<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
/X/ Filed by the Registrant
/ / 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 to Rule 14a-11(c) or Rule 14a-12
SCHERER HEALTHCARE, INC.
(Name of Registrant as Specified in Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
SCHERER HEALTHCARE, INC.
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
<PAGE>
SCHERER HEALTHCARE, INC.
2859 Paces Ferry Road, Suite 300
Atlanta, Georgia 30339
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD September 10, 1997
NOTICE HEREBY IS GIVEN that the 1997 Annual Meeting of Stockholders of
Scherer Healthcare, Inc. (the "Company") will be held in the eleventh floor
Board Room, Overlook II, 2839 Paces Ferry Road, Atlanta, Georgia on
Wednesday, September 10, 1997, at 9:30 a.m., local time, for the purposes of
considering and voting upon:
1. A proposal to elect four directors to serve until the 1998 Annual
Meeting of Stockholders.
2. Such other business as properly may come before the Annual Meeting or
any adjournments thereof. The Board of Directors is not aware of any
other business to be presented to a vote of the stockholders at the
Annual Meeting.
Information relating to the above matters is set forth in the attached
Proxy Statement. Stockholders of record at the close of business on July 29,
1997, are entitled to receive notice of and to vote at the Annual Meeting and
any adjournments thereof.
By Order of the Board of Directors.
/s/ ROBERT P. SCHERER, JR.
Chairman of the Board
and Chief Executive Officer
Atlanta, Georgia
July 29, 1997
PLEASE READ THE ATTACHED PROXY STATEMENT AND THEN PROMPTLY COMPLETE, EXECUTE
AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE.
IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE THE PROXY CARD AND VOTE IN
PERSON IF YOU SO DESIRE.
<PAGE>
SCHERER HEALTHCARE, INC.
2859 Paces Ferry Road, Suite 300
Atlanta, Georgia 30339
PROXY STATEMENT
for the Annual Meeting of Stockholders
to be Held September 10, 1997
This Proxy Statement is furnished to the stockholders of Scherer
Healthcare, Inc. (the "Company") in connection with the solicitation of
proxies by the Board of Directors of the Company to be voted at the 1997
Annual Meeting of Stockholders and at any adjournments thereof (the "Annual
Meeting"). The Annual Meeting will be held in the eleventh floor Board Room,
Overlook II, 2839 Paces Ferry Road, Atlanta, Georgia, on Wednesday,
September 10, 1997, at 9:30 a.m., local time.
The approximate date on which this Proxy Statement and form of proxy
card are first being sent or given to stockholders is August 4, 1997.
VOTING
General
The securities that can be voted at the Annual Meeting consist of Common
Stock of the Company, $.01 par value per share, with each share entitling its
owner to one vote on each matter submitted to the stockholders. The record
date for determining the holders of Common Stock who are entitled to receive
notice of and to vote at the Annual Meeting is July 29, 1997. On the record
date, approximately 4,314,223 shares of Common Stock were outstanding and
eligible to be voted at the Annual Meeting.
Quorum and Vote Required
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock of the Company is necessary to constitute a quorum at
the Annual Meeting. In counting the votes to determine whether a quorum
exists at the Annual Meeting, all votes "FOR" and instructions to withhold
authority to vote will be used.
In voting with regard to the proposal to elect directors, stockholders
may vote in favor of all nominees, withhold their votes as to all nominees or
withhold their votes as to specific nominees. The vote required to approve
the proposal to elect directors is a plurality of the votes cast by the
holders of shares entitled to vote, provided a quorum is present. As a
result, votes that are withheld will not be counted and will have no effect
in the election of directors.
Under the rules of the New York and American Stock Exchanges (the
"Exchanges") that govern most domestic stock brokerage firms, member firms
that hold shares in street name for beneficial owners may, to the extent that
such beneficial owners do not furnish voting instructions with respect to any
or all proposals submitted for stockholder action, vote in their discretion
upon proposals which are considered "discretionary" proposals under the rules
of the Exchanges. Member brokerage firms that have received no instructions
from their clients as to "non-discretionary" proposals do not have discretion
to vote on these proposals. Such "broker non-votes" will not be considered
in determining whether a quorum exists at the Annual Meeting and will not be
considered as votes cast in determining the outcome of any proposal.
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As of July 29, 1997 (the record date for the Annual Meeting), the
current directors and executive officers of the Company owned or controlled
the power to vote approximately 2,592,180 shares of Common Stock of the
Company eligible to be voted at the meeting, constituting approximately 60%
of the outstanding Common Stock. The Company believes that the holders of
more than a majority of the Common Stock outstanding on the record date will
vote all of their shares of Common Stock in favor of the election of the
director nominees and, therefore, that the presence of a quorum and the
election of the director nominees is reasonably assured.
