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Liberator Medical Holdings, Inc.
This proxy statement contains information related to our special meeting of stockholders to be held on Wednesday, January 20, 2016, at 9:00 a.m., local time, at our corporate headquarters located at 2979 SE Gran Park Way, Stuart, Florida 34997, and at any adjournments or postponements thereof. We are furnishing this proxy statement to the stockholders of Liberator Medical Holdings, Inc. as part of the solicitation of proxies by our board of directors for use at the special meeting.
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING
The following are some questions that you, as a stockholder of Liberator Medical Holdings, Inc., may have regarding the proposed merger and the special meeting, as well as brief answers to such questions. We urge you to read carefully the entirety of this proxy statement because the information in this section does not provide all the information that may be important to you with respect to the approval of the merger agreement. Additional important information is also contained in the annexes to this proxy statement.
Throughout this proxy statement we refer to Liberator Medical Holdings, Inc. as “Liberator” and as “we,” “our,” “us” and similar words.
Q: When and where is the special meeting of our stockholders?
A: The special meeting of Liberator stockholders will take place on Wednesday, January 20, 2016, at 9:00 a.m., local time, at our corporate headquarters located at 2979 SE Gran Park Way, Stuart, Florida 34997.
Q: What matters will be voted on at the special meeting?
A: We have entered into an Agreement and Plan of Merger (which we refer to in this proxy statement as the “merger agreement”) with C. R. Bard, Inc., a New Jersey corporation (which, together with any of its assignees, we refer to in this proxy statement as “Bard”), and its wholly-owned subsidiary, Freedom MergerSub, Inc., a Nevada corporation (which we refer to in this proxy statement as “Merger Sub”). Under the terms of the merger agreement, Merger Sub will merge with and into Liberator, with Liberator (which we sometimes refer to in this proxy statement as the “surviving corporation”) surviving the merger and becoming Bard’s wholly-owned subsidiary.
In order to complete the merger, we must obtain the affirmative vote of the holders of a majority of the
outstanding shares of our Common Stock at the close of business on the record date for the special meeting. At the special meeting, you will be asked to consider and vote on the approval of the merger agreement (which we sometimes refer to in this proxy statement as the “merger proposal”). In addition, you will be asked to consider and vote on a non-binding, advisory proposal to approve the compensation that may become payable to Liberator’s named executive officers in connection with the completion of the merger (which we sometimes refer to in this proxy statement as the “compensation proposal”). You may be asked to consider and vote on a proposal to adjourn the special meeting, if there are not sufficient votes in favor of approval of the merger agreement and we determine that such adjournment is necessary or appropriate to solicit additional proxies (which we sometimes refer to in this proxy statement as an “adjournment proposal”). This proxy statement contains important information about the merger and the special meeting, and you should read it carefully in its entirety.
Your vote is very important, regardless of the number of shares you hold. We encourage you to vote as soon as possible. The enclosed voting materials allow you to vote your shares without attending the special meeting of Liberator stockholders. For more specific information on how to vote, please see the questions and answers below and the section of this proxy statement entitled “The Special Meeting” beginning on page 20.
Q: As a Liberator stockholder, what will I receive upon completion of the merger?
A: If the merger is completed, you will receive merger consideration of $3.35 in cash for each share of our Common Stock that you own immediately prior to the effective time of the merger, without interest, and less
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applicable withholding taxes (which amount we sometimes refer to in this proxy statement as the “merger consideration”).
Q: How will cash dividends, if any, declared by the Liberator board of directors that remain unpaid as of the effective time of the merger be paid to holders of Common Stock?
On December 11, 2015, our board of directors declared a dividend of up to $0.0325 per share of our Common Stock, which is payable as follows:
• $0.02 per share in cash on January 8, 2016, to holders of record of shares of our Common Stock at the close of business on December 23, 2015; and
• up to $0.0125 per share in cash which will be paid within two business days before, or on, the closing date of the merger to holders of record of shares of our Common Stock at the close of business on that date, but only, if, after giving effect to such payment, our cash balances on a consolidated basis equal or exceed a threshold of $547,000 (subject to agreed upon reductions).
