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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to SECTION 240.14a-11(c) or
SECTION 240.14a-12
U.S. Physical Therapy, Inc.
(Name of Registrant as Specified In Its Charter)
U.S. Physical Therapy, Inc.
(Name of Person(s)Filing Proxy Statement)
<PAGE>
U.S. PHYSICAL THERAPY, INC.
3040 Post Oak Blvd., Suite 222
Houston, Texas 77056
(713) 297-7000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1997
_________________________
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of
Stockholders (the "Annual Meeting") of U.S. Physical Therapy, Inc.
(the "Company") will be held on Tuesday, May 20, 1997, at 10:00
a.m. (EDT), at the Rihga Royal Hotel, 151 West 54th Street, New
York, New York, for the following purposes:
(1) To elect ten directors;
(2) To consider and vote upon a proposal to amend the
Company's 1992 Stock Option Plan to (i) impose a 50,000 share
limitation on the number of shares subject to stock options that
may be granted to any officer or other employee during any calendar
year and (ii) increase by 95,000 the number of shares of Company
common stock reserved for issuance under the 1992 Stock Option
Plan; and
(3) To transact such other business as may properly come
before the Annual Meeting or any adjournments thereof.
Pursuant to the Bylaws, the Board of Directors has fixed the
close of business on April 14, 1997 as the record date for the
determination of stockholders entitled to notice of and to vote at
the Annual Meeting. Only holders of common stock of record at the
close of business on that date will be entitled to notice of and to
vote at the Annual Meeting or any adjournments thereof.
In the event that there are not sufficient votes to approve
any one or more of the foregoing proposals at the time of the
Annual Meeting, the Annual Meeting may be adjourned in order to
permit further solicitation of proxies by the Company.
By Order of the Board of Directors
/s/ Mark J. Brookner
Mark J. Brookner
Chief Financial Officer
and Treasurer
Houston, Texas
April 24, 1997
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL
MEETING, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
<PAGE>
U.S. PHYSICAL THERAPY, INC.
3040 Post Oak Blvd., Suite 222
Houston, Texas 77056
(713) 297-7000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
_________________________
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished to stockholders of U.S.
Physical Therapy, Inc. (the "Company") in connection with the
solicitation by the Board of Directors of the Company of proxies to
be used at the 1997 Annual Meeting of Stockholders (the "Annual
Meeting") of the Company, to be held on Tuesday, May 20, 1997, at
10:00 a.m. (EDT), at the Rihga Royal Hotel, 151 West 54th Street,
New York, New York, and at any adjournments thereof.
The Annual Meeting has been called for the following purposes:
(1) to elect ten directors; (2) to consider and vote upon a
proposal to amend the Company's 1992 Stock Option Plan to (i)
impose a 50,000 share limitation on the number of shares subject to
stock options that may be granted to any officer or other employee
during any calendar year and (ii) increase by 95,000 the number of
shares of Company common stock reserved for issuance under the 1992
Stock Option Plan; and (3) to transact such other business as may
properly come before the meeting or any adjournments thereof. If
the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares
represented thereby will be voted in accordance with the
instructions marked thereon. Properly executed but unmarked
proxies will be voted FOR the election of the ten nominees of the
Board of Directors as directors and FOR Proposal 2. If any other
matters are properly brought before the Annual Meeting, the persons
named in the accompanying proxy will vote the shares represented by
the proxies on such matters as determined by a majority of the
Board of Directors.
<PAGE>
The presence of a stockholder at the Annual Meeting will not
automatically revoke such stockholder's proxy. Stockholders may,
however, revoke a proxy at any time prior to its exercise by
delivering to the Company a duly executed proxy bearing a later
date, by attending the Annual Meeting and voting in person, or by
filing a written notice of revocation with Mark J. Brookner, Chief
Financial Officer and Treasurer of the Company, at 3040 Post Oak
Blvd., Suite 222, Houston, Texas 77056.
The cost of soliciting proxies in the form enclosed herewith
will be borne by the Company. In addition to the solicitation of
proxies by mail, the Company, through its directors, officers and
regular employees, may also solicit proxies personally or by
telephone. The Company will also request persons, firms and
corporations holding shares in their names or in the name of their
nominees, which are beneficially owned by others, to send proxy
material to and obtain proxies from such beneficial owners and will
reimburse such holders for their reasonable expenses in doing so.
This Proxy Statement is initially being mailed to stockholders on
or about April 24, 1997.
The securities which can be voted at the Annual Meeting
consist of shares of common stock of the Company with each share
entitling its owner to one vote on all matters. There is no
cumulative voting in the election of directors. The close of
business on April 14, 1997 has been fixed by the Board of Directors
as the record date for determination of stockholders entitled to
vote at the meeting. The number of shares of the Company's common
stock outstanding as of such date was 3,594,715. The presence, in
person or by proxy, of at least a majority of the total number of
outstanding shares of common stock is necessary to constitute a
quorum at the Annual Meeting. Directors of the Company will be
elected by a plurality vote of the votes cast at the Annual
Meeting. The affirmative vote of the holders of at least a
majority of the outstanding shares of the Company's common stock is
required for approval of Proposal 2. Abstentions and broker
non-votes will be treated as votes present for the purpose of
determining a quorum at the Annual Meeting. Broker non-votes will
not be counted as shares entitled to be voted on any matter.
Abstentions will have the same effect as a negative vote on
Proposal 2 since the required affirmative vote is calculated based
on the percentage of outstanding shares.
2<PAGE>
A copy of the Annual Report to Stockholders for the year ended
December 31, 1996 accompanies this Proxy Statement. The Company
has filed an Annual Report on Form 10-KSB for the year ended
December 31, 1996 with the Securities and Exchange Commission (the
"SEC"). Stockholders may obtain, free of charge, a copy of the
Form 10-KSB by writing to U.S. Physical Therapy, Inc., 3040 Post
Oak Blvd., Suite 222, Houston, Texas 77056, Att'n: Investor
Relations.
ELECTION OF DIRECTORS
The Board of Directors is composed of ten members. All
directors hold office until the next annual meeting of stockholders
of the Company and then until their successors have been elected
and qualified. There are no arrangements or understandings between
the Company and any person pursuant to which such person has been
elected as a director.
At the Annual Meeting, ten directors will be elected for one-year terms.
