Offer to Purchase for Cash
1,959,886 Shares of Common Stock
of
The Xxxxxx Biomechanics Group, Inc.
at
$1.525 Net Per Share
by
OrthoStrategies Acquisition Corp.
a wholly-owned subsidiary of
OrthoStrategies, Inc.
--------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, FEBRUARY 8, 2001, UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn 1,332,722 shares of common stock, par value $.02 per
share (the "Shares"), of The Xxxxxx Biomechanics Group, Inc., a New York
corporation ("Xxxxxx"). The consummation of the Offer is also subject to the
other conditions set forth in this Offer To Purchase. See Section 13.
The Offer is being made pursuant to a Tender Offer Agreement, dated as of
December 28, 2000 (the "Tender Offer Agreement"), among OrthoStrategies, Inc.,
OrthoStrategies Acquisition Corp. and Xxxxxx. At a meeting held on December 19,
2000, the Board of Directors of Xxxxxx unanimously determined that the terms of
the offer are fair to, and in the best interests of, the shareholders of Xxxxxx,
and approved the Tender Offer Agreement and certain other agreements described
in this Offer to Purchase. The Board Of Directors of Xxxxxx recommends that
Xxxxxx'x shareholders accept the Offer and tender their Shares in the Offer.
Shareholders are advised, however, to obtain a current market quote for the
Shares. On January 9, 2001, the closing price of the Shares was $1.75 per Share.
IMPORTANT
Any shareholder desiring to tender all or any portion of such
shareholder's Shares should (1) complete and sign the Letter of Transmittal or a
facsimile thereof in accordance with the instructions in the Letter of
Transmittal, including any required signature guarantees, and mail or deliver
the Letter of Transmittal or such facsimile with such shareholder's
certificate(s) for the tendered Shares and any other required documents to the
Depositary named herein, (2) follow the procedure for book-entry transfer of
Shares set forth in Section 3 or (3) request such shareholder's broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
such shareholder. Shareholders having Shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
broker, dealer, commercial bank, trust company or other nominee if they desire
to tender Shares so registered.
A shareholder of Xxxxxx who desires to tender Shares and whose
certificates for such Shares are not immediately available, or who cannot comply
with the procedure for Book-Entry Transfer on a timely basis, may tender such
Shares by following the procedures for guaranteed delivery set forth in Section
3.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer
materials may be directed to the Information Agent. Shareholders may also
contact their broker, dealer, commercial bank, trust company or other nominee.
SUMMARY TERM SHEET
This summary highlights important and material information from this Offer
to Purchase but does not purport to be complete. To fully understand the offer
described in this document and for a more complete description of the terms of
the offer described in this document, you should read carefully this entire
Offer to Purchase and the Letter of Transmittal (which together, as they may be
amended and supplemented, constitute the "Offer"). We have included section
references to direct you to a more complete description of the topics contained
in this summary.
WHO IS OFFERING TO BUY MY SECURITIES?
OrthoStrategies, Inc., a New York corporation ("OrthoStrategies"), through
its wholly-owned subsidiary, OrthoStrategies Acquisition Corp., a New York
corporation ("Purchaser") is offering to buy your Shares as described in this
document. See Section 9 of this document for further information about
OrthoStrategies. Except where the context requires otherwise, the term
"OrthoStrategies" is used in this Offer to Purchase to refer collectively to
OrthoStrategies, Inc. and OrthoStrategies Acquisition Corp.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
OrthoStrategies is offering to buy all Shares validly tendered and not
withdrawn in the Offer, up to a maximum of 1,959,886 shares of the common stock,
par value $.02 per share, of Xxxxxx, which constitutes approximately 75% of the
Shares currently outstanding. For information about the conditions to which the
Offer is subject, see Section 13.
HOW MUCH IS ORTHOSTRATEGIES OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
OrthoStrategies is offering to pay $1.525 in cash for each Share that it
is offering to purchase. See Section 1 for information about the terms of the
Offer.
IS THERE AN AGREEMENT GOVERNING THE OFFER?
Yes. OrthoStrategies and Xxxxxx entered into a Tender Offer Agreement
dated December 28, 2000. The Tender Offer Agreement sets forth, among other
matters, the terms and conditions of the Offer. See Section 11 -- "The Tender
Offer Agreement".
DOES ORTHOSTRATEGIES HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Yes. OrthoStrategies has received commitments from certain individuals and
entities to advance the funds necessary to purchase the Shares tendered and to
pay the fees and expenses related to the Offer. These individuals and entities
have sufficient liquid assets to pay for the Shares tendered in accordance with
the terms and conditions of the Offer. See Section 12 -- "Source and Amount of
Funds".
ARE ORTHOSTRATEGIES' FINANCIAL RESULTS RELEVANT TO MY DECISION AS TO WHETHER TO
TENDER IN THE OFFER?
Since the Offer is for cash and is not subject to any financing condition,
OrthoStrategies' financial results should not be relevant to your decision on
whether to tender your Shares in the Offer.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER MY SHARES?
You may tender your Shares into the Offer until 12:00 midnight, New York
City time, on Thursday, February 8, 2001, which is the scheduled expiration date
of the offering period, unless XxxxxXxxxxxxxxx decides to extend the offering
period. See Section 3 of this document for information about tendering your
Shares.
i
CAN THE OFFER BE EXTENDED, AND UNDER WHAT CIRCUMSTANCES?
Yes, XxxxxXxxxxxxxxx may extend the Offer, from time to time, to a date no
later than March 31, 2001; provided that once the conditions to the Offer have
been satisfied, OrthoStrategies cannot extend the Offer for more than five
business days without the consent of Xxxxxx.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
OrthoStrategies will announce by press release any extension of the Offer
no later than 9:00 a.m., New York City time, on the next day after the
previously scheduled expiration date. See Section 1 of this document for more
information about extension of the Offer.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
The Offer is conditioned upon, among other things, at least 1,332,722
Shares, which constitutes approximately 51% of the outstanding Shares, being
validly tendered and not withdrawn. For a complete description of all of the
conditions to which the Offer is subject, see Section 13.
HAVE ANY SHAREHOLDERS AGREED TO TENDER THEIR SHARES?
Yes. All of the Directors of Xxxxxx, Langer's President and Chief
Executive Officer and a significant shareholder of Xxxxxx, and certain entities
affiliated with such persons, who own in the aggregate 1,342,273 Shares have
agreed to tender their Shares in the Offer.
HOW DO I TENDER MY SHARES?
If you hold the certificates for your Shares, you should complete the
enclosed Letter of Transmittal and enclose all the documents required by it,
including your certificates, and send them to Register and Transfer Company (the
"Depositary") at the address listed on the back cover of this document. If your
broker holds your Shares for you in "street name" you must instruct your broker
to tender your Shares on your behalf. In any case, the Depositary must receive
all required documents prior to 12:00 midnight, New York City time, on February
8, 2001, which is the expiration date of the Offer, unless XxxxxXxxxxxxxxx
decides to extend the Offer. If you cannot comply with any of these procedures,
you still may be able to tender your Shares by using the guaranteed delivery
procedures described in this document. See Section 3 for more information on the
procedures for tendering your Shares.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
The tender of your Shares may be withdrawn at any time prior to the
expiration date of the offering period. In addition, if OrthoStrategies has not
agreed to accept your Shares for payment by Sunday, March 11, 2001, you can
withdraw them at any time after that date until OrthoStrategies accepts Shares
for payment. See Section 4 of this document for more information.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
You (or your broker or bank if your Shares were held in "street name")
must notify the Depositary at the address and telephone number listed on the
back cover of this document, and your notice must include, among other things,
the name of the shareholder that tendered the Shares, the number of Shares to be
withdrawn and the name in which the tendered Shares are registered. For complete
information about the procedures for withdrawing your previously tendered
Shares, see Section 4.
WHAT HAPPENS IF MORE THAN 1,959,886 SHARES ARE TENDERED?
OrthoStrategies is offering to purchase up to 1,959,886 Shares. If more
than 1,959,886 Shares are properly tendered and not withdrawn at the expiration
of the Offer, OrthoStrategies will purchase Shares on a pro rata basis. This
means that OrthoStrategies will purchase from each tendering shareholder a
number of Shares equal to the number of Shares properly tendered and not
withdrawn by such shareholder multiplied by a proration factor. The proration
factor is equal to the number of Shares OrthoStrategies is offering to purchase
divided by the total number of Shares properly tendered and not withdrawn by all
shareholders. See Section 2 for more information.
ii
WHEN WILL I KNOW HOW MANY OF MY SHARES WERE ACCEPTED FOR PAYMENT?
Because of the difficulty of determining the number of Shares properly
tendered and not withdrawn, OrthoStrategies does not expect that it will be able
to announce the final proration factor or commence payment for any Shares
purchased pursuant to the Offer until approximately four trading days after the
end of the offering period. The preliminary results of any proration will be
announced by press release as promptly as practicable after the time
OrthoStrategies accepts Shares for payment pursuant to the Offer. Shareholders
may obtain such preliminary information from the Information Agent and may be
able to obtain such information from their brokers. See Section 2 for more
information.
WHAT HAPPENS TO THE SHARES THAT ARE NOT ACCEPTED FOR PURCHASE?
If any tendered Shares are not accepted for payment for any reason, the
certificates for such unpurchased Shares will be returned, without expense, to
the tendering shareholder, or such other person as the tendering shareholder
specifies in the Letter of Transmittal. This includes any Shares not accepted
for payment as a result of proration. See Section 2 for more information.
WHAT DOES MY BOARD OF DIRECTORS THINK OF THE OFFER?
At a meeting held on December 19, 2000, the board of directors of Xxxxxx
unanimously determined that the terms of the Offer are fair to, and in the best
interests of, the shareholders of Xxxxxx, and approved the Tender Offer
Agreement and certain other agreements described in this Offer to Purchase. The
board of directors of Xxxxxx recommends that Xxxxxx'x shareholders accept the
Offer and tender their Shares in the Offer. Shareholders are advised, however,
to obtain a current market quote for the Shares. On January 9, 2001, the closing
price of the Shares was $1.75 per Share.
XXXX XXXXXX REMAIN A PUBLIC COMPANY AFTER THE OFFER?
Yes, after the Offer, Xxxxxx will remain a public company and will seek to
maintain its eligibility to trade on the NASDAQ SmallCap Market. To remain
eligible for continued inclusion on the NASDAQ SmallCap Market, Xxxxxx must have
tangible net assets of $2 million or more, a public float of at least 500,000
Shares, a market value of the public float of at least $1 million, at least 300
shareholders and a bid price of at least $1.00 per Share. On November 25, 2000,
Xxxxxx had stockholders' equity of approximately $2.4 million and, after the
purchase of Shares pursuant to this Offer, even if the maximum number of Shares
are purchased, will have a public float in excess of 600,000 shares and
approximately 300 shareholders of record, the approximate number of record
shareholders it has today. There can be no assurance, however, as to the future
bid price of Xxxxxx'x common stock and, consequently, the market value of the
public float, or as to the ability of Xxxxxx to otherwise satisfy the
requirements for continued inclusion in the NASDAQ SmallCap Market.
XXXX Xxxxxx'x MANAGEMENT PARTICIPATE IN THE OFFER?
OrthoStrategies has entered into an agreement (the "Shareholders
Agreement") with certain shareholders of Xxxxxx (including all of the Directors
of Xxxxxx, Langer's President and CEO, and a significant shareholder of Xxxxxx,
and certain entities affiliated with such persons), which in the aggregate own
1,342,273 Shares, in which these persons and their affiliated entities have
agreed to tender their Shares in the Offer. These persons and entities further
agreed to sell their Shares to OrthoStrategies for $1.525 per share if the Offer
is not completed or is terminated, in each case, due to the receipt by Xxxxxx or
its shareholders of an acquisition proposal at a price higher than $1.525 per
Share.
XxxxxXxxxxxxxxx and Xxxxxx have entered into an agreement with the
Directors of Xxxxxx in their individual capacities, wherein such individuals
have agreed to resign from the board of directors of Xxxxxx upon consummation of
the Offer and to use reasonably available efforts to elect to Xxxxxx'x board of
directors Xxxxxx X. Xxxxxx and four additional nominees of OrthoStrategies
reasonably acceptable to the Board. Such agreement also contains a commitment of
Xxxxxx and OrthoStrategies to the current directors of Xxxxxx to cause Xxxxxx to
maintain its directors' and officers' liability insurance for at least three
years.
Xxxxxx has entered into agreements with certain members of Xxxxxx'x
management (who are not Directors) providing for the payment of specified bonus
and severance amounts to these individuals as an incentive for them
iii
to remain employed with Xxxxxx until the closing of the Offer and during the
transition period after the closing of the Offer. See "Certain Agreements with
Xxxxxx Management" in Section 11 hereof.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If fewer than 1,332,722 Shares are validly tendered and not withdrawn in
the Offer, then OrthoStrategies is not obligated to purchase Shares pursuant to
the Offer and may terminate the Offer. However, the parties to the Shareholders
Agreement have agreed to tender an aggregate of 1,342,273 Shares and if such
parties comply with the Shareholders Agreement, or at least 1,332,722 Shares are
otherwise validly tendered and not withdrawn, and all the other conditions to
the Offer are satisfied or waived by OrthoStrategies, OrthoStrategies will be
obligated to purchase up to 1,959,886 Shares pursuant to the Offer.
The purchase of the Shares by OrthoStrategies will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of holders
of the Shares, which could adversely affect the liquidity and market value of
the remaining Shares held by the public. In addition, upon completion of the
Offer, OrthoStrategies will own a majority of Xxxxxx'x Shares and will have the
right to control Xxxxxx. See Section 7 of this document for additional
information about the effect of the Offer on your Shares.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On December 28, 2000, the last full trading day prior to the public
announcement of the Offer, the reported closing price of the Shares was $1.00
per Share. On January 9, 2001, the reported closing price of the Shares was
$1.75 per Share. You should obtain a recent market quotation for your Shares in
deciding whether to tender them. See Section 6 of this document for recent high
and low sales prices for the Shares.
WHO IS RESPONSIBLE FOR THE PAYMENT OF TAXES AND BROKERAGE FEES?
