SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
                               (Amendment No. ___)

Filed by the Registrant  [X]
Filed by a Party other than the Registrant  [  ]

Check the appropriate box:
[ ]  Preliminary Proxy Statement
[X]  Definitive Proxy Statement
[ ]Definitive]  Definitive Additional Materials
[ ]Soliciting]  Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12

                             GREENBRIAR CORPORATION
                  (Name of Registrant As Specified in Charter)

 ................................................................................
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X]  No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

     1) Title of each class of securities to which transaction applies:

     2) Aggregate number of securities to which transaction applies:

     3) Per unit  price  or  other  underlying  value  of  transaction  computed
        pursuant to Exchange Act Rule 0-11:

     4) Proposed maximum aggregate value of transaction:

     5) Total fee paid:

[ ]  Fee paid previously with preliminary materials.
[ ]  Check box if any part of the fee is offset  as  provided  by  Exchange  Act
     Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was
     paid  previously.  Identify the previous filing by  registration  statement
     number, or the Form or Schedule and the date of its filing.

     1)  Amount Previously Paid:
         .......................................................................
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                             GREENBRIAR CORPORATION
                               4265 Kellway Circle
                              Addison, Texas 7524475001

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                             To Be Held July 31, 1998June 4, 1999






Dear Stockholders of Greenbriar Corporation:

     You are cordially  invited to attend the Annual Meetingannual meeting of  Stockholdersstockholders of
Greenbriar  Corporation  (the "Company") to be held at 10:00 a.m., local time on July 31, 1998,June 4, 1999, at
4265  Kellway  Circle,  Addison,  Texas  75244,75001,  to  consider  and vote upon the
following matters:

              Proposal 1.  To electElection of  one Class III  DirectorI director and three Class  I DirectorsII
                           directors to  hold  office  in  accordance  with  the
                           Articles of Incorporation  and Bylaws of the Company ("company;
                           and

              Proposal 1");

              2.  To ratifyRatification of the selection of Grant Thornton,  LLP
                           as the Company's
     auditors ("Proposal 2"); and

              3. The  transaction  of such other business that may properly come
     before the meeting or any adjournment or postponement thereof.company's auditors.

     Only  Stockholdersstockholders of record at the close of business on July 2, 1998 who
own Common  Stock or Series B or Series D  Preferred  Stock will be  entitled to
notice of and toApril 12, 1999 can
vote at the Annual Meeting or any adjournments thereof.

     All  Stockholdersmeeting.

     You are cordially  invited and urged to attend the Annual
Meeting.annual meeting in person.  Even if
you plan to attend the Annual Meeting,meeting, you are still requested to sign, date and return
the accompanying  proxy in the enclosed addressed  envelope.  If you attend, you
may vote in person if you wish, even though you have sent your proxy.

By Order of the Board of Directors



Robert L. Griffis, Secretary

July 10, 1998April 28, 1999







                             GREENBRIAR CORPORATION
                               4265 Kellway Circle
                              Addison, Texas 7524475001
                                  (972)407-8400

                                 PROXY STATEMENT
                                       FOR
                         ANNUAL MEETING OF STOCKHOLDERS
                             To Be Held July 31, 1998


         This Proxy Statement (the "Proxy Statement")June 4, 1999


     The company is sending this proxy statement and the accompanying proxy card are being  furnished
to the holders of common stock,  par value $.01 per
share ("Common  Stock"),  and Series B and Series D Preferred  Stock,  par value
$0.10 per share  ("Preferred  Stock")  (collectively,  the  "Stockholders"),preferred  stock,  of
Greenbriar  Corporation, a Nevada corporation ("Greenbriar" or the "Company"),  in connection  with a  solicitation  of proxies by the
Boardboard of Directorsdirectors of the Companycompany  from the  Stockholdersstockholders  for use at the Annual Meetingannual
meeting of Stockholdersstockholders of the Company (the "Annual Meeting").  Proxies will be voted at the Annual Meeting
to be  held  at the  time  and  place  and for the  purposes  set  forth  in the
accompanying  Notice.  This Proxy  Statementcompany.  We are mailing this proxy statement and
the enclosed form of proxy is
being mailedbeginning on or about July 10, 1998.

         The  expense  of this  solicitation,  including  the  reasonable  costs
incurred by custodians, nominees, fiduciaries and other agents in forwarding the
proxy material to their  principals,  will be borne by the Company.  The Company
will also reimburse  brokerage firms and other custodians and nominees for their
expenses in  distributing  proxy material to beneficial  owners of the Company's
Common Stock in accordance with Securities and Exchange Commission requirements.
In addition to the solicitation  made hereby,  certain  directors,  officers and
employees of the Company may solicit proxies by telephone and personal contact.

         The  Company's  principal  executive  office is located at 4265 Kellway
Circle, Addison, Texas 75244, and its telephone number is (972) 407-8400.April 28, 1999.



                          VOTING AND PROXY INFORMATION
The BoardWho May Vote

     Holders of Directorsrecord of the Company has fixedcommon stock and Series B and D preferred stock at the
close of  business on July 2, 1998,  as the record date (the  "Record  Date") for  determining  the
holders of Common Stock and Preferred StockApril 12,  1999 are  entitled to receive  notice of and to
vote at the Annual Meeting.annual  meeting.  At the close of  business on the Record Date,record date there
were  outstanding  6,733,579  shares of  Common  Stock,common  stock,  615  shares of Series B
Preferredpreferred  Stock,  and  675,000  shares of Series D  Preferred  Stock,preferred  stock,  the only
outstanding  securities of the Companycompany  entitled to vote at the Annual  Meeting.annual  meeting.
The Common  Stock,  Series  B  and  Series  D  Preferred  Stock  werecommon stock is held by approximately  4,000, eight and one3,000 stockholders of record, respectively.

         For each  share held on the Record  Date,  a holderand all
series of Common  Stock or
Preferred Stockpreferred stock are closely held.

Required Votes

     Each  stockholder is entitled to one vote per share on all matters properly
brought before the Stockholdersstockholders at the Annual Meeting.annual meeting. Such votes may be cast in
person or by proxy.  Abstentions  may be  specified as to the approval of any of
the  Proposals and will have the effect of a vote against the  Proposals.  Under
the rules of the American Stock  Exchange, (the "Exchange"),  brokers holding shares for customers
have  authority  to  vote  on  certain  matters  when  they  have  not  received
instructions  from the  beneficial  owners and do not have such  authority as to
certain other matters  (so-called  "broker  non-votes").matters.  The Exchange rules allow member firms of the Exchange to
vote on both Proposals without specific instructions from beneficial owners.

     On the Record Date,  Mr. James R. Gilley,  ChairmanThe directors will be elected by a plurality of the Boardvotes cast in person or
by proxy.  The Proposal to ratify the selection of independent  accountants will
require the affirmative  vote of the Company,holders of a corporation  wholly owned by him, and his spouse and adult  children
(as individuals or as trustees for various family trusts), beneficially owned an
aggregate of approximately  32%majority of the outstanding  Common Stockvoters present
in person and 100%by proxy at the meeting and entitled to vote.

