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 ss. 240.14a-11(c) or ss. 240.14a-12
HENLEY HEALTHCARE, INC.
(Name of Registrant as specified in its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which the transaction
applies: NOT APPLICABLE
(2) Aggregate number of securities to which the transaction
applies: NOT APPLICABLE
(3) Per unit price or other underlying value of the transaction
computed pursuant to Exchange Act Rule 0-11: NOT APPLICABLE
(4) Proposed maximum aggregate value of the transaction:
NOT APPLICABLE
|_| 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: NOT APPLICABLE
(2) Form, Schedule or Registration Statement Number:
NOT APPLICABLE
(3) Filing Party: NOT APPLICABLE
(4) Date Filed: NOT APPLICABLE
<PAGE>
HENLEY HEALTHCARE, INC.
120 INDUSTRIAL BOULEVARD
SUGAR LAND, TEXAS 77478
June 19, 1998
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders (the
"Annual Meeting") of Henley Healthcare, Inc. (the "Company") to be held on
Friday, July 17, 1998 at 10:00 a.m., Houston, Texas time, at the Sweetwater
Country Club, Salon B, located at 4400 Palm Royale Boulevard, Sugar Land, Texas
77479.
At the Annual Meeting you will be asked to elect six directors of the
Company. In view of the importance of this action to be taken at the Annual
Meeting, you are urged to read the accompanying Proxy Statement carefully, and
regardless of the number of shares you own, we request that you complete, sign
date and return the enclosed Proxy Card promptly in the accompanying prepaid
envelope. You may, of course, attend the Annual Meeting and vote in person, even
if you have previously returned your Proxy Card. The Company's Board of
Directors believes that the election of each of the director-nominees is in the
best interest of the Company and its shareholders and therefore strongly
recommends that you vote FOR each of the directors nominated by the Company.
Yours very truly,
MICHAEL M. BARBOUR,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
<PAGE>
HENLEY HEALTHCARE, INC.
120 INDUSTRIAL BOULEVARD
SUGAR LAND, TEXAS 77478
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 17, 1998
Notice is hereby given that the annual meeting (the "Annual Meeting") of
the shareholders of Henley Healthcare, Inc., a Texas corporation (the
"Company"), will be held on Friday, July 17, 1998 at 10:00 a.m., Houston, Texas
time, at the Sweetwater Country Club, Salon B, located at 4400 Palm Royale
Boulevard, Sugar Land, Texas 77479 for the following purposes:
1. To elect a board of six directors; and
2. To transact such other business as may properly come before the Annual
Meeting.
A record of the shareholders was taken at the close of business on June 10,
1998, and only those shareholders of record on that date will be entitled to
notice of and to vote at the Annual Meeting. A list of shareholders will be
available commencing July 7, 1998 and may be inspected prior to the Annual
Meeting during normal business hours at the offices of the Company, 120
Industrial Boulevard, Sugar Land, Texas 77478.
Your participation in the Company's affairs is important. To ensure your
representation, if you do not expect to be present at the Annual Meeting, PLEASE
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT TO THE COMPANY PROMPTLY. An
addressed stamped envelope has been provided for your convenience.
By Order of the Board of Directors,
DAN D. SUDDUTH,
Executive Vice President,
Chief Financial Officer and Secretary
June 19, 1998
<PAGE>
HENLEY HEALTHCARE, INC.
120 INDUSTRIAL BOULEVARD
SUGAR LAND, TEXAS 77478
PROXY STATEMENT
This Proxy Statement is being mailed to Shareholders on or about June 19,
1998 in connection with the solicitation by the Board of Directors of Henley
Healthcare, Inc., a Texas corporation (the "Company"), of proxies to be voted at
the Annual Meeting of the Company's shareholders to be held in Houston, Texas on
July 17, 1998, and at any adjournment thereof, for the purposes set forth in the
accompanying notice.
Because many shareholders are unable to attend the Annual Meeting, the
Board of Directors solicits proxies to ensure that each shareholder has an
opportunity to vote on all matters scheduled to come before the Annual Meeting.
