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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________
Commission file number 0-8187
GREENBRIAR CORPORATION
(Formerly Medical Resource Companies of America)
(Name of Small Business Issuer in its charter)
Nevada 75-2399477
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4265 Kellway Circle, Addison, Texas 75244
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (214) 407-8400
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Stock, $.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
NO [ ] YES [X]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
The issuer's revenues for its most recent fiscal year were: $ 9,710,000
The aggregate market value of the voting stock held by non-affiliates of the
issuer, computed by reference to the closing sales price on March 26, 1996, was
approximately $14,200,000.
At March 26, 1996, the issuer had outstanding approximately 3,440,000 shares of
par value $.01 common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Annual Report on Form 10-KSB incorporates certain information
by reference from the definitive Proxy Statement for the registrant's Annual
Meeting of Stockholders scheduled to be held on May 24, 1996.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
TABLE OF CONTENTS
PART I
ITEM 1: DESCRIPTION OF BUSINESS...............................................1
General .............................................................1
The Assisted Living Industry..........................................1
Competition.....................................................3
Regulation......................................................4
Development By the Company............................................5
Acquisition of Wedgwood Retirement Inns, Inc..........................5
Assisted Living Services........................................6
Alzheimer's and Special Care Services...........................6
Congregate Care Services........................................6
Residence Summary...............................................7
Residence Description...........................................8
Development Summary.............................................9
Operations......................................................9
Regulatory Compliance..........................................10
Consideration..................................................10
Additional Agreements..........................................10
Corporate Offices..............................................11
Company Employees....................................................11
Sale of Mobility Assistance Subsidiaries.............................11
Environmental Matters................................................11
ITEM 2: DESCRIPTION OF PROPERTY..............................................12
ITEM 3: LEGAL PROCEEDINGS....................................................12
Southern Care Corporation vs. CareAmerica and
Medical Resource Companies of America..............................12
Sunrise Healthcare Corporation vs. CareAmerica, Inc..................12
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................13
i
PART II
ITEM 5: MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS............................................................13
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION.................................14
Liquidity and Capital Resources......................................14
Results of Operations................................................15
Fiscal 1995 As Compared to Fiscal 1994.........................15
Fiscal 1994 As Compared to Fiscal 1993.........................16
ITEM 7: FINANCIAL STATEMENTS.................................................17
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE................................17
PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT*........18
ITEM 10: EXECUTIVE COMPENSATION*..............................................18
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT*........................................................18
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS*......................18
ITEM 13: EXHIBITS, LIST AND REPORTS ON FORM 8-K...............................19
* Incorporated by reference to Proxy Statement.
ii
PART I
ITEM 1: DESCRIPTION OF BUSINESS
General
On March 27, 1996, the Company changed its name from Medical Resource Companies
of America to Greenbriar Corporation ("Greenbriar" or "the Company"). Greenbriar
provides full service residential housing and personal assistance with the
activities of daily living, as needed, for the elderly. Originally founded in
1974 as a real estate investment trust organized in California, in May 1991 the
Company transferred all its assets to a Nevada corporation bearing the same name
in order to continue operations in a more conventional incorporated form. Its
primary focus was on residential retirement and healthcare services and products
for the elderly and mobility impaired.
From 1991 until 1994, the Company acquired retirement, nursing and other
healthcare facilities, as well as commercial real estate, with the intention of
improving the physical structure, occupancy and efficiency of those facilities.
Eventually the facilities were resold to generate profits and provide working
capital to grow the Company and increase stockholders' equity. The Company also
acquired several companies that manufactured and sold or leased mobility
assistance equipment to individuals, airlines and tourist attractions.
During 1994, 1995 and early 1996, the Company disposed of its nursing homes and
retirement center properties, most of its commercial real estate and its
mobility companies and changed its business focus to meeting the full service
residential retirement and assisted living needs of the elderly.
The Company began development of a focused full service residential retirement
and assisted living strategy in 1994. The Company believes the overall demand
for alternative lifestyles for the elderly is rapidly increasing. Providing a
residential lifestyle and maximizing choices and independence while enhancing
the quality of life of a growing segment of elderly, upscale consumers,
particularly the frail elderly, is an industry believed to possess the potential
for significant growth.
The Company has decided to enter the assisted living market by designing and
building a proprietary chain of assisted living centers and by acquiring
existing companies that already have residences in operation. The Company owns,
leases, operates and manages 17 residences with 1,290 units. Another 16
residences, with 947 units, are under construction or in development.
The Assisted Living Industry
The assisted living segment of the long term care industry is growing rapidly.
There are three major factors driving this growth. The first is the aging of
America. The second is the cost-containment pressure in health care in general
and on Medicare and Medicaid in particular. The third is a change in lifestyles.
The traditional care giver, the homemaker, is now primarily a co-breadwinner and
unable to provide in-home care for aging parents, leading the child and the
parent to prefer the assisted living lifestyle for long term care.
1
The Company's demographic research shows that each day, 5,000 people turn 65.
From 1981 to 1994, the number of people in the United States age 65 and older
increased by more than 25% from 26.2 million to 33.2 million. The 85+ age group
is the fastest growing segment of the population. Over four million people in
the U.S. will be 85 or older in the year 2000.
The average age of a typical resident in an assisted living residence is rapidly
approaching 85. According to the Agency for Health Policy and Research, almost
60% of the people over 85 need help with one or more of the activities of daily
living ("ADLs") such as walking or bathing and instrumental activities of daily
living ("IADLs") such as paying bills or buying groceries.
Approximately 25% of people over age 85 utilize nursing home services. According
to the U.S. Department of Health and Human Services, between 25% and 40% of
nursing home patients do not need this level of service and care and would be
better served by a less institutional and less costly form of residential care,
such as that provided in an assisted living residence.
The Alzheimer's Association estimates that nearly half of those over age 85 have
the disease. The Association states that there are approximately 4 million
people with Alzheimer's now, and this is expected to rise to 14 million by the
middle of the next century. Currently 70% of the people with Alzheimer's are
cared for at home by family and friends. Many are also cared for in nursing
homes, because there is no other residential alternative available.
The industry has a mixed nomenclature for the services it provides and the
residential settings in which its clients - older persons who do not wish to or
cannot live alone without some help with ADLs and IADLs - are served. Full
Service Retirement Living, Assisted Living, Personal Care Living, Residential
Care Living - all are used to describe the industry. The facilities themselves
are referred to by many names: residential care facilities, adult congregate
living facilities, board and care homes, personal care homes, domiciliary care
homes, assisted living residences, and catered living facilities.
According to the industry trade association, the Assisted Living Facilities
Association of America ("ALFAA"), there are an estimated 30,000 to 40,000
assisted living facilities housing between 100,000 - 1,000,000 residents.
However, when the 'independent retirement center' industry, which has converted
many independent units to full service/personal care/assisted living is
considered as part of the 'Full Service Residential Retirement with Assistance
as needed' industry, the size of the industry may be significantly larger.
Further, many facilities calling themselves independent retirement centers
utilize home health services to provide a level of service that is essentially
the same as assistance with ADLs/IADLs.
The total population over 75, those typically served by this industry, is
approximately 14,800,000. Approximately 30% of them need some assistance with
ADLs. The terms 'evolving' and 'emerging' are often used to describe this
segment of housing and services for the elderly. It is an industry still
defining itself, even as the need for its services grows along with the aging of
America. The assisted living industry competes for residents with several long
term care alternatives, including nursing homes, home health agencies, community
based programs, retirement communities and home based retirement services.
2
Based on extensive research using industry sources, Company management estimates
that the assisted living industry's current revenues are $12 billion annually.
Management further anticipates revenues will reach $20 billion by the year 2000
and continue to increase until the middle of the next century.
Even though the industry is growing rapidly, it is still primarily a fragmented
business with many small providers. The 30 largest companies only operate
approximately 2% of the estimated 30,000 assisted living facilities currently in
business. Many of the remainder are bed and board residences with less than 10
residents.
It is expected that the industry will become increasingly consolidated in the
next few years, and this trend has already begun. However, due to a limited
supply of existing facilities, many providers have concentrated on developing
proprietary residences, primarily on a regional basis. If industry estimates are
correct, the only way to meet the demand is through extensive development of new
facilities.
Competition
Although Greenbriar Corporation has been involved with residential retirement
and assisted living through its ownership and management of The Fountainview and
Rivermont centers, the Company has limited experience and did not own or manage
any assisted living facilities on December 31, 1995. However, the Company has a
major development program underway in Texas and Oklahoma and recently acquired
Wedgwood Retirement Inns, Inc., which has been developing and operating senior
residences since 1968.
Extensive competition already exists in the for-profit and not-for-profit
sectors. Most of the industry leaders are privately held for-profits and
not-for-profits, often affiliated with religious organizations. In the past year
and a half, several assisted living operations have successfully gone to the
public equity market with initial public offerings.
A growing trend is the entry of regional and national nursing center companies
into the industry. Several publicly traded nursing home operators have acquired
facilities, converted wings of existing nursing homes and begun major
development efforts. Others have announced their intention to enter the assisted
living industry. There is also a split in emphasis in the industry with some
industry leaders emphasizing a residential 'social' model, more closely aligned
with the senior housing industry, and others supporting the 'medical' model,
aligned with the nursing center long term care industry. The concept of 'aging
in place' is a combination of these models, greatly influenced by the
Scandinavian model of providing housing and care for older persons. This concept
is emerging as the dominant housing and healthcare paradigm for assisted living
residents. Regardless of the operational philosophy being emphasized, many of
these organizations, whether they be regional or national operators, are well
financed and have significantly greater operating experience than the Company.
The Company expects that the assisted living business will become increasingly
competitive.
Greenbriar is seeking markets which are not currently served or are under
served. The Company is identifying these markets and intends to provide premier
services and amenities at a moderate price. It is also providing special care
services in a residential setting for those with memory loss and Alzheimer's,
the primary cause of memory loss. These residents are not mixed in with other
assisted living residents. The Company believes that this combination of target
markets and services may improve its ability to compete with non-specialized
assisted living residences and nursing homes.
3
Regulation
Unlike the nursing home industry, assisted living is not highly regulated.
However, all 50 states and the District of Columbia have regulations for
assisted living residences. The licensing terminology, definitions and
requirements vary from state to state. Though regulations and licensing
requirements vary, most states generally include requirements relating to such
matters as licensure, fire safety, sanitation, staff training, staffing levels
and living accommodations (for example, size of room, number of bathrooms, or
ventilation).
There are no specific federal regulations for assisted living residences but, as
federal and state funding increases, it is likely that more extensive regulation
will follow. ALFAA, the industry trade association, has an active program for
self-regulation which may reduce the burden of governmental regulation. However,
the history of the long term care industry does not support this optimistic
view.
Currently, only four states (Kentucky, Missouri, New Jersey and Wyoming) have
certificate of need ("CON") requirements for assisted living residences. Of
these states, the Company is only actively pursuing markets in Wyoming. If
federal and state reimbursements increase and there is overbuilding in the
industry, other states may initiate CON regulations. If this occurs, the
operators who can grow rapidly in the next few years could have a distinct
advantage, inasmuch as this barrier to entry could limit destructive
overbuilding and competition, such as occurred in some nursing home markets in
the past.
Twelve states have already elected to participate in the Medicaid Home and
Community Care Options Act of 1990 ("MHCCOA") and several other states are
studying the program. Texas, where Greenbriar is headquartered, is one of these
states. Under MHCCOA, states now have the option to use Medicaid funds to
support services for low income, frail older persons, in places of residence
other than nursing facilities. The program allows the state to amend its
Medicaid statutes to use funds in this manner, thus avoiding the repeated
process of obtaining a Medicaid waiver. Any facility participating in this
payment program must meet all applicable state and federal rules and
regulations.
Greenbriar may participate in federal and state reimbursement programs. However,
the Company expects the bulk of its revenues to come from private payment.
Conversely, if the proposed Medicaid block grants are signed into law, there
could be a dramatic increase in revenues from these sources, particularly with
double occupancy units. The Company is designing many of the units in the new
Greenbriar residences so they can be converted to double occupancy and still
provide a quality lifestyle.
The Americans with Disabilities Act ("ADA"), enacted July 26, 1990, has had and
will have a major impact on the full service residential retirement and assisted
living industry. The facilities developed or acquired by the Company must be in
compliance with this act. The Fair Housing Amendments Act of 1988 prohibits
discrimination against the handicapped in the sale or rental of a dwelling, or
in the provision of services or facilities in connection with such a dwelling.
This intensifies the need to be in compliance with the ADA. Regulation of the
industry is likely to increase, particularly for those providers accepting
Medicaid reimbursements.
4
Development By the Company
During 1995 the Company concentrated its efforts on identifying potentially
successful locations for assisted living residences. In this process,
proprietary demographic analysis and psychographic research methods were
developed.
The Company determined that it would concentrate its internal development
efforts on a 'County Seat America' approach to more readily identify potentially
under served markets. The following chart summarizes all the Company's
properties currrently under construction and development:
Anticipated Anticipated
Location Units Opening Ownership
- --------------------------------------- --------- ------------ ---------------
Under Construction
- ---------------------------------------
Sweetwater Springs (Lithia Springs, GA) 49 8/96 Leased(2)
The Greenbriar at Denison, TX 44 5/96 Owned
The Greenbriar at Muskogee, OK 48 1/97 Owned(1)
Villa de la Rosa (Roswell, NM) 93 10/96 Owned(1)
Under Development
- ---------------------------------------
Camelot Assisted Living (Harlingen, TX) 91 1/97 Owned(1)
Camelot Independent (Harlingen, TX) 61 thru 2000 Sold(3)
La Conner Retirement Inn (La Conner, WA) 59 6/97 Owned
Oak Knoll (Paradise CA) 99 5/97 Owned
Oak Park (Clermont, FL) 60 5/97 Owned
The Briarcliff at Texarkana, TX 44 3/97 Owned
The Briarcliff at Winston-Salem, NC 20 4/97 Owned
The Greenbriar at Brownwood, TX 44 3/97 Owned
The Greenbriar at Palestine, TX 44 3/97 Owned
The Greenbriar at Sherman, TX 44 2/97 Owned
The Greenbriar at Wichita Falls, TX 44 5/97 Owned
Woodmark at Steel Lake (Federal Way, WA) 103 4/97 Owned
---------
Total 947
(1) Financing committed.
(2) Leased from a real estate investment trust.
(3) Units sold to residents who pay a monthly service fee.
Acquisition of Wedgwood Retirement Inns, Inc.
On March 15, 1996, the Company acquired Wedgwood Retirement Inns, Inc., and
related entities and properties ("Wedgwood"), headquartered in Vancouver,
Washington. Wedgwood was one of the first builders and management companies in
the retirement and assisted living industry.
Wedgwood operates 16 properties, all offering some form of assistance with ADLs
or IADLs. Wedgwood also operates a head trauma injury/developmentally disabled
special care residence. Wedgwood owns one assisted living residence managed by a
third party and leases one assisted living residence managed by a third party.
5
Assisted Living Services
Assisted living services include many congregate care services and also include
a variety of help with ADLs/IADLs or other forms of non-medical assistance
available 24 hours a day. These generally are categorized as follows:
Personal Care Services. These services include providing assistance with
activities of daily living such as ambulation, bathing, dressing, personal
hygiene and grooming.
Supplemental Services. These services include bill paying, banking, personal
shopping, transportation coordination, pet care, devotional services and
reminder services.
Wellness Services. These are health related services, including assistance with
the administration of medication and health monitoring by a nurse, which
are provided as permitted by government regulation.
Alzheimer's and Special Care Services
Wedgwood has Alzheimer's special care units in two of its existing residences
and is including such units in three of the six residences under construction or
development. Alzheimer's care includes all the elements of congregate care and
assisted living as needed, with a higher 24 hour staff ratio to provide
oversight and activity programs scheduled around the clock. Higher staff levels
at all times bring commensurately higher monthly charges.
An Alzheimer's wing is a separate area secured from the rest of the building and
includes secured outdoor walking paths. The physical plant is specialized as
residents live, typically, in shared sleeping rooms of 350 - 400 square feet.
Common areas are enlarged to accommodate wandering and constant small group
activities. The units are usually furnished by Wedgwood, as compared to
congregate and assisted units where a resident uses their own furnishings.
Alzheimer's residents may choose to bring some personal belongings.
Congregate Care Services
Wedgwood operates five congregate care residences providing IADLS that are not
licensed for assisted living or Alzheimer's care. Four of these five residences
are leased with leases or extensions expiring through 2002. One of the four
leased residences is readily convertible to comprehensive assisted living and
Wedgwood expects to convert it to assisted living in 1996 if the lease, which
expires during 1996, can be renewed on acceptable terms. The cost of conversion
is estimated to be less than $25,000.
6
Residence Summary
The following table summarizes certain information regarding Wedgwood's
residences. These residences generally are either owned or leased, managed by
Wedgwood or under construction or development. One residence, owned by third
parties, is managed by Wedgwood for a fee based on gross revenues. One residence
leased by Wedgwood is managed by a third party to whom Wedgwood pays a
management fee, also based on gross revenues.
Date
Wedgwood
Operations
Location Units Commenced Ownership
- ------------------------------------ --------- ------------- -------------
Owned or Leased and Managed
- ------------------------------------
Camelot (Harlingen, TX)(5) 165 9/94 Owned(1)
Crown Pointe (Corona, CA) 147 1/93 Owned(4)
Liberty Rehab (Ellensburg, WA) 20 7/95 Owned(1)
Lincolnshire (Lincoln City, OR) 64 11/95 Owned(1)
Meadowbrook Place (Baker City, OR) 50 12/92 Owned(1)
Pacific Pointe (King City, OR)(5) 113 1/93 Leased(2)
Rose Garden Estates (Ritzville, WA) 21 11/95 Owned(1)
Summer Hill (Oak Harbor, WA)(5) 59 2/94 Owned(1)
The Terrace (Portland, OR)(5) 69 5/91 Owned(1)
Villa del Rey (Merced, CA)(5) 92 12/79 Leased(2)
Villa del Rey (Napa, CA)(5) 79 11/94 Leased(2)
Villa del Rey (Roswell, NM) 133 10/87 Leased(3,8)
Villa del Rey (Visalia, CA)(5) 98 12/79 Leased(2)
Villa del Sol (Roswell, NM) 12 12/95 Owned(1)
Wedgwood Terrace (Lewiston, ID)(5) 50 11/95 Leased(4)
---------
Subtotal 1,172
Managed, Owned by Third Party
- ------------------------------------
Timberhill Place (Corvallis, OR) 60 5/95 Managed
Leased, Managed by Third Party
- ------------------------------------
Neawanna by the Sea (Seaside, OR) 58 10/90 Leased(3,8)
=========
Total 1,290
* Please see table footnotes on page 8
On a consolidated basis, all properties managed by Wedgwood for two years or
more report approximately 95% occupancy.
7
Anticipated Anticipated
Location Units Opening Ownership
- ------------------------------------- ----------- ------------ ---------------
Under Construction
- -------------------------------------
Sweetwater Springs (Lithia Springs, GA) 49 8/96 Leased(3)
Villa de la Rosa (Roswell, NM) 93 10/96 Owned(1)
Under Development
- -------------------------------------
Oak Park (Clermont, FL) 60 5/97 Owned(6)
Woodmark at Steel Lake (Federal Way, WA) 103 4/97 Owned(6)
Camelot Assisted Living (Harlingen, TX) 91 1/97 Owned(1)
La Conner Retirement Inn (La Conner, WA) 59 6/97 Owned(6)
Camelot Independent (Harlingen, TX) 61 thru 2000 Sold(7)
Oak Knoll (Paradise CA) 99 5/97 Owned(6)
===========
Total 615
(1) Subject to first mortgage.