Unless otherwise specified on the proxy, it is the
intention of the persons named in the proxy to vote the shares
represented by each properly executed proxy for the election as
directors of each of the persons named below as nominees of the
Board of Directors. The Board of Directors believes that such
nominees will stand for election and will serve if elected as
directors. However, if any person nominated by the Board of
Directors fails to stand for election or is unable to accept
election, the proxies will be voted for the election of such other
person or persons as the Board of Directors may recommend.
Information As to Nominees
The following table sets forth the names of the Board of
Directors' ten nominees for election as directors. Each of these
persons currently serves as a director of the Company. Also set
forth is certain other information with respect to each such
person's age, the period during which he has served as a director
and positions currently held with the Company.
3<PAGE>
Position(s)
Director Held With
Nominees: Age (a) Since (b) the Company
J. Livingston 59 1990 Chairman of the
Kosberg Board
Roy W. Spradlin 47 1994 President, Chief
Executive Officer
and Director
Mark J. Brookner 52 1990 Chief Financial
Officer, Treasurer
and Director
Nelson Broms 77 1992 Director
Dan C. Arnold 67 1992 Director
George H. Hargrave 54 1990 Director
James B. Hoover 42 1993 Director
Marlin W. Johnston 65 1992 Director
Richard C.W. Mauran 64 1993 Director
Albert L. Rosen 73 1992 Director
(a) At March 31, 1997.
(b) Messrs. Kosberg, Hargrave and Brookner have served as
directors of each corporate predecessor (and subsidiaries
thereof) of the Company since the formation of the original
predecessor, National Rehab Associates, Inc., in June 1990.
Messrs. Hargrave and Brookner also served as officers of all
predecessors (and subsidiaries thereof) of the Company. Mr.
Kosberg served as an officer of certain, but not all,
predecessors (and subsidiaries thereof) of the Company.
The principal occupation of each nominee for the past five
years is set forth below.
4<PAGE>
J. Livingston Kosberg has served as Chairman of the Board of
the Company since April 1992 and as the Company's Chief Executive
Officer from April 1992 to August 1995. From September 1991 to
June 1995, Mr. Kosberg also served as Chairman of the Board and was
employed by CareerStaff Unlimited, Inc., which is a national
provider of temporary rehabilitation therapist staffing. Prior to
April 1992, Mr. Kosberg was primarily engaged in managing personal
investments through a variety of ventures and entities, including
National Rehab Associates, Inc., the Company's predecessor. Mr.
Kosberg was Chairman of the Board from April 1990 to April 1992,
and a member of the Board from May 1993 to March 1994, of
BioMedical Waste Systems, Inc., a medical waste treatment company.
Roy W. Spradlin has served as President and Chief Operating
Officer of the Company since May 1994. Effective August 1995, Mr.
Spradlin was named the Company's Chief Executive Officer. From
1991 to May 1994, Mr. Spradlin was President of outpatient clinics
for Pinnacle Rehabilitation Inc. ("Pinnacle"). Pinnacle is a
wholly-owned subsidiary of Pinnacle Care Inc., which provides
rehabilitation services in nursing homes, hospitals and owned and
operated outpatient physical therapy clinics. From 1988 through
1991, he was the Vice President of outpatient clinics in Missouri
and Kansas for Pinnacle. From 1980 through 1988, he was the
President and owner of North Kansas City Physical Therapy, Inc., a
provider of outpatient rehabilitation services at multiple sites in
the Kansas and Missouri area.
Mark J. Brookner has served as Chief Financial Officer and
Treasurer of the Company since April 1992. From April 1992 through
May 1994, he served as Secretary of the Company. In May 1994, Mr.
Brookner was elected Assistant Secretary of the Company. From
August 1991 through June 1994, Mr. Brookner served as Vice
President of the corporate general partner of Therapists Unlimited,
L.P., a predecessor of CareerStaff Unlimited, Inc. Mr. Brookner
served as Chief Financial Officer of BioMed from April 1990 to
April 1992. Since 1989, Mr. Brookner also has been actively
engaged in private investments with Mr. Kosberg.
Daniel C. Arnold has been engaged primarily in managing
personal investments since April 1988, except for the period
February 1989 to April 1991, when he served as Chairman of the
Board and Chief Executive Officer of Farm & Home Financial
5<PAGE>
Corporation and its wholly-owned subsidiary, Farm & Home Savings
Association. In April 1991, Mr. Arnold retired from these
positions, except that he remained Chairman of the Boards until
retiring as such in October 1991. His directorships in these
institutions terminated on June 30, 1994 upon acquisition by
another company. He also serves as a Director of Parkway
Properties, Inc., a real estate investment trust whose holdings are
predominately office buildings, and Belco Oil & Gas Corp., an oil
and gas exploration and production company.
Nelson Broms has been engaged primarily in managing personal
investments since May 1984. In May 1984, Mr. Broms retired as
Chairman of the Board of Directors, President and Chief Executive
Officer of the Equitable Life Holding Corporation. From August
1993 until June 1994, Mr. Broms was Chairman of the Board of
Directors and Chief Executive Officer of Ultra-Fem, Inc., a
consumer products company. Prior thereto, he was, and continues to
be, Senior Advisor to Primark, Inc., a company engaged in
information systems for financial entities. In 1989, Mr. Broms was
a Senior Advisor to Drexel Burnham Lambert, Inc. Previously a
director of Preferred Health Care, Ltd., Mr. Broms currently serves
as a director of Cortecs International, Ltd., a London-based
biotechnology company, and Mastercare, a managed-care, workers'
compensation company.
George H. Hargrave served as President and Chief Operating
Officer of the Company from April 1992 until May 1994 at which time
he relinquished those responsibilities and was named Vice Chairman
of the Board of Directors. From May 1994 to April 1995, he also has
been employed by the Company in the clinic development and
operations areas. Effective April 1995, Mr. Hargrave continues to
serve as a director of the Company, but no longer serves as Vice
Chairman or is employed by the Company. From August 1991 through
June 1994, Mr. Hargrave served as President of the corporate
general partner of Therapists Unlimited, L.P., a predecessor of
CareerStaff Unlimited, Inc. From 1986 through June 1990, Mr.
Hargrave was Senior Vice President and Chief Operating Officer for
Med Rehab, Inc., a Tallahassee, Florida based company that provided
rehabilitation services in nursing homes and hospitals, and owned
and operated outpatient physical therapy clinics.