Proxies
Stockholders should specify their choices with regard to the election of
the director nominees on the enclosed proxy card. All properly executed
proxy cards delivered by stockholders to the Company in time to be voted at
the Annual Meeting and not revoked will be voted at the Annual Meeting in
accordance with the directions noted thereon. In the absence of such
instructions, the shares represented by a signed and dated proxy card will be
voted "FOR" the election of all director nominees. If any other matters
properly come before the Annual Meeting, the persons named as proxies will
vote upon such matters according to their judgment.
Any stockholder delivering a proxy has the power to revoke it at any
time before it is voted by giving written notice to the Secretary of the
Company, at 2859 Paces Ferry Road, Suite 300, Atlanta, Georgia 30339, by
executing and delivering to the Secretary of the Company a proxy card bearing
a later date or by voting in person at the Annual Meeting; provided, however,
that under the rules of the Exchanges, any beneficial owner of the Company's
Common Stock whose shares are held in street name by a member brokerage firm
may revoke his proxy and vote his shares in person at the Annual Meeting only
in accordance with applicable rules and procedures of the Exchanges.
In addition to soliciting proxies through the mail, the Company may
solicit proxies through its directors, officers and employees in person and
by telephone or facsimile. Brokerage firms, nominees, custodians and
fiduciaries also may be requested to forward proxy materials to the
beneficial owners of shares held of record by them. All expenses incurred in
connection with the solicitation of proxies will be borne by the Company.
Share Ownership of Principal Stockholders and Management
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of June 2, 1997, by (i) each
person known to the Company to be the beneficial owner of more than 5% of the
Company's Common Stock, (ii) each director of the Company, (iii) each of the
executive officers of the Company named in the Summary Compensation Table
herein and (iv) all current directors and executive officers of the Company
as a group, based in each case on information furnished to the Company by
such persons or entities. The Company believes that each of the named
individuals and group has sole voting and investment power with regard to the
shares shown except as otherwise noted.
2
<PAGE>
Shares Beneficially
Beneficial Owner Owned (1) Percent Of Class
- ---------------- ------------------- ----------------
Robert P. Scherer, Jr. 2,607,980 (2) 60.2%
Chairman of the Board,
Chief Executive Officer
and Principal Stockholder
RPS Investments, Inc. 1,244,234.5 28.8%
Principal Stockholder
Settlement Voting Trust 562,738.5(2)(3) 13.0%
Principal Stockholder
SunTrust Bank 340,224 (4) 7.9%
Principal Stockholder
William J. Thompson 65,000 (5) 1.5%
Director and President
Kenneth H. Robertson 1,000 *
Director
Stephen Lukas, Sr. -- --
Director
All current directors and
executive officers as a
group (6 persons) 2,673,980(6) 61.2%
_______________
* Less than one percent.
(1) Beneficial ownership as reported in the table has been determined in
accordance with Securities Exchange Commission regulations and, as a
result, certain outstanding shares are deemed to be beneficially owned by
more than one person.
(2) The shares shown as owned by Mr. Scherer include 1,244,234.5 shares owned
by RPS Investments, Inc. As Chairman and sole stockholder of RPS
Investments, Inc., Mr. Scherer is deemed to be the beneficial owner of the
shares. The shares shown also include 562,738.5 shares that Mr. Scherer
holds as trustee of a Settlement Voting Trust for the benefit of his adult
children. Mr. Scherer is entitled to vote the shares held in the
Settlement Voting Trust. The shares shown also include 340,224 shares that
Mr. Scherer holds as co-trustee with SunTrust Bank of a residuary trust for
the benefit of his family. Voting and investment power is shared with
regard to such shares. The shares shown as owned by Mr. Scherer also
include 16,800 shares that Mr. Scherer may acquire upon
3
<PAGE>
exercise of outstanding stock options. The address of Mr. Scherer, RPS
Investments, Inc., and the Settlement Voting Trust is 2859 Paces Ferry
Road, Suite 300, Atlanta, Georgia 30339.
(3) The shares shown are held in a Settlement Voting Trust for the benefit of
Mr. Scherer's four adult children with Mr. Scherer as trustee. Mr. Scherer
is entitled to vote the shares held in the Settlement Voting Trust. See
Note (2) above.
(4) The shares shown are held as co-trustee of a residuary trust for the
benefit of Mr. Scherer's family and voting and investment power is shared
with Mr. Scherer, co-trustee of the residuary trust. See Note (2) above.
SunTrust Bank's address is 25 Park Place, N.E., Atlanta, Georgia 30303.
(5) Mr. Thompson may acquire the shares shown upon exercise of outstanding
stock options.
(6) The shares shown include 2,147,197 shares with respect to which voting or
investment power is shared and 81,800 shares that may be acquired upon
exercise of outstanding stock options, as described in the Notes above.