Shareholders are urged to carefully read the material in this Proxy Statement
and register their votes by marking the appropriate boxes on the enclosed proxy
card and to sign date and return the proxy card in the enclosed, addressed
stamped envelope. Proxies will be voted in accordance with the directions
specified thereon and otherwise in accordance with the judgment of the persons
designated as the holders of proxies. Abstentions are included in the
determination of the number of shares present and voting, but are not counted
for purposes of determining whether a proposal has been approved. Broker
nonvotes are not included in the determination of the number of shares present
and are not counted for purposes of determining whether a proposal has been
approved. Any abstentions and broker nonvotes will, therefore, have no effect on
the election of directors. Any proxy on which no direction is specified will be
voted: (1) FOR election of all nominees for director named herein and (2) in the
discretion of the persons named on the proxy cards, on any other matter which
may properly come before the Annual Meeting. A shareholder may revoke a proxy by
delivering to the Company written notice of revocation, delivering to the
Company a signed proxy signed on a later date or appearing at the Annual Meeting
and voting in person.
1
<PAGE>
OUTSTANDING VOTING SECURITIES
As of June 10, 1998, the record date for the determination of shareholders
entitled to vote at the Annual Meeting (the "Record Date"), there were issued
and outstanding 5,383,205 shares of common stock, par value $.01 per share (the
"Common Stock"), each of which is entitled to one vote on all matters properly
brought before the Annual Meeting. Holders of a majority of the shares of Common
Stock entitled to vote must be present, in person or by proxy, at the Annual
Meeting, to constitute a quorum for the transaction of business.
ELECTION OF DIRECTORS
At the Annual Meeting, six directors are to be elected, each director to
hold office until the next annual meeting of shareholders or until his successor
is duly elected and qualified. The persons named in the accompanying proxy (the
"Nominees") have been nominated by the Board of Directors, and have previously
served as directors of the Company. If any Nominee should become unavailable for
election, the proxy may be voted for a substitute Nominee selected by the
persons named in the proxy or the Board of Directors may be reduced accordingly.
The Board of Directors is not aware of any circumstances likely to render any
Nominee unavailable.
NOMINEES
Certain information regarding each of the Nominees is set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
- ---- --- -------- --------------
<S> <C> <C>
Michael M. Barbour 53 Director, President and Chief Executive Officer 1991
Dr. Chadwick F. Smith, M.D.(2) 64 Chairman of the Board 1991
Dan D. Sudduth 56 Director, Executive Vice President, 1996
Chief Financial Officer and Secretary
Dr. Pedro A. Rubio, M.D., Ph.D. (1) 53 Director 1996
Kenneth W. Davidson (2) 50 Director 1996
Dr. Ernest J. Henley, Ph.D.(1) 71 Director 1996
</TABLE>
(1) Member, Compensation Committee of the Board of Directors (the "Compensation
Committee")
(2) Member, Audit Committee of the Board of Directors (the "Audit Committee")
MICHAEL M. BARBOUR has served as President and Chief Executive Officer of
the Company since May 1991. Mr. Barbour has over 13 years experience in the
field of laser products. Prior to forming Lasermedics, Inc. (now known as Henley
Healthcare, Inc.), Mr. Barbour was President of Medical Training Centers of
America (formerly The Houston Laser Institute) from January 1987 to April 1991,
which he founded in order to train and inform doctors in the medical and
surgical use of lasers. From April 1984 to January 1987, he was President of
Surgimedics, a Houston, Texas, manufacturer and distributor of medical products.
Mr. Barbour graduated from the University of Houston in 1967 with a B.B.A. in
marketing.
CHADWICK F. SMITH, M.D. has served as a director of the Company since May
1991 and Chairman of the Board since June 1993. He is also a consultant to the
Company. See "Certain Relationships and Related Transactions." Dr. Smith is a
Clinical Professor of Orthopedic Surgery at the University of Southern
California School of Medicine, a position he has held since 1981. He has also
been a member of the Medical Staff of Orthopedic Hospital, Los Angeles,
California since 1966. Dr. Smith graduated with a B.A. from Southern Methodist
University in 1954 and graduated from the University of Texas medical school in
1958, and has been a diplomate of the American Board of Orthopedic Surgery since
1968.