Shareholders of record who tender Shares directly will not be obligated to
pay brokerage fees or commissions or, except as set forth in Instruction 6 of
the Letter of Transmittal, stock transfer taxes on the purchase of the Shares
pursuant to the Offer. However, any tendering shareholder or other payee who
fails to complete and sign the Substitute Form W-9 included in the Letter of
Transmittal may be subject to backup federal income tax withholding of 31% of
the gross proceeds payable to such shareholder or other payee pursuant to the
Offer. See Section 3 for more information. Shareholders who hold their Shares
through a broker, dealer, commercial bank, trust company or other nominee should
check with such institution as to whether they charge any service fees.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
If you have any questions you can call the Information Agent, Mackenzie
Partners, Inc., at (000) 000-0000. See the back cover of this Offer to Purchase.
iv
TABLE OF CONTENTS
Page
----
Summary Term Sheet ........................................................ i
Introduction .............................................................. 1
Section
1. Terms of the Offer .............................................. 1
2. Acceptance for Payment, Proration and Payment
for the Shares .................................................. 3
3. Procedure for Tendering Shares .................................. 4
4. Rights of Withdrawal ............................................ 6
5. Certain Federal Income Tax Consequences of the Offer ............ 7
6. Price Range of the Shares ....................................... 7
7. Effect of the Offer on the Market for the Shares ................ 8
8. Certain Information Concerning Xxxxxx ........................... 8
9. Certain Information Concerning OrthoStrategies .................. 10
10. Background of the Offer; Contacts with Xxxxxx ................... 11
11. Purpose of the Offer; Plans for Xxxxxx; The Tender
Offer Agreement; The Shareholders
Agreement and other Agreements .................................. 13
12. Source and Amount of Funds ...................................... 22
13. Certain Conditions of the Offer ................................. 22
14. Dividends and Distributions ..................................... 24
15. Certain Legal Matters ........................................... 24
16. Fees and Expenses ............................................... 25
17. Miscellaneous ................................................... 26
To the Holders of the Shares of
The Xxxxxx Biomechanics Group, Inc.:
INTRODUCTION
OrthoStrategies Acquisition Corp. a New York corporation ("Purchaser") and
wholly-owned subsidiary of OrthoStrategies, Inc., a New York corporation
("OrthoStrategies"), hereby offers to purchase 1,959,886 shares of common stock,
par value $.02 per share (the "Shares"), of The Xxxxxx Biomechanics Group, Inc.,
a New York corporation ("Xxxxxx"), which constitutes approximately 75% of the
Shares currently outstanding, at $1.525 per Share, net to the seller in cash
(the "Share Price"), upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which, as they
may be amended and supplemented from time to time, together constitute the
"Offer"). Except where the context requires otherwise, the term
"OrthoStrategies" is used herein to refer collectively to OrthoStrategies
Acquisition Corp. and OrthoStrategies, Inc. Tendering shareholders who are
record holders of their Shares and tender directly to the Register and Transfer
Company (the "Depositary") will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the purchase of the Shares by OrthoStrategies pursuant to the
Offer. Shareholders who hold their Shares through a broker, dealer, commercial
bank, trust company or other nominee should consult such institution as to
whether it charges any service fees in connection with the tender of Shares into
the Offer on behalf of its clients. OrthoStrategies will pay all charges and
expenses of the Depositary and Mackenzie Partners, Inc. (the "Information
Agent").
At a meeting held on December 19, 2000, the board of directors of Xxxxxx
unanimously determined that the terms of the Offer are fair to, and in the best
interests of, the shareholders of Xxxxxx, and approved the Tender Offer
Agreement, dated December 28, 2000, among OrthoStrategies, Purchaser and Xxxxxx
(the "Tender Offer Agreement") and certain other agreements described in this
Offer to Purchase.
The board of directors of Xxxxxx recommends that Xxxxxx'x shareholders
accept the Offer and tender their Shares in the Offer. Shareholders are advised,
however, to obtain a current market quote for the Shares. On January 9, 2001,
the closing price of the Shares was $1.75 per Share.
Xxxxxxxx & Xxxxxxx, financial advisor to Xxxxxx, has delivered to the
board of directors of Xxxxxx a written opinion, dated December 28, 2000, to the
effect that, as of such date and based upon and subject to certain matters
described therein, the $1.525 per Share cash consideration to be received in the
Offer by holders of Shares was fair, from a financial point of view, to the
shareholders of Xxxxxx (other than OrthoStrategies and its affiliates). A copy
of Xxxxxxxx & Xxxxxxx'x opinion, which sets forth the assumptions made,
procedures followed, matters considered and limitations on the review
undertaken, is attached as an exhibit to Xxxxxx'x Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), which has been filed by
Xxxxxx with the Securities and Exchange Commission (the "SEC") in connection
with the Offer and which is being mailed to shareholders herewith. Shareholders
are urged to, and should, read Xxxxxxxx & Xxxxxxx'x opinion carefully and in its
entirety.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn at least 1,332,722 Shares, which constitutes 51% of
the outstanding Shares. The Offer is also subject to the other conditions set
forth in this Offer to Purchase. See Section 13.
According to Xxxxxx, as of December 28, 2000 there were 2,613,181 Shares
outstanding and there were 301,000 Shares issuable pursuant to options, warrants
and other rights outstanding, of which 225,000 options are to be redeemed
pursuant to the Shareholders Agreement. See Section 11.
This Offer To Purchase and the related Letter of Transmittal contain
important information and they should be read in their entirety before any
decision is made with respect to the Offer.
1. Terms of the Offer
Upon the terms and subject to the conditions set forth in the Offer
(including the terms and conditions set forth in Section 13 (the "Offer
Conditions") and, if the Offer is extended or amended, the terms and conditions
of such extension or amendment), OrthoStrategies will accept for payment, and
pay for, 1,959,886 Shares validly tendered and not withdrawn as permitted by
Section 4, on or prior to the Expiration Date (as defined herein). The price
will be $1.525 per Share, net to the seller in cash. If more than 1,959,886
Shares are validly tendered and not withdrawn at the Expiration Date of the
Offer, OrthoStrategies will purchase Shares on a pro rata basis from
1
all tendering shareholders as explained herein. The term "Expiration Date" means
12:00 midnight, New York City time, on Thursday February 8, 2001, unless and
until OrthoStrategies extends the period for which the Offer is open, in which
event the term "Expiration Date" means the latest time and date on which the
Offer, as so extended by OrthoStrategies, expires. The period from the date
hereof until 12:00 midnight, New York City time, on February 8, 2001, as such
period may be extended, is referred to as the "Offering Period." The condition
that there be validly tendered and not withdrawn at least 1,332,722 Shares is
referred to as the "Tender Offer Condition."
For purposes of the Offer, a "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, New York City time.
Subject to the applicable regulations of the SEC, OrthoStrategies
expressly reserves the right, in its sole discretion, to waive, set forth or
change any term and condition of the Offer; provided, that, unless previously
approved by Xxxxxx in writing, no provision may be set forth or changed which
decreases the price per Share payable in the Offer, changes the form of
consideration payable in the Offer or imposes conditions to the Offer in
addition to those set forth in the Tender Offer Agreement that are materially
adverse to the holders of the Shares. Without the prior written consent of
Xxxxxx, OrthoStrategies cannot extend the expiration date of the Offer beyond
March 31, 2001; further, once the conditions to the Offer have been satisfied,
OrthoStrategies cannot extend the Offer for more than five business days without
the consent of Xxxxxx. During any such extension of the Offering Period, all
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the right of a tendering shareholder to withdraw such shareholder's
Shares. See Section 4.
Any extension, delay, termination or amendment of the Offer will be
followed as promptly as practicable 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. Subject to applicable law (including Rules 14d-4(d), 14d-6(c)
and 14e-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which require that any material change in the information published, sent
or given to shareholders in connection with the Offer be promptly disseminated
to shareholders in a manner reasonably designed to inform shareholders of such
change) and without limiting the manner in which OrthoStrategies may choose to
make any public announcement, OrthoStrategies will have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a press release or other public announcement.
OrthoStrategies will not provide a subsequent offering period, as provided
for in Rule 14d-11 under the Exchange Act. OrthoStrategies confirms that if it
makes a material change in the terms of the Offer or the information concerning
the Offer, or if it waives a material condition of the Offer, OrthoStrategies
will extend the Offer to the extent required by Rules 14d-4(d), 14d-6(c) and
14e-1 under the Exchange Act.
If, during the Offering Period, OrthoStrategies decreases the number of
Shares sought pursuant to the Offer or the Share Price (which may be done only
if previously approved by Xxxxxx in writing), such decrease will be applicable
to all holders whose Shares are accepted for payment pursuant to the Offer and,
if at the time notice of any decrease is first published, sent or given to
holders of such Shares, the Offer is scheduled to expire at any time earlier
than the tenth business day from and including the date that such notice is
first so published, sent or given, the Offer will be extended until the
expiration of such ten-business day period.
Consummation of the Offer is also conditioned upon the conditions set
forth in Section 13. OrthoStrategies reserves the right but is not obligated, in
accordance with applicable rules and regulations of the SEC, to waive any or all
of those conditions. If, by the Expiration Date, any or all of those conditions
have not been satisfied, OrthoStrategies may, prior to the Expiration Date, in
its sole discretion, elect to: (i) extend the Offer from time to time subject to
applicable withdrawal rights, retain all tendered Shares until the expiration of
the Offer, as extended, subject to the terms of the Offer; (ii) waive all of the
unsatisfied conditions and, subject to complying with applicable rules and
regulations of the SEC, accept for payment up to a maximum of 1,959,886 Shares
so tendered, subject to the pro rata provisions; or (iii) terminate the Offer
and not accept for payment any Shares and return all tendered Shares to
tendering shareholders. In the event that OrthoStrategies waives any condition
set forth in Section 13, the SEC may, if the waiver is deemed to constitute a
material change to the information previously provided to the shareholders,
require that the Offer remain open for an additional period of time and/or that
OrthoStrategies disseminate information concerning such waiver.
2
Xxxxxx has provided OrthoStrategies with Xxxxxx'x shareholder lists and
security position listings for the purpose of disseminating the Offer to holders
of the Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed by OrthoStrategies to record holders of
the Shares and will be furnished by OrthoStrategies to brokers, dealers, banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of the Shares.
2. Acceptance for Payment, Proration and Payment for the Shares
Upon the terms and subject to the conditions of the Offer (including the
Offer Conditions and, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), OrthoStrategies will accept for
payment, and will pay for, all Shares validly tendered and not withdrawn, up to
a maximum of 1,959,886 Shares. The price will be $1.525 per Share, net to the
seller in cash. If more than 1,959,886 Shares are validly tendered and not
withdrawn, OrthoStrategies will accept for purchase an amount of the tendered
Shares equal to 1,959,886 Shares, on a pro rata basis from each shareholder who
has validly tendered Shares pursuant to the Offer, promptly after the Expiration
Date. Subject to compliance with Rule 14e-1(c) under the Exchange Act,
OrthoStrategies expressly reserves the right to delay payment for Shares in
order to comply in whole or in part with any applicable law.
In the event that proration of tendered Shares is required,
OrthoStrategies will determine the appropriate proration factor as soon as
practicable following the Expiration Date. Proration for each shareholder
tendering Shares will be based on the ratio of the number of Shares
OrthoStrategies is offering to purchase to the total number of Shares properly
tendered and not withdrawn by all shareholders (with adjustments to avoid
purchases of fractional shares). Because of the difficulty in determining the
number of Shares properly tendered (including Shares tendered by guaranteed
delivery procedures described in Section 3 below) and not withdrawn,
OrthoStrategies does not expect that it will be able to announce the final
proration factor or commence payment for any Shares purchased pursuant to the
Offer until approximately four trading days after the Expiration Date. The
preliminary results of any proration will be announced by press release as
promptly as practicable after the Expiration Date. Shareholders may obtain such
preliminary information from the Information Agent and from their brokers. In
the event of any proration, the Depositary will select certain identifiable
Shares for payment from the total Shares properly tendered and not withdrawn by
a shareholder in accordance with such shareholder's directions, if any, as set
forth in such shareholder's Letter of Transmittal.
For purposes of the Offer, OrthoStrategies will be deemed to have accepted
for payment the Shares validly tendered and not withdrawn, if and when
OrthoStrategies gives oral or written notice to the Depositary of its acceptance
for payment of such Shares pursuant to the Offer. As noted, if more than
1,959,886 Shares are validly tendered and not withdrawn at the Expiration Date
of the Offer, OrthoStrategies will accept for purchase Shares on a pro rata
basis. Payment for any Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for the tendering shareholders for the purpose of receiving
payments from OrthoStrategies and transmitting such payments to the tendering
shareholders. In all cases, payment for any Shares accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares (or a timely Book-Entry Confirmation (as defined
below) with respect thereto), (ii) the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed, with any
required signature guarantees, or, in the case of a Book-Entry Transfer, an
Agent's Message (as defined below) in lieu of a Letter of Transmittal and (iii)
any other documents required by the Letter of Transmittal. Accordingly, payment
may be made to tendering shareholders at different times if delivery of the
certificates and other required documents occur at different times. The price
paid to any holder of the Shares pursuant to the Offer will be the highest price
per Share paid to any other holder of such Shares pursuant to the Offer.
Under no circumstances will interest on the consideration to be paid for
the Shares be paid, regardless of any extension of the Offer or any delay in
making such payment.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, including as a result of proration,
or if certificates are submitted for more Shares than are tendered, certificates
3
for such unpurchased Shares will be returned, without expense, to the tendering
shareholder, or such other person as the tendering shareholder specifies in the
Letter of Transmittal, as promptly as practicable following the expiration or
termination of the Offer. In the case of any Shares delivered by Book-Entry
Transfer into the Depositary's account at the Book-Entry Transfer Facility (as
defined below) pursuant to the procedures set forth in Section 3, such Shares
will be credited to such account maintained at the Book-Entry Transfer Facility
as the tendering shareholder specifies in the Letter of Transmittal, as promptly
as practicable following the expiration or termination of the Offer. If no such
instructions are given with respect to any Shares delivered by Book-Entry
Transfer, any such Shares not tendered or not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated in the
Letter of Transmittal as the account from which such Shares were delivered.
OrthoStrategies reserves the right to transfer or assign in whole or in
part from time to time to one or more of its direct or indirect subsidiaries or
to the individuals and entities named in Section 12, the right to purchase all
or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve OrthoStrategies of its obligations under
the Offer and will in no way prejudice the rights of tendering shareholders to
receive payment for any Shares validly tendered and accepted for payment
pursuant to the Offer.
3. Procedure for Tendering Shares
Valid Tender. To tender Shares pursuant to the Offer, either (i) a Letter
of Transmittal (or a manually signed facsimile thereof) properly completed and
duly executed in accordance with the instructions of the Letter of Transmittal,
together with any required signature guarantees and certificates for the Shares
to be tendered, or, in the case of a Book-Entry Transfer, an Agent's Message (in
lieu of a Letter of Transmittal), and any other required documents must be
received by the Depositary prior to the Expiration Date, at its address set
forth on the back cover of this Offer to Purchase or (ii) the tendering
shareholder must comply with the guaranteed delivery procedures set forth below.
