<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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SCHERER HEALTHCARE, INC.
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS 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)(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.
120 INTERSTATE NORTH PARKWAY, S.E.
SUITE 305
ATLANTA, GEORGIA 30339
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 16, 1998
NOTICE HEREBY IS GIVEN that the 1998 Annual Meeting of Stockholders
of Scherer Healthcare, Inc. (the "Company") will be held at Suite 5300, 303
Peachtree Street, Atlanta, Georgia, on Wednesday, September 16, 1998, at
10:00 a.m., local time, for the purposes of considering and voting upon:
1. A proposal to elect four Directors to serve until the 1999
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 28, 1998, 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.
ROBERT P. SCHERER, JR.
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Atlanta, Georgia
July 29, 1998
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.
120 INTERSTATE NORTH PARKWAY, S.E.
SUITE 305
ATLANTA, GEORGIA 30339
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 16, 1998
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 1998
Annual Meeting of Stockholders and at any adjournments thereof (the "Annual
Meeting"). The Annual Meeting will be held at Suite 5300, 303 Peachtree
Street, Atlanta, Georgia, on Wednesday, September 16, 1998, at 10:00 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 5, 1998.
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 28, 1998. On
the record date, approximately 4,332,457 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 that 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.
1
<PAGE>
As of July 28, 1998 (the record date for the Annual Meeting), the
current Directors and executive officers of the Company owned or controlled
the power to vote approximately 2,593,180 shares of Common Stock of the
Company eligible to be voted at the meeting, constituting approximately 59.9%
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 120 Interstate North Parkway, S.E., Suite 305, 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.
2
<PAGE>
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 March 31, 1998, 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
current 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.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
BENEFICIAL OWNER OWNED (1) PERCENT OF CLASS
---------------- -------------------- ----------------
<S> <C> <C>
Robert P. Scherer, Jr. 2,624,647(2) 60.3%
CHAIRMAN OF THE BOARD, PRESIDENT,
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
Stephen Lukas, Sr. 1,000 *
DIRECTOR
Kenneth H. Robertson 1,000 *
DIRECTOR
William J. Thompson 81,667(5) 1.9%
DIRECTOR
Gary W. Ruffcorn 8,333(6) *
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
All current directors and
executive officers as a
group (5 persons) 2,716,647(7) 61.2%
</TABLE>
- ---------------
* Less than one percent.
3
<PAGE>
(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 or entity.
(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 33,467 shares that Mr. Scherer may acquire
upon exercise of outstanding stock options. The address of Mr.
Scherer, RPS Investments, Inc., and the Settlement Voting Trust is 200
Galleria Parkway, Suite 220, 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 beneficially owned by SunTrust Bank as co-trustee
with Mr. Scherer 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) Mr. Ruffcorn may acquire the shares shown upon exercise of outstanding
stock options.
(7) The shares shown include 2,147,197 shares with respect to which voting
or investment power is shared and 123,467 shares that may be acquired
upon exercise of outstanding stock options, as described in the Notes
above.
4
<PAGE>
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 1998 Annual Meeting. Each of the nominees currently is a Director of the
Company. If re-elected as Directors at the Annual Meeting, each of such
persons would serve until the 1999 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 1999 ANNUAL MEETING OF STOCKHOLDERS AND UNTIL THEIR SUCCESSORS HAVE BEEN
DULY ELECTED AND QUALIFIED.
INFORMATION REGARDING NOMINEES FOR DIRECTOR
Set forth below is certain information as of March 31, 1998,
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, 72, has been President of Omnipharm
S.A., a holding company located in Geneva,
Switzerland, since January 1998. He was
President, Chief Executive Officer, and a
Director of Goldcaps, Inc., a subsidiary of IVAX
Corporation that is engaged in the production and
marketing of soft gelatin capsules, from 1992 to
December 1997. Mr. Lukas also served as Vice
President, Business Development of IVAX
Corporation from January 1993 to December 1997.