PROPOSAL 1 - ELECTION OF DIRECTORS
Nominees
The Board of Directors has set the authorized number of directors of
the Company at four and nominated Stephen Lukas, Sr., Kenneth H. Robertson,
Robert P. Scherer, Jr. and William J. Thompson for re-election as directors
at the 1997 Annual Meeting. Each of the nominees is currently a director of
the Company. If re-elected as directors at the Annual Meeting, each of such
persons would serve until the 1998 Annual Meeting of Stockholders and until
their successors are duly elected and qualified.
Each of the nominees has consented to serve another term as a
director if re-elected. If any of the nominees should be unavailable to
serve for any reason (which is not anticipated), the Board of Directors may
designate a substitute nominee or nominees (in which event the persons named
on the enclosed proxy card will vote the shares represented by all valid
proxy cards for the election of such substitute nominee or nominees), allow
the vacancies to remain open until a suitable candidate or candidates are
located, or by resolution provide for a lesser number of directors.
The Board of Directors unanimously recommends that the stockholders
vote "FOR" the proposal to re-elect Stephen Lukas, Sr., Kenneth H. Robertson,
Robert P. Scherer, Jr. and William J. Thompson as directors until the 1998
Annual Meeting of Stockholders and until their successors have been duly
elected and qualified.
4
<PAGE>
Information Regarding Nominees for Director
Set forth below is certain information as of June 2, 1997, regarding the
four nominees for Director, including their ages and principal occupations
(which have continued for at least the past five years unless otherwise
noted).
Stephen Lukas, Sr. Mr. Lukas, 71, has been President, Chief Executive
Officer, and a Director of Goldcaps, Inc., a subsidiary
of IVAX Corporation since 1992. Goldcaps, Inc. is
engaged in the production and marketing of soft gelatin
capsules. Mr. Lukas also serves as Vice President,
Business Development of IVAX Corporation and is a
Director of Galena A.S., a pharmaceutical manufacturing
company located in the Czeck Republic. Since 1974,
Mr. Lukas has been President and Director of Vienna
Woods Limited, a family holding company located in
Ontario, Canada. He was President and a Director of
Capsule Technology, a soft gelatin capsule manufacturing
and distribution company, from its formation in 1981
until his retirement in 1991. He also has been a
Director of Marquest Medical Products, Inc.
("Marquest"), a subsidiary of the Company since 1995.
Mr. Lukas has been a Director of the Company since
1989.
Kenneth H. Robertson Mr. Robertson, 62, has been Chairman of Conference-Call
USA, Inc. and Vice President of Business Development
of DIAL Services, Ltd. since 1988. These companies
derive their revenue from conference call services,
video conferencing, voice messaging and reselling
international long distance. Since 1984, Mr.
Robertson has been Managing Partner of Print
Marketing Concepts which publishes and prints
television program guides for newspapers. In
addition, Mr. Robertson has been the principal owner
and developer of a self-storage warehouse and
business incubator operation in Chicago since 1977.
He also has been a director of Marquest since 1995.
He has been a Director of the Company since 1980 and
served as Vice President of the Company in 1980 and
as President from July 1981 until June 1983.
Robert P. Scherer, Jr. Mr. Scherer, Jr., 64, has been Chairman of the Board of
Directors and Chief Executive Officer of the Company
since February 1995. Mr. Scherer, Jr. has been a
Director of the Company since 1977. He has been
Chairman of the Board and Chief Executive Officer of
RPS Investments, Inc. since its formation in January
1980. He has been Chairman of the Board of Directors
and Chief Executive Officer of Marquest since 1995.
Mr. Scherer was a Director of IRT Corporation, which
filed a petition for bankruptcy under the federal
bankruptcy laws in 1993.
William J. Thompson Mr. Thompson, 63, has been a Director and the President
and Chief Operating Officer of the Company since
1984. Mr. Thompson has been a Director of Marquest
since 1993 and its President and Chief Operating
Officer since 1995.
5
<PAGE>
Committees and Meetings of the Board of Directors
The Board of Directors conducts its business through meetings of the
Board and through its committees. In accordance with the Bylaws of the
Company, the Board of Directors has established an Executive Committee, a
Compensation Committee, an Audit Committee and a Nominating Committee.
The Executive Committee, during intervals between meetings of the
Board, may exercise the powers of the Board of Directors except with regard
to a limited number of matters which include amending the Certificate of
Incorporation or Bylaws of the Company, declaring a dividend or authorizing
the issuance of capital stock of the Company, adopting an agreement of merger
or consolidation on behalf of the Company, and recommending to the
stockholders of the Company a sale of substantially all of the assets of the
Company or the dissolution of the Company. All actions of the Executive
Committee are submitted for review and ratification by the full Board.
Currently, the Board of Directors has not established an Executive Committee.