Book-Entry Delivery. The Depositary will establish accounts with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make Book-Entry Transfer of the
Shares by causing the Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of the Shares may be
effected through Book-Entry Transfer, either a Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message in lieu
of the Letter of Transmittal, and any other required documents, must, in any
case, be transmitted to and received by the Depositary at its address set forth
on the back cover of this Offer to Purchase by the Expiration Date, or the
tendering shareholder must comply with the guaranteed delivery procedures
described below. The confirmation of a Book-Entry Transfer of the Shares into
the Depositary's account at the Book-Entry Transfer Facility as described above
is referred to herein as a "Book-Entry Confirmation." The term "Agent's Message"
means a message transmitted by the Book-Entry Transfer Facility to, and received
by, the Depositary and forming a part of a Book-Entry Confirmation, which states
that the Book-Entry Transfer Facility has received an express acknowledgment
from the participant in the Book-Entry Transfer Facility tendering the Shares
which are the subject of such Book-Entry Confirmation, that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that XxxxxXxxxxxxxxx may enforce such agreement against the participant.
Delivery of documents to the Book-Entry Transfer Facility in accordance with the
Book-Entry Transfer Facility's procedures does not constitute delivery to the
Depositary.
The method of delivery of any Shares, the Letter of Transmittal and all
other required documents, including delivery through the Book-Entry Transfer
Facility, is at the election and risk of the tendering shareholder. Shares will
be deemed delivered only when actually received by the Depositary (including, in
the case of a Book-Entry Transfer, by Book-Entry Confirmation). If delivery is
by mail, it is recommended that the shareholder use properly insured registered
mail with return receipt requested. In all cases, sufficient time should be
allowed to ensure timely delivery.
Signature Guarantees. Except as otherwise provided below, all signatures
on a Letter of Transmittal must be guaranteed by a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (each, an "Eligible Institution"). Signatures on a
Letter of Transmittal need not be guaranteed (i) if the Letter of Transmittal is
signed
4
by the registered holder (which term, for purposes of this section, includes any
participant in the Book-Entry Transfer Facility's systems whose name appears on
a security position listing as the owner of the Shares) of the Shares tendered
therewith and such registered holder has not completed the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. If
the certificates for any Shares are registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made or
certificates for any Shares not tendered or not accepted for payment, including
as a result of proration, are to be returned to a person other than the
registered holder of the certificates surrendered, then the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as described above. See Instructions 1 and 5 of the
Letter of Transmittal.
Guaranteed Delivery. A shareholder who desires to tender Shares pursuant
to the Offer and whose certificates for any Shares are not immediately available
or who cannot comply with the procedure for Book-Entry Transfer on a timely
basis, or who cannot deliver all required documents to the Depositary prior to
the Expiration Date, may tender such Shares by following all of the procedures
set forth below:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by OrthoStrategies, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), with any required signature
guarantees (or, in the case of a Book-Entry Transfer, an Agent's Message
in lieu of the Letter of Transmittal), and any other required documents,
are received by the Depositary within three business days after the date
of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Other Requirements. Notwithstanding any provision of this document,
payment for the Shares accepted for payment pursuant to the Offer will in all
cases be made only after timely receipt by the Depositary of the instruments and
documents referred to in Section 2.
Tender Constitutes an Agreement. The valid tender of any Shares pursuant
to one of the procedures described above will constitute a binding agreement
between the tendering shareholder and OrthoStrategies upon the terms and subject
to the conditions of the Offer, including the right to withdraw such Shares as
described in Section 4.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering shareholder will irrevocably appoint designees of OrthoStrategies as
such shareholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by XxxxxXxxxxxxxxx and with respect to any
and all non-cash dividends, distributions, rights, and other shares of common
stock or other securities issued or issuable in respect of such Shares on or
after December 28, 2000 (collectively, "Distributions"). All such proxies will
be considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, OrthoStrategies deposits
the payment for such Shares with the Depositary. All such powers of attorney and
proxies will be irrevocable and will be deemed granted in consideration of the
acceptance for payment by OrthoStrategies of the Shares tendered in accordance
with the terms of the Offer. Upon the effectiveness of such appointment, all
prior powers of attorney, proxies and consents given by such shareholder will be
revoked, and no subsequent powers of attorney, proxies and consents may be given
(and, if given, will not be deemed effective unless consented to by
OrthoStrategies). OrthoStrategies' designees will be empowered to exercise all
voting and other rights of such shareholder with respect to such Shares
5
(and any and all Distributions) as they, in their sole discretion, may deem
proper at any annual, special or adjourned meeting of the shareholders of
Xxxxxx, actions by written consent in lieu of any such meeting or otherwise.
OrthoStrategies reserves the right to require that, in order for any Shares to
be deemed validly tendered, immediately upon OrthoStrategies depositing the
payment for such Shares with the Depositary, OrthoStrategies must be able to
exercise full voting, consent and other rights with respect to such Shares (and
any and all Distributions).
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of the
Shares will be determined by OrthoStrategies in its sole discretion, which
determination will be final and binding. OrthoStrategies reserves the absolute
right to reject any and all tenders determined by it not to be in proper form or
the acceptance for payment of or payment for which may, in the opinion of
OrthoStrategies' counsel, be unlawful. OrthoStrategies also reserves the
absolute right to waive any defect or irregularity in the tender of any Shares
of any particular shareholder whether or not similar defects or irregularities
are waived in the case of other shareholders. No tender of any Shares will be
deemed to have been validly made until all defects and irregularities relating
thereto have been cured or waived. None of OrthoStrategies, the Depositary, the
Information Agent, or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. OrthoStrategies interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and
Instructions thereto) will be final and binding.
Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a shareholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such shareholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalty of perjury that such TIN is
correct and that such shareholder is not subject to backup withholding. If a
shareholder does not provide such shareholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such shareholder and payment of cash to such shareholder
pursuant to the Offer may be subject to backup withholding of 31%. All
shareholders surrendering Shares pursuant to the Offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proved in
a manner satisfactory to OrthoStrategies and the Depositary). Certain
shareholders (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. Non-corporate
foreign shareholders should complete and sign the main signature form and a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See "Important Tax
Information" in the Letter of Transmittal.
4. Rights of Withdrawal
Tenders of the Shares made pursuant to the Offer are irrevocable except
that Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the expiration of the Offering Period and, unless theretofore accepted for
payment by OrthoStrategies pursuant to the Offer, may also be withdrawn at any
time after Sunday, March 11, 2001.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at its address set forth on the back cover of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person having
tendered the Shares to be withdrawn, the number of the Shares to be withdrawn
and the names in which the certificate(s) evidencing the Shares to be withdrawn
are registered, if different from that of the person who tendered such Shares.
The signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for Book-Entry Transfer as set forth in Section 3, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares. If certificates for the Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, the
name of the registered holder and the serial numbers of the particular
certificates evidencing the Shares to be withdrawn must also be furnished to the
Depositary as aforesaid prior to the physical release of such certificates. All
questions as to the form and validity (including time of receipt) of any notice
of withdrawal will be determined by OrthoStrategies, in its sole discretion,
6
which determination will be final and binding. None of OrthoStrategies, the
Depositary, the Information Agent, or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give such notification. Withdrawals of
tendered Shares may not be rescinded, and any Shares properly withdrawn will be
deemed not to have been validly tendered for purposes of the Offer. However,
withdrawn Shares may be retendered by following any one of the procedures
described in Section 3 at any time prior to the Expiration Date.
If OrthoStrategies extends the Offer, is delayed in its acceptance for
payment of any Shares, or is unable to accept for payment any Shares pursuant to
the Offer for any reason, then, without prejudice to OrthoStrategies rights
under this Offer, the Depositary may, nevertheless, on behalf of
OrthoStrategies, retain tendered Shares, but such Shares may be withdrawn to the
extent that tendering shareholders are entitled to withdrawal rights as set
forth in this Section 4.
5. Certain Federal Income Tax Consequences of the Offer
Sales of the Shares pursuant to the Offer will be taxable transactions for
federal income tax purposes and may also be taxable under applicable state,
local and other tax laws. The consequences of the receipt of cash in exchange
for Shares pursuant to the Offer may vary depending on the particular
circumstances of a shareholder. For federal income tax purposes, a shareholder
whose Shares are purchased pursuant to the Offer will realize gain or loss equal
to the difference between the adjusted basis of the Shares sold and the amount
of cash received therefor. Such gain or loss will be capital gain or loss if the
Shares are held as capital assets by the shareholder and will be long-term
capital gain or loss if the shareholder's holding period in the Shares for
federal income tax purposes is more than one year at the time the Shares are
accepted for payment. Long-term capital gain of a non-corporate shareholder is
generally subject to a maximum tax rate of 20%. A shareholder's ability to use
capital losses to offset ordinary income is limited.
The income tax discussion set forth above is included for general
information only and may not be applicable to shareholders in special situations
such as shareholders who received their Shares upon the exercise of stock
options or otherwise as compensation and shareholders who are not United States
persons. Shareholders should consult their own tax advisors with respect to the
specific tax consequences to them, in their particular circumstances, of the
Offer, including the application and effect of federal, state, local, foreign or
other tax laws.
6. Price Range of the Shares
The Shares are traded on the NASDAQ SmallCap Market under the symbol GAIT
with quotations reported in the NASDAQ automated quotation system. The following
table sets forth, for the periods indicated, the high and low reported closing
bid prices for the Shares. The NASDAQ quotations are between dealers, do not
include retail markups, markdowns or commissions, and may not represent actual
transactions.
Closing Bid Price
-------------------
High Low
---- ---
Twelve Months Ended
February 28, 1999:
First Quarter ................................ 1 9/16 1 5/16
Second Quarter ............................... 1 7/16 1 5/16
Third Quarter ................................ 1 3/8 1 1/16
Fourth Quarter ............................... 1 7/8 1 1/4
Twelve Months Ended
February 29, 2000:
First Quarter ................................ 2 1 1/4
Second Quarter ............................... 1 13/16 1 5/8
Third Quarter ................................ 2 1 5/16
Fourth Quarter ............................... 1 15/16 1 11/16
7
Closing Bid Price
-------------------
High Low
---- ---
Twelve Months Ended
February 28, 2001:
First Quarter ................................ 1 3/4 1 5/8
Second Quarter ............................... 1 5/8 1 1/2
Third Quarter ................................ 1 5/8 1 3/8
Fourth Quarter (through December 31, 2000) ......... 1 1/2 1
On December 28, 2000, the last full trading day prior to the public
announcement of the terms of the Offer, the reported closing bid price was $1.00
per Share. On January 9, 2001, the reported closing price of the Shares on the
NASDAQ SmallCap Market was $1.75 per Share. Xxxxxx has never paid any cash
dividends. Shareholders are urged to obtain a current market quotation for the
Shares.
7. Effect of the Offer on the Market for the Shares
The purchase of any Shares by OrthoStrategies pursuant to the Offer will
reduce the number of the Shares that might otherwise trade publicly and may
reduce the number of holders of the Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
8. Certain Information Concerning Xxxxxx
Xxxxxx has its principal executive offices at 000 Xxxxxxx Xxxx, Xxxx Xxxx
Xxx Xxxx 00000. The telephone number of Xxxxxx at such location is (631)
667-1200. Xxxxxx, which was incorporated in 1971, is engaged in the design,
manufacture and marketing of foot and gait-related biomechanical products.
Xxxxxx'x largest product line, custom-made, prescription orthotic devices,
accounted for approximately 84% of revenues for the fiscal year ended February
29, 2000. Foot orthoses are contoured molds made from plastic, graphite, leather
or composite materials, which are placed in patients' shoes to (i) correct or
mitigate abnormalities in their gait and (ii) relieve symptoms associated with
foot or postural malalignment. These devices function by maintaining the proper
relationships between a patient's forefoot, rearfoot, leg and the horizontal
walking surface. To Xxxxxx'x knowledge, it has the greatest overall unit volume
and revenue in the custom foot orthoses industry. Xxxxxx'x customers are
primarily podiatrists, and also include orthopedists, physical therapists and
Orthotic & Prosthetic ("O&P") centers. Xxxxxx also makes ankle foot orthoses,
boot-like devices which assist individuals afflicted with neurological
impairments, foot deformities and injuries to achieve a more natural gait.
In addition to its line of orthotic products, Xxxxxx has developed and
markets a number of other products that help treat biomechanical medical
problems related to feet and gait, including:
o A proprietary medical grade soft tissue cushioning material named
PPT(R), which the Company believes provides superior protection
against forces of pressure, shock and shear. PPT conforms and bonds
to a broad array of orthotic and prosthetic devices, braces and
assemblies; and
o The Pediatric Counter Rotation System ("CRS"(R)), a device which
corrects in-toe/out-toe disorders of infancy, while allowing
unrestricted movement of the feet and legs.
Set forth below is certain summary consolidated financial information for
each of Xxxxxx'x three fiscal years in the period ended February 29, 2000 as
contained in Xxxxxx'x Annual Report on Form 10-K, as well as unaudited financial
information for the period ended November 25, 2000 as contained in Xxxxxx'x
Quarterly Report on Form 10-Q. More comprehensive financial information is
included in such reports (including management's discussion and analysis of
financial condition and results of operation) and other documents filed by
Xxxxxx with the SEC, and the following summary is qualified in its entirety by
reference to such reports and other documents and all of the financial
information and notes contained therein. Copies of such reports and other
documents may be examined at or obtained from the SEC in the manner set forth
below.
8
Selected Consolidated Financial Information
(In thousands, except per share data)
Nine months
ended Year Ended
---------- ------------------------------
Nov. 25, Feb. 29, Feb 28, Feb 28,
2000 2000 1999 1998
----- ------- ------ ------
Consolidated Statement of Operations:
Net Sales ............................... $ 8,691 $ 11,145 $ 10,307 $ 10,156
Income (loss) before income taxes ....... (224) (337) 329 370
Provision for (benefit from) income taxes 3 (2) 25 5
Net Income (loss) ....................... (227) (335) 304 365
Earnings per share:
Net income (loss) per common Share:
Basic ................................... (0.09) (0.13) 0.12 0.14
Diluted ................................. (0.09) (0.13) 0.12 0.14
Weighted average number of common shares:
Basic ................................... 2,578 2,571 2,854 2,585
Diluted ................................. 2,578 2,571 2,607 2,658
Cash dividends per share ................ -- -- -- --
Consolidated Balance Sheets:
Working Capital ......................... 1,536 1,715 2,423 2,090
Total Assets ............................ 4,507 4,738 5,125 4,848
Long-term Liabilities (excluding
current maturities) ................... 245 277 305 375
Stockholders' Equity .................... 2,436 2,536 2,934 2,663
Except as otherwise set forth herein, the information concerning Xxxxxx
contained in this Offer to Purchase has been taken from or based upon publicly
available documents and records on file with the SEC and other public sources
and is qualified in its entirety by reference thereto. Although OrthoStrategies
has no knowledge that would indicate that any statements contained herein based
on such documents and records are untrue, OrthoStrategies cannot take
responsibility for the accuracy or completeness of the information contained in
such documents and records, or for any failure by Xxxxxx to disclose events
which may have occurred or may affect the significance or accuracy of any such
information but which are unknown to OrthoStrategies.
