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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Henley Healthcare, Inc.
-----------------------
(Name of Issuer)
Common Stock, Par Value $.01
----------------------------
(Title of Class of Securities)
42550V 10 7
-----------
(CUSIP Number)
Kenneth W. Davidson, President
Maxxim Medical, Inc.
10300 49th Street North
Clearwater, Florida 33762
(813) 561-2100
--------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
September 30, 1997
------------------
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act,
but shall be subject to all other provisions of the Act (however, see the
Notes.)
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1 NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS.
Maxxim Medical, Inc.
76-0291634
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
Not applicable.
See Introduction to the Statement and Item 3 of the Statement below.
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Texas
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NUMBER OF 7 SOLE VOTING POWER
SHARES 3,000,000
-----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
0
OWNED BY EACH -----------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING 3,000,000
-----------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER
0
-----------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,000,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (10) EXCLUDES CERTAIN
SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
43.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
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2
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INTRODUCTION
This statement on Schedule 13D is filed on behalf of Maxxim Medical, Inc., a
Texas corporation ("Maxxim"). On April 30, 1996, Maxxim and Henley Healthcare,
Inc. ("Henley")(then known as Lasermedics, Inc.) entered into an agreement
whereby Henley purchased certain assets (and assumed certain liabilities)
associated with the Henley Healthcare Division of Maxxim, for a purchase price
of approximately $13.5 million. The purchase price was paid by the issuance by
Henley to Maxxim of a convertible subordinated promissory note in the principal
amount of $7 million (the "Note"), with the balance of the purchase price paid
in cash. From the date of the issuance of the Note (April 30, 1996) until
September 30, 1997, when the Note was first modified, Maxxim had the right to
convert the outstanding principal due under the Note into shares of Henley
common stock, par value $.01 per share ("Common Stock" or "Shares") at any time
at a conversion price of $3.00 per share, giving Maxxim the beneficial ownership
of 2,333,333 Shares with respect to the principal balance due under the Note.
Maxxim is also entitled to convert any accrued and unpaid interest due under the
Note into Common Stock. Interest on the Note currently accrues at a rate of 6%
per annum and increases 2% per annum on May 1 of each calendar year. Accrued
interest is due and payable on May 1 and November 1 of each calendar year until
May 1, 2003.
At the time of the April 1996 transaction between Henley and Maxxim, the Common
Stock was not registered under Section 12 of the Securities Exchange Act of
1934. Subsequently, on June 26, 1996, Henley filed a registration statement for
the Common Stock with the Securities and Exchange Commission, which registration
statement was declared effective on August 12, 1996.
In September 1997, Henley requested that Maxxim agree to an increase in the
amount of other debt to which the Note would be subordinate. Maxxim agreed to
such increase in exchange for a reduction in the conversion price from $3.00 to
$2.00. On September 30, 1997, the terms of the Note were so modified, giving
Maxxim the beneficial ownership of 3,500,000 Shares with respect to the $7
million principal balance due under the Note.
In connection with the original transaction between Maxxim and Henley, Maxxim
entered into a Voting and Shareholders Agreement (the "Agreement") with Henley,
Mr. Michael M. Barbour (President and a director of Henley) and Dr. Chadwick F.
Smith, M.D. (the Chairman of the Board of Henley), pursuant to which, among
other things, (i) Henley created a vacancy in its Board of Directors and elected
a nominee of Maxxim, Mr. Kenneth W. Davidson, to fill the vacancy, and (ii) Mr.
Barbour and Dr. Smith agreed to vote their Shares in favor of Maxxim's nominee
during the term of the Agreement. In addition, under the Agreement each of
Maxxim, Barbour and Smith granted to Henley the right to purchase all, but not
less than all, Shares which each of them might desire to sell in the future, on
the same terms as they proposed to sell such Shares to a third party. They also
each granted to one another the right to purchase all, but not less than all,
of such Shares if Henley does not purchase such Shares. The Agreement will
terminate upon the merger or consolidation of Henley with another corporation
(provided that Henley is not the survivor in the merger and the merger is not
with a company owned or controlled by any of the parties); a public offering of
Common Stock by Henley; or if both the principal amount due under the Note is
reduced to less than $1.5 million and Maxxim's ownership of the Common Stock is
reduced to less than 10% of the outstanding Shares.
On February 20, 1998, Maxxim converted $2,000,000 due under the Note into
1,000,000 Shares. In connection with such conversion, Henley agreed to register
3
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the 1,000,000 Shares for resale by Maxxim under the federal and state securities
laws as soon as reasonably practicable and Messrs. Barbour and Smith and Henley
agreed to waive their rights to purchase the Shares to be sold by Maxxim under
the registration statement.
