GALEN VOTING AGREEMENT
Exhibit
3
▇▇▇▇▇ VOTING AGREEMENT
This VOTING AGREEMENT (this “Agreement”) is entered into as of June 30, 2006, by and
among Grand Slam Holdings, LLC, a Delaware limited liability company (“Parent”), Grand Slam
Acquisition Corp., a Delaware corporation (“Merger Sub”), ▇▇▇▇▇ Partners III, L.P., a
Delaware limited partnership (“GP III”), ▇▇▇▇▇ Partners International III, L.P., a Delaware
limited partnership (“GP Intl III”), and ▇▇▇▇▇ Employee Fund III, L.P., a Delaware limited
partnership (“GEF III”) (each of GP III, GP Intl III and GEF III, a “Stockholder”
and, together, the “Stockholders”).
W I T N E S S E T H:
WHEREAS, as of the date of this Agreement, the Stockholders beneficially own, in the
aggregate, 10,088,724 shares of Common Stock, par value $0.001 per share (the “Common
Stock”), of Encore Medical Corporation, a Delaware corporation (the “Company”);
WHEREAS, concurrently herewith, the Company, Parent and Merger Sub are entering into an
Agreement and Plan of Merger, dated as of this date, as the same may be amended (the “Merger
Agreement”), pursuant to which Merger Sub will merge with and into the Company and the Company
will continue its existence as the surviving corporation (the “Merger”), and each share of
Common Stock will be converted into the right to receive cash in accordance with the terms of the
Merger Agreement; and
WHEREAS, as a condition to the willingness of Parent and Merger Sub to enter into the Merger
Agreement, and as an inducement and in consideration therefor, Parent and Merger Sub have required
that each of the Stockholders agree, and each of the Stockholders has agreed, to enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual premises, representations,
warranties, covenants and agreements contained in this Agreement, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS
SECTION 1.1 Defined Terms. For purposes of this Agreement, terms used in this
Agreement that are defined in the Merger Agreement but not in this Agreement shall have the
respective meanings ascribed to them in the Merger Agreement.
SECTION 1.2 Other Definitions. For purposes of this Agreement:
(a) “New Shares” means any shares of capital stock of the Company (other than Owned
Shares) over which either Stockholder acquires beneficial ownership at any time from and after the
date of this Agreement through the termination of the Voting Period.
(b) “Owned Shares” means all of the shares of Common Stock beneficially owned by the
Stockholders as of the date of this Agreement. The Owned Shares consist of: (i) 9,216,431 shares
of Common Stock held by GP III, (ii) 834,204 shares of Common Stock held by GP Intl
III and 38,089 shares of Common Stock held by GEF III. In the event of a stock dividend or
distribution, or any change in the Common Stock by reason of any stock dividend or distribution,
split-up,
recapitalization, combination, exchange of shares or the like, the “Owned Shares” shall
be deemed to refer to and include the Owned Shares (as defined in the first sentence of this
paragraph) as well as all stock dividends and distributions and any securities into which or for
which any or all of those Owned Shares may be changed or exchanged or which are received in the
transaction.
(c) Representative” means, with respect to any particular person, any director,
officer, employee, accountant, consultant, legal counsel, investment banker, advisor, agent or
other representatives of that person.
(d) “Transfer” means sell, transfer, tender, pledge, encumber, hypothecate, assign or
otherwise dispose, by operation of law or otherwise.
(e) “Voting Period” means the period from and including the date of this Agreement
through and including the earlier to occur of (i) the Effective Time and (ii) the termination of
the Merger Agreement by Parent or Merger Sub or the Company pursuant to Section 8.1 of the
Merger Agreement.
ARTICLE II
VOTING AGREEMENT AND IRREVOCABLE PROXY
VOTING AGREEMENT AND IRREVOCABLE PROXY
SECTION 2.1 Agreement to Vote.
(a) Each of the Stockholders hereby agrees that, during the Voting Period, such Stockholder
shall vote or execute consents, as applicable, with respect to the Owned Shares and any New Shares
beneficially owned by it as of the applicable record date (or cause to be voted or a consent to be
executed with respect to the Owned Shares and any New Shares beneficially owned by it as of the
applicable record date) in favor of the approval of the Merger Agreement and the transactions
contemplated by the Merger Agreement, at any meeting (or any adjournment or postponement thereof)
of, or in connection with any proposed action by written consent of, the holders of any class or
classes of capital stock of the Company at or in connection with which any of such holders vote or
execute consents with respect to any of the foregoing matters.