6<PAGE>
James B. Hoover has been a general partner of Welsh, Carson,
Anderson & Stowe, a management buyout firm focused on the
acquisition of health care and information services companies since
November 1992. From February 1984 through October 1992, Mr. Hoover
was a general partner with the investment banking firm of
Robertson, Stephens & Company, serving initially as a senior
medical industry research analyst and subsequently as manager of
the firm's health care corporate finance group. Mr. Hoover
presently serves on the Board of Directors of Housecall Medical
Resources, Inc. Mr. Hoover served as a special advisor to the
Board of the Company from April 1992 until February 1993, when he
was elected a director of the Company.
Marlin W. Johnston has been a management consultant with Tonn
& Associates since September 1993. During 1992 and 1993, Mr.
Johnston served as a management consultant to the Texas Department
of Health and the Texas Department of Protective and Regulatory
Services. From May 1989 to March 1991, he served as Senior Account
Executive of ACS TransFirst, which provides transaction processing
and electronic benefit transfer services to health and human
services agencies.
Richard C.W. Mauran has been engaged primarily in managing
personal investments for more than the past five years. Mr. Mauran
was appointed a director of the Company in August 1993. He also
serves on the Board of Directors of French Fragrances Inc., a
perfume company.
Albert L. Rosen retired as President and General Manager of
the San Francisco Giants major league baseball team in December
1992. He had served in such position since September 1985.
From 1982 to December 1988, Mr. Kosberg served as Chairman of
the Boards of Directors of First Texas Savings Association ("First
Texas") and of Gibraltar Savings Association ("Gibraltar"), a
subsidiary of First Texas. From 1983 to December 1988 and from
1984 to December 1988, respectively, Mr. Brookner served as Chief
Financial Officer of First Texas and of Gibraltar. During the
later years of these periods he also served as Vice Chairman of
First Texas and of Gibraltar. Both First Texas and Gibraltar were
placed in receivership in December 1988. In December 1992, Messrs.
Kosberg and Brookner, along with the eight other former directors
7<PAGE>
and advisory directors of First Texas and Gibraltar, agreed to make
monetary payments to the Federal Deposit Insurance Corporation, as
receiver (the "FDIC"), in settlement of certain claims made by the
FDIC and the Office of Thrift Supervision ("OTS") in connection
with such persons' prior service with First Texas and Gibraltar.
Neither Messrs. Kosberg or Brookner nor any of the other persons
admitted any of the allegations that were the basis of the FDIC and
OTS claims. The settlement agreement with the FDIC settled certain
unspecified claims the FDIC was prepared to assert through
litigation relating to or arising out of the performance or
nonperformance of the duties of certain officers, directors and
advisory directors of First Texas and Gibraltar, including Messrs.
Kosberg and Brookner. The OTS order settling its claims against
Messrs. Kosberg and Brookner alleged that they had engaged in
unsafe and unsound practices, conflicts of interest and breaches of
fiduciary duties.
In settling with the FDIC and OTS, Mr. Kosberg agreed to pay
to the FDIC $1,192,877, net of the value attributed by the FDIC and
OTS to certain stock options in a data processing company formerly
owned primarily by First Texas and Gibraltar which Mr. Kosberg
received as part of the settlement. Mr. Kosberg also agreed to
certain profit sharing with the FDIC in the event such data
processing company became publicly traded within three years from
the settlement at a price in excess of his costs relating to the
stock underlying the options. In April 1995, Mr. Kosberg paid the
FDIC $1,696,200 in full satisfaction of such profit sharing amount.
In settling with the OTS, Mr. Kosberg also consented to an order in
which he agreed not to participate in the affairs of an insured
depository institution except with the prior approval of federal
banking authorities. Mr. Brookner paid the FDIC $200,000 in
settlement of the FDIC and OTS claims. In June 1990, Mr. Brookner
consented to the entry by the OTS of an order removing him as an
institution-affiliated party of Farm & Home Savings Association,
Nevada, Missouri, and prohibiting him from participating in the
conduct of the affairs of any insured depository institution
without prior regulatory approval. Mr. Brookner has advised the
Company that he believes that the OTS sought the order because of
his affiliation with First Texas and Gibraltar.
8<PAGE>
Corporate Governance and Other Matters
The Board of Directors has appointed an Audit Committee whose
members currently consist of Messrs. Broms and Johnston. The Audit
Committee is responsible for engaging the Company's independent
auditors and reviewing with them the scope and timing of their
audit services and any other services they are asked to perform,
their report on the Company's financial statements following
completion of their audit and the Company's policies and procedures
with respect to internal accounting and financial controls. The
Audit Committee met one time during 1996.
The Board has a Compensation Committee, the current members of
which are Messrs. Arnold, Rosen and Hoover. The Compensation
Committee reviews matters concerning compensation of employees of
the Company. During 1996, the Compensation Committee held two
meetings.
In November 1994, the Board of Directors established the
Executive Committee whose members are Messrs. Kosberg, Arnold and
Hoover. The Executive Committee assists management by providing
advice and recommendations when needed and performs such other
services as delegated by the Board of Directors. During 1996, the
Executive Committee did not hold any meetings.
There is no separate Nominating Committee of the Board of
Directors.
During 1996, the Company's Board of Directors held four
meetings. No incumbent director attended fewer than 75% of the
total number of meetings of the Board of Directors of the Company
and of all committees of the Board of Directors of the Company on
which he served, except Mr. Mauran who attended two of four
meetings.
Compensation of Directors
Directors who are also employees of the Company are not
compensated separately for serving on the Board. Each of the
Company's directors who are not employees of the Company received
$3,500 for attendance at each regular meeting of the Board of
9<PAGE>
Directors. Directors are also reimbursed for their out-of-pocket
travel and related expenses incurred in attending all Board and
committee meetings. In November 1996, Messrs. Arnold, Broms,
Hoover, Johnston, Rosen and Mauran each received ten-year non-qualified options
to purchase 6,000 shares of the Company's common
stock. The exercise price of these options, which were granted
under the Company's 1992 Stock Option Plan, is $10.25 per share.
Mr. Kosberg received $75,000 for serving as Chairman of the Board
in 1996, pursuant to the terms of an employment agreement which
expired on August 16, 1996.
EXECUTIVE COMPENSATION
Compensation
The following table shows the compensation paid by the Company
and its subsidiaries during 1996, 1995 and 1994 to the Company's
Chief Executive Officer and the Company's other executive officer
(the "named executive officers").