(2) Leased from third party individuals or partnership.
(3) Residence is leased from a Real Estate Investment Trust.
(4) 60% ownership of real estate and lessee.
(5) Residence was not constructed by Wedgwood.
(6) Financing not yet committed.
(7) Units are sold to residents who then pay a monthly service fee.
(8) 49% ownership of lessee.
Residence Description
Wedgwood's residences range in size from 20 to 165 units, range from one to
three stories and from 10,000 to 148,000 square feet. Most of the newer
residences are 60 to 80 units, two stories and 50,000 to 70,000 square feet.
Each residence is designed with a large family room, usually equipped with a
fireplace, a spacious open dining area, library, TV room, commercial kitchen,
beauty salon and laundry facilities, as well as several indoor and outdoor
recreational areas. Units range in size from 350 - 400 square feet for a studio
unit, to 550 - 650 square feet for a one bedroom unit and to 750 - 850 square
feet for a two bedroom unit. Alzheimer's care units are about the same size as
studios. Assisted living units typically include a private bathroom,
kitchenette, closets, living and sleeping areas, as well as a lockable door,
emergency call system, individual temperature controls, fire alarm and a
sprinkler system, among other amenities. Alzheimer's care units contain only
sleeping, limited storage and, in some of the units, bathroom areas. They do not
have emergency call systems but do have sprinkler and fire alarm systems.
8
Development Summary
The following table summarizes certain information regarding residences
constructed and developed by Wedgwood:
Approximate
Date Construction Approximate Development/ Cost Per
Location Units Opened Period (Months) Construction Costs Unit
- ------------------------- ------- -------- ----------------- ------------------------- -----------
Corona, CA 147 1986 12 $ 7,469,000 $ 50,800
Roswell, NM 133 10/88 10 6,161,000 46,300
Seaside, OR 58 10/90 9 3,056,000 52,700
Baker City, OR 50 5/94 6 2,344,000 46,900
Lincoln City, OR 64 11/95 12 4,145,000 64,800
Ellensburg, WA 20 7/95 9 1,362,000 68,100
Ritzville, WA 21 12/95 7 722,000 43,900
Includes land construction and service costs, architectural and engineering
costs, and furniture, fixtures, and equipment. Excludes construction period
interest, development fees, and pre-opening costs.
Conversion of 21 units from prior use and construction of 29 additional
units.
Includes land and common areas for a phase II expansion of 29 units.
Land cost was $256,000 or $12,800 per unit, for 30 acres of land. This
property is a special care unit for head injury and developmentally
disabled persons and its rehabilitative program includes animal husbandry
and light farming activities.
In addition, Wedgwood has developed and designed over 3,700 beds of congregate
care, assisted living, skilled nursing and psychiatric hospitals for third
parties, primarily in the last 15 years.
Wedgwood constructed most of these facilities.
Operations
The day-to-day operations of each residence are managed by an administrator who
is responsible for all operations of the residence, including overseeing the
quality of care and services, marketing, coordinating social activities,
monitoring financial performance and ensuring appropriate maintenance of grounds
and building. The administrator is responsible for all personnel, including
management, line staff and independent contractors. Line staff consists of
personal care, maintenance and kitchen personnel. Most routine personal care
health services are provided by nurses or nurse assistants under the supervision
of a nurse who are, typically, employed by Wedgwood. Additionally, Wedgwood or
the resident may, from time to time, contract for personal care services from
third parties. Wedgwood also consults with outside providers, such as
pharmacists and dietitians, to assist residents with medication review, menu
planning and response to any special dietary needs. Personal care, dietary
services, housekeeping and laundry services are performed primarily by line
staff who are either part or full-time employees of Wedgwood and who are trained
to perform a variety of such services. Most building maintenance services,
typically, are performed by part or full-time employees, while elevator, HVAC
maintenance and landscaping services, generally, are performed by third party
contractors.
Wedgwood's headquarters provides management support services to each of
Wedgwood's residences including the development of operational standards,
budgets and quality assurance programs and the provision of recruiting,
training, and financial and accounting services, such as data processing,
accounts payable, billing and payroll services. Corporate personnel and
residence administrators collaborate with respect to the establishment of
residence goals and strategies, quality assurance oversight, development of
Wedgwood policies and procedures, development and implementation of new
programs, cash management, human resource management and community development.
9
Regulatory Compliance
Wedgwood believes that its residences are in compliance with all applicable
regulatory requirements. However, in the ordinary course of business, a
residence could be cited for deficiencies. In such cases, Wedgwood expects to
take appropriate and timely corrective action to eliminate such deficiencies.
During the past three years, Wedgwood has not been cited for any such
deficiencies which were not properly eliminated on a timely basis.
Medicaid provides insurance for certain financially or medically needy persons,
regardless of age, and is funded jointly by federal, state and local
governments. However, without a Medicaid Waiver Program, states can use federal
Medicaid funds only for long-term nursing facilities. Under the Medicaid Waiver
Program, states apply to the Health Care Financing Administration for a waiver
to use Medicaid funds to support community-based options for the low income
elderly that need long-term care. These waivers permit states to reallocate a
portion of Medicaid funding for nursing facility care to other forms of care
such as assisted living.
In compliance with the underlying state bond financing, rents at one residence
in Oregon must be approved by an agency of the state. Two other residences
financed with loans guaranteed by the Department of Housing and Urban
Development (HUD) have rents requiring approval by HUD. Wedgwood has not
experienced any denials of requested rents or rent increases.
Consideration
As part of the acquisition of Wedgwood, Greenbriar committed to pay or issue
675,000 shares of its Series D preferred stock, 1,912,800 shares of its Series E
preferred stock and $425,000 in cash and notes. To assist Greenbriar in its
efforts to help make the acquisition tax-free, James R. Gilley and members of
his family agreed to contribute a shopping center in North Carolina in exchange
for the Greenbriar Series D preferred stock referred to above. The consideration
received by James R. Gilley and members of his family, valued at $3,375,000, was
based upon an independent appraisal of the North Carolina shopping center. Both
classes of stock are unregistered, have no trading market unless converted to
common stock, and are entitled to one vote per share on all matters to come
before a meeting of stockholders. The Series D preferred stock bears a
cumulative quarterly dividend of 9.5% per year. The Series E preferred stock
bears no dividend for two years, and it is anticipated that Series E shares will
be converted to Greenbriar common stock before that time. With shareholder
approval, expected at a shareholders' meeting during 1996, both series of
preferred stock will become convertible into unregistered shares of Greenbriar
common, with the Series E convertible at 1.2 shares for each share of Greenbriar
common stock and Series D convertible at two shares for each share of Greenbriar
common stock.
10
Additional Agreements
As part of the Wedgwood acquisition, Greenbriar entered into one year employment
agreements with Paul Dendy, Mark Hall and Teresa Waldroff. The Company also
entered into a three year construction management agreement with Victor L. Lund.
As part of the construction management agreement Mr. Lund agrees to oversee the
construction of full service retirement and assisted living facilities (four in
1996, approximately six in 1997 and approximately ten in 1998), including those
that provide Alzheimer's care. As consideration for performance of his services,
Mr. Lund is to receive monthly fees based on the percentage of completion of
each of these projects with a total fee of $150,000 for each project
successfully completed, less profits from Villa del Rey - Retirement, Ltd. and
Neawanna By The Sea Limited Partnership. Greenbriar also obtained an option to
acquire Mr. Lund's ownership interests in Villa del Rey - Retirement, Ltd. and
Neawanna By The Sea Limited Partnership.
Corporate Offices
Wedgwood's principal executive offices are located at 816 NE 87th Avenue,
Vancouver, Washington, where Wedgwood leases approximately 6,000 square feet of
office space for $6,194 per month. This lease expires during December 1996.
Company Employees
As of March 15, 1996, the Company employed approximately 345 full time persons
and 166 part time persons. The Company employed 35 full time employees in its
Corporate offices in Texas and Washington. The balance of the Company's
employees work in its various facilities.
Sale of Mobility Assistance Subsidiaries
On February 9, 1996, The Company sold its wholly owned subsidiary American
Mobility, Inc. ("AMI") along with AMI's subsidiaries Odyssey Mobility, Inc.,
Aviation Mobility, Inc. and Alpha Mobility, Inc. to Innovative Health Services,
Inc. ("IHS"), a private company. The sales price was $4,300,000, consisting of a
$2 million note and $2,300,000 (230,000 shares) of IHS's Class A convertible
preferred stock. The Company will record a gain of approximately $930,000 on the
sale of AMI. The price and terms of the sale were determined through arms length
negotiations between the parties. The $2 million note bears interest at the
prime rate plus 1% and is payable quarterly. The note calls for annual principal
payments equal to a percentage of IHS's earnings with a final payment due on
February 9, 2001. The preferred stock has a cumulative dividend rate of 8% per
annum, payable quarterly. The preferred stock has no voting rights unless
dividends are in arrears. After three years, under certain circumstances, the
Company can convert the preferred stock into IHS common stock, at a price of 75%
of the prevailing market price at the time of conversion.
Environmental Matters
The Company and/or Wedgwood have conducted environmental assessments of all of
the undeveloped sites and sites currently under construction and believe that
the third party owner of the property managed by Wedgwood has conducted such an
assessment. These assessments have not revealed any environmental liability that
the Company believes would have a material adverse effect on its business,
assets or results of operations, nor is the Company aware of any such
environmental liability. Wedgwood has operated ten residences for which
environmental assessments have not been conducted for periods ranging from one
to 18 years. The Company believes that all residences are in compliance in all
material respects with all Federal, state and local laws, ordinances and
regulations regarding hazardous or toxic substances or petroleum products. The
Company has not been notified by any governmental authority, and it is not
otherwise aware, of any material non-compliance, liability or claim relating to
hazardous or toxic substances or petroleum products in connection with any of
its present properties.
11
ITEM 2: DESCRIPTION OF PROPERTY
Greenbriar's principal office is a 27,500 square feet facility that it owns in
Addison, Texas. The facility includes the executive offices of the Company as
well as warehouse space. Such facilities are adequate for the foreseeable
future.
At December 31, 1995, the Company owned three shopping centers in Georgia. These
are the remaining properties from the 1993 acquisition of EquiVest Inc.
("EquiVest"). The Company also owns a shopping center in North Carolina which
was acquired as part of the March 15, 1996 acquisition of Wedgwood. It is
anticipated that these properties will be sold for amounts that approximates the
carrying value of the properties.
The Company owns a 44 unit, 71 bed assisted living and Alzheimer's facility in
Denison, Texas which it anticipates will open for operation in May 1996.
For details on the Company's properties acquired through Wedgwood please see
page 7.
ITEM 3: LEGAL PROCEEDINGS
Southern Care Corporation vs. CareAmerica and Medical Resource Companies of
America
In December 1991 the Company sold four nursing homes in Georgia to Southern Care
Corporation. CareAmerica, Inc. ("CareAmerica"), a subsidiary of the Company,
entered into a management agreement with Southern Care Corporation for the
management of the four homes. Subsequent to 1993, CareAmerica was no longer
providing management services to Southern Care Corporation. Southern Care
Corporation has filed a lawsuit alleging gross mismanagement against
CareAmerica. The lawsuit seeks damages in excess of $1,500,000. In addition,
Southern Care Corporation has filed a lawsuit against the Company to cancel the
$6,700,000 mortgage note payable to the Company and recover interest payments
made in 1992 and 1993. The Company believes it has substantial defenses against
all claims and CareAmerica has counterclaims for substantial sums for breach of
the management contract.
Sunrise Healthcare Corporation vs. CareAmerica, Inc.
Eldercare Housing Foundation ("Eldercare"), owned a nursing home in Tucson,
Arizona and Sunrise Healthcare Corporation ("Sunrise") had a management contract
to manage the home. Eldercare subsequently awarded the management contract to
CareAmerica, a Company subsidiary. Sunrise (and a related company, Sundance) has
filed a lawsuit against CareAmerica, Inc., James Gilley (and his wife) and Terry
Wilson (and his wife - Mr. Wilson is a former employee of the Company) alleging,
generally, that the defendants interfered with Sunrise's management contract.
The Company's bylaws provide indemnification for officers and employees. The
plaintiffs claim appears to be for losses in the range of $380,000 plus punitive
and treble damages, attorney's fees and costs. In addition to its defenses,
CareAmerica has counter claims against Sunrise alleging breach of contract and
negligent property management for damages in the amount of $943,000.
12
The Company has been named as defendant in other lawsuits in the ordinary course
of business. Management of the Company is of the opinion that these lawsuits
will not have a material effect on the financial condition of the Company.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 1995.
PART II
ITEM 5: MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded under the symbol "GBR" and is listed on the
American Stock Exchange.
The high and low closing sales prices of the Company's common stock on the
American Stock Exchange during the last two fiscal years are set forth below:
1995 1994
High Low High Low
First Quarter 8 3/4 5 12 1/2 9 1/16
Second Quarter 10 15/16 5 5/16 11 1/4 8 1/8
Third Quarter 13 7/16 9 1/16 10 5/8 5 5/16
Fourth Quarter 13 7/16 7 3/16 7 13/16 4 3/8
The above prices have been adjusted to reflect a one for five reverse split of
the Company's common stock that occurred on December 1, 1995.
The Company has not paid any cash dividends on its common stock. The Board of
Directors currently intends to retain earnings for further development of the
Company's business and not pay cash dividends on the Company's common stock in
the foreseeable future. No dividends can be paid on the Company's common stock
if dividends are in arrears on the Company's preferred stock. All dividend
payments on preferred stock are current.
13
The closing price of the Company's common stock on March 26, 1996 was $15.875
per share. As of March 7, 1996, there were 3,887 holders of record of the
Company's common stock.
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Liquidity and Capital Resources
At December 31, 1995 the Company had current assets of $10,908,000. Of that
amount $7,199,000 was held in cash. Total current liabilities were $893,000. The
Company's total long term debt at December 31, 1995 was $901,000, which
represents non-recourse debt with respect to two shopping centers owned by the
Company. During 1995 the Company continued the program of selling its
non-strategic assets and using the proceeds to acquire additional businesses and
invest in existing operations.
In January 1995 the Company sold The Fountainview, a retirement center in West
Palm Beach, Florida. The net sales proceeds were approximately $18,000,000. The
Company used approximately $9,000,000 of the proceeds to repay the mortgage. The
balance was used to increase working capital.
In January 1995, the Company used approximately $5,000,000 of its cash to pay
off short-term bank debt.
In May 1995, EquiVest Inc. sold a shopping center in Florida for $750,000. The
proceeds included $600,000 in cash and a mortgage note for $150,000. The note is
due May 24, 2000 and bears interest in rates varying from 8 1/4% to 12 1/4%.
In June 1995, the Company sold its economic interest in a legal claim with
respect to Wespac Investors Trust III, an unrelated third party. The Company
received proceeds of $1,085,000. The Company used the proceeds to redeem its
outstanding Series A preferred stock, which had a dividend rate of 12%.
As part of a larger transaction that occurred in 1992, the Company received the
rights to receive interest on certain escrow funds in the year 2028. At the time
of the transaction, for accounting purposes, the Company placed no value on that
right. In August 1995 the Company sold its rights to that future interest for
$1,140,000 in cash.
The Board of Directors of the Company has authorized management to re-purchase
up to 300,000 shares of the Company's common stock at such prices and times as
management deems appropriate. During 1995 the Company purchased 296,613 shares
of its common stock for a total of $2,010,000.
In March 1996, the Company acquired Wedgwood Retirement Inns, Inc. and related
entities and properties (see Item 1, page 5). As of December 31, 1995, on a pro
forma basis, the Company and Wedgwood have combined assets of $88,278,000,
combined liabilities of $46,531,000 and combined stockholders equity of
$41,747,000. Greenbriar and Wedgwood combined have sufficient liquidity and
capital resources to meet their current obligations.
14
The Company is continuing its plan of developing and acquiring facilities
throughout the United States. If necessary, the Company could complete the
facilities under construction through the use of existing capital. However, the
Company anticipates it will finance the facilities. The Company is currently
negotiating with a number of potential lenders.
Results of Operations
Fiscal 1995 As Compared to Fiscal 1994
The Company reported total revenue of $9,710,000 and net earnings of $5,797,000
or $1.57 per share for the year ended December 31, 1995 compared to total
revenue of $15,019,000 and net earnings of $1,788,000 or $.40 per share for the
year ended December 31, 1994.
During 1995 the Company continued its program of selling assets that were not
essential to its core business (see Item 1: Description of Business on page 1).
In January 1996, the Company sold its mobility products subsidiaries. The
financial statements reflect the revenue and costs associated with this
operation as discontinued operations.
On January 28, 1995 the Company sold what was then its remaining retirement and
assisted living facility, The Fountainview, at a gain of $5,149,000. During the
month of January 1995, The Fountainview generated revenues of $557,000 and
operating expenses of $322,000. During 1994 the Company owned both the
Fountainview and Rivermont Retirement Center, a facility which was sold in
December 1994. The revenue and expenses reflected in long term care for 1994
reflect the operations for both The Fountainview and Rivermont for the entire
year.
Revenue from real estate operations was $666,000 in 1995 as compared to
$2,029,000 in 1994. Cost of operating these properties was $337,000 in 1995 as
compared to $1,486,000 in 1994. Real estate operations reflect the revenue and
expenses from commercial real estate properties which the Company acquired in
1993 through the acquisition of EquiVest Inc. The Company acquired EquiVest with
the stated intention of selling the acquired assets. The reduced level of
revenue and expense for EquiVest reflects the ongoing sales of EquiVest
properties.
Gain on sales of assets for the year ended December 31, 1995 was $7,043,000.
This compares to $4,633,000 for the year ended December 31, 1994. The majority
of 1995's gain consists of $5,149,000 from the sale of Fountainview.
In April 1995 EquiVest sold a shopping center in Florida for $750,000 and
reported a gain of $100,000.
In June 1995 the Company sold its economic interest in a legal claim with
respect to Wespac Investors Trust III. The sales price was $1,085,000 and the
Company recorded a gain of $654,000. Separately, the Company acquired 49% of the
outstanding common stock of Wespac Investors Trust III in a private transaction.
The Company immediately sold its economic interest in that stock at no gain or
loss.
15
As part of a larger transaction that occurred in 1992 the Company received the
rights to the interest on certain escrow funds in the year 2028. At the time of
the transaction, for accounting purposes, the Company placed no value on that
right. In August 1995 the Company sold its rights to the future interest for
$1,140,000 in cash.
General and administrative expenses were $2,764,000 in 1995 as compared to
$4,028,000 in 1994. The most significant reason for this decrease was the sale
of The Fountainview in January 1995.
Interest income was $1,205,000 in 1995 as compared to $418,000 in 1994. Interest
expense was $206,000 in 1995 as compared to $2,979,000 in 1994. As the Company
sells assets, it increases the cash it has available for investments. The
increase in interest income reflects the interest received on those investments.
The decrease in interest expense was caused principally by two factors. First,
when the Company sold its assets it was also relieved of the obligation to pay
interest on liabilities associated with those assets. Second, the Company used
certain of its available cash to pay down corporate debt which further reduced
interest expense in 1995.
