shares of common stock at $2.50 per share
and options to Mr. Lund to purchase 10,000 shares of common stock at $0.69
per share..
(5) Consists of 751,820 shares of common stock owned by Mr. Rhoades, options to
Mr, Rhoades to purchase 200,000 shares of common stock at $17.50 per share,
and 1,192 shares owned by his spouse. Mr Rhoades disclaims beneficial
ownership of shares owned by his spouse.
(6) Consists of 46,000 shares of common stock issued for promissory notes of
$92,500, for which 13,000 shares are currently pledged as collateral,
options to purchase 20,000 shares of common stock for $11.25 per share, all
of which are vested, options to purchase 100,000 shares for $2.50 per share
that vest one-third each year beginning at December 31, 1999 and options to
purchase 200,000 shares of common stock at $0.69 per share exercisable
through December 31, 2009.
(7) 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. He also has options to purchase 30,000 shares for $2.50 per
share that vest one-third each year beginning at December 31, 1999.
(8) Consists of options to purchase 10,000 shares of common stock for $17.75
per share, options to purchase 10,000 shares at $2.50 per share and options
to purchase 10,000 shares at $0.69 per share.
(9) Consists of 3,000 shares of common stock owned by Matthew G. Gallins LLC,
options to Mr. Gallins to purchase 10,000 shares of common stock for $17.75
per share, 10,000 shares at $2.50 per share and 10,000 shares at $0.69 per
share.
(10) Includes 155,709 shares of common stock owned of record by Mr. Shirley,
483,291 shares of common stock which Mr. Shirley may acquire upon
conversion of certain limited partnership units, options to purchase 10,000
shares at $2.50 per share and options to purchase 10,000 shares at $0.69
per share.
(11) The holders of Series F preferred stock are entitled to elect one member to
the board, but this right has not been exercised by such holders. Series F
preferred stock is not otherwise entitled to vote except with regard to
certain matters that effect changes to its rights and preferences. Series G
senior non-voting convertible preferred stock is not entitled to vote
except with regard to certain matters that effect changes to its rights and
preferences.
(12) There are 1,400,000 shares of Series F preferred stock outstanding and
533,000 shares of Series G preferred stock outstanding. The Series F
preferred stock and Series G preferred stock presently are convertible into
800,000 shares of common stock and 304,572 shares of common stock,
respectively.
(13) Based on a Schedule 13D, dated April 8, 1998, filed by each of these
entities and by Gene E. Phillips, each of these entities owns of record the
number of shares set forth for such entity in the table above and each of
such entities and Mr. Phillips disclaim they filed such Schedule 13D as a
"group". According to the Schedule 13D, Basic Capital Management, Inc. may
be deemed to beneficially own 311,560 shares, including the shares owned of
record by American Realty Trust, Inc. and Nevada Sea Investments, Inc., and
Mr. Phillips may be deemed to beneficially own all 1,054,345 shares owned
of record and beneficially by these six entities. In the Schedule 13D, Mr.
Phillips does not affirm beneficial ownership of any of these shares.
Executive Compensation
The following tables set forth the compensation paid by the company for
services rendered during the fiscal years ended December 31, 1999, 1998 and 1997
to the Chief Executive Officer of the company and to the other executive
officers of the company whose total annual salary in 1999 exceeded $100,000, the
number of options granted to any of such persons during 1999 and the value of
the unexercised options held by any of such persons on December 31, 1999.
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<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation-
Number of
Shares of
Common Stock
Name and Annual Underlying All
Principal Compensation- Options Other
Position Year Salary Compensation(1)
--------- ---- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
James R. Gilley, 1999 $479,000 200,000 $6,500
Chairman, President and 1998 414,000 200,000 6,500
Chief Executive Officer 1997 460,000 200,000 6,500
Gene S. Bertcher, 1999 198,000 200,000 4,500
Executive Vice President and 1998 162,000 100,000 -
Chief Financial Officer 1997 180,000 - -
Robert L. Griffis, 1999 111,000 - -
Senior Vice President 1998 90,000 30,000 -
1997 100,000 - -
(1) Constitutes directors' fees paid by the company to the named individuals.
Option Grants Table
(Option Grants in Last Fiscal Year)
Number of Percent of
Securities Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted Fiscal Year Per Share Date
---- ---------- ------------- ----------- ----------
James R. Gilley 200,000 37% $0.69 12/31/09
Gene S Bertcher 200,000 37% 0.69 12/31/09
Aggregated Option Exercises in Last Fiscal
Year and FY-End Option Values
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options at 1999
Shares Acquired Value Options at 1999 FY-End FY-End
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------- ----------- ------------- ----------- -------------
James R. Gilley -- -- 1,000,000 -- $224,000 --
Gene S. Bertcher -- -- 320,000 -- 224,000 --
Robert L. Griffis -- -- 30,000 -- -- --
</TABLE>
Stock Option Plan
The compensation committee administers the company's 1992 Stock Option
Plan, as amended (the "1992 Plan"), and 1997 Stock Option Plan (the "1997
Plan"), each of which provides for grants of incentive and non-qualified stock
options to the company's executive officers, as well as its directors and other
key employees, and consultants in the case of the 1997 Plan. Under both Plans,
options are granted to provide incentives to participants to promote long-term
performance of the company and specifically, to retain and motivate senior
management in achieving a sustained increase in stockholder value. Currently,
neither Plan has a pre-set formula or criteria for determining the number of
options that may be granted. The exercise price for an option granted under both
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Plans is determined by the compensation committee, in an amount not less than
100 percent of the fair market value of the company's common stock on the date
of grant. The compensation committee reviews and evaluates the overall
compensation package of the executive officers and determines the awards based
on the overall performance of the company and the individual performance of the
executive officers. The company currently has reserved 217,500 shares of common
stock for issuance under the 1992 Plan and 500,000 shares of common stock under
the 1997 Plan. As of the date of this proxy statement options have been granted
for all shares reserved under the 1992 Plan and all but 11,100 shares under the
1997 Plan.
Employment Agreements
The company has an employment agreement with James R. Gilley, Chairman,
President and Chief Executive Officer, dated January 1, 1997, that provides for
a three year term that recommences each day. The agreement provides for a base
salary of $460,000 and 200,000 fully vested, non-qualified stock options each
year in lieu of any cash bonus. The agreement may be terminated only upon
resignation, mutual consent or for good cause.