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
Name and Securities
Principal Fiscal Underlying
Position(s) Year Salary Bonus($) Options(#)
Roy W. Spradlin (a) 1996 $150,000 $ 30,000 15,000
President and Chief 1995 125,000 25,000 50,000
Executive Officer 1994 77,725 20,000 80,000
Mark J. Brookner 1996 125,000 20,000 10,000
Chief Financial 1995 110,000 15,000 15,000
Officer and
Treasurer 1994 110,000 10,000 --
(a) Mr. Spradlin became President and Chief Operating Officer in
May 1994. In August 1995, he was named Chief Executive
Officer.
10<PAGE>
Option Grants
The following table contains information with respect to
grants of stock options to each of the named executive officers
during the year ended December 31, 1996.
Option Grants in 1996 Fiscal Year
Individual Grants
Number of
Securities % of Total
Underlying Options Exercise
Options Granted to or Base
Granted Employees In Price Expiration
Name (*)(a) Fiscal Year ($/SH) Date
Roy W. Spradlin 15,000 22% $9.25 8/14/06
Mark J. Brookner 10,000 14% 9.25 8/14/06
(a) The options vest one-fourth on each of the second, third,
fourth and fifth anniversaries of the date of grant. Vesting
will be accelerated in the event of a "change in control" of
the Company (defined generally as the acquisition of 50% or
more of the Company's outstanding voting stock, a change in a
majority of the Board of Directors or a merger, consolidation
or acquisition of all or substantially all of the assets of
the Company), subject to certain limitations if vesting would
result in adverse tax consequences to the optionee. The
option exercise price equaled the fair market value of a share
of the Company's common stock on the dates of grant, as
determined in accordance with the Company's 1992 Stock Option
Plan.
Option Exercises and Holdings
The following table sets forth the 1996 year-end value of all
unexercised in-the-money options held by the named executive
officers. No options were exercised by any of the named executive
officers during 1996.
11<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
Value of Securities
Underlying Unexercised
Number of Securities In-the-Money Options
Underlying Unexercised at FY-End ($)(a)
Options At FY-End (#) Exercisable/
Name Exercisable/Unexercisable Unexercisable
Roy W. Spradlin 12,500/132,500 $37,500/$148,000
Mark J. Brookner 12,500/47,500 6,250/28,050
(a) Market value of underlying securities at year-end of $9.75 per
share minus the exercise or base price of in-the-money options
at year-end.
Employment Agreements
Mr. Spradlin has entered into an amended and restated
employment agreement with the Company dated as of February 21,
1997, which supersedes his prior employment agreement entered into
as of May 18, 1994. Under his new employment agreement, Mr.
Spradlin is employed as President and Chief Executive Officer for
a five-year term ending on February 21, 2002. Pursuant to the
terms of his new employment agreement, Mr. Spradlin will receive an
annual salary in 1997 of $165,000. Additionally, Mr. Spradlin is
eligible to receive cash bonuses payable at the discretion of the
Board of Directors and, subject to conditions of eligibility, is
entitled to participate in any employee benefit plans adopted by
the Company. Mr. Spradlin's new employment agreement may be
terminated by the Company prior to the expiration of its five-year
term in the event (i) he becomes disabled for 90 consecutive days
or (ii) his employment is terminated for "cause" (as defined in the
agreement). In the event that (i) Mr. Spradlin's employment is
terminated without "cause," (ii) the Company sells all or
substantially all of its assets, (iii) more than 50% of the
Company's outstanding common stock is transferred or sold by the
Company's stockholders, (iv) the Company completes a merger or
12<PAGE>
consolidation in which the stockholders of the Company immediately
prior to the merger or consolidation own less than 50% of the
surviving company or (v) the Company is dissolved in a voluntary or
involuntary dissolution, Mr. Spradlin would be entitled to receive
a lump sum termination/severance benefit equal to one and one-half
times his annual salary plus bonus for the then most recent 12-month period.
Under his new employment agreement, in the event of
his death, Mr. Spradlin's heirs or beneficiaries would become
entitled to receive a payment equal to one year's annual salary.
Mr. Spradlin's new employment agreement further contains a covenant
not to compete during its five-year term and for two years (reduced
to one year after an event described in clauses (ii)-(iv) above,
unless he continues to be employed after such event) thereafter.
Mr. Brookner previously had a five-year employment agreement
with the Company which expired on August 16, 1996.
Certain Transactions
In May 1994, the Company completed the issuance and sale of
$3,000,000 aggregate principal amount of 8% Convertible
Subordinated Notes, Series C due June 30, 2004 (the "Series C
Notes"). The Series C Notes were issued at par in a private
placement to Sloan Financial Corporation ("Sloan Financial"), a
company which is controlled by one of the Company's directors, Mr.
Richard C. W. Mauran. The Series C Notes are convertible, at the
option of the holder, into the number of whole shares of common
stock of the Company determined by dividing the principal amount
converted by $10.00, subject to adjustment upon the occurrence of
certain events. Interest on the Series C Notes is payable at a
rate of 8% per annum, payable quarterly. Holders of Series C Notes
also have certain registration rights with respect to the
underlying common shares. Sloan Financial also owns $2,000,000
aggregate principal amount of the Company's 8% Convertible
Subordinated Notes due June 30, 2003 (the "Notes"), which were
issued by the Company at par in June 1993. The conversion price of
the Notes is also $10.00, subject to adjustment as provided in the
Notes. Interest on the Notes is also payable quarterly at an
annual rate of 8%, and holders of the Notes possess certain
registration rights with respect to the underlying shares. See
"Principal Holders of Voting Securities."
13<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and officers to file with the SEC initial
reports of ownership of the Company's equity securities and to file
subsequent reports when there are changes in such ownership. The
Company believes that during 1996 all Section 16(a) filing
requirements applicable to the Company's directors and officers
were complied with on a timely basis.