On March 13, 1998, Maxxim converted another $2,000,000 due under the Note into
1,000,000 additional Shares. In connection with such conversion, Henley agreed
to register the additional 1,000,000 Shares for resale by Maxxim under the
federal and state securities laws as soon as reasonably practicable and Messrs.
Barbour and Smith and Henley agreed to waive their rights to purchase the Shares
to be sold by Maxxim under the registration statement.
On April 15, 1998, Maxxim sold 500,000 Shares in a private sale.
Item 1. Security and Issuer:
This statement relates to shares of Common Stock, par value $.01 per share, of
Henley Healthcare, Inc., a Texas corporation, the principal executive offices of
which are located at 120 Industrial Blvd., Sugar Land, Texas 77478-3128.
Item 2. Identity and Background.
The person filing this statement is Maxxim Medical, Inc., a Texas corporation.
The principal business of Maxxim is the manufacture and development of a
diversified range of specialty medical products. The principal office and
principal business of Maxxim are located at 10300 49th Street North, Clearwater,
Florida 33762. The attached Schedule I sets forth a list of the executive
officers and directors of Maxxim as well as their business addresses, present
principal occupations or employment and the name, principal business and address
of any corporation or other organization in which such employment is conducted,
and citizenship. Maxxim has no controlling person or corporation.
During the last five years, neither Maxxim nor, to the best of Maxxim's
knowledge, any person named on Schedule I, has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) nor been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction in which as a result of such proceeding Maxxim or any such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On April 30, 1996, Maxxim and Henley (then known as Lasermedics, Inc.) entered
into an agreement whereby Henley purchased certain assets (and assumed certain
liabilities) associated with the Henley Healthcare Division of Maxxim, for a
purchase price of approximately $13.5 million. The purchase price was paid by
the issuance by Henley to Maxxim of a convertible subordinated promissory note
in the principal amount of $7 million (the "Note"), with the balance of the
purchase price paid in cash. The outstanding principal and interest due under
the Note may be converted by Maxxim at any time, and from time to time, into
Common Stock without the payment of any additional consideration.
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Item 4. Purpose of Transaction
The original purpose of Maxxim's acquisition of the Note was to assist Henley in
financing the purchase of the Henley Healthcare Division from Maxxim. Maxxim
negotiated the Voting and Shareholders Agreement with Messrs. Barbour and Smith
in order to assure Maxxim representation on the Board of Directors of Henley so
that it could influence the management of Henley. Maxxim negotiated the
convertibility of the Note into Common Stock in order to have the opportunity to
share in any increase in the value of Henley Common Stock during the period in
which the Note was outstanding.
Maxxim converted $2 million of the outstanding amount due under the Note into 1
million Shares in February 1998, and an another $2 million due under the Note
into an additional 1 million Shares in March 1998, at the request of Henley.
Henley was out of compliance with the listing standards of the Nasdaq Stock
Market at such time, due to an increase in such standards in February 1998, and
the conversion of such amounts of debt into equity brought Henley into
compliance with the new standards.
Maxxim sold 500,000 Shares on April 15, 1998, in a private sale. Maxxim intends
to further reduce its percentage of Share ownership as opportunities arise,
consistent with maintaining the value of its investment in its remaining Shares
and the Note. In connection with the conversion of the $4,000,000 due under the
Note into 2,000,000 Shares, Henley agreed to register the 2,000,000 Shares for
resale by Maxxim under the federal and state securities laws as soon as
reasonably practicable.
Item 5. Interest in Securities of the Issuer.
(a) According to Henley's most recently available filing with the Commission,
there were 5,383,205 Shares of Common Stock outstanding on March 25, 1998. At
May 1, 1998, Maxxim owned of record 1,500,000 Shares, or approximately 27.9% of
the total number of outstanding Shares. Maxxim beneficially owns an additional
1,500,000 Shares, issuable upon the conversion of the outstanding principal
amount due under the Note ($3,000,000). Therefore, Maxxim beneficially owns a
total of 3,000,000 Shares, or approximately 43.6% of the 6,883,205 Shares which
would be outstanding upon the issuance of the additional 1,500,000 Shares upon
the conversion of the remaining principal amount due under the Note. Maxxim is
also entitled to convert any accrued and unpaid interest due under the Note into
Common Stock. Interest on the Note currently accrues at a rate of 6% per annum
and increases 2% per annum on May 1 of each calendar year. Accrued interest is
due and payable on May 1 and November 1 of each calendar year until May 1, 2003.
