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Securities and Exchange Commission
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 12, 1996
HEALTHCARE ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
Delaware 0-26538
(State or other jurisdiction of incorporation) (Commission File No.)
200 East Broward Boulevard 33301
P.O. Box 1900 (Zip Code)
Fort Lauderdale, Florida 33301
(Address of principal executive office)
Registrant's telephone number, including area code: (954) 761-2908
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ITEM 5. OTHER EVENTS
On November 12, 1996, Healthcare Acquisition Corp. ("Registrant"),
Healthcare Acquisition Inc., a Texas corporation ("Acquisition") which is a
wholly owned subsidiary of Registrant, and Encore Orthopedics, Inc., a Texas
corporation ("Encore"), entered into an Agreement and Plan of Merger ("Merger
Agreement") dated November 12, 1996 pursuant to which Acquisition will merge
with and into Encore (the "Merger"), and whereby Encore will be the surviving
corporation and become a wholly-owned subsidiary of the Registrant, subject to
the terms and conditions of the Merger Agreement which will be submitted to the
stockholders of the Registrant and Encore for their approval.
Background
Registrant was formed in March 1995 as a Specified Purpose Acquisition
Company(R)(1), the objective of which is to acquire an operating business in the
health care industry by merger, exchange of stock, stock or asset acquisition
or similar type of reorganization (a "Business Combination"). In March 1996,
Registrant successfully consummated an initial public offering of its equity
securities (the "IPO") from which it derived net proceeds of approximately
$9,000,000 after expenses. $8,383,500 of such amount was placed in a trust
account (the "Trust Fund") and invested in short-term United States government
securities. The funds held in the Trust Fund will be released upon the
consummation of a Business Combination. The balance of the net proceeds from
the IPO is available for use by Registrant in its pursuit of a Business
Combination. Other than its pursuit of a Business Combination, Registrant has
not engaged in any business to date. If Registrant does not consummate a
Business Combination by September 8, 1997 or, if certain criteria are met,
March 8, 1998, it will be dissolved pursuant to the terms of its Certificate of
Incorporation.
The Merger
Subject to the terms and conditions of the Merger Agreement, other than
shares held by Encore shareholders who receive cash upon the exercise of their
dissenters' rights under Texas law, Encore Common Stock and Encore Series A
Preferred Stock will be converted into HCAC Common Stock and warrants to
purchase HCAC Common Stock for a four year period at an initial exercise price
of $7.00 per share New HCAC $7.00 Warrants. The exact conversion ratio cannot
be determined at this time, however, the conversion ratio will be determined as
follows: First, HCAC and Encore will determine the total number of shares of
HCAC Common Stock ("New HCAC Common Stock") and New HCAC $7.00 Warrants ("New
HCAC $7.00 Warrants") that will either be issued upon conversion of Encore
Common Stock and Encore Series A Preferred Stock in the Merger or will be
reserved for issuance pursuant to outstanding Encore Common Stock options
having an exercise price of less than $5.00 per share ("Included Stock
Options"). HCAC will assume all outstanding Encore Common Stock options at the
Effective Time, as described below.
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(1) Specified Purposed Acquisition Company is a registered service mark of
GKN Securities Corp.
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The number of shares of New HCAC Common Stock will be determined by dividing
$40,000,000 (less any amounts payable by Encore to shareholders exercising
dissenters' rights) by the result obtained by dividing (i) the sum of (a)
$150,000 plus (b) the amount of cash HCAC has on hand as of the effective date
of the Merger (less any amounts payable by HCAC to stockholders who exercise
their "Conversion Rights" as described below or to pay any accounts payable
owed by HCAC on such date) by (ii) the number of shares of HCAC Common Stock
issued and outstanding immediately prior to the consummation of the Merger
(after deducting the shares to be converted). The number of New HCAC $7.00
Warrants will be equal to 15% of the number of shares of New HCAC Common Stock.
Second, the New HCAC Common Stock and New HCAC $7.00 Warrants will be allocated
so that each share of Encore Series A Preferred Stock is converted into (A)
1.25 shares of New HCAC Common Stock for every share of New HCAC Common Stock
into which a share of Encore Common Stock is converted in the Merger, and (B)
1.25 New HCAC $7.00 Warrants for every New HCAC $7.00 Warrant into which a
share of Encore Common Stock is converted in the Merger. The number of shares
of HCAC Common Stock and New HCAC $7.00 Warrants issuable upon the exercise of
the Included Stock Options (as described below) will be reserved for issuance
from the New HCAC Common Stock and the New HCAC $7.00 Warrants. No fractional
shares of HCAC Common Stock or New HCAC $7.00 Warrants for fractional shares
will be issued. The conversion formula is more specifically set forth in the
Merger Agreement.
At the Effective Time, the Included Stock Options and all other
outstanding Encore Common Stock options will be assumed by HCAC and,
thereafter, will be exercisable for HCAC Common Stock and New HCAC $7.00
Warrants. Pursuant to such assumed stock options, optionees shall have the
right to receive from HCAC, in accordance with the terms of such option, for
each share of Encore Common Stock for which, and at the exercise price at
which, such options were exercisable immediately prior to the consummation of
the Merger, the number of shares of HCAC Common Stock and New HCAC $7.00
Warrants into which a share of Encore Common Stock is converted by virtue of
the Merger.