The company has an employment agreement with Gene S. Bertcher, Executive Vice
President and Chief Financial Officer. The agreement, dated January 1, 1997,
provides for a two year term that recommences each day. The agreement provides
for compensation of $180,000 per year, discretionary bonus and may be terminated
early only upon resignation, mutual consent or for good cause.
COMPENSATION COMMITTEE REPORT
The compensation paid to the company's executive officers is reviewed and
approved annually by the compensation committee of the board of directors. The
compensation committee consists entirely of non-employee directors. Current
members of the committee are Messrs. Benton, Chrysson, Gallins and McMurray. In
addition to approving annual compensation for the company's executive officers,
the compensation committee approves any incentive awards for executive officers
and other key employees, any stock option grants and additional benefits such as
the company's 401(k) plan.
The company's compensation philosophy is to attract, retain and reward
executives who have shown they are capable of leading the company in achieving
its business objectives and performance goals. These objectives include
preserving and increasing the company's asset value; positioning the company's
operations in geographic markets offering long term, profitable growth
opportunities; preserving and enhancing shareholder value and keeping the
company competitive in its marketing and operations. The accomplishment of these
objectives is measured against conditions prevalent in the assisted living
industry. In recent years the industry has grown to be a highly competitive
industry for residents, real estate and services in a rapidly changing regional
and national environment.
The compensation committee determined that the primary forms of executive
compensation should be base salary and stock options. The company's performance
is a key consideration (to the extent that such performance can be fairly
attributed or related to an executive's performance) and each executive's
responsibilities and capabilities are key considerations. The committee strives
to keep executive base salaries competitive for comparable positions in other
corporations where possible. In addition, the committee believes in equity
compensation wherein executives will be additionally rewarded based on
increasing the company's shareholder value. Base salaries are predicated on a
number of factors, including:
o recommendation of the Chief Executive Officer;
o knowledge of similarly situated executives at other companies;
o the executive's position and responsibilities within the company;
o the compensation committee's subjective evaluation of the executive's
contribution to the company's performance;
o the executive's experience and
o the term of the executive's tenure with the company.
Chief Executive Officer Compensation
James R. Gilley, President and Chief Executive Officer, has an employment
agreement with the company providing, among other things, his base salary and
other benefits. As a result, the compensation committee did not review
compensation for the Chief Executive Officer position.
Compensation Committee
Michael McMurray, Chairman Paul Chrysson
Don Benton Matthew Gallins
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PERFORMANCE GRAPH
The following graph compares the cumulative total return on a $100 investment in
the company's common stock on December 31, 1995 through December 31, 1999, based
on the company's closing stock price on December 31, for each of those years.
The same information is provided for the Standard & Poor's 500 index and, from
1996 through 1999 for an industry peer group1.
[GRAPHIC OMITTED]
- -------------------------
1 The company considers its peer group to be public companies whose business
is primarily in the assisted living industry. Those companies are Alterra
Healthcare Corporation, American Retirement Corporation, ARV Assisted
Living, Inc., Assisted Living Concepts, Inc., Brookdale Living Communities,
Inc., Carematrix Corporation, Emeritus Corporation, Regent Assisted Living,
Inc. and Sunrise Assisted Living, Inc. Only eight of these companies have
been public since December 1996 and, consequently, only their performance
is shown from that time.
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Certain Relationships and Related Transactions
The following paragraphs describe certain transactions between the company
and any stockholder beneficially owning more than 5% of the outstanding common
stock, the executive officers and directors of the company and members of the
immediate family or affiliates of any of them, which occurred since the
beginning of the 1997 fiscal year.
On November 19, 1993 the company sold 200,000 unregistered shares of its
common stock to The April Trust, a grantor trust for the benefit of James R.
Gilley, Chairman, President and Chief Executive Officer of the company, and his
wife, at a price equal to the closing price of the shares on the American Stock
Exchange on that date ($11.25) per share for consideration consisting of a
$2,250,000 promissory note (for which Mr. Gilley is a co-maker) for the full
purchase price thereof, of which 20% of the principal amount of the note is a
recourse obligation of Mr. Gilley and the grantor trust and the balance of the
note is nonrecourse. Such note bears interest at the rate of 5.5% per annum,
which accrues and is payable along with all principal upon maturity on November
18, 2003, and is secured by a pledge of the stock back to the company to hold as
collateral for payment of the note pending payment in full. On December 16,1996,
the compensation committee extended the due date of such note to November 18,
2008.
Gene S. Bertcher and Robert L. Griffis, officers of the company, are
indebted to the company for an aggregate of $92,500 and $75,000, respectively,
for notes issued in payment for shares of Common Stock. Mr. Bertcher's notes are
secured by a pledge of 13,000 shares of common stock. Mr. Griffis' note is
secured by a pledge of his 30,000 shares. Such notes bear interest at a rate
equal to any cash or stock dividends declared on the purchased stock and are due
in a single installment for each such note on or before October 1, 2002.
As part of the Wedgwood Acquisition and as an accommodation to the sellers
to assist them to help achieve a tax-free acquisition, James R. Gilley and
members of his family agreed to contribute a retail property in North Carolina
to the company in exchange for 675,000 shares of the company's Series D
preferred stock. Mr. Gilley and his family had owned the retail property for
over five years. The consideration received by James R. Gilley and members of
his family, valued at $3,375,000, was based upon an independent appraisal of the
North Carolina shopping center. The Series D preferred stock is unregistered,
has no trading market unless converted to common stock and is entitled to one
vote per share on all matters to come before a meeting of stockholders. The
Series D preferred stock bears a cumulative quarterly dividend of 9.5% per year,
which approximates the cash flow Mr. Gilley and his family members were
receiving from the retail property prior to its contribution to the company. The
Series D preferred stock is convertible into unregistered shares of common stock
at a ratio of one share of common stock for two shares of Series D preferred
stock. Mr. Gilley and his family members and affiliates transferred all of the
shares of Series D preferred stock to The April Trust effective April 1997.
