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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
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ENCORE MEDICAL CORPORATION
(Name of the Issuer)
ENCORE MEDICAL CORPORATION
(Name of Person(s) Filing Statement)
$7.00 WARRANTS
RIGHTS TO ACQUIRE $7.00 WARRANTS
(Title of Class of Securities)
29256E125
(CUSIP Number of Class of Securities)
HARRY L. ZIMMERMAN,
VICE PRESIDENT - LEGAL AFFAIRS AND SECRETARY
9800 METRIC BLVD.
AUSTIN, TEXAS 78758
(512) 832-9500
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
Copy to:
RICHARD S. ROTH
JACKSON WALKER L.L.P.
1100 LOUISIANA, SUITE 4200
HOUSTON, TEXAS 77002
(713) 752-4200
DECEMBER 2, 1998
(Date Tender Offer First Published, Sent or Given to Security Holders)
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CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
TRANSACTION VALUATION(1) AMOUNT OF FILING FEE(2)
$418,487.00 $84.00
- --------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the filing fee. Assumes
purchase of all 1,228,728 outstanding warrants at $0.25 per warrant and
all outstanding rights to acquire 445,220 warrants at $0.25 per each
warrant acquirable upon exercise of a right.
(2) Calculated according to Rule 0-11(b)(1) under the Securities Exchange
Act of 1934, as amended, based upon the transaction valuation
multiplied by one fiftieth of one percent.
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[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
Amount Previously Paid: ____________
Form or Registration No.: ____________
Filing Party: ____________
Date Filed: ____________
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ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Encore Medical Corporation, a Delaware
corporation (the "Company"), which has its principal executive
offices at 9800 Metric Blvd., Austin, Texas 78758, telephone number
(512) 832-9500.
(b) The information set forth in the front cover page, "Introduction,"
"Section 1. Purpose of the Offer; Certain Effects of the Offer;
Plans of the Company After the Offer," "Section 4. Expiration Date;
Extension of the Offer" and "Section 12. Transactions and
Arrangements Concerning the Warrants and Rights" of the Offer to
Purchase, a copy of which is attached hereto as Exhibit (a)(1) (the
"Offer to Purchase"), is incorporated herein by reference.
(c) The information set forth in the front cover page, "Introduction,"
"Section 1. Purpose of the Offer; Certain Effects of the Offer;
Plans of the Company After the Offer" and "Section 9. Price Range
of Common Stock" of the Offer to Purchase is incorporated herein by
reference.
(d) This statement is being filed by the issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "Section 11. Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by
reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER
OR AFFILIATE.
(a)-(j) The information set forth in "Section 1. Purpose of the Offer;
Certain Effects of the Offer; Plans of the Company After the Offer"
of the Offer to Purchase is incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "Section 12. Transactions and
Arrangements Concerning the Warrants and Rights" of the Offer to
Purchase is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE ISSUER'S SECURITIES.
The information set forth in "Section 1. Purpose of the Offer;
Certain Effects of the Offer; Plans of the Company After the Offer"
and "Section 12. Transactions and Arrangements Concerning the
Warrants and Rights" of the Offer to Purchase is incorporated
herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Section 14. Fees and Expenses" of the
Offer to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "Section 10. Certain Information
Concerning the Company" of the Offer to Purchase is incorporated
herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) The information set forth in "Section 12. Transactions and
Arrangements Concerning the Warrants and Rights" of the Offer to
Purchase is incorporated herein by reference.
(b) The information set forth in "Section 3. Certain Legal Matters;
Regulatory and Foreign Approvals; No Appraisal Rights" of the Offer
to Purchase is incorporated herein by reference.
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(c) The information set forth in "Section 1. Purpose of the Offer;
Certain Effects of the Offer; Plans of the Company After the Offer"
of the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) Reference is hereby made to the Offer to Purchase and the related
Letter of Transmittal, copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively, and incorporated in their
entirety herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated December 2, 1998.
(a)(2) Letter of Transmittal.
(b) None.
(c) None.
(d) None.
(e) None.
(f) None.
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
December 2, 1998
ENCORE MEDICAL CORPORATION,
a Delaware Corporation
/s/ Nick Cindrich
----------------------------------
Nick Cindrich
Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
(a)(1) Offer to Purchase dated December 2, 1998.
(a)(2) Letter of Transmittal.
5
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EXHIBIT (a)(1)
ENCORE MEDICAL CORPORATION
OFFER TO PURCHASE FOR CASH
ANY OR ALL OUTSTANDING WARRANTS,
EACH EXERCISABLE AT $7.00 PER SHARE OF COMMON STOCK,
AT
$0.25 PER WARRANT
AND ANY OR ALL OUTSTANDING RIGHTS TO
ACQUIRE WARRANTS,
WHICH WARRANTS ARE
EACH EXERCISABLE AT $7.00 PER SHARE OF COMMON STOCK,
AT
$0.25 PER EACH WARRANT
ACQUIRABLE UPON EXERCISE OF A RIGHT
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, AUSTIN, TEXAS TIME, ON WEDNESDAY, DECEMBER 30,
1998, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
Encore Medical Corporation, a Delaware corporation (the "Company"), is
offering to purchase (i) any or all of its outstanding warrants, which have an
exercise price of $7.00 per share (the "Warrants"), at a price, net to the
seller in cash, of $0.25 per Warrant (the "Purchase Price"), and (ii) any or all
of its outstanding rights to acquire Warrants, which Warrants are each
exercisable at $7.00 per share (the "Rights"), at a purchase price, net to the
seller in cash, of $0.25 per each Warrant acquirable upon exercise of a Right,
upon the terms and subject to the conditions set forth herein and in the related
Letter of Transmittal (which together constitute the "Offer"). Each Warrant
entitles the holder thereof to purchase one share of Common Stock, $.001 par
value per share ("Common Stock"), of the Company at a price of $7.00 per share,
subject to adjustment, from the date of issuance until March 25, 2001.
---------------------------------
As of November 30, 1998, the Company had issued and outstanding
1,228,728 Warrants and 445,220 Rights to acquire Warrants. Neither the Warrants
nor the Rights are quoted by The Nasdaq National Market or are listed for
trading on any stock exchange. On November 30, 1998, the closing sales price of
the Common Stock on the Nasdaq National Market (under the symbol "ENMC") was
$3.8125 per share. See Section 9. WARRANTHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE COMMON STOCK.
---------------------------------
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF WARRANTS OR
RIGHTS BEING TENDERED AND NOT WITHDRAWN, NOR UPON OBTAINING ANY FINANCING. THE
OFFER IS SUBJECT ONLY TO THE CONDITIONS SET FORTH IN SECTION 8.
---------------------------------
THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION AS TO WHETHER ANY WARRANTHOLDER OR RIGHTHOLDER SHOULD TENDER ANY
OR ALL OF SUCH WARRANTHOLDER'S OR RIGHTHOLDER'S WARRANTS OR RIGHTS PURSUANT TO
THE OFFER. EACH WARRANTHOLDER AND RIGHTHOLDER MUST MAKE HIS, HER OR ITS OWN
DECISION WHETHER TO TENDER WARRANTS AND/OR RIGHTS AND, IF SO, HOW MANY WARRANTS
AND/OR RIGHTS TO TENDER. THE COMPANY HAS BEEN ADVISED THAT THE DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY CURRENTLY INTEND TO TENDER AN AGGREGATE OF
240,983 WARRANTS AND RIGHTS TO ACQUIRE AN AGGREGATE OF 275,482 WARRANTS.
---------------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR THE
ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
---------------------------------
The date of this Offer to Purchase is December 2, 1998.
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IMPORTANT
Any warrantholder or rightholder desiring to tender all or any portion
of such holder's Warrants or Rights should either (a) complete and sign the
Letter of Transmittal or a facsimile thereof in accordance with the instructions
in the Letter of Transmittal, and mail or deliver it and any other required
documents (including the certificates representing the Warrants to be tendered)
to the Company at 9800 Metric Boulevard, Austin, Texas 78758, Attn: Vice
President - Legal Affairs, or (b) request such holder's broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
such holder. Any holder whose Warrants are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such person
if such holder desires to tender Warrants.
Questions and requests for assistance or for additional copies of this
Offer to Purchase or the Letter of Transmittal may be directed to the Company at
the address and telephone number set forth on the last page of this Offer to
Purchase.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF
THE COMPANY AS TO WHETHER WARRANTHOLDERS OR RIGHTHOLDERS SHOULD TENDER OR
REFRAIN FROM TENDERING WARRANTS OR RIGHTS PURSUANT TO THE OFFER. NO PERSON HAS
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN
CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE
OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SUMMARY .........................................................................................................2
INTRODUCTION......................................................................................................4
SPECIAL FACTORS...................................................................................................5
SECTION 1. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER; PLANS OF THE
COMPANY AFTER THE OFFER.......................................................................5
SECTION 2. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.......................................................6
PURCHASE OF WARRANT OR RIGHT................................................................. 6
BACK-UP WITHHOLDING.......................................................................... 6
SECTION 3. CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS; NO
APPRAISAL RIGHTS..............................................................................6
THE OFFER.........................................................................................................7
SECTION 4. EXPIRATION DATE; EXTENSION OF THE OFFER.......................................................7
SECTION 5. PROCEDURE FOR TENDERING OF WARRANTS AND RIGHTS................................................7
PROPER TENDER OF WARRANTS AND RIGHTS..........................................................7
SIGNATURE GUARANTEES AND METHOD OF DELIVERY...................................................8
FEDERAL BACKUP WITHHOLDING....................................................................8
DETERMINATIONS OF VALIDITY OF WARRANTS OR RIGHTS; REJECTION OF
WARRANTS OR RIGHTS; WAIVER OF DEFECTS; NO OBLIGATION TO GIVE
NOTICE OF DEFECTS.............................................................................8
SECTION 6. WITHDRAWAL RIGHTS.............................................................................8
SECTION 7. ACCEPTANCE FOR PAYMENT OF WARRANTS OR RIGHTS AND PAYMENT OF
PURCHASE PRICE................................................................................9
SECTION 8. CERTAIN CONDITIONS OF THE OFFER..............................................................10
SECTION 9. PRICE RANGE OF COMMON STOCK..................................................................11
SECTION 10. CERTAIN INFORMATION CONCERNING THE COMPANY..................................................12
GENERAL ...................................................................................12
SUMMARY CONSOLIDATED FINANCIAL DATA.........................................................12
ADDITIONAL INFORMATION......................................................................13
SECTION 11. SOURCE AND AMOUNT OF FUNDS..................................................................14
SECTION 12. TRANSACTIONS AND ARRANGEMENTS CONCERNING THE WARRANTS
AND RIGHTS..................................................................................14
SECTION 13. EXTENSION OF THE TENDER PERIOD; TERMINATION; AMENDMENTS ....................................15
SECTION 14. FEES AND EXPENSES...........................................................................16
SECTION 15. MISCELLANEOUS...............................................................................16
SCHEDULE A. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.....................................................A-1
</TABLE>
(i)
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SUMMARY
This summary is provided solely for the convenience of the
warrantholders and rightholders and is qualified in its entirety by reference to
the full text and more specific details contained in this Offer to Purchase and
the related Letter of Transmittal and any amendments hereto and thereto.