The interest payment due May 1, 1998 has been paid.
To the best of Maxxim's knowledge, of the persons listed on Schedule I, only
Messrs. Davidson and Henley beneficially own any Shares of Henley. Mr. Davidson
beneficially owns an additional 20,000 Shares, representing Shares he has the
current right to acquire under currently exercisable stock options. Mr. Henley
beneficially owns an additional 45,000 Shares, representing Shares he has the
current right to acquire under currently exercisable warrants.
(b) Maxxim has the sole right to vote and dispose of all of the Shares
beneficially owned by it. To the best of Maxxim's knowledge, each of Messrs.
Davidson and Henley has the sole right to vote and dispose of the Shares
beneficially owned by him.
5
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(c) In September 1997, Henley requested that Maxxim agree to an increase in the
amount of other debt to which the Note would be subordinate. Maxxim agreed to
such increase in exchange for a reduction in the conversion price from $3.00 to
$2.00. On September 30, 1997, the terms of the Note were so modified, giving
Maxxim the beneficial ownership of 3,500,000 Shares with respect to the $7
million principal balance due under the Note.
On February 20, 1998, Maxxim converted $2,000,000 due under the Note into
1,000,000 Shares. On March 13, 1998, Maxxim converted another $2,000,000 due
under the Note into an additional 1,000,000 Shares. On April 15, 1998, Maxxim
sold 500,000 Shares for $3.09 per share in a private sale.
To the best of Maxxim's knowledge, except as described above, there have been no
other transactions in the Common Stock effected during the period from July 30,
1997, to May 1, 1998, by Maxxim or any of the persons listed in Schedule I.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
In connection with the original transaction between Maxxim and Henley, Maxxim
entered into a Voting and Shareholders Agreement (the "Agreement") with Henley,
Mr. Michael M. Barbour (President and a director of Henley) and Dr. Chadwick F.
Smith, M.D. (the Chairman of the Board of Henley), pursuant to which, among
other things, (i) Henley created a vacancy in its Board of Directors and elected
a nominee of Maxxim, Mr. Kenneth W. Davidson, to fill the vacancy, and (ii) Mr.
Barbour and Dr. Smith agreed to vote their Shares in favor of Maxxim's nominee
during the term of the Agreement. In addition, under the Agreement each of
Maxxim, Barbour and Smith granted to Henley the right to purchase all, but not
less than all, Shares which each of them might desire to sell in the future, on
the same terms as they proposed to sell such Shares to a third party. They also
each granted to one another the right to purchase all, but not less than all,
of such Shares if Henley does not purchase such Shares. The Agreement will
terminate upon the merger or consolidation of Henley with another corporation
(provided that Henley is not the survivor in the merger and the merger is not
with a company owned or controlled by any of the parties); a public offering of
Common Stock by Henley; or if both the principal amount due under the Note is
reduced to less than $1.5 million and Maxxim's ownership of the Common Stock is
reduced to less than 10% of the outstanding Shares. According to Henley's most
recently available filing with the Commission, Messrs. Smith and Barbour
beneficially owned 430,666 and 421,748 Shares, respectively, at March 16, 1998.
Of such Shares, 235,000 and 228,333 Shares were issuable to Messrs. Smith and
Barbour, respectively, upon the exercise of presently outstanding options. The
Shares beneficially owned by Messrs. Smith and Barbour represent approximately
7.67% and 7.52% of the Shares which would be outstanding upon the issuance of
all such Shares. Maxxim disclaims beneficial ownership of the Shares
beneficially owned by Messrs. Smith and Barbour.
In February and March, 1998, Maxxim converted $4,000,000 due under the Note into
2,000,000 Shares. In connection with such conversion, Henley agreed to register
the 2,000,000 Shares for resale by Maxxim under the federal and state securities
laws as soon as reasonably practicable and Messrs. Barbour and Smith and Henley
agreed to waive their rights to purchase the Shares to be sold by Maxxim under
the registration statement.
6
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Item. 7. Material to be Filed as Exhibits.
1.1 Convertible Subordinated Promissory Note of Henley, dated April 30, 1996, in
the original principal amount of $7,000,000 payable to Maxxim. (Previously filed
with the Commission as Exhibit 1.2 to the Form 8-K of Henley, dated April 30,
1996, and incorporated herein by this reference.)
1.2 First Modification to Convertible Subordinated Promissory Note of Henley,
dated September 30, 1997.
1.3 Registration Rights Agreement dated April 30, 1996 by and between Henley and
Maxxim. (Previously filed with the Commission as Exhibit 1.3 to the Form 8-K of
Henley, dated April 30, 1996, and incorporated herein by this reference.)