How to Vote

     Votes may be cast in person at the  annual  meeting  or by proxy  using the
enclosed  proxy card. A facsimile  of the outstanding  Series D  Preferred  Stock of the Company  (approximately  38.2% of
shares  entitled  to vote);  Mr.  Victor L.  Lund,  a director  of the  Company,
beneficially owned approximately 16.5% of the outstanding shares of Common Stock
(approximately 15% of shares entitled to vote); and Floyd B. Rhoades, President,
Chief  Executive  Officer  and a director  of the  Company,  beneficially  owned
approximately  12.9% of the  outstanding  shares of Common Stock  (approximately
11.7% of shares entitled to

                                        1





vote). All such persons have indicated theyproxy will vote their shares, comprising a
total of more than 64.9% of the shares  entitled  to vote,  for the  approval of
each of the Proposals, which will insure such approval by the Stockholders.be accepted.  All shares of
Common Stockcommon stock and Preferred  Stockpreferred  stock that are  represented at the Annual Meetingannual meeting by
properly  executed  proxies  received by the  Companycompany  prior to or at the Annual  Meetingannual
meeting and not revoked will be voted at the Annual Meetingannual  meeting in accordance  with
the instructions indicated in suchtheir proxies. Unless instructions to the contrary
are specified in the proxy,  each such proxy will be voted FOR the election as a
Directordirector of the nominees listed herein and for approval of the other Proposal.

Proxies Can Be Revoked

     Any proxy given pursuant to this  solicitation may be revoked by the person
giving it at any time before it is voted.  Proxies may be revoked by (i)
filing with
the Secretary of the Company,company,  before the vote is taken at the Annual
Meeting,annual meeting, a
written  notice of  revocation  bearing a date later than the date of the proxy,
(ii) duly executing and delivering a

                                        1






subsequent proxy relating to the same shares or (iii)  attending the Annual  Meetingannual meeting and
voting in person  (although  attendance at the Annual Meetingannual meeting will not in and of
itself  constitute a revocation  of a proxy).  Any written  notice of revocation
should be sent to: Corporate  Secretary,  Greenbriar  Corporation,  4265 Kellway
Circle, Addison, Texas 75244.75001.

Expenses of Solicitation

     The  company  will bear the  expense of this  solicitation,  including  the
reasonable costs incurred by custodians,  nominees, fiduciaries and other agents
in  forwarding  the proxy  material  to you.  The  company  will also  reimburse
brokerage  firms  and other  custodians  and  nominees  for  their  expenses  in
distributing proxy material to you. In addition to the solicitation made by this
proxy statement,  certain  directors,  officers and employees of the company may
solicit proxies by telephone and personal contact.





                                   PROPOSAL 1
                              ELECTION OF DIRECTORS

Nominees

     At the Annual  Meeting,annual meeting,  one Class IIII director will be elected to hold office
until the 2000 Annual Meeting2001 annual meeting of Stockholders  or until his successor is
elected  and  qualified,stockholders  and three Class III directors will
be elected to hold office  until the 2001 Annual Meeting2002 annual  meeting of  Stockholders  or until their  successors
are elected and qualified.stockholders.  The
Company'scompany's Articles of Incorporation  provide that the directors are divided into
three  classes  of equal or  approximately  equal  number and that the number of
directors  constituting  the Boardboard of Directorsdirectors  will from time to time be fixed
and determined by a vote of a majority of the Company'scompany's directors serving at the
time of such vote.  The Boardboard of  Directorsdirectors is now  comprised of seveneight  members,
with Classes I and II  consisting  of three
members and Class III  consisting  of one  member.  The Board of  Directors  has
provided,  however, that there shall be eight members of the Board effective the
date of the  Annual  Meeting,  with each of Class I and II consisting  of three  members and Class III  consisting of
two members.

     It is intended that the accompanying  proxy,  unless contrary  instructions
are set  forth  therein,  will be voted for the  election  of the  nominees  for
election as  directors  as set forth in the  following  table.  If the  nominees
become unavailable for election to the Boardboard of Directors,directors,  the persons named in
the proxy may act with discretionary  authority to vote the proxy for such other
persons if any, as may be designated by the Boardboard of  Directors.directors.  However,  the Boardboard is
not aware of any  circumstances  likely to render the nominees  unavailable  for
election.  The  withholding of authority or abstention  will have no effect upon
the  election  of  directors  by  holders  of Common Stockcommon  stock  and  Series B and D
Preferred  Stockpreferred stock because under Nevada law directors are elected by a plurality of
the votes cast, assuming a quorum is present.  The presence of a majority of the
outstanding shares of Common  Stockcommon stock and Series B and D Preferred Stock,preferred stock, voting as
one class,  will  constitute a quorum.  The shares held by each holder of Common Stockcommon
stock and Series B and D Preferred Stockpreferred stock who signs and returns the enclosed form
of proxy will be counted for purposes of determining the presence of a quorum at
the meeting.

     The  following  table sets forth  certain  information  with respect to the
persons who will be the  nominees  for  election  at the Annual  Meetingannual  meeting and the
other incumbent directors and executive officers of the Company.company. Included within
the information below is information  concerning the business experience of each
such  person  during the past five years.  The number of shares of Common  Stockcommon  stock
beneficially  owned by each of the  directors  as of MayMarch 31, 19981999 is set forth
below in "Securities Ownership of Certain Beneficial Owners."