Available Information. Xxxxxx is subject to the information and reporting
requirements of the Exchange Act and in accordance therewith is obligated to
file reports and other information with the SEC relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning Xxxxxx'x directors and officers, their remuneration, stock options
granted to them, the principal holders of Xxxxxx'x securities, any material
interests of such persons in transactions with Xxxxxx and other matters is
required to be disclosed in proxy statements distributed to Xxxxxx'x
shareholders and filed with the SEC. Such reports, proxy statements and other
information should be available for inspection at the public reference room at
the SEC's offices at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000 and also
should be available for inspection and copying at the regional offices of the
SEC located at Seven World Trade Center, 13th Floor, New York, New York 10048
and Citicorp Center, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000. Copies may be obtained by mail, upon payment of the SEC's customary
charges, by writing to its principal office at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxx
Xxxxx, Xxxxxxxxxx, X.X. 00000, and can be obtained electronically on the SEC's
Website at xxxx://xxx.xxx.xxx.
9
9. Certain Information Concerning OrthoStrategies
OrthoStrategies, Inc. and OrthoStrategies Acquisition Corp. were recently
organized under the laws of the State of New York. Purchaser is a wholly-owned
subsidiary of OrthoStrategies. The mailing address of Purchaser and
OrthoStrategies is 00 Xxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxx Xxxx 00000. The business
telephone number of Purchaser and OrthoStrategies is 000-000-0000.
OrthoStrategies was founded by Xxxxxx X. Xxxxxx, to pursue an acquisition
of one or more companies engaged in the manufacture of orthotic and prosthetic
devices for persons afflicted with musculoskeletal disorders or injuries. The
only shareholder, director and officer of OrthoStrategies is Xxxxxx X. Xxxxxx.
OrthoStrategies has not engaged in any substantive business activities other
than activities related to the negotiation, execution and delivery of the Tender
Offer Agreement with Xxxxxx, and the agreements contemplated thereby, and
activities related to the commencement of the Offer.
Purchaser was founded to effect the acquisition of Xxxxxx. Xxxxxx X.
Xxxxxx is the sole director and officer of Purchaser. Purchaser has not engaged
in any substantive business activities other than activities related to the
negotiation, execution and delivery of the Tender Offer Agreement with Xxxxxx,
and the agreements contemplated thereby, and activities related to the
commencement of the Offer.
Xxxxxx X. Xxxxxx, 44, has been an executive in the orthotics industry
since 1979. From March, 1992 to December, 1996, Xx. Xxxxxx was the President and
Chief Executive Officer of Advanced Orthopedic Technologies, Inc. ("AOTI"), a
publicly held company which, during such period, grew from annual revenues of
approximately $5 million in 1992 to approximately $18 million in 1996. In
December, 1996, AOTI was acquired by NovaCare Orthotics and Prosthetics, Inc.;
Xx. Xxxxxx supervised its integration into NovaCare, and from December, 1996
until July, 1999, Xx. Xxxxxx served NovaCare in various executive positions,
most recently being Executive Vice President of Sales and Marketing. When
NovaCare sold its orthotics and prosthetics business to Hanger Orthopedic Group
in July, 1999, Xx. Xxxxxx became Hanger's Executive Vice President of Marketing,
Public Relations and Strategic Planning. In September, 2000, Xx. Xxxxxx resigned
from Hanger to pursue his strategy of acquiring a company in the musculoskeletal
industry.
Xx. Xxxxxx is a Certified Prosthetist Orthotist and was one of the
founders and principals of the predecessor company of AOTI established in 1982.
Xx. Xxxxxx has a significant professional presence in the musculoskeletal
industry, has lectured widely and has held numerous professional and teaching
appointments at hospitals and educational institutions.
Xx. Xxxxxx invited Xxxx Xxxxxx and Kanders & Company, Inc., to participate
with him in OrthoStrategies' acquisition of control of Xxxxxx.
Xxxxxx X. Xxxxxxx, 43, is the sole shareholder, director and officer of
Kanders & Company, Inc., a consulting and investment firm. Xx. Xxxxxxx has
served as Chairman of the Board of Directors of Armor Holdings, Inc., a company
listed on the New York Stock Exchange, since January 1996. From October 1992 to
May 1996, Xx. Xxxxxxx served as Vice-Chairman of the Board of Xxxxxx Eyecare
Corporation. From June 1992 to March 1993, Xx. Xxxxxxx was the President and a
director of Pembridge Holdings.
Xxxx Xxxxxx, 51, was a co-founder of DonJoy Orthopedics, a sports
medicine, knee brace company, which today is called dj Orthopedics. As
President, he helped grow the company from a start-up operation to annual sales
over $70 million. DonJoy was sold to Xxxxx+Nephew, a British-based healthcare
company in 1987. Xx. Xxxxxx is currently Chairman of BREG, Inc., which he helped
co-found in 1990. BREG is a diverse orthopedic company with product lines
including cold therapy, pain care products, knee bracing, and soft goods.
OrthoStrategies has no material assets. However, Xx. Xxxxxx, Mr. Xxxx
Xxxxxx and Kanders & Company, Inc. have agreed in a funding commitment letter
("Commitment Letter") to provide OrthoStrategies with the funds necessary to
acquire the Shares tendered in the Offer and to pay related fees and expenses or
to directly fund and acquire the shares which OrthoStrategies has the right to
purchase in the Offer.
Kanders & Company, Inc. has the right to assign a portion of the Shares
allocated for acquisition by it; provided that no such assignment shall relieve
it of the obligation to fund the entire purchase price of the Shares allocated
for purchase by Kanders & Company, Inc. Xxxxxx X. Xxxxxx, Xxxx Xxxxxx and
Kanders & Company, Inc., may hold their shares in corporations, limited
liability companies, partnerships, or trusts owned and controlled by them.
10
XxxxxXxxxxxxxxx believes that financial information relating to
OrthoStrategies, Xxxxxx X. Xxxxxx, Xxxx Xxxxxx and Kanders & Company, Inc is not
material to a decision to sell or tender Shares in the Offer or to hold and
retain Shares. OrthoStrategies bases such belief on the fact that the Offer is
for cash, there is no financing condition to the Offer, none of Xxxxxx X.
Xxxxxx, Xxxx Xxxxxx and Kanders & Company, Inc will incur any indebtedness in
connection with the funding of the purchase of Shares, and none of such parties
or their affiliates or assignees have continuing commitments to Xxxxxx to
provide any financial support to Xxxxxx. Xxxxxx X. Xxxxxx has personally
committed to Kanders & Company, Inc. that Xx. Xxxxxx would provide $500,000 of
collateral to support a $1,000,000 line of credit to Xxxxxx by State Bank of
Long Island, effective on the closing of the Offer; that if State Bank of Long
Island does not implement such line of credit to Xxxxxx on the Closing of the
Offer, Xx. Xxxxxx will provide $500,000 to Xxxxxx either as a loan, by exercise
of OS Options having an aggregate exercise price of $500,000, or by providing
$500,000 in collateral to induce another bank to provide an equivalent line of
credit ("Credit Obligation"). Xx. Xxxxx'x net worth is in excess of $2 million,
which is in excess of his funding commitments to OrthoStrategies to provide the
purchase price for the Shares in the Offer and pay for his share of related fees
and expenses of OrthoStrategies and his undertaking to Kanders & Company, Inc.
to satisfy such Credit Obligation. In addition, the net worth of Xxxx Xxxxxx and
Kanders & Company, Inc. exceeds $1 million and $2 million, respectively, which
is in excess of their respective funding commitments to OrthoStrategies to
provide the purchase price for the Shares in the Offer and pay for their
respective shares of any related fees and expenses of OrthoStrategies. Each of
Xx. Xxxxxx, Xx. Xxxxxx and Kanders & Company, Inc. has sufficient liquidity to
satisfy such funding commitments to OrthoStrategies, and in the case of Xx.
Xxxxxx, the Credit Obligation to Kanders & Company, Inc.
None of OrthoStrategies, nor, to the best of its knowledge, Xxxxxx X.
Xxxxxx, Xxxxxx X. Xxxxxxx, Kanders & Company, Inc. or Xxxx Xxxxxx, nor any
associate or majority-owned subsidiary of OrthoStrategies, beneficially owns or
has a right to acquire any Shares or has engaged in any transactions in the
Shares in the past 60 days except pursuant to the Tender Offer Agreement and
Shareholders Agreement as set forth in Sections 10 and 11. Neither
OrthoStrategies nor Xx. Xxxxxx, Xx. Xxxxxxx, Kanders & Company, Inc., or Xx.
Xxxxxx has purchased any Shares during the past two years.
Except as set forth in Section 10 and Section 11, there have been no
negotiations, transactions or material contacts between OrthoStrategies, or, to
the best knowledge of OrthoStrategies, any of Xxxxxx X. Xxxxxx, Xxxxxx X.
Xxxxxxx, Kanders & Company, Inc. or Xxxx Xxxxxx, on the one hand, and Xxxxxx or
its affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors, or a sale or other transfer of a material amount of assets. Except as
described in Section 10, neither OrthoStrategies, nor, to the best of its
knowledge, any of Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, Kanders & Company, Inc.,
or Xxxx Xxxxxx, has had any transaction with Xxxxxx or any of its executive
officers, directors or affiliates that would require disclosure under the rules
and regulations of the SEC applicable to the Offer. To the best knowledge of
OrthoStrategies, none of the foregoing entities or individuals has, within the
last five years, been convicted in a criminal proceeding, or has been a party to
any judicial or administrative proceeding that resulted in a judgment, decree or
final order enjoining such person from future violations or prohibiting
activities subject to federal or state securities laws or a finding of any
violations of federal or state securities laws.
10. Background of the Offer; Contacts with Xxxxxx
On June 8, 1998, Xx. Xxxxxx contacted Xxxxxxx Xxxxxx, a director and
significant shareholder of Xxxxxx, to ascertain whether Xxxxxx was interested in
being acquired. On June 17, 1998, Xx. Xxxxxx and Xxxxxx X. Xxxxxxx met with Xx.
Xxxxxx. Another meeting was held on September 18, 1998, among Xx. Xxxxxx, Xx.
Xxxxxx and Xxxxxx X. Xxxxxxx, another director of Xxxxxx. Although there were
preliminary discussions regarding the possibility of Xxxxxx being acquired or
Xx. Xxxxxx becoming involved in the management of Xxxxxx, no agreement was
reached at this time and Xx. Xxxxxx determined to suspend his efforts.
In January 2000 Xx. Xxxxxx again contacted Xx. Xxxxxx to determine whether
there was any interest in selling his shareholdings in Xxxxxx. Xx. Xxxxxx
referred Xx. Xxxxxx to Xxxxxxx X. Xxxxx, Chairman of Xxxxxx. On January 6, 2000,
Xx. Xxxxx explained to Xx. Xxxxxx that Xxxxxx was then in the midst of various
initiatives and was not interested in commencing discussions regarding any major
transactions until these initiatives had been completed.
11
On July 26, 2000, Xx. Xxxxxx spoke with Xx. Xxxxx to ascertain whether
Xxxxxx was then interested in being acquired. Thereafter, a Confidentiality
Agreement was entered into between Xxxxxx and OrthoStrategies dated July 26,
2000. Xx. Xxxxxx and Xx. Xxxxx then began a series of discussions which
continued for several weeks during which they considered various possible
structures for a transaction, including the purchase of the assets of Xxxxxx, a
merger of the companies or a purchase of the shares of principal shareholders of
Xxxxxx. The Xxxxxx board of directors first considered the acquisition proposal
from OrthoStrategies at a meeting on August 2, 2000.
On August 10, 2000, attorneys from Xxxxxxx, Xxxxxxxxx LLP, counsel to Xx.
Xxxxxx and XxxxxXxxxxxxxxx, contacted Xxxxxxx & Xxxxxxxx, LLC, counsel to
Xxxxxx, to discuss the due diligence materials that would need to be reviewed
and the general terms of an acquisition transaction with a view to entering into
a letter of intent. From August 10, 2000, through September 14, 2000,
representatives of Xxxxxx, including its legal counsel, had various discussions
with representatives of OrthoStrategies and participated in various conference
calls during which they considered alternative structures. After these
negotiations, the board of directors of Xxxxxx met on September 16, 2000 and
ratified the execution of a Letter of Intent, dated September 14, 2000, wherein
OrthoStrategies confirmed its interest, subject to the completion of its due
diligence, to acquire Xxxxxx by means of a merger whereby Xxxxxx would become a
wholly-owned subsidiary of OrthoStrategies. The Letter of Intent contemplated
that OrthoStrategies would pay the shareholders of Xxxxxx $1.75 per Share,
subject to adjustment based on Xxxxxx'x net worth and net working capital as of
the closing date of the merger.
Subsequent to the execution of the Letter of Intent, Xxxxxxx, Xxxxxxxxx
LLP, on behalf of OrthoStrategies, delivered a letter to Xxxxxx, dated September
19, 2000, specifying various documents and financial and other materials
required by XxxxxXxxxxxxxxx in connection with its review of the business and
affairs of Xxxxxx.
During the course of its due diligence review, in light of Xxxxxx'x
inability to meet forecasted results of operations, XxxxxXxxxxxxxxx determined
that it was not willing to acquire all of the outstanding Shares of Xxxxxx on
the terms set forth in the Letter of Intent. In October 2000, XxxxxXxxxxxxxxx
advised Xxxxxx that it was no longer interested in consummating the transaction
contemplated by the Letter of Intent, but that nevertheless, it was interested
in acquiring a controlling interest in Xxxxxx at a lower price. Representatives
of OrthoStrategies and Xxxxxx continued to negotiate modifications to the
proposed transaction. The Xxxxxx board of directors met October 19, 2000,
October 25, 2000, October 31, 2000, and November 8, 2000 to review the status of
negotiations with OrthoStrategies.
These discussions resulted in the execution and delivery by
OrthoStrategies and Xxxxxx of a document captioned "Term Sheet for Revised
Transaction" dated November 10, 2000 ("Term Sheet"). In the Term Sheet
OrthoStrategies confirmed its intent, subject to its continued due diligence and
the financial results of Xxxxxx, to conduct a tender offer for up to 75% of the
outstanding Shares of Xxxxxx at a price of $1.525 per share, with a minimum
required tender of 51% of the outstanding Shares. The Term Sheet further
provided that certain shareholders of Xxxxxx, holding in the aggregate,
approximately 51.4% of the outstanding Shares would, at the time OrthoStrategies
and Xxxxxx entered into the Tender Offer Agreement, enter into an agreement
wherein they would agree to tender their shares in the Offer and, in certain
events, to sell their Shares directly to OrthoStrategies. The Term Sheet also
provided that Xxxxxx would xxxxx OrthoStrategies options to purchase 1,400,000
Shares exercisable for 180 days after closing of the tender offer, at an initial
exercise price of $1.525 per share, increasing to $1.550 per share 91 days after
Closing; $1.575 per share 121 days after Closing; and $1.60 per share 151 days
after Closing.