1.4 Voting and Shareholders Agreement dated April 30, 1996 by and among Henley,
Michael M. Barbour, Chadwick F. Smith, MD, and Maxxim. (Previously filed with
the Commission as Exhibit 1.4 to the Form 8-K of Henley, dated April 30, 1996,
and incorporated herein by this reference.)
1.5 Letter Agreement, dated February 20, 1998, relating to the conversion by
Maxxim of $2 million due under the Henley Note into 1 million Shares of Common
Stock.
1.6 Letter Agreement, dated March 13, 1998, relating to the conversion by Maxxim
of $2 million due under the Henley Note into 1 million Shares of Common Stock.
7
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Schedule I
Each of the individuals below, except for Messrs. Davidson, Graham, Lamont,
Wafelman and Beek, is a citizen of the United States of America. Messrs.
Davidson, Graham and Lamont are citizens of Canada. Messrs. Wafelman and Beek
are citizens of The Netherlands. For each person whose employment is with
Maxxim, the principal business of their employer and their business address is
described under Item 2 above.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT; PRINCIPAL
NAME BUSINESS OF EMPLOYER; BUSINESS ADDRESS.
- ---- ---------------------------------------
<S> <C>
Kenneth W. Davidson............... Chairman of the Board, President and Chief Executive Officer
Maxxim Medical, Inc.
Peter M. Graham................... Executive Vice President, Chief Operating Officer and
Secretary
Maxxim Medical, Inc.
David L. Lamont................... Vice President and Group Vice President
Maxxim Medical, Inc.
Henry T. DeHart................... Vice President, Executive Vice President Operations, Case
Management
Maxxim Medical, Inc.
Jack F. Cahill.................... Vice President, Executive Vice President Sales and
Marketing, Case Management
Maxxim Medical, Inc.
Alan S. Blazei.................... Vice President, Controller and Treasurer
Maxxim Medical, Inc.
Joseph D. Dailey.................. Vice President, Information Services
Maxxim Medical, Inc.
Suzanne R. Garon.................. Vice President, Human Resources
Maxxim Medical, Inc.
Rob W. Beek....................... Vice President, Managing Director, Maxxim Medical Europe
Maxxim Medical, Inc.
Donald R. DePriest................ President of MedCom Development Corporation, the General
Partner of MCT Investors, L.P., a limited partnership
engaged in the business of venture capital investing.
MCT Investors, L.P.
625 Slaters Lane, G100
Alexandria, VA 22314
Peter G. Dorflinger............... President and Chief Operating Officer of Physicians Resource
Group, Inc., a physicians practice management company.
Physicians Resource Group, Inc.
3 Lincoln Center, Suite 1540
5430 LBJ Freeway
Dallas, TX 75240
</TABLE>
8
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<TABLE>
<S> <C>
Martin Grabois, M.D............... Professor and Chairman of the Department of
Physical Medicine and Rehabilitation at Baylor College
of Medicine in Houston, Texas.
Baylor College of Medicine
Dept. of PM&R
1333 Moursund Ave.
Clinic Bldg. A221
Houston, TX 77030
Ernest J. Henley, Ph.D............ Professor of Chemical Engineering at the University of
Houston
49 Brior Hollow Lane
#1902
Houston, TX 77027
Richard O. Martin, Ph.D........... Chairman and Chief Executive Officer, of Physio-Control
International Corp., a manufacturer of cardiac
defibrillators and monitoring equipment.
Physio-Control International Corp.
11811 Willows Road N.E.
Redmond, WA 98073-9706
Henk R. Wafelman, Ing............. Executive Chairman of the Dutch Society of Enterprises in
Medical Technology, a Netherlands based technology
society.
Taksteeg 3
1012 PB
Amsterdam, The Netherlands
</TABLE>
9
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: May 8, 1998
Alan S. Blazei
- -------------------------------------
(Signature)
Vice President, Controller, Treasurer
- -------------------------------------
(Name and Title)
10
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EXHIBIT 1.2
FIRST MODIFICATION TO CONVERTIBLE
SUBORDINATED PROMISSORY NOTE
THIS FIRST MODIFICATION TO CONVERTIBLE SUBORDINATED PROMISSORY NOTE (this
"Modification") dated as of September 30, 1997, between Henley Healthcare,
Inc., a Texas corporation (the "Company"), and Maxxim Medical, Inc., a Delaware
corporation (the "Holder"). Hereinafter, capitalized words and phrases used
herein which are defined in the Note (as such term is hereinafter defined) are
used herein as therein defined, unless otherwise indicated.