He is a Director of Galena A.S., a pharmaceutical
manufacturing company located in the Czech
Republic. Since 1974, Mr. Lukas has been
President and Director of Vienna Woods Limited, a
family holding company located in Ontario,
Canada. Mr. Lukas has been a Director of the
Company since 1989.
Kenneth H. Robertson Mr. Robertson, 63, is managing member of
Robertson & Partners LLC and is Chief Executive
Officer of Conference-Call USA, Inc. and DIAL
Services Ltd. These companies derive their
revenue from conference call services, video
conferencing, voice messaging and reselling
international long distance. He was Chairman of
Conference- Call USA, Inc. from 1988 to 1996. Mr.
Robertson also was Financial Managing Partner of
Print Marketing Concepts L.P., which published
television program guides for newspapers, from
1984 to 1996. In addition, Mr. Robertson has been
the principal owner and developer of a
self-storage warehouse and business incubator
operation in Chicago, Illinois, since 1977. 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 to June 1983.
Robert P. Scherer, Jr. Mr. Scherer, 65, has been Chairman of the Board of
Directors and Chief Executive Officer of the
Company since February 1995 and President since
May 1998. Mr.
5
<PAGE>
Scherer has been a Director of the Company since
1977. He has been Chairman of the Board of
Directors and Chief Executive Officer of RPS
Investments, Inc. since its formation in January
1980. He was Chairman of the Board of Directors
and Chief Executive Officer of Marquest Medical
Products, Inc. ("Marquest") from 1995 until July
1997. Marquest was a majority owned subsidiary of
the Company until its sale in July 1997. 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, 64, has been a Director of the
Company since 1984. Mr. Thompson was also the
President and Chief Operating Officer of the
Company from 1984 to July 1997. Mr. Thompson was
a Director of Marquest from 1993, and its
President and Chief Operating Officer from 1995,
in each case until the Company's sale of Marquest
in July 1997.
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 the authority to establish 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, 1998, the Board of Directors
met one time 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. During
intervals between meetings, the Directors engage in informal discussions
among themselves and management of the Company regarding the business and
operations of the Company and, in some instances, take action by consent in
lieu of a meeting.
6
<PAGE>
DIRECTOR COMPENSATION
Effective for the fiscal year ended March 31, 1998, Directors who
are not employees of the Company are paid $5,000 per year, and all Directors
are reimbursed for reasonable expenses incurred in attending meetings.
Beginning in the fiscal year ending March 31, 1999, Directors will receive
their fees in equal quarterly installments.
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table summarizes the compensation paid or accrued by
the Company during the fiscal years ended March 31, 1998, 1997, and 1996 to
the Company's Chief Executive Officer and each other person who served as an
executive officer during fiscal 1998 and whose compensation for fiscal 1998
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) 1998 $ - $ - $ - 50,000 $ -
CHAIRMAN OF THE BOARD, 1997 - - - - -
PRESIDENT, CHIEF 1996 - - - - -
EXECUTIVE OFFICER, AND A
DIRECTOR
William J. Thompson (2) 1998 $ 69,123(3) $ - $ - 50,000 $191,014(4)
FORMER PRESIDENT AND 1997 169,712(3) - - - 33,928(5)
CHIEF OPERATING OFFICER 1996 180,000 - - - -
AND A DIRECTOR
Amy M. Murphy (6) 1998 $108,270 $124,000(7) $ - 50,000 $ -
FORMER PRESIDENT AND CHIEF 1997 7,308 - - - -
OPERATING OFFICER 1996 - - - - -
Gary W. Ruffcorn 1998 $ 85,307 $ 43,000(8) $ - 25,000 $ -
CHIEF FINANCIAL OFFICER 1997 79,865 5,000 - - -
1996 52,115(9) - - -
</TABLE>
- ---------------
(1) The Board of Directors elected Mr. Scherer as Chairman of the Board of
Directors and Chief Executive Officer in February 1995 and as President
in May 1998. Mr. Scherer did not receive salary or bonus compensation
from the Company during the fiscal years reported. However, Mr. Scherer
was compensated by Scherer Scientific, Ltd. for fiscal year 1996 through
February 1997. Scherer Scientific, Ltd., was under common control with
RPS Investments, Inc., a principal stockholder of the Company. Scherer
Scientific, Ltd. provided the Company with administrative, accounting,
professional and corporate facilities costs through July 1, 1995. The
Company paid Scherer Scientific, Ltd. $150,000 during fiscal year 1996
for these services.