The company agreed to register the shares of common stock into which the
Series D preferred stock is convertible under limited circumstances, as follows:
the company agreed to give the holders of such shares the right to demand
registration of all or a portion of the common stock upon conversion provided
holders of at least a majority of the shares join in such demand; and the
company agreed to give the holders of common stock "piggy-back" registration
rights to include all or a portion of the shares in any other registration
statement filed by the company under the Securities Act (other than on Form S-8
or Form S-4), subject to certain rights of the company not to include all or a
portion of such shares under certain circumstances. The company agreed to pay
all expenses of the demand or piggy-back registration other than underwriting
fees, discounts and commissions.
The company agreed to register the shares of common stock into which the
Series E preferred stock was converted, in connection with the Wedgwood
Acquisition, a large percentage of which is held by Victor L. Lund, under
limited circumstances, as follows: commencing two years after the closing of the
Wedgwood Acquisition, the company agreed to give the holders of such shares the
right to demand registration of all or a portion of the common stock provided at
least a majority of the shares join in such demand and the company agreed to
give the holders of the common stock "piggy-back" registration rights to include
all or a portion of the shares in any other registration statement filed by the
company under the Securities Act (other than on Form S-8 or Form S-4), subject
to certain rights of the company not to include all or a portion of such shares
under certain circumstances. The company agreed to pay all expenses of the
demand or piggy-back registration, other than underwriting fees, discounts and
commissions.
In connection with the Wedgwood Acquisition, the company entered into a
Construction Management Agreement with Victor L. Lund pursuant to which Mr. Lund
agreed to serve, for three years following closing of the Wedgwood Acquisition,
as a construction manager to oversee construction for the company of up to 20
assisted living facilities, including those that provide Alzheimer's care,
during the term of the agreement. The Construction Management Agreement was
terminated by mutual agreement in October 1997. Mr. Lund received monthly fees
based on the percentage of completion of each facility with a total fee of
$150,000 for each facility successfully completed, less any distributions paid
to Mr. Lund from any partnership or limited liability company in which Mr. Lund
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and the company both own equity interests. Mr. Lund was responsible for paying
the costs of any construction supervisors or similar on-site personnel employed
by him to satisfy his oversight duties to the company. Mr. Lund owns a 51%
equity interest and the company owns a 49% equity interest in two limited
partnerships. The company has an option to buy Mr. Lund's interests in these
partnerships for $10,000.
In 1996 The April Trust purchased a Stock Purchase Warrant from an
unaffiliated holder to purchase 108,000 shares of common stock at an exercise
price of $12.98 per share. That warrant contains anti-dilution clauses requiring
a reduction in the exercise price to adjust for any issuances of common stock at
a price less than the exercise price, which had occurred and would occur in
connection with the merger with American Care. To eliminate any future conflicts
and negotiations of changes in the exercise price, the warrant was amended to
fix the exercise price at $10.00 and to extend the termination date until
October 1, 2006.
On January 13, 1998, Lone Star Opportunity Fund, L.P. ("Lone Star")
purchased 1,400,000 shares of Series F preferred stock and 800,000 shares of
Series G preferred stock for an aggregate purchase price of $22,000,000. In the
first quarter of 2000 the Company redeemed 267,000 shares of the Series G
Preferred Stock. The outstanding Series F preferred stock and Series G preferred
stock are convertible into 1,104,572 shares of common stock. The company agreed
to register the shares of common stock into which the Series F preferred stock
and Series G preferred stock are convertible under limited circumstances, as
follows: the company agreed to give the holders of such shares the right to
demand registration on two occasions of all or a portion of the common stock
upon conversion provided holders of at least a majority of the shares join in
such demand and the aggregate offering price is equal to at least $3 million;
the company agreed to give the holders of common stock "piggy-back" registration
rights to include all or a portion of the shares in any other registration
statement filed by the company under the Securities Act (other than on Form S-8
or Form S-4), subject to certain rights of the company not to include all or a
portion of such shares under certain circumstances; and the company agreed to
register the shares on Form S-3 upon conversion, if Form S-3 is available to the
company, as long as the aggregate offering price for the shares registered on
such Form S-3 were at least equal to $3 million and provided the company will
not be required to effect more than one registration on Form S-3 during any
twelve month period. The company agreed to pay all expenses of any demand,
piggy-back or Form S-3 registration, other than underwriting fees, discounts and
commissions.
It is the policy of the company that all transactions between the company
and any officer or director, or any of their affiliates, must be approved by the
conflict of interest committee, which is comprised of non-management members of
the board of directors of the company. All of the transactions described above
were approved.
Organization of the Board of directors
The board of directors has the following committees:
Committee Members
Executive James R. Gilley - Chairman
Victor L. Lund
Paul G. Chrysson
Michael E. McMurray
Audit Matthew G. Gallins - Chairman
Don C. Benton
Paul G. Chrysson
Michael E. McMurray
William A. Shirley, Jr.
Compensation Committee Michael E. McMurray - Chairman
Don C. Benton
Paul G. Chrysson
Matthew G. Gallins
Conflicts of Interest Paul G. Chrysson - Chairman
Don C. Benton
Matthew G. Gallins
Michael E. McMurray
11
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The executive committee conducts the normal business operations of the
company and acts as the nominating committee. The audit committee recommends an
independent auditor for the company, consults with such independent auditor and
reviews the company's financial statements. The compensation committee fixes the
compensation of officers and key employees of the company and administers the
company's stock option plans. The conflicts of interest committee receives and
investigates any reports of or perceived conflicts of interest in any activities
undertaken by the company.
Any stockholder who wishes to recommend a prospective nominee for the
board of directors for consideration by the executive committee for the election
in 2001 may write: Corporate Secretary, 4265 Kellway Circle, Addison, Texas
75001, on or before January 1, 2001.
The board of directors had three meetings during 1999. The executive
committee met once, the audit committee met twice and the compensation committee
met twice.