                                        2




Nominees and Business Experience Class III Being elected at Annual Meeting for a term to expire in 2000 - ------------------------------------------------------------ William A. Shirley, Jr. Mr. Shirley was Chairman of the Board and President of Villa Age 55 Residential Care Homes, Inc. from 1989 until its acquisition by the Company on December 31, 1997. Mr. Shirley is also President of Pascal Enterprises, a real estate investment company wholly owned by Mr. Shirley. Class I Being elected at Annual Meeting for a term to expire in 2001 - ------------------------------------------------------------ Gene S. Bertcher Mr. Bertcher has been Executive Vice President, Chief Financial Officer and Age 50 Treasurer of the company since November 1989 and was a director from November 1989 until September 1996. He is a certified public accountant Class II Being elected at Annual Meeting for a term to expire in 2002 - ------------------------------------------------------------ Michael E. McMurray Mr. McMurray has been a director of the company since May 1991. Since Age 44 July 1987, Mr. McMurray has been Vice President of Investments for Prudential Securities. Prior to joining Prudential Securities, Mr. McMurray was a financial consultant for Shearson Lehman Hutton from 1983 until July 1987. Matthew G. Gallins Mr. Gallins has been a director of the company since June 1994. Since Age 43 1990, Mr. Gallins has been a director, President and Chief Operations Officer of Gallins Vending Company, Inc., a food services vending company. He is director of Southern Community Bank in Winston-Salem, North Carolina and has served on the boards of various charitable organizations. Victor L. Lund Mr. Lund has been a director of the company since 1996. He founded Age 70 Wedgwood Retirement Inns, Inc. ("Wedgwood") in 1977. Wedgwood became a wholly owned subsidiary of the company on March 31, 1996. For most of Wedgwood's existence, Mr. Lund was Chairman of the Board, President and Chief Executive Officer, positions he held until Wedgwood was acquired by the company. He continues to serve as Chairman of the board of Wedgwood. Incumbent Directors and Business Experience Class I Term expires in 2001 - -------------------- James R. Gilley Mr. Gilley has been Chairman of the Companycompany since November Age 64 1989 and Age 65 was President and Chief Executive Officer from November 1989 until December 31, 1996. Floyd B. Rhoades Mr. Rhoades has been a Director and Chief Executive Officer Age 57 of the Company since December 31,16, 1996. He has been the Chairman,was re-elected as President and Chief Executive Officer of American Care Communities, Inc. ("American Care") since its inception in 1992. American Care became a wholly owned subsidiary of the Company on December 31, 1996. From 1985 to 1991 Mr. Rhoades served as President of Living Centers. In 1992 Mr. Rhoades was the recipient of the National Council of Aging's Distinguished Service Award. He was the founding President of the North Carolina Assisted Living Association, and he is a Board Member of the Accreditation Commission for Home Care.October 2, 1998. Paul G. Chrysson Mr. Chrysson has been a Directordirector of the company since May 1995. He is Age 4344 President of C.B. Development Co., Inc., a North Carolina real estate developer, a position he has held for over five years. Mr. Chrysson is a member of the boards of directors of Boddie-Noell Properties, Inc. and the Board of Advisors of Wachovia Bank-WinstonBank-Forsyth County, Winston Salem, North Carolina and has served on the boards of various charitable organizations. He has been a licensed real estate agent since 1974 and a licensed contractor since 1978. Incumbent Directors and Business Experience Class II Term expires in 1999 - -------------------- Michael E. McMurray Mr. McMurray has been a Director since May 1991. Since July 1987, Mr. McMurray has been Vice President of Investments Age 43 for Prudential Securities. Prior to joining Prudential Securities, Mr. McMurray was a financial consultant for Shearson Lehman Hutton from 1983 until July 1987. Matthew G. Gallins Mr. Gallins has been a Director since June 1994. Since 1990, Age 42 Mr. Gallins has been a Director, President and Chief Operations Officer of Gallins Vending Company, Inc., a food services vending company. He has also been the owner and served as Vice President and Secretary of Exit Inc. (d.b.a. Tomatoz Grill), a restaurant, since 1993. He is a Foundation Board Director for Tanglewood Park in North Carolina, a Member of the Annual Campaign Fund for the United Way, and past Chairman of Special Events Solicitation Committee for the Forsyth County Mental Health 3 Association. He is director of Southern Community Bank in Winston- Salem, North Carolina. Victor L. Lund Mr. Lund was the founder of Wedgwood Retirement Inns, Inc. Age 69 ("Wedgwood") in 1977. Wedgwood became a wholly owned subsidiary of the Company on March 31, 1996. For most of Wedgwood's existence, he was the Chairman of the Board, President and Chief Executive Officer, positions he held until Wedgwood was acquired by the Company. He presently continues to serve as Chairman of the Board of Wedgwood. Class III Term expires in 2000 - -------------------- Don C. Benton Mr. Benton has been a Directordirector of the company since June 1994. Mr. BentonHe Age 4344 currently serves as a consultant to various twelve stepTwelve Step ministry programs. He was Director of Twelve Step Ministries, Lovers Lane United Methodist Church of Dallas from 1991 until 1997 and has been a Consultantconsultant for Spiritual Counseling and Education for the Addiction Recovery Center since 1993 and1993. He also served in that capacity for the Argyle Specialty Hospital. He has served as unit coordinator, admissions coordinator, and milieu therapist for various hospitals and facilities throughout Texas since 1988. HeMr. Benton is a Licensed Chemical Dependency Counselor and a Certified Alcohol and Drug Abuse Counselor. William A. Shirley, Jr. Mr. Shirley has been a director of the company since 1998. He was Age 55 Chairman of the Board and President of Villa Residential Care Homes, Inc. from 1989 until its acquisition by the company on December 31, 1997. Mr. Shirley is President of Pascal Enterprises, a real estate investment company wholly owned by Mr. Shirley. Other Executive Officers and Business Experience Gene S. Bertcher Mr. Bertcher has been Executive Vice President and Chief Age 49 Financial Officer and Treasurer of the Company since November 1989 and was a Director from November 1989 until September 1996. He is a certified public accountant. Robert L. Griffis Mr. Griffis has been Senior Vice President of the Companycompany since Age 62 since63 November 1992, and Secretary since June 1994 and was a Directordirector from June 1994 until September 1996. For the nine years prior to becoming an officer of the Company,company, he was involved in the healthcare industry, as Senior Vice President of Retirement Corporation of America, Senior Vice President of National Heritage, Inc., President of Health Resources, Inc., President of the long term care division of Clinitex Corp., and, from 1991 to 1992, as a consultant to the Company.company.
Securities Ownership of Certain Beneficial Owners The following table sets forth as of June 30, 1998,March 31, 1999, certain information with respect to all Stockholdersstockholders known by the Companycompany to own beneficially more than 5% of the outstanding Common Stockcommon stock and Series D, F and G Preferred Stockpreferred stock (which are the only outstanding classes of securities of the Company,company, except for Series B Preferred Stock)preferred stock, the ownership of which is immaterial), as well as information with respect to the Company's Common Stockcompany's common stock and Series D, F and G Preferred Stockpreferred stock owned beneficially by each director, and director nominee, and current executive officer whose compensation from the Companycompany in 19971998 exceeded $100,000, and by all directors and executive officers as a group. Unless otherwise indicated, each of such Stockholdersthese stockholders has sole voting and investment power with respect to the shares beneficially owned. The number of shares of Series B Preferred Stock outstanding and convertible into Common Stock is immaterial and no information has been provided below regarding Series B Preferred Stock ownership. 4 Preferred Stock Common Stock ------------------------ ------------------------------------------------------------------------------------------- ------------------------------------------------------- Number of Shares--shares Assuming Full Number Percent Number Percent Assuming FullConversion of Preferred Percent Name and Address of of of of Conversion of PreferredStock and of of Beneficial Owner Shares Series Shares Class Stock and Options by Holder Class ------------------- -------------------------------- -------- --------- -------- -------- ---------------------------------- ----------------------- ------- Series D Preferred Stock(1) -------------------------- James R. Gilley 675,000(2)Gilley(2 & 3) 675,000 100% 2,607,151(3) 35.0% 2,944,651 37.9%2,807,151 35.6% 3,144,651 38.2% 4265 Kellway Circle Addison TX 7524475001 Sylvia M. Gilley 675,000(2)Gilley(2 & 3) 675,000 100% 2,607,151(3) 35.0% 2,944,651 37.9%2,807,151 35.6% 3,144,651 38.2% 6211 Georgian Court Dallas TX 75240 Victor L. Lund - - 1,214,961 18.0% 1,214,961 18.0%Lund(4) -- -- 1,224,961 17.5% 1,224,961 17.5% 816 NE 87th Ave.Avenue Vancouver WA 98664