<TABLE>
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The Company Encore Medical Corporation
Warrants Each Warrant entitles the holder thereof to
purchase one share of Common Stock at a
price of $7.00 per share, subject to
adjustment, from the date of issuance until
March 25, 2001. See Section 12.
Number of Warrants 1,228,728 (all of the Warrants outstanding).
Purchase Price of Warrants $0.25 per Warrant, net to the seller in
cash, upon the terms and conditions set
forth herein and in the Letter of
Transmittal. See Section 8.
Rights Each Right entitles the holder thereof to
acquire that number of Warrants specified in
the Right.
Number of Warrants Acquirable
Upon Exercise of Rights 445,220
Purchase Price of Rights $0.25 per Warrant acquirable upon exercise
of the Right, net to the seller in cash,
upon the terms and conditions set forth
herein and in the Letter of Transmittal. See
Section 8.
Expiration Date of Offer December 30, 1998, at 12:00 midnight,
Austin, Texas time, unless extended.
How to Tender Warrants
and Rights See Section 5. For further information,
call the Company or consult your broker for
assistance.
Withdrawal Rights Tendered Warrants and Rights may be
withdrawn at any time until the Expiration
Date of the Offer, and may also be withdrawn
after January 29, 1999 unless previously
accepted for payment by the Company. See
Section 4 and Section 6.
Conditions to Offer The Offer is not conditioned upon any
minimum number of Warrants or Rights being
tendered and not withdrawn or upon obtaining
financing. The Offer is subject only to the
conditions set forth in Section 8.
Purpose and Effects of Offer The Company is making the Offer to eliminate
the potential dilutive effect that would
occur if the Warrants or Rights are
exercised by the holders thereof on or
before March 25, 2001, the expiration date
of the Warrants. The Offer also gives
warrantholders and rightholders the
opportunity to sell their Warrants and
Rights at a time when the Warrants and
Rights are not actively traded. See Section
1.
Market Price of Common Stock On November 30, 1998, the closing sales
price of the Common Stock on the Nasdaq
National Market was $3.8125 per share. See
Section 9. Warrantholders and
</TABLE>
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<TABLE>
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rightholders are urged to obtain a current
market quotation. No active trading market
exists for the Warrants or Rights. See
Section 1.
Brokerage Commissions Not payable by warrantholders or
rightholders.
Stock Transfer Tax None, except as provided in Instruction 3
of the Letter of Transmittal and Section 7.
Payment Date As soon as practicable after the Expiration
Date of the Offer.
Further Information Any questions, requests for assistance or
requests for additional copies of this Offer
to Purchase, the Letter of Transmittal or
other materials relating to the Offer may be
obtained by contacting the Company at the
address and telephone number set forth on
the last page of this Offer to Purchase.
</TABLE>
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INTRODUCTION
Encore Medical Corporation, a Delaware corporation (the "Company"), is
offering to purchase (i) any or all of its outstanding warrants, which have an
exercise price of $7.00 per share (the "Warrants"), at a price, net to the
seller in cash, of $0.25 per Warrant (the "Purchase Price") and (ii) any or all
of its outstanding rights to acquire Warrants (the "Rights"), at a purchase
price, net to the seller in cash, of $0.25 per each Warrant acquirable upon
exercise of a Right, upon the terms and subject to the conditions set forth
herein and in the related Letter of Transmittal (which together constitute the
"Offer"). Each Warrant entitles the holder thereof to purchase one share of
Common Stock, $.001 par value per share ("Common Stock"), of the Company at a
price of $7.00 per share, subject to adjustment, from the date of issuance until
March 25, 2001.
As of November 30, 1998, the Company had issued and outstanding
1,228,728 Warrants and 445,220 Rights to acquire Warrants, which were held by
124 and 122 recordholders and beneficial owners, respectively. On November 30,
1998, the closing sales price of the Common Stock on the Nasdaq National Market
was $3.8125 per share. See Section 9. WARRANTHOLDERS AND RIGHTHOLDERS ARE URGED
TO OBTAIN A CURRENT MARKET QUOTATION FOR THE WARRANTS.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF WARRANTS OR
RIGHTS BEING TENDERED AND NOT WITHDRAWN, NOR UPON OBTAINING FINANCING. THE OFFER
IS SUBJECT ONLY TO THE CONDITIONS SET FORTH IN SECTION 8.
THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION AS TO WHETHER ANY WARRANTHOLDER OR RIGHTHOLDER SHOULD TENDER ANY
OR ALL OF SUCH HOLDER'S WARRANTS OR RIGHTS PURSUANT TO THE OFFER. EACH
WARRANTHOLDER OR RIGHTHOLDER MUST MAKE HIS, HER OR ITS OWN DECISION WHETHER TO
TENDER WARRANTS OR RIGHTS AND, IF SO, HOW MANY WARRANTS OR RIGHTS TO TENDER. THE
COMPANY HAS BEEN ADVISED THAT THE DIRECTORS AND EXECUTIVE OFFICERS OF THE
COMPANY CURRENTLY INTEND TO TENDER AN AGGREGATE OF 240,983 WARRANTS AND RIGHTS
TO ACQUIRE AN AGGREGATE OF 275,482 WARRANTS.
Warrantholders or rightholders are not under any obligation to accept
the Offer or to remit the Warrants or Rights to the Company pursuant to the
Offer. Tendering warrantholders or rightholders will not be obligated to pay
brokerage commissions, solicitation fees or, subject to the Instructions to the
Letter of Transmittal, stock transfer taxes on the purchase of Warrants or
Rights by the Company. ANY TENDERING WARRANTHOLDER, RIGHTHOLDER OR OTHER PAYEE
WHO FAILS TO COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE
LETTER OF TRANSMITTAL (OR, IN THE CASE OF A FOREIGN INDIVIDUAL, FORM W-8
OBTAINABLE FROM THE COMPANY) MAY BE SUBJECT TO REQUIRED U.S. FEDERAL INCOME TAX
BACKUP WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH WARRANTHOLDER,
RIGHTHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 5.
The address of the principal executive offices of the Company is 9800
Metric Boulevard, Austin, Texas 78758.
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SPECIAL FACTORS
SECTION 1. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER; PLANS OF THE
COMPANY AFTER THE OFFER
Each Warrant is exercisable for one share of Common Stock at a price of
$7.00 per share, subject to adjustment in certain events, and each Right is
exercisable for the number of Warrants specified therein. All of the Warrants
and Rights were issued in March 1997 in the Company's merger with Healthcare
Acquisition Corp. (the "Merger") and were registered under the Securities Act of
1933, as amended (the "Securities Act").
On November 30, 1998, there were 1,228,728 Warrants, 445,220 Rights to
acquire Warrants and 8,845,740 shares of Common Stock issued and outstanding. On
such date, the Warrants and Rights were held by 124 and 122 record holders,
respectively, and approximately 124 and 122 beneficial owners, respectively. If
all outstanding Warrants and Rights were exercised for shares of Common Stock on
a one-for-one basis, the Common Stock into which such Warrants and Rights were
converted would represent approximately 15.9% of the issued and outstanding
Common Stock of the Company (excluding the effect of the exercise or conversion
of the Company's other outstanding options and warrants). This percentage
represents a significant potential dilution of the Common Stock upon exercise of
the Warrants and Rights on or before March 25, 2001, the expiration date of the
Warrants and Rights. The Company is making the Offer to eliminate the potential
dilutive effect that would occur if the Warrants and Rights are exercised by the
holders thereof.
Owners of the Warrants and Rights are not under any obligation to
accept the Offer to remit their Warrants and Rights to the Company pursuant to
the Offer. Warrants and Rights that the Company acquires pursuant to the Offer
will be retired and will not be reissued. If fewer than all of the Warrants and
Rights are purchased pursuant to the Offer, the Company may, in its sole
discretion, purchase any then outstanding Warrants and Rights through privately
negotiated transactions, open market purchases, another tender offer or
otherwise, on such terms and at such prices as the Company may determine from
time to time, the terms of which could be the same as, or more or less favorable
to warrantholders or rightholders than, the terms of the Offer. Any possible
future purchases of Warrants or Rights by the Company will depend on many
factors, including the market price of the Common Stock, the Company's business
and financial position, alternative investment opportunities available, the
results of the Offer and general economic and market conditions. However, Rule
13e-4 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), prohibits the Company and its affiliates from purchasing any Warrants or
Rights, other than pursuant to the Offer, until at least ten (10) business days
after the Expiration Date.
The Board of Directors (including the seven directors who are not
employees of the Company and were present at the meeting) has unanimously
authorized the Offer. The Offer gives warrantholders and rightholders the
opportunity to sell their Warrants for cash without the usual transaction costs
associated with sales. The Company will utilize cash generated from operations
to fund the purchase of Warrants and Rights accepted for payment pursuant to the
Offer.