Compensation of Directors
The company pays each director a fee of $2,500 per year, plus a meeting
fee of $1,000 for each board meeting attended.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3, 4 and 5 furnished to the company
pursuant to Rule 16a-3(e) promulgated under the Securities Exchange Act of 1934
(the "Exchange Act"), or upon written representations received by the company,
the company is not aware of any failure by any director, officer or beneficial
owner of more than 10% of the company's common stock to file with the Securities
and Exchange Commission, on a timely basis, any Form 3, 4 or 5 relating to 1998.
PROPOSAL 2
APPROVAL OF 2000 STOCK OPTION PLAN
General
The company's Board of Directors has approved, and recommends that the
stockholders approve, the adoption of the 2000 Stock Option Plan (the "2000
Plan") under which the company will reserve 500,000 shares of Common Stock for
issuance to key employees, directors and consultants of the company pursuant to
options granted by the Board of Directors (or the Compensation Committee of the
Board of Directors, if appointed) during the term of the Plan. Following is a
description of the 2000 Plan.
The purposes of the 2000 Plan are to encourage key employees, directors
and consultants of the company and its subsidiaries to acquire a proprietary
interest in the company and thus share in the future success of the company's
business; to enable the company, by offering comparable incentives, to attract
and retain quality management personnel, directors and consultants who are in a
position to make important and direct contributions to the success of the
company; and to promote a closer identity of interests between the company's
employees, directors and consultants and its stockholders. The maximum number of
shares reserved for issuance and subject to option under the 2000 Plan will be
500,000 shares of Common Stock. Under the 2000 Plan, officers, key employees,
directors and consultants of the company and its subsidiaries will be eligible
to receive options to purchase Common Stock. The exercise period of each option
will be determined by the Board of Directors, but no option shall have a term
longer than ten years. Options granted under the 2000 Plan may be either
Incentive Stock Options or options that are not intended to be Incentive Stock
Options ("Non-qualified Stock Options"). The Board of Directors is authorized to
designate the recipients of options, the dates of grants, the number of shares
subject to options, the option price, the terms of payment upon exercise of the
options, and the time during which the options may be exercised. The Board of
Directors may delegate its authority to a committee of the Board of Directors
from time to time under the Plan.
The 2000 Plan will continue for a period of ten years and no options
will be granted on or after June 2, 2010. All options granted prior to that time
will remain in effect in accordance with their terms. In the event of any future
change in the company's Common Stock as a result of stock splits or stock
dividends, or combinations or exchanges of stock, or otherwise, the number of
shares available for option and subject to any option and the price per share of
shares subject to any option may be proportionately adjusted by the Board of
Directors, which will administer the 2000 Plan, subject to its power to delegate
authority from time to time to a committee of the Board of Directors to
administer the 2000 Plan.
The Board of Directors has full power to select optionees from among
the officers, key employees, directors and consultants of the company and its
subsidiaries, and to specify the terms and conditions of any option granted
under the 2000 Plan; however, no option may be granted at an exercise price less
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than 100% of the fair market value of the company's Common Stock on the business
day preceding the date of the grant of such option. No option may be exercisable
more than ten years after the date of its grant, but options may have differing
permissible exercise periods.
The Board of Directors may not grant an Incentive Stock Option to any
consultant who is not a salaried employee of the company, or any of its
subsidiaries, nor may it grant an Incentive Stock Option to any stockholder who
at the time of the grant beneficially owns more than 10% of the company's
outstanding voting securities, unless such option has an exercise price at the
time of the grant of at least 110% of the fair market value of the Common Stock,
and the option is not exercisable for more than five years from the date of
grant. Incentive Stock Options may not be granted to any person when the effect
would be to permit such person to first exercise options, in any calendar year,
for the purchase of shares of Common Stock having a fair market value in excess
of $100,000 (determined at the time of the grant of the options).
Incentive Stock Options and Non-qualified Stock Options may not be
transferred except by will or the laws of descent and distribution, and during
the lifetime of the optionee to whom granted, may be exercised only by such
optionee. Incentive Stock Options and Non-qualified Stock Options may be
exercised by the optionee within three months after termination of employment,
directorship or consulting relationship (unless the option expires earlier by
its terms), unless such termination was due to death or disability of the
optionee. In the event of the death of an optionee holding an Incentive Stock
Option or Non-qualified Stock Option while employed by, or serving as a director
or consultant of, the company the option shall be exercisable by the person or
persons to whom such optionee's rights pass by will or by the laws of descent
and distribution at any time prior to the expiration date of the option or
within one year after the date of such death, whichever is earlier, but only to
the extent the optionee had the right to exercise such Incentive Stock Option or
Non-qualified Stock Option on the date of his death. In the event of the
disability of an optionee holding an Incentive Stock or Non-qualified Stock
Option while employed by, or serving as a director or consultant of, the
company, which results in termination of such optionee's employment,
directorship or consulting relationship, the Board of Directors may allow an
Incentive Stock Option or Non-qualified Stock Option to be exercisable by the
optionee at any time prior to the expiration date of the Incentive Stock Option
or Non-qualified Stock Option or within one year after the date of such
termination, whichever is earlier, but only to the extent the optionee had the
right to exercise such option at the date of such termination.
The Board of Directors may amend the 2000 Plan at any time in any
manner; however, no amendment may, without the approval of the company's
stockholders, increase the maximum number of shares issuable under the 2000 Plan
except in the case of certain capital adjustments.
As of the date of this Proxy Statement, there were approximately 75
persons eligible to receive Incentive Stock Options and ten persons eligible to
receive Non-qualified Stock Options under the 2000 Plan, consisting of 6
executive officers, 5 non-officer directors and 70 other employees.
The company has two additional stock option plans, the Amended 1992
Stock Option Plan (the "1992 Plan") and the 1997 Stock Option Plan (the "1997
Plan"). As of the date of this Proxy Statement, options had been granted for all
207,500 shares reserved for issuance under the 1992 Plan and options had been
granted for all but 11,100 shares reserved for issuance under the 1997 Plan. The
Compensation Committee administers the 1992 Plan.
The closing price for the company's Common Stock on the Exchange on
March 31, 2000 was $1.81.
Federal Income Tax Consequences
There are no federal income tax consequences to the optionee or the
company upon the grant of stock options under the 2000 Plan. The federal tax
consequences upon exercise will vary depending on whether the option is an
Incentive Stock Option or a Non-qualified Stock Option.