The Xxxxxx board of directors met on November 11, 2000 to review and
discuss the final form of the Term Sheet, which had been circulated to the
Directors prior to the meeting; the Board approved the Term Sheet and authorized
Xxxxxx X. Xxxxx, Chairman, to execute and deliver the Term Sheet.
Subsequent to the execution of the Term Sheet, OrthoStrategies continued
its review of the business and affairs of Xxxxxx, and counsel to
XxxxxXxxxxxxxxx, counsel to Xxxxxx and counsel to the parties to the
Shareholders Agreement, negotiated and exchanged several drafts of the Tender
Offer Agreement, Shareholders Agreement and other agreements described herein.
On November 29, 2000, the Xxxxxx Board of Directors met and reviewed the
negotiations of the definitive agreements with XxxxxXxxxxxxxxx and the open
issues and authorized Xxxxxx X. Xxxxx, Chairman of Xxxxxx, to continue
negotiations with XxxxxXxxxxxxxxx.
12
The Board of Directors of Xxxxxx held a meeting on December 10, 2000 to
consider in general the progress of negotiations with XxxxxXxxxxxxxxx, and on
December 11, 2000, the board of directors of Xxxxxx held a meeting to consider
the drafts which had been proposed of the Tender Offer Agreement and related
documents. At the December 11, 2000, meeting, representatives of OrthoStrategies
made a presentation regarding its proposal.
The Board of Directors of Xxxxxx met on December 19, 2000 to review the
substantially final definitive Tender Offer Agreement, Shareholders Agreement
and related agreements; determined that it was in the best interests of Xxxxxx
to proceed with the proposed transaction with OrthoStrategies; and authorized
the execution of such agreements by Xxxxxx X. Xxxxx, Chairman, subject to
changes approved by him.
11. Purpose of the Offer; Plans for Xxxxxx; The Tender Offer Agreement; The
Shareholders Agreement and other Agreements
Purpose. The purpose of the Offer is to acquire for cash up to a maximum
of 1,959,886 Shares, which constitutes approximately 75% of the Shares of Xxxxxx
currently outstanding. After completion of the purchase of Shares pursuant to
the Offer, OrthoStrategies and/or its assignees will collectively own all of the
Shares acquired in the Offer.
Plans for Xxxxxx. As of the date of this Offer to Purchase, and except as
otherwise described in this Section 11, OrthoStrategies does not have any
current plans or proposals with respect to Xxxxxx that relate to or would result
in:
a. Any extraordinary transaction, such as a merger, reorganization
or liquidation, involving Xxxxxx or any of its subsidiaries;
b. Any purchase, sale or transfer of a material amount of assets of
Xxxxxx or any of its subsidiaries;
c. Any material change in the present dividend policy, indebtedness
or capitalization of Xxxxxx;
d. Any other material change in Xxxxxx'x corporate structure or
business;
e. The Shares of Xxxxxx ceasing to be authorized to be quoted in an
automated quotations system operated by a national securities association;
or
f. Any class of equity securities of Xxxxxx becoming eligible for
termination of registration under Section 12(g) (4) of the Exchange Act.
Xxxxxx X. Xxxxxx expects to evaluate and review Xxxxxx and its business,
assets, corporate structure, capitalization, operations, properties, policies,
management and personnel with a view towards determining how to optimally
realize any potential benefits which arise from the operations of Xxxxxx.
Accordingly, OrthoStrategies reserves the right to change Xxxxxx'x business by
reorganizing its operations, structure and personnel. OrthoStrategies intends to
seek to expand Xxxxxx'x business through internal growth and through
acquisitions or by establishing relationships with other companies whose
operations relate to the manufacture or distribution of orthotic and prosthetic
devices. Xxxxxx X. Xxxxxx has reviewed the operations of various participants in
the musculoskeletal prosthetic and orthotic industry and engaged in preliminary
background conversations with certain members of the industry. At this time,
however, XxxxxXxxxxxxxxx does not have an established timetable, has not made
any acquisition proposal to any entity other than Xxxxxx, and is not a party to
any acquisition, merger or similar agreement, other than the Tender Offer
Agreement, nor is it involved in negotiations in respect of any such agreements.
Depending upon the opportunities available, OrthoStrategies may cause
Xxxxxx to seek additional debt or equity financing, including the financing
which would be provided by the exercise of the OS Options (as defined below in
this Section 11) to be issued by Xxxxxx to OrthoStrategies. There can be no
assurance, however, that any such financing will be available to Xxxxxx, and
none of OrthoStrategies, Xxxxxx Xxxxxx, Xxxx Xxxxxx or Kanders & Company, Inc.
or their assignees, if any, will be required to exercise any of the OS Options.
If Xxxxxx finances its activities through the issuance of equity securities,
such issuance will result in dilution to the interests of Xxxxxx'x shareholders.
To the extent Xxxxxx incurs debt or issues debt securities in connection with
its expansion activities, Xxxxxx will be subject to the obligations associated
with such indebtedness and there can be no assurance that Xxxxxx'x cash flow
will be sufficient to repay such indebtedness.
13
Xxxxxx'x present working capital line with American National Bank, under
which Xxxxxx has borrowed approximately $90,000, will expire on the earlier to
occur of the closing of the Offer or February 28, 2001. While OrthoStrategies
has obtained a written indication of interest from another bank to provide a
replacement facility to Xxxxxx upon closing of the Offer, there is no assurance
that any such facility will be obtained by Xxxxxx.
Although none of OrthoStrategies, Kanders & Company, Inc., Xxxxxx X.
Xxxxxx and Xxxx Xxxxxx has any present intention to acquire any Shares in the
open market, other than the Shares to be acquired pursuant to the Offer, and
none of such individuals or entity has any present intention to dispose of any
Shares so acquired (other than as discussed in Section 12), OrthoStrategies,
Kanders & Company, Inc., Xxxxxx X. Xxxxxx and Xxxx Xxxxxx may acquire additional
Shares following the consummation of the Offer (including those issuable
pursuant to the OS Options), or dispose of Shares on the over-the-counter
market, in privately negotiated transactions or otherwise. Any such transactions
may be effected at any time and from time to time, and may be made upon such
terms and at such prices as OrthoStrategies shall determine, which may be more
or less than the price paid in the Offer.
General Information about the Agreements. The following is a summary of
certain provisions of the Tender Offer Agreement, the Shareholders Agreement (as
defined below) and certain other agreements which were executed and delivered
concurrently with the Tender Offer Agreement or which OrthoStrategies
anticipates will be executed and delivered by Xxxxxx immediately prior to or
concurrently with the consummation of the Offer (collectively, the
"Agreements"). This summary of such Agreements is not a complete description of
the terms and conditions of any of such Agreements and is qualified in its
entirety by reference to the full text of such Agreements which are filed with
the SEC as exhibits to the Tender Offer Statement on Schedule TO filed by
OrthoStrategies (the "Schedule TO") and are hereby incorporated herein by
reference. Capitalized terms not otherwise defined below have the respective
meanings assigned to them in the particular Agreement indicated below. Each of
the Agreements discussed below may be examined, and copies obtained, as set
forth in Section 8 of this Offer to Purchase.
The Tender Offer Agreement
The Offer. The Tender Offer Agreement provides that OrthoStrategies will
commence the Offer and that upon the terms and subject to prior satisfaction or
waiver (to the extent permitted to be waived) of the conditions of the Offer,
promptly after expiration of the Offer, OrthoStrategies will accept for payment,
and pay for up to 1,959,886 Shares validly tendered and not withdrawn pursuant
to the Offer. The price shall be $1.525 per Share, net cash to the seller. If
more than 1,959,886 Shares are validly tendered and not withdrawn,
OrthoStrategies will accept for purchase promptly after the Expiration Date an
amount of the tendered Shares equal to 1,959,886 Shares, on a pro rata basis
from each shareholder who has validly tendered Shares pursuant to the Offer. The
Tender Offer Agreement provides that OrthoStrategies has the right, in its sole
discretion, to modify and make certain changes to the terms and conditions of
the Offer, except that unless previously approved by Xxxxxx in writing, no
provision may be set forth or changed which: decreases the price per Share
payable in the Offer, changes the form of consideration payable in the Offer or
imposes conditions to the Offer in addition to those set forth in the Tender
Offer Agreement that are materially adverse to the holders of the Shares.
Without the prior written consent of Xxxxxx, OrthoStrategies cannot extend the
expiration date of the Offer beyond March 31, 2001; further, once the conditions
to the Offer have been satisfied, OrthoStrategies cannot extend the Offer for
more than five business days without the consent of Xxxxxx.
Termination of the Tender Offer Agreement. The Tender Offer Agreement may
be terminated at any time before OrthoStrategies has purchased Shares pursuant
to the Offer:
(1) by mutual written consent duly authorized by the boards of directors
of OrthoStrategies and Xxxxxx;
(2) by either OrthoStrategies or Xxxxxx if there shall be any applicable
domestic law, rule or regulation that makes consummation of the Offer illegal or
otherwise prohibited or if any judgment, injunction, order or decree of a court
of competent jurisdiction shall restrain or prohibit the consummation of the
Offer, and such judgment, injunction, order or decree shall become final and
nonappealable;
(3) by action of the board of directors of OrthoStrategies if:
x Xxxxxx has failed to comply in any material respect with any of its
covenants or agreements contained in the Tender Offer Agreement, and
such failure has not been cured prior to the earlier of:
14
o five (5) business days following the giving of written notice
to Xxxxxx of such failure; or
o the business day prior to the date on which the Offer is
scheduled to expire;
o the board of directors of Xxxxxx amends or modifies in a manner
adverse to OrthoStrategies its approval or recommendation of the
Offer, withdraws such recommendation or shall have approved or
recommended any other Company Acquisition Proposal (as defined in
the Tender Offer Agreement which definition is set forth under the
heading "Acquisition Proposals" below) or shall have resolved to do
any of the foregoing; or
o the shareholders of Xxxxxx shall have tendered fewer than 1,332,722
Shares or the shareholders which are party to the Shareholders
Agreement shall have tendered in the aggregate fewer than 1,305,606
of their Shares in accordance with the Shareholders Agreement;
provided, in each case, that the representations and warranties of
OrthoStrategies contained in the Tender Offer Agreement are, as of the date of
termination by OrthoStrategies, correct in all respects, except for such
exceptions which would not have a material adverse effect on OrthoStrategies.
(4) by action of the board of directors of Xxxxxx if:
o OrthoStrategies fails to comply in any material respect with any of
its covenants or agreements contained in the Tender Offer Agreement,
and such failure is not cured prior to the earlier of:
o five (5) business days following the giving of written notice
to OrthoStrategies of such failure; or
o the business day prior to the date on which the Offer is then
scheduled to expire; or
o OrthoStrategies fails to commence the Offer within the time required
in the Tender Offer Agreement;
provided, in each case that the representations and warranties of Xxxxxx
contained in the Tender Offer Agreement are, as of the date of termination,
correct in all respects, except for such exceptions which would not have a
material adverse effect on Xxxxxx.
(5) By the board of directors of Xxxxxx if:
o the board of directors of Xxxxxx receives or there is publicly
announced a bona fide written Company Acquisition Proposal
(which Company Acquisition Proposal was unsolicited and did
not otherwise result from a breach by Xxxxxx or certain of its
affiliates of the non-solicitation provisions contained in the
Tender Offer Agreement) and the board of directors of Xxxxxx
determines in good faith (i) that such Company Acquisition
Proposal is reasonably likely, if consummated, to result in a
transaction more favorable to Xxxxxx'x shareholders from a
financial point of view than the transaction contemplated by
the Tender Offer Agreement (a "Superior Proposal") and (ii)
after consultation with outside counsel, that approval,
acceptance or recommendation of such Company Acquisition
Proposal or tender or exchange offer is necessary in order for
its directors to comply with their respective fiduciary
duties, and Xxxxxx shall substantially concurrently with such
termination enter into a definitive agreement containing the
terms of a Superior Proposal; provided, however, that Xxxxxx
shall not exercise its right to terminate this Agreement until
after three (3) days following OrthoStrategies' receipt of
written notice advising OrthoStrategies that Xxxxxx'x board of
directors has received a Superior Proposal (or that a tender
or exchange offer with respect to the Shares has been
commenced) and that Xxxxxx'x board of directors will, subject
to any action taken by OrthoStrategies, cause Xxxxxx to accept
such Superior Proposal (or recommend such tender or exchange
offer);
(6) by either OrthoStrategies or Xxxxxx if the Offer shall not have been
consummated by March 31, 2001, other than as a result of the failure of the
party seeking termination to comply with its obligations under the Tender Offer
Agreement.
Effect of Termination. If the Tender Offer Agreement is terminated,
neither OrthoStrategies nor Xxxxxx (nor any of their respective directors or
officers) will have any liability or further obligation to the other party,
except as specifically provided in the Tender Offer Agreement with respect to
the payment of fees and expenses, and except that each will remain liable for
any breach of the Tender Offer Agreement.
15
Fees and Expenses. Each of Xxxxxx and OrthoStrategies will pay its
respective expenses in connection with the Tender Offer Agreement, except that:
(1) If the Tender Offer Agreement is terminated by Xxxxxx as a result of
the failure of OrthoStrategies to comply in any material respect with its
covenants or agreements contained in the Tender Offer Agreement and to timely
cure a breach of such covenants or agreements after the notice thereof, or if
OrthoStrategies shall terminate the Tender Offer Agreement when it does not have
the right to do so, OrthoStrategies shall reimburse Xxxxxx for its reasonable
out-of-pocket expenses actually incurred in connection with the Offer, up to a
maximum of $150,000. Xxxxxx X. Xxxxxx has personally guaranteed the payment by
OrthoStrategies of Xxxxxx'x out-of-pocket expenses, up to a maximum amount of
$150,000 ("Xxxxxx Expense Guaranty") if Xxxxxx should terminate the Tender Offer
Agreement as described in this clause 1.
(2) If the Tender Offer Agreement is terminated by Xxxxxx in order to
accept and enter into an agreement relating to a Superior Proposal, or if the
Tender Offer Agreement is terminated by OrthoStrategies as a result of an
amendment or modification by the board of directors of Xxxxxx of its
recommendation of the Offer in a manner adverse to OrthoStrategies, withdrawal
by the board of directors of Xxxxxx of its recommendation or the approval by the
board of directors of Xxxxxx of another Company Acquisition Proposal, or a
determination by the board of directors of Xxxxxx to do any of the foregoing,
Xxxxxx will reimburse OrthoStrategies for its reasonable out-of-pocket costs and
expenses incurred in connection with the Tender Offer Agreement and the
transactions contemplated thereby.