NOTWITHSTANDING THE FOREGOING, THE COMPANY, ITS BOARD OF DIRECTORS AND
ITS EXECUTIVE OFFICERS MAKE NO RECOMMENDATION AS TO WHETHER ANY WARRANTHOLDER OR
RIGHTHOLDER SHOULD TENDER ANY OR ALL OF SUCH HOLDER'S WARRANTS OR RIGHTS
PURSUANT TO THE OFFER. EACH WARRANTHOLDER OR RIGHTHOLDER MUST MAKE HIS, HER OR
ITS OWN DECISION WHETHER TO TENDER WARRANTS OR RIGHTS AND, IF SO, HOW MANY
WARRANTS OR RIGHTS TO TENDER. The directors and executive officers of the
Company (who beneficially own an aggregate of 516,465 Warrants and Rights to
acquire an aggregate of 275,482 Warrants, representing approximately 30.9% of
the total number of Warrants) have stated that they currently intend to tender
their Warrants and Rights. See Section 8. Notwithstanding the foregoing, such
directors and executive officers may tender or not tender their Warrants at
their discretion.
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SECTION 2. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax considerations
relevant to the purchase by the Company of the Warrants and Rights pursuant to
the Offer. This summary is based on current provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), regulations thereunder, administrative
rulings and court decisions, all of which are subject to change (possibly
retroactively). The summary does not address state, local, or foreign tax
consequences, nor does it discuss federal income tax consequences to categories
of warrantholders or rightholders subject to special rules, such as tax-exempt
organizations, insurance companies, financial institutions, foreign persons,
persons who hold Warrants or Rights as part of a "straddle" or "conversion"
transaction and dealers in stocks and securities. In addition, this summary does
not address the federal income tax consequences to warrantholders or
rightholders other than the original warrantholders or rightholders. The Company
does not intend to request a ruling from the Internal Revenue Service ("IRS")
nor an opinion of counsel regarding any of the federal income tax matters
discussed in this summary. ACCORDINGLY, BEFORE MAKING A DECISION TO TENDER A
WARRANT OR RIGHT, EACH WARRANTHOLDER AND RIGHTHOLDER IS URGED TO CONSULT THE
HOLDER'S OWN TAX ADVISOR AS TO THE FEDERAL INCOME AND OTHER TAX CONSEQUENCES TO
THE HOLDER OF THE PURCHASE BY THE COMPANY OF A WARRANT OR RIGHT PURSUANT TO THE
OFFER.
Purchase of Warrant or Right. The purchase by the Company of a Warrant
or Right pursuant to the Offer will be a taxable transaction to any tendering
warrantholder or rightholder. If the Warrant or Right was not transferred to the
holder in connection with the performance of services, the holder will recognize
gain or loss equal to the difference between the Purchase Price of the Warrant
or Right and the holder's adjusted tax basis in the Warrant or Right. Assuming
that the Common Stock subject to the Warrant or Right would have been a capital
asset (within the meaning of Section 1221 of the Code) if acquired by the
holder, any gain or loss recognized will be capital in nature and will be
long-term or short-term depending on the holding period of the Warrant or Right.
The capital gain or loss will be long-term if the holder held the Warrant or
Right for longer than one year. Otherwise, the capital gain or loss will be
short-term. If the Warrant or Right was transferred to the holder in connection
with the performance of services (and assuming that the Warrant or Right did not
have a readily ascertainable fair market value at the time of grant), the holder
will recognize ordinary income equal to the excess of the Purchase Price of the
Warrant or Right over the amount, if any, paid by the holder for the Warrant or
Right.
Back-up Withholding. Federal income tax law requires that a
warrantholder or rightholder whose tendered Warrants or Rights are accepted for
exchange must provide the Company with his or her correct and properly certified
taxpayer identification number ("TIN") or, in the alternative, establish a basis
for exemption from backup withholding. Exempt holders (including, among others,
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. If the Company is not provided with the
correct TIN or an adequate basis for exemption, the holder may be subject to
penalty. Additionally, delivery to the holder of the purchase price for the
Warrant or Right will be subject to backup withholding in an amount equal to 31%
of the purchase price. If withholding results in an overpayment of taxes, a
refund may be obtained from the IRS.
SECTION 3. CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS; NO APPRAISAL
RIGHTS
The Company is not aware of any license or regulatory permit that
appears to be material to its business that might be adversely affected by its
acquisition of Warrants or Rights as contemplated in the Offer or of any
approval or other action by any government or governmental, administrative or
regulatory authority or agency, domestic or foreign, that would be required for
the Company's acquisition of Warrants or Rights pursuant to the Offer. Should
any such approval or other action be required, the Company currently
contemplates that it will seek such approval or other action. The Company cannot
predict whether it may determine that it is required to delay the acceptance for
payment of, or payment for, Warrants or Rights tendered pursuant to the Offer
pending the outcome of any such matter. There can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without
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substantial conditions or that the failure to obtain any such approval or other
action might not result in adverse consequences to the Company's business. In
lieu of seeking such approval, the Company may determine to terminate the Offer
as described in Section 8. The Company intends to make all required filings
under the Exchange Act. The Company's obligations under the Offer to accept for
payment, or make payment for, Warrants or Rights are subject to certain
conditions. See Section 8.
There is no stockholder, warrantholder or rightholder vote required in
connection with the Offer.
There are no appraisal rights available to holders of Warrants or
Rights in connection with the Offer.
THE OFFER
SECTION 4. EXPIRATION DATE; EXTENSION OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Company
will accept for payment (and thereby purchase) all Warrants or Rights that are
properly tendered on or before the Expiration Date (and not withdrawn in
accordance with Section 6) at the Purchase Price. The term "Expiration Date"
means 12:00 midnight, Austin, Texas time, on Wednesday, December 30, 1998,
unless and until the Company shall have extended the period of time during which
the Offer is open, in which event the term "Expiration Date" shall refer to the
latest time and date at which the Offer, as so extended by the Company, shall
expire. See also Section 8 regarding certain conditions of the Offer.
As described in Section 13, the Company expressly reserves the right,
in its sole discretion, at any time or from time to time, to extend the period
of time during which the Offer is open by making public announcement of such
extension. See Section 13. There can be no assurance, however, that the Company
will exercise its right to extend the Offer.
If the Company increases the price to be paid for Warrants or Rights
and the Offer is scheduled to expire at any time earlier than the tenth business
day from and including the date that notice of such increase is first published,
sent or given in the manner specified in Section 13, the Offer will be extended
until the expiration of the ten business day period immediately following the
date of such notice. For purposes of the Offer, "business day" means any day
other than a Saturday, Sunday or Federal holiday and consists of the time period
from 12:01 a.m. through 12:00 midnight, Austin, Texas time.
All Warrants and each Right to acquire a Warrant purchased pursuant to
the Offer will be purchased at the Purchase Price in cash, upon the terms and
subject to the conditions set forth in this Offer to Purchase. All Warrants and
Rights not purchased pursuant to the Offer, including Warrants and Rights
tendered and withdrawn, will be promptly returned to the tendering
warrantholders or rightholders at the Company's expense.
SECTION 5. PROCEDURE FOR TENDERING OF WARRANTS AND RIGHTS
Proper Tender of Warrants and Rights. For Warrants and Rights to be
properly tendered pursuant to the Offer, the Warrants and Rights, together with
a properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) with any required signature guarantees, and any other documents
required by the Letter of Transmittal, must be received before the Expiration
Date by the Company at its address set forth on the last page of this Offer to
Purchase.
A tender of Warrants or Rights made pursuant to any method of delivery
set forth herein will constitute a binding agreement between the tendering
warrantholder or rightholder and the Company upon the terms and conditions of
the Offer. LETTERS OF TRANSMITTAL AND CERTIFICATES REPRESENTING WARRANTS SHOULD
BE SENT DIRECTLY TO THE COMPANY.
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<PAGE> 10
Signature Guarantees and Method of Delivery. No signature guarantee is
required on the Letter of Transmittal if the Letter of Transmittal is signed by
the registered owner of the Warrants or Rights tendered therewith, and payment
and delivery are to be made directly to such registered owner at such owner's
address shown on the records of the Company, or if Warrants are tendered for the
account of a bank, dealer, credit union, savings association or other entity
that is a member in good standing of a recognized Medallion Program approved by
the Securities Transfer Association (each such entity being hereinafter referred
to as an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 2 of the Letter of Transmittal. If a Warrant or Right is registered
in the name of a person other than the signer of a Letter of Transmittal, or if
payment is to be made, or Warrants not purchased or tendered are to be issued,
to a person other than the registered owner, the Warrants must be endorsed or
accompanied by an appropriate power, in either case signed exactly as the name
of the registered owner appears on the Warrant, with the signature on the
Warrant or power guaranteed by an Eligible Institution. In all cases, payment
for Warrants or Rights tendered and accepted for payment pursuant to the Offer
will be made only after timely receipt by the Company of such Warrants, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantee, and any other required
documents.
THE METHOD OF DELIVERY OF THE WARRANTS OR RIGHTS IS AT THE ELECTION AND
RISK OF THE TENDERING WARRANTHOLDER OR RIGHTHOLDER. IF DELIVERY IS MADE BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
Federal Backup Withholding. Unless an exemption applies under the
applicable law and regulations concerning "backup withholding" of Federal income
tax, the Company will be required to withhold, and will withhold, 31% of the
gross proceeds otherwise payable to a warrantholder or rightholder or other
payee pursuant to the Offer unless the warrantholder or rightholder or other
payee provides such person's tax identification number (social security number
or employer identification number) and certifies that such number is correct.
Each tendering warrantholder or rightholder, other than a non-corporate foreign
warrantholder or rightholder, should complete and sign the main signature form
and the Substitute Form W-9 included as part of the Letter of Transmittal, so as
to provide the information and certification necessary to avoid backup
withholding, unless an applicable exemption exists and is proved in a manner
satisfactory to the Company. Non-corporate foreign warrantholders or
rightholders should generally complete and sign a Form W-8, Certificate of
Foreign Status, a copy of which may be obtained from the Company, in order to
avoid backup withholding. See Section 2.