DAN D. SUDDUTH joined the Company as Executive Vice President and Chief
Financial Officer in February, 1997. He has been a director of the Company since
January 1996. Mr. Sudduth was Chief Financial Officer for Mezzanine Telecom,
Inc., a Houston-based telecommunications company ("MTI"'), from 1994 to January
1997 and currently serves as a Director of MTI. During 1995 and 1996, Mr.
Sudduth was President and Director of AMC Home Healthcare, Inc., a respiratory
therapy company in Houston, Chairman of Mezzanine Financial Relations, Inc., a
merchant banking firm in Houston, and Chief Financial Officer and Director of
Creative Communications International, Inc., a Houston telecommunications
company. From 1992 to 1994, Mr. Sudduth served as Chairman and Chief Executive
Officer of Heart Labs of America, Inc.
2
<PAGE>
From 1988 to 1992, he was President and Chief Financial Officer of American
Biomed, Inc. Mr. Sudduth received a B.B.A. in 1964 from Lamar University.
PEDRO A. RUBIO, M.D., PH.D., has been a Director of the Company since
January 1996. He is currently a Clinical Associate Professor of Surgery at the
University of Texas Health Science Center in Houston. He was Director of
Education of the Laser Training Institute of Houston, from November 1993 until
January 1996. He served as World President of the International College of
Surgeons in Chicago in 1995, and was Chairman of the Department of Surgery at
the Columbia/HCA Medical Center Hospital in Houston from 1976 to 1994, when he
became Chairman Emeritus. Dr. Rubio holds the degrees of Bachelor of Science,
Master of Science in Surgical Technology, Doctor of Philosophy in Biomedical
Technology and Doctor of Medicine and Surgery. Dr. Rubio is a Diplomate of the
American Boards of Surgery, Laser Surgery, Abdominal Surgery, Forensic Medicine,
Quality Assurance and Utilization Review, Forensic Examiners and Pain
Management.
KENNETH W. DAVIDSON has been a Director of the Company since April 1996. He
has also been President, Chief Executive Officer and Chairman of the Board of
Directors of Maxxim Medical, Inc. ("Maxxim") since November 1986, and a Director
since 1982. Prior to that time, Mr. Davidson was the Corporate Director of
Business Development at Intermedics, Inc., which is principally a manufacturer
of implantable devices such as pacemakers. Mr. Davidson is also a Director of
Encore Orthopedics, Inc., a designer and manufacturer of implantable orthopedic
devices.
DR. ERNEST J. HENLEY has been a Director of the Company since April 1996,
and is also a consultant to the Company. He has been a Director of Maxxim since
1976. See "Certain Relationships and Related Transactions." Dr. Henley's
principal employment for more than fifteen years has been as a Professor of
Chemical Engineering at the University of Houston.
ACTIVITY, STRUCTURE AND COMPENSATION OF THE BOARD OF DIRECTORS AND CERTAIN
COMMITTEES
The Company's operations are managed under the broad supervision of the
Board of Directors, which has responsibility for the establishment and
implementation of the Company's general operating philosophy, objectives, goals
and policies. Pursuant to delegated authority, certain board functions are
delegated to standing committees of the board, audit committee and the
compensation committee. The board currently does not have a nominating
committee. During 1997, the Board of Directors was comprised of the six Nominees
listed above and convened on nine regularly scheduled meetings and four
specially schedule meetings. The audit and compensation committees each held two
meetings during the year. Each director attended at least 75% of all meetings of
the board and all committees on which he served during the year.
AUDIT COMMITTEE. The members of the Audit Committee are Mr. Davidson and
Dr. Smith. The Audit Committee assists the Board in matters relating to the
corporate accounting and reporting practices of the Company and the quality and
integrity of the financial reports of the Company. The Audit Committee
recommends the engagement or discharge of the Company's independent auditors,
reviews with the independent auditors the plan, scope and timing of their
audits, reviews the auditors' fees and, after completion of the audit, reviews
the auditors' report with management and the independent auditors. The Audit
Committee is charged with satisfying the Board that the activities of the
Company's independent auditors and the internal control procedures are
reasonably designed to assure sound accounting procedures, adequate reserves,
the safekeeping of the Company's assets and property and the proper control of
income and expenditures. The Audit Committee also reviews the Company's Annual
Report to Shareholders before its release, oversees the Company's policies on
business integrity and ethics, conflicts of interest and sensitive payments
programs.