APPROVAL OF AMENDMENTS TO 1992 STOCK OPTION PLAN
(Proposal 2)
The Company maintains two stock option plans: the 1992 Stock
Option Plan, as amended (the "1992 Option Plan") and the Executive
Stock Option Plan ("Executive Option Plan"). A total of 550,000
shares of common stock (subject to adjustment for changes in
capitalization) are currently reserved for issuance upon the
exercise of stock options granted under the 1992 Option Plan to key
employees, officers and directors of the Company or any of its
affiliates. A total of 200,000 shares of common stock (subject to
adjustment for changes in capitalization) are currently reserved
for issuance upon the exercise of stock options granted under the
Executive Option Plan to officers of the Company or any of its
affiliates. The purposes of the 1992 and Executive Option Plans
are to provide an incentive for eligible individuals to remain in
the employ or service of the Company or its affiliates, to extend
to them the opportunity to acquire a proprietary interest in the
Company so that they will apply their best efforts for the benefit
of the Company and to aid the Company in attracting able persons to
serve the Company and its affiliates.
Proposed Amendments to 1992 Option Plan
The Board of Directors has voted, subject to stockholder
approval at the Annual Meeting, to amend the 1992 Option Plan to
(i) specify that options covering no more than 50,000 shares of
common stock of the Company may be granted to any officer or other
employee during any calendar year and (ii) increase by 95,000 (from
550,000 to 645,000) the number of shares of common stock reserved
for issuance upon exercise of options granted under the 1992 Option
Plan (in each case, subject to adjustment for stock dividends,
stock splits and the like as provided in the 1992 Option Plan).
14<PAGE>
The limitation on the maximum number of shares of common stock that
may be granted to any employee in a calendar year is a consequence
of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code") effective for fiscal years from 1994 forward under
which no deduction is allowed for annual compensation in excess of
$1 million paid by a publicly traded corporation to its chief
executive officer and the four other most highly compensated
officers. Under Section 162(m), there is no limitation on the
deductibility of "qualified performance-based compensation." To
satisfy this definition: (i) the compensation must be paid solely
on account of the attainment of one or more pre-established,
objective performance goals; (ii) the performance goals under which
compensation is paid must be established by a compensation
committee comprised solely of two or more directors who qualify as
"outside directors" for purposes of the exception; (iii) the
material terms under which the compensation is to be paid must be
disclosed to and subsequently approved by shareholders of the
corporation before payment is made in a separate vote; and (iv) the
compensation committee must certify in writing before payment of
the compensation that the performance goals and any other material
terms were in fact satisfied. Under Treasury regulations, in the
case of compensation attributable to stock options, the performance
goal requirement (summarized in (i) above) is deemed satisfied, and
the certification requirement (summarized in (iv) above) is
inapplicable, if: (i) the grant or award is made by a compensation
committee satisfying the above requirements; (ii) the plan under
which the option is granted states the maximum number of shares
with respect to which options may be granted during a specified
time period to an employee; and (iii) under the terms of the
option, the amount of compensation is based solely on an increase
in the value of the stock after the date of grant. In the event
the proposed amendments to the 1992 Option Plan are not approved by
the stockholders at the Annual Meeting, no option grants will be
made under the Plan to anyone who is an executive officer of the
Company at the time of the grant.
The 95,000 share increase in the shares reserved for issuance
under the 1992 Option Plan represents the number of remaining
shares available for grant under the Executive Option Plan.
Because the per share exercise price of options granted under the
Executive Option Plan may be no less than 175% of fair market value
of a share of Company common stock on the date of grant (as opposed
15<PAGE>
to not less than fair market value for incentive options and not
less than par value for non-qualified options granted under the
1992 Plan), the Board of Directors believes that officers of the
Company and its affiliates who are eligible to receive option
grants under the Executive Option Plan are not provided with an
appropriate incentive to expend maximum effort on behalf of the
Company. Accordingly, the Board has amended the 1992 Option Plan
to increase the shares reserved thereunder by the same number of
shares remaining available for grant under the Executive Option
Plan, subject to stockholder approval of such increase at the
Annual Meeting. If such increase is approved by the stockholders
at the Annual Meeting, no further grants of options will be made
under the Executive Option Plan. The proposed increase also will
assure that a meaningful number of shares will be available for
future grant to key employees, officers and directors of the
Company and its affiliates under the 1992 Option Plan.
At March 31, 1997, a total of 55,250 shares of common stock
remained available for future grant under the 1992 Option Plan. At
March 31, 1997, a total of 40 key employees, officers and directors
of the Company and its affiliates were eligible to participate in
the 1992 Option Plan. Based on the closing bid price of the
Company's common stock on March 31, 1997 of $9 5/8, the aggregate
market value of the 95,000 additional shares to be reserved under
the 1992 Option Plan is $914,375.
Required Vote
The approval by the affirmative vote of a majority of the
outstanding shares is required to approve the proposed amendments
to the 1992 Option Plan to (i) specify that options covering no
more than 50,000 shares of common stock of the Company may be
granted to any officer or other employee during any calendar year
and (ii) increase by 95,000 (from 550,000 to 645,000) the number of
shares of common stock reserved for issuance upon exercise of
options granted under the 1992 Option Plan. The Board recommends
a vote FOR approval of such amendments.
16<PAGE>
Description of the 1992 Option Plan
The principal provisions of the 1992 Stock Option Plan are
summarized below under the caption "Description of the 1992 Option
Plan." Such summary does not, however, purport to be complete and
is qualified in its entirety by the terms of the 1992 Option Plan.
Shareholders may obtain, free of charge, a copy of the 1992 Option
Plan by writing Mark J. Brookner, Chief Financial Officer and
Treasurer, U.S. Physical Therapy, Inc., 3040 Post Oak Blvd., Suite
222, Houston, Texas 77056.
The 1992 Option Plan provides for the grant of options that
are intended to qualify as "incentive stock options" under Section
422 of the Code as well as non-qualified options. The 1992 Option
Plan is administered by the Stock Option Committee ("Option
Committee"), which is appointed by the Board of Directors. The
Option Committee selects the key employees, officers and directors
of the Company and its affiliates to whom options are granted. The
current members of the Option Committee are Messrs. Kosberg and
Hargrave. The Company will need to reconstitute the Option
Committee in order to satisfy the requirements of Section 162(m) of
the Code.