4
Preferred Stock Common Stock ---------------------------- ------------------------------------------------------- Number of shares Assuming Full Number Percent Number Percent Conversion of Preferred Percent Name and Address of of of of Stock and of of Beneficial Owner Shares Series Shares Class Options by Holder Class --------------------- -------- --------- -------- ------- ----------------------- ------- Floyd B. Rhoades - - 1,022,000(4) 14.7% 1,022,000(4) 14.7%Rhoades(5) -- -- 953,012 13.3% 953,012 13.3% 95 Argonaut Street Aliso Viego CA 92656 Gene S. Bertcher(6) -- -- 166,000 2.3% 166,000 2.3% 4265 Kellway Circle Addison TX 75244 Gene S. Bertcher - - 74,000(5) 1.1% 74,000 1.1% 4265 Kellway Circle Addison, TX 7524475001 Robert L. Griffis - - 30,000(6)Griffis(7) -- -- 30,000 * 30,000 * 4265 Kellway Circle Addison TX 7524475001 Michael E. McMurray - - 10,000(7)McMurray(8) -- -- 20,000 * 10,00020,000 * 5330 Merrick Rd.Road Massapequa NY 11758 Matthew G. Gallins - - 15,000(8)Gallins(9) -- -- 23,000 * 15,00023,000 * 715 Stadium Drive Winston-Salem NC 27101 Paul G. Chrysson - - 10,000(9)Chrysson(8) -- -- 20,000 * 10,00020,000 * 1045 Burke Street Winston-Salem NC 27101 Don C. Benton - - 10,000(10)Benton(8) -- -- 20,000 * 10,00020,000 * Arrowhead Ranch Route 1 Clarksville, TX 75246 William A. Shirley, Jr. - - 568,446(11) 7.7% 568,446 7.7%(12) -- -- 599,000 8.6% 599,000 8.6% 2621 State Street Dallas TexasTX 75204 Series F and G Preferred Stock(12) ------------------------------Stock(11 & 12) Lone Star Opportunity Fund LP(12) 2,200,000 100% - --- -- 1,257,143 15.7% Fund, L.P.15.3% 600 NorthN Pearl Street, Suite 1550 Dallas TexasTX 75201 American Realty Trust, Inc.(14) - - 197,500 2.9% 197,500 2.9%(13) -- -- 97,500 1.4% 97,500 1.4% 10670 North Central Expressway Suite 300 Dallas TexasTX 75231 Basic Capital Management, Inc.(14) - -(13) -- -- 141,260 2.1%2% 141,260 2.1%2% 10670 North Central Expressway Suite 600 5 Dallas TexasTX 75231 Preferred Stock Common Stock ------------------------ --------------------------------------------------------------- Number of Shares-- Number Percent Number Percent Assuming Full Percent Name and Address of of of of Conversion of Preferred of of Beneficial Owner Shares Series Shares Class Stock and Options by Holder Class ------------------- ----------- -------- -------- -------- --------------------------- ------- Nevada Sea Investments, Inc.(14) - -(13) -- -- 72,800 1.1%1% 72,800 1.1%1% 10670 North Central Expressway Suite 501 Dallas TexasTX 75231 International Health Products, Inc.(14) - -(13) -- -- 249,085 3.7%3.6% 249,085 3.7%3.6% 10670 North Central Expressway Suite 410 Dallas TexasTX 75231 Davister Corp.(14) - -Corporation (13) -- -- 251,200 3.7%3.6% 251,200 3.7%3.6% 10670 North Central Expressway Suite 410 Dallas TexasTX 75231 Institutional Capital Corporation (14) - -(13) -- -- 242,500 3.6% 242,500 3.6% 10670 North Central Expressway Suite 411 Dallas TexasTX 75231 All executive officers, 675,000(1)2)directors and 675,000 100% 5,561,558 68.1% 5,899,058 69.4% and directors and4,912,112 70.2% 5,249,612 71.4% director nominees as a group (10group(1 & 2) (nine persons) - --------------------
5 - ----------------------- * Less than one percent.percent (1) Represents Series D Preferred Stockpreferred stock which votes with Common Stockcommon stock and Series B Preferred Stockpreferred stock as one class. Series D Preferred Stockpreferred stock is convertible into Common Stockcommon stock at a rate of one share of Common Stockcommon stock for two shares of Series D Preferred Stock.preferred stock. (2) The shares are owned by a grantor trust for the benefit of Mr. and Mrs. Gilley. Sylvia M. Gilley is the spouse of James R. Gilley. (3) Consists of 972,851500,000 shares of Common Stockcommon stock owned by JRG Investments Co., Inc., a corporation wholly owned by James R. Gilley ("JRG"); 390,300863,151 shares of Common Stockcommon stock owned by a grantor trust for the benefit of James R. and Sylvia M. Gilley; options to James R. Gilley to purchase 200,000 shares of Common Stockcommon stock at $10.75 per share, exercisable through December 1, 2000; options to James R. Gilley to purchase 200,000 shares of Common Stockcommon stock at $13.275 per share, exercisable through December 31, 2006; options to James R. Gilley to purchase 200,000 shares of Common Stockcommon stock at $17.50 per share, exercisable through December 31, 2007; options to James R. Gilley to purchase 200,000 shares of common stock at $2.50 per share, exercisable through December 31, 2008; a warrant to purchase 108,000 shares at an exercise price of $12.98 per share, exercisable through October 1, 2006, owned by the grantor trust for the benefit of Mr. and Mrs. Gilley; and 536,000 shares of Common Stockcommon stock owned of record by Mrs. Gilley. Other than shares owned by the grantor trust, Mrs. Gilley disclaims any beneficial ownership of the shares owned by Mr. Gilley and JRG. Mr. Gilley and JRG disclaim beneficial ownership of the shares owned by Mrs. Gilley. Mr. Gilley has pledged all of his shares in JRG to Institutional Capital Corporation (formerly known as MS Holding Corp.), a non-affiliated entity, as collateral for repayment of a promissory note payable by JRG to Institutional Capital Corporation in the remaining principal amount of $2,996,373. The note requires payment of annual interest only until December 31, 1998, when the principal balance and all accrued interest is due and payable. Of the shares of Common Stockcommon stock owned by the grantor trust, 200,000 shares were acquired by the trust from the Companycompany in November 1993 in consideration of a $2,250,000 partial recourse promissory note executed by the grantor trust and Mr. Gilley (as co-maker). This note bears interest at an annual rate of 5.5% until November 2003, when the entire 6 principal balance and all accrued interest is due. The note is collateralized by the 200,000 shares purchased by the grantor trust, and the grantor trust and Mr. Gilley (as co-maker) have personal recourse only for the first 20% of the principal balance. (4) Consists of 820,0001,214,961 shares of Common Stockcommon stock owned by Mr. Lund and options to Mr. Lund to purchase 10,000 shares of common stock at $2.50 per share. (5) Consists of 751,820 shares of common stock owned by Mr. Rhoades, options to Mr.Mr, Rhoades to purchase 200,000 shares of Common Stockcommon stock at $17.50 per share, and 2,0001,192 shares owned by his spouse. Mr.Mr Rhoades disclaims beneficial ownership of the shares owned by his spouse. (5)(6) Consists of 54,00046,000 shares of Common Stockcommon stock issued for promissory notes of $92,500, for which 13,000 shares are currently pledged as collateral, and options to purchase 20,000 shares of Common Stockcommon stock for $11.25 per share, all of which are vested. (6)vested, and options to purchase 100,000 shares for $2.50 per share that vest one-third each year beginning at December 31, 1999. (7) In November 1992, Mr. Griffis obtained a loan from the Companycompany for $75,000 which was used to exercise options to purchase 30,000 shares of the Company's Common Stock.company's common stock. The loan is collateralized by the shares purchased by Mr. Griffis. (7)He also has options to purchase 30,000 shares for $2.50 per share that vest one-third each year beginning at December 31, 1999. (8) Consists of options to purchase 10,000 shares of Common Stockcommon stock for $17.75 per share and options to purchase 10,000 shares at $2.50 per share. (8)(9) Consists of 3,000 shares of Common Stockcommon stock owned by Matthew G. Gallins LLC, 2,000 shares of Common Stock owned by Mr. Gallins' minor children, for which he serves as custodian, and options to Mr. Gallins to purchase 10,000 shares of Common Stockcommon stock for $17.75 per share. (9) Consists of options to purchaseshare and 10,000 shares of Common Stock for $17.75at $2.50 per share. (10) Consists of options to purchase 10,000Includes 105,709 shares of Common Stock for $17.75 per share. (11) Includes 85,155 shares of Common Stockcommon stock owned of record by Mr. Shirley, and 483,291 shares of Common Stockcommon stock which Mr. Shirley may acquire upon conversion of certain limited partnership units. (12)units and options to purchase 10,000 shares at $2.50 per share. (11) The holders of Series F Convertible Preferred Stock ("Series F Preferred Stock")preferred stock are entitled to elect one member to the Board,board, but this right has not been exercised by such holders. Series F Preferred Stockpreferred stock is not otherwise entitled to vote except with regard to certain matters that effect changes to its rights and preferences. Series G Senior NonVoting Convertible Preferred Stock ("Series G Preferred Stock")senior non-voting convertible preferred stock is not entitled to vote except with regard to certain matters that effect changes to its rights and preferences. (13)(12) There are 1,400,000 shares of Series F Preferred Stockpreferred stock outstanding and 800,000 shares of Series G Preferred Stockpreferred stock outstanding. The Series F Preferred Stockpreferred stock and Series G Preferred Stockpreferred stock presently are convertible into 800,000 shares of Common Stockcommon stock and 457,143 shares of Common Stock,common stock, respectively. (14)(13) Based on a Schedule 13D, dated April 8, 1998, filed by each of these entities and by Gene E. Phillips, each of these entities owns of record the number of shares set forth for such entity in the table above and each of such entities and Mr. Phillips disclaim they filed such Schedule 13D as a "group". According to the Schedule 13D, Basic Capital Management, Inc. may be deemed to beneficially own 311,560 shares, including the shares owned of record by American Realty Trust, Inc. and Nevada Sea Investments, Inc., and Mr. Phillips may be deemed to beneficially own all 1,154,3451,054,345 shares owned of record and beneficially by these six entities. In the Schedule 13D, Mr. Phillips does not affirm beneficial ownership of any of these shares. Executive Compensation The following tables set forth the compensation paid by the Companycompany for services rendered during the fiscal years ended December 31, 1998, 1997, 1996 and 19951996 to the Chief Executive Officer of the Companycompany and to the other executive officers of the Companycompany whose total annual salary in 19971998 exceeded $100,000, the number of options granted to any of such persons during 1997,1998, and the value of the unexercised options held by any of such persons on December 31, 1997. 71998. 6
Summary Compensation Table Long Term Compensation- Name and Number of Principal Shares of PositionName and Annual Common Stock All --------Principal Compensation- Underlying Other Position Year Salary Options Compensation(1) - -------------------------- ---- ------------- ---------------------------- ------------------------ --------------- James R. Gilley, 1997 $460,0001998 $414,000 200,000 $6,500 Chairman(2)Chairman, President and 1997 460,000 200,000 6,500 Chief Executive Officer(2) 1996 460,000 200,000 8,500 1995 460,000 200,000 7,500 Floyd B. Rhoades, 1998 180,000 - 6,500 Former President(3) 1997 200,000 200,000 6,500 President and Chief 1996 152,000 - - Executive Officer(2) 1995 153,000 - - Gene S. Bertcher, 1998 162,000 100,000 - Executive Vice President 1997 180,000 - - Executive Viceand Chief Financial Officer 1996 180,000 - 7,500 President and Chief 1995 172,500 - 6,500 Financial Officer Robert L. Griffis, 1998 90,000 30,000 - Senior Vice President 1997 100,000 - - Senior Vice President 1996 120,000 - 7,500 1995 115,000Jerry Ramsdale 1998 125,000 6,000 - 6,500 Paul W. Dendy (3) Executive Vice PresidentPresident-Human 1997 125,00062,500 4,000 - Resources 1996 - - 1996 131,250 10,000 7,500 1995 75,000 - - - -------------------------
(1) Constitutes directors' fees paid by the Companycompany to the named individuals. (2) James R. Gilley served as President and Chief Executive Officer until December 31, 1996.16, 1996 and resumed the office October 2, 1998 when Floyd B. Rhoades was named President and Chief Executive Officer on December 31, 1996 as part ofdeparted the American Care Acquisition. Mr.company. (3) Floyd B. Rhoades has a three year employment agreement with the Company under which he will receive an annual salary of $200,000. (3) Paul W. Dendy ceased to be an executive officer in MayOctober 1998. His compensation for 1995 and a portion of 1996 representrepresents compensation paid by Wedgwood Retirement Inns,American Care Communities, Inc. prior to its acquisition by the Companycompany on MarchDecember 31, 1996.
Option Grants Table (Option Grants in Last Fiscal Year) PercentNumber of NumberPercent of Securities Total Options Exercise or Underlying Granted to Exercise or Options Employees in Base Price Expiration Name Options Granted Fiscal Year Per Share Date ----- ----------------- ---------- -------------- ------------ ---------- ---------------- James R. Gilley 200,000 50% $17.5030% $2.50 12/31/07 Floyd B. Rhoades 200,000 50% 17.5008 Gene S Bertcher 100,000 15% 2.50 12/31/0708 Robert L. Griffis 30,000 4% 2.50 12/31/08 Jerry Ramsdale 6,000 1% 2.50 12/31/08
87
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values Value of Unexercised Number of Securities In-the-Money Underlying Unexercised Options at 19971998 Options at 1998 FY-End FY-End Shares Acquired Value Options at 1997 FY-End FY-End ---------------------- -------------------------------------------- Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable ---- ----------- --------- ----------------- --------------- --------- ----------- ------------- ----------- ------------- James R. Gilley - - 600,000 - $2,244,000 $--- -- 800,000 -- $12,500 $-- Floyd B. Rhoades - --- -- 200,000 - - --- -- -- Gene S. Bertcher - - 20,000 - 127,500 - Paul W. Dendy - - 10,000 - 63,750 --- -- 120,000 -- 6,250 -- Robert L. Griffis -- -- 30,000 -- 1,875 --
Stock Option Plan The Compensation Committeecompensation committee administers the Company'scompany's 1992 Stock Option Plan, as amended (the "1992 Plan"), and 1997 Stock Option Plan (the "1997 Plan"), each of which provides for grants of incentive and non-qualified stock options to the Company'scompany's executive officers, as well as its directors and other key employees, and consultants in the case of the 1997 Plan. Under both Plans, options are granted to provide incentives to participants to promote long-term performance of the Companycompany and specifically, to retain and motivate senior management in achieving a sustained increase in stockholder value. Currently, neither Plan has a pre-set formula or criteria for determining the number of options that may be granted. The exercise price for an option granted under both Plans is determined by the Compensation Committee,compensation committee, in an amount not less than 100 percent of the fair market value of the Company's Common Stockcompany's common stock on the date of grant. The Compensation Committeecompensation committee reviews and evaluates the overall compensation package of the executive officers and determines the awards based on the overall performance of the Companycompany and the individual performance of the executive officers. The Companycompany currently has reserved 217,500 shares of Common Stockcommon stock for issuance under the 1992 Plan and 500,000 shares of Common Stockcommon stock under the 1997 Plan. As of the date of this Proxy Statement,proxy statement options hadhave been granted for all but 63,50022,000 shares reserved under the 1992 Plan and no options had been granted86,888 shares under the 1997 Plan. Employment Agreements Effective December 31, 1996, the Company entered intoThe company has an employment agreement with Floyd B. Rhoades to become theJames R. Gilley, Chairman, President and Chief Executive Officer, of the Company. Mr. Rhoades' agreement is for a term of three years, with an annual salary of $200,000. Effectivedated January 1, 1997, the Company entered into an Employment Agreement with James R. Gilley to serve as Chairmanthat provides for a three year term that recommences each day. The Agreementagreement provides for a base salary of $460,000 and 200,000 fully vested, non-qualified stock options each year in lieu of any cash bonus. The Agreementagreement may be terminated early only upon resignation, mutual consent or for good cause. Also effective January 1, 1997,The company had an employment agreement with Floyd B. Rhoades, President and Chief Executive Officer from December 31, 1996 to October 2, 1998, dated December 30, 1996, that provided for a three year term and provided compensation of $200,000 per year. Mr. Rhoades ceased to serve as President and Chief Executive Officer on October 2, 1998 and he was paid under his Employment Agreement until March 31, 1999 when the Company entered intoagreement was canceled for consideration of $77,000. The company has an Employment Agreementemployment agreement with Gene S. Bertcher, to serve as Executive Vice President and Chief Financial Officer. The agreement, dated January 1, 1997, provides for a two year term that recommences each day. The Agreementagreement provides for base salarycompensation of $180,000 andper year, discretionary bonus and may be terminated early only upon resignation, mutual consent or for good cause. COMPENSATION COMMITTEE REPORT The compensation paid to the company's executive officers is reviewed and approved annually by the compensation committee of the board of directors. The compensation committee consists entirely of non-employee directors. Current members of the committee are Messrs. Benton, Chrysson, Gallins and McMurray. In addition to approving annual compensation for the company's executive officers, the compensation committee approves any incentive awards for executive officers and other key employees, any stock option grants and additional benefits such as the company's 401(k) plan. The company's compensation philosophy is to attract, retain and reward executives who have shown they are capable of leading the company in achieving its business objectives and performance goals. These objectives include preserving and increasing the company's asset value; positioning the company's operations in geographic markets offering long term, profitable 8 growth opportunities; preserving and enhancing shareholder value and keeping the company competitive in its marketing and operations. The accomplishment of these objectives is measured against conditions prevalent in the assisted living industry. In recent years the industry has grown to be a highly competitive industry for residents, real estate and services in a rapidly changing regional and national environment. The compensation committee determined that the primary forms of executive compensation should be base salary and stock options. The company's performance is a key consideration (to the extent that such performance can be fairly attributed or related to an executive's performance) and each executive's responsibilities and capabilities are key considerations. The committee strives to keep executive base salaries competitive for comparable positions in other corporations where possible. In addition, the committee believes in equity compensation wherein executives will be additionally rewarded based on increasing the company's shareholder value. Base salaries are predicated on a number of factors, including: o recommendation of the Chief Executive Officer; o knowledge of similarly situated executives at other companies; o the executive's position and responsibilities within the company; o the compensation committee's subjective evaluation of the executive's contribution to the company's performance; o the executive's experience and o the term of the executive's tenure with the company. Chief Executive Officer Compensation Floyd B. Rhoades, President and Chief Executive Officer until October 2, 1998 and James R. Gilley, President and Chief Executive Officer since October 2, 1998, both had employment agreements with the company providing, among other things, each individual's base salary and other benefits. As a result, the compensation committee did not review compensation for the Chief Executive Officer position. Compensation Committee Michael McMurray, Chairman Don Benton Paul Chrysson Matthew Gallins 9 PERFORMANCE GRAPH The following graph compares the cumulative total return on a $100 investment in the company's common stock on December 31, 1994 through December 31, 1998, based on the company's closing stock price on December 31, for each of those years. The same information is provided for the Standard & Poor's 500 index and, from 1996 through 1998 for an industry peer group1. [GRAPHIC OMITTED] Year Greenbriar S&P 500 Industry 1994 100 100 1995 771 134 1996 1,067 161 100 1997 1,343 211 159 1998 195 268 159 - ---------------------- 1 The company considers its peer group to be public companies whose business is primarily in the assisted living industry. Those companies are Alternative Living Services, Inc., ARV Assisted Living, Inc., Assisted Living Concepts, Inc., Capital Senior Living, Inc., Carematrix Corporation, Emeritus Corporation, Karrington Health, Inc., Regent Assisted Living, Inc. and Sunrise Assisted Living, Inc. Only eight of these companies have been public since December 1996 and, consequently, only their performance is shown from that time. 10 Certain Relationships and Related Transactions The following paragraphs describe certain transactions between the Companycompany and (i) any stockholder beneficially owning more than 5% of the outstanding Common Stock, (ii)common stock, the executive officers and directors of the 9 Companycompany and (iii) members of the immediate family or affiliates of any of the foregoing,them, which transactions occurred since the beginning of the 1996 fiscal year. On November 19, 1993 the Companycompany sold 200,000 unregistered shares of its Common Stock,common stock to The April Trust, a grantor trust for the benefit of James R. Gilley, Chairman, President and Chief Executive Officer of the Board of the Company,company, and his wife, at a price equal to the closing price of the shares on the American Stock Exchange on that date ($11.25) per share for consideration consisting of a $2,250,000 promissory note (for which Mr. Gilley is a co-maker) for the full purchase price thereof, of which 20% of the principal amount of the note is a recourse obligation of Mr. Gilley and the grantor trust and the balance of the note is nonrecourse. Such note bears interest at the rate of 5.5% per annum, which accrues and is payable along with all principal upon maturity on November 18, 2003, and is secured by a pledge of the stock back to the Companycompany to hold as collateral for payment of the note pending payment in full. On December 16,1996, the Compensation Committeecompensation committee extended the due date of such note to November 18, 2008. Gene S. Bertcher and Robert L. Griffis, officers of the Company,company, are indebted to the Companycompany for an aggregate of $92,500 and $75,000, respectively, for notes issued in payment for shares of Common Stock. Mr. Bertcher's notes are secured by a pledge of 13,000 shares of Common Stock.common stock. Mr. Griffis"Griffis' note is secured by a pledge of his 30,000 shares. Such notes bear interest at a rate equal to any cash or stock dividends declared on the purchased stock and are due in a single installment for each such note on or before December 31, 1999.October 1, 2002. As part of the Wedgwood Acquisition and as an accommodation to the Sellerssellers to assist them to help achieve a tax-free acquisition, James R. Gilley and members of his family agreed to contribute a retail property in North Carolina to the Companycompany in exchange for 675,000 shares of the Company'scompany's Series D Preferred Stock.preferred stock. Mr. Gilley and his family had owned the retail property for over five years. 