COMPENSATION COMMITTEE. The members of the Compensation Committee are Drs.
Rubio and Henley. The Compensation Committee reviews and determines the salaries
for senior executive officers and the key officers and employees who participate
in various incentive compensation plans. The Compensation Committee approves the
granting of stock options, including the number of shares subject to and the
exercise price of, each stock option granted, in accordance with the Company's
various stock option plans. The Compensation Committee is also responsible for
reviewing significant personnel compensation policies and benefit programs and
major changes thereto. The Compensation Committee reviews and recommends to the
Board the direct and indirect compensation and employee benefits of the elected
officers of the Company, administers any incentive plans and bonus plans, and
reviews the Company's policies relating to the compensation of senior management
and, generally, other employees. In addition, the Compensation Committee reviews
management's long-range planning for executive development and succession,
establishes and periodically reviews policies on management perquisites, and
performs certain other review functions relating to management compensation and
employee relations policies.
3
<PAGE>
COMPENSATION OF DIRECTORS. Effective January 15, 1996, the Board of
Directors of the Company adopted the following plans which were approved by the
Company's shareholders in July 1996: (i) a 1996 Incentive Stock Plan (the
"Incentive Plan") under which the Company can issue up to 1.2 million shares of
the Company's Common Stock to eligible officers, employees, and consultants of
the Company, including employee directors ("Employee Directors"), and (ii) a
1996 Non- Employee Directors Stock Option Plan (the "Director Plan") under which
the Company can issue up to 250,000 shares of Common Stock to its outside
directors.
Employee Directors are eligible to participate in the Incentive Plan. Under
the Incentive Plan, the Compensation Committee can grant incentive awards of
options, restricted stock, phantom stock, and stock and cash bonuses
(collectively, "Incentive Awards") to Employee Directors. The Compensation
Committee determines whether the Employee Directors receive Incentive Awards and
the amount and type of such Incentive Awards. In connection with their
membership in the Board of Directors in 1997, each of Messrs. Sudduth and
Barbour was granted an option under the Incentive Plan to purchase 10,000 shares
of the Company's Common Stock at a price of $7.88 per share. The options granted
to Messrs. Barbour and Sudduth vest over a three-year period.
The Director Plan entitles each newly-elected director who is neither (i)
an existing director of the Company (an "Existing Director"), (ii) an employee
of the Company nor (iii) appointed or elected to the Board in connection with or
as a result of the completion of a financing or acquisition transaction in which
the appointment or election of such person is a condition to the obligation of
any party to complete the transaction (a "New Director"), to receive a one-time
option to purchase up to 25,000 shares of Common Stock on the date of such
election (the Existing Directors and the New Directors are sometimes
collectively referred to herein as the "Eligible Directors"). Further, the
Director Plan also entitles each Eligible Director to receive an option to
purchase 10,000 shares on each date he or she is reelected to serve as a member
of the Board. All options granted under the Director Plan will constitute
non-qualified stock options ("NQO").
During 1997, four directors were eligible to participate in the Director
Plan. They were Drs. Rubio, Smith, and Henley and Mr. Davidson. In connection
with their re-election to the Board of Directors in June 1997, Drs. Rubio,
Smith, and Henley and Mr. Davidson were each granted a stock option under the
Director Plan to purchase 10,000 shares (for an aggregate of 40,000 shares) of
the Company's Common Stock at a price of $4.81 per share.
The Director Plan also provides that at the discretion of the Board of
Directors, the Company may pay a cash fee to non-employee directors from time to
time for serving on and for attendance at meetings of, the Board of Directors or
any committee thereof (as such fees are set by the Board of Directors from time
to time). Employee Directors do not receive additional compensation for service
on the Board of Directors or its committees. During the year ended December 31,
1997, the Company paid Drs. Rubio, Smith, and Henley and Mr~Davidson $500 per
person for attendance at each meeting of the Board of Directors.
VOTING AGREEMENTS REGARDING ELECTION
Under the terms of that certain purchase agreement between Maxxim and the
Company, dated April 30, 1996, whereby the Company acquired certain assets (and
assumed certain liabilities) of the Henley Healthcare Division of Maxxim, Dr.