Incentive Stock Options. When an optionee exercises an Incentive Stock
Option, the optionee will not at that time recognize any income, nor will the
company be entitled to a deduction. The optionee will recognize capital gain or
loss at the time of disposition of the shares acquired through the exercise of
an Incentive Stock Option if the disposition occurs more than two years after
the option was granted and if the shares have been held more than one year after
it was exercised. The company will not be entitled to a tax deduction if the
optionee satisfies these holding requirements. The net federal income tax effect
to the holder of Incentive Stock Options is to defer, until the acquired stock
is sold, taxation of any increase in the stock's value from the time of grant of
the option to the time of its exercise, and to tax such gain, at the time of
sale, at capital gain rates rather than at ordinary income rates.
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If the holding requirements are not met, then upon sale of the shares
the optionee generally recognizes as ordinary income the excess of the fair
market value of the shares at the date of exercise over the exercise price, and
any increase in the value of the option stock subsequent to exercise is long or
short-term capital gain to the optionee depending on the optionee's holding
period for the stock. However, if the sale is for a price less than the value of
the shares on the date of exercise, the optionee might recognize ordinary income
only to the extent the sales price exceeded the option price. In either case,
the company is entitled to a business expense deduction to the extent of
ordinary income recognized by the optionee.
Non-qualified Stock Options. When an optionee exercises a Non-qualified
Stock Option, the optionee recognizes ordinary income in the amount of the
excess of the fair market value of the shares received upon exercise over the
aggregate amount paid for those shares, and the company may deduct as an expense
the amount of income so recognized by the optionee. For capital gains purposes,
the holding period of the shares begins upon the exercise of the option, and the
optionee's basis in the shares is equal to the fair market value of the shares
on the date of exercise.
If, upon exercise of a Non-qualified Stock Option, the optionee pays
all or part of the purchase price by delivering to the company shares of
already-owned stock, there are no federal income tax consequences to the
optionee or the company to the extent of the number of shares so delivered. As
to any additional shares issued, the optionee recognizes ordinary income equal
to the aggregate fair market value of the additional shares received, less any
cash paid to the company, and the company is allowed to deduct as an expense the
amount of such income. For purposes of calculating tax upon disposition of the
shares acquired, the holding period and basis of the new shares, to the extent
of the number of old shares delivered, is the same as for those old shares. The
holding period for the additional shares begins on the date the option is
exercised, and the basis in those additional shares is equal to the taxable
income recognized by the optionee, plus the amount of any cash paid to
Greenbriar.
For a more complete description of the Plan, see attached Exhibit 1,
GREENBRIAR CORPORATION 2000 STOCK OPTION PLAN.
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 D Preferred Stock
attending the Annual Meeting, voting as one class, is necessary to approve and
adopt the 2000 Plan. Accordingly, if a stockholder abstains from voting certain
shares on the approval and adoption of the 2000 Plan, or a beneficial owner
fails to deliver written instructions to his nominee holder of shares so that
the nominee holder is not able to vote such shares, 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 and adoption of the 2000 Plan and
therefore will have no effect on the outcome of the vote.
The Board of Directors of the company recommends a vote FOR approval
and adoption of the 2000 Plan described above.
PROPOSAL 3
RATIFICATION OF AUDITORS
The board of directors has selected Grant Thornton, LLP to serve as the
company's independent auditors for the year ending December 31, 2000. The
stockholders are being asked to ratify the board's selection. Representatives of
Grant Thornton, LLP will be present at the annual meeting, will have the
opportunity to make a statement and will be available to answer appropriate
questions.
Ratification of the appointment of Grant Thornton, LLP as the company's
independent auditors for the fiscal year ending December 31, 2000 requires the
approval by a majority vote of the outstanding shares of common stock and Series
B and D preferred stock attending the annual meeting, either in person or by
proxy.
The Board of Directors recommends a vote FOR Proposal 3.
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ANNUAL REPORT
The annual report to stockholders, including consolidated financial
statements, for the year ended December 31, 1999, accompanies the proxy material
being mailed to all stockholders. The annual report is not a part of the proxy
solicitation material. The annual report includes the company's Form 10-K for
1999, including the financial statements and schedules, as filed with the
Securities Exchange Commission. A stockholder may also request copies of any
exhibit to the Form 10-K, and the company will charge a fee to cover expenses to
prepare and send any exhibits. You may request these from: Corporate Secretary,
Greenbriar Corporation, 4265 Kellway Circle, Addison, Texas 75001.
OTHER MATTERS
The board of directors does not intend to bring any other matters
before the annual meeting and has not been informed that any other matters are
to be presented to the annual meeting by others. In the event that other matters
properly come before the annual 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 judgment.
DEADLINE FOR SUBMISSION
OF PROPOSALS TO BE PRESENTED
AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who intends to present a proposal at the 2001 annual
meeting of stockholders must file such proposal with the company by March 2,
2001 for possible inclusion in the company's proxy statement and form of proxy
relating to the meeting.
By Order of the Board of Directors
Robert L. Griffis, Secretary
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EXHIBIT 1
GREENBRIAR CORPORATION
2000 STOCK OPTION PLAN
500,000 Shares
ARTICLE I
GENERAL
1.1 Purpose of the Plan.
--------------------
The purpose of the Greenbriar Corporation 2000 Stock Option Plan (the "Plan") is
to assist Greenbriar Corporation, a Nevada corporation (the "company"), in
securing and retaining Key Participants of outstanding ability by making it
possible to offer them an increased incentive to join or continue in the service
of the company and to increase their efforts for its welfare through
participation or increased participation in the ownership and growth of the
company.
1.2 Definitions.
------------
(a) "Acceleration Event" means any event which in the opinion of the
Board of Directors of the company is likely to lead to changes in control of
share ownership of the company, whether or not such change in control actually
occurs.
(b) "Award" means an Option granted to a Key Participant under the
Plan.
(c) "Board of Directors" or "Board" means the Board of Directors of the
company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the committee referred to in Section 1.3.
(f) "Common Stock" means the Common Stock of the company.