Fiscal 1994 As Compared to Fiscal 1993
The Company reported total revenues of $17,030,000 and net earnings of
$1,788,000 or $.40 per share for the year ended December 31, 1994 compared to
total sales of $11,057,000 and net income of $1,505,000 or $.40 per share for
1993.
Sales and rentals of Mobility Products decreased from $2,351,000 in 1993 to
$2,011,000 in 1994. In the second quarter of 1994 the Company decided to cease
selling scooters through the use of independent sales representatives. The low
level of volume and low profit margins could not justify the continuation of
selling through this method. The Company decided to utilize its manufacturing
and assembly capabilities to support its theme park and airline activities.
Sales of ECVs for 1994 were $182,000 as compared to $913,000 in 1993. Revenues
from the theme park and airline operations were $1,829,000 in 1994 as compared
to $1,438,000 in 1993. The costs of the Mobility Products decreased from
$1,932,000 in 1993 to $1,636,000 in 1994. The reduction in costs is due
principally to lower sales.
During all of 1994, the Company owned and operated two retirement facilities:
The Fountainview in West Palm Beach, Florida and Rivermont Retirement Center in
Norman, Oklahoma. For these two facilities, combined 1994 operating revenues
were $7,939,000 and combined operating expenses were $5,059,000. Based upon the
Company's business plan during 1993, these assets were classified as assets held
for sale and there are, therefore, no comparative figures for 1993.
During 1993, CareAmerica, Inc., a subsidiary of the Company, managed certain
properties for third parties. This effort concluded during 1993. CareAmerica is
no longer managing properties for others.
On March 31, 1993, the Company merged with EquiVest Inc. EquiVest owns and
operates commercial real estate. Real estate operations reflect the revenue and
expenses from the EquiVest properties. Revenues from real estate operations
decreased from $4,280,000 in 1993 to $2,029,000 in 1994. Expenses from real
estate operations decreased from $2,407,000 in 1993 to $1,486,000 in 1994. The
Company acquired EquiVest with the stated intention of selling EquiVest's
assets. The reduced level of revenue and expenses for EquiVest reflect the
ongoing sale of its properties.
16
Gain on sales of assets for the year ended December 31, 1994, was $4,633,000
compared to $2,450,000 for 1993. The gains in 1994 include those from the sale
of the Rivermont Retirement facility as well as various EquiVest assets. Absent
recognition of these gains, the Company would have had losses before income
taxes in both 1994 and 1993.
General and administrative expenses increased from $3,782,000 in 1993 to
$4,942,000 in 1994. During 1994 the sale of EquiVest assets provided the
opportunity to substantially reduce administrative costs of that operation. The
administrative costs of EquiVest decreased from $581,000 in 1993 to $527,000 in
1994. This decrease was offset by the increase in administrative costs due to
the consolidation of Fountainview and Rivermont. During 1993 these investments
were classified as assets held for sale.
Interest income decreased from $1,326,000 in 1993 to $418,000 in 1994. On March
31, 1993, the Company sold an $8.7 million mortgage bearing interest at 10%. The
reduction in interest income is a result of the Company no longer receiving
interest from that mortgage. Further, the Company holds a $6.7 million
receivable from Southern Care Corporation. A subsidiary of the Company is in
litigation with Southern Care Corporation (see Item 3: Legal Proceedings on page
12). As a result, the Company has ceased accruing income with respect to the
note until such time as the litigation is resolved.
Interest expense increased from $1,500,000 in 1993 to $2,979,000 in 1994. The
increase is due primarily to the inclusion of Rivermont and Fountainview in
1994.
As of December 31, 1994 the Company had a deferred tax asset of $2,185,000. This
asset is expected to be recovered within two to three years from earnings from
current operations as well as gains from the sales of certain of the Company's
real estate assets.
During 1994, management determined that it was in the Company's best interest to
discontinue its operations in skilled medical care which consists of nursing and
eating disorder facilities. During 1994, the Company sold the two nursing home
facilities which it owned in Houston and San Antonio, Texas and an eating
disorder facility which it owned in Wickenburg, Arizona.
ITEM 7: FINANCIAL STATEMENTS
The financial statements required by this item begin at page F-1 hereof.
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
17
PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
There is hereby incorporated by reference the information required by this item
which will appear in a proxy statement to be filed with the Securities and
Exchange Commission relating to the Registrant's Annual Meeting of Stockholders
to be held on May 24, 1996. The proxy statement will be filed within 120 days
after the Company's fiscal year end.
ITEM 10: EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information required by this item
which will appear in a proxy statement to be filed with the Securities and
Exchange Commission relating to the Registrant's Annual Meeting of Stockholders
to be held on May 24, 1996. The proxy statement will be filed within 120 days
after the Company's fiscal year end.
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is hereby incorporated by reference the information required by this item
which will appear in a proxy statement to be filed with the Securities and
Exchange Commission relating to the Registrant's Annual Meeting of Stockholders
to be held on May 24, 1996. The proxy statement will be filed 120 days after the
Company's fiscal year end.
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information required by this item
which will appear in a proxy statement to be filed with the Securities and
Exchange Commission relating to the Registrant's Annual Meeting of Stockholders
to be held on May 24, 1996. The proxy statement will be filed within 120 days
after the Company's fiscal year end.
18
ITEM 13: EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) The following exhibits required to be filed by Item 601 of Regulation
S-B are filed as part of this Annual Report on Form 10-KSB:
Exhibit
Number Description of Exhibits
3.1 Articles of Incorporation of Medical Resource Companies of America
("Registrant") (filed as Exhibit 3.1 to Registrant's Form S-4
Registration Statement, Registration No. 33-55968, and incorporated
herein by this reference). 3.1.1 Restated Articles of Incorporation of
Greenbriar Corporation, filed herewith.
3.2 Bylaws of Registrant (filed as Exhibit 3.2 to Registrant's Form S-4
Registration Statement, Registration No. 33-55968, and incorporated
herein by this reference).
3.2.1 Amendment to Section 3.1 of the Bylaws of Registrant adopted upon
approval of the Merger(filed as Exhibit 3.2.1 to Registrant's Form S-4
Registration Statement, Registration No.33-55968, and incorporated
herein by this reference).
3.3 Certificate of Decrease in Authorized and Issued Shares, filed
herewith.
4.1 Certificate of Designations, Preferences and Rights of Preferred Stock
dated October 7, 1992 relating to Registrant's Series A Preferred
Stock (filed as Exhibit 4.1 to Registrant's Form S-4 Registration
Statement, Registration No. 33-55968, and incorporated herein by this
reference).
4.1.2 Certificate of Designations, Preferences and Rights of Preferred
Stock dated May 7, 1993, relating to Registrant's Series B Preferred
Stock (filed as Exhibit 4.1.2 to Registrant's Form S-3 Registration
Statement, Registration No. 33-64840, and incorporated herein by this
reference.
4.1.3 Certificate of Designations, Preferences and Rights of Preferred
Stock dated August 18, 1993, relating to Registrants' Series C
Preferred Stock (filed as Exhibit 4.1.3 to Registrant's Form 10-KSB
for the year ended December 31, 1993).
4.1.3.1 Amendment to Certificate of Designations, Preferences and Rights of
Preferred Stock dated August 18, 1993, relating to Registrants' Series
C Preferred Stock, filed herewith.
4.1.4 Certificate of Designations, Preferences and Rights of Preferred
Stock dated March 15, 1996, relating to Registrants' Series D
Preferred Stock, filed herewith.
4.1.5 Certificate of Designations, Preferences and Rights of Preferred
Stock dated March 15, 1996, relating to Registrants' Series E
Preferred Stock, filed herewith.
19
Exhibit
Number Description of Exhibits
4.3.2 Registration Rights Agreement dated April 27, 1990 between
Registrant's predecessor and International Health Products, Inc.
(assumed by Registrant), which has been assigned to JRG Investments,
Inc., relating to 4,150,000 shares of Registrant's Common Stock, the
benefits of which were further assigned to Professional Investors
Insurance, Inc. as to 600,000 shares in November 1992(filed on June 5,
1990, as an Exhibit to the Registrant's predecessor's Current Report
on Form 8-K and incorporated herein by reference).
4.3.3 Form of Assignment of Registration Rights Agreement dated September
30, 1992 between JRG Investments, Inc. and Professional Investors
Insurance, Inc. relating to 600,000 shares of Registrant's Common
Stock (filed as Exhibit 4.3.3 to Registrant's Form S-4 Registration
Statement, Registration No. 33-55968, and incorporated herein by this
reference).
4.4 Form of Registration Rights Agreement dated December 1, 1991 between
Registrant and W. Michael Gilley (filed as Exhibit 4.4 to Registrant's
Form S-4 Registration Statement, Registration No. 33-55968, and
incorporated herein by this reference).
4.5.1 Stock Purchase Agreement dated May 7, 1993 for the purchase of
Complete Corporation and Remuda Acquisition Corporation (filed as
Exhibit 4.5.1 to Registrant's Form 10-KSB for the year ended December
31, 1993).
4.5.2 Registration Rights Agreement dated May 7, 1993 granted to the
shareholders of Complete Corporation and Remuda Acquisition Corp.
(filed as Exhibit 4.5.2 to Registrant's Form 10-KSB for the year ended
December 31, 1993).
4.5.3 Agreement and Plan of Merger dated June 30, 1994 with New Life
Treatment Centers, Inc. relating to the disposition of Remuda Ranch
Center for Anorexia and Bulimia, Inc. (filed as Exhibit 4.5.3 to
Registrant's Form 10-KSB for the year ended December 31, 1994).
4.5.4 Amended and Restated Certificate of Incorporation of New Life
Treatment Centers, Inc. (filed as Exhibit 4.5.4 to Registrant's Form
10-KSB for the year ended December 31, 1994).
4.5.5 Registration Righ t Agreement dated July 29, 1994 re. New Life
Treatment Centers, Inc. (filed as Exhibit 4.5.5 to Registrant's Form
10-KSB for the year ended December 31, 1994).
4.5.6 Restricted Stock Agreement dated July 29, 1994 re. New Life Treatment
Centers, Inc. (filed as Exhibit 4.5.6 to Registrant's Form 10-KSB for
the year ended December 31, 1994).
20
Exhibit
Number Description of Exhibits
4.6.1 Stock Purchase Agreement dated August 16, 1993 for the issuance of
Series C Preferred Stock (filed as Exhibit 4.6.1 to Registrant's Form
10-KSB for the year ended December 31, 1993).
4.6.2 Stock Purchase Agreement dated August 16, 1993 between Clay Capital
Corporation and Altman Nursing, Inc. (filed as Exhibit 4.6.2 to
Registrant's Form 10-KSB for the year ended December 31, 1993).
4.7.1 Stock Purchase Agreement dated January 30, 1996 between Joseph L.
Durant, Innovative Health Services, Inc. and Medical Resource
Companies of America (filed as Exhibit 4.7.1 to Registrant's Form 8-K,
dated February 20, 1996, and incorporated herein by this reference).
4.8.1 Stock Purchase Agreement dated March 15, 1996 between Wedgwood
Retirement Inns, Inc., Victor L. Lund, Paul Dendy, Mark Hall, Frank R.
Reeves, Doris Thornsbury, Teresa Waldroff and Medical Resource
Companies of America (filed with Registrant's 8-K, dated March 15,
1996, and incorporated herein by this reference).
4.8.2 Amendment to Stock Purchase Agreement (dated March 15, 1996) dated
March 15, 1996 between Wedgwood Retirement Inns, Inc, Victor L. Lund,
Paul Dendy, Mark Hall, Frank R. Reeves, Doris Thornsbury, Teresa
Waldroff and Medical Resource Companies of America (filed with
Registrant's 8-K, dated March 15, 1996, and incorporated herein by
this reference).
10.1 Real Estate Lease of Alpha Mobility, Inc. (filed as Exhibit 10.1 to
Registrant's Form S-4 Registration Statement, Registration No.
33-55968, and incorporated herein by this reference).
10.3.2 Form of $62,500 Promissory Note dated December 27, 1991 payable to
Registrant by Gene S. Bertcher representing the purchase price for
250,000 shares of Registrant's Common Stock (filed as Exhibit 10.3.2
to Registrant's Form S-4 Registration Statement, Registration No.
33-55968, and incorporated herein by this reference).
10.3.3 Form of Renewal of Promissory Note dated October 14, 1992 extending
the maturity date of the Promissory Note referenced in Exhibit 10.3.2
(filed as Exhibit 10.3.3 to Registrant's Form S-4 Registration
Statement, Registration No. 33-55968, and incorporated herein by this
reference).
10.3.4 Form of Security Agreement - Pledge (Nonrecourse) between Gene S.
Bertcher and Registrant securing the Promissory Note referenced in
Exhibit 13.3.2. (filed as Exhibit 10.3.4 to Registrant's Form S-4
Registration Statement, Registration No. 33-55968, and incorporated
herein by this reference).
21
Exhibit
Number Description of Exhibits
10.4.1 Form of Stock Option to purchase 150,000 shares of Registrant's
Common Stock issued to Robert L. Griffis on October 12, 1992 (filed as
Exhibit 10.4.1 to Registrant's Form S-4 Registration Statement,
Registration No. 33-55968, and incorporated herein by this reference).
10.4.2 Form of $75,000 Promissory Note dated October 12, 1992 payable to
Registrant by Robert L. Griffis representing the purchase price for
150,000 shares of Registrant's Common Stock (filed as Exhibit 10.4.2
to Registrant's Form S-4 Registration Statement, Registration No.
33-55968, and incorporated herein by this reference).
10.4.3 Form of Security Agreement - Pledge (Nonrecourse) between Registrant
and Robert L. Griffis securing the Promissory Note referenced in
Exhibit 10.4.2 (filed as Exhibit 10.4.3 to Registrant's Form S-4
Registration Statement, Registration No. 33-55968, and incorporated
herein by this reference).
10.6.1 Form of Stock Option to purchase 100,000 shares of Registrant's
Common Stock issued to Oscar Smith on October 1, 1992 (filed as
Exhibit 10.6.1 to Registrant's Form S-4 Registration Statement,
Registration No. 33-55968, and incorporated herein by this reference).
10.6.2 Form of $50,000 Promissory Note dated October 1, 1992 payable to
Registrant by Oscar Smith representing the purchase price for 100,000
shares of Registrant's Common Stock (filed as Exhibit 10.6.2 to
Registrant's Form S-4 Registration Statement, Registration No.
33-55968, and incorporated herein by this reference).
10.6.3 Form of Security Agreement - Pledge (Nonrecourse) between Registrant
and Oscar Smith securing the Promissory Note referenced in Exhibit
10.6.2 (filed as Exhibit 10.6.3 to Registrant's Form S-4 Registration
Statement, Registration No. 33-55968, and incorporated herein by this
reference).
10.7.1 Form of Stock Option to purchase 80,000 shares of Registrant's
Common Stock issued to Lonnie Yarbrough on October 12, 1992 (filed as
Exhibit 10.7.1 to Registrant's Form S-4 Registration Statement,
Registration No. 33-55968, and incorporated herein by this reference).
10.7.2 Form of $40,000 Promissory Note dated October 12, 1992 payable to
Registrant by Lonnie Yarbrough representing the purchase price for
80,000 shares of Registrant's Common Stock (filed as Exhibit 10.7.2 to
Registrant's Form S-4 Registration Statement, Registration No.
33-55968, and incorporated herein by this reference).
10.7.3 Form of Security Agreement - Pledge (Nonrecourse) between Registrant
and Lonnie Yarbrough securing the Promissory Note referenced in
Exhibit 10.7.2 (filed as Exhibit 10.7.3 to Registrant's Form S-4
Registration Statement, Registration No. 33-55968, and incorporated
herein by this reference).
22
Exhibit
Number Description of Exhibits
10.8.1 Form of Stock Option to purchase 80,000 shares of Registrant's
Common Stock issued to Dennis McGuire on October 1, 1992 (filed as
Exhibit 10.8.1 to Registrant's Form S-4 Registration Statement,
Registration No. 33-55968, and incorporated herein by this reference).
10.8.2 Form of $40,000 Promissory Note dated October 1, 1992 payable to
Registrant by Dennis McGuire representing the purchase price for
80,000 shares of Registrant's Common Stock (filed as Exhibit 10.8.2 to
Registrant's Form S-4 Registration Statement, Registration No.
33-55968, and incorporated herein by this reference).
10.8.3 Form of Security Agreement - Pledge (Nonrecourse) between Registrant
and Dennis McGuire securing the Promissory Note referenced in Exhibit
10.8.2 (filed as Exhibit 10.8.3 to Registrant's Form S-4 Registration
Statement, Registration No. 33-55968, and incorporated herein by this
reference).
10.9.1 Form o f Stock Option to purchase 10,000 shares of Registrant's
Common Stock issued to Michael Merrell on October 12, 1992 (filed as
Exhibit 10.9.1 to Registrant's Form S-4 Registration Statement,
Registration No. 33-55968, and incorporated herein by this reference).
10.9.2 Form of $5,000 Promissory Note dated October 12, 1992 payable to
Registrant by Michael Merrell representing the purchase price for
10,000 shares of Registrant's Common Stock (filed as Exhibit 10.9.2 to
Registrant's Form S-4 Registration Statement, Registration No.
33-55968, and incorporated herein by this reference).
10.9.3 Form of Security Agreement - Pledge (Nonrecourse) between Registrant
and Michael Merrell securing the Promissory Note referenced in Exhibit
10.9.2 (filed as Exhibit 10.9.3 to Registrant's Form S-4 Registration
Statement, Registration No. 33-55968, and incorporated herein by this
reference).
10.9.4 Form of $187,000 promissory note dated December 29, 1994, payable to
Registrant by W. Michael Gilley representing the purchase price for
150,000 shares of Registrant's Common Stock (filed as Exhibit 10.9.4
to Registrant's Form 10-KSB for the year ended December 31, 1994).
10.9.5 Form of Security Agreement-Pledge between Registrant and W. Michael
Gilley securing the promissory note referenced in Exhibit 10.9.4
(filed as Exhibit 10.9.5 to Registrant's Form 10-KSB for the year
ended December 31, 1994).
10.9.6 Form of $62,500 promissory note dated December 29, 1994, payable to
Registrant by L.A. Tuttle representing the purchase price of 50,000
shares of Registrant's common stock (filed as Exhibit 10.9.6 to
Registrant's Form 10-KSB for the year ended December 31, 1994).
23
Exhibit
Number Description of Exhibits
10.9.7 For of Security Agreement-Pledge between Registrant and L.A. Tuttle
securing the promissory note reference in Exhibit 10.9.6 (filed as
Exhibit 10.9.7 to Registrant's Form 10-KSB for the year ended December
31, 1994).
10.11 Stock Exchange Agreement dated December 31, 1991 for the acquisition
of CareAmerica, Inc. (filed as Exhibit 10.13 to Registrant's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1991 and
incorporated herein by reference).
10.12 Employment Agreement and Agreement Not to Compete between Registrant
and Dennis McGuire dated November 1, 1990 (filed as Exhibit 10.12 to
Registrant's Form S-4 Registration Statement, Registration No.
33-55968, and incorporated herein by this reference).
10.13 Registrant's 1992 Stock Option Plan (filed as Exhibit 10.13 to
Registrant's Form S-4 Registration Statement, Registration No.
33-55968, and incorporated herein by this reference).
10.13.1 Amendment to Registrant's 1992 Stock Option Plan (filed as Exhibit
10.13.1 to Registrant's Form 10-KSB for year ended December 31, 1994).