(2) Mr. Thompson resigned from the position of President and Chief Operating
Officer of the Company effective July 28, 1997.
(3) The amount shown includes salary of $10,385 and $123,638 paid by the
Company and $39,123 and $46,074 paid by Marquest, a majority owned
subsidiary of the Company until July 1997, for fiscal years 1998 and
1997,
7
<PAGE>
respectively. Fiscal year 1998 includes $19,615 paid to Mr. Thompson for
consulting services provided subsequent to his resignation as President
and Chief Operating Officer of the Company.
(4) The amount shown is a severance benefit paid to Mr. Thompson by the
Company in connection with his termination as President and Chief
Operating Officer of Marquest following the sale of Marquest effective
July 28, 1997.
(5) The amount shown is a reimbursement for certain living expenses and
related tax liability paid to Mr. Thompson by Marquest.
(6) Ms. Murphy resigned from the position of President and Chief Operating
Officer of the Company effective May 12, 1998. Ms. Murphy was
compensated by Scherer Scientific, Ltd. through February 1997. The
Company paid to Scherer Scientific, Ltd. $70,000 and $43,000 in fiscal
1997 and 1996, respectively, as reimbursement for a portion of Ms.
Murphy's salary.
(7) The amount shown includes $100,000 paid to Ms. Murphy in connection with
her service to the Company related to the sale of Marquest in July 1997.
(8) The amount shown includes $25,000 paid to Mr. Ruffcorn in connection
with his service to the Company related to the sale of Marquest in July
1997.
(9) Mr. Ruffcorn was compensated by Scherer Scientific, Ltd. until July 1,
1995.
The Company's executive officers also participate in the
Company's Incentive Stock Option Plans. See "Stock Option Plans" below.
STOCK OPTION PLANS
GENERAL. The Company maintains the Scherer Healthcare, Inc.
1987 Stock Option Plan, 1987 Long-Term Incentive Plan, 1988 Stock Option Plan
and 1994 Stock Incentive Plan (collectively, the "Stock Option Plans") to
attract and retain key executive personnel, Directors and advisors, and to
encourage their continued employment with and service to the Company.
OPTION GRANTS. The following table sets forth information
regarding the number and terms of stock options granted to the named
executive officers during the fiscal year ended March 31, 1998. Included in
such information,
8
<PAGE>
in accordance with the rules and regulations of the Securities and Exchange
Commission, is the potential realizable value of each option granted,
calculated using the 5% and 10% option pricing model.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERM (3)
OPTIONS IN FISCAL BASE PRICE EXPIRATION ------------------------
NAME GRANTED (#) YEAR ($/SH) DATE (2) 5%($) 10%($)
---- ----------- ------ -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Scherer, Jr. 50,000 (1) 17.9% $1.69 6/11/2002 $23,346 $ 51,588
William J. Thompson 50,000 (1) 17.9 1.69 6/11/2007 53,142 134,671
Amy M. Murphy 50,000 (1) 17.9 1.69 6/11/2007 53,142 134,671
Gary W. Ruffcorn 25,000 (1) 8.9 1.69 6/11/2007 26,571 67,336
</TABLE>
- --------------
(1) The Company granted the options to the named executive officers on June
11, 1997 pursuant to the 1994 Stock Incentive Plan. Options for
one-third of the shares vest on January 1 of each year until fully
vested.
(2) The options were granted for a term of 10 years (five years in the case
of options granted to Mr. Scherer), subject to earlier termination upon
occurrence of certain events related to termination of employment or
change of control of the Company; provided, however, the term for
reload options is that of the original option.