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. The Series D Preferred Stockpreferred stock is unregistered, has no trading market unless converted to Common Stock,common stock and is entitled to one vote per share on all matters to come before a meeting of stockholders. The Series D Preferred Stockpreferred stock bears a cumulative quarterly dividend of 9.5% per year, which approximates the cash flow Mr. Gilley and his family members were receiving from the retail property prior to its contribution to the Company.company. The Series D Preferred Stockpreferred stock is convertible into unregistered shares of Common Stockcommon stock at a ratio of one share of Common Stockcommon stock for two shares of Series D Preferred Stock.preferred stock. Mr. Gilley and his family members and affiliates transferred all of the shares of Series D Preferred Stockpreferred stock to The April Trust effective April 1997. The Companycompany agreed to register the shares of Common Stockcommon stock into which the Series D Preferred Stockpreferred stock is convertible under limited circumstances, as follows: (i) the Companycompany agreed to give the holders of such shares the right to demand registration of all or a portion of the Common Stockcommon stock upon conversion provided holders of at least a majority of the shares join in such demand; and (ii) the Companycompany agreed to give the holders of Common Stockcommon stock "piggy-back" registration rights to include all or a portion of the shares in any other registration statement filed by the Companycompany under the Securities Act (other than on Form S-8 or Form S-4), subject to certain rights of the Companycompany not to include all or a portion of such shares under certain circumstances. The Companycompany agreed to pay all expenses of the demand or piggybackpiggy-back registration other than underwriting fees, discounts orand commissions. The Companycompany agreed to register the shares of Common Stockcommon stock into which the Series E Preferred Stockpreferred stock was converted, in connection with the Wedgwood Acquisition, a large percentage of which is held by Victor L. Lund, under limited circumstances, as follows: (i) commencing two years after the closing of the Wedgwood Acquisition, the Companycompany agreed to give the holders of such shares the right to demand registration of all or a portion of the Common Stockcommon stock provided at least a majority of the shares join in such demand;demand and (ii) the Companycompany agreed to give the holders of the Common Stockcommon stock "piggy-back" registration rights to include all or a portion of the shares in any other registration statement filed by the Companycompany under the Securities Act (other than on Form S-8 or Form S-4), subject to certain rights of the Companycompany not to include all or a portion of such shares under certain circumstances. The Companycompany agreed to pay all expenses of the demand or piggy-back registration, other than underwriting fees, discounts orand commissions. In connection with the Wedgwood Acquisition, the Companycompany entered into a Construction Management Agreement with Victor L. Lund pursuant to which Mr. Lund agreed to serve, for three years following closing of the Wedgwood Acquisition, as a construction manager to oversee construction for the Companycompany of up to 20 assisted living facilities, including those that provide Alzheimer's care, during the term of the agreement. The Construction Management Agreement was terminated by mutual agreement in October 1997. Mr. Lund received monthly fees based 10 on the percentage of completion of each facility with a total fee of $150,000 for each facility successfully completed, less any distributions paid to Mr. Lund from any partnership or limited liability company in which Mr. Lund and the Companycompany both own equity interests. Mr. Lund was responsible for paying the costs 11 of any construction supervisors or similar on-site personnel employed by him to satisfy his oversight duties to the Company.company. Mr. Lund owns a 51% equity interest and the Companycompany owns a 49% equity interest in two limited partnerships. The Companycompany has an option to buy Mr. Lund's interests in these partnerships for $10,000. Various representations were made to the Company in connection with the Wedgwood Acquisition. Subsequent to the acquisition, two lawsuits were filed against the Company and Victor L. Lund. In October 1997, the Company and Mr. Lund entered into an agreement whereby the Company would indemnify him for any damages resulting from the lawsuits and to agree to assume responsibility for all legal fees associated with the lawsuits. In return, Mr. Lund agreed to give the Company 125,000 shares of Common Stock. Subsequent to entering into this agreement, the Company and Mr. Lund were awarded a summary judgment and a directed verdict, including legal fees, by the respective courts. Victor L. Lund and Mark W. Hall, a former officer of the Company, made loans to Wedgwood of $880,158 during several years prior to the Company's acquisition of Wedgwood to partially fund construction and acquisition of facilities, and for working capital. The notes bear interest at rates ranging from 9.25% to 10.50% and were due on demand. The remaining balances of these loans were paid in full in March 1998. In addition, as of June 30, 1998, Mr. Lund has guaranteed repayment of approximately $11,000,000 of Wedgwood indebtedness and the Company has agreed to indemnify Mr. Lund against any liability under his guarantees. In 1996 The April Trust purchased a Stock Purchase Warrant from an unaffiliated holder to purchase 108,000 shares of Common Stockcommon stock at an exercise price of $12.98 per share. SuchThat warrant contains anti-dilution clauses requiring a reduction in the exercise price to adjust for any issuances of Common Stockcommon stock at a price less than the exercise price, which had occurred and would occur in connection with the merger with American Care. To eliminate any future conflicts and negotiations of changes in the exercise price, the warrant was amended to fix the exercise price at $10.00 and to extend the termination date until October 1, 2006. On January 13, 1998, Lone Star Opportunity Fund, L.P. ("Lone Star") purchased 1,400,000 shares of Series F Preferred Stockpreferred stock and 800,000 shares of Series G Preferred Stockpreferred stock for an aggregate purchase price of $22,000,000. The Series F Preferred Stockpreferred stock and Series G Preferred Stockpreferred stock are convertible into 1,257,143 shares of Common Stock.common stock. The Companycompany agreed to register the shares of Common Stockcommon stock into which the Series F Preferred Stockpreferred stock and Series G Preferred Stockpreferred stock are convertible under limited circumstances, as follows: (i) the Companycompany agreed to give the holders of such shares the right to demand registration on two occasions of all or a portion of the Common Stockcommon stock upon conversion provided holders of at least a majority of the shares join in such demand and the aggregate offering price is equal to at least $3 million; (ii) the Companycompany agreed to give the holders of Common Stockcommon stock "piggy-back" registration rights to include all or a portion of the shares in any other registration statement filed by the Companycompany under the Securities Act (other than on Form S-8 or Form S-4), subject to certain rights of the Companycompany not to include all or a portion of such shares under certain circumstances; and (iii) the Companycompany agreed to register the shares on Form S-3 upon conversion, if Form S-3 is available to the Company,company, as long as the aggregate offering price for the shares registered on such Form S-3 were at least equal to $3 million and provided the Companycompany will not be required to effect more than one registration on Form S-3 during any twelve month period. The Companycompany agreed to pay all expenses of any demand, piggy-back or Form S-3 registration, other than underwriting fees, discounts orand commissions. It is the policy of the Companycompany that all transactions between the Companycompany and any officer or director, or any of their affiliates, must be approved by the Conflictconflict of Interest Committee,interest committee, which is comprised of non-management members of the Boardboard of Directorsdirectors of the Company.company. All of the transactions described above were approved. Organization of the Board of Directorsdirectors The Boardboard of Directorsdirectors has the following committees: 11 Committee Members --------- ------- Executive James R. Gilley - Chairman Victor L. Lund Paul Chrysson Michael E. McMurray Floyd B. Rhoades Audit Matthew G. Gallins - Chairman Don C. Benton Paul G. Chrysson Michael E. McMurray William A. Shirley, Jr.(1) Compensation Committee Michael E. McMurray - Chairman Don C. Benton Paul G. Chrysson Matthew G. Gallins Conflicts of Interest Paul G. Chrysson - Chairman Don C. Benton Matthew G. Gallins Michael E. McMurray William A. Shirley, Jr.