10.20.2 Contract of Sale dated December 28, 1994 with Autumn America
Retirement, Ltd. regarding the sale of Fountainview Retirement Center
(filed as Exhibit 10.20.2 to Registrant's Form 10-KSB for year ended
December 31, 1994).
10.20.3 Exchange Agreement dated December 20, 1994 to settle the Fountainview
second mortgage profit participation, (filed as Exhibit 10.20.3 to
Registrant's Form 10-KSB for year ended December 31, 1994).
10.21.1 Extended and Consolidated Promissory Note in the principal amount
of $5,700,000 dated effective May 23, 1992 payable by JRG Investment
Co., Inc. to M.S. Holding Co. Corp. (filed as Exhibit 10.22.1 to
Registrant's Form S-4 Registration Statement, Registration No.
33-55968, and incorporated herein by this reference).
10.21.2 Extended and Consolidated Pledge Agreement dated effective May 23,
1992 between JRG Investment Co., Inc. and M.S. Holding Co. Corp.
securing the Note referenced in Exhibit 10.22.1 (filed as Exhibit
10.22.2 to Registrant's Form S-4 Registration Statement, Registration
No. 33-55968, and incorporated herein by this reference).
10.21.3 Pledge Agreement dated as of May 23, 1992 between James R. Gilley
and M.S. Holding Co. Corp. (filed as Exhibit 10.22.3 to Registrant's
Form S-4 Registration Statement, Registration No. 33-55968, and
incorporated herein by this reference).
24
Exhibit
Number Description of Exhibits
10.21.4 Irrevocable Proxy from James R. Gilley to M.S. Holding Co. Corp.
relating to shares of capital stock of JRG Investment Co., Inc. (filed
as Exhibit 10.22.4 to Registrant's Form S-4 Registration Statement,
Registration No. 33-55968, and incorporated herein by this reference).
10.21.5 Blank Assignment and Power of Attorney signed by JRG Investment
Co., Inc. relating to 482,000 shares of Registrant's Common Stock
(filed as Exhibit 10.22.5 to Registrant's Form S-4 Registration
Statement, Registration No. 33-55968, and incorporated herein by this
reference).
10.21.6 Blank Assignment and Power of Attorney signed by JRG Investment
Co., Inc. relating to 1,268,000 shares of Registrant's Common Stock
(filed as Exhibit 10.22.6 to Registrant's Form S-4 Registration
Statement, Registration No. 33-55968, and incorporated herein by this
reference).
10.21.7 Three Blank Assignments and Powers of Attorney signed by JRG
Investment Co., Inc., each relating to 600,000 shares of Registrant's
Common Stock (filed as Exhibit 10.22.7 to Registrant's Form S-4
Registration Statement, Registration No. 33-55968, and incorporated
herein by this reference).
10.21.8 Blank Assignment and Power of Attorney signed by JRG Investment
Co., Inc. relating to 2,281,818 shares of Registrant's Common Stock
(filed as Exhibit 10.22.8 to Registrant's Form S-4 Registration
Statement, Registration No. 33-55968, and incorporated herein by this
reference).
10.21.9 Blank Assignment and Power of Attorney signed by JRG Investment
Co., Inc. relating to 905,557 shares of Registrant's Series A
Preferred Stock (filed as Exhibit 10.22.9 to Registrant's Form S-4
Registration Statement, Registration No. 33-55968, and incorporated
herein by this reference).
10.22 Purchase and Sale Agreement dated February 1, 1993 for the purchase
of nursing homes in Houston and San Antonio, Texas (filed as Exhibit
10.23 to Registrant's Form S-4 Registration Statement, Registration
No. 33-55968, and incorporated herein by this reference).
10.23.3 Assets Purchase Agreement dated December 13, 1994 with Hermann Park
Manor and HCCI-Houston, Inc. for the Sale of Hermann Park manor (filed
as Exhibit 10.23.3 to Registrant's Form 10-KSB for the year ended
December 31, 1994).
10.23.4 Assets Purchase Agreement dated December 13, 1994 with Alta Vista
Nursing Center, Inc. and HCCI-Houston, Inc. for the Sale of Alta Vista
Nursing Center (filed as Exhibit 10.23.4 to Registrant's Form 10-KSB
for the year ended December 31, 1994).
25
Exhibit
Number Description of Exhibits
10.25.1 Agreement dated September 14, 1994 to terminate and settle
Executive Employment Agreement with Arthur G. Weiss (filed as Exhibit
10.25.1 to Registrant's Form 10- KSB for the year ended December 31,
1994).
10.30.2 Memorandum of Understanding amending Exhibit 10.30.1. (Filed as
Exhibit 10.30.2 to Registrant's Form 10-KSB for the year ended
December 31, 1993).
10.30.3 Letter dated January 6, 1995, terminating Stock Purchase Agreement
relating to Bankers Protective Life Insurance Company. (Filed as
Exhibit 10.30.3 to Registrant's Form 10-KSB for the year ended
December 31, 1994).
10.33 Stock Option Agreement dated November 21, 1993 between Registrant and
Arthur G. Weiss. (Filed as Exhibit 10.33 to Registrant's Form 10-KSB
for the year ended December 31, 1993).
10.34 Stock Option Agreement dated November 21, 1993 between Registrant and
Gene S. Bertcher. (Filed as Exhibit 10.34 to Registrant's Form 10-KSB
for the year ended December 31, 1993).
10.35.1 Purchase Agreement dated December 6, 1994 with Arizona Baptist
Retirement Centers, Inc. for the Sale of Rivermont at the Trails.
(Filed as Exhibit 10.35.1 to Registrant's Form 10-KSB for the year
ended December 31, 1994).
11.1 Statement Regarding Computation of Earnings per Share of Registrant.
22.1 Subsidiaries of Registrant.
b) Reports on Form 8-K - None
26
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GREENBRIAR CORPORATION
April 10, 1995 By:/s/ James R. Gilley
-------------------
James R. Gilley, President
In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
April 10, 1996 /s/ James R. Gilley
James R. Gilley, Chairman, President, Chief Executive
Officer (Principal Executive Officer) and Director
April 10, 1996 /s/ Gene S. Bertcher
Gene S. Bertcher, Executive Vice President and Chief
Financial Officer (Principal Financial and Accounting
Officer) and Director
April 10, 1996 /s/ W. Michael Gilley
W. Michael Gilley, Executive Vice President and
Director
April 10, 1996 /s/ Robert L. Griffis
Robert L. Griffis, Senior Vice President, Secretary and
Director
April 10, 1996 /s/ Richards D. Barger
Richards D. Barger, Director
April 10, 1996 /s/ Don C. Benton
Don C. Benton, Director
27
April 10, 1996 /s/ Paul G. Chrysson
Paul G. Chrysson, Director
April 10, 1996 /s/ Matthew G. Gallins
Matthew G. Gallins, Director
April 10, 1996 /s/ Steven R. Hague
Steven R. Hague, Director
April 10, 1996 /s/ Michael E. McMurray
Michael E. McMurray, Director
April 10, 1996 /s/ Victor L. Lund
Victor L. Lund, Director (since March 15, 1996)
April 10, 1996 /s/ Paul Dendy
Paul Dendy, Director (since March 15, 1996)
April 10, 1996 /s/ Mark Hall
Mark Hall, Director (since March 15, 1996)
28
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Certified Public Accountants F-2
Consolidated Balance Sheets - December 31, 1995 and 1994 F-3
Consolidated Statements of Earnings - Years Ended F-5
December 31, 1995 and 1994
Consolidated Statement of Changes in Stockholders' Equity - F-6
December 31, 1995 and 1994
Consolidated Statements of Cash Flows - Years Ended F-7
December 31, 1995 and 1994
Notes to Consolidated Financial Statements F-9
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Greenbriar Corporation
We have audited the accompanying consolidated balance sheets of Greenbriar
Corporation and subsidiaries as of December 31, 1994 and 1995, and the related
consolidated statements of earnings, changes in stockholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Greenbriar
Corporation and subsidiaries as of December 31, 1994 and 1995, and the
consolidated results of their operations and their consolidated cash flows for
the years then ended, in conformity with generally accepted accounting
principles.
/s/ Grant Thornton LLP
GRANT THORNTON LLP
Dallas, Texas
March 8, 1996
Greenbriar Corporation
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
December 31,
1995
Pro forma
ASSETS 1994 1995 (Note M)
------ ------ --------
(unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 8,311 $ 7,199 $ 7,781
Accounts receivable - trade, less allowance of
$601 in 1994 1,925 23 170
Deferred income tax benefit 2,185 2,150 -
Real estate under contract of sale 14,889 - -
Other current assets 1,455 1,536 2,017
------ ------ ------
Total current assets 28,765 10,908 9,968
REAL ESTATE 3,204 3,190 3,190
NET ASSETS OF MOBILITY GROUP 3,330 3,371 3,371
INVESTMENT IN SECURITIES, AT COST 1,678 1,853 1,853
MORTGAGE NOTES RECEIVABLE 6,700 7,368 7,368
PROPERTY AND EQUIPMENT, AT COST
Land 100 322 5,998
Buildings and improvements 767 767 48,942
Equipment and furnishings 192 203 1,786
Construction in progress - 1,576 1,928
--- ------ ------
1,059 2,868 58,654
Less accumulated depreciation 186 252 252
---- ---- ----
873 2,616 58,402
RESTRICTED CASH AND INVESTMENTS - - 2,846
OTHER ASSETS 414 466 1,280
---- ---- ------
$44,964 $29,772 $88,278
====== ====== ======
The accompanying notes are an integral part of these statements.
F-3
Greenbriar Corporation
CONSOLIDATED BALANCE SHEETS - CONTINUED
(Amounts in thousands, except per share data)
December 31,
1995
Pro forma
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1995 (Note M)
------ ------ --------
(unaudited)
CURRENT LIABILITIES
Note payable $ 5,008 $ - $ -
Current maturities of long-term debt 379 8 1,525
Long-term debt collateralized by properties under
contract of sale 8,933 - -
Accounts payable - trade 1,149 412 1,360
Accrued expenses 1,753 343 1,735
Other current liabilities 1,405 130 499
------ ---- ----
Total current liabilities 18,627 893 5,119
LONG-TERM DEBT 1,110 901 37,218
DEFERRED INCOME TAXES - - 1,111
DEFERRED GAIN 3,083 3,083 3,083
STOCKHOLDERS' EQUITY
Series A cumulative preferred stock, $.10 par value;
liquidation value of $1,085 in 1994; authorized,
10,000 shares; issued and outstanding, 1,085
shares in 1994 108 - -
Series B cumulative convertible preferred stock,
$.10 par value; liquidation value of $1,330 in
1995 and $1,351 in 1994; authorized, 100 shares;
issued and outstanding, 14 shares 1 1 1
Series C cumulative convertible preferred stock,
$.10 par value; liquidation value of $2,000;
authorized, issued and outstanding, 20 shares 2 2 2
Series D cumulative preferred stock, $.10 par value
authorized, 675 shares - - 68
Series E cumulative preferred stock, $.10 par value
authorized, 1,913 shares - - 191
Common stock, $.01 par value; authorized, 20,000
shares; issued and outstanding, 3,452 and 3,708
shares in 1995 and 1994, respectively 185 35 35
Additional paid-in capital 36,442 33,957 50,550
Accumulated deficit (12,156) (6,584) (6,584)
------- ------- ------
24,582 27,411 44,263
Less stock purchase notes receivable (2,438) (2,516) (2,516)
------- ------- ------
22,144 24,895 41,747
------- ------- ------
$ 44,964 $ 29,772 $88,278
======= ======= ======
The accompanying notes are an integral part of these statements.
F-4
Greenbriar Corporation
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except share data)
Years ended December 31,
1994 1995
------ -----
Revenue
Long-term care facilities $ 7,939 $ 557
Real estate operations 2,029 666
Gain on sales of assets 4,633 7,043
Interest 418 1,205
Other - 239
--- ----
15,019 9,710
Expenses
Long-term care facilities 5,059 322
Real estate operations 1,486 337
General and administrative 4,028 2,764
Interest 2,979 206
------ ----
13,552 3,629
------ ------
Earnings from continuing operations before income taxes 1,467 6,081
Income tax expense 240 186
---- ----
Earnings from continuing operations 1,227 5,895
Discontinued operations
Loss from operations, net of income taxes (617) (98)
Gain on disposal, net of income taxes 1,178 -
------ --
NET EARNINGS 1,788 5,797
Preferred stock dividend requirement (327) (225)
----- -----
Earnings allocable to common stockholders $ 1,461 $ 5,572
====== ======
Earnings per share
Continuing operations $ .24 $ 1.60
Net earnings $ .40 $ 1.57
Weighted average number of common and equivalent shares outstanding 3,679 3,539
The accompanying notes are an integral part of this statement.
F-5
Greenbriar Corporation
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Amounts in thousands)
Stock
Additional purchase
Preferred stock Common stock paid in Accumulated notes Treasury Total
Shares Amount Shares Amount capital deficit receivable stock equity
------ ------ ------ ------ ------- ------- ---------- ----- ------
Balances at January 1, 1994 1,075 $ 107 18,395 $183 $36,132 $(13,616) $(2,250) $(7) $20,549
Issuance of shares - - 147 2 179 - (188) 7 -
Dividends on preferred stock,
including imputed dividends
of $42 44 4 - - 131 (328) - - (193)
Net earnings - - - - - 1,788 - - 1,788
--- --- --- --- --- -------- --- --- ------
Balances at December 31, 1994 1,119 111 18,542 185 36,442 (12,156) (2,438) - 22,144
Issuance of shares - - 116 1 77 - (78) - -
Conversion of preferred stock (1) - 19 - - - - - -
Conversion of subordinated debt - - 67 1 199 - - - 200
Purchase of common stock - - (1,226) (12) (1,998) - - - (2,010)
Purchase of preferred stock (1,085) (108) - - (976) - - - (1,084)
Dividends on preferred stock 1 - - - 73 (225) - - (152)
One-for-five reverse stock split - - (14,066) (140) 140 - - - -
Net earnings - - - - - 5,797 - - 5,797
--- --- --- --- --- ------ --- --- ------
Balances at December 31, 1995 34 $ 3 3,452 $ 35 $33,957 $ (6,584) $(2,516) $ - $24,895
=== == ====== === ====== ======= ====== === ======
The accompanying notes are an integral part of these statements.
F-6
Greenbriar Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Years ended December 31,
1994 1995
------ -----
Cash flows from operating activities
Net earnings $ 1,788 $ 5,797
Adjustments to reconcile net earnings to net
cash used in operating activities
Discontinued operations (561) 98
Depreciation and amortization 1,306 182
Gain on sales of assets (4,633) (7,043)
Recognition of deferred gain (1,070) -
Stock dividends on investment securities - (175)
Changes in operating assets and liabilities
Accounts receivable (72) 1,902
Refundable income taxes 945 -
Deferred income tax benefit 369 35
Other current and noncurrent assets (2,381) (9)
Accounts payable and other liabilities 818 (3,546)
---- ------
Total adjustments (5,279) (8,556)
------ ------
Net cash provided by (used in) operating activities of:
Continuing operations (3,491) (2,759)
Discontinued operations (231) 209
----- ----
Net cash used in operating activities (3,722) (2,550)
Cash flows from investing activities
Proceeds from sales of assets 32,196 20,800
Proceeds from sales of discontinued operations 6,557 -
Additions to real estate (462) (54)
Purchase of property and equipment (608) (1,809)
Net cash effect of sale of subsidiary (273) -
Additions to mortgage notes receivable - (668)
Investing activities of discontinued operations (344) (348)
----- -----
Net cash provided by investing activities 37,066 17,921
The accompanying notes are an integral part of these statements.
F-7
Greenbriar Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Amounts in thousands)
Years ended December 31,
1994 1995
------ -----
Cash flows from financing activities
Proceeds from borrowings
Affiliates $ 1,000 $ -
Other 10,156 -
Payments on debt
Affiliates (1,625) -
Other (35,434) (14,321)
Dividends on preferred stock (193) (152)
Purchase of common stock - (2,010)
--- -------
Net cash used in financing activities (26,096) (16,483)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 7,248 (1,112)
Cash and cash equivalents at beginning of year 1,063 8,311
------ ------
Cash and cash equivalents at end of year $ 8,311 $ 7,199
====== =======
See Note C for supplemental disclosure of cash flows and noncash investing and
financing transactions.
F-8
Greenbriar Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature of Operations
--------------------
As discussed in Note B, Greenbriar Corporation (formerly Medical Resource
Companies of America) has disposed of substantially all of its
nonassisted-living operating assets. Its business will consist of
development and operation of assisted living facilities which provide
housing, hospitality and personal and healthcare services to elderly
individuals. At December 31, 1995, the Company had one facility under
construction and sites under contract for four facilities. In March 1996,
the Company acquired a business that operates 16 facilities. See Note M.
A summary of the significant accounting policies applied in the preparation
of the accompanying consolidated financial statements follows.
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of Greenbriar
Corporation and its majority-owned subsidiaries (collectively, the Company).
All significant intercompany transactions and accounts have been eliminated.
Depreciation
------------
Depreciation is provided for in amounts sufficient to relate the cost of
property, plant and equipment to operations over their estimated service
lives. Depreciation is computed by the straight-line method.
Profit Recognition on Sales of Real Estate
------------------------------------------
Gains on sales of real estate are recognized when the requirements of
Statement of Financial Accounting Standards No. 66, "Accounting for Sales of
Real Estate," are met. Until the requirements for full profit recognition
have been met, a transaction is accounted for using either the deposit, cost
recovery, installment sale or financing method, whichever is appropriate
under the circumstances.
Use of Estimates
----------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash Equivalents
----------------
The Company considers all short-term deposits and money market investment
with a maturity of less than three months to be cash equivalents.
F-9
Greenbriar Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE B - DISCONTINUED OPERATIONS
In 1994, management concluded that operation of skilled medical care
facilities, consisting of nursing homes and eating disorder clinics, was not
in the best interest of the Company. In June 1994, the Company sold its
investment in Remuda Ranch Center for Anorexia and Bulimia, Inc. for shares
of the buyer's preferred stock, valued at $1,678,000. The preferred stock
bears a cumulative dividend of 8% and is convertible into shares of common
stock equal to approximately 4.9% of the outstanding shares at December 31,
1995. In December 1994, the Company's subsidiary, Altman Nursing, Inc., sold
its two skilled nursing facilities for an aggregate price of $6,400,000.
These sales resulted in an aggregate gain of $1,785,000, less applicable
income taxes of $607,000.
In 1995, management decided to sell the mobility products segment. The
segment was sold in February 1996 for stock and notes valued at
approximately $4,300,000. A gain of approximately $930,000, less applicable
income taxes, will be recorded in the first quarter of 1996.
Summarized balance sheet data for the mobility products segment is as
follows (amounts in thousands):
December 31,
1994 1995
---- ----
Assets
Current assets
Cash $ 65 $ 220
Inventories 370 363
Other 158 174
---- ----
Total current assets 593 757
Net property, plant and equipment 1,052 989
Other noncurrent assets, primarily goodwill and patents 1,945 1,811
----- -----
3,590 3,557
Liabilities
Current liabilities 260 186
---- ----
Net assets $3,330 $3,371
===== =====
The operations of the skilled medical care segment and the mobility products
segment have been presented in the accompanying financial statements as
discontinued operations.