(3) The potential realizable value was calculated based on the grant-date
valuation method assuming (i) the options were 100% vested on the date
of grant and (ii) that the market price of the Company's Common Stock
appreciates from the date of grant to the expiration of the options at
a 5% and 10% annualized rate.
OPTION EXERCISES. The following table sets forth the number of shares of
Common Stock acquired upon the exercise of options by the named executive
officers during the fiscal year ended March 31, 1998, including the aggregate
value of gains on the date of exercise. The table also sets forth (i) the
number of shares covered by unexercised options (both exercisable and
unexercisable) as of March 31, 1998, and (ii) the respective value of
"in-the-money" options, which represents the positive spread between the
exercise price of existing options and the fair market value of the Company's
Common Stock at March 31, 1998.
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Scherer, Jr. - - 33,467 33,333 $34,334 $68,666
William J. Thompson - - 81,667 43,333 34,334 68,666
Amy M. Murphy - - 16,667 33,333 34,334 68,666
Gary W. Ruffcorn - - 8,333 16,667 17,166 34,334
</TABLE>
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, the former
President and Chief Operating Officer of the Company, 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, who then served as the
Company's Vice President of Corporate Operations and Secretary, as determined
by the Compensation Committee. Scherer Scientific, Ltd. continued to provide
compensation directly 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 and 1998
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 was President and Chief Operating Officer of the
Company from 1984 to July 1997. Mr. Thompson also was Marquest's President
and Chief Operating Officer from 1995 until the Company's sale of Marquest in
July 1997. 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 determines their compensation. The Compensation Committee
is also responsible for the granting and administration of stock options.
10
<PAGE>
The Compensation Committee has furnished the following report for
fiscal 1998:
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
GENERAL. 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.
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.
Compensation Committee
Stephen Lukas, Sr.
Kenneth H. Robertson
RELATED PARTY TRANSACTIONS
AFFILIATE LOANS. Prior to fiscal 1996, Scherer Capital Company L.L.C.
("Scherer Cap") and Scherer Scientific, Ltd. ("Scherer Sci"), entities
controlled by Robert P. Scherer, Jr., the Chairman of the Board, President,
Chief Executive Officer and majority stockholder of the Company, 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%.
In January 1997, the Company and Scherer Cap restructured the balance
of $2,128,000 on the Affiliate Loans (the Company had repaid all amounts owed
to Scherer Sci) into a promissory note (the "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 Robert P. Scherer, Jr. In exchange for certain
considerations, $50,000 of the principal balance was forgiven and the
interest rate was reduced to prime, adjusted quarterly, in the Amended Note.
The monthly payment in the Amended Note was fixed
11
<PAGE>
at $43,408, except for the last payment which would 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. The Company has reported the $50,000 of debt forgiveness as an
equity transaction due to the common control at the time between the
respective parties.
On July 28, 1997, the Company used a portion of the proceeds from the
sale of Marquest (see "Sale of Marquest" below) to pay in full the outstanding
principal balance of approximately $1,867,000 and the associated accrued
interest of approximately $12,000 on the Amended Note. Accordingly, the
Amended Note was canceled and the shares of Marquest Common Stock pledged as
collateral under the Amended Note were released back to the Company.
In March 1996, 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. Borrowings under the Loan Agreement were
represented by convertible notes due April 1, 2001 (the "Scherer Cap Notes'),
bore interest at prime rate plus 1.5%, and were secured by Marquest's
inventory, building, and equipment. Pursuant to the Loan Agreement, the
Scherer Cap Notes were convertible at the option of Scherer Cap into shares
of Marquest Common Stock at a conversion price of $.70 per share.
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, Jr. 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 was
entitled to vote the shares held in the voting trust. In July 1997, Mr.
Scherer converted the outstanding principal amount of $700,000 under the Loan
Agreement and Scherer Cap Notes into 1,000,000 shares of Marquest Common
Stock and, accordingly, the Scherer Cap Notes were canceled.