Determinations of Validity of Warrants or Rights; Rejection of Warrants
or Rights; Waiver of Defects; No Obligation to Give Notice of Defects. All
questions as to the validity, form, eligibility (including time of receipt) and
acceptance for payment of any tender of Warrants or Rights will be determined by
the Company, in its sole discretion, which determination shall be final and
binding on all parties. The Company reserves the absolute right to reject any or
all tenders it determines not to be in proper form or the acceptance for payment
of which may, in the opinion of the Company's counsel, be unlawful. The Company
also reserves the absolute right to waive any of the conditions of the Offer and
any defect or irregularity in the tender of any particular Warrants or Rights.
No tender of Warrants or Rights will be deemed to be properly made until all
defects or irregularities have been cured or waived. Neither the Company nor any
other person is or will be obligated to give notice of any defects or
irregularities in tenders, and none of them will incur any liability for failure
to give any such notice.
SECTION 6. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 6, a tender of Warrants or
Rights pursuant to the Offer is irrevocable. Warrants or Rights tendered
pursuant to the Offer may be withdrawn (a) at any time before the Expiration
Date and (b) after January 29, 1999 unless accepted before such time for payment
by the Company as described in the first paragraph of Section 7. If the Company
extends the period of time during which the Offer is open, is delayed in
accepting for payment or paying for Warrants or Rights or is unable to accept
for payment or pay for Warrants or Rights
Page 8
<PAGE> 11
pursuant to the Offer for any reason, then, without prejudice to the Company's
rights under the Offer, the Company may retain all Warrants or Rights tendered,
and such Warrants or Rights may not be withdrawn except as otherwise provided in
this Section 6, subject to Rule 13e-4(f)(5) under the Exchange Act, which
provides that the issuer making the tender offer shall either pay the
consideration offered, or return the tendered securities promptly after the
termination or withdrawal of the tender offer.
For a withdrawal to be effective, the Company must timely receive (at
its address set forth on the last page of this Offer to Purchase), by written,
telegraphic or facsimile transmission, a notice of withdrawal. Such notice of
withdrawal must specify the name of the person having tendered the Warrants or
Rights to be withdrawn, the number of Warrants or Rights to be withdrawn and the
name of the registered owner, if different from that of the person who tendered
such Warrants or Rights. If the Warrants have been delivered or otherwise
identified to the Company, then, prior to the release of such Warrants, the
tendering warrantholder or rightholder must also submit the serial numbers shown
on the particular Warrants, and the signature on the notice of withdrawal must
be guaranteed by an Eligible Institution (except in the case of Warrants
tendered by an Eligible Institution).
All questions as to the form and validity (including timely receipt) of
notices of withdrawal will be determined by the Company, in its sole discretion,
which determination shall be final and binding on all parties. Neither the
Company nor any other person is or will be obligated to give any notice of any
defects or irregularities in any notice of withdrawal, and none of them will
incur any liability for failure to give any such notice. A withdrawal of a
tender of Warrants or Rights may not be rescinded, and Warrants or Rights
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. Withdrawn Warrants or Rights may, however, be re-tendered before
the Expiration Date by again following the applicable procedures described in
Section 5.
SECTION 7. ACCEPTANCE FOR PAYMENT OF WARRANTS OR RIGHTS AND PAYMENT OF PURCHASE
PRICE
Upon the terms and subject to the conditions of the Offer, promptly
after the Expiration Date, the Company will purchase and pay the Purchase Price
for all Warrants and for each Warrant acquirable upon exercise of a Right
(subject to certain matters discussed in Section 4 and Section 13) as are
properly tendered and not withdrawn as permitted in Section 6. For purposes of
the Offer, the Company will be deemed to have accepted for payment (and thereby
purchased) Warrants and Rights which are tendered and not withdrawn when, as and
if it gives oral or written notice to tendering warrantholders and rightholders
of its acceptance of such Warrants or Rights for payment pursuant to the Offer.
See Section 8 for regarding certain conditions of the Offer.
Payment for Warrants and Rights pursuant to the Offer will be made by
the Company to the tendering warrantholders and rightholders. Notwithstanding
any other provision hereof, payment for Warrants and Rights accepted for payment
pursuant to the Offer will in all cases be made only after timely receipt by the
Company of the accepted Warrants and Rights, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees and any other required documents. Under no circumstances
will interest be paid by the Company, regardless of any delay in making such
payment.
The Company will pay any stock transfer taxes with respect to the
transfer and sale of Warrants and Rights to it pursuant to the Offer. If,
however, (a) payment of the Purchase Price is to be made to any person other
than the registered holder, (b) Warrants or Rights not tendered or accepted for
purchase are to be registered in the name of any person other than the
registered holder, (c) tendered Warrants or Rights are registered in the name of
any person other than the person signing the Letter of Transmittal or (d) a
transfer tax is imposed for any reason other than the transfer or sale of the
Warrants or Rights to the Company pursuant to the Offer, then the amount of any
transfer taxes (whether imposed on the registered holder or such person) payable
on account of the transfer to such person will be deducted from the Purchase
Price unless satisfactory evidence of the payment of such taxes or exemption
therefrom is submitted. See Instruction 3 of the Letter of Transmittal.
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<PAGE> 12
ANY TENDERING WARRANTHOLDER, RIGHTHOLDER OR OTHER PAYEE WHO FAILS TO
COMPLETE FULLY AND SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF
TRANSMITTAL (OR, IN THE CASE OF A FOREIGN INDIVIDUAL, FORM W-8 OBTAINABLE FROM
THE COMPANY) MAY BE SUBJECT TO REQUIRED U.S. FEDERAL INCOME TAX WITHHOLDING OF
31% OF THE GROSS PROCEEDS PAID TO SUCH WARRANTHOLDER, RIGHTHOLDER OR OTHER PAYEE
PURSUANT TO THE OFFER. SEE SECTION 5.
SECTION 8. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, and in addition to
(and not in limitation of) the Company's right to extend or otherwise amend the
Offer at any time in its sole discretion, the Company shall not be required to
accept for payment or make payment for any Warrant or Right tendered, and may
terminate or amend the Offer, if before acceptance for payment or payment for
any such Warrant or Right any of the following shall have occurred or shall have
been determined to have occurred by the Company, whose determination shall be
conclusive:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, before any court or governmental, regulatory or
administrative authority, agency or tribunal, domestic or foreign,
which (i) challenges or seeks to challenge the making of the Offer, the
acquisition of Warrants or Rights pursuant to the Offer or otherwise
relates in any manner to the Offer; or (ii) in the sole judgment of the
Company, could materially adversely affect the business, condition
(financial or other), income, operations or prospects of the Company
and its subsidiaries, taken as a whole, or otherwise materially impair
in any way the contemplated future conduct of the business of the
Company or any of its subsidiaries or materially impair the Offer's
contemplated benefits to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced, or deemed to be applicable to the Offer or the
Company or any of its subsidiaries, by any court or any government or
governmental, regulatory or administrative authority, agency, tribunal,
domestic or foreign, which in the Company's sole judgment, would or
might directly or indirectly, (i) make the acceptance for payment of,
or payment for, Warrants or Rights illegal or otherwise restrict or
prohibit consummation of the Offer; (ii) delay or restrict the ability
of the Company, or render the Company unable, to accept for payment, or
pay for, Warrants or Rights; (iii) materially impair the contemplated
benefits of the Offer to the Company; or (iv) materially and adversely
affect the business, condition (financial or other), income, operations
or prospects of the Company and its subsidiaries, taken as a whole, or
otherwise materially impair in any way the contemplated future conduct
of the business of the Company or any of its subsidiaries;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any United States national
securities exchange or in the over-the-counter market (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index); (ii) any significant decline in the market
prices of equity securities in the United States or abroad; (iii) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States; (iv) the commencement of a war,
armed hostilities or other international or national crisis directly or
indirectly involving the United States; (v) any limitation (whether or
not mandatory) by any governmental, regulatory or administrative agency
or authority on, or any event which, in the sole judgment of the
Company, might affect, the extension of credit by banks or other
lending institutions in the United States; (vi) any change in the
general political, market, economic or financial conditions in the
United States or abroad that could, in the sole judgment of the
Company, have a material adverse effect on the Company's business,
operations or prospects; or (vii) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
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<PAGE> 13
(d) any tender or exchange offer with respect to the Warrants or Rights
(other than the Offer) or any other class of the Company's equity
securities or any merger, acquisition, business combination or other
similar transaction with or involving the Company or any subsidiary,
shall have been proposed, announced or made by any unaffiliated person
or entity;
(e) any change shall occur or be threatened in the business, condition
(financial or other), income, operations or prospects of the Company
and its subsidiaries, taken as a whole, which in the sole judgment of
the Company, is or may be materially adverse to the Company; or
(f) it shall have been publicly disclosed or the Company shall have
learned that (i) any person, entity or "group" (as that term is used in
Section 13(d)(3) of the Exchange Act) shall have acquired, or proposed
to acquire, beneficial ownership of more than 5% of the outstanding
Common Stock (other than a person, entity, or "group" which had
publicly disclosed such ownership in a Schedule 13D or 13G (or an
amendment thereto) on file with the Commission prior to November 30,
1998), (ii) any such person or group that on or prior to November 30,
1998, had filed such a Schedule with the Commission thereafter shall
have acquired or shall propose to acquire beneficial ownership of
additional shares of Common Stock representing 2% or more of the
outstanding Common Stock, (iii) any new group shall have been formed
which beneficially owns more than 5% of the outstanding Common Stock or
(iv)any person, entity or group shall have filed a Notification and
Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, or made a public announcement reflecting an intent to acquire the
Company or any of its subsidiaries or any of their respective assets or
securities; and, in the sole judgment of the Company, in any such case
and regardless of the circumstances (including any action or inaction
by the Company) giving rise to such condition, such event makes it
inadvisable or undesirable to proceed with the Offer or with such
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Company and
may be asserted or waived by the Company regardless of the circumstances
(including any action or inaction by the Company) giving rise to any such
condition, and any such condition may be waived by the Company, in whole or in
part, at any time and from time to time in its sole discretion; provided,
however, that the Exchange Act and the rules and regulations promulgated
thereunder require that all conditions to the Offer, other than those relating
to the receipt of certain necessary governmental approvals, must be satisfied or
waived prior to the Expiration Date. The Company's failure at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right or the waiver of any such right with respect to particular facts or
circumstances, and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination by the Company
concerning the events described above and any related judgment by the Company
regarding the inadvisability of proceeding with the acceptance of payment or
payment for any tendered Warrants or Rights will be final and binding on all
parties.