Incentive stock options (those intended to qualify for special
tax treatment under the Code) granted under the 1992 Option Plan
are granted at a per share exercise price of not less than the fair
market value of a share of common stock on the date of grant. The
exercise prices of non-qualified options granted under the 1992
Option Plan are determined by the Option Committee upon each grant
(but may not be less than the par value of a share of the Company's
common stock). The Option Committee determines which eligible
individuals receive options and how many are issued. The maximum
option term for an incentive option is 10 years from the date of
grant. No incentive option may be granted more than 10 years after
the effective date of the 1992 Option Plan. No person may be
granted an incentive option if, at the time of the grant, such
person owns, directly or indirectly, more than 10% of the total
combined voting power of the Company or of any affiliate unless the
option price is at least 110% of the fair market value of the
common stock on the date of grant of the option and the exercise
period of such incentive option is by its terms limited to five
17<PAGE>
years. Payment for shares purchased under the 1992 Option Plan may
be made either in cash or cash equivalents or by exchanging shares
of common stock of the Company with a fair market value equal to or
less than the total option price plus cash for any difference, as
determined in the discretion of the Option Committee.
If an employee's employment with the Company or an affiliate
terminates by reason of death or disability, his or her options, to
the extent then exercisable, may be exercised within one year after
such death or disability. If the optionee's employment terminates
for any reason other than death or disability, options held by such
optionee terminate 30 days after the date of such termination
unless otherwise provided in the option agreement. The Option
Committee may extend the period during which the options may be
exercised.
Options granted under the 1992 Option Plan are exercisable
during an optionee's lifetime only by the optionee or the
optionee's guardian or legal representative. Options are not
transferable other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as
defined in the Internal Revenue Code or Title I of the Employee
Retirement Income Security Act or the rules thereunder. Further,
shares of common stock issued upon exercise of an option may not be
transferred until after six months from the date the option is
granted.
Subject to the terms and conditions of and within the
limitations of the 1992 Option Plan, the Option Committee may
modify, extend or renew outstanding options granted under the 1992
Option Plan, or accept the surrender of options and authorize the
granting of new options under the 1992 Option Plan in substitution
therefor.
If the outstanding shares of the Company's common stock are
increased or decreased by reason of a stock dividend or split,
combination, exchange of shares, or other recapitalization, merger
or otherwise, in which the Company is the surviving corporation, or
by reason of a spin-off of a part of the Company into a separate
entity, or assumptions and conversions of outstanding grants due to
the acquisition by the Company of a separate entity, an appropriate
and proportionate adjustment will be made in the aggregate number
18<PAGE>
and class of the reserved shares, in the number and class of shares
subject to each outstanding option, and the per share exercise
price of each outstanding option shall be automatically adjusted to
equitably reflect the effect of such change.
Adjustments to account for changes in capitalization will be
made by the Board, whose determination in that respect will be
conclusive. No fractional shares of common stock will be issued
under the 1992 Option Plan on account of any such adjustment, and
any fractions resulting from any such adjustment will be rounded
downward to the nearest whole share.
Except as otherwise provided in the option agreement, upon any
dissolution or liquidation of the Company, or upon a merger or
consolidation in which the Company is not the surviving
corporation, or upon any transaction by a third party which results
in any person owning 50% or more of the total combined voting power
of all classes of stock of the Company, the 1992 Option Plan and
the options issued thereunder will terminate, unless provision is
made in connection with such transaction for the continuation of
the Plan and/or the assumption of the options or for the
substitution for such options of new options covering the stock of
a successor corporation or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kinds of shares and
the per share exercise price. In the event of such termination,
all outstanding options shall be exercisable in full during such
period immediately prior to the occurrence of such termination as
the Board of Directors in its discretion shall determine.
The Board of Directors of the Company at any time may amend
the 1992 Option Plan as to shares of common stock as to which
options have not been granted. However, the approval of the
Company's stockholders is required for any amendment that would
(1) increase the aggregate number of shares of common stock as to
which options may be granted (other than adjustments upon changes
in capitalization); (2) increase the maximum period during which
options may be exercised; or (3) extend the effective period of the
1992 Option Plan. The Board at any time may terminate or suspend
the 1992 Option Plan. No termination, suspension or amendment of
the Plan may, without the consent of the optionee to whom an option
has been granted, alter or impair any of the rights of the holder
of the option.
19<PAGE>
At March 31, 1997, there were warrants outstanding to purchase
a total of 120,000 shares of Company common stock. The exercise
price of the warrants is $8.125 per share. The exercise price of
the warrants and number of shares of common stock issuable upon
exercise thereof are subject to adjustment in certain
circumstances, including the grant of stock options out of the
additional 95,000 shares to be reserved for issuance under the 1992
Option Plan at exercise prices below the fair market value of the
Company's common stock or below the exercise price of the warrants.
The Company does not currently anticipate granting any options out
of the additional 95,000 shares at exercise prices below the fair
market value of the Company's common stock.
Federal Income Tax Consequences of the 1992 Option Plan
The grant of an option will not be a taxable event for the
optionee or the Company.
Incentive Options. An optionee will not recognize taxable
income upon exercise of an incentive option, and any gain realized
upon a disposition of shares of stock received pursuant to the
exercise of an incentive option will be taxed as long-term capital
gain if the optionee holds the shares for at least two years after
the date of grant and for one year after the date of exercise.
However, the excess of the fair market value of stock subject to an
incentive option on the exercise date over the option exercise
price will be included in the optionee's alternative minimum
taxable income in the year of exercise (or, if the optionee is
subject to certain securities law restrictions, in the year in
which such restrictions expire, unless the optionee elects within
30 days following exercise to have income determined without regard
to such restrictions) for purposes of the alternative minimum tax.
An optionee may be entitled to a credit against regular tax
liability in future years for minimum taxes paid with respect to
the exercise of incentive options. The Company will not be
entitled to any business expense deduction with respect to the
grant or exercise of an incentive option, except as discussed
below.
For the exercise of an option to qualify for the foregoing tax
treatment, the optionee generally must be an employee of the
Company or a corporate subsidiary from the date the option is
20<PAGE>
granted through a date within three months before the date of
exercise of the option. In the case of an optionee who is
disabled, the three-month period for exercise following termination
of employment is extended to one year. In the case of an employee
who dies, the time for exercising incentive stock options after
termination of employment and the holding period for stock received
pursuant to the exercise of the option are waived.
If all of the foregoing requirements are met except for the
one-year or two-year holding period mentioned above, the optionee
will recognize ordinary income upon the disposition of the stock in
an amount equal to the excess of the fair market value of the stock
at the time the option was exercised over the option exercise
price. The balance of the realized gain, if any, will be capital
gain. The employer corporation will be allowed a business expense
deduction to the extent the optionee recognizes ordinary income,
except that no deduction will be allowed for compensation in any
one year paid to the chief executive officer and the four other
most highly compensated executive officers of the Company to the
extent such compensation does not satisfy the requirements of
Section 162(m) of the Code.