In connection with the sale of Marquest (see "Sale of Marquest" below)
in July 1997, the 2,546,392 shares of Marquest Common Stock that Mr. Scherer
owned and the 515,464 shares of Marquest Common Stock held in the voting
trust for the benefit of his adult children were converted into cash pursuant
to the terms of the transaction.
SALE OF MARQUEST. Pursuant to the terms of an Agreement and Plan of
Merger dated as of March 14, 1997 (the "Merger Agreement"), between Marquest,
then a 51% owned subsidiary of the Company, Vital Signs, Inc. ("VSI"), and
VSI Acquisition Corporation, a wholly-owned subsidiary of VSI, effective July
28, 1997, VSI acquired Marquest upon the merger (the "Merger") of VSI
Acquisition Corporation with and into Marquest. At the effective time of the
Merger, all of the issued and outstanding shares of Marquest Common Stock
were converted into the right to receive $0.797 in cash per share and
Marquest became a wholly-owned subsidiary of VSI. As a result, the Company
received approximately $5,747,000 in cash in exchange for its 7,211,192
shares of Marquest Common Stock and approximately $309,000 in cash through
the exercise of warrants to purchase Marquest Common Stock and the conversion
of these shares into cash pursuant to the Merger. Additionally, pursuant to
the terms of the Scherer Healthcare Inducement Agreement dated as of March
14, 1997 (the "Inducement Agreement"), between the Company, Marquest, and
VSI, VSI purchased certain assets from the Company that were leased or
licensed by the Company to Marquest and used by Marquest in the manufacture
and sale of arterial blood gas products (the "ABG Assets") and the Company
entered into a covenant not to compete with VSI in the manufacture and sale
of arterial blood gas products for a period of three years. VSI paid the
Company an aggregate of $5,860,000 in cash for the ABG Assets and the
covenant not to compete.
12
<PAGE>
STOCKHOLDER RETURN PERFORMANCE GRAPH
The Company's Common Stock is listed for trading on The Nasdaq Stock
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 investment on March 31,
1993. 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, 1993. The stockholder return
reflected below for the five year historical period may not be indicative of
future performance.
COMPARISON OF CUMULATIVE FIVE-YEAR STOCKHOLDER RETURN
-----------------------------------------------------
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
March 31,
---------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Scherer Healthcare $100 $ 99 $ 24 $ 24 $ 12 $ 18
Nasdaq Stock Market (US) $100 $108 $120 $163 $181 $275
Nasdaq Health Services $100 $131 $151 $183 $164 $196
</TABLE>
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, 1998, 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 each of 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 1999 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 31, 1999, 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, 1998
------------------------------------
The Company's 1998 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 1998 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Gary W. Ruffcorn and Jeanne M. Fernendez, 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 1998 Annual Meeting of Stockholders of the Company, to be held at to be
held at Suite 5300, 303 Peachtree Street, Atlanta, Georgia, on September 16,
1998, at 10:00 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, 1998, 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 28, 1998).
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>
- --------------------------------------
SCHERER HEALTHCARE, INC.
- --------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Mark box at right if an address change or THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
comment has been noted on the reverse side / / PROPOSAL LISTED BELOW.
of this card.
1. Elect as directors the four nominees / / FOR ALL
Mark box at right if you plan to attend the / / listed below to serve until the 1999 NOMINEES listed
Annual Meeting. Annual Meeting of Stockholders and (except as marked
until their successors are elected and to the contrary
qualified (except as marked to the below).
contrary below):
/ / WITHHOLD
AUTHORITY to
vote for all
Stephen Lukas, Sr., Kenneth H. Robertson, nominees listed.
Robert P. Scherer, Jr., and William J. Thompson
INSTRUCTION: To withhold authority to vote for any
individual nominee, strike a line through the nominee's
name in the list above.
</TABLE>
- -----------------------------------
Signature
- -----------------------------------
Signature, if shares held jointly
Date: -----------------------------
16