If you transfer your shares of our Common Stock before the $0.0125 dividend is paid (including if you transfer your shares after December 23, 2015), you will lose your right to payment of the $0.0125 dividend.
Each holder of shares of our Common Stock as of the effective time of the merger will be entitled to receive, in addition to the merger consideration with respect to such holder’s shares of our Common Stock, the total amount of dividends declared by our board of directors as described above to which such holder is entitled with respect to such holder’s shares of our Common Stock as of the applicable record date for such dividends, that remains unpaid as of the effective time of the merger.
Q: How does the per share merger consideration compare to the market price of the Common Stock prior to announcement of the merger?
A: The $3.35 per share cash merger consideration represents an approximate 25.9% premium over $2.66, the closing price of our Common Stock on the NYSE MKT on November 19, 2015, the last full trading day before the signing of the merger agreement, an approximate 26.9% premium over $2.64, the closing price of our Common Stock on the NYSE MKT on November 12, 2015, one week before the last full trading day before the signing of the merger agreement, an approximate 26.4% premium over $2.65, the closing price of our Common Stock on the NYSE MKT on October 19, 2015, one month before the last full trading day before the signing of the merger agreement, and an approximate 27.4% premium over $2.63, the closing price of our Common Stock on the NYSE MKT on September 21, 2015, two months before the last full trading day before the signing of the merger agreement. It also represents an approximate 31.4% premium to the volume-weighted average of $2.55 per share of our Common Stock, over the 60-day trading period ended on November 19, 2015, and an approximate 5.7% premium to the volume-weighted average price of $3.17 per share of our Common Stock, over the five-year period ended on November 19, 2015.
Q: What do I need to do now?
A: After you carefully read this proxy statement in its entirety, including its annexes, consider how the merger affects you and then vote or provide voting instructions as described in this proxy statement. We encourage you to read the proxy statement carefully and in its entirety, consider your options and please vote, as your vote is very important.
Q: Who can vote and attend the special meeting?
A: All stockholders of record as of the close of business on December 28, 2015, the record date set by our board of directors for the special meeting, are entitled to receive notice of and to attend and vote at the special meeting, or any postponement or adjournment thereof. If you want to attend the special meeting and your shares are held in an account at a brokerage firm, bank or other nominee, you must bring to the special meeting a proxy from the record holder (your broker, bank or nominee) of the shares authorizing you to vote at the special meeting.
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Q: What constitutes a quorum at the special meeting?
A: In order to constitute a quorum and to transact business at the special meeting, a majority of the outstanding shares of our Common Stock on the record date must be represented at the special meeting, either in person or by proxy. Shares represented by proxies that reflect abstentions and broker non-votes will be counted as shares that are present and entitled to vote for purposes of determining the presence of a quorum.
Q: What vote of our stockholders is required to approve the merger agreement?
A: The affirmative vote of the holders of a majority of the outstanding shares of our Common Stock at the close of business on the record date is required to approve the merger agreement. Because the vote is based on the number of votes entitled to be cast, rather than the number of votes actually cast, failure to vote your shares or marking your proxy “ABSTAIN” will have the same effect as voting “AGAINST” the approval of the merger agreement—so please vote “FOR” the merger proposal.
As a condition to Bard and Merger Sub entering into the merger agreement, our chief executive officer and president and our chief financial officer have entered into a voting and support agreement with Bard (which we sometimes refer to in this proxy statement as the “voting agreement”) pursuant to which they have agreed, among other things, to vote the shares owned by them in favor of the approval of the merger agreement. As of December 28, 2015, the record date for the special meeting, a total of 20,480,867 shares of our Common Stock, plus an additional 75,000 shares of our Common Stock resulting from a recent exercise of options to acquire shares of our Common Stock, representing, in the aggregate, approximately 38% of the shares of our Common Stock outstanding and entitled to vote as of that date, were subject to the voting agreement. See the section of this proxy statement entitled “The Merger—Voting Agreement” beginning on page 44, and for a copy of the voting agreement, Annex B hereto.
Q: How many votes are required to approve the compensation proposal?