(1) - ------------------- (1) Mr. Shirley will be appointed to these two Committees upon his election to the board of Directors at the annual meeting.12 The Executive Committeeexecutive committee conducts the normal business operations of the Companycompany and acts as Nominating Committee.the nominating committee. The Audit Committeeaudit committee recommends an independent auditor for the Company,company, consults with such independent auditor and reviews the Company'scompany's financial statements. The Compensation Committeecompensation committee fixes the compensation of officers and key employees of the Companycompany and administers the Company'scompany's stock option plans. The Conflictsconflicts of Interest Committeeinterest committee receives and investigates any reports of or perceived conflicts of interest in any activities undertaken by the Company.company. Any stockholder who wishes to recommend a prospective nominee for the Boardboard of Directorsdirectors for consideration by the Executive Committeeexecutive committee for the election in 2000 may write Robert L. Griffis,write: Corporate Secretary, 4265 Kellway Circle, Addison, Texas 75244.75001, on or before January 1, 2000. The Company's Boardboard of Directors held threedirectors had six meetings during 1998. The executive committee met twice, the year ended December 31, 1997. Each Director attended at least 75% ofaudit committee met twice and the aggregate number of meetings held by the Board of Directors and its Committees during the time each such Director was a member of the Board or of any Committee of the Board.compensation committee met once. Compensation of Directors The Companycompany pays each director a fee of $2,500 per year, plus a meeting fee of $1,000 for each Boardboard meeting attended. Section 16(a) Beneficial Ownership Reporting Compliance Based solely upon a review of Forms 3, 4 and 5 furnished to the Companycompany pursuant to Rule 16a-3(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), or upon written representations received by the Company,company, the Companycompany is not aware of any failure by any director, officer or beneficial owner of more than 10% of the Company's Common Stockcompany's common stock to timely file with the Securities and Exchange Commission, on a timely basis, any Form 3, 4 or 5 relating to 1997. 12 1998. PROPOSAL 2 RATIFICATION OF AUDITORS The Boardboard of Directorsdirectors has selected Grant Thornton, LLP to serve as the Company'scompany's independent auditors for the year ending December 31, 1998.1999. The Stockholdersstockholders are being asked to ratify the Board'sboard's selection. Representatives of Grant Thornton, LLP will be present at the Annual Meeting andannual meeting, will have the opportunity to make a statement and will be available to answer appropriate questions. Ratification of the appointment of Grant Thornton, LLP as the Company'scompany's independent auditors for the fiscal year ending December 31, 19981999 requires the approval by a majority vote of the outstanding shares of Common Stockcommon stock and Series B and D Preferred Stockpreferred stock attending the Annual Meeting,annual meeting, either in person or by proxy. The Board of Directors recommends a vote FOR the above Proposal 2. --- ANNUAL REPORT The Annual Reportannual report to Stockholders,stockholders, including consolidated financial statements, for the year ended December 31, 1997,1998, accompanies the proxy material being mailed to all Stockholders.stockholders. The Annual Reportannual report is not a part of the proxy solicitation material. The annual report includes the company's Form 10-K for 1998, including the financial statements and schedules, as filed with the Securities Exchange Commission. A stockholder may also request copies of any exhibit to the Form 10-K, and the company will charge a fee to cover expenses to prepare and send any exhibits. You may request these from: Corporate Secretary, Greenbriar Corporation, 4265 Kellway Circle, Addison, Texas 75001. OTHER MATTERS The Boardboard of Directorsdirectors does not intend to bring any other matters before the Annual Meetingannual meeting and has not been informed that any other matters are to be presented to the Annual Meetingannual meeting by others. In the event that other matters properly come before the Annual Meetingannual meeting or any adjournments thereof it is intended that the persons named in the accompanying proxy and acting thereunder will vote in accordance with their best judgment. 13 DEADLINE FOR SUBMISSION OF PROPOSALS TO BE PRESENTED AT THE 19992000 ANNUAL MEETING OF STOCKHOLDERS Any Stockholderstockholder who intends to present a proposal at the 1999 Annual Meeting2000 annual meeting of Stockholdersstockholders must file such proposal with the Companycompany by March 10, 19991, 2000 for possible inclusion in the Company'scompany's proxy statement and form of proxy relating to the meeting. By Order of the Board of Directors Robert L. Griffis, Secretary 1314 Greenbriar Corporation This Proxy is Solicited on Behalf of the Board of Directors The undersigned hereby (1) acknowledges receipt of the Noticenotice of Annual Meetingannual meeting of Stockholdersstockholders of Greenbriar Corporation, (the "Company"), to be held at the offices of the Companycompany at 4265 Kellway Circle, Addison, Texas 75001, on July 31, 1998,June 4, 1999, beginning at 10:00 a.m., Dallas Time, and the Proxy Statementproxy statement in connection therewith and (2) appoints James R. Gilley and Gene S. Bertcher, and each of them, the undersigned's proxies with full power of substitution for and in the name, place and stead of the undersigned, to vote upon and act with respect to all of the shares of Common Stockcommon stock and Series B and D Preferred Stockpreferred stock of the Companycompany standing in the name of the undersigned, or with respect to which the undersigned is entitled to vote and act, at the meeting and at any adjournment thereof. The undersigned directs that the undersigned's proxy be voted as follows:
1. ELECTION OF [ ] FOR the Class IIII nominee and [ ] WITHHOLD AUTHORITY [ ] ABSTAIN DIRECTORS Class III nominees listed below to vote for the Class III from votingI (except as marked to the nominee and Class III contrary below) nominees listed below Class IIII nominee: William A. Shirley, Jr.Gene S. Bertcher Class III nominees: James R. Gilley, Floyd B. RhoadesMichael E. McMurray, Matthew G. Gallins, and Paul G. ChryssonVictor L. Lund (Instruction: To withhold authority to vote any individual nominee, writeright that nominee's name on the line provided below.) ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 2. RATIFY SELECTION OF [ ] FOR [ ] AGAINST [ ] ABSTAIN GRANT THORNTON , LLP ratification ratification from voting AS THE COMPANY'S AUDITORS 3. IN THE DISCRETION OF THE PROXIES, ON ANY OTHER MATTER WHICH MAY PROPERLY COME BEFORE THE MEETING.
This proxy will be voted as specified above. If no specification is made, this proxy will be voted for the election of the Class IIII director nominee and Class III director nominees in item 1 above and for the ratification and approval in item 2 above. The undersigned hereby revokes any proxy heretofore given to vote or act with respect to the Common Stockcommon stock or Series B and D Preferred Stockpreferred stock of the Companycompany and hereby ratifies and confirms all that the proxies, their substitutes, or any of them may lawfully do by virtue hereof. If more than one of the proxies named shall be present in person or by substitute at the meeting or at any adjournment thereof, the majority of the proxies so present and voting, either in person or by substitute, shall exercise all of the powers hereby given. Please date, sign and mail this proxy in the enclosed envelope. No postage is required. Date ________________ ____, 1998 ---------------------------------------1999 --------------------------------------------- Signature of Stockholder ------------------------------------------------------------------------------------ Signature of Stockholder Please date this proxy and sign your name exactly as it appears hereon. Where there is more than one owner, each should sign. When signing as an attorney, administrator, executor, guardian or trustee, please add your title as such. If executed by a corporation, the proxy should be signed by a duly authorized officer. 14 15