(3) If the Tender Offer Agreement is terminated by OrthoStrategies (i) as
a result of the failure of Xxxxxx to comply in any material respect with its
covenants or agreements contained in the Tender Offer Agreement and to timely
cure such breach after notice thereof, or if Xxxxxx shall terminate the Tender
Offer Agreement when it does not have the right to do so, or (ii) because the
shareholders of Xxxxxx shall have tendered fewer than 1,332,722 Shares or the
shareholders which are party to the Shareholders Agreement shall have tendered
in the aggregate fewer than 1,305,606 of their Shares in accordance with the
Shareholders Agreement, Xxxxxx will reimburse OrthoStrategies for its reasonable
out-of-pocket costs and expenses incurred in connection with the Tender Offer
Agreement and the transactions contemplated thereby subject to a maximum of
$325,000, of which the first $250,000 would be paid in cash and the excess over
$250,000 paid in Shares valued at $1.525 per Share.
Acquisition Proposals. Neither Xxxxxx nor any of its subsidiaries nor any
of the respective officers, directors, employees or other agents of Xxxxxx or
its subsidiaries nor any other related party will:
o take any action to solicit, initiate or encourage, directly or
indirectly, any offer or proposal for, or any indication of interest
in, or the making of any proposal or offer (including, without
limitation, any proposal or offer to shareholders of Xxxxxx) with
respect to a merger, consolidation, reorganization, recapitalization
or other business combination involving Xxxxxx or its subsidiaries
or the acquisition of an equity interest in, or a substantial
portion of the assets of, Xxxxxx or any of its subsidiaries (any
such proposal or offer being referred to as a "Company Acquisition
Proposal"); or
o unless otherwise required in accordance with the fiduciary duties of
the board of directors of Xxxxxx under applicable law as advised by
counsel to Xxxxxx, engage in discussions or negotiations with, or
disclose any nonpublic information relating to Xxxxxx or any of its
subsidiaries or afford access to the properties, books or records of
Xxxxxx or any of its subsidiaries, to any person that may be
considering making, or has made, a Company Acquisition Proposal.
Xxxxxx will promptly notify OrthoStrategies after receipt of any Company
Acquisition Proposal or any request for nonpublic information relating to
OrthoStrategies or any of its subsidiaries or for access to the properties,
books or records of Xxxxxx or any of its subsidiaries by any person that may be
considering making, or has made, a Company Acquisition Proposal.
Covenants. The Tender Offer Agreement contains certain covenants and
restrictions as to the conduct of business by Xxxxxx pending the completion of
the Offer, including covenants requiring Xxxxxx to conduct its business only in
the ordinary course; restricting Xxxxxx'x ability, among other matters, to take
actions that would change or affect the capital structure of Xxxxxx or involve
the issuance or redemption of securities, and limiting Xxxxxx'x ability to sell
assets, make capital expenditures, engage in acquisitions, incur indebtedness,
enter into employment or severance agreements, enter into or modify material
contracts, amend benefit plans or settle claims.
16
Certain Agreements with Xxxxxx Management. The Tender Offer Agreement
further obligates Xxxxxx to redeem from the holders thereof certain options
currently outstanding to purchase 225,000 Shares. These options are held by four
shareholders who are parties to the Shareholders Agreement (Xxxxxxx X. Xxxxx,
Xxxxxx X. Xxxxxxx and Xxxxxxx Xxxxxx, each a Director of the Company, and Xxxxxx
X. Xxxxxx, President and CEO of the Company). The redemption price for the
options is, in each case, equal to the excess of $1.525 over the per Share
exercise price of the options. The aggregate amount to be paid by Xxxxxx to
redeem these 225,000 options, assuming a tender offer price of $1.525 per Share,
is $70,635.
The Tender Offer Agreement permits Xxxxxx to pay up to $25,000 in the
aggregate to its Directors for services rendered in their active roles in
connection with the negotiation of the transactions contemplated by this
Agreement, all of which was paid prior to the date of the Tender Offer
Agreement.
As an incentive to those members of Xxxxxx executive management who are
not Directors (Xxxxxx X. Xxxxxx, President and CEO; Xxxxxx X. Xxxxxxxx, Chief
Financial Officer; and Xxxxxx Xxxxxxxx, Vice President of Operations) to remain
in the employ of Xxxxxx through the Closing of the Offer and to assist in the
transition period following the Closing:
x Xxxxxx will provide bonuses to such executives if certain
performance targets are met at the month end preceding the Closing
of the Offer. Such bonus will be up to $20,000 for Xx. Xxxxxx,
$20,000 for Xx. Xxxxxxxx and $25,000 for Xx. Xxxxxxxx, with minimum
guaranteed bonuses to Messrs. Xxxxxxxx and Xxxxxxxx of $5,000 each.
To receive such bonus, such individuals must remain in the employ of
Xxxxxx for 90 days following the Closing of the Offer.
x Xxxxxx will provide three months base salary as a severance payment
to Messrs. Xxxxxxxx and Xxxxxxxx if they are terminated without
cause within six months of the Closing of the Offer. The Company has
committed to continue to employ Xx. Xxxxxx, and Xx. Xxxxxx has
committed to remain employed with the Company, for three months
after the Closing of the Offer; thereafter Xx. Xxxxxx will be
entitled to receive three months base salary as a severance payment.
Representations and Warranties. The Tender Offer Agreement contains
representations and warranties by each of Xxxxxx and OrthoStrategies that are
customary for a transaction of this kind. These representations and warranties
are deemed to be made as of the date of the Tender Offer Agreement and as of the
date of the closing of the Offer. OrthoStrategies is not obligated to close the
Offer and purchase Shares if (1) any representation or warranty of Xxxxxx shall
have been inaccurate or incomplete as of the date of the Tender Offer Agreement,
except for such exceptions which individually or in the aggregate would not
constitute a material breach of any representation or warranty, or (2) any
representation or warranty of Xxxxxx shall be inaccurate or incomplete as of the
Closing Date, except for such exceptions which individually or in the aggregate
would not have a material adverse effect on the financial condition, business,
or results of operations of Xxxxxx and its subsidiaries taken as a whole (a
"Company Material Adverse Effect").
Amendment of the Tender Offer Agreement. At any time prior to the purchase
of the Shares pursuant to the Offer, Xxxxxx and OrthoStrategies may modify or
amend the Tender Offer Agreement by written agreement executed and delivered by
duly authorized officers of the respective parties.
Directors' and Officers' Insurance. In the Tender Offer Agreement,
OrthoStrategies, Purchaser and Xxxxxx agreed that after the purchase of Shares
pursuant to the Offer, Xxxxxx will maintain its existing officers' and
directors' liability insurance ("D&O Insurance") for a period of three years;
provided, however, that (x) Xxxxxx may substitute therefor policies (which may
be "tail" policies) containing terms with respect to coverage and amount no less
favorable in any material respect to the directors and officers, and (y) if the
existing D&O Insurance expires, is terminated or cancelled during such
three-year period, Xxxxxx will use commercially reasonable best efforts to
obtain similar D&O Insurance for the remainder of such three-year period.
Appraisal Rights. Holders of the Shares do not have appraisal rights as a
result of the Offer pursuant to the New York Business Corporation Law.
The OS Options. The Tender Offer Agreement requires that Xxxxxx xxxxx to
OrthoStrategies options to purchase 1,400,000 Shares (the "OS Options"). The OS
Options will be exercisable for a period of 180 days commencing as of the
closing date of the Offer. The exercise price of the OS Options initially will
be $1.525 per
17
Share; shall increase to $1.550 per Share ninety-one days after the Closing of
the Offer; shall increase to $1.575 per Share one hundred twenty one days after
the Closing of the Offer; and shall increase to $1.60 per Share one hundred
fifty one days after the Closing of the Offer. The number of Shares issuable
upon exercise of the OS Options and the exercise price thereof will be subject
to adjustment from time to time in the event of (i) any dividend or distribution
or the Shares (including any distribution of other or additional stock or other
securities or options by way of dividend, spin-off, reclassification,
recapitalization or similar corporate arrangement); (ii) any dividend on or
subdivision of the Shares; or (iii) any combination, consolidation or
reclassification of the Shares.
In case of any consolidation or merger to which Xxxxxx is a party, the
sale of substantially all the assets of Xxxxxx or a capital reorganization or
reclassification of the Shares or other securities issuable upon exercise of the
OS Options, proper provision shall be made so that upon exercise of an OS Option
the holder shall be entitled to receive the kind and amount of stock and other
securities and property receivable upon such merger or consolidation, sale or
capital reorganization or reclassification by a holder of the number of Shares
or other securities issuable upon exercise of an Option immediately prior to
such merger or consolidation, sale or capital reorganization or
reclassification.
The OS Options will be transferable, in whole or in part, subject to
applicable securities laws. OrthoStrategies intends to assign the OS Options to
Xxxxxx X. Xxxxxx and Kanders & Company, Inc., if they purchase Shares pursuant
to the Offer directly rather than through OrthoStrategies, in the same
proportions as their relative commitment to fund the purchase of Shares tendered
in the Offer; provided, however, that in the event that fewer than the maximum
number of Shares are tendered, the proportion of OS Options shall be adjusted
such that the number OS Options retained by OrthoStrategies and/or Xxxxxx Xxxxxx
shall relate to such number of shares which can be purchased for an amount equal
to (a) $1,500,000, less (b) the amount actually paid by XxxxxXxxxxxxxxx and/or
Xxxxxx Xxxxxx for the purchase of Shares pursuant to the Tender Offer Agreement.
There can be no assurance that the OS Options will be exercised by
OrthoStrategies or any assignee thereof. Xxxxxx may need additional financing to
achieve its growth objectives and subject to approval of the then current board
of directors of Xxxxxx, such financing may be provided by OrthoStrategies or
other related parties upon other terms, including by the purchase of convertible
notes or preferred stock of Xxxxxx or other methods and the sale prices,
conversion prices, or the exercise prices of such securities may be lower or
higher than the exercise price of the OS Options or the then current market
price of the Shares.
In connection with the issuance of the OS Options, Xxxxxx and
OrthoStrategies have entered into a Registration Rights Agreement. In the
Registration Rights Agreement Xxxxxx granted to OrthoStrategies certain demand
and "piggy-back" registration rights with respect to the Shares or other
securities issuable upon exercise of the OS Options. The Registration Rights
Agreement contains certain covenants customary for such agreements, including an
agreement by Xxxxxx to indemnify OrthoStrategies against certain liabilities
under the Securities Act in connection with the distribution of the Shares or
other securities issuable upon exercise of the OS Options.
The rights of OrthoStrategies under the Registration Rights Agreement are
assignable to any party which might acquire the OS Options or the securities
issuable upon exercise thereof. As noted above, Xxxxxx X. Xxxxxx and Kanders &
Co. may acquire the OS Options directly and, therefor, OrthoStrategies' rights
under the Registration Rights Agreement.
The Shareholders Agreement
On December 28 , 2000, OrthoStrategies, Xxxxxx and Xxxxxxxxx entered into
an agreement with Xxxxxxx Xxxxxx, Xxxxxxx X. Xxxxx, Xxxxxx Xxxxxxx, Xxxxxx X.
Xxxxxxx, Xxxxxx Xxxxx, Xxxxxx X. Xxxxxx, Trigran Investments, L.P., The Xxxxxx
Family Limited Partnership and the Xxxxxxx Xxxxxx 1990 Family Trust
(individually, a "Shareholder," collectively, the "Shareholders"). This
agreement is referred to herein as the "Shareholders Agreement". Messrs. Xxxxxx,
Xxxxx, Xxxxxxx and Xxxxxxx comprise all of the current members of the Board of
Directors of Xxxxxx; Xx. Xxxxxx is the current President and Chief Executive
Officer of the Company; and such partnerships and trust are affiliates of Xx.
Xxxxxx. Xx. Xxxxx, who is not a director or employee of Xxxxxx, owns 248,553
Shares.
18
The Shareholders Agreement obligates each Shareholder to tender his or its
Shares (1,355,606 Shares in the aggregate) in the Offer and obligates
OrthoStrategies to purchase such Shares, subject to the terms and conditions of
the Offer, at a price of $1.525 per Share, or such higher price as
OrthoStrategies may set in the Offer. The Shareholders Agreement provides
further that if the Offer is not completed or is terminated due to the receipt
by Xxxxxx of a competing offer at a price above $1.525 per Share, at the
election of OrthoStrategies on or prior to March 31, 2001, each Shareholder will
sell his or its Shares to OrthoStrategies at a price of $1.525 per Share.
Although the Shareholders Agreement states that the shareholders party thereto
own and will tender 1,355,606 Shares, subsequent to the execution of the
Shareholders Agreement it was determined that the shareholders party thereto
actually owned 1,342,273 Shares.
In the aggregate, the 1,342,273 Shares which the Shareholders Agreement
obligates the Shareholders to tender in the Offer or sell to OrthoStrategies,
represent approximately 51.4% of Xxxxxx'x outstanding Shares.
Each Shareholder also agreed in the Shareholders Agreement that at any
shareholder meeting, or in any written consent in lieu thereof, such Shareholder
will vote his Shares against (i) any amendment of Xxxxxx'x Certificate of
Incorporation or by-laws, which would be reasonably likely to impede, frustrate,
prevent or nullify the Offer or any of the other transactions contemplated by
the Tender Offer Agreement or change in any manner the voting rights of any
class of Xxxxxx'x common stock, (ii) any action that would cause Xxxxxx to
breach any representation, warranty or covenant contained in the Tender Offer
Agreement or (iii) any action to elect to Xxxxxx'x board of directors anyone
other than the designees of OrthoStrategies or replacements of existing
directors, which replacement directors agree to resign on the closing of the
Offer.
The Shareholders Agreement further obligates those Shareholders which hold
options to acquire Shares to sell such options to Xxxxxx effective upon the
closing of the Offer or the purchase of Shares by OrthoStrategies pursuant to
the Shareholders Agreement. The aggregate number of such options to be redeemed
by Xxxxxx is 225,000 and the price to be paid therefor is equal to the excess of
$1.525 per share over the respective exercise prices of such options, for a
total aggregate consideration of $70,635 to be paid by Xxxxxx.