Smith, Mr. Barbour, and Maxxim entered into a voting agreement (the "Voting
Agreement") by which Dr. Smith and Mr. Barbour agreed to vote their shares of
Common Stock for a nominee of Maxxim until certain conditions specified therein
are met. Pursuant to the Voting Agreement, Mr. Davidson was designated by Maxxim
to be its designee and was named as a director of the Company effective May 1,
1996. Mr. Davidson is nominated for re-election at the Annual Meeting.
VOTE REQUIRED FOR ELECTION
The six Nominees who receive the greatest number of votes cast by the
holders of Common Stock entitled to vote and present, in person or by proxy, at
the Annual Meeting shall be the duly elected Directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL SIX NOMINEES TO THE
COMPANY'S BOARD OF DIRECTORS.
4
<PAGE>
OTHER INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information regarding the beneficial
ownership of the Company's Common Stock at the Record Date by (a) each
shareholder known by the Company to be the beneficial owner of more than five
percent of the outstanding shares of Common Stock, (b) each Director and
Nominee, (c) each executive officer named in the Summary Compensation Table (see
"Executive Compensation" below) and (d) all Directors and executive officers as
a group:
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(2) PERCENT OF CLASS
Ernest J. Henley, Ph.D ..................... 3,045,000(3) 43.95%
Kenneth W. Davidson ........................ 3,020,000(3) 43.75%
10300 49th Street North
Clearwater, Florida 33762
Maxxim Medical, Inc. ....................... 3,000,000(4) 43.58%
10300 49th Street North
Clearwater, Florida 33762
Chadwick F. Smith, MD ...................... 430,666(5) 7.67%
1127 Wilshire Blvd ......................
Los Angeles, California 90017
Michael M. Barbour ......................... 421,748(6) 7.52%
Pedro A. Rubio, MD, Ph.D ................... 145,792(7) 2.67%
Dan D. Sudduth ............................. 88,511(8) 1.63%
All Executive Officers and Directors as a
Group (9 persons) ....................... 4,152,057(9) 54.79%
- ------------
(1) Unless otherwise specified, the address of each beneficial owner is c/o
Henley Healthcare, Inc. 120 Industrial Boulevard, Sugar Land, Texas 77478.
(2) Except as otherwise indicated, all shares are beneficially owned, and the
sole investment and voting power is held, by the person named. This table
is based on information supplied by the officers, directors and principal
shareholders and reporting forms, if any, filed with the Securities and
Exchange Commission on behalf of such persons. A person is deemed to
beneficially own shares of common stock underlying options, warrants or
other convertible securities if the stock can be acquired by such person
within sixty days of the date hereof.
(3) Includes 1,500,000 shares issuable upon the conversion of the Company's
convertible subordinated promissory note, as amended, in the principal
amount of $3 million issued to Maxxim (the "Maxxim Note"), and 2,000,000
shares currently owned by Maxxim, as to which Dr. Henley and Mr. Davidson,
who are directors of both the Company and Maxxim, may be deemed the
beneficial owners by virtue of their affiliation with Maxxim. See "Certain
Relationships and Related Transactions." The additional 45,000 and 20,000
shares listed for each of Dr. Henley and Mr. Davidson, respectively,
consist entirely of warrants and/or options exercisable as of the date
hereof.
(4) In addition to holding 2,000,000 shares of common stock, Maxxim is the
holder of the Maxxim Note, which is convertible into 1,500,000 shares of
Common Stock. See "Certain Relationships and Related Transactions."
(5) Includes 235,000 shares issuable upon exercise of currently exercisable
options.
(6) Includes 228,333 shares issuable upon exercise of currently exercisable
options.
(7) Includes 78,333 shares issuable upon exercise of currently exercisable
options.
(8) Includes 63,333 shares issuable upon exercise of currently exercisable
options or warrants.
(9) In addition to the 1,500,000 shares issuable upon conversion of the Maxxim
Note and the currently exercisable options and warrants listed above, this
amount includes (i) 40 shares beneficially owned by Theron L. Morrow, the
Company's Vice President of U.S. Sales and Marketing, (ii) 100 shares
beneficially owned by Daniel M. Lavelle, the Company's Vice President of
International Sales and Marketing, and (iii) 200 shares beneficially owned
by Tracy L. Mathews, the Company's Vice President and Controller.