SECTION 9. PRICE RANGE OF COMMON STOCK
No active trading market for the Warrants or the Rights exists. The
following table sets forth, for the fiscal quarters indicated, the range of high
and low sales prices per share of Common Stock, as quoted on the Nasdaq National
Market under the symbol "ENMC."
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<PAGE> 14
<TABLE>
<CAPTION>
Quarterly Period High Low
- ---------------- -------- ---------
<S> <C> <C>
Fiscal year ended December 31, 1998
1st Quarter ......................................... $5 5/16 $3 15/16
2nd Quarter ......................................... 5 3 5/8
3rd Quarter.......................................... 4 5/8 2 1/8
4th Quarter (through November 30, 1998).............. 3 7/8 2 3/16
High Low
-------- --------
Fiscal year ended December 31, 1997
1st Quarter (since March 25, 1997)................... $5 1/4 $4 31/32
2nd Quarter ......................................... 5 1/8 3 9/16
3rd Quarter.......................................... 5 1/4 4 1/4
4th Quarter.......................................... 4 7/8 3 13/32
</TABLE>
On November 30, 1998, the closing sales price of the Common Stock as
reported by the Nasdaq National Market was $3.8125 per share. Warrantholders and
rightholders are urged to obtain a current market quotation for the Common
Stock. As of November 30, 1998, the Company had issued and outstanding 1,228,728
Warrants and 445,220 Rights to acquire Warrants held by approximately 124 and
122 record holders and beneficial owners, respectively.
SECTION 10. CERTAIN INFORMATION CONCERNING THE COMPANY
General. The Company through its primary operating subsidiary, Encore
Orthopedics, Inc., designs, manufactures, markets and distributes orthopedic
products and supplies. Its products are used primarily by orthopedic medical
specialists to treat patients with musculoskeletal conditions resulting from
degenerative diseases, deformities, traumatic events and participation in
sporting events. The Company's products cover a broad variety of orthopedic
needs and include hip, knee and shoulder implants to reconstruct damaged joints
and trauma products to repair bone fractures.
Schedule A hereto sets forth the name, business address and present
principal occupation or employment and any other material occupations,
positions, offices or employments during the last five years of each director
and executive officer of the Company.
Summary Consolidated Financial Data. The summary consolidated financial
data of the Company set forth below has been excerpted or derived form the
financial statements and notes of the Company's Form 10-K for the years ended
December 31, 1997 and December 31, 1996 and the Company's Form 10-Q for the
quarter ended October 2, 1998. More comprehensive financial information is
included in such reports and in other documents filed by the Company with the
Commission. The summary consolidated financial information that follows is
qualified in its entirety by reference to such reports and such other documents
and all the financial information (including any related notes) contained
therein. Such reports and other documents may be examined and copies may be
obtained form the offices of the Commission as described in "--Additional
Information."
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<PAGE> 15
CONSOLIDATED SUMMARY FINANCIAL DATA
(amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
For the year ended December 31, For the nine months ended
------------------------------ ---------------------------
October 2, September 26,
STATEMENT OF INCOME DATA 1997 1996 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales ....................................... $ 24,440 $ 14,454 $ 20,500 $ 18,062
Cost of goods sold .......................... 7,936 6,058 6,688 5,849
Operating expenses .......................... 14,004 9,434 12,028 10,162
Operating income ............................ 2,500 2,129 1,784 2,051
Net income .................................. 1,259 1,033 1,013 941
Basic earnings per share .................... $ .16 $ (.04) $ .11 $ .12
Shares used in computing basic earnings
per share ................................... 8,033 5,463 9,104 7,846
Diluted earnings per share .................. $ .12 $ (.04) $ .09 $ .09
Shares used in computing diluted
earnings per share .......................... 10,253 5,463 10,708 10,104
OTHER OPERATING DATA:
Ratio of earnings to fixed charges .......... $ 3.28 $ 2.13 $ 4.10 $ 3.23
BALANCE SHEET DATA:
Cash ........................................ $ 9 $ 472 $ 1 $ 77
Current assets .............................. 19,135 15,388 22,675 19,682
Total assets ................................ 25,721 20,275 30,294 26,170
Current liabilities ......................... 4,453 5,376 5,272 4,077
Long-term debt, net of current portion ...... 2,444 4,913 5,636 3,694
Total liabilities ........................... 7,697 11,389 10,956 8,571
Stockholders' equity ........................ 18,024 6,589 19,338 17,599
Book value per common share ................. $ 1.99 $ .65 $ 2.11 $ 1.95
</TABLE>
Additional Information. The Company is subject to the informational
requirements of the Exchange Act and in accordance therewith files periodic
reports, proxy statements and other information with the Commission. The Company
is required to disclose in such proxy statements certain information, as of
particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company. The Company has also filed an Issuer Tender Offer Statement on
Schedule 13E-4 with the Commission which include certain additional information
relating to the Offer.
For further information with respect to the Company and the Offer,
reference is made to the Schedule 13E-4 and the exhibits thereto. Such Schedule
and exhibits, along with reports and other information filed with the
Commission, may be inspected without charge at the office of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of
the Commission located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and at 500 West Madison (Suite 1400), Chicago, Illinois 60661. Copies
of such material may also be
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<PAGE> 16
obtained at prescribed rates from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a
Web site at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the Commission. Statements contained in this Offer to Purchase as to the
contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
document filed with the Commission, each such statement being qualified in all
respects by such reference.
SECTION 11. SOURCE AND AMOUNT OF FUNDS
Assuming that the Company purchases 1,228,728 outstanding Warrants and
outstanding Rights to acquire 445,220 Warrants, pursuant to this Offer, the
total amount required by the Company to purchase such Warrants and Rights at
$0.25 per Warrant and to pay related fees and expenses will be approximately
$450,000. See Section 14. The Company anticipates that it will fund the purchase
of the Warrants and Rights pursuant to the Offer and the payment of related fees
and expenses from cash generated from operations.
SECTION 12. TRANSACTIONS AND ARRANGEMENTS CONCERNING THE WARRANTS AND RIGHTS
All of the outstanding Rights were issued in the Merger, and all of the
outstanding Warrants were either issued in the Merger or upon exercise of Rights
issued in the Merger.
The Warrants were issued pursuant to a warrant agreement between the
Company and Continental Stock Transfer and Trust Company, as warrant agent, and
the Warrants are evidenced by warrant certificates in registered form. The
Warrants provide for adjustment of the exercise price and for a change in the
number of shares issuable upon exercise to protect holders against dilution in
the event of a stock dividend, stock split, combination or reclassification of
the Common Stock or upon issuance of shares of Common Stock at prices lower than
the market price of the Common Stock, with certain exceptions.
As of November 30, 1998, there were 1,228,728 Warrants and Rights to
acquire 445,220 Warrants outstanding. Each Warrant entitles the registered
holder to purchase one share of Common Stock at an exercise price of $7.00 at
any time until 5:00 p.m., New York City time, on March 25, 2001.
The Warrants and Rights do not confer upon the warrantholders and
rightholders any voting or other rights of a stockholder of the Company. Upon
notice to the warrantholders and rightholders, the Company has the right to
reduce the exercise price or extend the expiration date of the Warrants or
Rights.
Neither the Company nor any of its subsidiaries has effected any
transactions in the Warrants or Rights since the issuance thereof in March 1997.
Except as set forth below, no director or executive officer of the Company
listed on Schedule A hereto, or any of subsidiaries or any associates of any of
the foregoing, beneficially owns any Warrants or Rights or has effected any
transactions in the Warrants or Rights since the issuance of the Warrants or
Rights in March 1997.
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<PAGE> 17
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF WARRANTS
WARRANTS OUTSTANDING BEFORE
NAME BENEFICIALLY OWNED OFFER
- ---- ------------------ -------------------
<S> <C> <C>
Nick Cindrich (1) 251,264 15.0%
Craig L. Smith, Ph.D. (2) 53,277 3.2%
Kenneth Ludwig, Jr. (3) 43,591 2.6%
Harry L. Zimmerman (4) 43,087 2.6%
August Faske (3) 43,039 2.6%
J.D. Webb, Jr. (3) 41,669 2.5%
John H. Abeles, M.D. 21,178 1.3%
Lamar F. Laster (5) 7,332 *
Dennis J. Enright (5) 5,998 *
Gregory J. Kaseeska (3) 4,030 *
Richard Martin (3) 1,333 *
Kenneth W. Davidson (3) 667 *
------- -----
Total 516,465 30.9%
- ------------
</TABLE>
* Less than one percent.
(1) Includes 45,587 Warrants acquirable upon exercise of Rights.
(2) Includes 51,811 Warrants acquirable upon exercise of Rights.
(3) All of these Warrants are acquirable upon exercise of Rights.
(4) Includes 39,755 Warrants acquirable upon exercise of Rights.
(5) Includes 2,000 Warrants acquirable upon exercise of Rights.
Neither the Company, any of its directors or executive officers hereto
nor any of its subsidiaries is a party to any contract, arrangement,
understanding or relationship with any other person relating, directly or
indirectly, to the Offer (whether or not legally enforceable) with respect to
any securities of the Company (including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or the giving or withholding
of proxies, consents or authorizations). The directors and executive officers or
the Company (who beneficially own an aggregate of 516,465 Warrants, representing
approximately 30.9% of the total number of Warrants) have stated that they
currently intend to tender their Warrants and Rights. Notwithstanding the
foregoing, such directors and executive officers may tender or not tender their
Warrants and Rights at their discretion.