Langer's Board of Directors
The Tender Offer Agreement provides that Xxxxxx will use its best efforts
to facilitate the election to the board of directors of Xxxxxx, effective as of
the purchase of (i) a majority of the issued and outstanding Shares and, (ii)
subject to the conditions of the Offer, all Shares tendered in the Offer, Xxxxxx
X. Xxxxxx and up to four additional individuals, designated by XxxxxXxxxxxxxxx,
currently anticipated to be Xxxx Xxxxxx, Xxxxx X. Xxxxxxx, Xxxxxxxx X. Xxxxxx
and Xxxxxx Xxxxxxxxx. Further, Xxxxxx will use its best efforts to facilitate
the resignation, effective as of the purchase of (i) a majority of the issued
and outstanding Shares and, (ii) subject to the conditions of the Offer, all
Shares tendered in the Offer, of Xxxxxxx Xxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxxx
X. Xxxxx from the Xxxxxx board of directors.
OrthoStrategies, Purchaser and Xxxxxx entered into an agreement with
Xxxxxxx X. Xxxxx, Xxxxxxx Xxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxx Xxxxxxx whereby
each of these individuals, acting in his individual capacity, agreed to resign
from the board of directors of Xxxxxx, effective upon the purchase of at least
of majority of the outstanding Shares in the Offer or the acquisition by
Purchaser or its assignees, pursuant to the Shareholders Agreement, of the
outstanding Shares owned by such individuals. In addition, this Agreement
provides that upon purchase of the Shares as described in the immediately
preceding sentence, Xxxxxx, OS and Purchaser will cause Xxxxxx to maintain its
existing directors' and officers' liability insurance for a period of three
years, subject to Xxxxxx'x right to obtain substitute policies as more fully
discussed above.
Xxxxx X. Xxxxxxx, 61, has served as a director of Armor Holdings since
January 1996. Xx. Xxxxxxx served as Chairman and Chief Operating Officer of
Xxxxxxx Xxxxx Financial Corp. (the predecessor of Xxxxxx Eyecare Corporation)
from December 1986 until October 1992 and as a director of Xxxxxx Eyecare
Corporation from October 1992 until November 1995.
Xxxxxx Xxxxxxxxx, 69, is President of AGA Associates, investment advisors
founded in 1986. Prior to that, Xx. Xxxxxxxxx was a financial advisor at several
brokerage firms. His management experience includes President of Xxxxxx Ind.,
Division of Safeguard Ind. (SFE, NYSE), and Chairman of Rudor Ind., a
multi-division service
19
organization. He was also Chairman of Gerber Ind., designers of department store
interiors from 1980 to 1983. Xx. Xxxxxxxxx received his BS in Management from
Rensselaer Polytechnic Institute. He was also a trustee of New York Medical
College and a member of the Young Presidents Organization (YPO).
Xxxxxxxx X. Xxxxxx, 43, joined Xxxxxx Capital Management in 1994 as
President. In addition to overseeing the firm's operations and strategic
development, he manages the portfolios of numerous individuals and families. Xx.
Xxxxxx also is responsible for managing Xxxxxx Capital Management's West Coast
operations. With two decades of experience in finance and wealth management, Xx.
Xxxxxx previously was managing general partner of Xxxxxxxx Xxxxxx & Co., LP, a
private investment boutique he founded in 1987. Prior to that, he was an
associate director of Bear, Xxxxxxx & Co., LP. Xx. Xxxxxx'x earlier finance
experience includes positions at Edelman Group and Xxxxxxxxxxx & Company. Xx.
Xxxxxx is a director of Troma Entertainment, Inc. and the Xxxxxxx Xxxxxx
Foundation. He received his B.A. degree in Political Science from the University
of Pennsylvania.
Though the compensation to be paid to the new non-management directors has
not yet been determined, the "Best Efforts Agreement" (See "Certain Additional
Agreements") contemplates that each of the non-management directors will be
issued options for their services and that Xxxxx X. Xxxxxxx will also receive a
cash stipend for serving as Chairman of Xxxxxx.
Employment Agreement with Xxxxxx X. Xxxxxx. Pursuant to the Tender Offer
Agreement, Xxxxxx employed Xxxxxx X. Xxxxxx to serve in an advisory capacity and
as an observer to the board of directors of Xxxxxx on an interim basis.
Effective the closing of the Offer, it is anticipated that the new board of
directors of Xxxxxx designated by XxxxxXxxxxxxxxx will approve, and Xxxxxx will
enter into, an Executive Employment Agreement with Xx. Xxxxxx, (the "Employment
Agreement"), pursuant to which Xx. Xxxxxx will be elected a director, President
and Chief Executive Officer of Xxxxxx for an initial term expiring December 31,
2003. Xx. Xxxxxx' Employment Agreement will provide for a base salary of no less
than $175,000 per annum. The Agreement also provides that Xx. Xxxxxx shall be
eligible to receive in respect of each calendar year a performance based bonus
in accordance with a bonus plan to be approved by the Compensation Committee of
Xxxxxx'x board of directors. In addition, Xx. Xxxxxx will be entitled to
participate in any pension plan, health and accident plan or any other employee
benefit plan or arrangement offered to Xxxxxx'x employees and senior executives.
Upon execution of the Tender Offer Agreement and the commencement of his
employment with Xxxxxx, Xx. Xxxxxx was granted an option to purchase 175,000
Shares pursuant to Xxxxxx'x 1992 Stock Option Plan at an exercise price of
$1.525 per Share. Xx. Xxxxxx' options vest in three equal installments on
December 31, 2001, 2002 and 2003, if he is employed with Xxxxxx on such dates,
and, subject to the terms of the Option Agreement, are exercisable until the
tenth anniversary of the date on which the Tender Offer Agreement was executed.
Consulting Agreement with Kanders & Company, Inc. OrthoStrategies
contemplates that upon consummation of the Offer, the new board of directors of
Xxxxxx designated by OrthoStrategies will approve, and Xxxxxx will enter into, a
Consulting Agreement with Kanders & Company, Inc. (the "Consulting Agreement").
The Consulting Agreement provides that during its term Kanders & Company, Inc.
will act as a non-exclusive consultant to Xxxxxx and will provide Xxxxxx with
general investment banking and financial advisory services, including assistance
in the development of a corporate financing and acquisition strategy.
The Consulting Agreement will provide for an initial term of three years.
Pursuant to the Agreement, Kanders & Company, Inc. is to receive an annual fee
of $100,000, options to purchase 100,000 Shares of Xxxxxx at a price of $1.525
per Share and reimbursement for out-of-pocket expenses. The Consulting Agreement
will also obligate Xxxxxx to indemnify Kanders & Company, Inc., pursuant to an
Indemnification Agreement to be entered into between Xxxxxx and Kanders &
Company, Inc., against any loss or expense, including all interest, assessments
and other charges paid or payable in connection with any loss or expense,
Kanders & Company, Inc. might incur as a result of any claim brought against
Xxxxxx or Kanders & Company, Inc. arising out of or related to the relationship
between Kanders & Company, Inc. and Xxxxxx, or activities undertaken by Kanders
& Company, Inc. at the request of Xxxxxx. In addition, the Consulting Agreement
contemplates that Xxxxxx and the Company will execute additional engagement
letters in connection with specific transactions in which the services of
Kanders & Company, Inc. will be relied upon by Xxxxxx for which Kanders &
Company, Inc. will receive additional compensation.
20
As an inducement to the execution and delivery of the Consulting
Agreement, Kanders & Company, Inc. will agree that, during the term of the
Consulting Agreement and for a period of one year thereafter, it will not
solicit or engage in any business competitive with the business of Xxxxxx or,
subject to certain limitations, invest in or give financial support to any
business competitive with that of Xxxxxx.
The 100,000 options (the "Consultant's Options") to be issued to Kanders &
Company, Inc. pursuant to the Consulting Agreement are to be evidenced by an
Option Agreement (the "Consultant's Option Agreement") to be entered into on the
Closing of the Offer. The Consultant's Option Agreement provides that the
Consultant's Options will vest in three equal installments on December 31, 2001,
2002 and 2003, provided that if Xxxxxx Xxxxxxx, the principal shareholder of
Kanders & Company, Inc., shall die or be disabled prior to December 31, 2003,
there shall be deemed vested a pro-rata portion of the Shares which would have
vested as of the end of the year during which he dies, based on the number of
days elapsed during such year prior to his death. The Consultant's Options,
subject to vesting, will be exercisable for ten years at a price of $1.525 per
Share. The number of Shares issuable upon exercise of the Consultant's Options
and the exercise price thereof are subject to adjustment on terms similar to
those contained in the Option Agreement evidencing the OS Options, except that
the Consultant's Option Agreement also provides for an adjustment in the event
Xxxxxx shall issue or sell any Shares in exchange for consideration in an amount
per Share less than the exercise price of the Consultant's Options at the time
of such issuance or sale.
In connection with the issuance of the Consultant's Options, Xxxxxx will
xxxxx to Kanders & Company, Inc. certain compulsory, demand and "piggy-back"
registration rights with respect to the securities issuable upon exercise of the
Consultant's Options. The Consultant's Registration Rights Agreement contains
certain covenants and agreements customary for such agreements, including an
agreement by Xxxxxx to indemnify Kanders & Company, Inc. from certain
liabilities under the Securities Act in connection with the registration of the
securities underlying the Consultant's Options.
Certain Additional Agreements
Xxxxxx Xxxxxx has executed an agreement ("Lockup Agreement") pursuant to
which he has agreed that he will not, for a period of three years, sell or
otherwise hypothecate or dispose of any of the shares acquired by him unless he
has received the permission of the Company's Board of Directors and of Kanders &
Company, Inc. Notwithstanding the forgoing, if Kanders & Company, Inc. disposes
of any of its Shares during such three year period, Xx. Xxxxxx will have the
right for a limited time to sell a percentage of his Shares equal to the
percentage of Kanders & Company, Inc.'s shares which are sold by Kanders &
Company, Inc.
In consideration of the execution by Kanders & Company, Inc. and Xxxx
Xxxxxx of the Commitment Letter, OrthoStrategies and Xxxxxx Xxxxxx ("Xxxxxx
Parties") entered into a letter agreement with Kanders & Company, Inc. and Xxxx
Xxxxxx ("Best Efforts Agreement") pursuant to which (i) the Xxxxxx Parties
agreed to use their collective best efforts immediately upon the consummation of
the purchase of the Shares in his/its capacity as a direct or indirect
shareholder of Xxxxxx, to take all necessary actions, and to use his/its
respective best efforts to cause Xxxxxx to execute the Consulting Agreement with
Kanders & Company, Inc., to issue the Consultant's Options to Kanders & Company,
Inc., to execute a related Indemnification Agreement in favor of Kanders &
Company, Inc., to execute the Registration Rights Agreement relating to the
Consultant's Options, to issue to each of the non-management directors of Xxxxxx
options to purchase up to 30,000 shares of Xxxxxx common stock at an exercise
price of $1.525 per share, and, in addition (i) to cause Xxxxx X. Xxxxxxx to be
elected a director and non-executive Chairman of Xxxxxx and to be paid annual
compensation of $10,000 and (ii) to cause Xxxx Xxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxx
Xxxxxx, and Xxxxxxxx Xxxxxx to be elected as directors of Xxxxxx.
The Best Efforts Agreement also provides that, in order to induce
OrthoStrategies to enter into the Tender Offer Agreement and to proceed with the
purchase of the Shares and to induce Xxxxxx Xxxxxx to enter into the Commitment
Letter, each of Kanders & Co. and Xxxx Xxxxxx agrees, immediately upon the
consummation of the purchase of the Shares in his/its capacity as a direct or
indirect shareholder of Xxxxxx, to take all necessary actions, and to use
his/its respective best efforts to cause Xxxxxx to take all necessary actions,
in order that Xxxxxx shall execute and deliver the Employment Agreement between
Xxxxxx and Xxxxxx Xxxxxx, pursuant to which Xxxxxx Xxxxxx shall serve as
President and Chief Executive Officer of Xxxxxx for a three year term.
21
The Best Efforts Agreement further provides that all parties will jointly
exert their best efforts, immediately upon the consummation of the purchase of
the Shares in their respective capacities as direct or indirect shareholders of
Xxxxxx, to take all necessary actions, and to use their respective best efforts
to cause Xxxxxx to take all necessary actions, in order that Xxxxxx shall
execute and deliver separate indemnification agreements between Xxxxxx and
Xxxxxx in a form acceptable to Xxxxxx and between Xxxxxx and Xxxx Xxxxxx, Xxxxxx
Xxxxxxxxx, Xxxxx X. Xxxxxxx and Xxxxxxxx Xxxxxx pursuant to which Xxxxxx will
indemnify such persons to the fullest extent authorized by law, against any and
all losses and expenses (including all interest, assessments and other charges
paid or payable in connection therewith) incurred in connection with the service
of such persons as an officer and/or director of Xxxxxx and its subsidiaries and
affiliates.
The parties to the Best Efforts Agreement have further agreed that if
XxxxxXxxxxxxxxx is unable to close under the Tender Offer Agreement because any
party fails to fund his or its commitment under the Commitment Letter, the
non-funding party shall be responsible for all of the expenses of
OrthoStrategies and Kanders & Company, Inc. incurred in connection with the
Offer and any amount required to be paid by Xx. Xxxxxx pursuant to the Xxxxxx
Expense Guaranty described above. However, if in the reasonable opinion of any
of such parties, OrthoStrategies has the right to terminate the Tender Offer
Agreement pursuant to the terms and conditions of the Tender Offer Agreement,
any of the parties, on behalf of itself and any of its designees (collectively
"Withdrawing Party") may, without liability or further obligation, decline to
provide funds for the purchase of the Shares and decline to purchase Shares
("Withdrawal"); provided, however, that
(a) if OrthoStrategies thereafter declines to close under the Tender Offer
Agreement, each of the parties shall have a continuing obligation to fund a
portion of OrthoStrategies' and Kanders & Co.'s Expenses in the same proportion
as required under the Commitment Letter; and
(b) if XxxxxXxxxxxxxxx nevertheless proceeds to a Closing under the Tender
Offer Agreement despite a party's Withdrawal, and the Withdrawing Party does not
in fact purchase Shares, such Withdrawing Party shall not have any obligation to
contribute to the fees and expenses which would otherwise be required to be paid
by such Withdrawing Party pursuant to the Commitment Letter.
12. Source and Amount of Funds
OrthoStrategies estimates that the total amount of funds required to
purchase 1,959,886 Shares pursuant to the Offer and to pay related fees and
expenses will be approximately $3.5 million. OrthoStrategies has entered into a
Commitment Letter with Xxxxxx Xxxxxx, Xxxx Xxxxxx and Kanders & Company, Inc.
wherein they each agree to provide OrthoStrategies on a timely basis with the
funds necessary to purchase the Shares tendered and to pay all fees and expenses
required to be paid by OrthoStrategies in connection with the Offer.
If the maximum number of Shares (1,959,886) are tendered, the necessary
funds to pay the purchase price of the Shares will be provided, $1,000,000 by
Xxxxxx X. Xxxxxx, $300,000 by Xxxx Xxxxxx, and the balance of $1,688,860 by
Kanders & Company, Inc. In the event that a smaller number of Shares are
tendered, they will provide funds to pay the purchase price in the same ratio.