A: The Securities and Exchange Commission has adopted rules that require us to seek a non-binding advisory vote with respect to certain payments that will or may be made by Liberator to Liberator’s named executive officers based on or otherwise relating to the merger. The vote to approve the compensation proposal is advisory and, therefore, will not be binding on Liberator. However, our board of directors values the opinions of our stockholders, and our board of directors will consider stockholders’ concerns and will evaluate whether any actions are necessary to address those concerns. Our board of directors will consider the affirmative vote of a majority of the votes cast with respect to the compensation proposal as advisory approval of the compensation proposal.
Q: How can the special meeting be adjourned, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the special meeting in favor of approval of the merger agreement?
A: Assuming a quorum is present, the affirmative vote of a majority of the votes cast with respect to any adjournment proposal is required to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes in favor of approval of the merger agreement. Marking your proxy “ABSTAIN,” failing to cast your vote in person or by proxy, or failing to give voting instructions to your brokerage firm, bank, trust or other nominee, will not affect the outcome of any proposal to adjourn the special meeting, but will reduce the number of affirmative votes required to approve such a proposal.
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Q: How many votes do Liberator stockholders have?
A: Each holder of record of our Common Stock as of December 28, 2015, the record date for the special meeting, will be entitled to one vote for each share of our Common Stock held on that date. As of the record date, there were 53,885,978 shares of our Common Stock outstanding and entitled to vote at the special meeting.
Q: How does Liberator’s board of directors recommend I vote?
A: At a meeting held on November 19, 2015, our board of directors unanimously determined that the form, terms and provisions of the merger agreement are fair, advisable and in the best interests of Liberator and our stockholders and unanimously approved the merger agreement and the transactions contemplated thereby, including the merger. Accordingly, our board of directors unanimously recommends that you vote “FOR” the approval of the merger agreement. Our board of directors also unanimously recommends that Liberator stockholders vote “FOR” the compensation proposal and “FOR” any proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes in favor of approval of the merger agreement.
Q: How do I vote my shares?
A: If you are a stockholder of record as of the record date, you can give a proxy to be voted at the special meeting in any of the following ways:
• over the telephone by calling a toll-free number;
• electronically, using the Internet; or
• by completing, signing and mailing the enclosed proxy card.
The telephone and Internet voting procedures have been set up for your convenience. We encourage you to save corporate expense by submitting your vote by telephone or Internet. The procedures have been designed to authenticate your identity, to allow you to give voting instructions, and to confirm that those instructions have been recorded properly. If you are a stockholder of record as of the record date and you would like to submit your proxy by telephone or Internet, please refer to the specific instructions provided on the enclosed proxy card. If you wish to submit your proxy by mail, please return your completed and signed proxy card to us before the special meeting.
If you hold your shares in “street name” through a broker, bank or nominee, you must vote your shares in the manner prescribed by your broker, bank or other nominee. Your broker, bank or other nominee has enclosed or otherwise provided a voting instruction card for you to use in directing the broker, bank or nominee how to vote your shares, and telephone and Internet voting is also encouraged for stockholders who hold their shares in “street name.”
Q: When should I send in my proxy card?
A: You should send in your proxy card as soon as possible so that your shares will be voted at the special meeting. Alternatively, you may follow the instructions on the proxy card to submit your proxy by telephone or via the Internet.
Q: May I vote my shares in person at the meeting?
A: Yes. If you are a stockholder of record as of the record date, you may attend the special meeting and vote your shares in person. If your shares are held in “street name,” you must request a legal proxy from the broker, bank or
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nominee that holds your shares and present that proxy and proof of identification at the special meeting to vote your shares. However, we urge you to submit your proxy even if you plan to attend the meeting in person.
Q: May I change my vote after I have submitted my proxy?
A: Yes. You may revoke your proxy and change your vote at any time before your proxy is voted at the special meeting. If you are a stockholder of record, you may revoke your proxy and change your vote by signing and submitting a later-dated proxy by telephone, Internet or mail, by delivering to Mark A. Libratore, our Corporate Secretary at Liberator Medical Holdings, Inc., 2979 SE Gran Park Way Stuart, FL 34997, a signed written notice of revocation bearing a date later than the date of the proxy and stating that the proxy is revoked, or by voting in person at the meeting. Your proxy will not be revoked by your attendance at the meeting, unless you specifically revoke it or vote in person at the meeting. If you hold your shares in “street name” and have instructed a broker, bank or nominee to vote your shares, you must follow directions received from your broker, bank or nominee to change those instructions.
