PROXY STATEMENT
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
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 ss. 240.14a-11(c) or
ss. 240.14a-12
INDUSTRIAL HOLDINGS, INC.
(Name of Registrant as specified in its Charter)
INDUSTRIAL HOLDINGS, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or
14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per
Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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:
[X] 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:
(3) Filing Party:
(4) Date Filed:
<PAGE>
INDUSTRIAL HOLDINGS, INC.
7135 ARDMORE
HOUSTON, TEXAS 77054
TO OUR SHAREHOLDERS:
You are cordially invited to attend a Special Meeting of Shareholders of
Industrial Holdings, Inc. (the "Company") to be held at the Company's offices on
September 30, 1996 at 7135 Ardmore, Houston, Texas 77054, at 10:00 a.m. Houston
time.
At the meeting, you will be asked to adopt an amendment to the Articles of
Incorporation increasing the number of authorized shares of the Company's Common
Stock from 7,500,000 to 20,000,000 (the "Amendment"). During the meeting,
Company management will be available to respond to questions. This proposed
increase is important since it will, among other things, allow the Company to
continue its strategy of financing acquisitions through a combination of debt
and equity. Currently, the Company is approaching the limit of its authorized
shares which have not been reserved for issuance. Failure to increase the number
of authorized shares could seriously limit the Company's ability to successfully
pursue its acquisition strategy.
YOUR BOARD OF DIRECTORS BELIEVES THAT THE AMENDMENT TO THE ARTICLES OF
INCORPORATION, WHICH WAS ADOPTED UNANIMOUSLY BY THE BOARD, IS IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE FOR
THE ADOPTION OF THE AMENDMENT.
You are urged to read carefully the attached Proxy Statement in its entirety for
a complete description of the Amendment. Please sign, date and return the
enclosed proxy card promptly. It is important to vote. If you fail to return
your proxy card, the effect of such failure will be as if you voted your shares
against adoption of the Amendment. If you attend the meeting, which we hope that
you will, you may vote in person even if you have previously mailed a proxy
card. We look forward to seeing you at the Special Meeting of Shareholders.
August 30, 1996
Sincerely,
Robert E. Cone
Chairman of the Board
President and Chief Executive Officer
<PAGE>
INDUSTRIAL HOLDINGS, INC.
7135 ARDMORE
HOUSTON, TEXAS 77054
---------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be Held September 30, 1996
---------------------------
Notice is hereby given that a Special Meeting of the Shareholders of
Industrial Holdings, Inc. (the "Company") will be held at the Company's
principal offices at 7135 Ardmore, Houston, Texas 77054, at 10:00 a.m., Houston
time, on September 30, 1996, for the following purposes:
1. To adopt an amendment to the Company's Articles of Incorporation that
provides for an increase in the number of authorized shares of Common Stock from
7,500,000 to 20,000,000 shares; and
2. To consider and act upon such other business as may properly come
before the meeting.
The close of business on August 22, 1996 has been fixed as the record
date for the determination of shareholders entitled to receive notice of and to
vote at the Special Meeting or any adjournment(s) thereof. The affirmative vote
of the holders of 66 2/3% of the outstanding shares of Common Stock of the
Company is required to adopt the amendment to the Articles of Incorporation.
You are cordially invited to attend the Special Meeting. YOUR VOTE IS
IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. WHETHER OR NOT YOU PLAN TO
ATTEND THE SPECIAL MEETING, WE ASK THAT YOU MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE. YOU MAY REVOKE
YOUR PROXY AT ANY TIME BEFORE ITS EXERCISE BY VOTING IN PERSON AT THE SPECIAL
MEETING OR BY DELIVERING A WRITTEN REVOCATION OR LATER DATED PROXY TO THE
SECRETARY AT OR BEFORE THE MEETING.
By Order of the Board of Directors
ROBERT E. CONE
Chairman of the Board
President and Chief Executive Officer
August 30, 1996
<PAGE>
INDUSTRIAL HOLDINGS, INC.