If an optionee exercises an incentive option by tendering
shares of common stock with a fair market value equal to part or
all of the option exercise price, the exchange of shares will be
treated as a nontaxable exchange (except that this treatment would
not apply if the optionee had acquired the shares being transferred
pursuant to the exercise of an incentive option and had not
satisfied the special holding period requirements summarized
above). If the exercise is treated as a tax free exchange, the
optionee would have no taxable income from the exchange and
exercise (other than minimum taxable income as discussed above) and
the tax basis of the shares exchanged would be treated as the
substituted basis for the shares received. If the optionee used
shares received pursuant to the exercise of an incentive option (or
another statutory option) as to which the optionee had not
satisfied the applicable holding period requirement, the exchange
would be treated as a taxable disqualifying disposition of the
exchanged shares.
21<PAGE>
Non-qualified Options. Upon exercising a non-qualified
option, an optionee will recognize ordinary income in an amount
equal to the difference between the exercise price and the fair
market value of the stock on the date of exercise (or, if the
optionee is subject to certain restrictions imposed by the
securities laws, upon the lapse of those restrictions, unless the
optionee makes a special tax election within 30 days after exercise
to have income determined without regard to the restrictions). If
the employer corporation complies with applicable reporting
requirements, it will be entitled to a business expense deduction
in the same amount and generally in the same year as the optionee
recognizes ordinary income. Upon a subsequent sale or exchange of
shares acquired pursuant to the exercise of a non-qualified option,
the optionee will have taxable gain or loss, measured by the
difference between the amount realized on the disposition and the
tax basis of the shares (generally, the amount paid for the shares
plus the amount treated as ordinary income at the time the option
was exercised), except that no deduction will be allowed for
compensation in any one year paid to the chief executive officer
and the four other most highly compensated executive officers of
the Company to the extent such compensation does not satisfy the
requirements of Section 162(m) of the Code.
If the optionee surrenders shares of common stock in payment
of part or all of the exercise price for non-qualified options, no
gain or loss will be recognized with respect to the shares
surrendered (regardless of whether the shares were acquired
pursuant to the exercise of an incentive option) and the optionee
will be treated as receiving an equivalent number of shares
pursuant to the exercise of the option in an nontaxable exchange.
The basis of the shares surrendered will be treated as the
substituted tax basis for an equivalent number of option shares
received and the new shares will be treated as having been held for
the same holding period as had expired with respect to the
transferred shares. The difference between the aggregate option
exercise price and the aggregate fair market value of the shares
received pursuant to the exercise of the option will be taxed as
ordinary income. The employer corporation will be entitled to a
deduction as described above. The optionee's basis in the
additional shares will be equal to the amount included in the
optionee's income.
22<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP acts as the Company's independent public
accountants. Representatives of Ernst & Young LLP are expected to
be present at the Annual Meeting. They will be given an
opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
STOCK OWNED BY MANAGEMENT
The following table sets forth information as of April 14,
1997 with respect to the shares of the Company's common stock
beneficially owned by each director of the Company, each of the
named executive officers and by all directors and executive
officers as a group. Except as otherwise indicated, the business
address of each such person is 3040 Post Oak Blvd., Suite 222,
Houston, Texas 77056.
Name and Amount and Percent of
Address of Nature of Common
Beneficial Beneficial Stock
Owner Ownership (a) Outstanding
Daniel C. Arnold, Director
1001 Fannin Street,
Suite 1220
Houston, TX 77002 117,500 (b) 3.22%
Nelson Broms, Director
305 Main Street
Ridgefield, CT 06877 36,500 1.01
Mark J. Brookner,
Chief Financial Officer,
Treasurer and Director 102,500 2.83
George H. Hargrave,
Director
505 Moraine Way
Heath, TX 75087 167,000 4.65
23<PAGE>
James B. Hoover, Director
Welsh, Carson, Anderson
& Stowe
One World Financial
Center, Suite 3601
New York, NY 10281 69,000(c) 1.90
Marlin W. Johnston, Director
Arboretum Plaza One, #350
9442 Capital of Texas
Highway North
Austin, TX 78759 41,000 1.13
J. Livingston Kosberg,
Chairman of the Board 498,330(d) 13.86
Richard C.W. Mauran,
Director
Sloan Financial Corporation
31 Burton Ct.
Franklins Row
London, SW 3, England 520,000(d) 12.76
Albert L. Rosen, Director
15 Mayfair Drive
Rancho Mirage, CA 92270 79,000 2.18
Roy W. Spradlin, President,
Chief Executive Officer
and Director 18,750 --
All directors and
executive officers as a
group (10 persons) 1,655,580 38.06
* Less than 1%.
(a) In accordance with Rule 13d-3 under the Securities Exchange
Act of 1934 (the "1934 Act"), a person is deemed to be the
beneficial owner, for purposes of this table, of any shares of
the Company's common stock if he has or shares voting power or
24<PAGE>
investment power with respect to such security, or has the
right to acquire beneficial ownership at any time within 60
days from April 14, 1997. As used herein, "voting power" is
the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the
disposition of shares. All persons shown in the table above
have sole voting and investment power, unless otherwise
indicated. This table includes 237,250 shares of common stock
subject to outstanding options which are exercisable within 60
days from April 14, 1997. Of such shares, Messrs. Arnold,
Broms, Brookner, Hoover, Johnston, Spradlin, Mauran and Rosen,
hold options to purchase 39,000, 29,000, 27,500, 39,000,
29,000, 18,750, 26,000 and 29,000 shares, respectively. This
table also includes 217,500 shares that can be acquired upon
conversion of $2,175,000 aggregate principal amount of the
Company's outstanding 8% Convertible Subordinated Notes due
June 30, 2003 and 300,000 shares that can be acquired upon
conversion of $3,000,000 aggregate principal amount of the
Company's outstanding 8% Convertible Subordinated Notes,
Series C due June 30, 2004.
(b) Includes 50,000 shares owned by the Arnold Family Limited
Partnership; 16,000 shares owned by the Bintliff 1990 Limited
Partnership; and 12,500 shares that can be acquired upon
conversion of $125,000 aggregate principal amount of the
Company's outstanding 8% Subordinated Notes due June 30, 2003
held by the Arnold Family Limited Partnership. Mr. Arnold is
the managing general partner of the Arnold Family Limited
partnership and a general partner of the Bintliff 1990 Limited
Partnership. As such, he has shared voting and dispositive
power over the shares held by the two partnerships. Mr.