SECTION 13. EXTENSION OF THE TENDER PERIOD; TERMINATION; AMENDMENTS
The Company expressly reserves the right, in its sole discretion, at
any time or from time to time and regardless of whether or not any of the events
set forth in Section 8 shall have occurred or shall be deemed by the Company to
have occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, or payment for, any Warrants or Rights
by giving oral or written notice of such extension and making a public
announcement thereof. During any such extension, all Warrants or Rights
previously tendered and not purchased or withdrawn will remain subject to the
Offer, except to the extent that such Warrants or Rights may be withdrawn as set
forth in Section 6. The Company also expressly reserves the right, in its sole
discretion, to terminate the Offer, not accept for payment and not make payment
for any Warrants or Rights not theretofore accepted for payment or paid for upon
the occurrence of any of the conditions specified in Section 8 by giving oral or
written notice of such termination and making a public announcement thereof.
Subject to compliance with applicable law, the Company further reserves the
Page 15
<PAGE> 18
right, in its sole discretion, and regardless of whether or not any of the
events set forth in Section 8 shall have occurred or shall be deemed by the
Company to have occurred, to amend the Offer in any respect, including, without
limitation, by increasing or decreasing the consideration offered in the Offer
to owners of Warrants or Rights. Amendments to the Offer may be made at any time
or from time to time by public announcement thereof, such announcement, in the
case of an extension, to be issued no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. Any
public announcement made pursuant to the Offer will be disseminated promptly to
warrantholders or rightholders in a manner reasonably designed to inform
warrantholders or rightholders of such change. Without limiting the manner in
which the Company may choose to make a public announcement, except as required
by applicable law, the Company shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service.
If the Company materially changes the terms of the Offer or the
information concerning the Offer, the Company will extend the Offer to the
extent required by Rule 13e-4 promulgated under the Exchange Act. If the Company
increases the price to be paid for Warrants and the Offer is scheduled to expire
at any time earlier than the expiration of a period ending on the tenth business
day from and including the date that notice of such increase is first published,
sent or given, the Offer will be extended until the expiration of such period of
ten (10) business days.
SECTION 14. FEES AND EXPENSES
Certain directors or executive officers of the Company may, from time
to time, contact warrantholders or rightholders to provide them with information
regarding the Offer. Such directors and executive officers will not make any
recommendation to any warrantholder or rightholder as to whether to tender all
or any Warrants or Rights and will not solicit the tender of any Warrants or
Rights. The Company will not compensate any director or executive officer for
this service.
The Company will pay (or cause to be paid) any stock transfer taxes on
its purchase of Warrants or Rights, except as otherwise provided in Instruction
3 of the Letter of Transmittal. See Section 7.
Assuming all outstanding Warrants and Rights are tendered pursuant to
the Offer, it is estimated that the expenses incurred by the Company in
connection with the Offer will be approximately as set forth below. The Company
will be responsible for paying all such expenses.
<TABLE>
<CAPTION>
<S> <C>
Printing and mailing fees................... $ 2,000
Filing fees................................. 84
Legal, accounting and miscellaneous......... 17,916
Total.................................. $ 20,000
========
</TABLE>
SECTION 15. MISCELLANEOUS
The Offer is not being made to, nor will the Company accept tenders
from, owners of Warrants or Rights in any jurisdiction in which the Offer or its
acceptance would not be in compliance with the laws of such jurisdiction. The
Company is not aware of any jurisdiction where the making of the Offer or the
tender of Warrants would not be in compliance with applicable law. If the
Company becomes aware of any jurisdictions where the making of the Offer or the
tender of Warrants is not in compliance with any applicable law, the Company
will make a good faith effort to comply with such law. If, after such good faith
effort, the Company cannot comply with such law, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of Warrants or
Rights residing in such jurisdiction. In any jurisdiction in which the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer will be deemed to be made on the Company's behalf by
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
ENCORE MEDICAL CORPORATION
December 2, 1998
Page 16
<PAGE> 19
SCHEDULE A. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, present principal occupation
or employment and any other material occupations, positions, offices or
employments (and business addresses thereof) during the last five years of each
director and executive officer of the Company. The business address of each of
the persons listed below is c/o Encore Medical Corporation, 9800 Metric Blvd.,
Austin, Texas 78758. Each such person is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND OTHER MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR
EMPLOYMENTS DURING THE LAST FIVE YEARS
- -------------------------------------- -----------------------------------------------------------------------------
<S> <C>
Nick Cindrich Nick Cindrich founded Encore Orthopedics, Inc. in March of 1992 and served as
President from March 1992 until August 1992. From August 1992 through August
1994, Mr. Cindrich was self-employed as a business consultant. From August 1994
to March 1997, he has served as the Chief Executive Officer and Chairman of the
Board of Directors of Encore Orthopedics, Inc. and since March 1997, has served as
the Chief Executive Officer and Chairman of the Board of the Company.
Craig L. Smith, Ph.D. Craig L. Smith, Ph.D. was a director of Encore Orthopedics, Inc. from July 1992 to
March 1997, and was President from August 1992 to March 1997. He has served in
these positions for the Company since March 1997. Dr. Smith first joined Encore
Orthopedics, Inc. as its Vice President of Research and Development in April 1992.
Dr. Smith serves on the Board of Spinal Dynamics, Inc., a privately owned company.
August Faske August Faske, Vice President - Finance and Chief Financial Officer joined Encore
Orthopedics, Inc. in April 1992.
Gregory J. Kaseeska, CPIM Gregory J. Kaseeska, CPIM: Vice President - Operations joined Encore
Orthopedics, Inc. in March 1993 as the Materials Manger, with responsibilities for
inventory control and production control He was promoted to Vice President -
Operations of the Company in March 1998.
Kenneth J. Ludwig, Jr. Kenneth J. Ludwig, Jr., Vice President - Investor Relations and Business
Development joined Encore Orthopedics, Inc. in April 1992.
J.D. Webb, Jr. J.D. Webb, Jr., Vice President - Research and Development joined Encore
Orthopedics, Inc. in April 1992.
Harry L. Zimmerman Harry L. Zimmerman, Vice President - Legal Affairs and Secretary joined Encore
Orthopedics, Inc. in April 1994. From 1992 to April 1994, Mr. Zimmerman was
associated with the law firm of Winstead Sechrest & Minick, P.C., a law firm based
in Texas, where he was responsible for the corporate, tax and real estate practices.
John H. Abeles, M.D. John H. Abeles, M.D. was President, Treasurer and a director of Healthcare
Acquisition Corp. ("HCAC") prior to the merger between Encore Orthopedics, Inc.
and Healthcare Acquisition, Inc., a wholly owned subsidiary of HCAC (the "Merger")
and has served as a Director of the Company since the Merger occurred in March
1997. Since 1980, Dr. Abeles has been President of MedVest Inc., which has
provided consulting services to, and has been active in the founding and financing of,
emerging companies, principally in the healthcare industry. Dr. Abeles is currently
a member of the board of directors of Oryx Technology Corporation, DUSA
Pharmaceuticals, Inc., PharmaPrint Corporation and I-Flow Corporation.
</TABLE>
A-1
<PAGE> 20
<TABLE>
<S> <C>
Kenneth W. Davidson Kenneth W. Davidson was a director of Encore from November 1996 to March
1997 and became a director of the Company in March 1997. Mr. Davidson has
served as Chairman, President and CEO of Maxxim Medical, Inc. from November
1986 to the present.
Dennis J. Enright Dennis J. Enright was a director of Encore Orthopedics, Inc. from August 1994 to
March 1997 and became a director of the Company in March 1997. Mr. Enright
was employed by 3M as Staff Vice President, Technology Development and had
been with 3M since 1965 until he retired in 1995.
Jay M. Haft Jay M. Haft was Chairman of the Board and Secretary of HCAC prior to the
Merger and has served as a Director of the Company since the Merger occurred in
March 1997. He is Managing General Partner of Gen Am "1" Venture Fund, an
international venture capital fund. Mr. Haft is also a director of Robotic Vision
Systems, Inc. (OTC), Noise Cancellation Technologies, Inc. (OTC), Extech, Inc.
(OTC), Viragen, Inc. (OTC), PC Service Source, Inc. (OTC), DUSA
Pharmaceuticals, Inc. (OTC), Oryx Technology Corp. (OTC), Thrift Management,
Inc. (OTC) and Conserver Corporation of America (OTC). He serves as Chairman
of the Board of Noise Cancellation Technologies, Inc. and Extech, Inc. He is
currently of counsel to Parker Duryee Rosoff & Haft, in New York, New York. He
was previously a senior corporate partner of such firm (1989-1994), and prior to
that a founding partner of Wofsey, Certilman, Haft et al. (1966-1988).
Joel S. Kanter Joel S. Kanter was a director of the HCAC prior to the Merger and has served as a
Director of the Company since the Merger occurred in March 1997. Since
February 1995, Mr. Kanter has been President and a director of Walnut Financial
Services, Inc., a financial service and consulting firm listed on the Nasdaq
SmallCap Market, and Walnut Capital Corp., a venture capital firm listed on the
Nasdaq SmallCap Market that has provided financing and consulting services to
companies in the healthcare industry. In 1996, Mr. Kanter was also named chief
executive officer of these companies. Mr. Kanter is also currently a consultant to
Universal Partners, L.P., which specializes in the provision of bridge financing to
small and medium sized corporations. From 1988 through February 1995, Mr.
Kanter was a consultant to Walnut Capital Corp. and from 1986 through the
present, Mr. Kanter has served as the President of Windy City, Inc., and currently
serves as a director of Transglobal Services, Inc., formerly known as Concept
Technologies, Inc., GranCare, Inc., I-Flow Corporation, MEDCROSS, Inc. and
Osteoimplant Technologies, Inc.