Summarized operating results of these segments are as follows (in
thousands):
1994 1995
------ -----
Revenues $13,581 $2,027
====== =====
Loss before income taxes (935) (149)
Income tax benefit (318) (51)
----- ----
Net loss from operations $ (617) $ (98)
===== ====
F-10
NOTE C - CASH FLOW INFORMATION
Supplemental information on cash flows and noncash investing and financing
transactions is as follows (in thousands):
Years ended
December 31,
1994 1995
---- ----
Supplemental cash flow information
Interest paid $ 3,722 $ 211
Income taxes paid 27 46
Supplemental data on noncash investing and financing activities
Stock dividend paid on preferred shares 93 73
Sale of stock in exchange for notes receivable from employees and
officers 186 78
Conversion of subordinated debt to common stock - 200
Sale of assets in exchange for outstanding Series A preferred stock - 1,085
Sale of subsidiary
Securities received $(1,678) $ -
Assets sold 4,462 -
Liabilities transferred (3,861) -
Gain on sale 804 -
---- --
Net cash effect of sale of subsidiary $ (273) $ -
===== ==
F-11
NOTE D - DEBT
Long-term debt is comprised of the following (in thousands):
December 31,
1994 1995
---- ----
Mortgage note payable to a bank, payable monthly through maturity
in 1996. $ 8,933 $ -
Mortgage notes payable to a corporation bearing interest at 11.52%;
principal and interest payable in monthly installments through
maturity in 2004. 916 909
Note payable to a corporation bearing interest at 5%; principal and
interest payable in monthly installments through
maturity in December 1995. $ 341 $ -
Convertible note payable to an individual bearing interest at 6%;
interest due quarterly and principal due at maturity in 1998
(convertible into common stock at $3 per share). 200 -
Other 32 -
--- --
10,422 909
Less: Current maturities (379) (8)
Debt collateralized by properties under contract of sale (8,933) -
------ --
$ 1,110 $901
====== ===
NOTE E - INCOME TAXES
At December 31, 1995, the Company had net operating loss carryforwards of
approximately $7,500,000 which expire between 1999 and 2008. However,
approximately $5,100,000 of these net operating loss carryforwards have
limitations that restrict utilization to approximately $600,000 for any one
year. Also, carryforwards of $1,800,000, which expire between 2006 and 2008,
may only be used to offset future taxable income of the subsidiaries in
which the losses were generated.
The following is a summary of the components of income tax expense from
continuing operations (in thousands):
Year ended
December 31,
1994 1995
---- ----
Current $160 $151
Deferred 80 35
--- ---
$240 $186
==== ====
F-12
NOTE E - INCOME TAXES - Continued
Deferred tax assets and associated valuation allowances were comprised of
the following (in thousands):
December 31,
1994 1995
---- ----
Deferred tax assets:
Net operating loss carryforwards $ 4,650 $ 2,570
Real estate 488 141
Charitable contribution carryforwards - 606
Tax credits 125 220
Accrued expenses 60 103
Other 187 195
---- ----
Total deferred tax assets 5,510 3,835
Valuation allowance (3,325) (1,430)
Deferred tax liabilities:
Investment in securities - (237)
Other - (18)
--- ----
Total deferred tax liabilities - (255)
--- -----
Net deferred tax asset $ 2,185 $ 2,150
====== ======
Management expects the net deferred tax asset will be recovered within two
to three years from earnings of the Company.
Following is a reconciliation of income tax expense from continuing
operations with the amount of tax computed at the statutory rate (in
thousands):
Year ended December 31,
1994 1995
---- ----
Tax at the statutory rate $ 499 $ 2,004
Amortization of intangibles 113 30
Change in deferred tax asset valuation allowance,
exclusive of reductions for sold company in 1994 (547) (1,895)
Correction of prior period estimates 138 -
Other 37 47
--- ---
Tax expense $ 240 $ 186
==== ====
F-13
NOTE F - STOCKHOLDERS' EQUITY
On November 17, 1995, the Board of Directors authorized a one-for-five
reverse stock split effective December 1, 1995. All share and per share data
has been retroactively restated to give effect to the stock split.
The Series A preferred stock had a liquidation value of $1 per share and an
initial dividend rate of 6% that escalated to a maximum rate of 12% in 1994.
For accounting purposes, the preferred stock was deemed issued at a
discount. Such discount was being accreted in a manner that resulted in a
constant imputed dividend rate of 12%. Dividends were payable in cash or
additional shares at the stockholders' option. The Series A preferred stock
was redeemed in 1995.
The Series B preferred stock has a liquidation value of $1 per share and is
convertible into common stock over a ten-year period at prices escalating
from $25.00 per share in 1993 to $55.55 per share by 2001. Dividends at a
rate of 6% are payable in cash or preferred shares at the option of the
Company. At December 31, 1995 and 1994, there were cumulative, unpaid
dividends of approximately $73,000.
The Series C preferred stock has a liquidation value of $1 per share and is
convertible into common stock at a price of $15.00 per share. Dividends are
payable in cash at a rate of 6%.
Information relating to stock option activity during 1995 and 1994 is as
follows:
Year ended
December 31,
1994 1995
---- ----
Outstanding at beginning of year 327,500 155,500
Granted - 10,000
Cancelled (30,000) -
Expired - (10,000)
Reacquired (142,000) -
-------- -------
Outstanding at end of year 155,500 155,500
======= =======
The options are exercisable at various times through 2005 at prices ranging
from $11.25 to $13.20 per share. In 1994, the Company purchased options
covering 142,000 shares of common stock from a former employee/director for
$178,000.
At December 31, 1995, options to purchase 133,500 shares were exercisable.
F-14
NOTE G - EARNINGS PER SHARE
Earnings per share are determined by dividing net earnings, adjusted for
preferred stock dividends, by the weighted average number of common shares
outstanding during the period. Dilutive stock options are included in
weighted average shares outstanding. Fully diluted earnings per share,
giving effect to assumed conversion of convertible preferred stock and
notes, are not presented because the effect of these securities is
insignificant.
NOTE H - OTHER RELATED PARTY TRANSACTIONS
1994
----
The Company sold to W. Michael Gilley, Executive Vice-President/Director of
the Company, 30,000 shares of common stock for a $187,500 note; principal
and interest are due in December 1999. Additional loans to executives and
directors of $55,000 were made in 1994. Also, a former executive of the
Company was paid commissions of $145,000 relating to the sale of property.
Sylvia Gilley, wife of the Company's Chief Executive Officer, James R.
Gilley, made a loan of $1,000,000 to the Company. The loan was repaid
during 1994.
1995
----
The Company purchased land from Sylvia Gilley for $221,000.
NOTE I - CONTINGENCIES
The Company and a subsidiary, CareAmerica, Inc. (CareAmerica) are defendants
in lawsuits brought by a corporation that purchased nursing homes from the
Company in 1991. The plaintiff alleges mismanagement of the homes during the
period that CareAmerica provided management services, seeks damages in
excess of $1,500,000, seeks cancellation of $6,700,000 of mortgage notes
payable to the Company and secured by the nursing homes, and seeks recovery
of interest payments made on the mortgage notes. Management believes the
Company has substantial defenses against all claims.
The Company is also defendant in several other lawsuits arising in the
ordinary course of business. Management of the Company is of the opinion
that these lawsuits will not have a material effect on the consolidated
results of operations or financial position of the Company.
F-15
NOTE J - SEGMENT INFORMATION
The Company's operations are classified into two business segments: real
estate and residential retirement centers. The real estate segment involves
the ownership and operation of commercial real estate. The residential
retirement segment involves the ownership and management of retirement
centers. The Company's mobility products segment has been presented as a
discontinued operation (Note B). Information with respect to business
segments for the years ended December 31, 1995 and 1994 is set forth below
(amounts in thousands):
Real Residential Corporate
estate retirement and other Total
------ ---------- --------- -----
1995
Revenues $ 789 $ 5,706 $ 3,215 $ 9,710
Gain on sale of assets 93 5,149 1,801 7,043
Earnings from continuing
operations before income taxes 271 5,274 536 6,081
Identifiable assets 3,326 1,527 24,919 29,772
Depreciation77 43 62 182
Capital expenditures 54 353 11 418
1994
Revenues $ 5,132 $ 9,660 $ 227 $15,019
Gain on sale of assets 2,913 1,720 - 4,633
Earnings (loss) from continuing
operations before income taxes 2,483 1,848 (2,864) 1,467
Identifiable assets 11,608 15,038 18,318 44,964
Depreciation239 683 66 988
Capital expenditures 462 43 573 1,078
NOTE K - FAIR VALUE OF FINANCIAL INVESTMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to
estimate values:
Cash and cash equivalents - The carrying amount approximates fair value
because of the short maturity of these instruments.
Investment in securities - The investment in securities consists of 8%
convertible preferred stock of a private company. It is not practicable to
estimate the fair value because the stock is not traded. Accordingly, the
investment is carried at its cost in the consolidated balance sheet.
F-16
NOTE K - FAIR VALUE OF FINANCIAL INVESTMENTS - Continued
Mortgage notes receivable - The mortgage notes receivable consist primarily
of $6,700,000 of notes with a stated interest rate of 14% and are due in
2021. It is not practicable to estimate the fair value of the notes.
Long-term debt - The fair value of the Company's long-term debt is estimated
based on market rates for the same or similar issues. At December 31, 1995,
the carrying amount of long-term debt approximates its fair value.
NOTE L - FOURTH QUARTER ADJUSTMENTS
During the fourth quarter of 1995, the Company made an adjustment to reduce
the deferred tax valuation allowance by $1,895,000.
During the fourth quarter of 1994, the Company wrote off goodwill related to
a 1992 acquisition of approximately $150,000, made other adjustments
reducing earnings by approximately $175,000 and reduced the deferred tax
valuation allowance by approximately $550,000.
NOTE M - ACQUISITION OF WEDGEWOOD RETIREMENT INNS, INC. AND AFFILIATES
In March 1996, the Company acquired substantially all of the assets and
liabilities of a number of companies under common control and managed by
Wedgewood Retirement Inns, Inc. The business of these companies consists of
the operation of 16 assisted living, congregate and Alzheimer's facilities.
Consideration given was 675,000 shares of Series D preferred stock,
1,912,784 shares of Series E preferred stock, and $425,000 in cash and
notes, all valued at approximately $14,000,000. To structure this
acquisition as a tax-free exchange, the Company acquired a shopping center
in North Carolina from James R. Gilley and members of his family in exchange
for the Series D preferred stock. Consideration was given based upon the
current independently appraised value of $3,375,000. The Series D and E
preferred stock is convertible, upon approval of the common stockholders,
into 1,931,500 shares of common stock.
The 1995 unaudited pro forma balance sheet presents the consolidated
financial position of the Company as if the acquisition had occurred at
December 31, 1995. The pro forma balance sheet is for illustrative purposes
only and does not purport to be indicative of the actual financial position
had the transaction been consummated as of that date.
F-17
EXHIBIT 3.1.1
STATE OF NEVADA
AMENDED & RESTATED
ARTICLES OF INCORPORATION
OF
GREENBRIAR CORPORATION
We, the directors of Greenbriar Corporation, wish to restate the Articles
of Incorporation, as amended, for Greenbriar Corporation:
ARTICLE ONE
The name of the Corporation is Greenbriar Corporation.
ARTICLE TWO
The address of the Corporation's principal office in the State of Nevada is
One East First Street, Reno, Nevada 89501, and the name of its registered agent
at such address is The Corporation Trust Company of Nevada.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the Act.
ARTICLE FOUR
The Corporation shall have authority to issue two classes of stock, and the
total number authorized shall be twenty million (20,000,000) shares of Common
Stock of the par value of one cent ($.01) each, and ten million (10,000,000)
shares of Preferred Stock of the par value of ten cents ($.10) each. A
description of the different classes of stock of the Corporation and a statement
of the designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, in respect of each class of
such stock are as follows:
1. Issuance in Class or Series. The Preferred Stock may be issued from time
to time in one or more series, or divided into additional classes and such
classes into one or more series. The terms of a class or series, including all
rights and preferences, shall be as specified in the resolution or resolutions
adopted by the Board of Directors designating such class or series, which
resolution or resolutions the Board of Directors is hereby expressly authorized
to adopt. Such resolution or resolutions with respect to a class or series shall
specify all or such of the rights or preferences of such class or series as the
Board of Directors shall determine, including the following, if applicable: (a)
the number of shares to constitute such class or series and the distinctive
designation thereof; (b) the dividend or manner for determining the dividend
payable with respect to the shares of such class or series and the date or dates
from which dividends shall accrue, whether such dividends shall be cumulative,
and, if cumulative, the date or dates from which dividends shall accumulate and
whether the shares in such class or series shall be entitled to preference or
priority over any other class or series of stock of the Corporation with respect
to payment of dividends; (c) the terms and conditions, including price or a
manner for determining the price, of redemption, if any, of the shares of such
class or series; (d) the terms and conditions of a retirement or sinking fund,
if any, for the purchase or redemption of the shares of such class or series;
(e) the amount which the shares of such class or series shall be entitled to
receive, if any, in the event of any liquidation, dissolution or winding up of
the Corporation and whether such shares shall be entitled to a preference or
priority over shares of another class or series with respect to amounts received
in connection with any liquidation, dissolution or winding up of the
Corporation; (f) whether the shares of such class or series shall be convertible
into, or exchangeable for, shares of stock of any other class or classes, or any
other series of the same or any other class or classes of stock, of the
Corporation and the terms and conditions of any such conversion or exchange; (g)
the voting rights, if any, of shares of stock of such class or series in
addition to those granted herein; (h) the status as to reissuance or sale of
shares of such class or series redeemed, purchased or otherwise reacquired, or
surrendered to the Corporation upon conversion; (i) the conditions and
restrictions, if any, on the payment of dividends or on the making of other
distributions on, or the purchase, redemption or other acquisition by the
Corporation or any subsidiary, of any other class or series of stock of the
Corporation ranking junior to such shares as to dividends or upon liquidation;
(j) the conditions, if any, on the creation of indebtedness of the Corporation,
or any subsidiary; and (k) such other preferences, rights, restrictions and
qualifications as the Board of Directors may determine.
All shares of the Common Stock shall be of the same class and shall have
equal dividend or distribution, liquidation and other rights.
All shares of the Common Stock shall rank equally, and all shares of the
Preferred Stock shall rank equally, and be identical within their classes in all
respects regardless of series, except as to terms which may be specified by the
Board of Directors pursuant to the above provisions. All shares of any one
series of a class of Preferred Stock shall be of equal rank and identical in all
respects, except that shares of any one series issued at different times may
differ as to the dates which dividends thereon shall accrue and be cumulative.
2. Other Provisions. Shares of Common Stock or Preferred Stock of any class
or series may be issued with such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative participating, option or
special rights, and qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions providing for the
issuance of such stock adopted by the Board of Directors. Any of the voting
powers, designations, preferences, rights and qualifications, limitations or
restrictions of any such class or series of stock may be made dependent upon
facts ascertainable outside the resolution or resolutions of the Board of
Directors providing for the issue of such stock by the Board of Directors,
provided the manner in which such facts shall operate upon the voting powers,
designations, preferences, rights and qualifications, limitations or
restrictions or such class or series is clearly set forth in the resolution or
resolutions providing for the issue of such stock adopted by the Board of
Directors. Shares of Common or Preferred Stock reacquired by the Corporation
shall no longer be deemed outstanding and shall have no voting or other rights
unless and until reissued. Shares reacquired by the Corporation may be canceled
and restored to the status of authorized and unissued stock by action of the
Board of Directors.
3. Common Stock. Except as otherwise provided in any resolution or
resolutions adopted by the Board of Directors, the Common Stock shall (a) have
the exclusive voting power of the corporation; (b) entitle the holders thereof
to one vote per share at all meetings of the stockholders of the Corporation;
(c) entitle the holders to share ratably, without preference over any other
shares of the Corporation, in all assets of the Corporation in the event of any
dissolution, liquidation or winding up of the Corporation; and (d) entitle the
record holder thereof on such record dates as are determined, from time to time,
by the Board of Directors to receive such dividends, if any, if, as and when
declared by the Board of Directors.
ARTICLE FIVE
The Corporation is to have perpetual existence.
ARTICLE SIX
No stockholder shall have any pre-emptive right to purchase shares of the
Corporation.
ARTICLE SEVEN
1. Designations. The governing board of the Corporation shall be styled as
a "Board of Directors," and any member of said Board shall be styled as a
"Director."
The number of members constituting the first Board of Directors is three (3);
and the name and the post office address of each of said members are as follows:
Name Address
James R. Gilley 10670 North Central Expressway, Suite 555
Dallas, Texas 75231
Gene S. Bertcher 10670 North Central Expressway, Suite 555
Dallas, Texas 75231
Al Gonzales 10670 North Central Expressway, Suite 555
Dallas, Texas 75231
2. Number, Election and Terms of Directors. The business and affairs of the
Corporation shall be managed by a Board of Directors, which, subject to the
rights of holders of shares of any class of series of Preferred Stock of the
Corporation then outstanding to elect additional Directors under specified
circumstances, shall consist of not less than three nor more than twenty-one
persons. The exact number of Directors within the minimum and maximum
limitations specified in the preceding sentence shall be fixed from time to time
by either (i) the Board of Directors pursuant to a resolution adopted by a
majority of the entire Board of Directors, (ii) the affirmative vote of the
holders of eighty percent (80%) or more of the voting power of all of the shares
of the Corporation entitled to vote generally in the election of Directors
voting together as a single class, or (iii) pursuant to Paragraph 7 of Article
Nine hereof. No decrease in the number of Directors constituting the Board of
Directors shall shorten the term of any incumbent Director. The directors shall
be divided into three classes of equal or approximately equal number, with all
three classes to be elected at the special meeting of stockholders at which this
Amended Article Seven, Paragraph 2 is approved. The initial term of office of
Class 1, currently a class of three directors, will expire' at the annual
meeting of stockholders in 1993; of Class 11, currently a class of three
directors, at the annual meeting of stockholders in 1994; and of Class III,
currently a class of three directors, at the annual meeting of stockholders in
1995. Each director elected shall hold office until his successor shall be
elected and shall qualify. At each annual meeting of stockholders beginning with
the annual meeting of stockholders in 1993, directors elected to succeed those
whose terms are then expiring shall be elected for a full term of office
expiring at the third succeeding annual meeting of stockholders after their
election. Should the number of directors which constitute the whole Board of
Directors be changed as permitted by this Paragraph 2 of Article 7, such
majority of the whole Board of Directors or such holders of eighty percent (80%)
or more of the voting power of the Corporation, as applicable, shall also fix
and determine the number of directors of which each class shall be comprised.
3. Stockholder Nomination of Director Candidates. Advance notice of
stockholder nominations for the election of Directors shall be at least 120 days
in advance of the date in which the next previous annual meeting of stockholders
was held.
4. Newly-Created Directorships and Vacancies. Subject to the rights of the
holders of any series of any Preferred Stock then outstanding, newly-created
directorships resulting from any increase in the authorized number of Directors
and any vacancies in the Board of Directors resulting from the death,
resignation, retirement, disqualification, removal from office or other cause
may be filled by a majority vote of the Directors then in office even though
less than a quorum, or by a sole remaining Director.
5. Removal. Subject to the rights of the holders of any series of any
Preferred Stock then Outstanding, any Director or the entire Board of Directors,
may be removed from office at any annual or special meeting called for such
purpose, and then only for cause and only by the affirmative vote of the holders
of eighty percent (80%) or more of the voting power of all of the shares of the
Corporation entitled to vote generally in the election of Directors, voting
together as a single class. As used herein, cause shall mean only the following:
proof beyond the existence of a reasonable doubt that a Director has been
convicted of a felony, committed gross negligence or willful misconduct
resulting in a material detriment to the Corporation, or committed a material
breach of his fiduciary duty to the Corporation resulting in a material
detriment to the Corporation.