The Compensation Committee is responsible for determining the
compensation of the Directors, officers and employees of the Company and for
administering the Company's employee benefit plans. See "Executive
Compensation - Stock Option Plans" herein. The Compensation Committee is
composed of Messrs. Lukas and Robertson.
The Audit Committee is responsible for reviewing the adequacy of the
Company's system of internal financial controls, recommending to the Board of
Directors the appointment of the independent auditor and evaluating the
proposed scope of the independent auditor's audit, evaluating the independent
auditor's performance and fee arrangement, conducting a post-audit review of
the Company's financial statements and audit findings in advance of
publication, and reviewing in advance proposed changes in the Company's
accounting methods. The Audit Committee is comprised of Messrs. Lukas and
Robertson.
The Nominating Committee identifies individuals as nominees for
election as Directors and officers of the Company. The full Board of
Directors currently serves as the Nominating Committee.
During the fiscal year ended March 31, 1997, the Board of Directors
met seven times and the Compensation Committee and the Audit Committee did
not meet. Each of the current Directors of the Company attended all of the
meetings of the Board of Directors and committees on which he served.
Director Compensation
Directors who are not employees of the Company are paid $500 for
each Board of Directors or committee meeting actually attended, and all
directors are reimbursed for reasonable expenses incurred in attending
meetings.
6
<PAGE>
EXECUTIVE COMPENSATION
Compensation Summary
The following table summarizes the compensation paid or accrued by
the Company during the fiscal years ended March 31, 1997, 1996, and 1995 to
the Company's Chief Executive Officer and each of the Company's other
executive officers whose compensation for fiscal 1997 exceeded $100,000 (the
"named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION> LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(#) COMPENSATION
- ---------------------------------------------- --------- ------------ ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Scherer, Jr. (1) 1997 $ -- $ -- $ -- -- $ --
Chairman of the Board 1996 -- -- -- -- --
Chief Executive Officer, and a Director 1995 -- -- -- 20,000(2) --
William J. Thompson 1997 $ 169,712(3) $ -- $ -- -- $ 46,573(4)
President and a Director 1996 180,000 -- -- -- 6,500(4)
1995 180,000 - -- -- 25,000 9,100(4)
</TABLE>
- ------------------------
(1) The Board of Directors elected Mr. Scherer as Chairman of the Board of
Directors and Chief Executive Officer in February 1995. Mr. Scherer did
not receive salary or bonus compensation from the Company during the
fiscal years reported. However, during the 1996 and 1995 fiscal years,
Mr. Scherer was compensated by Scherer Scientific, Ltd. Scherer
Scientific, Ltd. charged the Company, $150,000 and $688,000 during fiscal
1996 and 1995, respectively, for administrative, accounting,
professional, and corporate facilities costs. Scherer Scientific, Ltd. is
an affiliate of, and is under common control with, RPS Investments, Inc.,
which is a principal stockholder of the Company. See "Related Party
Transactions - Transactions with Scherer Scientific, Ltd."
(2) The Company and Mr. Scherer canceled these options by mutual agreement as
of July 1, 1995.
(3) The amount shown includes salary of $123,638 paid by the Company and salary
of $46,074 paid by Marquest, a majority owned subsidiary of the Company.
(4) All of the amounts shown as paid or accrued in fiscal 1996 and 1995 and
$7,338 of the amount shown as paid in fiscal 1997 represent the Company's
respective contributions to Mr. Thompson's account in the Scherer
Healthcare, Inc. 401(k) Retirement and Savings Plan. The amounts shown as
paid or accrued in fiscal 1997 includes $33,928 paid by Marquest as
reimbursement for certain living expenses and related tax liability and
$5,307 paid by Marquest for an automobile allowance.
The Company's executive officers also participate in the Company's
Incentive Stock Option Plans. See "Stock Option Plans" below.
Stock Option Plans
The Company maintains the Scherer Healthcare, Inc. 1987 Stock Option
Plan, 1987 Long-Term Incentive Plan, 1988 Stock Option Plan and 1994 Stock
Incentive Plan (collectively, the "Stock Option Plans") to attract and retain
key executive personnel, directors and advisors, and to encourage their
continued employment with and service to the Company. The Company did not
grant any stock options during the fiscal year ended March 31, 1997.
The following table sets forth information as of March 31, 1997 regarding
(i) the number of exercisable and unexercisable stock options held by each of
the individuals named in the Summary Compensation Table above and (ii) the
respective estimated current values of such stock options. No stock options
were exercised by such individuals during the fiscal year ended March 31,
1997.
7
<PAGE>
Fiscal Year End Option Values
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FISCAL AT FISCAL
YEAR-END(#) YEAR-END($)(1)
EXERCISABLE/ EXERCISABLE/
NAME AND POSITION UNEXERCISABLE UNEXERCISABLE
- ------------------------------ --------------- -----------------
<S> <C> <C>
Robert P. Scherer, Jr. .......... 16,800 /- $--
Chairman of the Board,
Chief Executive Officer
and a Director
William J. Thompson.............. 65,000/10,000 $--
President and a Director
</TABLE>
- ------------------------
(1) The dollar value is determined by subtracting the option exercise prices
from the per share fair market value of the Company's Common Stock as of
March 31, 1997 as reported on The Nasdaq National Market.