The Tender Offer Agreement provides that OrthoStrategies has the right, at
the closing, to assign the right to purchase the Shares, in whole or in part, to
another entity controlled by OrthoStrategies or to Xxxxxx X. Xxxxxx, Xxxxxxx
Xxxxxx or Kanders & Company, Inc., or the designees thereof. Any such assignment
will not relieve OrthoStrategies of its obligations under the Tender Offer
Agreement. Kanders & Company, Inc. has the right to assign a portion of the
Shares allocated for acquisition by it; provided that no such assignment shall
relieve it of the obligation to fund the entire purchase price of the Shares
allocated for purchase by Kanders & Company, Inc.
13. Certain Conditions of the Offer
Notwithstanding any other provision of the Offer, OrthoStrategies is not
required to accept for payment or pay for, or may delay the acceptance for
payment of or payment for, any tendered Shares, or may, in its sole discretion,
terminate or amend the Offer as to any Shares not then paid for if fewer than
1,332,722 Shares (equivalent to 51% of the outstanding Shares) are properly and
validly tendered pursuant to the Offer and not withdrawn prior to the expiration
of the Offer (the "Minimum Condition"), or any necessary or required consent,
registration, approval,
22
permit or authorization of any governmental entity applicable to the Offer shall
not have been obtained or, if on or after December 29, 2000, and at or before
the time of payment for any of such Shares (whether or not any Shares have
theretofore been accepted for payment), any of the following events occurs:
x. Xxxxxx breaches or fails to perform in any material respect any of its
obligations, covenants or agreements under the Tender Offer Agreement; any
representation or warranty of Xxxxxx set forth in the Tender Offer
Agreement was inaccurate or incomplete in any material respect when made
or thereafter becomes inaccurate or incomplete as of the date of the
Tender Offer Agreement, except for such exceptions, which individually or
in the aggregate, would not constitute a material breach of any
representation or warranty contained in the Tender Offer Agreement as of
the date thereof; or any representation or warranty of Xxxxxx set forth in
the Tender Offer Agreement shall be inaccurate or incomplete as of the
Closing Date, except for such exceptions as of the Closing Date which,
individually or in the aggregate, would not constitute a Company Material
Adverse Effect, as defined in the Tender Offer Agreement;
b. there is instituted or pending any action, litigation, proceeding,
investigation or other application (an "Action") before any court or other
governmental authority by any governmental authority or instituted or
pending any action by any other person, domestic or foreign: (i)
challenging the acquisition by Purchaser of Shares, seeking to restrain or
prohibit the consummation of the transactions contemplated by the Offer or
seeking to obtain any material damages in connection with the transactions
contemplated by the Offer; (ii) seeking to prohibit, or impose any
material limitations on, Purchaser's ownership or operation of all or any
portion of it or Xxxxxx'x business or assets (including the business or
assets of their respective affiliates and subsidiaries), or to compel
Purchaser to dispose of or hold separate all or any portion of Purchaser
or Xxxxxx'x business or assets (including the business or assets of their
respective affiliates and subsidiaries) as a result of the transactions
contemplated by the Offer; (iii) seeking to make the acceptance for
payment, purchase of, or payment for, some or all of the Shares illegal or
render Purchaser unable to, or result in a delay in, or restrict, the
ability of Purchaser to accept for payment, purchase or pay for some or
all of the Shares; (iv) seeking to impose material limitations on the
ability of Purchaser effectively to acquire or hold or to exercise full
rights of ownership of the Shares including, without limitation, the right
to vote the Shares purchased by it on an equal basis with all other Shares
on all matters properly presented to the shareholders; or (v) that, in any
event is reasonably likely to have a Company Material Adverse Effect;
c. any statute, rule, regulation, order or injunction is enacted,
promulgated, entered, enforced or deemed applicable to the Offer, or any
other action has been taken, proposed or threatened, by any court or other
governmental entity that could, be expected to, directly or indirectly,
result in any of the effects of, or have any of the consequences sought to
be obtained or achieved in, any action referred to in clauses (i) through
(v) of paragraph (b) above;
d. any person, entity or group shall have entered into a definitive
agreement or an agreement in principle with respect to a tender offer or
exchange offer for some portion or all of the Shares or a merger,
consolidation, acquisition, reorganization, recapitalization or other
business combination with or involving the Company;
e. the board of directors of Xxxxxx (or a special committee thereof) has
amended, modified or withdrawn its approval or recommendation of the Offer
or the Tender Offer Agreement or shall have endorsed, approved or
recommended any other Company Acquisition Proposal, or has resolved to do
any of the foregoing;
f. the Tender Offer Agreement is terminated by Xxxxxx or OrthoStrategies
in accordance with its terms, or OrthoStrategies reaches an agreement or
understanding in writing with Xxxxxx providing for termination or
amendment of the Offer or delay in payment for the Shares;
g. there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in securities on the NASDAQ SmallCap Market for a
period in excess of three hours (other than a suspension or limitation
triggered by price fluctuations and suspensions or limitations resulting
from physical damage to or interference with the systems of NASDAQ
provided such interference is not related to market conditions), (ii) a
declaration of a banking moratorium in the United States or any suspension
of payments in respect of banks in the United States, (iii) a commencement
or escalation of a war, armed hostilities or other international or
national calamity resulting in a general mobilization of a substantial
portion of the armed
23
forces of the United States; (iv) the imposition by the Federal Reserve of
a limitation on the extension of credit by United States banks or a
decline of at least 30% in either the Dow Xxxxx Average of Industrial
Stocks or the Standard & Poor's 500 index from the date of the Tender
Offer Agreement;
which, in the reasonable judgment of XxxxxXxxxxxxxxx, in any such case, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment of
or payment for Shares.
Further, OrthoStrategies will have no obligation to accept for payment or
pay for any tendered shares, unless, as of the closing time each of the
following additional conditions shall have been satisfied:
a. Xxxxxx X. Xxxxxx shall have been elected President and Chief Executive
Officer of Xxxxxx, and his employment with Xxxxxx shall not have been
terminated by Xxxxxx without cause, unless Xx. Xxxxxx shall have declined
to accept or continue employment;
b. Xxxxxxx X. Xxxxx, Xxxxxxx Xxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxx Xxxxxxx
shall have resigned from Xxxxxx'x board of directors and Xxxxxx X. Xxxxxx
and up to four individuals designated by OrthoStrategies reasonably
acceptable to the board of directors of Xxxxxx shall have been elected to
Xxxxxx'x board of directors (unless XxxxxXxxxxxxxxx fails to designate
acceptable nominees);
c. The Shareholders Agreement shall be in full force and effect unless
breached or terminated by OrthoStrategies;
x. Xxxxxx shall have issued and outstanding no more than 2,613,181 Shares
plus such number of Shares as may be issued pursuant to the exercise of
options outstanding as of the commencement of the Offer;
x. Xxxxxx'x Agreements with its current bank, American National Bank, and
the extension thereof to the earlier to occur of February 28, 2001 or the
Closing of the Offer shall remain in full force and effect;
x. Xxxxxx shall have obtained all consents, agreements and governmental
approvals necessary or appropriate for consummation of the Offer, other
than those relating to agreements which provide for payment or receipt by
Xxxxxx of less than $12,500;
g. except for the bonuses and severance payments discussed above in
Section 11 -- "Tender Offer Agreement: Certain Agreements with Xxxxxx
Management" consummation of the Offer will not give rise to any obligation
for severance, bonuses, change of control or "golden parachute" payments
to any of Xxxxxx'x employees;
h. the OS Option Agreement and the related Registration Rights Agreement
shall have been executed and delivered by Xxxxxx and the OS Options shall
have been granted;
i. No change shall have occurred in any governmental regulation of and
reimbursement rules relating to the business of Xxxxxx or its products
which has a Company Material Adverse Effect;
The foregoing conditions are for the sole benefit of OrthoStrategies and
may be asserted by OrthoStrategies regardless of the circumstances (including
any action or inaction by OrthoStrategies other than a material breach of this
Agreement) giving rise to such condition or may be waived by OrthoStrategies, in
its sole discretion, by express and specific action to that effect, in whole or
in part at any time and from time to time.
14. Dividends and Distributions
Pursuant to the Tender Offer Agreement, Xxxxxx has agreed that until
termination of the Tender Offer Agreement, Xxxxxx may not declare, set aside or
pay any dividend payable in cash, stock or property with respect to the Shares.
15. Certain Legal Matters
Except as otherwise disclosed herein, based upon an examination of
publicly available filings with respect to Xxxxxx, OrthoStrategies is not aware
of any licenses or other regulatory permits which appear to be material to the
business of Xxxxxx and which might be adversely affected by the acquisition of
the Shares by OrthoStrategies pursuant to the Offer or of any approval or other
action by any governmental, administrative or regulatory agency or authority
which would be required for the acquisition or ownership of the Shares by
OrthoStrategies pursuant to the Offer. Should any such approval or other action
be required, it is currently contemplated that such approval
24
or action would be sought or taken. There can be no assurance that any such
approval or action, if needed, would be obtained or, if obtained, that it would
be obtained without substantial conditions or that adverse consequences might
not result to Xxxxxx'x or OrthoStrategies' business or that certain parts of
Xxxxxx'x or OrthoStrategies' business might not have to be disposed of in the
event that such approvals were not obtained or such other actions were not
taken, any of which might enable OrthoStrategies to elect to terminate the Offer
without the purchase of the Shares thereunder, if the relevant conditions to
termination were met. OrthoStrategies' obligation under the Tender Offer
Agreement to accept for payment and pay for the Shares is subject to certain
other conditions. See Section 13.
Under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules that have been promulgated thereunder by the Federal
Trade Commission ("FTC"), certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice and the FTC and certain waiting period
requirements have been satisfied. The acquisition of the Shares by
OrthoStrategies is not subject to these requirements.
State Takeover Laws
Section 912 of the New York Business Corporation Law (the "BCL") limits
the ability of a New York corporation to engage in "business combinations" (as
defined in the BCL) with an "interested stockholder" (defined generally as any
beneficial owner of 10% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its approval to the business combination prior to the shareholder
becoming an interested stockholder. Xxxxxx'x board of directors has granted such
approvals and taken such actions as are necessary so that the Offer may be
consummated as promptly as practicable on the terms contemplated. Since the
Xxxxxx Board has approved the transactions contemplated by the Tender Offer
Agreement, OrthoStrategies (or its affiliates) would not be considered an
"interested stockholder" and, therefor, would not be prevented or prohibited
from effectuating a business combination with Xxxxxx after the purchase of the
Shares pursuant to the Offer contemplated hereby, so long as the subsequent
business combination is approved by Xxxxxx'x then board of directors, and the
Xxxxxx board of directors has otherwise acted to eliminate or minimize the
effects of such statute or regulation on the transactions contemplated hereby.
Based on information supplied by or on behalf of Xxxxxx, XxxxxXxxxxxxxxx
does not believe that any state takeover laws purport to apply to the Offer
other than the "Security Takeover Disclosure Rules" of the State of New York
promulgated pursuant to Article 16 of the BCL. OrthoStrategies has filed with
the Bureau of Investor Protection and Securities of the Department of Law of the
State of New York the Registration Statement required by the New York Security
Takeover Disclosure Rules. OrthoStrategies has not currently taken any actions
necessary to comply with any other state takeover statute or regulation.
OrthoStrategies reserves the right to challenge the applicability or validity of
any state law purportedly applicable to the Offer, other than that of the State
of New York, and nothing in this Offer to Purchase or any action taken in
connection with the Offer is intended as a waiver of such right. If it is
asserted that any state takeover statute, other than that of the State of New
York, is applicable to the Offer and if an appropriate court does not determine
that it is inapplicable or invalid as applied to the Offer, OrthoStrategies
might be required to file certain information with, or to receive approvals
from, the relevant state authorities, and OrthoStrategies might be unable to
accept for payment or pay for any Shares tendered pursuant to the Offer. In such
case, OrthoStrategies may not be obliged to accept for payment or pay for any
Shares tendered pursuant to the Offer.
16. Fees and Expenses
Mackenzie Partners, Inc. is acting as Information Agent in connection with
the Offer. The Information Agent may contact holders of the Shares by personal
interview, mail, telephone, telex, telegraph and other methods of electronic
communication and may request brokers, dealers, banks, trust companies and other
nominees to forward the Offer materials to beneficial holders. The Information
Agent will receive reasonable and customary compensation for its services, be
reimbursed for certain reasonable out-of-pocket expenses and be indemnified
against certain liabilities and expenses in connection with its services,
including certain liabilities under the Federal securities laws.
Registrar and Transfer Company is acting as Depositary Agent in connection
with the Offer. OrthoStrategies will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the Depositary against certain
liabilities and
25
expenses in connection therewith, including liabilities under the Federal
securities laws. Brokers, dealers, commercial banks and trust companies will be
reimbursed by OrthoStrategies for customary mailing and handling expenses
incurred by them in forwarding material to their customers.
17. Miscellaneous
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of the Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, OrthoStrategies may, in its sole discretion, take such
action as it may deem necessary to make the Offer in any such jurisdiction and
extend the Offer to holders of the Shares in such jurisdiction.
OrthoStrategies is not aware of any jurisdiction in which the making of
the Offer or the acceptance of the Shares in connection therewith would not be
in compliance with the laws of such jurisdiction.
OrthoStrategies has filed a Schedule TO with the SEC pursuant to Rule
l4d-3 of the General Rules and Regulations under the Exchange Act, furnishing
certain additional information with respect to the Offer, and may file
amendments thereto. The Schedule TO and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the principal office
of the SEC in Washington, D.C.
No person has been authorized to give any information or make any
representation on behalf of OrthoStrategies not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, such information
or representation must not be relied upon as having been authorized.
OrthoStrategies Acquisition Corp.
January 10, 2001,
26
Tender of Shares to Depository
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly executed, will be accepted. The Letter of Transmittal,
certificates for the Shares and any other required documents should be sent or
delivered by each shareholder of Xxxxxx or his broker-dealer, commercial bank,
trust company or other nominee to the Depositary as follows:
The Depositary for the Offer is:
Register and Transfer Company
By Registered Mail: By Hand Delivery: By Overnight Courier:
10 Commerce Drive 00 Xxxxxxxx Xxxxx 00 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx, Xxxxxxxx,
Xxx Xxxxxx 00000 Xxx Xxxxxx 00000 New Jersey 07016
By Facsimile Transmission:
(000) 000-0000
Confirm Facsimile by Telephone Only:
(000) 000-0000 x0000
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal, the Notice of Guaranteed Delivery and
related materials may be directed to the Information Agent at its telephone
number and location listed below. You may also contact your broker, dealer,
commercial bank or trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
MACKKENZIE
PARTNERS, INC.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000 (Call Collect)
or
Call Toll-Free (000) 000-0000
Email: xxxxx@xxxxxxxxxxxxxxxxx.xxx