6. Amendment, Repeal, etc. Notwithstanding anything contained in these
Articles of Incorporation to the contrary, the affirmative vote of the holders
of eighty percent (80%) or more of the voting power of all of the shares of the
Corporation entitled to vote generally in the election of Directors, voting
together as a single class, shall be required to alter, amend or adopt any
provision inconsistent with or repeal this Article Seven, or to alter, amend,
adopt any provision inconsistent with or repeal comparable sections of the
Bylaws of the Corporation.
ARTICLE EIGHT
Notwithstanding anything contained in these Articles of Incorporation to
the contrary, the affirmative vote of the holders of eighty percent (80%) or
more of the voting power of all the shares of the Corporation entitled to vote
generally in the election of Directors, voting together as a single class, shall
be required to call a special meeting of stockholders or to alter, amend, adopt
any provision inconsistent with or repeal this Article Eight, or to alter,
amend, adopt any provision inconsistent with comparable sections of the Bylaws.
ARTICLE NINE
No stock, whether paid up or issued as fully paid, shall be subject to
assessment to pay the debts of the Corporation.
ARTICLE TEN
The Corporation shall have the power to indemnify its present or former
Directors, officers, employees and agents or any person who served or is serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise to
the full extent permitted by the General Corporation Law of Nevada. Such
indemnification shall not be deemed exclusive of any other rights to which such
person may be entitled, under any bylaws, agreements, vote of stockholders or
disinterested Directors, or otherwise.
ARTICLE ELEVEN
A Director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages or breach of fiduciary duty
as a director, except for liability (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involved intentional misconduct or a knowing violation of
law, (iii) under the Act, or, (iv) for any transaction from which the Director
derived an improper personal benefit.
ARTICLE TWELVE
The name and address of the incorporator is as follows:
Michael M. Watson
3200 NCNB Center, Tower 1
300 N. Ervay Street
Dallas, Texas 75201
BYLAWS OF
GREENBRIAR CORPORATION
(the "Corporation")
ARTICLE I
Offices
Section 1.1. The registered office of the Corporation shall be in the County of
Washoe, State of Nevada.
Section 1.2. The Corporation may also have offices at such other places both
within and without the State of Nevada as the Board of Directors may from
time to time determine or the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 2.1. All meetings of the stockholders for the election of Directors and
for any other purpose may be held at such time and place, within or without
the State of Nevada, as shall be stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
Section 2.2. An annual meeting of the stockholders for the election of Directors
and for the transaction of such other business as may properly come before
the meeting shall be held each year, within six months after the end of the
prior fiscal year at 10:00 a.m. on a date to be selected by the Board of
Directors. At the meeting, the stockholders shall elect directors, and
transact such other business as may properly be brought before the meeting.
Section 2.3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten (10) nor more than fifty (50) days before
the date of the meeting.
Section 2.4. The officer who has charge of the stock ledger of the Corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder, for any purpose germane to the meeting, which shall be open to
the inspection of any stockholder during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof,
and may be inspected by any stockholder who is present.
Section 2.5. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the Articles of Incorporation,
may be called by the President or by the Board of Directors or by the
written order of a majority of the Directors; and shall be called by the
President or Secretary at the request in writing of stockholders owning 80%
or more of the entire capital stock of the Corporation issued and
outstanding and entitled to vote. Such request by the stockholders shall
state the purpose or purposes of the proposed meeting.
Section 2.6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten (10) nor more than fifty (50) days
before the date of the meeting, to each stockholder entitled to vote at
such meeting.
Section 2.7. Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
Section 2.8. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction
of business except as otherwise provided by statute, by the Articles of
Incorporation or by these Bylaws. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall
have the power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have been
transacted at the meeting as originally notified. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date
is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting.
Section 2.9. When a quorum is present at any meeting, the vote of the holders of
a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes,
these Bylaws or of the Articles of Incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question. The stockholders present at a duly organized
meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
Section 2.10. Unless otherwise provided in the Articles of Incorporation, each
stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy executed in writing by the stockholder or by his
or her duly authorized attorney-in-fact, for each share of the capital
stock having voting power held by such stockholder, but no proxy shall be
voted on after six (6) months from its date, unless the proxy provides for
a longer period. Each proxy shall be filed with the Secretary of the
Corporation prior to, or at the time of, the meeting. Any vote may be taken
via voice or by show of hands unless the holders of at least ten percent
(10%) of shares outstanding and entitled to vote object, in which case
written ballots shall be used.
Section 2.11. Any action required to be taken at any annual or special meeting
of stockholders may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted, and shall be delivered to the
Corporation by hand delivery or certified mail, return receipt requested,
to its registered office in Nevada, its principal place of business or an
officer or agent having custody of the minute book of the Corporation. The
Corporation shall provide a copy thereof to all stockholders not
participating in the consent action. Notwithstanding anything contained in
these Bylaws to the contrary, this Section 2.11 of Article II may be
amended, supplemented, or appealed only by the affirmative vote of the
holders of 80% or more of the voting power of all of the shares of the
Corporation entitled to vote generally in the election of Directors, voting
together as a single class.
Section 2.12. Any stockholder proposing to nominate a person for election to the
Board of Directors shall provide the Corporation 120 days prior written
notice of such nomination, stating the name and address of the nominee and
describing his qualifications for being a Director of the Corporation. Such
notice shall be sent or delivered to the principal office of the
Corporation to the attention of the Board of Directors, with a copy to the
President and Secretary of Corporation.
Section 2.13. At any meeting of stockholders, the President of the Corporation
shall act as the chairman of the meeting, and the stockholders shall not
have the right to elect a different person as chairman of the meeting. The
chairman of the meeting shall have the authority to determine (i) when the
election polls shall be closed in connection with any vote to be taken at
the meeting; and (ii) when the meeting shall be recessed. No action taken
at a meeting shall become final and binding if any group of stockholders
representing 20% or more of the shares entitled to be voted for such action
shall contest the validity of any proxies or the outcome of any election.
Section 2.14. The Board of Directors may fix in advance a record date for the
purpose of determining stockholders entitled to notice of, or to vote at, a
meeting of stockholders, such record date to be not less than ten nor more
than fifty days prior to such meeting; or the Board of Directors may close
the stock transfer books for such purpose for a period of not less than ten
nor more than fifty days prior to such meeting. In the absence of any
action of the Board of Directors, the date upon which the notice of the
meeting is mailed shall be the record date.
Section 2.15. The order of business at annual meetings, and so far as
practicable at other meetings of stockholders, shall be as follows unless
changed by the Chairman:
(a) Call to order
(b) Proof of due notice of meeting
(c) Determination of quorum and examination of proxies
(d) Announcement of availability of voting list (See Bylaw 2.04)
(e) Announcement of distribution of annual statement (See Bylaw 7.4)
(f) Reading and disposing of minutes of last meeting of stockholders
(g) Reports of Officers and committees
(h) Appointment of voting inspectors
(i) Unfinished business
(j) New business
(k) Nomination of Directors
(1) Opening of polls for voting
(m) Recess
(n) Reconvening; closing of polls
(o) Report of voting inspectors
(p) Other business
(q) Adjournment
ARTICLE III
Directors
Section 3.1. The business and affairs of the Corporation shall be managed by a
Board of Directors, which shall have and may exercise all of the powers of
the Corporation, except such as are expressly conferred upon the
stockholders by law, by the Articles of Incorporation or by these Bylaws.
Subject to the rights of the holders of shares of any series of Preferred
Stock then outstanding to elect additional Directors under specified
circumstances, the Board of Directors shall consist of not less than three
(3) nor more than twenty-one (21) persons. The exact number of Directors
within the minimum and maximum limitations specified in the preceding
sentence shall be fixed from time to time by either (i) the Board of
Directors pursuant to a resolution adopted by a majority of the entire
Board of Directors, (ii) the affirmative vote of the holders of 80% or more
of the voting power of all of the shares of the Corporation entitled to
vote generally in the election of Directors, voting together as a single
class, or (iii) the Articles of Incorporation. No decrease in the number of
Directors constituting the Board of Directors shall shorten the term of any
incumbent Director. The directors shall be divided into three classes of
equal or approximately equal number, with all three classes to be elected
at the special meeting of stockholders in March 1993. The initial term of
office of Class I, currently a class of three directors, will expire at the
annual meeting of stockholders in 1993; of Class II, currently a class of
three directors, at the annual meeting of stockholders in 1994; and of
Class III, currently a class of three directors, at the annual meeting of
stockholders in 1995. Each director elected shall hold office until his
successor shall be elected and shall qualify. At each annual meeting of
stockholders beginning with the annual meeting of stockholders in 1993,
directors elected to succeed those whose terms are then expiring shall be
elected for a full term of office expiring at the third succeeding annual
meeting of stockholders after their election. Should the number of
directors which constitute the whole Board of Directors be changed as
permitted by this Paragraph 2 of Article 7, such majority of the whole
Board of Directors or such holders of eighty percent (80%) or more of the
voting power of the Corporation, as applicable, shall also fix and
determine the number of directors of which each class shall be comprised.
Subject to the rights of holders of any series of any Preferred Stock then
outstanding, any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other
cause may be filed by a majority vote of the Directors then in office even
though less than a quorum or by a sole remaining Director and the Directors
so chosen shall hold office until the next annual election and until their
successors are duly elected and shall qualify, unless sooner displaced. If
the remaining Directors fail to select a successor Director to fill a
vacancy within sixty (60) days of its occurrence, the vacancy shall be
filled by the vote of a majority of the outstanding shares. If there are no
Directors in office, then an election of Directors may be held in the
manner provided by statute. Newly-created directorships resulting from any
increase in the authorized number of Directors may be filled by the
remaining Directors. Directors elected to fill a vacancy will serve the
remaining portion of the unexpired term; provided, however, that Directors
elected to fill a vacancy by virtue of expanding the number of Directors
shall serve until the next election of Directors by stockholders.
Section 3.2. No stockholder shall have the right to cumulate his votes for the
election of Directors but each share shall be entitled to one vote in the
election of such Director. At any meeting of the stockholders, every
stockholder having the right to vote may vote either in person or by proxy
executed in writing by the stockholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
Corporation prior to, or at the time of, the meeting.
Meetings of the Board of Directors
Section 3.3. The Board of Directors of the Corporation may hold meetings, both
regular and special, either within or without the State of Nevada.
Section 3.4. The first meeting of each newly elected Board of Directors shall be
held without further notice immediately following the annual meeting of the
stockholders, and at the same place unless the Directors change such time
or place by unanimous vote.
Section 3.5. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be
determined by the Board.
Section 3.6. Special meetings of the Board may be called by the President or by
Directors constituting at least one-third of Directors in office, on three
(3) days' notice to each Director, either personally or by mail or by
telegram.
Section 3.7. At all meetings of the Board, a majority of the Directors shall
constitute a quorum for the transaction of business and the act of a
majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute, these Bylaws or by the Articles of
Incorporation. If a quorum shall not be present at any meeting of the Board
of Directors, the Directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until
a quorum shall be present. Each Director who is present at a meeting will
be deemed to have assented to any action taken at such meeting unless his
dissent to the action is entered into the minutes of the meeting, or unless
he or she files their written dissent thereto with the Secretary of the
meeting or forwards such dissent by registered mail to the Secretary of the
Corporation immediately after such meeting.
Section 3.8. Unless otherwise restricted by the Articles of Incorporation or
these Bylaws, any action required or permitted to be taken at any meeting
of the Board of Directors or of any committee thereof may be taken without
a meeting, if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
Section 3.9. Unless otherwise restricted by the Articles of Incorporation or
these Bylaws, members of the Board of Directors, or any committee
designated by the Board of Directors, may participate in a meeting of the
Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in
a meeting shall constitute presence in person at the meeting.
Section 3.10. Interested Directors, Officers and stockholders.
(a) If Paragraph (b) is satisfied, no contract or other transaction
between the Company and any of its Directors, Officers or stockholders
(or any corporation or firm in which any of them are directly or
indirectly interested) shall be invalid solely because of such
relationship or because of the presence of such Director, Officer or
stockholder at the meeting authorizing such contract or transaction,
or his participation in such meeting or authorization.
(b) Paragraph (a) shall apply only if:
(1) The material facts of the relationship or interest of each such
Director, Officer or stockholder are known or disclosed:
(A) To the Board of Directors and they nevertheless authorizes
or ratifies the contract or transaction by a majority of the
Directors present, each such interested Director to be
counted in determining whether a quorum is present but not
in calculating the majority necessary to carry the vote; or
(B) To the stockholders and they nevertheless authorize or
ratify the contract or transaction by a majority of the
shares present, each such interested stockholder to be
counted in determining whether a quorum is present but not
in calculating the majority necessary to carry the vote; and
(2) The contract or transaction is fair to the Corporation as of the
time it is authorized or ratified by the Board of Directors, a
committee of the Board or the stockholders.
(c) This provision shall not be construed to invalidate a contract or
transaction which would be valid in the absence of this provision.
Committees of Directors
Section 3.11. The Board of Directors may, by resolution adopted by a majority of
the whole Board, designate an Executive Committee from among its members.
Section 3.12. The Executive Committee shall consist of three or more Directors.
The Executive Committee shall serve at the pleasure of the Board of
Directors.
Section 3.13. The Executive Committee shall have and may exercise the authority
of the Board of Directors in the management of the business and affairs of
the Corporation except where action of the full Board of Directors is
required by statute or by the Articles of Incorporation, and shall have
power to authorize the seal of the Corporation to be affixed to all papers
which may require it; except that the Executive Committee shall not have
authority to: amend the Articles of Incorporation; approve a plan of merger
or consolidation; recommend to the stockholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
Corporation other than in the usual and regular course of its business;
recommend to the stockholders the voluntary dissolution of the Corporation;
amend, alter, or repeal the Bylaws of the Corporation or adopt new Bylaws
for the Corporation; fill any vacancy in the Board of Directors or any
other corporate committee; fix the compensation of any member of any
corporate committee; alter or repeal any resolution of the Board of
Directors; declare a dividend; or authorize the issuance of shares of the
Corporation in excess of one million dollars in value. Each Director shall
be deemed to have assented to any action of the Executive Committee unless,
within seven days after receiving actual or constructive notice of such
action, he or she deliver their written dissent thereto to the Secretary of
the Corporation.
Section 3.14. The number of Executive Committee members may be increased or
decreased (but not below three) from time to time by resolution adopted by
a majority of the whole Board of Directors.
Section 3.15. Any member of the Executive Committee may be removed by the Board
of Directors by the affirmative vote of a majority of the whole Board
whenever in its judgment the best interests of the Corporation will be
served thereby.
Section 3.16. A vacancy occurring in the Executive Committee (by death,
resignation, removal or otherwise) shall be filled by the Board of
Directors in the manner provided for original designation in Section 3.11
above.
Section 3.17. Time, place and notice, if any, of Executive Committee meetings
shall be determined by the Executive Committee.
Section 3.18. At meetings of the Executive Committee, a majority of the number
of members designated by the Board of Directors shall constitute a quorum
for the transaction of business. The act of a majority of the members
present at any meeting at which a quorum is present shall be the act of the
Executive Committee, except as otherwise specifically provided by the
statute or by the Articles of Incorporation or by these Bylaws. If a quorum
is not present at a meeting of the Executive Committee, the members present
thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum is present.
Section 3.19. By resolution of the Board of Directors, the members of the
Executive Committee may be paid their expenses, if any, of attendance at
each meeting of the Executive Committee and may be paid a fixed sum for
attendance at each meeting of the Executive Committee or a stated salary as
a member thereof. No such payment shall preclude any member from serving
the Corporation in any other capacity and receiving compensation therefor.
Section 3.20. The Executive Committee shall keep regular minutes of its
proceedings and report the same to the Board of Directors when required.
The minutes of the proceedings of the Executive Committee shall be placed
in the minute book of the Corporation.
Section 3.21. Any action required or permitted to be taken at a meeting of the
Executive Committee may be taken without a meeting if a consent in writing,
setting forth the action so taken, is signed by all the members of the
Executive Committee. Such consent shall have the same force and effect as a
unanimous vote at a meeting. The signed consent, or a signed copy thereof,
shall be placed in the minute book.
Section 3.22. The designation of an Executive Committee and the delegation of
authority to it shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed by law.
Section 3.23. The Board of Directors may, by resolution adopted by the majority
of the Directors, designate one or more other committees to conduct the
business and affairs of the Corporation to the extent authorized by the
resolution including but not limited to the following: Audit Committee,
Compensation Committee, Stock Option Committee and Conflict of Interest
Committee. The Board of Directors, by majority vote, shall have the power
at any time to change the powers and members of any committee, to fill
vacancies and to dispose of any committee. Members of any committee shall
receive such compensation as the Board of Directors may from time to time
provide. The designation of any committee and the delegation of authority
to such committee shall not operate to relieve the Board of Directors of
any responsibility imposed by law.
Compensation of Directors
Section 3.24. Unless otherwise restricted by the Articles of Incorporation or
these Bylaws, the Board of Directors shall have the authority to fix the
compensation of Directors. The Directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be
paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as Director. No such payment shall preclude any Director
from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
ARTICLE IV
Notices
Section 4.1. Whenever, under the provisions of the statutes or of the Articles
of Incorporation or of these Bylaws, notice is required to be given to any
Director or stockholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such
Director or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed
to be given at the time when the same shall be deposited in the United
States mail. Notice to Directors may also be given by telegram or
facsimile.
Section 4.2. Whenever any notice is required to be given under the provisions of
the statutes or of the Articles of Incorporation or of these Bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
Officers
Section 5.1. The officers of the Corporation shall be chosen by the Board of
Directors and shall be a president, one or more vice presidents, any one or
more of which may be designated executive vice president or senior vice
president, a secretary, and a treasurer. The Board of Directors may also
choose a chairman of the board, assistant vice presidents and one or more
assistant secretaries and assistant treasurers. Any number of offices may
be held by the same person, unless the Articles of Incorporation or these
Bylaws otherwise provide. The Chairman shall be elected from among the
Directors.
Section 5.2. The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice
presidents, a secretary and a treasurer.
Section 5.3. The Board of Directors may appoint such other officers and agents
as it shall deem necessary who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined
from time to time by the Board.
Section 5.4. The salaries of all officers and agents of the Corporation shall be
fixed by the Board of Directors or a committee thereof.
Section 5.5. The officers of the Corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the
Board of Directors may be removed with or without cause at any time by the
affirmative vote of a majority of the Board of Directors then in office at
any regular or special meeting. Such removal shall be without prejudice to
the contract rights, if any, of the person so removed, provided, however,
that the election or appointment of an officer shall not, of itself, create
contract rights. Any vacancy occurring in any office of the Corporation
shall be filled by the Board of Directors.
Chairman of the Board
Section 5.6. The Chairman of the Board, if any, shall preside at all meetings of
the Board of Directors of the Corporation. In the Chairman's absence, such
duties shall be attended to by the President. The Chairman shall not be an
executive officer of the Corporation and shall have no duties or powers,
express, apparent, or implied, except as set forth herein or in resolutions
adopted by the Board of Directors. The Chairman may be the chief executive
officer of the Corporation if so designated.