8
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of
Stephen Lukas, Sr. and Kenneth H. Robertson. Prior to July 1, 1995, all of
the Company's executive officers other than William J. Thompson were
compensated by Scherer Scientific, Ltd. and did not receive separate cash
compensation from the Company. However, Scherer Scientific, Ltd. charged the
Company annual fees for administrative, accounting, payroll and professional
services and corporate facilities costs. As a result, during periods prior
to July 1, 1995, the Compensation Committee's responsibilities with respect
to executive compensation for all executive officers other than Mr. Thompson
was limited to compensation under the Stock Option Plans. Beginning July 1,
1995, the Company assumed direct responsibility for the compensation of its
executive officers, other than Mr. Scherer and Amy M. Murphy, Vice President
of Corporate Operations and Secretary of the Company, as determined by the
Compensation Committee. Scherer Scientific, Ltd. continued to provide direct
compensation to Mr. Scherer and Ms. Murphy until February 24, 1997. Prior to
such date, the Company reimbursed Scherer Scientific, Ltd. for a portion of
Ms. Murphy's compensation. On February 24, 1997, the Company assumed direct
responsibility for the compensation of Ms. Murphy. The Company did not
provide any compensation to Mr. Scherer during fiscal 1997 although it is
anticipated that the Company will compensate Mr. Scherer in future periods
subject to a determination of the level of such compensation by the
Compensation Committee. Prior to November 1996, the Company paid all of
William J. Thompson's salary and Marquest reimbursed the Company for a
portion of the salary. In November 1996, Marquest began paying salary
directly to Mr. Thompson and the Company reduced Mr. Thompson's salary with
the Company. Mr. Thompson is the President and Chief Operating Officer of
the Company and Marquest. The Compensation Committee is responsible for
developing and making recommendations to the Board of Directors with respect
to compensation policies. The Committee approves the compensation of
executive officers paid by the Company and, on an annual basis, determines
their compensation. The Compensation Committee is also responsible for the
granting and administration of stock options.
The Compensation Committee has furnished the following report for fiscal
1997:
Compensation Philosophy
The objectives of the Company's executive compensation program are to
provide a level of compensation which will attract, retain, and motivate
executives capable of achieving long-term success for the Company's
stockholders in terms of increasing Company and stockholder value.
Executive Officer Compensation
There are three main components of the executive compensation program:
(i) base salary; (ii) potential annual cash bonus; and (iii) periodic awards
of stock options or other equity participation to encourage achievement over
time and to align executive officer and stockholder interests. Executive
officers are eligible for the same benefits, including group health, life,
and disability insurance and participation in the Scherer Healthcare, Inc.
401(k) Retirement and Savings Plan, as are available generally to the
Company's and its subsidiaries' non-union employees. Perquisites provided
to executive officers are not material.
Annual Salary. The Compensation Committee determines the salary of the
executive officers, with the objective of assuring that salary levels are
competitive. They are determined by considering duties and responsibilities
of the officers and their impact upon the operations and the growth in value
of the Company. The level of equity or potential equity participation in the
Company is considered in establishing compensation levels.
9
<PAGE>
Incentive Compensation. Incentive compensation is provided on an annual
basis. Bonus awards are determined by the Compensation Committee on a
subjective basis, taking into account activities and accomplishments for the
fiscal year.
Stock Option Awards. Stock options are granted to executive officers and
to other employees on a periodic basis, with vesting over several years.
Awards are made at a level which is considered to provide a meaningful
incentive to the executive officers.
President's Compensation
William J. Thompson, President and Chief Operating Officer, is the most
senior executive officer that received compensation directly from the Company
during fiscal 1997. The amount of Mr. Thompson's annual salary is
established by the Compensation Committee using the criteria for executive
officers discussed above. Mr. Thompson did not receive an increase in salary
for fiscal 1997.
Mr. Thompson's bonus is determined in the discretion of the Compensation
Committee. The Committee considers the accomplishments of the operating
units which report directly to Mr. Thompson in determining the bonus amount.
It also has considered the accomplishments of Marquest, of which the Company
owned a 51% percent interest during fiscal 1997 and to which Mr. Thompson
devoted a substantial amount of his efforts. Mr. Thompson did not receive a
bonus for fiscal 1997.
Due to the amount of time Mr. Thompson dedicated to Marquest during
fiscal 1997 Marquest reimbursed the Company for 66% of Mr. Thompson's salary
benefits and other employment related expenses. Further, and as described
above, Marquest assumed direct responsibility for a portion of Mr. Thompson's
salary in November 1996.
