SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): DECEMBER 7, 2000
(NOVEMBER 22, 2000)
HENLEY HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
TEXAS
(State or other jurisdiction of incorporation)
0-21054 76-0511324
(Commission File Number) (IRS Employer Identification No.)
120 INDUSTRIAL BOULEVARD, SUGAR LAND, TEXAS 77478
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 276-7000
NOT APPLICABLE
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
PRIVATE PLACEMENT OF SERIES E CONVERTIBLE PREFERRED STOCK
On November 22, 2000, Henley Healthcare, Inc., a Texas corporation (the
"Company"), sold in a private placement 1,500 shares of the Company's Series E
Convertible Preferred Stock, par value $.10 per share (the "Series E Shares"),
convertible into shares of the Company's common stock, par value $.01 per share
(the "Common Stock") for an aggregate purchase price of $1,500,000. The
purchasers were The Endeavour Capital Fund S.A., Esquire Trade & Finance, Inc.,
and Celeste Trust Reg (collectively, the "Purchasers"), each of which are
accredited investors. In connection with the acquisition of the Series E Shares,
the Purchasers also were issued warrants to acquire 1,595,745 shares of Common
Stock. The warrants expire November 30, 2005 and have an exercise price of $.52
per share. An additional 1,000 Series E Shares will be purchased by the
Purchasers for a purchase price of $1,000,000 upon notice by the Company to the
escrow agent specifying the additional closing date (the "Additional Closing");
PROVIDED HOWEVER, that the Additional Closing will not occur until the later of
(i) 21 days after the effective date of the registration statement covering the
resale of the shares of Common Stock issuable upon the conversion of the Series
E Shares and exercise of the warrants issued to the Purchasers and the placement
agent as described herein or (ii) 10 days after the notice is delivered. The
Purchasers will also be issued warrants in connection with the Additional
Closing in an amount equal to 50% of the number of shares of Common Stock
issuable upon conversion of the Series E shares assuming a Series E Fixed
Conversion Price (as defined herein). The Series E Shares bear an 8% cumulative
dividend payable to the holders of the Series E shares quarterly in arrears. The
dividends shall be payable in cash or in Common Stock at the Company's option.
The Series E Shares are convertible into the Company's Common Stock at the
lesser of (i) the closing bid price for the Company's Common Stock as reported
by Bloomberg L.P. for the trading day immediately proceeding the initial
issuance of the Series E Shares (the "Series E Fixed Conversion Price"), or (ii)
the amount obtained by multiplying .8 by the average closing bid price for the
Company's Common Stock as reported by Bloomberg L.P. for the lowest three
trading days during the period beginning on the twenty-second day prior to the
conversion date for such conversion and ending on such conversion date (the
"Variable Conversion Price").
The Series E Shares have no voting rights and rank junior to all of the
Company's previously issued shares of Series A, Series B, Series C and Series D
Preferred Stock. In addition, the Series E Shares are redeemable at the holder's
option if, among other things, the Company is unable to issue shares of its
Common Stock upon conversion of the Series E Shares due to Nasdaq regulations.
The Company, at its option, may redeem all or a portion of the Series E Shares
if the Variable Conversion Price is lower than the Series E Fixed Conversion
Price for 10 consecutive trading days for an amount equal to 125% of the price
of the Series E Shares plus accrued dividends. The Series E Shares have a
liquidation preference of $1,000 per share, plus the accrued and unpaid
dividends thereon through the date of final distribution.
The placement agent, Union Atlantic LC and Union Atlantic Capital L.C.,
received a commission of 9% which was paid by the issuance of 135 Series E
Shares, as well as warrants to acquire 75,000 shares of Common Stock at a price
equal to 110% of the warrants issued to the
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Purchasers with an expiration date of November 30, 2005. The placement agent
also will be entitled to a 9% commission on any amounts received at the
Additional Closing.