The President
Section 5.7. The President shall be the Chief Executive Officer of the
Corporation; he or she shall preside at all meetings of the stockholders
and of the Board of Directors (unless the Corporation has a Chairman of the
Board, who will, in that case, preside at all meetings of the Board of
Directors), shall have general and active management of the business and
affairs of the Corporation and shall see that all orders and resolutions of
the Board are carried into effect. He or she shall perform such other
duties and have such other authority and powers as the Board of Directors
may from time to time prescribe. Within this authority and in the course of
his or her duties the President shall:
(a) Preside at all meetings of the stockholders and in the absence of the
Chairman of the Board, or, if there is none, at all meetings of the
Board of Directors, and shall be ex officio a member of all the
standing committees, including the Executive Committee, if any.
(b) Sign all certificates of stock of the Corporation, in conjunction with
the Secretary or Assistant Secretary, unless otherwise ordered by the
Board of Directors.
(c) When authorized by the Board of Directors or required by law, execute,
in the name of the Corporation, deeds conveyances, notices, leases,
checks, drafts, bills of exchange, warrants, promissory notes, bonds,
debentures, contracts, and other papers and instruments in writing,
and unless the Board of Directors orders otherwise by resolution, make
such contracts as the ordinary conduct of the Corporation's business
requires.
(d) Subject to the approval of the Board of Directors, appoint and remove,
employ and discharge, and prescribe the duties and fix the
compensation of all agent, employees, and clerks of the Corporation
other than the duly appointed Officers, and, subject to the direction
of the Board of Directors, control all of the Officers, agents and
employees of the Corporation.
Section 5.8. The Vice-Presidents, if any, in the order of their seniority,
unless otherwise determined by the Board of Directors, shall, in the
absence or disability of the President, perform the duties and have the
authority and exercise the powers of the President. They shall perform such
other duties and have such other authority and powers as the Board of
Directors may from time to time prescribe or as the President may from time
to time delegate.
Section 5.9. The Secretary shall attend all meetings of the Board of Directors
and all meetings of the stockholders and record all votes and minutes of
all proceedings in a book to be kept for that purpose, and shall perform
like duties for the Executive Committee when required. He or she shall
give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors. He or she shall keep in safe
custody the Seal of the Corporation and, when authorized by the Board of
Directors or the Executive Committee, affix the same to any instrument
requiring it, and when so affixed, it shall be attested by his signature or
by the signature of the Treasurer or an Assistant Secretary. He or she
shall be under the supervision of the President. He or she shall perform
such other duties and have such other authority and powers as the Board of
Directors may from time to time prescribe or as the President may from time
to time delegate.
Section 5.10. The Assistant Secretaries, if any, in the absence or disability of
the Secretary, perform the duties and have the authority and exercise the
powers of the Secretary. They shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe or
as the President may from time to time delegate.
Section 5.11. The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements of the Corporation and shall deposit all monies and other
valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board
of Directors, taking proper vouchers for such disbursements, and shall
render to the President and Directors, at the regular meeting of the Board,
or whenever they may request it, an account of all his transactions as
Treasurer and of the financial condition of the Corporation. If required by
the Board of Directors, he or she shall give the Corporation a bond in such
form, in such sum, and with such surety or sureties as satisfactory to the
Board of Directors, for the faithful performance of the duties of his or
her office. He or she shall perform such other duties and have such other
authority and powers as the Board of Directors may from time to time
prescribe or as the President may from time to time delegate.
Section 5.12. The Assistant Treasurer, if any, shall, in the absence of the
Treasurer or in the event of his or her inability or refusal to act,
perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
ARTICLE VI
Certificates for Shares
Section 6.1. The shares of the Corporation shall be represented by a
certificate. Certificates shall be signed by, or in the name of the
Corporation by, the Chairman of the Board of Directors, or the President or
Vice President and the Treasurer or an assistant treasurer, or the
Secretary or an assistant secretary of the Corporation.
Upon the face or back of each stock certificate issued to represent any
partly paid shares, or upon the books and records of the Corporation in the
case of uncertificated partly paid shares, shall be set forth the total
amount of the consideration to be paid therefor and the amount paid thereon
shall be stated. Certificates shall also contain such legends or statements
as may be required by law and any agreement between the Corporation and the
holder thereof.
If the Corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special lights
of each class of stock or series thereof and the qualification, limitations
or restrictions of such preferences and/or rights shall be set forth in
full or summarized on the face or back of the certificate which the
Corporation shall issue to represent such class or series of stock,
provided that, except as otherwise provided in the Act, in lieu of the
foregoing requirements, there may be set forth on the face or back of the
certificate which the Corporation shall issue to represent such class or
series of stock, a statement that the Corporation will furnish without
charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Any security
of the Corporation, including, among others, any certificate evidencing
shares of the Common Shares and Preferred Shares or warrants to purchase
Common Shares and Preferred Shares of the Corporation, which is issued to
any person without registration under the Securities Act of 1933, as
amended, or the Blue Sky laws of any state, shall not be transferable until
the Corporation has been furnished with a legal opinion of counsel with
reference thereto, satisfactory in form and content to the Corporation and
its counsel, to the effect that such sale, transfer or pledge does not
involve a violation of the Securities Act of 1933, as amended, or the Blue
Sky laws of any state having jurisdiction. The certificate representing the
security shall bear substantially the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR UNDER THE BLUE SKY LAWS OF ANY STATE
AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED UNLESS SUCH OFFER, SALE OR
TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933 OR ANY
APPLICABLE BLUE SKY LAWS. ANY OFFER, SALE OR TRANSFER OF THESE SECURITIES
MAY NOT BE MADE WITHOUT THE PRIOR WRITTEN APPROVAL OF THE CORPORATION OR
ITS COUNSEL. "
Section 6.2. The consideration for the issuance of shares shall consist of any
tangible or intangible property or benefit to the Corporation, including,
but not limited to, cash, promissory notes, services performed, contracts
for services to be performed or other securities of the corporation. Before
the Corporation issues shares, the Board of Directors must determine that
the consideration received or to be received for the shares to be issued is
adequate. The judgment of the Board of Directors as to the adequacy of the
consideration received for the shares issued is conclusive in the absence
of actual fraud in the transaction. When the Corporation receives the
consideration for which the Board of Directors authorized the issuance of
shares, the shares issued therefor are fully paid and nonassessable. The
Corporation may place in escrow shares issued for a contract for future
services or benefits or a promissory note, or make any other arrangements
to restrict the transfer of the shares. The Corporation may credit
distributions made for the shares against their purchase price, until the
services are performed, the benefits are received or the promissory note is
paid. If the services are not performed, the benefits are not received or
the promissory note is not paid, the shares escrowed or restricted and the
distributions credited may be canceled in whole or in part.
Section 6.3. Unless otherwise provided in the subscription agreement,
subscriptions of shares, whether made before or after organization of the
Corporation, shall be paid in full at such time or in such installments and
at such times as shall be determined by the Board of Directors for payment
on subscriptions shall be uniform as to all shares of the same series. In
case of default in the payment on any installment or call when payment is
due, the Corporation may proceed to collect the amount due in the same
manner as any debt due to the Corporation.
Section 6.4. For any indebtedness of a Stockholder to the Corporation, the
Corporation shall have a first and prior lien on all preferred or common
shares owned by him and on all dividends or other distributions declared
thereon.
Section 6.5. Within a reasonable time after the issuance or transfer of
uncertificated stock, the Corporation shall send to the registered owner
thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to any requirements of the Act or
a statement that the Corporation will furnish without charge to each
stockholder who so requests the powers, designations preferences and
relative participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions
of such preferences and/or rights.
Section 6.6. Any or all the signatures on a certificate may be facsimile. In
case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he
or she were such officer, transfer agent or registrar at the date of issue.
Lost Certificates
Section 6.7. The Board of Directors may direct a new certificate or certificates
to be issued in place of any certificate or certificates theretofore issued
by the Corporation alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing such issue of a
new certificate or certificates or uncertificated shares, the Board of
Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his or her legal representative, to
advertise the same in such manner as it shall require or to give the
Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
Transfer of Stock
Section 6.8. Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it
shall be the duty of the Corporation or the transfer agent of the
Corporation to issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction upon its books. Upon
receipt of proper transfer instructions from the registered owner of
uncertificated shares, such uncertificated shares shall be canceled and
issuance of new equivalent uncertificated shares or uncertificated shares
shall be made to the person entitled thereto and the transaction shall be
recorded upon the books of the corporation. Transfers of shares shall be
made only on the books of the Corporation by the registered holder thereof,
or by his or her attorney thereunto authorized by power of attorney and
filed with the Secretary of the Corporation or the transfer agent.
Section 6.9. Every stockholder or transferee shall furnish the Secretary or a
transfer agent with the address to which notice of meetings and all other
notices may be served upon or mailed to him or her, and in default thereof,
he or she shall not be entitled to service or mailing of any such notice.
Fixing Record Date
Section 6.10. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights
in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than fifty (50) nor less
than ten (10) days before the date of such meeting, nor more than fifty
(50) days prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for the adjourned meeting.
Registered Stockholders
Section 6.11. The Corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares to receive
dividends, to vote as such owner, and to hold such person registered on its
books liable for calls and assessments as the owner of such shares, and
shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise provided by
the laws of Nevada.
ARTICLE VII
Miscellaneous/Dividends
Section 7.1. Dividends upon the capital stock of the Corporation, subject to the
provisions of the Articles of Incorporation, if any, and applicable law,
may be declared by the Board of Directors at any regular or special
meeting. Dividends may be paid in cash, in properly or in shares of capital
stock, subject to the provisions of the Articles of Incorporation.
Section 7.2. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the
Directors from time to time, in their absolute discretion, think proper as
a reserve or reserves to meet contingencies, or for equalizing dividends,
or for repairing or maintaining any property of the Corporation, or for
such other purpose as the Directors shall determine to be in the interest
of the Corporation, and the Directors may modify or abolish any such
reserve in the manner in which it was created.
Annual Statement
Section 7.4. Not later than one hundred fifty (150) days after the close of each
full fiscal year of the Corporation, the Directors shall mail a report of
the business and operation of the Corporation during such fiscal year to
the stockholders, which report shall constitute the accounting of the
Directors for such fiscal year. The report (herein the "Annual Report")
shall be in such form and have such content as the Directors deem proper.
The Annual Report shall include a balance sheet and a statement of income
and surplus of the Corporation. Such financial statement shall be
accompanied by the report of an independent certified public accountant
thereon. A manually signed copy of the accountant's report shall be filed
with the Directors.
Checks
Section 7.5. All checks, demands, drafts, or other orders for payment of money,
notes or other evidences of indebtedness issued in the name of the
Corporation, shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time
designate.
Contracts
Section 7.6. The Board of Directors may authorize any officer, officers, agent,
or agents, to enter into any contract or execute and deliver any instrument
in the name of and on behalf of the Corporation, and such authority may be
general or confined to specific instances.
Deposits
Section 7.7. All funds of the Corporation not otherwise employed shall be
deposited from time to time to the credit of the Corporation in such banks,
trust companies, or other depositories as the Board of Directors may
select.
Fiscal Year
Section 7.8. The fiscal year of the Corporation shall be fixed by resolution of
the Board of Directors.
Seal
Section 7.9. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Nevada." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Indemnification
Section 7.10. Unless otherwise provided in the Articles of Incorporation, the
Corporation shall indemnity its officers, agents and Directors to the full
extent permitted by the General Corporation Law of Nevada. The protection
and indemnification provided hereunder shall not be deemed exclusive of any
other rights to which such Director, agent or officer or former Director or
officer or such person may be entitled under any agreement, insurance
policy, vote of stockholders or otherwise.
ARTICLE VIII
Amendments
Section 8.1. Notwithstanding any other provision contained in these Bylaws to
the contrary, Sections 2.5, 2.11, 2.12 and 2.13 of Article II, Section 3.1
of Article III, and this Article VII of these Bylaws may be amended,
supplemented, or repealed only by the affirmative vote of 80% or more of
all of the shares of the Corporation entitled to vote generally in the
election of Directors, voting together as a single class. In addition to
the foregoing, the Board of Directors may amend or repeal these Bylaws or
adopt new Bylaws.
EXHIBIT 3.3
CERTIFICATE OF DECREASE IN
AUTHORIZED AND ISSUED SHARES
The following certificate is filed on behalf of MEDICAL RESOURCE COMPANIES
OF AMERICA, a Nevada corporation, pursuant to Section 78.207 of the Nevada
Revised Statutes:
1. The number of shares of common stock, par value $0.01 per share,
before the change in capitalization was 100,000,000.
2. The number of shares of common stock, par value $0.01 per share, after
the change in capitalization, was 20,000,000. There is no change in
par value.
3. One share of new common stock, par value $0.01 per share, will be
issued for each five shares of old common stock, par value $0.01
outstanding before the change.
4. No fractional shares will be issued. Cash will be paid in lieu of
issuing fractional shares upon surrender of certificates representing
shares of old common stock, at the rate of $2.00 for each one-fifth
share of new common stock.
5. Approval of the change by stockholders was not required nor obtained.
6. The change is effective immediately.
MEDICAL RESOURCE COMPANIES
OF AMERICA
Filed By: /s/ Gene S. Bertcher
IN THE OFFICE OF THE Gene S. Bertcher, Executive Vice
SECRETARY OF STATE OF THE President
STATE OF NEVADA
JAN 10 1996
No. 4538-91 By: /s/ Robert L. Griffis
/s/ Dean Heller Robert L. Griffis, Secretary
Secretary of State
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on this 9th day of January, 1996, by
GENE S. BERTCHER.
/s/ Frances A. Eagle
Notary Public, State of Texas
Frances A. Eagle
Printed Name of Notary
My Commission Expires: 10/31/99
EXHIBIT 4.1.3.1
MEDICAL RESOURCE COMPANIES OF AMERICA
Certificate of Designations, Preferences and
Rights and Preferred Stock
By Resolution of the Board of Directors
We, James R. Gilley, President and Robert L. Griffis, Secretary, of Medical
Resource Companies of America, a corporation organized and existing under the
laws of the State of Nevada, in accordance with the provisions of Section 78.195
of the Nevada Revised Statutes thereof, DO HEREBY CERTIFY:
That, said Board of Directors adopted a resolution granting additional
rights for the Series C Preferred Stock, which resolution is as follows:
RESOLVED, that the Board of Directors of this Corporation hereby
grants certain rights, in addition and without amendment to those set forth
in the Certificate of Designation for the Series C Preferred Stock of the
Corporation, to the holders of the Series C Preferred Stock, and as more
particularly set forth on Exhibit C1 to these minutes.
IN WITNESS WHEREOF, said Medical Resource Companies of America has
caused its corporate seal to be hereunto affixed and this certificate to be
signed by James R. Gilley its President, and Robert L. Griffis its
Secretary this 15th day of March, 1996.
By: /s/ James R. Gilley
James R. Gilley, President
By: /s/ Robert L. Griffis
Robert L. Griffis, Secretary
STATE OF TEXAS
COUNTY OF DALLAS
On March 15, 1996 personally appeared before me, a Notary Public, James R.
Gilley, President, and Robert L. Griffis, Secretary, of Medical Resource
Companies of America, who acknowledged that they executed the above instrument
on behalf of said corporation.
/s/ Frances A. Eagle
Notary Public, State of Texas
EXHIBIT C1
SERIES C PREFERRED STOCK
1. Holders of Series C Preferred Stock shall have the right to vote
together with the holders of the Common Stock, and not as a class (except as
provided below), on any matters to come before a vote of the shareholders. Each
share of Series C Preferred Stock shall be entitled to one vote.
2. These voting rights for each share of Series C Preferred Stock are in
addition to and without amendment of those set forth in the Certificate of
Designation for the Series C Preferred Stock of the Corporation. Nothing
contained herein shall affect or limit the voting powers, designations,
preferences, limitations, restrictions and relative rights of the Series C
Preferred Stock.
EXHIBIT 4.1.4
MEDICAL RESOURCE COMPANIES OF AMERICA
Certificate of Designations, Preferences and
Rights and Preferred Stock
By Resolution of the Board of Directors
We, James R. Gilley, President and Robert L. Griffis, Secretary, of Medical
Resource Companies of America, a corporation organized and existing under the
laws of the State of Nevada, in accordance with the provisions of Section 78.195
of the Nevada Revised Statutes thereof, DO HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Articles of Incorporation (or an amendment thereto) of said Corporation, said
Board of Directors, adopted, by unanimous written consent, a resolution
providing for the issuance of a series of Six Hundred Seventy-Five Thousand
(675,000) shares of Series D Preferred Stock, which resolution is as follows:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of
its Articles of Incorporation, effective as of March 15, 1996, a series
of Preferred Stock of the Corporation be and it hereby is created, such
series of Preferred Stock to be designated Series D Preferred Stock, to
consist of 675,000 shares with a par value of $0.10 per share and to
have dividend rate, rights of redemption and prices at which shares of
such series may be redeemed as set forth on Exhibit D1 to these
minutes.
IN WITNESS WHEREOF, said Medical Resource Companies of America has caused
its corporate seal to be hereunto affixed and this certificate to be signed by
James R. Gilley its President, and Robert L. Griffis its Secretary this 15th day
of March, 1996.
By: /s/ James R. Gilley
James R. Gilley, President
By: /s/ Robert L. Griffis
Robert L. Griffis, Secretary
STATE OF TEXAS
COUNTY OF DALLAS
On March 15, 1996 personally appeared before me, a Notary Public, James R.
Gilley, President, and Robert L. Griffis, Secretary, of Medical Resource
Companies of America, who acknowledged that they executed the above instrument
on behalf of said corporation.
/s/ Frances A. Eagle
Notary Public, State of Texas
EXHIBIT D1
SERIES D PREFERRED STOCK
1. Medical Resource Companies of America (the "Company") establishes a series
of Preferred Stock pursuant to the authority contained in the Articles of
Incorporation of the Company, to be known as Series D Preferred Stock, par
value $0.10 per share.
2. There shall be authorized the issuance of 675,000 shares of Series D
Preferred Stock.
3. The issue price of Series D Preferred Stock shall be $5.00 per share, (the
"Issue Price") issuable in exchange for property of like amount, or in lieu
of dividends as described below.
4. An annual cash dividend shall be payable on Series D Preferred Stock, in
the amount of $.47407 per share, payable quarterly beginning three months
following the date of issuance. Such dividends shall be cumulative from the
date of issue, so that no dividend (other than a dividend payable in Common
Stock of the Company) or other distribution shall be paid or declared or
made, and no amounts shall be applied to the purchase or redemption of the
Common Stock or any other class of stock ranking junior to the Series D
Preferred Stock as to dividends unless full cumulative dividends for all
past dividend periods shall have been paid or declared and set apart for
payment, and full dividends for the then current dividend period shall have
been or simultaneously therewith shall be paid or declared and set apart
for payment, on outstanding Series D Preferred Stock.
5. In the event of any dissolution, liquidation or winding up of the Company,
whether voluntarily or involuntarily, the holders of Series D Preferred
Stock, without any preference among them, along with and pari passu with
the holders of the Series A, B & C Preferred Stock, shall be entitled to
receive in cash out of the assets of the Company, whether capital or
surplus or otherwise, before any distribution of the assets shall be made
to the holders of Common Stock, an amount equal to the aggregate Issue
Price of their shares, together, in all cases, with unpaid accumulated
dividends, if any, whether such dividends are earned, declared or
otherwise, to the date fixed for such payment. After payment to the holders
of the Series D Preferred Stock of the full preferential amounts
hereinbefore provided for, the holders of Series D Preferred Stock will
have no other rights or claims to any of the remaining assets of the
Company, either upon distribution of such assets or upon dissolution,
liquidation or winding up. The sale of all or substantially all of the
property of the Company to, or the merger, consolidation or reorganization
of the Company into or with, any other company, or the purchase or
redemption by the Company of any shares of any class of its Preferred Stock
or its Common Stock or any other class of its stock shall not be deemed to
be a distribution of assets or a dissolution, liquidation or winding up for
the purposes of this paragraph.