Compensation Committee
Stephen Lukas, Sr.
Kenneth H. Robertson
RELATED PARTY TRANSACTIONS
Indebtedness to Related Parties. Prior to fiscal 1996, Scherer
Scientific, Ltd., Scherer Capital, L.L.C. ("Scherer Cap") and RPS
Investments, Ltd. made loans (the "Affiliate Loans") to the Company and its
subsidiaries the proceeds of which were used for working capital and business
and equipment acquisitions. The Affiliate Loans were payable on demand and
bore interest at prime rate plus 1%. RPS Investments, Inc. beneficially owns
approximately 28.8% of the outstanding Common Stock of the Company. Robert
P. Scherer, Jr., the Chairman of the Board and Chief Executive Officer of the
Company, had a controlling interest in Scherer Scientific, Ltd., RPS
Investments, Ltd., and Scherer Cap. He is the controlling stockholder and a
director and executive officer of RPS Investments, Inc. Additionally, Amy M.
Murphy, who is an executive officer of the Company, serves as an executive
officer of RPS Investments, Inc. and served as an executive officer of
Scherer Scientific, Ltd. and Scherer Cap. Scherer Scientific, Ltd., RPS
Investments, Ltd., and Scherer Cap were dissolved in March 1997.
In January 1997, the Company and Scherer Cap restructured the balance of
$2,128,000 on the Affiliate Loans (the Company previously repaid all amounts
owed to Scherer Scientific, Ltd.) into a promissory note (the
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<PAGE>
"Original Note") to be repaid in monthly installments of principal and
interest over a five-year term with a maturity date of December 1, 2001. The
Original Note was collateralized by 2,432,251 shares of Marquest Common Stock
owned by the Company, had a fixed monthly payment of $44,437, except for the
last payment, and bore interest at prime rate plus 1%, adjusted quarterly.
In connection with the dissolution of Scherer Cap in March 1997, the Original
Note was amended (the "Amended Note") and subsequently assigned to the four
adult children, who are not affiliated with the Company, of Mr. Scherer. In
exchange for certain considerations, $50,000 of the principal balance of the
loan was forgiven and the interest rate was reduced to prime, adjusted
quarterly, in the Amended Note. The monthly payment in the Amended Note is
fixed as $43,408, except for the last payment which will be for the amount of
the unpaid principal balance plus any unpaid accrued interest as of December 1,
2001. The term and collateral remained the same in the Amended Note as in
the Original Note. As of March 31, 1997, the principal balance of the
Amended Note was approximately $1,958,000 and the interest rate was 8.25%.
In March 1997, Marquest and Scherer Cap entered into a loan and security
agreement (the "Loan Agreement") pursuant to which Marquest borrowed $700,000
to repay $700,000 that it borrowed from Scherer Cap in December 1995 for
working capital purposes. The Loan Agreement contemplated the possibility of
additional borrowings of up to $800,000. Borrowings under the Loan Agreement
are represented by convertible notes due April 1, 2001 (the "Scherer Cap
Notes"), bear interest at prime rate plus 1.5%, and are secured by Marquest's
inventory, building, and equipment. Pursuant to the Loan Agreement, which
expires February 28, 2001, the Scherer Cap Notes are convertible at the
option of Scherer Cap into shares of Marquest's Common Stock at a conversion
price of $.70 per share. As of March 31, 1997, Marquest had borrowed $700,000
under the Loan Agreement and the Scherer Cap Notes and the interest rate was
9.75%. Additionally, in March 1996 Scherer Cap purchased 2,061,856 shares of
Marquest Common Stock for an aggregate purchase price of $1,000,000. In
connection with its dissolution in March 1997, Scherer Cap assigned the Loan
Agreement and the Scherer Cap Notes, and transferred 1,546,392 shares of the
Marquest Common Stock that it owned to Mr. Scherer. The remaining 515,464
shares of Marquest Common Stock owned by Scherer Cap were transferred into a
voting trust for the benefit of Mr. Scherer's adult children. Mr. Scherer is
entitled to vote the shares held in the voting trust.
Transactions with Scherer Scientific, Ltd. Prior to the dissolution of
Scherer Scientific, Ltd. in March 1996, Robert P. Scherer, Jr. and Amy M.
Murphy were compensated by Scherer Scientific, Ltd. and did not receive
separate cash compensation from the Company. However, during fiscal 1997 and
1996, the Company paid $70,000 and $43,000, respectively, to Scherer
Scientific, Ltd. as reimbursement for that portion of Ms. Murphy's
compensation allocated to her capacity as an officer of the Company.
Effective February 24, 1997, the Company assumed direct responsibility for
the compensation of Ms. Murphy. Prior to fiscal 1997, the Company had
assumed direct responsibility for the compensation of the other officers of
the Company that previously received compensation from Scherer Scientific,
Ltd.