WITNESSETH:
WHEREAS, the Company issued to the Holder a $7,000,000 Convertible
Subordinated Promissory Note dated as of April 30, 1996 (the "Note");
WHEREAS, the Company intends to enter into that certain Asset Purchase
Agreement on September 30, 1997, between the Company and CYBEX International,
Inc., a New York corporation ("CYBEX"), whereby the Company will acquire
certain of the assets of CYBEX;
WHEREAS, in connection with the CYBEX acquisition, the Company has
requested that the Holder execute an amendment (the "Subordination Amendment")
to that certain Subordination Amendment, dated as of April 30, 1996, by and
among the Holder, the Company and Comerica Bank - Texas (the "Subordination
Agreement") increasing the amount of allowable indebtedness under the Senior
Loan Documents (as defined in the Subordination Agreement) from $10,000,000 to
12,000,000;
WHEREAS, the Holder has agreed to execute the Subordination Amendment in
exchange for the reduction of its Conversion Price (as defined in the Note)
from $3.00 to $2.00; and
WHEREAS, the parties hereto desire to modify the applicable provisions of
the Note.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. MODIFICATION OF THE NOTE.
1.1 Section 4.1 of the Note is hereby deleted and the following
section is substituted therefor:
"4.1 Conversion Privilege and Conversion Price. Subject to and upon
compliance with the provisions of this Article IV, at the option of the
Holder, all or any portion of the amounts owed and outstanding under this
Note may be converted at any time and from time to time into fully paid and
nonassessable shares of Common Stock (the "Shares"), calculated as to each
conversion to the nearest 1/100 of a share at the Conversion Price,
determined as hereinafter provided, in effect at the time of conversion.
Unless and until the occurrence of an Event of Default, the Conversion
<PAGE> 2
Price shall be $2.00 per share of Common Stock, subject to adjustment in
accordance with Article 5 hereof. Upon the occurrence of an Event of
Default, the Conversion Price shall be automatically adjusted to an amount
equal to the lesser of (i) the Conversion Price in effect as of the date
of the Event of Default and (ii) 80% of the average Market Price for the
30 trading days immediately preceding the date of the Event of Default,
which amount shall be subject to further adjustment in accordance with
Article 5 hereof. All amounts so converted shall be applied first to pay
any accrued and unpaid interest and second to reduce the principal amount
of this Note as of the date of such conversion as if payment or prepayment
in such amount has occurred, with any reduction in principal to be applied
to satisfy the Company's redemption obligations under Section 2.3.2 hereof
in accordance with Section 2.3.4 hereof. This right of conversion must be
exercised by delivery of a written notice to the Company setting forth the
amount to be converted to be effective upon the Company's receipt of such
notice (the "Conversion Notice"). Notwithstanding the foregoing, in the
event the Company provides notice to the Holder of its intention to redeem
all or any portion of the outstanding principal balance of this Note
pursuant to Section 2.3.1 hereof, the Company must receive the Conversion
Notice on or before the last Business Day prior to the effective date of
such redemption to the extent that the Holder desires to convert all or
any portion of the amount to be redeemed by the Company."
1.2 Section 6.7(b) of the Note is hereby deleted and the following
section is substituted therefor:
"(b) Funded Debt of the Company under the Senior Indebtedness
not exceeding $12,000,000 in aggregate principal amount at any one time
outstanding;"
2. NO FURTHER EFFECT. Except as expressly modified hereby, the Note
shall remain in full force and effect.
3. GOVERNING LAW. This Modification shall be governed by and construed
in accordance with the laws of the State of Texas.
4. COUNTERPARTS; EFFECTIVENESS. This Modification may be signed in any
number of counterparts, each of which shall be an original, and with the effect
as if the signatures thereto and hereto were upon the same instrument. This
Modification shall be effective as of the date hereof when each of the parties
hereto shall have executed counterparts hereof.
5. ORAL AGREEMENTS. This Modification represents the final expression
between the parties with respect to the subject matter hereof, and may not be
contradicted by evidence of prior or contemporaneous oral agreement of the
parties.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Modification to be
executed as of the first written above.
HENLEY HEALTHCARE, INC.
a Texas corporation
By: /s/ Michael M. Barbour
-------------------------------------
Michael M. Barbour,
President and Chief Executive Officer
MAXXIM MEDICAL, INC.
a Delaware corporation
By: /s/ Ken Davidson
-------------------------------------
Name: Ken Davidson
-----------------------------------
Title: President
----------------------------------
<PAGE> 1
EXHIBIT 1.5
[MAXXIM MEDICAL LETTERHEAD]
February 20, 1998
Maxxim Medical, Inc.