5
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company serve at the pleasure of the Board of
Directors and are subject to annual appointment by the Board at its first
meeting following the Annual Meeting of shareholders. All of the Company's
executive officers are listed in the following table, and certain information
concerning those officers who are not also members of the Board of Directors
follows the table:
NAME AGE POSITION
Michael M. Barbour 53 Director, President and Chief Executive Officer
Dan D. Sudduth. 56 Director, Executive Vice President and Chief
Financial Officer
Theron L. Morrow 43 Vice President -- U.S. Sales and Marketing
Daniel M. Lavelle 47 Vice President -- International Sales and Marketing
Tracy L. Mathews 36 Vice President and Controller
THERON L. MORROW has been Vice President-Sales and Marketing of the Company
since November 1997. He has over 12 years of experience in the medical devices
industry. From 1991 to 1996, Mr. Morrow was Divisional Vice President of
Marketing for Maxxim Medical, Inc. Mr. Morrow holds a B.S. degree in sports
medical sciences from Texas Christian University.
DANIEL M. LAVELLE has been Vice President of International Sales and
Marketing for the Company since May 1996. Mr. Lavelle has 19 years of experience
in the physical medicine rehabilitation markets with major emphasis on
international distribution. From 1989 to May 1996, Mr. Lavelle was a Divisional
Vice President for Maxxim Medical, Inc.
TRACY L. MATHEWS has been Vice President for the Company since June 1998
and Controller since April 1996. He has over 14 years of experience in
accounting after graduating from Lamar University in 1984 with a degree in
accounting. He worked as a staff accountant, then accounting manager for Goodman
Manufacturing from 1984 to 1990. Beginning in 1990, he worked as a staff
accountant for Southwest Medical Packaging ("Southwest") until he was promoted
to Controller when Southwest was acquired by Maxxim in April 1994. Mr. Mathews
is a certified public accountant.
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION. The following table provides information
concerning compensation paid or accrued during the fiscal years ended December
31, 1997, 1996 and 1995 to the Company's President and Chief Executive Officer,
Michael M. Barbour, and Executive Vice President, Chief Financial Officer and
Secretary, Dan D. Sudduth. During 1997, 1996 and 1995, no other executive
officers received compensation which exceeded $100,000:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------- ---------------
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITIONYEAR SALARY BONUS COMPENSATION OPTIONS/ SARS (#)
- ---------------------- --------- ------------ ---------- --------------- ---------------
<S> <C> <C> <C> <C>
Michael M. Barbour 1997 $160,000 40,000 -- 3,333
CEO 1996 $171,657 -- -- --
1995 $110,000 -- $9,000 --
Dan D. Sudduth (1) 1997 $134,811 -- -- 3,333
CFO
</TABLE>
(1) Mr. Sudduth was a consultant to the Company prior to February 1997 when he
became an employee.
6
<PAGE>
OPTION GRANTS. The following table provides certain information with
respect to common stock options granted during the fiscal year ended December
31, 1997 by the Company's President and Chief Executive Officer, Michael M.
Barbour, and its Executive Vice President, Chief Financial Officer and
Secretary, Dan D. Sudduth:
<TABLE>
<CAPTION>
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS GRANTED EXERCISE PRICE
NAME UNDERLYING OPTIONS GRANTED TO EMPLOYEES ($/SHARE) EXPIRATION DATE
- ------------------- ---------------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Michael M. Barbour 10,000 50% $7.88 11/07/00
Dan D. Sudduth 10,000 50% $7.88 11/07/00
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR ENDED
OPTION VALUES. The following table provides certain information with respect to
option exercises during the fiscal year ended December 31, 1997 by the Company's
President and Chief Executive Officer, Michael M. Barbour, and its Executive
Vice President, Chief Financial Officer and Secretary, Dan D. Sudduth:
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT FISCAL
NAME EXERCISE REALIZED AT FISCAL YEAR END (#) YEAR END ($) (1) REALIZED
- -------------------- ----------- ---------- --------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ ------------ ----------- -------------
<S> <C> <C> <C>
Michael M. Barbour -- -- 225,000 3,333 $ 712,500 --
Dan D. Sudduth -- -- -- 3,333 -- --
</TABLE>
- ---------------
(1) Calculated by multiplying the number of shares underlying outstanding
in-the-money options by the difference between the last sales price of the
Common Stock on December 31, 1997 ($7.00 per share) and the exercise
prices, which range between $3.00 and $4.50 per share. Options are
in-the-money if the fair market value of the underlying Common Stock
exceeds the exercise price of the option.