Sale of Marquest. On March 14, 1997, Marquest entered into an Agreement
and Plan of Merger dated such date (the "Merger Agreement") between Marquest,
Vital Signs, Inc. ("VSI"), and VSI Acquisition Corporation, a wholly-owned
subsidiary of VSI ("Newco"). Simultaneous with the execution of the Merger
Agreement, the Company entered into the Scherer Healthcare Inducement
Agreement between the Company, VSI and Marquest and Robert P. Scherer, Jr.
entered into the Robert Scherer Inducement Agreement between Mr. Scherer and
VSI. At separate Special Meetings of Stockholders of Marquest and the
Company held on July 28, 1997, the stockholders of Marquest and the Company
approved the Merger Agreement and the Scherer Healthcare Inducement Agreement
and the transactions contemplated thereby. The transactions contemplated by
the Merger Agreement and the Scherer Healthcare inducement Agreement were
consummated on July 28, 1997.
11
<PAGE>
Pursuant to the Merger Agreement, Newco merged with and into Marquest
(the "Merger"), with Marquest surviving the Merger as a wholly-owned
subsidiary of VSI and, with certain exceptions and limitations, upon
effectiveness of the Merger, all then outstanding shares of Marquest Common
Stock were converted into the right to receive $0.797 per share of Marquest
Common Stock in cash. Immediately prior to the Merger, the Company owned
7,211,192 shares of Marquest Common Stock directly and held warrants to
purchase an additional 6,580,000 shares of Marquest Common Stock at an
exercise price of $0.75 per share. Accordingly, the Company is entitled to
receive an aggregate of approximately $6,057,000 with respect to its shares
of Marquest Common Stock and warrants for the purchase of Marquest Common
Stock. The Company no longer has an ownership interest in Marquest.
The Scherer Healthcare Inducement Agreement provided for the sale by the
Company to VSI of certain assets of the Company leased or licensed by the
Company to Marquest and used by Marquest in the manufacture and sale of
arterial blood gas products and the execution by the Company of a Covenant
Not to Compete in the manufacture or sale of arterial blood gas products for
a period of three years following the effective time of the Merger
transaction. The transactions contemplated by the Scherer Healthcare
Inducement Agreement were subject to, and were consummated immediately
following, the consummation of the Merger. VSI paid to the Company an
aggregate consideration of $5,860,000 for the assets sold under the Scherer
Healthcare Inducement Agreement and for the Covenant Not to Compete.
Pursuant to the Robert Scherer Inducement Agreement, upon consummation of
the Merger, Mr. Scherer entered into a Covenant Not to Compete with VSI in
exchange for payment of $140,000 in cash. The Covenant Not to Compete
provides that Mr. Scherer will not compete with VSI in the manufacture and
sale of arterial blood gas products for a period of three years.
STOCKHOLDER RETURN PERFORMANCE GRAPH
The Company's Common Stock is listed for trading on The Nasdaq National
Market under the symbol "SCHR." The price information reflected for the
Company's Common Stock in the following performance graph and accompanying
table is based upon the closing sales prices of the Common Stock on the dates
indicated as reported by Nasdaq assuming a $100.00 investment on March 31,
1992. The performance graph compares the Company's cumulative total
stockholder return with the Nasdaq Stock Market Total Return Index and the
Nasdaq Health Services Stock Index. The graph assumes that the value of the
investment in each index was $100 on March 31, 1992. The stockholder return
reflected below for the five year historical period may not be indicative of
future performance.
12
<PAGE>
Comparison of Cumulative Five-Year Stockholder Return
Graph
March 31,
------------------------------------------------------
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Scherer Healthcare $100 $ 80 $ 80 $ 19 $ 19 $ 9
Nasdaq Stock
Market (US) $100 $115 $124 $138 $187 $208
Nasdaq Health Services $100 $ 98 $129 $149 $180 $162
13
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
regulations of the Securities and Exchange Commission thereunder require the
Company's directors and executive officers and persons who own more than 10%
of the Company's Common Stock, as well as certain affiliates of such persons,
to file initial reports of their ownership of the Company's Common Stock and
subsequent reports of changes in such ownership with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
Directors, executive officers and persons owning more than 10% of the
Company's Common Stock are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) reports
they file. Based solely on its review of the copies of such reports received
by it and written representations that no other reports were required for
those persons, the Company believes that during the fiscal year ended March
31, 1997, all filing requirements applicable to its directors, executive
officers and owners of more than 10% of its Common Stock were complied with
in a timely manner except that Amy M. Murphy and Gary W. Ruffcorn filed a
late Form 3.
STOCKHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of stockholders, including nominations for the Board of
Directors, intended to be presented at the 1998 Annual Meeting of
Stockholders should be submitted by certified mail, return receipt requested,
and must be received by the Company at its executive offices in Atlanta,
Georgia, on or before March 30, 1998 to be eligible for inclusion in the
Company's proxy statement and form of proxy relating to that meeting and to
be introduced for action at the meeting. Any stockholder proposal must be in
writing and must set forth (i) a description of the business desired to be
brought before the meeting and the reasons for conducting the business at the
meeting, (ii) the name and address, as they appear on the Company's books, of
the stockholder submitting the proposal, (iii) the class and number of shares
that are beneficially owned by such stockholder, (iv) the dates on which the
stockholder acquired the shares, (v) documentary support for any claim of
beneficial ownership, (vi) any material interest of the stockholder in the
proposal, (vii) a statement in support of the proposal and (viii) any other
information required by the rules and regulations of the Securities and
Exchange Commission.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors of the Company knows of no matters other than
those referred to in the accompanying Notice of Annual Meeting of
Stockholders which may properly come before the Annual Meeting. However, if
any other matter should be properly presented for consideration and voting at
the Annual Meeting or any adjournments thereof, it is the intention of the
persons named as proxies on the enclosed form of proxy card to vote the
shares represented by all valid proxy cards in accordance with their judgment
of what is in the best interest of the Company.
Atlanta, Georgia
July 29, 1997
----------------------------
The Company's 1997 Annual Report, which includes audited financial
statements, has been mailed to stockholders of the Company with these proxy
materials. The Annual Report does not form any part of the material for the
solicitation of proxies.
14
<PAGE>
REVOCABLE PROXY
COMMON STOCK
SCHERER HEALTHCARE, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 1997 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Amy M. Murphy and Gary W. Ruffcorn, and each
of them, proxies, with full power of substitution, to act for and in the name
of the undersigned to vote all shares of Common Stock of Scherer Healthcare,
Inc. (the "Company") which the undersigned is entitled to vote at the 1997
Annual Meeting of Stockholders of the Company, to be held in the eleventh
floor Board Room, Overlook II, 2839 Paces Ferry Road, Atlanta, Georgia, on
Wednesday, September 10, 1997, at 9:30 a.m., local time, and at any and all
adjournments and postponements thereof, as indicated on the reverse side
hereof with respect to all matters set forth in the Proxy Statement dated
July 29, 1997, and all supplements and amendments thereto, and in their
discretion upon all matters incident to the conduct of such Annual Meeting
and all matters presented at the Annual Meeting but which are not known to
the Board of Directors of the Company at the time of the solicitation of this
proxy. The undersigned hereby revokes any proxy or proxies heretofore given
by the undersigned to vote at the Annual Meeting or any adjournment or
postponement thereof.
The undersigned may elect to withdraw this proxy card at any time prior to
its use by giving written notice to the Secretary of the Company, by
executing and delivering to the Secretary of the Company a duly executed
proxy card bearing a later date, or by appearing at the Annual Meeting and
voting in person. If the undersigned withdraws this proxy in the manner
described above and prior to the Annual Meeting does not submit a duly
executed and later dated proxy card to the Company, the undersigned may note
in person at the Annual Meeting all shares of Common Stock of the Company
owned of record by the undersigned as of the record date (July 29, 1997).
PLEASE COMPLETE, DATE AND SIGN ON REVERSE SIDE AND MAIL THIS PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE
Please mark, date, and sign this proxy card on the reverse side exactly as
your name(s) appear(s) hereon. When shares are held jointly, both holders
should sign. When signing as attorney, executor, administrator, trustee,
guardian, or custodian, please give your full title. If the holder is a
corporation or a partnership, the full corporate or partnership name should
be signed by a duly authorized officer.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ----------------------------------- ----------------------------------
- ----------------------------------- ----------------------------------
- ----------------------------------- ----------------------------------
<PAGE>
/x/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
- -------------------------------------------------------------------------------
SCHERER HEALTHCARE, INC.
- -------------------------------------------------------------------------------
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date
-------------------
- ------------------------------------ -------------------------------------
Stockholder sign here Co-owner sign here
DETACH CARD
The Board of Directors recommends a vote "FOR" the Proposal listed below.
<TABLE>
<CAPTION>
FOR ALL FOR ALL
NOMINEES WITHHOLD EXCEPT
--------- ---------- --------
<S> <C> <C> <C>
1. Elect as directors the four nominees listed below to serve until the / / / / / /
1998 Annual Meeting of Stockholders and until their successors are
elected and qualified.
</TABLE>
Stephen Lukas, Sr.
Kenneth H. Robertson
Robert P. Scherer, Jr.
William J. Thompson
NOTE: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the
nominee's(s') name(s). Your shares will be voted for the remaining
nominee(s).
Mark box at right if an address change or comment has been noted / /
on the reverse side of this card.
Mark box at right if you plan to attend the Annual Meeting. / /
DETACH CARD
16