(g) "Fair Market Value" means the closing price of the shares on the
American Stock Exchange or other exchange on which the Common Stock is primarily
traded on the day on which such value is to be determined or, if no shares were
traded on such day, on the next preceding day on which shares were traded, as
reported by The Wall Street Journal. If at any time shares of Common Stock are
not traded on an exchange or in the over-the-counter market, Fair Market Value
shall be the value determined by the Board of Directors or Committee
administering the Plan, taking into consideration those factors affecting or
reflecting value which they deem appropriate.
(h) "Grantee" means a Key Participant to whom an Award is granted under
the Plan.
(i) "Incentive Share" means a share of Common Stock awarded to a Key
Participant under Article VI hereof on such terms as are determined by the
Committee.
(j) "Incentive Share Agreement" means a written agreement in such form
as the Board or Committee, as applicable, shall approve that evidences the terms
and conditions of an award of Incentive Shares hereunder.
(k) "Incentive Stock Option" means an option to purchase shares of
Common Stock which is intended to qualify as an incentive stock option as
defined in Section 422 of the Code.
(l) "Key Participant" means any person, including officers, directors,
agents and consultants of the company or any Subsidiary who are designated a Key
Participant by the Board or Committee, as applicable, and is or is expected to
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be primarily responsible for the management, growth, or supervision of some part
or all of the business of the company. The power to determine who is and who is
not a Key Participant is reserved solely for the Committee.
(m) "Non-qualified Stock Option" means an option to purchase shares of
Common Stock which is not intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code.
(n) "Option" means an Incentive Stock Option or a Non-qualified Stock
Option.
(o) "Optionee" means a Key Participant to whom an Option is granted
under the Plan.
(p) "Parent" means any corporation which qualifies as a parent of a
corporation under the definition of "parent corporation" contained in Section
425(e) of the Code.
(q) "Subsidiary" means any corporation which qualifies as a subsidiary
of a corporation under the definition of "subsidiary corporation" contained in
Section 425(f) of the Code.
(r) "Term" means the period during which a particular option may be
exercised as determined by the Committee and as provided in the option
agreement.
1.3 Administration of the Plan.
---------------------------
The Plan shall be administered by the Compensation Committee (the
"Committee") appointed by the Board of Directors consisting solely of
two or more Non-Employee Directors, as defined in Rule 16b-3 (see
Section 1.10, below), or in the absence of an appointment of such a
Committee, the full Board shall serve as the Committee. Subject to the
control of the Board, and without limiting the control over decisions
described in Section 1.7, the Committee shall have the power to
interpret and apply the Plan and to make regulations for carrying out
its purpose. More particularly, the Committee shall determine which Key
Participants shall be granted Options and the terms of such grants.
When granting Options, the Committee shall designate the Option as
either an Incentive Stock Option or a Non-qualified Stock Option.
Determinations by the Committee under the Plan (including, without
limitation, determinations of the person to receive Awards, the form,
amount and timing of such Awards, and the terms and provisions of such
Awards and the agreements evidencing same) need not be uniform and may
be made by it selectively among persons who receive, or are eligible to
receive, Awards under the Plan, whether or not such persons are
similarly situated. In serving on the Committee, members thereof shall
be considered to be acting in their capacity as members of the Board of
Directors and shall be entitled to all rights of indemnification
provided by the Bylaws of the company or otherwise to members of the
Board of Directors.
1.4 Shares Subject to the Plan.
---------------------------
The total number of shares that may be purchased pursuant to Options
under the Plan shall not exceed 500,000 shares of Common Stock. Shares
subject to the Options which terminate or expire prior to exercise
shall be available for future Awards under the Plan without again being
charged against the limitation of 500,000 shares set forth above.
Shares issued pursuant to the Plan may be either unissued shares of
Common Stock or reacquired shares of Common Stock held in treasury.
1.5 Terms and Conditions of Options.
--------------------------------
All Options shall be evidenced by agreements in such form as the
Committee shall approve from time to time subject to the provisions of
Article II and Article III, as appropriate, and the following
provisions:
(a) Exercise Price. The exercise price of the Option shall not
be less than the Fair Market Value (as determined by the Committee) of
the Common Stock at the time the Option is granted.
(b) Exercise. The Committee shall determine whether the Option
shall be exercisable in full at any time during the Term or in
cumulative or non-cumulative installments during the Term.
(c) Termination of Employment or Contractor Relationship. An
Optionee's Option shall expire on the expiration of the Term specified
in Section 2.1 or 3.1 as the case may be, or upon the occurrence of
such events as are specified in the agreement. In the event of exercise
of the Option after termination of employment or contractor
relationship, the Optionee may exercise the Option only with respect to
the shares which could have been purchased by the Optionee at the date
of such termination. However, the Committee may, but is not required
to, waive any requirements made pursuant to Section 1.5(b) so that some
or all of the shares subject to the Option may be exercised within the
time limitation described in this subsection. An Optionee's employment
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or contractor relationship shall be deemed to terminate on the last
date for which he receives a regular wage, salary or contract payment.
Whether military, government or other service or other leave of absence
shall constitute a termination of employment shall be determined in
each case by the Committee at its discretion, and any determination by
the Committee shall be final and conclusive. A termination of
employment or contractor relationship shall not occur where the
Optionee transfers from the company to one of its Subsidiaries or
transfers from a Subsidiary to the company.
(d) Death or Disability. Upon termination of an Optionee's
employment or contractor relationship by reason of death or disability
(as determined by the Committee consistent with the definition of
Section 422(c)(7) of the Code), the Option shall expire on the earlier
of the expiration of (i) the date specified in the Option which in no
event shall be later than 12 months after the date of such termination,
or (ii) the Term specified in Section 2.1 or 3.1 as the case may be.
The Optionee or his successor in interest, as the case may be, may
exercise the Option only as to the shares that could have been
purchased by the Optionee at the date of his termination of employment.
However, the Committee may, but is not required to, waive any
requirements made pursuant to Section 1.5(b) so that some or all of the
shares subject to the Option may be exercised within the time
limitation described in this subsection.