7135 ARDMORE
HOUSTON, TEXAS 77054
PROXY STATEMENT
This Proxy Statement is being mailed to shareholders on or about August
30, 1996, in connection with the solicitation of proxies by the Board of
Directors of Industrial Holdings, Inc. (the "Company") for use at the Special
Meeting of Shareholders to be held at the Company's principal offices at 7135
Ardmore, Houston, Texas 77054, at 10:00 a.m., Houston time, on September 30,
1996, and at any adjournments thereof, for the purpose of considering and voting
on the matters set forth in the accompanying Notice of Special Meeting of
Shareholders. All shares represented by properly executed proxies, unless such
proxies previously have been revoked, will be voted at the Special Meeting in
accordance with the directions on such proxies. If no direction is indicated,
the shares will be voted FOR the adoption of the proposal to amend the Company's
Articles of Incorporation to increase the authorized Common Stock, par value
$.01 per share ("Common Stock"), from 7,500,000 to 20,000,000 shares, and as
recommended by the Board of Directors with respect to any other matters, or if
no recommendation is given, in their own discretion. A shareholder may revoke a
proxy by (a) voting in person at the Special Meeting, (b) delivering to the
Company written notice of revocation, or (c) delivering to the Company a signed
proxy bearing a later date at or before the meeting.
VOTING OF SECURITIES
At the close of business on August 22, 1996, the record date for the
determination of shareholders entitled to notice of and to vote at the Special
Meeting and any adjournment thereof, there were issued, outstanding and entitled
to vote 3,781,817 shares of the Company's Common Stock. Common Stock is the only
class of outstanding securities entitled to notice of and to vote at the Special
Meeting. The presence, in person or by proxy, of a majority of the shares of
Common Stock outstanding on the record date is necessary to constitute a quorum
at the Special Meeting. Assuming such a quorum is present, the adoption of the
amendment will require the affirmative vote of the holders of 66 2/3% of the
outstanding shares of Common Stock of the Company. Each share of Common Stock is
entitled to one vote on all matters requiring a shareholder vote at the Special
Meeting. Abstentions and broker non-votes will be treated as present for
purposes of determining a quorum and will be treated as votes against the
proposal.
-1-
PROPOSAL TO ADOPT AMENDMENT TO THE ARTICLES OF INCORPORATION
TO INCREASE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
On August 13, 1996, the Board of Directors unanimously adopted
resolutions approving a proposal to amend the Articles of Incorporation of the
Company to increase the number of authorized shares of the Company's Common
Stock from 7,500,000 to 20,000,000 (the "Amendment"). The text of the Amendment
is set forth in APPENDIX A to this Proxy Statement. The affirmative vote of the
holders of 662/3% of the outstanding shares of Common Stock of the Company is
required to approve the adoption of Amendment.
If adopted, the Amendment would result in an increase in the number of
shares of Common Stock available from 3,718,183 to 16,218,183 shares. Of the
3,718,183 currently available shares, only 760,605 are available for issuance,
as a total of 2,957,578 shares have been reserved for issuance upon the
conversion of debt, the exercise of various outstanding warrants and options
issued and issuable pursuant to the Company's stock option plans.
DESCRIPTION AND EFFECT OF AMENDMENT
The Certificate of Incorporation currently authorizes the issuance of
7,500,000 shares of Common Stock, $.01 par value, 3,781,817 of which were issued
and outstanding as of August 22, 1996, and 7,500,000 shares of Preferred Stock,
$.01 par value, none of which were issued and outstanding as of August 22, 1996.
If the Amendment is adopted, the number of authorized shares of Common
Stock will be increased from 7,500,000 to 20,000,000 as of the date on which the
Amendment is filed with the Secretary of State of the State of Texas. The
additional 12,500,000 authorized shares would be part of the existing class of
Common Stock, and, if and when issued, would have the same rights and privileges
as the shares of Common Stock presently issued and outstanding. If adopted,
neither the number of authorized shares nor the par value of the Preferred Stock
will be affected by the Amendment.