103000 49th Street North
Clearwater, FL 34622
Gentlemen:
This letter will serve as our agreement relating to certain issues
concerning the conversion by Maxxim Medical, Inc. a Delaware corporation
("Maxxim"), of a portion of the certain convertible subordinated promissory note
dated April 30, 1996, in the original principal amount of $7,000,000, as amended
by that certain note modification agreement dated September 20, 1997 (the
"Convertible Note"), issued by Henley Healthcare, Inc., a Texas corporation
("Henley"), to Maxxim. For good and valuable consideration, the receipt of
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Pursuant to Section 4.1 of the Convertible Note, Maxxim gives notice of
the conversion of $2,000,000 of the principal amount of the Convertible
note into 1,000,000 shares of the common stock, par value $.01 per
share ("Common Stock"), of Henley, based on the current conversion
price of $2.00 per share under the Convertible Note. The data of such
conversion is effective as of the date of this letter and Henley hereby
tenders to Maxxim a certificate representing the 1,000,000 shares of
Common Stock. Notwithstanding the provisions of Section 4.1 of the
Convertible Note, the parties agree that the entire $2,000,000 of the
convertible Note so converted reduces the principal amount of the
Convertible Note and such sum shall be applied to Henley's full
redemption obligation due in the year 2003 and partially to Henley's
redemption obligation due in the year 2002 as provided in Section 2.3
of the convertible Note. All accrued and unpaid interest on the
convertible Note through February 28, 1998 in the aggregate amount of
$26,667 is hereby paid in cash by Henley.
2. As further consideration for the agreement of Maxxim to convert the
amount of Convertible Note set forth above, Henley hereby agrees to
use its commercially reasonable best efforts to file a shelf
registration statement on Form S-3, as amended from time to time, (the
"Registration Statement") with the U.S. Securities & Exchange
Commission ("SEC") to register resales of the Common Stock issued to
Maxxim hereby as soon as reasonably practicable after the date hereof;
provided, that, Maxxim hereby acknowledges and agrees that the
Registration Statement will not be filed until such time as Henley has
completed the audit of its consolidated financial statements at and as
of December 31, 1997, and filed its Annual Report on Form 10-K with
the SEC including the results of such audit which matters Henley
agrees to accomplish as soon as practicable. Henley shall use its
commercially reasonable best efforts to have the Registration
Statement declared effective as soon as possible after such filing,
and to keep such Registration Statement continuously effective until
the second anniversary of the initial date of effectiveness of such
Registration Statement subject to extension as herein provided;
provided, however, that Henley may voluntarily from time to time
suspend the effectiveness of the Registration Statement for a limited
time which in no event shall be longer than 90 days in any instance
and 150 days in the aggregate, if Henley has been advised in writing
by its counsel or its underwriters that the offering of shares of
Common Stock pursuant to the Registration Statement would materially
and adversely affect, or
<PAGE> 2
would be improper in view of (or improper without disclosure in a
prospectus), a proposed financing, public offering, reorganization,
re-capitalization, merger, consolidation or similar transaction involving
Henley, in which case Henley shall be required to keep such Registration
Statement effective for an additional period of time beyond the second
anniversary date equal to the number of days the effectiveness thereof is
suspended pursuant to this provision. Upon the occurrence of any event that
would cause the Registration Statement to contain a material misstatement
or omission or not to be effective and usable during the period that such
Registration Statement is required to be effective and usable, Henley shall
promptly notify Maxxim in writing specifying the reasons that the
Registration Statement may not be used to sell Common Stock including a
copy of the written advice received by Henley from its counsel or
underwriters and Henley shall promptly file an amendment to the
Registration Statement and use its commercially reasonable best efforts to
cause such amendment to be declared effective as soon as practicable
thereafter. Henley will bear all costs and expenses related to the
Registration Statement other than the expenses incurred by Maxxim for
underwriters commissions and discounts or legal fees incurred by Maxxim.
Maxxim shall furnish to Henley such information regarding its holdings and
the proposed manner of distribution of Common Stock as Henley may
reasonably request and as shall be required by the rules and regulations of
the SEC in connection with the Registration Statement. Notwithstanding the
foregoing, Maxxim hereby acknowledges and agrees that Henley may include in
the Registration Statement the offering for resale of additional shares of
its common stock issuable upon the conversion of other securities of Henley
to be issued in connection with proposed private placement to be
accomplished by Henley in the next 30 days after the date of this letter;
provided, however, that such inclusion will not reduce in any manner the
number of Maxxim shares to be included in the Registration Statement.
