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EXHIBIT 7
[FEMRX LOGO]
October 9, 1998
Dear Option Holder:
We are pleased to inform you that on October 3, 1998, the Company entered
into an agreement and plan of merger (the "Merger Agreement") providing for the
acquisition of the Company by Xxxxxxx & Xxxxxxx. Pursuant to the Merger
Agreement, Xxxxxxx & Xxxxxxx, through a wholly-owned subsidiary, has commenced a
tender offer for all outstanding shares of the Company's common stock at the
offer price of $2.35 in cash per share (the "Offer Price"). As an option holder
you have the opportunity to participate in the tender offer by exercising your
options and tendering the shares you receive upon exercise into the tender
offer.
You currently hold at least one grant of stock options. The exercise price
of your options will vary depending on when your options were granted. As a
result of, and contingent upon, the closing of the tender offer, all of your
options will be vested prior to the closing of the tender. As explained in the
enclosed Offer to Purchase and Letter of Transmittal, you can "contingently"
exercise all or any of your options by following the instructions in the Offer
to Purchase and the Letter of Transmittal. This exercise is "contingent" because
it will be done if, but only if, the tender offer is consummated. In summary,
you are required to deliver a Letter of Transmittal that indicates which, if
any, options you wish to exercise. In addition to instructions regarding your
contingent exercise, such Letter of Transmittal will instruct First Chicago
Trust Company of New York (which is acting as depositary for the shares in the
tender offer) to send to the Company from the tender offer proceeds, an amount
equal to the exercise price for the options you wish to exercise. You will
receive from such proceeds, on a per share basis, the Offer Price less the
exercise price of the option (subject to such wage and employment withholding
taxes and any other withholding that may be required, as described in the Offer
to Purchase and the Letter of Transmittal). Of course, you are not required to
exercise "contingently"; you can exercise by direct payment of the exercise
price to the Company or choose not to exercise at all.
ALTHOUGH YOU ARE NOT REQUIRED TO EXERCISE YOUR OPTIONS AS A RESULT OF THIS
TRANSACTION, YOU SHOULD BE AWARE THAT UPON THE CONSUMMATION OF THE TENDER OFFER,
ANY OPTIONS THAT YOU HAVE NOT EXERCISED (EITHER BEFORE THE DATE OF SUCH
CONSUMMATION OR CONTINGENTLY UPON THE CONSUMMATION OF THE TENDER OFFER) WILL BE
TERMINATED AS OF THE CONSUMMATION OF THE TENDER OFFER.
The tender offer is currently scheduled to expire at 12:00 midnight New
York City time on Friday, November 6, 1998.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND FOUND
ADVISABLE THE MERGER AGREEMENT WITH XXXXXXX & XXXXXXX AND HAS DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
STOCKHOLDERS AND HAS RECOMMENDED TO THE COMPANY'S STOCKHOLDERS THAT THEY TENDER
THEIR SHARES PURSUANT TO THE TENDER OFFER.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
000-000-0000 fax 000-000-0000
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The Merger Agreement represents the culmination of a comprehensive effort
by the Board to develop a transaction that would provide maximum benefits to
stockholders and option holders. In pursuit of this goal, the Board, with the
assistance of its financial advisor, Xxxxxxx Xxxxxx Xxxx, sought to elicit the
highest and best proposals to acquire the Company from all credible interested
parties and evaluated various alternative transactions.
In determining to approve the Merger Agreement and the transactions
contemplated thereby, the Board gave careful consideration to a number of
factors described in the attached Schedule 14D-9 that has been filed with the
Securities and Exchange Commission. Among other things, the Board considered the
opinion of Xxxxxxx Xxxxxx Xxxx, dated October 2, 1998, that the cash
consideration to be offered by Xxxxxxx & Xxxxxxx in the transaction is fair,
from a financial point of view, to the stockholders of the Company.
The enclosed Schedule 14D-9 describes the Board's decision and contains
other important information relating to such decision. We urge you to read it
carefully.
Accompanying this letter and the Schedule 14D-9 is the Offer to Purchase
and related materials, including a Letter of Transmittal to be used for
tendering your shares or contingently exercising any or all of your options.
These documents describe the terms and conditions of the tender offer and
provide instructions regarding how to participate in the tender offer with
respect to your options. WE URGE YOU TO READ THE ENCLOSED MATERIAL CAREFULLY.
If you need information about the exercise price of your options or have
other questions about your options or how to participate in the tender offer,
please contact Xxxxxx X. Xxxxxx at the Company at (408) 752-8580 ext. 105.
Very truly yours,
/s/ XXXXXX X. XXXXXXXX
XXXXXX X. XXXXXXXX
President and Chief Executive Officer