(e) Payment. Payment for shares as to which an Option is
exercised shall be made in such manner and at such time or times as
shall be provided in the option agreement, including cash, Common Stock
of the company which was previously acquired by the Optionee, or any
combination thereof. The Fair Market Value of the surrendered Common
Stock as of the date of exercise shall be determined in valuing Common
Stock used in payment for Options.
(f) Non-transferability. No Option granted under the Plan
shall be transferable other than by will or by the laws of descent and
distribution. During the lifetime of the Optionee, an Option shall be
exercisable only by the Optionee.
(g) Additional Provisions. Each option agreement may contain
such other terms and conditions not inconsistent with the provisions of
the Plan, including the award of cash amounts, as the Committee may
deem appropriate from time to time.
1.6 Stock Adjustments; Mergers.
---------------------------
(a) Generally. Notwithstanding Section 1.4, in the event the
outstanding shares are increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities
of the company or of any other corporation by reason of any merger,
sale of stock, consolidation, liquidation, recapitalization,
reclassification, stock split up, combination of shares, stock
dividend, or transaction having similar effect, the total number of
shares set forth in Section 1.4 shall be proportionately and
appropriately adjusted by the Committee.
(b) Options. Following a transaction described in subsection
(a) above, if the company continues in existence, the number and kind
of shares that are subject to any Option and the option price per share
shall be proportionately and appropriately adjusted without any change
in the aggregate price to be paid therefor upon exercise of the Option.
If the company will not remain in existence or substantially all of its
voting Common Stock and Common Stock will be purchased by a single
purchaser or group of purchasers acting together, then the Committee
may (i) declare that all Options shall terminate 30 days after the
Committee gives written notice to all Optionee's of their immediate
right to exercise all Options then outstanding (without regard to
limitations on exercise otherwise contained in the Options), or (ii)
notify all Optionee's that all Options granted under the Plan shall
apply with appropriate adjustments as determined by the Committee to
the securities of the successor corporation to which holders of the
numbers of shares subject to such Options would have been entitled, or
(iii) take action that is some combination of aspects of (i) and (ii).
The determination by the Committee as to the terms of any of the
foregoing adjustments shall be conclusive and binding. Any fractional
shares resulting from any of the foregoing adjustments under this
section shall be disregarded and eliminated.
1.7 Acceleration Event.
-------------------
If an Acceleration Event occurs in the opinion of the Board of
Directors, based on circumstances known to it, the Board of Directors
may direct the Committee to declare that any or all Options granted
under the Plan shall become exercisable immediately notwithstanding the
provisions of the respective agreements granting any such Awards.
1.8 Notification of Exercise.
-------------------------
Options shall be exercised by written notice directed to the Secretary
of the company at the principal executive offices of the company. Such
written notice shall be accompanied by any payment required pursuant to
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Section 1.5(e). Exercise by an Optionee's heir or the representative of
his estate shall be accompanied by evidence of his authority to so act
in form reasonably satisfactory to the company.
1.9 Modification, Extension and Renewal of Awards.
---------------------------------------------
Subject to the terms and conditions and within the limitations of the
Plan, the Committee may modify, extend or renew outstanding Awards or
accept the surrender of outstanding Awards (to the extent not
theretofore exercised) granted under the Plan or under any other plan
of the company or a Subsidiary, and authorize the granting of new
Awards pursuant to the Plan in substitution therefor, and the
substituted Awards may bear such different or additional terms and
conditions as the Committee shall deem appropriate within the
limitations of the Plan. Notwithstanding the foregoing, however, no
modification of an Award shall, without the consent of the Grantee
holding the Award, adversely affect the rights or obligations of such
Grantee.
1.10. Compliance with Rule 16b-3.
--------------------------
It is intended that the provisions of the Plan and any Award shall
comply in all respects with the terms and conditions of Rule 16b-3
under the Securities Exchange Act of 1934, as in effect on April 1,
2000 and as amended, or any successor provisions, as it relates to
persons subject to the reporting requirements of Section 16(a) of such
Act. Any agreement granting an Award shall contain such provisions as
are necessary or appropriate to assure such compliance. To the extent
that any provision hereof is found not to be in compliance with such
rule as it relates to such Act, such provision shall be deemed to be
modified so as to be in compliance with such rule, or if such
modification is not possible, shall be deemed to be null and void, as
it relates to such Grantee.
ARTICLE II
INCENTIVE STOCK OPTIONS
2.1 Terms of Incentive Stock Options.
--------------------------------
Each Incentive Stock Option granted under the Plan shall be exercisable
only during a Term fixed by the Committee; provided, however, that the
Term shall end no later than 10 years after the date the Incentive
Stock Option is granted.
2.2 Limitation on Options.
----------------------
The aggregate Fair Market Value of Common Stock (determined at the time
the Incentive Stock Option is granted) subject to Incentive Stock
Options granted to a Key Participant under all plans of the Key
Participant's employer corporation and its Parent or Subsidiary
corporations and that become exercisable for the first time by such Key
Participant during any calendar year may not exceed $100,000.
2.3 Special Rule for Ten Percent Shareholder.
-----------------------------------------
If at the time an Incentive Stock Option is granted, a participant owns
or possesses stock constituting more than ten percent (10%) of the
total combined voting power of all classes of stock of his employer
corporation or of its Parent or any of its Subsidiaries, as determined
using the attribution rules of Section 424(d) of the Code, then the
terms of the Incentive Stock Option shall specify that the option price
shall be at least 110% of the Fair Market Value of the stock subject to
the Incentive Stock Option and such Incentive Stock Option shall not be
exercisable after the expiration of five years from the date such
Incentive Stock Option is granted.
2.4 Interpretation.
--------------
In interpreting this Article II of the Plan and the provisions of
individual option agreements, the Committee and the Board shall be
governed by the principles and requirements of Sections 421, 422 and
425 of the Code, and applicable Treasury Regulations.
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<PAGE>
ARTICLE III
NONQUALIFIED STOCK OPTIONS
3.1 Terms and Conditions of Options.
In addition to the requirements of Section 1.5, each Nonqualified Stock
Option granted under the Plan shall be exercisable only during a Term
fixed by the Committee.