Arnold disclaims beneficial ownership of these securities
except to the extent of his pecuniary interest therein. Such
amount excludes 50,000 shares owned by Mr. Arnold's wife, of
which Mr. Arnold disclaims beneficial ownership.
(c) Includes 5,000 shares that can be acquired upon conversion of
$50,000 aggregate principal amount of the Company's
outstanding 8% Convertible Subordinated Notes due June 30,
2003 owned by Mr. Hoover.
(d) See "Principal Holders of Voting Securities."
25<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information as of April 14, 1997
with respect to the ownership of shares of common stock by the
persons known to management to be the beneficial owners of more
than 5% of the Company's outstanding common stock. The information
is based on the most recent statements on Schedule 13D or 13G filed
on behalf of such persons or on other information available to the
Company.
Amount and
Nature of Percent of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership Outstanding
J. Livingston Kosberg
3040 Post Oak Blvd.,
Suite 222
Houston, Texas 77056 498,330(a) 13.86%
Clarence E. Mayer
5847 San Felipe,
Suite 1700
Houston, Texas 77057 337,500(b) 9.39%
Richard C.W. Mauran
Sloan Financial
Corporation
31 Burton Ct.
Franklins Row
London, SW 3, England 520,000(c) 12.76%
(a) The Schedule 13G of Mr. Kosberg dated February 16, 1993 states
that such amount includes 56,250 shares held by the Dolores
Wilkenfeld Trust and 442,080 shares held by the Livingston
Kosberg Trust. Mr. Kosberg is the trustee of both trusts and
the income beneficiary of the Livingston Kosberg Trust. Mr.
Kosberg does not hold any shares individually in his own name.
The reported share amount excludes 1,170 shares held by Mr.
Kosberg's wife and 48,000 shares held by Mr. Kosberg's three
children and their spouses. Mr. Kosberg disclaims beneficial
ownership of such shares.
26<PAGE>
(b) The Schedule 13D of Mr. Mayer dated February 16, 1993 states
that he has sole voting and dispositive power over the entire
number of such shares.
(c) Includes 200,000 shares of Company common stock that may be
acquired by Sloan Financial Corporation ("Sloan Financial"),
of which Mr. Mauran is the controlling stockholder, upon
conversion of $2,000,000 aggregate principal amount of the
Company's outstanding 8% Convertible Subordinated Notes due
June 30, 2003 owned by Sloan Financial and 300,000 shares of
Company common stock that may be acquired by Sloan Financial
upon conversion of $3,000,000 aggregate principal amount of
the Company's outstanding 8% Convertible Subordinated Notes,
Series C, due June 30, 2004 owned by Sloan Financial. The
Schedule 13D of Sloan Financial and Mr. Mauran states that
they possess shared voting and shared dispositive power over
the entire number of such shares. Also includes 20,000
director options held by Mr. Mauran.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
TO BE PRESENTED AT 1998 ANNUAL MEETING OF STOCKHOLDERS
Any proposal intended to be presented by any stockholder for
action at the 1998 Annual Meeting of Stockholders of the Company
must be received by the Company on or before December 26, 1997 in
order for the proposal to be considered for inclusion in the proxy
statement and form of proxy relating to the 1998 Annual Meeting.
Nothing in this paragraph shall be deemed to require the Company to
include in its proxy statement and form of proxy relating to the
1998 Annual Meeting any stockholder proposal which does not meet
all of the requirements for inclusion established by the SEC in
effect at the time such proposal is received.
27<PAGE>
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors
of the Company does not know of any other matters to be presented
for action by the stockholders at the 1998 Annual Meeting. If,
however, any other matters not now known are properly brought
before the meeting, the persons named in the accompanying proxy
will vote such proxy in accordance with the determination of a
majority of the Board of Directors.
By Order of the Board of Directors
/s/ Mark J. Brookner
Mark J. Brookner
Chief Financial Officer and Treasurer
Houston, Texas
April 24, 1997
28<PAGE>
U.S. PHYSICAL THERAPY, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- May 20, 1997
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of U.S. Physical Therapy, Inc.
(the "Company") hereby appoints J. Livingston Kosberg and Mark J.
Brookner, and each of them, with full power of substitution in
each, as proxies to cast all votes, as designated below, which the
undersigned stockholder is entitled to cast at the 1997 Annual
Meeting of Stockholders of the Company to be held on Tuesday, May
20, 1997, at 10:00 a.m. (EDT), at the Rihga Royal Hotel, 151 West
54th Street, New York, New York, and at any adjournments thereof,
upon the following matters.
This proxy will be voted as directed by the undersigned
stockholder. UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1, FOR
PROPOSAL 2 AND IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY
OF THE BOARD OF DIRECTORS AS TO OTHER MATTERS.
The undersigned stockholder hereby acknowledges receipt of the
Notice of Annual Meeting and Proxy Statement, and hereby revokes
any proxy or proxies heretofore given. This proxy may be revoked
at any time before its exercise.
(continued and to be signed and dated on reverse side)
<PAGE>
1. Election of ten directors for one-year terms. Nominees: J.
Livingston Kosberg, Roy W. Spradlin, Mark J. Brookner, Daniel
C. Arnold, Nelson Broms, George H. Hargrave, James B. Hoover,
Marlin W. Johnston, Richard C.W. Mauran and Albert L. Rosen.
FOR all nominees listed WITHHOLD AUTHORITY
above (except as marked to vote for all nominees
to the contrary below). listed.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, print that nominee's name on the space provided below.)
___________________________________________
2. Approval under the Company's 1992 Stock Option Plan of (i)
50,000 share limit on the maximum number of shares subject to
stock options that may be granted to any officer or employee
during any calendar year and (ii) 95,000 share increase in the
number of shares reserved for issuance.
FOR AGAINST ABSTAIN
3. As determined by a majority of the Company's Board of
Directors, the proxies are authorized to vote upon such other
business as may properly come before the meeting, or any
adjournments thereof.
Please date and sign exactly as
name appears hereon and return in
the enclosed envelope.
Date:_________________________
______________________________
Signature of Stockholder or
Authorized Representative
(Only one signature is required
in the case of stock ownership
in the name of two or more
persons.
A-2