The Board of Directors believes that the increase in the authorized
number of shares of Common Stock will increase the Company's flexibility in
meeting possible future financing requirements, effecting future transactions
such as acquisitions and meeting other corporate needs as they arise. In
addition, the Company intends to offer in the near future to the holders of its
632,500 currently outstanding Class A Redeemable Warrants, each to purchase one
share of Common Stock at $6.00 per share, a Class B Redeemable Warrant and a
newly created Class C Redeemable Warrant, upon the exercise of each Class A
Redeemable Warrant. Thus, as many of 1,265,000 shares of the newly authorized
shares of Common Stock could be reserved for issuance under the additional Class
B and new Class C Redeemable Warrants to be issued. Any such warrants will be
issued to exercising Class A Warrantholders only by means of a prospectus that
is part of an effective registration statement. The Class A Redeemable Warrants
expire in January 1997. It is anticipated that each Class B Redeemable Warrant
and each Class C Redeemable Warrant will entitle its holder to purchase one
share of Common Stock at $10.00 and $15.00 per share, respectively, and that
both warrants will expire two years after their issuance. Other than as
previously described, the Company has no current arrangements, agreements,
understandings or plans for the issuance of shares of Common Stock in connection
with an offering or an acquisition.
It is not anticipated that the Amendment, if adopted, will affect the
registration of the Common Stock under the Securities Exchange Act of 1934, as
amended.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE
AMENDMENT.
-2-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information regarding the beneficial
ownership of Common Stock at August 22, 1996 by (i) each person known to the
Company to beneficially own more than 5% of its Common Stock, (ii) each
director, (iii) each executive officer and (iv) all directors and executive
officers as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENTAGE OF
BENEFICIAL OWNER BENEFICIALLY OWNED(1) CLASS
------------------- --------------------- -------------
<S> <C> <C>
Renaissance Capital Partners, II, Ltd.
8080 North Capital Expressway
Suite 210, LB 59
Dallas, TX 75206-1857........................ 625,153(2) 14.2%
St. James Capital Partners, L.P.
5599 San Felipe Suite 300
Houston, Texas 77056........................ 295,000(3) 7.2%
DIRECTORS AND EXECUTIVE OFFICERS:
Robert E. Cone............................... 337,548(4) 8.2%
James H. Brock, Jr........................... 125,000(5) 3.2%
Christine A. Smith........................... 55,081(6) 1.4%
William J. Argeroplos........................ 142,441(7) 3.6%
Charles J. Anderson.......................... 72,000(7) 1.9%
Barbara S. Shuler............................ 72,393(8) 1.9%
John P. Madden............................... 175,083(9) 4.4%
James W. Kenney.............................. 15,000(7) *
All officers and directors
as a group (8 persons) (4) - (8)........... 994,546 20.8%
</TABLE>
- -----------------------------
* Less than 1%
(1) Subject to community property laws where applicable, each person has
sole voting and investment power with respect to the shares listed,
except as otherwise specified. Each person is a United States citizen.
This table is based upon information supplied by officers, directors and
principal shareholders and Schedules 13D and 13G, if any, filed with the
Securities and Exchange Commission.
(2) These shares may be acquired on the conversion of a $1.875 million
convertible debenture and the exercise of 50,000 warrants.
(3) Includes 80,000 shares that may be acquired upon the exercise of
warrants.
(4) Includes 115,000 shares that may be acquired upon the exercise of stock
options.
(5) Includes 25,000 shares that may be acquired upon the exercise of a
warrant and 65,000 that may be acquired upon the exercise of stock
options.
(6) Includes 45,000 shares that may be acquired upon the exercise of stock
options.
(7) Includes 15,000 shares that may be acquired upon the exercise of stock
options.
(8) Includes 10,000 shares that may be acquired upon the exercise of stock
options.