EMPLOYMENT CONTRACTS
In November 1996, the Company entered into an agreement with Michael M.
Barbour, effective as of May 1, 1996, employing him as its Chief Executive
Officer at a base annual salary of $160,000. The agreement also provides for an
annual bonus amount payable to Mr. Barbour based on specific formula as provided
in the agreement. The agreement terminates on December 31, 1998.
7
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective May 1996, the Company entered into a consulting agreement with
Chadwick F. Smith, MD, one of its Directors. The agreement includes an annual
compensation of $90,000 and terminates on December 31, 1998.
In May 1996, the Company entered into an agreement with Mezzanine Financial
Relations, Inc., a financial relations company ("Mezzanine"), pursuant to which
Mezzanine agreed to provide financial consulting services with regard to
potential mergers and acquisitions in consideration for a monthly fee of
$10,000. Mr. Sudduth, Executive Vice President, Chief Financial Officer and a
Director of the Company, is a shareholder of Mezzanine and its Chairman of the
Board. The agreement terminated on January 31, 1997.
On April 30, 1996, the Company entered into an agreement with Maxxim,
whereby the Company purchased certain assets (and assumed certain liabilities)
associated with for an estimated purchase price of approximately $13.5 million.
The purchase price was paid by the issuance of the Company's convertible
subordinated promissory note in the principal amount of $7 million, with the
balance of the purchase price paid in cash provided through a financing with a
bank. Mr. Davidson and Dr. Henley are currently employed by Maxxim, with Mr.
Davidson serving in the capacities of Chairman of the Board, Chief Executive
Officer and President and Dr. Henley serving as a Director and consultant. Dr.
Henley's consulting agreement, which was entered into between Dr. Henley and
Maxxim in 1987, was acquired in the transaction with Maxxim. The agreement
included a monthly consulting fee in the amount of $5,833 and terminated on
October 31, 1997. The Company currently uses Dr. Henley's services on as-needed
basis for a monthly consulting fee of $1,750.
On February 9, 1998, the Company purchased substantially all of the assets
and assumed certain liabilities associated with AMC Acquisition Corp., a Texas
corporation ("AMC"), for an estimated purchase price of approximately $450,000
plus related acquisition costs of approximately $30,000. The purchase price was
paid by the issuance of 68,000 shares of common stock, with a market price of
approximately $6.618 per share. Dan D. Sudduth, a director and Executive Vice
President, Chief Financial Officer and Secretary of the Company, and his son,
Britton D. Sudduth, were shareholders of AMC and each received 17,000 shares of
common stock valued at $112,506 each.
AUDITORS
Arthur Andersen LLP ("Andersen") has served as the independent public
accountants of the Company since October 1997. It is not proposed that any
formal action be taken at the Annual Meeting with respect to the continued
employment of Arthur Andersen, inasmuch as no such action is legally required.
Representatives of Arthur Andersen plan to attend the Annual Meeting and will be
available to answer appropriate questions. Its representatives will have an
opportunity to make a statement at the meeting if they so desire, although it is
not expected that any statement will be made.
Prior to October 1997, Goldstein Golub Kessler & Company, P.C., certified
public accountants ("GGK"), served as independent auditors for the Company.
During 1997, the audit committee of the board of directors considered several
independent public accounting firms for possible selection as the Company's
auditors for 1997, including GGK. After this review, Arthur Andersen was
selected as the Company's independent public accountants for 1997. Management
had no disagreement with GGK on any material matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure. GGK's
report on the financial statements for the year ended December 31, 1996 did not
contain an adverse opinion or a disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting principles.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires a company's directors and
executive officers, and persons who own more than 10% of the equity securities
of the Company to file initial reports of ownership and reports of changes in
ownership of the Common Stock with the Securities and Exchange Commission.