3. The Registration Rights Agreement entered by and between Maxxim and Henley
dated April 30, 1996 ("Registration Rights Agreement"), remains in full
force and effect, except that the shares of Common Stock issued by Henley
to Maxxim, as set forth in paragraph 1 above, shall no longer be
"Registerable Securities" as defined in such Registration Statement as
provided herein. Henley acknowledges and agrees that registration of the
Maxxim Common Stock does not constitute a Demand Registration pursuant to
the provisions of the Registration Rights Agreement.
4. Henley and Maxxim agree that the indemnification and contribution rights
and obligations of the parties as provided in Section 5 of the Registration
Rights Agreement shall be applicable to the Transactions herein described
and are incorporated herein by this reference as if fully set forth.
5. Each of Henley, Chadwick F. Smith and Michael M. Barbour hereby waive and
release in full their rights of first refusal granted under Section 2 of
that certain Voting Agreement dated April 20, 1996, executed by such
persons and Maxxim insofar as such rights apply to the sale by Maxxim of
the shares of Common Stock to be included in the Registration Statement.
Henley agrees that any legend on the Maxxim Common Stock certificate shall
be removed by Henley's Registrar or Transfer agent within 24 hours of
notice to Henley, that Maxxim has sold any of the Common Stock pursuant to
the Registration Statement.
6. This letter may not be amended without the written approval of the parties
hereto, and shall be construed, interpreted and enforced under the laws of
the State of Texas.
Please acknowledge you acceptance and agreement of the above by
acknowledging this agreement in the space provided below.
<PAGE> 3
Very truly yours,
HENLEY HEALTHCARE, INC.
BY:/s/ Michael M. Barbour
-----------------------
TITLE: President
--------------------
Acknowledged and agreed to by:
MAXXIM MEDICAL, INC.
By: /s/ Kenneth W. Davidson
-------------------------------
Title: President
----------------------------
Date: Feb. 20/98
-----------------------------
/s/ Chadwick F. Smith
----------------------------------
Chadwick F. Smith
Date: 2-20-98
-----------------------------
/s/ Michael M. Barbour
----------------------------------
Michael M. Barbour
Date: 2-20-98
-----------------------------
<PAGE> 1
EXHIBIT 1.6
[MAXXIM MEDICAL LETTERHEAD]
March 13, 1998
Maxxim Medical, Inc.
10300 49th Street North
Clearwater, FL 34622
Gentlemen:
This letter will serve as our agreement relating to certain issues
concerning the conversion by Maxxim Medical, Inc. a Delaware corporation
("Maxxim"), of a portion of the certain convertible subordinated promissory
note dated April 30, 1996, in the original principal amount of $7,000,000, as
amended by that certain note modification agreement dated September 20, 1997
(the "Convertible Note"), issued by Henley Healthcare, Inc., a Texas corporation
("Henley"), to Maxxim. For good and valuable consideration, the receipt of
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Pursuant to Section 4.1 of the Convertible Note, Maxxim gives notice
of the conversion of $2,000,000, of the principal amount of the
Convertible note into 1,000,000 shares of the common stock par value
$.01 per share ("Common Stock"), of Henley, based on the current
conversion price of $2.00 per share under the Convertible Note. The
date of such conversion is effective as of the date of this letter and
Henley hereby tenders to Maxxim a certificate representing the
1,000,000 shares of Common Stock. Notwithstanding the provisions of
Section 4.1 of the Convertible Note, the parties agree that the entire
$2,000,000 of the convertible Note so converted reduces the principal
amount of the Convertible Note and such sum shall be applied to
Henley's full redemption obligation due in the year 2003 and 2002 and
partially to Henley's redemption obligation due in the year 2001 as
provided in Section 2.3 of the convertible Note. All accrued and
unpaid interest on the convertible Note through March 31, 1998 in the
aggregate amount of $66,667 is hereby paid in cash by Henley.