(b) Each of the Stockholders hereby agrees that, during the Voting Period, such Stockholder
shall vote or execute consents, as applicable, with respect to the Owned Shares and any New Shares
beneficially owned by it as of the applicable record date (or cause to be voted or a consent to be
executed with respect to the Owned Shares and any New Shares beneficially owned by it as of the
applicable record date) against each of the matters set forth in clauses (i), (ii) or (iii) below
at any meeting (or any adjournment or postponement thereof) of, or in connection with any proposed
action by written consent of, the holders of any class or classes of capital stock of the Company
at or in connection with which any of such holders vote or execute consents with respect to any of
the following matters:
(i) any action, proposal, transaction or agreement involving the Company or any of its
subsidiaries that would reasonably be expected to, in any material respect,
prevent, impede, frustrate, interfere with, delay, postpone or adversely affect the
Merger or the other transactions contemplated by the Merger Agreement; or
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(ii) any Acquisition Proposal, other than an Acquisition Proposal made by Parent.
(c) Any vote required to be cast or consent required to be executed pursuant to this Section
2.1 shall be cast or executed in accordance with the applicable procedures relating thereto so as
to ensure that it is duly counted for purposes of determining that a quorum is present (if
applicable) and for purposes of recording the results of that vote or consent
(d) Except as set forth in clauses (a) and (b) of this Section 2.1, no Stockholder
shall be restricted from voting in favor of, against or abstaining with respect to any matter
presented to the stockholders of the Company. In addition, nothing in this Agreement shall give
Parent the right to vote any Owned Shares at any meeting of the stockholders other than as provided
in this Section 2.1.
SECTION 2.2 Grant of Irrevocable Proxy. Each of the Stockholders hereby irrevocably
appoints Parent as such Stockholder’s proxy and attorney-in-fact, with full power of substitution
and resubstitution, to vote or execute consents during the Voting Period, with respect to the Owned
Shares and any New Shares beneficially owned by such Stockholder, solely in respect of the matters
described in, and in accordance with, Section 2.1. This proxy is given to secure the
performance of the duties of such Stockholder under this Agreement. None of the Stockholders shall
directly or indirectly grant any person any proxy (revocable or irrevocable), power of attorney or
other authorization with respect to any of the Owned Shares or New Shares that is inconsistent with
Sections 2.1 and 2.2.
SECTION 2.3 Nature of Irrevocable Proxy. The proxy and power of attorney granted
pursuant to Section 2.2 by each of the Stockholders shall be irrevocable during the Voting
Period, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable
proxy and shall revoke any and all prior proxies granted by such Stockholder, and such Stockholder
acknowledges that the proxy constitutes an inducement for Parent and Merger Sub to enter into the
Merger Agreement. The power of attorney granted by each of the Stockholders is a durable power of
attorney and shall survive the bankruptcy, death or incapacity of such Stockholder. The proxy and
power of attorney granted hereunder shall terminate automatically at the expiration of the Voting
Period.
ARTICLE III
COVENANTS
COVENANTS
SECTION 3.1 Transfer Restrictions. Each of the Stockholders agrees that such
Stockholder shall not, and shall not permit any person, directly or indirectly, to:
(a) Transfer any or all of the Owned Shares or New Shares beneficially owned by such
Stockholder; provided that the foregoing shall not prevent the conversion of such Owned Shares and
New Shares into the right to receive Merger Consideration pursuant to the Merger in accordance with
the terms of the Merger Agreement; or
(b) deposit any Owned Shares or New Shares beneficially owned by such Stockholder in a voting
trust or subject any of such Owned Shares or New Shares beneficially owned by such Stockholder to
any arrangement or agreement with any person (other than Parent)
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with respect to the voting or the
execution of consents with respect to any such Owned Shares or New Shares that would reasonably be
expected to restrict such Stockholder’s ability to comply with and perform such Stockholder’s
covenants and obligations under this Agreement.
SECTION 3.2 No Shop Obligations of the Stockholder. Each Stockholder covenants and
agrees with Parent that, during the Voting Period, such Stockholder shall not and shall not
authorize any of such Stockholder’s Representatives to, directly or indirectly, (i) initiate,
solicit, encourage, or knowingly facilitate any inquiry, proposal or offer, or the making,
submission or reaffirmation of any inquiry, proposal or offer (including any proposal or offer to
the Company’s stockholders), that constitutes or would reasonably be expected to lead to any
Acquisition Proposal, or (ii) engage in any discussions or negotiations concerning an Acquisition
Proposal. Notwithstanding the foregoing, nothing in this Agreement shall limit, restrict or
otherwise affect the actions taken in compliance with the Merger Agreement by any Affiliate of any
Stockholder in his capacity as a member of the Board of Directors of the Company or any committee
thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders hereby, severally but not jointly, represents and warrants to Parent
and Merger Sub as follows:
SECTION 4.1 Authorization. Such Stockholder has all legal capacity, power and
authority to execute and deliver this Agreement and to perform its obligations hereunder. This
Agreement has been duly executed and delivered by such Stockholder and constitutes a legal, valid
and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with
its terms.