Lamar F. Laster Lamar F. Laster was a director of Encore Orthopedics, Inc., the Company's
predecessor, from August 1994 to March 1997 and became a director of the
Company in March 1997. Mr. Laster is currently Chief Executive Officer of
Lamarz Interests, Inc., a Houston-based financial consulting and investment firm,
with which he has been associated since 1994. Previously he served as Executive
Vice President and Chief Operating Officer of STAAR Surgical Company
("STAAR") from October 1989 to February 1994, and he was Chairman of the
Board of STAAR from June 1990 to February 1994. He was also Vice President of
Finance and Chief Financial Officer of STAAR from November 1987 to October
1989. He served as a director of STAAR beginning in 1984.
Richard Martin, Ph.D. Richard Martin, Ph.D. was a director of Encore Orthopedics, Inc. from February 1996
to March 1997 and became a director of the Company in March 1997. Dr. Martin is
currently Chairman and Chief Executive Officer of Physio-Control International
Corporation, positions that he has held since 1991.
</TABLE>
A-2
<PAGE> 21
Facsimile copies of the Letter of Transmittal, properly completed and
duly executed, will be accepted. The Letter of Transmittal, Warrants, Rights and
any other required documents should be sent or delivered by each warrantholder
or rightholder of the Company or such holder's broker, dealer, commercial bank
or trust company to the Company.
ENCORE MEDICAL CORPORATION
9800 Metric Boulevard
Austin, Texas 78758
Attn: Vice President - Legal Affairs
(512) 832-9500
(512) 834-6310 (fax)
<PAGE> 1
EXHIBIT (a)(2)
ENCORE MEDICAL CORPORATION
OFFER TO PURCHASE FOR CASH
ANY OR ALL OUTSTANDING WARRANTS,
EACH EXERCISABLE AT $7.00 PER SHARE OF COMMON STOCK,
AT
$0.25 PER WARRANT
AND ANY OR ALL OUTSTANDING RIGHTS TO
ACQUIRE WARRANTS,
WHICH WARRANTS ARE
EACH EXERCISABLE AT $7.00 PER SHARE OF COMMON STOCK,
AT
$0.25 PER EACH WARRANT
ACQUIRABLE UPON EXERCISE OF AN OPTION
LETTER OF TRANSMITTAL
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, AUSTIN, TEXAS TIME,
ON WEDNESDAY, DECEMBER 30, 1998, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
TO: ENCORE MEDICAL CORPORATION
By Mail, Hand or
By Facsimile Transmission: Overnight Delivery: For Information:
- -------------------------- ------------------- ----------------
(512) 834-6310 Encore Medical Corporation (512)832-9500
Attn: Vice President - 9800 Metric Blvd.
Legal Affairs Austin, Texas 78758
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
Any questions or requests for assistance or for additional copies of
the Offer to Purchase or this Letter of Transmittal may be directed to the
Company at the address indicated above. Warrantholders and rightholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer (as defined herein).
The undersigned acknowledges receipt of the Offer to Purchase, dated
December 2, 1998 (the "Offer to Purchase"), of Encore Medical Corporation, a
Delaware corporation (the "Company"), and this Letter of Transmittal (which
together constitute the "Offer"), pursuant to which the Company is offering to
purchase (i) any or all of its outstanding warrants with an exercise price of
$7.00 (the "Warrants"), at a price, net to the seller in cash, of $0.25 per
Warrant (the "Purchase Price") and (ii) any or all of its outstanding rights to
acquire Warrants (the "Rights"), at a purchase price, net to the seller in cash,
of $0.25 per each Warrant acquirable upon exercise of a Right, upon the terms
and subject to the conditions set forth in the Offer to Purchase and herein
(which together constitute the ("Offer"). Each Warrant entitles the holder
thereof to purchase one share of Common Stock, $.001 par value per share
("Common Stock"), of the Company at a price of $7.00 per share, subject to
adjustment, from the date of issuance until March 25, 2001.
This Letter of Transmittal must be used when the Certificates for
Warrants are physically delivered to the Company and to deliver Rights to the
Company. Capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Offer to Purchase.
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW (in the spaces marked with an "X")
PLEASE FOLLOW CAREFULLY THE INSTRUCTIONS PROVIDED BELOW
<PAGE> 2
List below the Warrants and Rights that are to be tendered pursuant to
the Offer to Purchase. If the space below is inadequate, list the certificate
numbers and principal amounts on a separate signed schedule and affix the list
to this Letter of Transmittal.
DESCRIPTION OF WARRANTS AND RIGHTS TENDERED
- --------------------------------------------------------------------------------
NAME AND ADDRESS PLEASE FILL IN
OF REGISTERED HOLDER NUMBERS AND AMOUNTS
- --------------------------------------------------------------------------------
| (1) (2) (3) |
| WARRANT AGGREGATE NUMBER OF |
| CERTIFICATE NUMBER OF WARRANTS |
| NUMBER WARRANTS TENDERED |
|------------------------------------------------------|
| |
|------------------------------------------------------|
| |
|------------------------------------------------------|
| |
|------------------------------------------------------|
TOTAL | |
|-------------------------------------------------------
--------------------------------------------------------
| (1) (2) |
| AGGREGATE NUMBER OF |
| NUMBER OF RIGHTS |
| RIGHTS TENDERED |
|------------------------------------------------------|
| |
|------------------------------------------------------|
| |
|------------------------------------------------------|
| |
|------------------------------------------------------|
TOTAL | |
|------------------------------------------------------|
(a) Any beneficial owner whose Warrants are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender Warrants should contact such registered holder promptly
and instruct such registered holder to tender the Warrants on his or her
behalf. If such beneficial holder wishes to tender Warrants on his or her
own behalf, such beneficial owner must, prior to completing and executing
this Letter of Transmittal and delivering such holder's Warrant
certificates, either make appropriate arrangements to register ownership of
the Warrants in such holder's name or obtain a properly completed power
from the registered holder. THE TRANSFER OF RECORD OWNERSHIP OF THE
WARRANTS MAY TAKE CONSIDERABLE TIME AND, DEPENDING ON WHEN SUCH TRANSFER IS
REQUESTED, MAY NOT BE ACCOMPLISHED PRIOR TO THE EXPIRATION DATE.
(b) Unless otherwise indicated, it will be assumed that all Warrants evidenced
by each Warrant certificate delivered to the Company are being tendered
hereby.
(c) Unless otherwise indicated, it will be assumed that all of your Rights are
being tendered hereby.
-2-
<PAGE> 3
Ladies and Gentlemen:
Subject to, and effective upon, acceptance for payment of the Warrants
and Rights tendered herewith, in accordance with the terms and subject to the
conditions set forth in the Offer to Purchase, the undersigned hereby sells,
assigns and transfers to the Company all right, title and interest in the
above-described Warrants and Rights that are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Warrants and
the Rights tendered hereby, and that when the same are accepted for purchase by
the Company, the Company will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges and encumbrances and such Warrants
and Rights shall not be subject to any adverse claims. The undersigned will,
upon request, execute and deliver any additional documents deemed by the Company
to be necessary or desirable to complete the purchase of the Warrants and the
Rights tendered hereby.
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the heirs, executors,
administrators, trustees in bankruptcy and legal representatives, successors and
assigns of the undersigned. Except as stated in the Offer to Purchase, the
tender of Warrants and Rights submitted herewith is irrevocable.
The undersigned understands that tenders of Warrants and Rights
pursuant to any one of the procedures described in Offer to Purchase under
"Section 5. Procedure for Tendering of Warrants" and in the instructions hereto
will constitute the undersigned's acceptance of the terms and conditions of the
Offer, including the undersigned's representation and warranty that (a) the
undersigned has a "net long position" in the Warrants and Rights being tendered
within the meaning of Rule 13e-4 promulgated under the Securities Exchange Act
of 1934, as amended, and (b) the tender of such Warrants and Rights complies
with Rule 13e-4. The Company's acceptance for payment of Warrants and Rights
tendered pursuant to the Offer will constitute a binding agreement between the
undersigned and the Company upon the terms and conditions of the Offer.
The Offer to Purchase is subject to a number of conditions, each of
which may be waived or modified by the Company, as described in the Offer to
Purchase under the caption "Section 8. Certain Conditions of the Offer." THE
UNDERSIGNED RECOGNIZES THAT, AS A RESULT OF SUCH CONDITIONS, THE COMPANY MAY NOT
BE REQUIRED TO ACCEPT THE WARRANTS OR RIGHTS TENDERED HEREBY. In such event, the
tendered Warrants or Rights not accepted for purchase will be returned to the
undersigned at the address shown below the undersigned's signature(s), unless
otherwise indicated in the boxes entitled "Special Issuance Instructions" or
"Special Delivery Instructions" below.
Unless otherwise indicated herein under "Special Issuance
Instructions," please issue the check for the purchase price of the Warrants and
Rights purchased or Warrant certificates evidencing Warrants (if any) not
tendered or not accepted for purchase in the name(s) of the registered holder(s)
appearing under the "Description of Warrants and Rights Tendered" above.
Similarly, unless otherwise indicated herein under "Special Delivery
Instructions," please mail the check for the purchase price of the Warrants and
Rights purchased or Warrant certificates evidencing Warrants (if any) not
tendered or not accepted for purchase to the address(es) of the registered
holder(s) appearing under the "Description of Warrants and Rights Tendered"
above.
================================================================================
SIGNATURE(S)
HOLDER WHO WISHES TO TENDER WARRANTS OR RIGHTS
IN THE TENDER OFFER MUST SIGN
(See Instructions 1 and 2 and the instructions in Section 5 of
the Offer to Purchase)
Signature of Registered Holder or Authorized Signatory:
X
------------------------------------------------------------------------------
Type or Print Name:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
Tax Identification or Social Security No.:
- --------------------------------------------------------------------------------
Signature of Registered Holder or Authorized Signatory (if more than one):
X
------------------------------------------------------------------------------
Type or Print Name:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
Tax Identification or Social Security No.:
- --------------------------------------------------------------------------------
Must be signed by registered holder(s) exactly as his, her or its
name(s) appear(s) on the certificate(s) for the tendered Warrants or by
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee,
-3-
<PAGE> 4
executor, administrator, guardian, attorney-in-fact, officer of a corporation,
agent or other person acting in a fiduciary or representative capacity, please
provide the following information and see Instruction 2 (please print):
Name:
--------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Area Code and Telephone No.:
---------------------------------------------------
Capacity (Full Title):
---------------------------------------------------------
================================================================================
GUARANTEE OF SIGNATURE(S)
(If required)
(See Instruction 2)
Name of Firm:
------------------------------------------------------------------
Authorized Signature:
----------------------------------------------------------
Title:
-------------------------------------------------------------------------
Dated: , 1998
-------------------------------------
================================================================================
COMPLETE AND SIGN SUBSTITUTE FORM W-9 IN ADDITION TO THE SIGNATURE(S)
REQUIRED ABOVE.