Officers, directors and greater than 10% shareholders are required to furnish
the Company with copies of all Section 16(a) reports they file. Based solely on
a review of the forms the Company has received or prepared, the Company believes
that during the year ended December 31, 1997, all filing requirements applicable
to the Company's directors, officers and greater than 10% shareholders were met
except Dr. Chadwick F. Smith who failed to file a Form 4 on a timely basis.
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MISCELLANEOUS MATTERS
The annual report on Form 10-KSB covering the year ended December
31, 1997 accompanies this Proxy Statement, but does not form any part of the
proxy solicitation materials. Any shareholder proposals to be included in the
Board of Directors' solicitation of proxies for the 1999 Annual Meeting of
Shareholders must be received by the Company at its principal executive offices,
located at 120 Industrial Boulevard, Sugar Land, Texas 77478, no later than
March 17, 1999.
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The Company will bear the expense of preparing,
printing and mailing the proxy solicitation material and the proxy. In addition
to the use of the mail, proxies may be solicited by personal interview,
telephone and telegram by directors and regular employees of the Company. The
Company may also engage the services of a proxy solicitation firm to assist in
the solicitation of proxies. The Company estimates that the fee of any such firm
will not exceed $5,000 plus reimbursement of reasonable out-of-pocket expenses.
Arrangements may also be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of stock held of record by such persons, and the Company may
reimburse them for reasonable out-of-pocket expenses incurred by them in
connection therewith.
The persons designated to vote shares covered by the Board of Directors'
proxies intend to exercise their judgment in voting such shares on other matters
that may properly come before the Annual Meeting. Management of the Company does
not expect that any matters other than those referred to in this proxy statement
will be presented for action at the Annual Meeting.
By Order of the Board of Directors
DAN D. SUDDUTH,
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND SECRETARY
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HENLEY HEALTHCARE, INC.
THE BOARD OF DIRECTORS SOLICITS THIS PROXY FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 17, 1998
PROXY The undersigned shareholder of Henley Healthcare, Inc.
FOR (the "Company") hereby appoints Michael M. Barbour and Dan
ANNUAL D. Sudduth, or either of them, the true and lawful
MEETING attorneys, agents and proxies of the undersigned, each with
OF full power of substitution, to vote on behalf of the
SHAREHOLDERS undersigned at the Annual Meeting of Shareholders of the
Company to be held at the Sweetwater Country Club, Salon B,
located at 4400 Palm Royale Boulevard, Sugar Land, Texas
77479, on Friday, July 17, 1998, at 10:00 a.m., Houston
Time, and at any adjournments of said meeting, all of the
shares of the Company's common stock in the name of the
undersigned or which the undersigned may be entitled to
vote.
1. THE ELECTION OF DIRECTORS
JULY 17, 1998
o FOR the election of Michael M. Barbour, Dr.
Chadwick F. Smith, Dan D. Sudduth, Dr. Pedro
A. Rubio, Kenneth W. Davidson and Dr. Ernest
J. Henley as directors.
o WITHHOLD AUTHORITY to vote on ALL nominees
for director listed above.
o WITHHOLD AUTHORITY to vote ONLY for the
nominee or nominees, written on the line
provided below:
2. In their discretion, upon such other matters as may
properly come before the meeting; hereby revoking any
proxy or proxies heretofore given by the undersigned.
(THIS PROXY MUST BE DATED AND SIGNED ON THE REVERSE SIDE.)
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(CONTINUED FROM OTHER SIDE)
PROXY This Proxy, when properly executed, will
FOR be voted in the manner directed herein by the
ANNUAL undersigned shareholder. If no direction is
MEETING made, this Proxy will be voted FOR the election
OF of the nominees above and in accordance with the
SHAREHOLDERS discretion of the persons designated above with
respect to any other business properly before
JULY 17, 1998 the meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and the Proxy Statement furnished herewith.
Dated ____________________, 1998
____________________________________
Shareholder's Signature
____________________________________
Signature if held jointly
Signature should agree with name printed
hereon. If Stock is held in the name of more
than one person, EACH joint owner should
sign. Executors, administrators, trustees,
guardians and attorneys should indicate the
capacity in which they sign. Attorneys
should submit powers of attorney.
PLEASE MARK, SIGN, DATE AND RETURN IN THE ENVELOPE ENCLOSED
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