Pursuant to the Merger Agreement, an amount of HCAC Common Stock issued in
the Merger equal to ten percent (10%) of the New HCAC Common Stock ("Escrow
Shares") shall be deposited in escrow by certain Encore shareholders and will
be forfeited if certain sales targets are not met for Encore's fiscal year
ended December 31, 1996. Terms of the escrow are more specifically set forth
in the Merger Agreement.
The consummation of the Merger is conditioned upon various matters
including, among others, (i) approval of the Merger Agreement by the vote of a
majority of the outstanding shares of HCAC Common Stock, and holders of less
than twenty percent (20%) in interest of shares held by the Public Stockholders
(as hereinafter defined) elect to have their shares converted into cash
pursuant to the conversion rights ("Conversion Rights"), set forth in Article
Sixth of the Registrant's Certificate of Incorporation, and (ii) approval of
the Merger Agreement by 66-2/3% of the shareholders of Encore and holders of
less than five percent (5%) of the aggregate number of outstanding shares of
Encore Common Stock and Encore Series A Preferred Stock exercise their
statutory dissenters' rights. In addition, the Merger Agreement contains
representations and
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warranties by each of the parties to the Merger Agreement which must be true
and accurate at the effective time of the Merger and certain covenants that
must be fulfilled or waived by the parties to the Merger Agreement before the
effective time of the Merger.
As stated above, the affirmative vote of a majority of the outstanding
shares of HCAC Common Stock is required to approve the Merger Agreement;
provided, however, if twenty percent (20%) or more in interest of the Public
Stockholders vote against the Merger and follow certain procedures to exercise
their Conversion Rights, the Registrant will not consummate the Merger. The
stockholders of the Registrant who were stockholders prior to its initial
public offering ("Initial Stockholders"), have agreed to vote the shares of
HCAC Common Stock held by them prior to Registrant's initial public offering in
accordance with the vote of the majority of all other shares of HCAC Common
Stock ("Public Shares") that are voted on the proposal to approve the Merger
Agreement. If the Registrant consummates the Merger, the holders of the Public
Shares (hereinafter, the "Public Stockholders"), who vote against the Merger
and follow certain procedures have the right to exercise their Conversion
Rights and thereby demand that the Registrant convert their shares to cash for
a per share conversion price equal to the amount held in the Trust Fund divided
by the number of shares held by the Public Stockholders. The Initial
Shareholders are deemed "Public Shareholders" with respect to any Public Shares
they hold. Based upon the amount in the Trust Fund plus accrued interest
thereon, as of September 30, 1996, which was approximately $8,617,000, the
conversion price would be approximately $5.00 per share.
Operations after the Merger
As a result of the Merger, Acquisition will be merged with and into Encore
and Encore will be the surviving corporation and become a wholly owned
subsidiary of Registrant. Subject to stockholder approval, Registrant's
Certificate of Incorporation will be amended as of the consummation of the
Merger to (i) change its name to "Encore Medical Corporation"; (ii) eliminate
Article Sixth of the Certificate of Incorporation which contains provisions
that are inapplicable after a Business Combination is consummated; (iii)
increase the authorized number of shares of HCAC Common Stock from 20,000,000
to 35,000,000 shares; and (iv) provide for a classified Board of Directors
consisting of three classes. One class of the Board of Directors will be
originally elected for a term expiring at the annual meeting of stockholders to
be held in 1998, another class will be originally elected for a term expiring
at the annual meeting of stockholders to be held in 1999, and the remaining
class to be originally elected for a term expiring at the annual meeting of
stockholders to be held in 2000. Each class thereafter will be elected for a
three year term.
Effective upon consummation of the Merger, the Board of Directors will
consist of ten members. Three members of the newly constituted Board shall be
from Registrant's existing Board and the remaining seven members shall be
designees of Encore. In addition, Registrant's two executive officers will
resign effective at the consummation of the Merger, and will be replaced by the
current officers of Encore. Encore's current officers and management will
become the officers and management of the surviving corporation of the Merger.
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Certain Information about Encore.
Encore is an Austin, Texas based corporation which is engaged in the
business of designing, manufacturing, marketing and selling products for the
orthopedic implant industry. Such products include total knee joint implant
products, total hip implant products, a total shoulder implant product and a
variety of trauma implant products.
Encore commenced active operations in the second quarter of 1992 and its
December 31, 1995 audited financial statements reflected revenues of
approximately $13,791,000 for the fiscal year ended December 31, 1995,
resulting in net income of approximately $1,408,000 for the same period.
Unaudited results for the nine months ended September 27, 1996, reflected
revenues of approximately $11,616,000, which resulted in net income of
approximately $291,000.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS
(c) The following documents are filed herewith as exhibits:
2.1 Agreement of Merger dated November 12, 1996 (without
exhibits or schedules)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HEALTHCARE ACQUISITION CORP.
/s/ Jay M. Haft
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Name: Jay M. Haft
Title: Chairman of the Board
Dated: December 3, 1996
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