PAYER'S NAME: Encore Medical Corporation
- --------------------------------------------------------------------------------
A SUBSTITUTE FORM W-9 MUST BE COMPLETED BY ALL
WARRANTHOLDERS AND RIGHTHOLDERS
- --------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND
FORM W-9 CERTIFY BY SIGNING AND DATING BELOW.
------------------------------
Department of the Treasury Social Security Number
Internal Revenue Service
OR
------------------------------
Employer Identification Number
- --------------------------------------------------------------------------------
PAYER'S REQUEST FOR CERTIFICATION--UNDER THE PENALTIES PART 2--
TAXPAYER IDENTIFICATION OF PERJURY, I CERTIFY THAT THE Awaiting TIN [ ]
NUMBER (TIN) INFORMATION PROVIDED ON THIS FORM
IS TRUE, CORRECT AND COMPLETE.
SIGNATURE: X
-----------------------------------------------------------
DATE:
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
-4-
<PAGE> 5
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
- --------------------------------------------------------------------------------
To be completed ONLY if the check for the purchase price of the
Warrants or Rights purchased or Warrant certificates evidencing Warrants (if
any) not tendered or not accepted for purchase are to be issued in the name of
someone other than the person whose signature appears on the face of the
Warrants.
Issue (check appropriate box(es)):
[ ] Warrants to [ ] Rights to:
Name(s):
-----------------------------------------------------------------------
Address(es):
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
(INCLUDE ZIP CODE)
TAX IDENTIFICATION OR SOCIAL SECURITY NO.:
-------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
- --------------------------------------------------------------------------------
To be completed ONLY if the check for the purchase price of the
Warrants or Rights purchased or Warrant certificates evidencing Warrants (if
any) not tendered or not accepted for purchase are to be mailed to someone other
than the person whose signature appears on the face of the Warrants or to such
persons at an address other than that shown in the box entitled "Description of
Warrants and Rights Tendered."
Mail (check appropriate box(es)):
[ ] Warrants to [ ] Rights to:
Name(s):
-----------------------------------------------------------------------
Address(es):
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
(INCLUDE ZIP CODE)
TAX IDENTIFICATION OR SOCIAL SECURITY NO.:
-------------------------------------
- --------------------------------------------------------------------------------
-5-
<PAGE> 6
INSTRUCTIONS
1. Delivery of this Letter of Transmittal and Certificates for
Warrants. This Letter of Transmittal must be used when the certificates for
Warrants are physically delivered to the Company.
Certificates for all physically delivered Warrants, as well as a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by this Letter of Transmittal, must be
received by the Company at its address set forth on the front page of this
Letter of Transmittal on or prior to midnight, Austin, Texas time, on the
Expiration Date.
THE METHOD OF DELIVERY OF WARRANTS OR RIGHTS AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING WARRANTHOLDER OR
RIGHTHOLDER. IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted. By
executing this Letter of Transmittal (or photocopy thereof), the tendering
warrantholder or rightholder waives any right to receive any notice of the
acceptance for payment of the Warrants or Rights.
2. Signatures on this Letter of Transmittal; Powers and Endorsements;
Guarantee of Signatures. The signature(s) of the registered holder(s) on this
Letter of Transmittal in the box titled "Signature(s)" must correspond with the
name(s) as written on the face of the Warrants without alteration, enlargement
or any change whatsoever.
(a) If any of the Warrants are held of record by two or more persons,
all such persons must sign this Letter of Transmittal.
(b) If any of the Warrants are registered in different names, it will
be necessary to complete, sign and submit as many separate Letters of
Transmittal and any necessary accompanying documents as there are
different registrations.
(c) If this Letter of Transmittal is signed by the registered holder(s)
of the Warrants, no endorsements of Warrants or separate powers are
required, unless certificates for Warrants not tendered are to be
issued in the name of, or delivered to, any person other than the
registered holder(s). Signatures on any such Warrants or powers must be
guaranteed by an Eligible Institution (unless signed by an Eligible
Institution).
(d) If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Warrants, such Warrants must be endorsed or
accompanied by appropriate powers and signed exactly as the name(s) of
the registered holder(s) appear(s) on such Warrants. Signatures on any
such Warrants or powers must be guaranteed by an Eligible Institution
(unless signed by an Eligible Institution).
(e) If this Letter of Transmittal or any certificates or powers are
signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person should so indicate
when signing, and unless waived by the Company, proper evidence
satisfactory to the Company of the authority of such person to so act
must be submitted with this Letter of Transmittal.
3. Transfer Taxes. The Company will pay or cause to be paid all stock
transfer taxes, if any, with respect to the tender of any Warrants or Rights to
it pursuant to the Offer. If, however, (a) payment of the purchase price for the
Warrants or Rights is to be made to, or certificates for any Warrants not
tendered or accepted for purchase are to be issued in the name of, or delivered
to, any person other than the registered holder(s), (b) tendered Warrants are
registered in the name of any person other than the person signing the Letter of
Transmittal or (c) a stock transfer tax is imposed for any reason other than the
transfer or sale of the Warrants or Rights to the Company pursuant to the Offer,
the amount of any stock transfer taxes (whether imposed on the registered
holder(s) or such other person) will be payable by the tendering holder(s).
Unless satisfactory evidence of the payment of such taxes, or exemption
therefrom, is submitted herewith, the amount of such transfer taxes will be
deducted from the purchase price payable to the tendering holder(s). EXCEPT AS
PROVIDED IN THIS INSTRUCTION 3, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS
TO BE AFFIXED TO THE WARRANT CERTIFICATES LISTED IN THIS LETTER OF TRANSMITTAL.
4. Partial Tenders. If fewer than all the Warrants represented by any
certificate delivered to the Company are to be tendered, fill in the number of
Warrants that are to be tendered in the column three of the box entitled
"Description of Warrants and Rights Tendered." In such case, a new certificate
for the remainder of the Warrants represented by the old certificate will be
sent to the person(s) signing this Letter of Transmittal, unless otherwise
provided in the boxes entitled "Special Issuance
-6-
<PAGE> 7
Instructions" or "Special Delivery Instructions" on this Letter of Transmittal,
as promptly as practicable following the expiration or termination of the Offer.
ALL WARRANTS REPRESENTED BY CERTIFICATES DELIVERED TO THE COMPANY WILL BE DEEMED
TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED. FURTHERMORE, UNLESS OTHERWISE
INDICATED, IT WILL BE ASSUMED THAT ALL OF YOUR RIGHTS, AS DEFINED ABOVE, ARE
BEING TENDERED HEREBY.
5. Special Issuance and Delivery Instructions. If the check for the
Purchase Price of any Warrants or Rights purchased is to be issued in the name
of, and/or any Warrants not tendered or not purchased are to be returned to, a
person other than the person(s) signing this Letter of Transmittal or if the
check for payment of Warrants or Rights accepted for payment by the Company
and/or any certificates for Warrants not tendered or not purchased are to be
mailed to someone other than the person(s) signing this Letter of Transmittal or
to an address other than that shown below the signature of the person(s) signing
this Letter of Transmittal, then the boxes captioned "Special Issuance
Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal should be completed.
6. Requests for Assistance or Additional Copies. Any questions or
requests for assistance may be directed to the Company at the telephone number
and address listed on the front of this Letter of Transmittal. Requests for
additional copies of the Offer to Purchase, this Letter of Transmittal or other
materials related to the Offer may be directed to the Company and such copies
will be furnished promptly at the Company's expense. Warrantholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
7. Irregularities. All questions as to the Purchase Price, the form of
documents and the validity, eligibility (including time of receipt) and
acceptance of any tender of Warrants or Rights will be determined by the
Company, in its sole discretion, and its determination shall be final and
binding. The Company reserves the absolute right to reject any or all tenders of
Warrants or Rights that it determines are not in proper form or the acceptance
for payment of, or payment for, Warrants or Rights that may, in the opinion of
the Company's counsel, be unlawful. The Company also reserves the absolute right
to waive any of the conditions to the Offer or any defect or irregularity in any
tender of Warrants or Rights and the Company's interpretation of the terms and
conditions of the Offer (including these instructions) shall be final and
binding. Unless waived, any defects or irregularities in connection with tenders
must be cured within such time as the Company shall determine. Neither the
Company nor any other person shall be under any duty to give notice of any
defect or irregularity in tenders, nor shall any of them incur any liability for
failure to give any such notice. Tenders will not be deemed to have been made
until all defects and irregularities have been cured or waived.
8. Substitute Form W-9 and Form W-8. The tendering warrantholder or
rightholder is required to provide the Company with either a correct Taxpayer
Identification Number ("TIN") on Substitute Form W-9, which is provided below,
or, in the case of foreign warrantholders or rightholders, a properly completed
Form W-8. Warrantholders or rightholders wishing to obtain a copy of Form W-8
may contact the Company. Failure to provide the information on either Substitute
Form W-9 or Form W-8 may subject the tendering warrantholder or rightholder to a
31% Federal income tax backup withholding on the payment of the Purchase Price.
The box in Part 2 of Substitute Form W-9 may be checked if the tendering
warrantholder or rightholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future. If the box in Part 2
is checked and the Company is not provided with a TIN by the time of payment,
the Company will withhold 31% of all payments of the Purchase Price thereafter
until a TIN is provided to the Company.
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