3.2 Section 83(b) Election.
----------------------
The company recognizes that certain persons who receive Nonqualified
Stock Options may be subject to restrictions regarding their right to
trade Common Stock under applicable securities laws. Such may cause
Optionee's exercising such Options not to be taxable under the
provisions of Section 83(c) of the Code. Accordingly, Optionee's
exercising such Nonqualified Stock Options may consider making an
election to be taxed upon exercise of the Option under Section 83(b) of
the Code and to effect such election will file such election with the
Internal Revenue Service within thirty (30) days of exercise of the
Option and otherwise in accordance with applicable Treasury
Regulations.
ARTICLE IV
ADDITIONAL PROVISIONS
4.1 Stockholder Approval.
---------------------
The Plan shall be submitted for the approval of the stockholders of the
company at the first annual meeting of stockholders held subsequent to
the adoption of the Plan and in all events within one year of its
approval by the Board of Directors. If at said meeting the stockholders
of the company do not approve the Plan, the Plan shall terminate.
4.2 Compliance with Other Laws and Regulations.
-------------------------------------------
The Plan, the grant and exercise of Options hereunder, and the
obligation of the company to sell and deliver shares under such
Options, shall be subject to all applicable Federal and state laws,
rules, and regulations and to such approvals by any government or
regulatory agency as may be required. The company shall not be required
to issue or deliver any certificates for shares of Common Stock prior
to (a) the listing of such shares on any stock exchange on which the
Common Stock may then be listed and (b) the completion of any
registration or qualification or exemption of such shares under any
Federal or state law, or any ruling or regulation of any government
body which the company shall, in its sole discretion, determine to be
necessary or advisable.
4.3 Amendments.
-----------
The Board of Directors may discontinue the Plan at any time, and may
amend it from time to time, but no amendment, without approval by
stockholders, may increase the total number of shares which may be
issued under the Plan. Other than as expressly permitted under the
Plan, no outstanding Award may be revoked or altered in a manner
unfavorable to the Grantee without the consent of the Grantee.
4.4 No Rights As Shareholder.
-------------------------
No Grantee shall have any rights as a shareholder with respect to any
share subject to his or her Option prior to the date of issuance to him
or her of a certificate or certificates for such shares.
4.5 Withholding.
-----------
Whenever the company proposes or is required to issue or transfer
shares of Common Stock under the Plan, the company shall have the right
to require the Grantee to remit to the company an amount sufficient to
satisfy any Federal, state or local withholding tax liability in such
form as the company may determine or accept in its sole discretion,
including payment by surrender or retention of shares of Common Stock
prior to the delivery of any certificate or certificates for such
shares.
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4.6 Continued Employment Not Presumed.
----------------------------------
This Plan and any document describing this Plan and the grant of any
Award hereunder shall not give any Optionee or other Participant a
right to continued employment or directorship by the company or its
Subsidiaries or affect the right of the company or its Subsidiaries to
terminate the employment or directorship of any such person with or
without cause.
4.7 Effective Date; Duration.
-------------------------
The Plan shall become effective as of June 2, 2000 pursuant to Board of
Director and Stockholder approval received on such date and shall
expire on June 2, 2010. No Awards may be granted under the Plan after
June 2, 2010, but Awards granted on or before that date may be
exercised according to the terms of the related agreements and shall
continue to be governed by and interpreted consistent with the terms
hereof.
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<PAGE>
<TABLE>
Greenbriar Corporation
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby acknowledges receipt of the notice of annual meeting
of stockholders of Greenbriar Corporation, to be held at the offices of the
company at 4265 Kellway Circle, Addison, Texas 75001, on June 2, 2000, beginning
at 10:00 a.m., Dallas Time, and the proxy statement in connection therewith and
appoints James R. Gilley and Gene S. Bertcher, and each of them, the
undersigned's proxies with full power of substitution for and in the name, place
and stead of the undersigned, to vote upon and act with respect to all of the
shares of common stock and Series B and D preferred stock of the company
standing in the name of the undersigned, or with respect to which the
undersigned is entitled to vote and act, at the meeting and at any adjournment
thereof.
The undersigned directs that the undersigned's proxy be voted as follows:
<S> <C> <C> <C> <C>
1. ELECTION OF [ ] FOR the Class III nominees [ ] WITHHOLD AUTHORITY
DIRECTORS listed below (except as marked to vote for the Class III
to the contrary below) nominees listed below
Class III nominees: Donald C. Benton, William A. Shirley, Jr.
(Instruction: To withhold authority to vote any individual nominee, write that nominee's name on the
line provided below.)
----------------------------------------------------------------------------------------------------
2. APPROVAL OF 2000 [ ] FOR [ ] AGAINST [ ] ABSTAIN
STOCK OPTION PLAN approval approval from voting
3. RATIFY SELECTION OF [ ] FOR [ ] AGAINST [ ] ABSTAIN
GRANT THORNTON , LLP ratification ratification from voting
AS THE company'S
AUDITORS
4. IN THE DISCRETION OF THE PROXIES, ON ANY OTHER MATTER WHICH
MAY PROPERLY COME BEFORE THE MEETING.
</TABLE>
This proxy will be voted as specified above. If no specification is made, this
proxy will be voted for the election of the Class III director nominees in item
1 above, for the approval in item 2 above and for ratification and approval of
item 3 above.
The undersigned hereby revokes any proxy heretofore given to vote or act with
respect to the common stock or Series B and D preferred stock of the company and
hereby ratifies and confirms all that the proxies, their substitutes, or any of
them may lawfully do by virtue hereof.
If more than one of the proxies named shall be present in person or by
substitute at the meeting or at any adjournment thereof, the majority of the
proxies so present and voting, either in person or by substitute, shall exercise
all of the powers hereby given.
Please date, sign and mail this proxy in the enclosed envelope. No postage is
required.
Date , 2000
---------------- ----
------------------------------------------
Signature of Stockholder
------------------------------------------
Signature of Stockholder
Please date this proxy and sign your name
exactly as it appears hereon. Where there is
more than one owner, each should sign. When
signing as an attorney, administrator,
executor, guardian or trustee, please add
your title as such. If executed by a
corporation, the proxy should be signed by a
duly authorized officer.
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