Pursuant to the terms of the Statement of Designation of Rights and
Preferences of the Series E Preferred Stock, the Company is not required to
issue shares of its Common Stock on conversion of the Preferred Stock unless
such shares have been approved for listing on the exchange or market on which
the Common Stock is trading. In such an event, until the Company obtains the
requisite shareholder approval, the Company is not obligated to issue shares in
excess of the amount of shares which does not require shareholder approval,
which under the Nasdaq SmallCap rule is 20% of the Company's outstanding Common
Stock. Therefore, until the Company receives shareholder approval, the Series E
Shares will not be convertible into more than the number of shares of Common
Stock which may be listed under the Nasdaq SmallCap Rules without obtaining
shareholder approval. The Company has agreed to seek shareholder approval for
the issuance of the Series E Shares at the next meeting of its shareholders in
order to eliminate this limit on the shares of Common Stock issuable on
conversion of the Series E Shares.
PRIVATE EQUITY CREDIT AGREEMENT
The Company also entered into a Private Equity Credit Agreement with each
of the Purchasers dated as of November 20, 2000 (the "Equity Agreement').
Pursuant to the terms of the Equity Agreement, when called for by the Company (a
"Put Date"), the Purchasers have agreed to purchase up to $7,500,000 (the
"Equity Line") of the Company's Series F Convertible Preferred Stock, par value
$.10 per share (the "Series F Shares"). The purchase price per share is $1,000.
The Company has agreed to call for a minimum of $1,000,000 from the Purchasers,
or the Company will be liable for a significant penalty. The maximum amount that
may be called by the Company on any Put Date is limited to 15% of the total
dollar volume of the Company's Common Stock in the preceding thirty day period.
The Company may not call for a purchase of any of the Series F Shares until the
later of (i) the effective date of the registration statement covering the
resale of the shares of Common Stock issuable upon conversion of the Series F
shares and exercise of the warrants issuable to pursuant to the terms of Equity
Agreement or (ii) 10 days notice of a Put Date. In addition, the Company must
satisfy certain closing conditions prior to each Put Date. The Company makes no
assurances that it will be able to call upon any of the amounts available under
the Equity Line.
In connection with any purchase of Series F Shares, the Purchasers will
also be issued warrants to purchase a number of shares of Common Stock equal to
50% of the number of shares of Common Stock issuable upon conversion of such
Series F Shares assuming a Series F Fixed Conversion Price (as defined below).
Such warrants will have an exercise price equal to 110% of the lowest three
closing bid prices of the Common Stock during the period beginning on the
twenty- second day prior to the Put Date. The Series F Shares bear an 8%
cumulative dividend payable to the holders of the Series F shares quarterly in
arrears. The dividends shall be payable in cash or in Common Stock at the
Company's option. The Series F Shares are convertible into the Company's Common
Stock at the lesser of (i) the closing bid price for the Company's Common Stock
as reported by Bloomberg L.P. for the trading day immediately proceeding the
closing date of the respective Put Date of the Series F Shares (the "Series F
Fixed Conversion Price"), or (ii) the amount
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obtained by multiplying .85 by the average closing bid price for the Company's
Common Stock as reported by Bloomberg L.P. for the lowest three trading days
during the period beginning on the twenty-second day prior to the conversion
date for such conversion and ending on such conversion date (the "Variable
Conversion Price").
The Series F Shares have no voting rights and rank junior to all of the
Company's previously issued shares of Series A, Series B, Series C, Series D and
Series E Preferred Stock. In addition, the Series F Shares are redeemable at the
holder's option if, among other things, the Company is unable to issue shares of
its Common Stock upon conversion of the Series F Shares due to Nasdaq
regulations. The Company, at its option, may redeem all or a portion of the
Series F Shares if the Variable Conversion Price is lower than the Series F
Fixed Conversion Price for 10 consecutive trading days for an amount equal to
125% of the price of the Series F Shares plus accrued dividends. The Series F
Shares have a liquidation preference of $1,000 per share, plus the accrued and
unpaid dividends thereon through the date of final distribution.