SECTION 4.2 Ownership of Shares. Such Stockholder is the sole beneficial owner of all
of such Stockholder’s Owned Shares and has, or will have at the time of any vote with respect to
the matters contemplated by Article II, the sole power to vote (or cause to be voted or
consents to be executed) and to dispose of (or cause to be disposed of) all of such Owned Shares.
Such Stockholder does not own or hold any right to acquire any additional shares of any class of
capital stock of the Company or other securities of the Company or any interest therein or any
voting rights with respect to any securities of the Company. None of such Stockholder’s Owned
Shares are subject to any voting trust agreement or other contract, agreement, arrangement,
commitment or understanding to which such Stockholder is a party restricting or otherwise relating
to the voting or Transfer of such Stockholder’s Owned Shares. Such Stockholder has good and valid
title to such Stockholder’s Owned Shares, free and clear of any and all Liens.
SECTION 4.3 No Conflicts. Except (a) for a filing of an amendment to a Schedule 13D
or Schedule 13G, and (b) for a filing of a Form 4 or Form 5 as required by the Exchange Act, (i)
no filing with any Governmental Entity, and no authorization, consent or approval of any other
person is necessary for the execution of this Agreement by such Stockholder or the performance by
such Stockholder of its obligations hereunder and (ii) none of the execution and
delivery of this Agreement by such Stockholder or the performance by such Stockholder of its
obligations hereunder shall (A) result in, give rise to or constitute a violation or breach of or a
default (or any event which with notice or lapse of time or both would become a violation,
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breach or default) under any of the terms of any agreement or other instrument to which such Stockholder
is a party or by which such Stockholder or any of such Stockholder’s Owned Shares is bound, or (B)
violate any applicable law, rule, regulation, order, judgment, or decree applicable to such
Stockholder, except for any of the foregoing as could not reasonably be expected to impair such
Stockholder’s ability to perform its obligations under this Agreement in any material respect.
SECTION 4.4 Reliance by Parent and Merger Sub. Such Stockholder understands and
acknowledges that Parent and Merger Sub are entering into the Merger Agreement in reliance upon the
execution and delivery of this Agreement by such Stockholder and the agreement by such Stockholder
herein to perform such Stockholder’s obligations hereunder and comply with the terms hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Each of Parent and Merger Sub hereby represent and warrant to each of the Stockholders that
(i) it has all legal capacity, power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and (ii) this Agreement has been duly executed and delivered by
it and constitutes a legal, valid and binding obligation of the party, enforceable against it in
accordance with the terms of this Agreement.
ARTICLE VI
TERMINATION
TERMINATION
This Agreement shall terminate upon the expiration of the Voting Period; provided that
Sections 7.6 through 7.11 and Sections 7.13 through 7.15 shall
survive termination of this Agreement. Notwithstanding the foregoing, termination of this
Agreement shall not prevent any party from seeking any remedies (at law or in equity) against any
other party for that party’s breach of any of the terms of this Agreement prior to the date of
termination.
ARTICLE VII
MISCELLANEOUS
MISCELLANEOUS
SECTION 7.1 Appraisal Rights. Each of the Stockholders hereby waives any rights of
appraisal or rights to dissent from the Merger or the approval of the Merger Agreement that such
Stockholder may have under applicable law and shall not permit any such rights of appraisal or
rights of dissent to be exercised with respect to any Owned Shares or any New Shares.
SECTION 7.2 Non-Survival of Representations and Warranties. The respective
representations and warranties of the Stockholders, Parent and Merger Sub shall not survive the
closing of the transactions contemplated hereby and by the Merger Agreement.
SECTION 7.3 Further Actions. Each of the Stockholders agrees that such Stockholder
shall take any further action and execute any other documents or instruments as may be necessary to
effectuate the intent of this Agreement.
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SECTION 7.4 Fees and Expenses. Except as otherwise expressly set forth in this
Agreement, all costs and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring the cost or expense whether or not the
Merger is consummated.
SECTION 7.5 Amendments, Waivers, etc. This Agreement may be amended by the parties at
any time. This Agreement may not be amended except by an instrument in writing signed on behalf of
each of the parties. Any party hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered pursuant hereto and
(iii) subject to the requirements of applicable law, waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby. The failure of any party
to assert any rights or remedies shall not constitute a waiver of such rights or remedies.