(9) Includes 10,000 shares that may be acquired upon the exercise of stock
options. Excludes 324,965 shares owned by persons related to Mr. Madden,
but as to which Mr. Madden disclaims beneficial ownership.
-3-
COST OF SOLICITATION
The Company will bear the costs of the solicitation of proxies from its
shareholders, which will be conducted primarily by mail. The Company has engaged
ChaseMellon Shareholder Services to assist with the solicitation of proxies for
a fee of $3,500.00 plus expenses. In addition proxies may be solicited by
directors, officers and regular employees of the Company in person or by
telephone or other forms of wire or facsimile. The directors, officers and
employees of the Company will not be compensated additionally for such
solicitation but may be reimbursed for out-of-pocket expenses in connection with
the solicitation. The Company is also making arrangements with brokerage houses
and other custodians, nominees and fiduciaries for the delivery of solicitation
material to the beneficial owners of Common Stock and the Company will reimburse
the brokers, custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses in connection with such services.
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Company for inclusion in the
Company's proxy statement and form of proxy relating to that meeting not later
than January 20, 1997.
By Order of the Board of Directors
ROBERT E. CONE
Chairman of the Board
President and Chief Executive Officer
August 30, 1996
-4-
<PAGE>
APPENDIX A
AMENDMENT
TO THE INDUSTRIAL HOLDINGS, INC.
ARTICLES OF INCORPORATION
Set forth below is the text of paragraph (A) of Article IV of the
Company's Articles of Incorporation as proposed to be amended (bracketed
information has been deleted and underlined information has been added):
"ARTICLE IV
(A) The maximum number of shares of all classes of stock which the
Corporation is authorized to have outstanding at any one time is [15,000,000]
27,500,000 shares, [7,500,000] 20,000,000 of which shall be common stock, $.01
par value per shares ("Common Stock") and 7,500,000 of which shall be preferred
stock, $.01 par value per share ("Preferred Stock"), issuable in one or more
series. All or any part of the Common Stock and the Preferred Stock may be
issued by the Corporation from time to time and for such consideration as the
Board of Directors may determine. All of such shares, if and when issued, and
upon receipt of such consideration by the Corporation, shall be fully paid and
nonassessable."
A-1
<PAGE>
PRELIMINARY COPY
INDUSTRIAL HOLDINGS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING TO BE HELD SEPTEMBER 30, 1996
P The proxies are directed to vote as specified below and in their
discretion on all other matters coming before the meeting. If no direction
is made, the proxy will vote FOR the proposed Amendment to the Company's
Articles of Incorporation. This proxy is solicited by the Board of
R Directors.
1. APPROVAL OF AMENDMENT OF ARTICLES OF INCORPORATION TO
INCREASE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM
O 7,500,000 TO 20,000,000
[ ] FOR [ ] AGAINST [ ] ABSTAIN
X [ ] I plan to attend the meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
Y PROMPTLY, USING THE ENCLOSED ENVELOPE.
<PAGE>
INDUSTRIAL HOLDINGS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING TO BE HELD SEPTEMBER 30, 1996
P The undersigned appoints Robert E. Cone and Christine A. Smith and each of
them, as attorneys and proxies of the undersigned, with power of
substitution, to represent the undersigned at the Special Meeting of
Shareholders of Industrial Holdings, Inc. (the "Company") to be held
R September 30, 1996, and at any adjournments thereof, and to vote all
shares of Common Stock of the Company which the undersigned is entitled to
vote on all matters coming before said meeting.
O Dated:________________________, 1996
-----------------------------------
X Signature
-----------------------------------
Y Signature if held jointly
THIS PROXY MUST BE SIGNED EXACTLY
AS NAME APPEARS HEREON. Executors,
administrators, trustees, etc., should give full title as
such. If the signer is a corporation, please sign full
corporate name by duly authorized officer. If signer is
a partnership, please sign partnership name by
authorized person.