Pursuant to the terms of the Equity Agreement, the Company may not notice
the Purchasers of a Put Date unless the shares of its Common Stock issuable on
conversion of the Series F Shares to be purchased have been approved for listing
on the exchange or market on which the Common Stock is trading. Therefore, until
the Company receives shareholder approval, the Company may not notice the
Purchasers of a Put Date unless the Series F Shares will not be convertible into
more than the number of shares of Common Stock which may be listed under the
Nasdaq SmallCap Rules without obtaining shareholder approval. The Company has
agreed to seek shareholder approval for the issuance of the Series F Shares at
the next meeting of its shareholders in order to eliminate this limit on the
shares of Common Stock issuable on conversion of the Series F Shares.
The placement agent, Union Atlantic LC and Union Atlantic Capital L.C.,
will be entitled to a 9% commission on any amounts received on a Put Date.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS.
The following exhibits, from which schedules and exhibits have been
omitted and will be furnished to the Commission upon its request, are filed with
this report on Form 8-K.
3.1 -- Statement of Designation of Rights and Preferences of the Series
E Convertible Preferred Stock of Henley Healthcare, Inc.
3.2 -- Statement of Designation of Rights and Preferences of the Series
F Convertible Preferred Stock of Henley Healthcare, Inc.
4.1 -- Registration Rights Agreement dated as of November 20, 2000, by
and among Henley Healthcare, Inc., The Endeavour Capital Fund
S.A., Esquire Trade & Finance, Inc., and Celeste Trust Reg. for
the Series E Shares and related warrants.
4.2 -- Registration Rights Agreement dated as of November 20, 2000, by
and among Henley Healthcare, Inc., The Endeavour Capital Fund
S.A., Esquire Trade & Finance, Inc., and Celeste Trust Reg. for
the Series F Shares and related warrants.
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4.3 -- Form of Warrant for Securities Purchase Agreement
4.4 -- Form of Warrant for Private Equity Credit Agreement
10.1 -- Securities Purchase Agreement dated as of November 20, 2000,
between Henley Healthcare, Inc., The Endeavour Capital Fund S.A.,
Esquire Trade & Finance, Inc., and Celeste Trust Reg.
10.2 -- Private Equity Credit Agreement dated as of November 20, 2000, by
and among Henley Healthcare, Inc., The Endeavour Capital Fund
S.A., Esquire Trade & Finance, Inc., and Celeste Trust Reg.
10.3 -- Financial Consulting Agreement dated as of September 26, 2000 by
and among Henley Healthcare, Inc., Union Atlantic LC and Union
Atlantic Capital, L.C.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HENLEY HEALTHCARE, INC.
By: /s/ JAMES L. STURGEON
James L. Sturgeon
Chief Financial Officer
December 5, 2000
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EXHIBITS
3.1 -- Statement of Designation of Rights and Preferences of the Series
E Convertible Preferred Stock of Henley Healthcare, Inc.
3.2 -- Statement of Designation of Rights and Preferences of the Series
F Convertible Preferred Stock of Henley Healthcare, Inc.
4.1 -- Registration Rights Agreement dated as of November 20, 2000, by
and among Henley Healthcare, Inc., The Endeavour Capital Fund
S.A., Esquire Trade & Finance, Inc., and Celeste Trust Reg. for
the Series E Shares and related warrants.
4.2 -- Registration Rights Agreement dated as of November 20, 2000, by
and among Henley Healthcare, Inc., The Endeavour Capital Fund
S.A., Esquire Trade & Finance, Inc., and Celeste Trust Reg. for
the Series F Shares and related warrants.
4.3 -- Form of Warrant for Securities Purchase Agreement
4.4 -- Form of Warrant for Private Equity Credit Agreement
10.1 -- Securities Purchase Agreement dated as of November 20, 2000,
between Henley Healthcare, Inc., The Endeavour Capital Fund S.A.,
Esquire Trade & Finance, Inc., and Celeste Trust Reg.
10.2 -- Private Equity Credit Agreement dated as of November 20, 2000, by
and among Henley Healthcare, Inc., The Endeavour Capital Fund
S.A., Esquire Trade & Finance, Inc., and Celeste Trust Reg.
10.3 -- Financial Consulting Agreement dated as of September 26, 2000 by
and among Henley Healthcare, Inc., Union Atlantic LC and Union
Atlantic Capital, L.C.
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