Q: If my broker, bank or nominee holds my shares in “street name,” will they vote my shares for me?
A: Your broker, bank or nominee will not be able to vote your shares without instructions from you. You should instruct your broker, bank or nominee to vote your shares following the procedure provided by your broker, bank or nominee. Without instructions, your shares will not be voted, which will have the effect of a vote “AGAINST” approval of the merger agreement.
Q: What should I do if I receive more than one set of voting materials?
A: You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card or voting instruction card that you receive, or, if you submit your proxy vote by telephone or Internet, vote once for each proxy card you receive.
Q: What happens if I do not vote, whether by attending the special meeting in person, returning a proxy card or through telephone or Internet voting procedures?
A: The failure to vote will have the same effect as voting “AGAINST” approval of the merger agreement. The failure to vote will not affect the outcome of the vote on the compensation proposal or any proposal to adjourn the special meeting, but will reduce the number of affirmative votes required to approve such proposal.
Q: Is the merger expected to be taxable to me for U.S. federal income tax purposes?
A: The exchange of shares of our Common Stock for the merger consideration will be a taxable transaction to our stockholders for U.S. federal income tax purposes.
You should read the section of this proxy statement entitled “Material U.S. Federal Income Tax Consequences” beginning on page 54 for a more complete discussion of the U.S. federal income tax consequences of the merger. Tax matters can be complicated, and the tax consequences of the merger to you will depend on your particular tax situation. You should consult your own tax advisor as to the tax consequences of the merger to you.
Q: Should I send in my Liberator share certificates now?
A: No. Promptly after the merger is completed, each holder of record immediately prior to the effective time of the merger will be sent a letter of transmittal, together with written instructions for exchanging share certificates
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for the applicable portion of the merger consideration in cash. These instructions will tell you how and where to send in your certificates in exchange for your cash consideration. You will receive your cash payment after the paying agent receives your stock certificates and any other documents requested in the instructions.
Q: What should I do if I have lost my share certificates?
A: The materials you will be sent after the completion of the merger will include the procedures that you must follow if you cannot locate your stock certificate. This will include an affidavit that you will need to sign attesting to the loss of your stock certificate. You may also be required to provide a customary indemnity agreement to Liberator in order to cover any potential loss.
Q: What happens if I sell my shares before the special meeting?
A: The record date of the special meeting is earlier than the special meeting and the date that the merger is expected to be completed. If you transfer your shares of our Common Stock after the record date but before the special meeting, you will retain your right to vote at the special meeting, but you will have transferred the right to receive the merger consideration. In order to receive the merger consideration, you must hold your shares of our Common Stock through completion of the merger.
Q: When do you expect the merger to be completed?
A: We are working toward completing the merger promptly. We expect the merger to close in the first calendar quarter of 2016. However, in addition to obtaining stockholder approval, we must satisfy all other closing conditions contained in the merger agreement, so we cannot be certain of the timing of the completion of the merger.
Q: Is Bard’s obligation to complete the merger subject to Bard’s receipt of financing?
A: No. Bard must complete the merger regardless of whether it receives financing.
Q: Am I entitled to dissenter’s rights?
A: Pursuant to the Section 92A.390 of the Nevada Revised Statutes (the “NRS”), no holder of any shares of our Common Stock will have or be entitled to assert dissenter’s rights or any other rights of appraisal as a result of or in connection with the merger agreement and the transactions contemplated thereby, including the merger.
Q: How will the merger affect my options to acquire shares of Common Stock?
A: If we complete the merger, at the effective time of the merger, each outstanding and unexercised option to acquire shares of our Common Stock with an exercise price less than the merger consideration will immediately fully vest and be cancelled in exchange for the right to receive an amount equal to the total number of shares subject to such option as of the effective time of the merger multiplied by the excess, if any, of the merger consideration over the exercise price, less applicable withholdings. All other options to acquire shares of our Common Stock unexercised at the effective time of the merger will, at the effective time of the merger, automatically be extinguished and cancelled without the right to receive any consideration.