6. So long as full cumulative dividends on all outstanding shares of Series D
Preferred Stock for all dividend periods have been paid or declared and set
apart for payment and subject to any applicable requirements of Nevada law,
the Company may, at its option, redeem the whole or any part of the shares
of Series D Preferred Stock, and the redemption price thereof shall be
equal to the Issue Price of the shares so redeemed, plus the amount of
unpaid accumulated dividends, if any, to the date of such redemption. All
such redemptions of Series D Preferred Stock shall be effected in
accordance with any procedure for redemptions set forth in the General
Corporation Law of the State of Nevada. Shares of Series D Preferred Stock
which are redeemed shall be restored to the status of authorized but
unissued shares.
On or before the date fixed for redemption, the Company, if it elects to
call such shares for redemption, shall provide for payment of a sum
sufficient to redeem the shares called for redemption either (1) by setting
aside the sum, separate from its other funds, in trust for the benefit of
the holders of the shares to be redeemed, or (2) by depositing such sum in
a bank or trust company as a trust fund, with irrevocable instructions and
authority to the bank or trust company to give or complete the notice of
redemption and to pay, on or after the date fixed for redemption, the
redemption price on surrender of certificates evidencing the shares of
Series D Preferred Stock called for redemption. From and after the date
fixed for redemption, (a) the shares shall be deemed to be redeemed, (b)
dividends thereon shall cease to accumulate, (C) such setting aside or
deposit shall be deemed to constitute full payment of the shares, (d) the
shares shall no longer be deemed to be outstanding, (e) the holders thereof
shall cease to be shareholders with respect to such shares, and (f) the
holders thereof shall have no rights with respect thereto, except the right
to receive their proportionate shares of the fund set aside pursuant hereto
or deposited upon surrender of their respective certificates. Any interest
accrued on funds set aside pursuant hereto or deposited shall belong to the
Company. If the holders of shares do not, within six (6) years after such
deposit, claim any amount so deposited for redemption thereof, the bank or
trust company shall upon demand pay over to the Company the balance of the
funds so deposited, and the bank or trust company shall thereupon be
relieved of all responsibility to such holders.
7. Holders of the Series D Preferred Stock shall have no right to cause
redemption of the Series D Preferred Stock by the Company.
8. Holders of Series D Preferred Stock shall have the right to vote together
with the holders of the Common Stock, and not as a class (except as
provided below), on any matters to come before a vote of the shareholders.
Each share of Series D Preferred Stock shall be entitled to one vote.
9. In addition, the holders of shares of any and all series of Series D
Preferred Stock outstanding on the record date for any such meeting of the
shareholders shall be entitled to vote, as a single class, upon any
proposed amendment to the Company's Articles of Incorporation, and their
consent shall be required for any action of the Board of Directors, if such
amendment or action would (I) increase or decrease the aggregate number of
authorized shares of Series D Preferred Stock, (ii) increase or decrease
the Issue Price of shares of Series D Preferred Stock, (iii) effect an
exchange, reclassification or cancellation of all or part of the shares of
Series D Preferred Stock, (iv) effect an exchange, or create a right of
exchange, of all or any part of the shares of another class into shares of
Series D Preferred Stock, (v) change the designations, preferences,
limitations, or relative rights of any series of Series D Preferred Stock
at the time outstanding in those respects in which the shares thereof vary
from shares of other series or Series D Preferred Stock at the time
outstanding, (vi) change the shares of Series D Preferred Stock into the
same or a different number of shares, either with or without par value, of
the same class or another class or classes, or (vii) cancel or otherwise
affect accumulated but undeclared dividends on the shares of Series D
Preferred Stock, and no such proposed amendment or action shall be deemed
to have been adopted and approved without the affirmative vote or consent
of holders of a majority of shares of Series D Preferred Stock then
outstanding.
10. Subject to and upon compliance with the provisions hereof, and upon the
approval of a majority of the shareholders of Common Stock (the "Common
Stock") of the Company, which shall specifically exclude the vote of the
holders of the Series D & E Preferred Stock for the approval, each holder
of shares of Series D Preferred Stock shall have the right, at such
holder's election, at any time after the close of business one year
following the issuance of the Series D Preferred Stock, to convert all or
any portion (in minimum increments of $25,000 per exercise if for less than
all shares owned) of shares of Series D Preferred Stock into shares of
Common Stock of the Company on the basis of Issuance Conversion Price per
each share of Common Stock. The formula for such conversion shall be that
the aggregate amount of the Issue Price of the shares of Series D Preferred
Stock to be converted, divided by the Issuance Conversion Price, shall
equal the number of shares of Common Stock to be issued upon conversion.
The "Issuance Conversion Price" per share of the stock conveyed shall be
$10.00. The Issuance Conversion Price and number of common shares issuable
upon conversion shall be adjusted to take into account any and all
increases or reductions in the number of shares of Common Stock outstanding
which may have occurred since the date of issuance of the Series D
Preferred Shares by reason of a split, share dividend, merger,
consolidation, or other capital change or reorganization affecting the
number of outstanding common shares so as fairly and equitably to preserve
so far as reasonably possible the original conversion rights of the Series
D Preferred Shares, and provided further that when such adjustment is
required, no notice of redemption shall be given until such amendment and
adjustment shall have been accomplished.
Upon any conversion by a holder of all shares of Series D Preferred Stock,
cumulative unpaid dividends shall be paid to the holder concurrently with
the presentation of the shares for conversion. Upon any conversion of less
than all shares owned by such holder, cumulative unpaid dividends on such
portion not converted shall remain payable and shall be paid on the next
scheduled dividend payment date. Upon conversion of all or a part of the
outstanding Series D Preferred Shares, the Series D Preferred Shares
surrendered for conversion shall be canceled and returned to the status of
authorized but unissued shares. Under no circumstances shall the Company be
obligated to issue any fractional shares.
In order to exercise the conversion privilege, the holder of Series D
Preferred Stock shall present the shares to the Company at its office,
accompanied by written notice to the Company that the holder elects to
convert all or a portion of Series D Preferred Stock. Such notice shall
also state the name or names (with the address or addresses) in which the
certificate or certificates representing Common Stock which shall be
issuable on such conversion shall be issued. As soon as practicable after
the receipt of such notice and the presentation of the Shares of the Series
D Preferred Stock, the Company shall issue and shall deliver to the holder
a certificate or certificates for the number of full shares of common stock
issuable upon the conversion of Series D Preferred Shares (or portion
hereof), and provision shall be made for any fraction of a Unit as provided
above. Such conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which such notice shall have
been received by the Company, and the shares of Series D Preferred Stock
shall have been presented as aforesaid, and conversion shall be at the
Issuance Conversion Price in effect at such time, and at such time the
rights (other than rights in respect of accrued dividends) of the holder of
the shares of Series D Preferred Stock as such holder shall cease (to the
extent the shares of Series D Preferred Stock are so converted) and the
person or persons in whose name or names any certificate or certificates
for Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the Common Stock represented
thereby. Upon conversion by a holder of only a part of the shares of Series
D Preferred Stock held by such holder, new shares of Series D Preferred
Stock representing the shares not converted shall be issued in the name of
such holder. Notwithstanding the holder's designation of names in which
shares of Common Stock are to be issued, nothing contained in this Section
shall permit the holder of the Series D Preferred Shares to make any
transfer or assignment of its rights hereunder which is otherwise
prohibited by the Series D Preferred Shares or by law.
EXHIBIT 4.1.5
MEDICAL RESOURCE COMPANIES OF AMERICA
Certificate of Designations, Preferences and
Rights and Preferred Stock
By Resolution of the Board of Directors
We, James R. Gilley, President and Robert L. Griffis, Secretary, of Medical
Resource Companies of America, a corporation organized and existing under the
laws of the State of Nevada, in accordance with the provisions of Section 78.195
of the Nevada Revised Statutes thereof, DO HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Articles of Incorporation (or an amendment thereto) of said Corporation, said
Board of Directors, adopted, by unanimous written consent, a resolution
providing for the issuance of a series of one million nine hundred twelve
thousand seven hundred eighty-four shares (1,912,784) shares of Series E
Preferred Stock, which resolution is as follows:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of
its Articles of Incorporation, effective as of March 15, 1996 a series
of Preferred Stock of the Corporation be and it hereby is created, such
series of Preferred Stock to be designated Series E Preferred Stock, to
consist of 1,912,784 shares with a par value of $0.10 per share and to
have dividend rate, rights of redemption and prices at which shares of
such series may be redeemed as set forth on Exhibit E1 to these
minutes.
IN WITNESS WHEREOF, said Medical Resource Companies of America has caused
its corporate seal to be hereunto affixed and this certificate to be signed by
James R. Gilley its President, and Robert L. Griffis its Secretary this 15th day
of March, 1996.
By: /s/ James R. Gilley
James R. Gilley, President
By: /s/ Robert L. Griffis
Robert L. Griffis, Secretary
STATE OF TEXAS
COUNTY OF DALLAS
On March 15, 1996 personally appeared before me, a Notary Public, James R.
Gilley, President, and Robert L. Griffis, Secretary, of Medical Resource
Companies of America, who acknowledged that they executed the above instrument
on behalf of said corporation.
/s/ Frances A. Eagle
Notary Public, State of Texas
EXHIBIT E1
SERIES E PREFERRED STOCK
1. Medical Resource Companies of America (the "Company") establishes a series
of Preferred Stock pursuant to the authority contained in the Articles of
Incorporation of the Company, to be known as Series E Preferred Stock, par
value $0.10 per share.
2. There shall be authorized the issuance of 1,912,784 shares of Series E
Preferred Stock.
3. The issue price of Series E Preferred Stock shall be $9.514 per share, (the
"Issue Price") issuable in exchange for property of like amount, or in lieu
of dividends as described below.
4. The Series E Preferred Stock shall have equal dividend or distribution,
liquidation and other rights as the Common Stock of the Company except as
set forth below.
5. Holders of the Series E Preferred Stock shall have no right to cause
redemption of the Series E Preferred Stock by the Company.
6. Holders of Series E Preferred Stock shall have the right to vote together
with the holders of the Common Stock, and not as a class (except as
provided below), on any matters to come before a vote of the shareholders.
Each share of Series E Preferred Stock shall be entitled to one vote.
7. In addition, the holders of shares of any and all series of Series E
Preferred Stock outstanding on the record date for any such meeting of the
shareholders shall be entitled to vote, as a single class, upon any
proposed amendment to the Company's Articles of Incorporation, and their
consent shall be required for any action of the Board of Directors, if such
amendment or action would (I) increase or decrease the aggregate number of
authorized shares of Series E Preferred Stock, (ii) increase or decrease
the Issue Price of shares of Series E Preferred Stock, (iii) effect an
exchange, reclassification or cancellation of all or part of the shares of
Series E Preferred Stock, (iv) effect an exchange, or create a right of
exchange, of all or any part of the shares of another class into shares of
Series E Preferred Stock, (v) change the designations, preferences,
limitations, or relative rights of any series of Series E Preferred Stock
at the time outstanding in those respects in which the shares thereof vary
from shares of other series or Series E Preferred Stock at the time
outstanding, (vi) change the shares of Series E Preferred Stock into the
same or a different number of shares, either with or without par value, of
the same class or another class or classes, or (vii) cancel or otherwise
affect accumulated but undeclared dividends on the shares of Series E
Preferred Stock, and no such proposed amendment or action shall be deemed
to have been adopted and approved without the affirmative vote or consent
of holders of a majority of shares of Series E Preferred Stock then
outstanding.
8. Subject to and upon compliance with the provisions hereof, and upon the
approval of a majority of the shareholders of Common Stock (the "Common
Stock") of the Company, which shall specifically exclude the vote of the
holders of the Series D & E Preferred Stock for the approval, but not for
quorum purposes, each holder of shares of Series E Preferred Stock shall
have the right, at such holder's election to convert all or any portion (in
minimum increments of $25,000 per exercise if for less than all shares
owned) of the Issue Price of shares of Series E Preferred Stock into shares
of Common Stock of the Company on the basis of one share of Series E
Preferred Stock per each share of Common Stock.
Subject to and upon compliance with the provisions hereof, and upon the
approval of a majority of the shareholders of Common Stock (the "Common
Stock") of the Company, which shall specifically exclude the vote of the
holders of the Series D & E Preferred Stock for the approval, but not for
quorum purposes, the Company shall have the right to convert all or any
portion (in minimum increments of $25,000 per exercise if for less than all
shares owned) of shares of Series E Preferred Stock into shares of Common
Stock of the Company on the basis of one share of Series E Preferred Stock
per each share of Common Stock.
The number of common shares issuable upon conversion shall be adjusted to
take into account any and all increases or reductions in the number of
shares of Common Stock outstanding which may have occurred since the date
of issuance of the Series E Preferred Shares by reason of a split, share
dividend, merger, consolidation, or other capital change or reorganization
affecting the number of outstanding common shares so as fairly and
equitably to preserve so far as reasonably possible the original conversion
rights of the Series E Preferred Shares, and provided further that when
such adjustment is required, no notice of redemption shall be given until
such amendment and adjustment shall have been accomplished.
Upon conversion of all or a part of the outstanding Series E Preferred
Shares, the Series E Preferred Shares surrendered for conversion shall be
canceled and returned to the status of authorized but unissued shares.
Under no circumstances shall the Company be obligated to issue any
fractional shares.
In order to exercise the conversion privilege, the holder of Series E
Preferred Stock shall present the shares to the Company at its office,
accompanied by written notice to the Company that the holder elects to
convert all or a portion of Series E Preferred Stock. Such notice shall
also state the name or names (with the address or addresses) in which the
certificate or certificates representing Common Stock which shall be
issuable on such conversion shall be issued. As soon as practicable after
the receipt of such notice and the presentation of the Shares of the Series
E Preferred Stock, the Company shall issue and shall deliver to the holder
a certificate or certificates for the number of full shares of common stock
issuable upon the conversion of Series E Preferred Shares (or portion
hereof), and provision shall be made for any fraction of a Unit as provided
above. Such conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which such notice shall have
been received by the Company, and the shares of Series E Preferred Stock
shall have been presented as aforesaid, and at such time the rights of the
holder of the shares of Series E Preferred Stock as such holder shall cease
(to the extent the shares of Series E Preferred Stock are so converted) and
the person or persons in whose name or names any certificate or
certificates for Common Stock shall be issuable upon such conversion shall
be deemed to have become the holder or holders of record of the Common
Stock represented thereby. Upon conversion by a holder of only a part of
the shares of Series E Preferred Stock held by such holder, new shares of
Series E Preferred Stock representing the shares not converted shall be
issued in the name of such holder. Notwithstanding the holder's designation
of names in which shares of Common Stock are to be issued, nothing
contained in this Section shall permit the holder of the Series E Preferred
Shares to make any transfer or assignment of its rights hereunder which is
otherwise prohibited by the Series E Preferred Shares or by law.
If a majority of the shareholders of Common Stock of the Company fail to
approve the right of holders of Series E Preferred Stock to convert to
Common Stock within two years of the date of issuance, a dividend shall
become payable on the Series E Preferred Stock, in the amount of 12% of the
Issue Price, payable quarterly beginning twenty-seven months following the
date of issuance, in cash. Such dividends shall be cumulative from the date
of issue, so that no dividend (other than a dividend payable in Common
Stock of the Company) or other distribution shall be paid or declared or
made, and no amounts shall be applied to the purchase or redemption of the
Common Stock or any other class of stock ranking junior to the Series E
Preferred Stock as to dividends unless full cumulative dividends for all
past dividend periods shall have been paid or declared and set apart for
payment, and full dividends for the then current dividend period shall have
been or simultaneously therewith shall be paid or declared and set apart
for payment, on outstanding Series E Preferred Stock.
EXHIBIT 11.1
Exhibit 11.1
Greenbriar Corporation
COMPUTATION OF EARNINGS PER SHARE
Year ended December 31,
1994 1995
---- ----
Primary earnings per share
Weighted average number of common shares outstanding 3,679,000 3,539,000
========= =========
Net earnings $1,788,000 $5,797,000
Less dividends on preferred stock (327,000) (225,000)
--------- ---------
Net earnings allocable to common shares $1,461,000 $5,572,000
========= =========
Primary earnings per share $.40 $1.57
=== ====
Fully-diluted earnings per share
Weighted average number of common shares outstanding 3,679,000 3,539,000
Shares issuable on assumed conversion of debt 62,000 50,000
Shares issuable on assumed conversion of preferred stock 187,000 186,000
-------- --------
Weighted average number of common shares outstanding 3,928,000 3,775,000
========= =========
Net earnings allocable to common shares $1,461,000 $5,572,000
Add: Interest on convertible debt, net of tax effect 42,000 6,000
Dividends on convertible preferred stock 198,000 193,000
-------- --------
Net earnings allocable to common shares on a fully-diluted basis $1,701,000 $5,771,000
========= =========
Fully-diluted earnings per share (Note) $.43 $1.53
=== ====
Note -The computation of fully-diluted earnings per share is presented in
accordance with the requirements of Regulation S-B, although it is contrary
to APB Opinion No. 15 for 1994 in that it produces an antidilutive result.
EXHIBIT 22.1
State of State of
Entity Organization Qualification
- ---------------------------------------------------- -------------------- -------------------
Corporations
- ----------------------------------------------------
Altman Nursing, Inc. (1) NV TX
Assisted Lending, Inc. TX
CareAmerica, Inc. DE AZ
Complete Corporation TX
Equivest Oak Tree, Ltd. GA
Equivest West Inc. NV OR
EquiVest Inc. NV FL
Equivest Fairington, Ltd. GA
Hermiston Assisted Living, Inc. OR
King City Retirement Corporation OR
Liberty Acquired Brain Injury Habilitation Services, Inc. WA
Medical Concepts, Inc. NV
MRC Assisted Living, Inc. TX
MRC Payroll Company TX
Oak Harbor Retirement Center, Inc. WA
Remuda Acquisition Corp. TX
Tara Management, Inc. TX
The Briarcliff at Texarkana, Inc. TX
The Denison-Greenbriar, Inc. TX
The Greenbriar at Muskogee, Inc. OK
The Terrace, Inc. OR
Villa Del Rey - Seaside, Inc. OR
VLS & Associates, Inc. WA
Wedgwood Retirement Inns, Inc. WA
Limited Liability Corporations
- ----------------------------------------------------
Harlingen Retirement LLC TX
State of State of
Entity Organization Qualification
- ---------------------------------------------------- -------------------- -------------------
Lewiston Group LLC WA ID
Rose Garden Estates, LLC WA
Roswell Retirement, Ltd. Co. NM
Roswell Senior Apartments, Ltd. Co. NM
Sweetwater Springs Group, LLC GA
Partnerships & Limited Partnership
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Crown Pointe Development CA
Liberty Group WA
Lincolnshire Partners OR
Neawanna by the Sea Limited Partnership OR
Oak Harbor Retirement Center L.P. WA
Retirement Housing Associates WA CA
Villa del Rey - Roswell Limited Partnership NM
70% ownership
60% Ownership
49% Ownership