SECTION 7.6 Notices. All notices, requests, claims, instructions, demands and other
communications hereunder shall be in writing and shall be given (and shall be deemed to have been
duly given upon receipt) by delivery in person, by facsimile (provided that the facsimile
is promptly confirmed by telephone confirmation thereof) or by overnight courier to the respective
parties at the following addresses (or at such other address for a party as shall be specified by
like notice):
| (a) | If to the Stockholders, addressed to: | |||
| c/o ▇▇▇▇▇ Partners III, L.P. | ||||
| ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||||
| Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| with a copy (which shall not constitute notice) to: | ||||
| Ropes & ▇▇▇▇ LLP | ||||
| ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | ||||
| Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| (b) | if to Parent or Merger Sub, addressed to: | |||
| Blackstone Capital Partners V L.P. | ||||
| c/o The Blackstone Group | ||||
| ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ | ||||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇▇▇▇ ▇. ▇▇▇ | ||||
| Telecopy: ▇▇▇-▇▇▇-▇▇▇▇ | ||||
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| with a copy to (which shall not constitute notice): | ||||
| ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP | ||||
| ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq. | ||||
| Telecopy: ▇▇▇-▇▇▇-▇▇▇▇ | ||||
or to that other address as any party shall specify by written notice so given, and notice shall be
deemed to have been delivered as of the date so telecommunicated or personally delivered.
SECTION 7.7 Headings; Titles. Headings and titles of the Articles and Sections of
this Agreement are for the convenience of the parties only, and shall be given no substantive or
interpretative effect whatsoever.
SECTION 7.8 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so
long as the substance of the transactions contemplated hereby is not affected in any manner adverse
to any party. Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
SECTION 7.9 Entire Agreement. This Agreement (together with the Merger Agreement, to
the extent referred to in this Agreement) and any documents delivered by the parties in connection
herewith constitute the entire agreement among the parties with respect to the subject matter of
this Agreement and supersede all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof.
SECTION 7.10 Assignment; Binding Effect; No Third Party Beneficiaries; Further Action.
Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned
by any of the parties (whether by operation of law or otherwise) without the prior written consent
of the other parties, except that each of Parent and/or Merger Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations under this Agreement to any
Affiliate of Blackstone Capital Partners V. L.P. This Agreement shall be binding upon and shall
inure to the benefit of Parent and Merger Sub and their respective successors and assigns and shall
be binding upon the Stockholders and their respective heirs, executors and administrators. This
Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any other person (other
than, in the case of Parent and Merger Sub, their respective successors and assigns
and, in the case of the Stockholders, their respective heirs, executors and administrators)
any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.
SECTION 7.11 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York. Each of the parties hereto (i) consents to
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submit itself to the personal jurisdiction of the United States District Court for the Southern
District of New York or any court of the State of New York located in such district in the event
any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement,
(ii) agrees that it will not attempt to deny or defeat such personal jurisdiction or venue by
motion or other request for leave from any such court and (iii) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by this Agreement in any
court other than such courts sitting in the State of New York.
SECTION 7.12 Enforcement of Agreement; Specific Performance. The parties agree that
irreparable damage would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It is accordingly
agreed that Parent and Merger Sub shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement
in the state courts of the State of New York sitting in the City of New York or any court of the
United States located in the City of New York, this being in addition to any other remedy to which
such party is entitled at law or in equity. The parties agree that the Stockholders shall not be
entitled to an injunction or injunctions to prevent any breach of this Agreement by any of Parent
or Merger Sub or to enforce specifically any term or any provision of this Agreement.
SECTION 7.13 Counterparts; Facsimiles. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall constitute one and
the same agreement. This Agreement or any counterpart may be executed and delivered by facsimile
copies, each of which shall be deemed an original.
SECTION 7.14 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 7.15 Merger Agreement. The obligations of the Stockholders hereunder are
subject to the absence of any change (by amendment or waiver) to the Merger Agreement which is
materially adverse, directly or indirectly, to the Stockholders, including but not limited to: (i)
any change which decreases the Merger Consideration; or (ii) any change to the form of Merger
Consideration (other than the addition of consideration payable in any form).
[Signature page follows]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Stockholders have caused this Agreement to
be duly executed as of the day and year first above written.
| GRAND SLAM HOLDINGS, LLC | ||||||
| By: | ||||||
| Title: | ||||||
| GRAND SLAM ACQUISITION CORP. | ||||||
| By: | ||||||
| Title: | ||||||
| ▇▇▇▇▇ PARTNERS III, L.P. | ||||||
| By: Claudius, L.L.C., its General Partner | ||||||
| By: | ||||||
| Title: Member | ||||||
| ▇▇▇▇▇ PARTNERS INTERNATIONAL III, L.P. |
||||||
| By: Claudius, L.L.C., its General Partner | ||||||
| By: | ||||||
| Title: Member | ||||||
| ▇▇▇▇▇ EMPLOYEE FUND III, L.P. | ||||||
| By: Wesson Enterprises, Inc., its General Partner |
||||||
| By: | ||||||
| Title: President | ||||||
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