Q: What happens if the merger is not completed?
A: If the merger is not completed for any reason, the holders of our Common Stock and outstanding options to purchase shares of our Common Stock will not receive any payment for their shares or options in connection with the merger and your shares of our Common Stock and outstanding options will not be cancelled. Instead,
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our Common Stock and outstanding options to purchase shares of our Common Stock will remain outstanding and our Common Stock will continue to be quoted and traded on the NYSE MKT. Under specified circumstances, Liberator may be required to pay Bard a termination fee of $7,200,000 and/or reimburse Bard’s expenses up to a maximum amount of $2,000,000. See “The Merger Agreement—Termination Fee; Expenses” beginning on page 74.
Q: Do any Liberator directors or executive officers have interests in the merger that may differ from those of Liberator stockholders?
A: Yes. As discussed below, certain of our directors and executive officers have interests in the merger that differ from those of Liberator stockholders.
Concurrently with the execution of the merger agreement, Robert J. Davis, our chief financial officer, entered into a consultancy and non-competition agreement with Liberator, Bard and Merger Sub, and John Léger, our chief operating officer, entered into a non-competition agreement with Liberator, Bard and Merger Sub. Pursuant to Mr. Davis’s consultancy and non-competition agreement, Mr. Davis has agreed to transition from our chief financial officer to a consultant, effective as of and conditioned upon the closing of the merger. Mr. Davis has agreed to perform services for Liberator as a consultant on an as-needed basis from the date of closing of the merger until twelve months following the closing (unless earlier terminated) in exchange for a one-time consulting fee of $120,000 on the date of closing of the merger. As a result of Mr. Davis’s transition from chief financial officer of Liberator to consultant to Liberator, Mr. Davis is eligible for one year of salary continuation under the terms of his existing employment agreement with Liberator. Pursuant to Mr. Léger’s non-competition agreement, Mr. Léger is entitled to certain severance payments if his employment is terminated other than for “cause” or “good reason” within the two-year period following the merger. Certain of our other employees also entered into non-competition agreements in connection with the merger agreement, and these agreements also contain severance provisions.
Options to acquire shares of our Common Stock held by our directors and executive officers at the effective time of the merger with an exercise price less than the merger consideration will be accelerated and cancelled in exchange for the right to receive a cash payment equal to the total number of shares underlying such options multiplied by the excess of the merger consideration over the per share exercise price associated with such options.
Existing indemnification arrangements for our current and former directors and executive officers will be continued if the merger is completed. In addition to the existing indemnification arrangements, each of our current directors and executive officers will be entitled to the advancement of their expenses prior to the final disposition of any action (other than expenses for any action that was materially caused by such director or executive officer’s intentional misconduct, fraud or a knowing violation of the law), provided that he or she undertakes to repay the amount of such expenses if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified.
See “Interests of our Directors and Executive Officers in the Merger” beginning on page 46 for a description of the foregoing agreements and arrangements, as well as a description of other rights of our directors and executive officers that come into effect in connection with the merger.
Q: Who is paying for this proxy solicitation?
A: Liberator is conducting this proxy solicitation and will bear the cost of soliciting proxies, including the preparation, assembly, printing and mailing of this proxy statement, the proxy card and any additional information furnished to stockholders. Our directors, officers and employees may solicit proxies by personal interview, mail, email, telephone, facsimile or other means of communication. These persons will not be paid additional remuneration for their efforts.
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We have retained MacKenzie Partners, Inc. to assist us in answering questions and handling other matters with respect to the special meeting for a base fee of $15,000 and reimbursement for costs and expenses incurred. We also reimburse brokerage houses and other custodians, nominees and fiduciaries for their costs of forwarding proxy and solicitation materials to beneficial owners.
If you choose to submit your proxy by telephone, you are responsible for any related telephone charges you may incur. If you choose to submit your proxy over the Internet, you are responsible for any related Internet access charges you may incur.
Q: Who can help answer my questions?
A: If you would like additional copies, without charge, of this proxy statement or if you have questions about the merger, including the procedures for voting your shares, you should contact:
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