2. As further consideration for the agreement of Maxxim to convert the
amount of Convertible Note set forth above, Henley hereby agrees to
use its commercially reasonable best efforts to file a shelf
registration statement on Form S-3, as amended from time to time, (the
"Registration Statement") with the U.S. Securities & Exchange
Commission ("SEC") to register resales of the Common Stock issued to
Maxxim hereby as soon as reasonably practicable after the date hereof,
provided, that, Maxxim hereby acknowledges and agrees that the
Registration Statement will not be filed until such time as Henley has
completed the audit of its consolidated financial statements at and as
of December 31, 1997, and filed its Annual Report on Form 10-K with
the SEC including the results of such audit which matters Henley
agrees to accomplish as soon as practicable. Henley shall use its
commercially reasonable best efforts to have the Registration
Statement declared effective as soon as possible after such filing,
and to keep such Registration Statement continuously effective until
the second anniversary of the initial date of effectiveness of such
Registration Statement subject to extension as herein provided;
provided, however, that Henley may voluntarily from time to time
suspend the effectiveness of the Registration Statement for a limited
time which in no event shall be longer than 90 days in any instance
and 150 days in the aggregate, if Henley has been
<PAGE> 2
advised in writing by its counsel or its underwriters that the offering
of shares of Common Stock pursuant to the Registration Statement would
materially and adversely affect, or would be improper in view of (or
improper without disclosure in a prospectus), a proposed financing,
public offering, reorganization, recapitalization, merger,
consolidation or similar transaction involving Henley, in which case
Henley shall be required to keep such Registration Statement effective
for an additional period of time beyond the second anniversary date
equal to the number of days the effectiveness thereof is suspended
pursuant to this provision. Upon the occurrence of any event that would
cause the Registration Statement to contain a material misstatement or
omission or not to be effective and usable during the period that such
Registration Statement is required to be effective and usable, Henley
shall promptly notify Maxxim in writing specifying the reasons that the
Registration Statement may not be used to sell Common Stock including a
copy of the written advice received by Henley from its counsel or
underwriters and Henley shall promptly file an amendment to the
Registration Statement and use its commercially reasonable best efforts
to cause such amendment to be declared effective as soon as practicable
thereafter. Henley will bear all costs and expenses related to the
Registration Statement other than the expenses incurred by Maxxim for
underwriters' commissions and discounts or legal fees incurred by
Maxxim. Maxxim shall furnish to Henley such information regarding its
holdings and the proposed manner of distribution of Common Stock as
Henley may reasonably request and as shall be required by the rules and
regulations of the SEC in connection with the Registration Statement.
Notwithstanding the foregoing, Maxxim hereby acknowledges and agrees
that Henley may include in the Registration Statement the offering for
resale of additional shares of its common stock issuable upon the
conversion of other securities of Henley to be issued in connection
with proposed private placement to be accomplished by Henley in the
next 30 days after the date of this letter, provided however, that such
inclusion will not reduce in any manner the number of Maxxim shares to
be included in the Registration Statement.
3. The Registration Rights Agreement entered by and between Maxxim and
Henley dated April 30, 1996 ("Registration Rights Agreement"), remains
in full force and effect, except that the shares of Common Stock
issued by Henley to Maxxim, as set forth in paragraph 1 above, shall
no longer be "Registerable Securities" as defined in such Registration
Statement as provided herein. Henley acknowledges and agrees that
registration of the Maxxim Common Stock does not constitute a Demand
Registration pursuant to the provisions of the Registration Rights
Agreement.
4. Henley and Maxxim agree that the indemnification and contribution
rights and obligations of the parties as provided in Section 5 of the
Registration Rights Agreement shall be applicable to the Transactions
herein described and are incorporated herein by this reference as if
fully set forth.
5. Each of Henley, Chadwick F. Smith and Michael M. Barbour hereby waive
and release in full their rights of first refusal granted under
Section 2 of that certain Voting Agreement dated April 20, 1996,
executed by such persons and Maxxim insofar as such rights apply to
the sale by Maxxim of the shares of Common Stock to be included in the
Registration Statement. Henley agrees that any legend on the Maxxim
Common Stock certificate shall be removed by Henley's Registrar or
Transfer agent within 24 hours of notice to Henley, that Maxxim has
sold any of the Common Stock pursuant to the Registration Statement.
6. This letter may not be amended without the written approval of the
parties hereto, and shall be construed, interpreted and enforced under
the laws of the State of Texas.
Please acknowledge your acceptance and agreement of the above by
acknowledging this agreement in the space provided below.
2
<PAGE> 3
Very truly yours
HENLEY HEALTHCARE, INC.
By: /s/ Michael M. Barbour
-------------------------------
Title: President & CEO
----------------------------
Acknowledged and agreed to by
MAXXIM MEDICAL, INC.
By: /s/ Alan Blazei
--------------------------------
Title: V.P. & Controller
-----------------------------
Date: 3/13/98
------------------------------
/s/ Chadwick F. Smith
- -----------------------------------
Chadwick F. Smith
Date: 3/13/98
------------------------------
/s/ Michael M. Barbour
- -----------------------------------
Michael M. Barbour
Date: 3/13/98
------------------------------
