<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
HOME NUTRITIONAL SERVICES, INC.
(NAME OF SUBJECT COMPANY)
COMPANY N MERGER CORP.
W. R. GRACE & CO.
(BIDDERS)
------------------------
COMMON STOCK, NO PAR VALUE
(TITLE OF CLASS OF SECURITIES)
437264 10 4
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
ROBERT B. LAMM, ESQ.
W. R. GRACE & CO.
ONE TOWN CENTER ROAD
BOCA RATON, FLORIDA 33486-1010
(407) 362-1645
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPIES TO:
PHILIP A. GELSTON, ESQ.
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
(212) 474-1000
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
TRANSACTION AMOUNT OF
VALUATION* FILING FEE
$93,573,821 $18,714.76
<FN>
* PURSUANT TO, AND AS PROVIDED BY, RULE 0-11(D), THIS AMOUNT IS BASED ON THE
PURCHASE OF 11,920,232 SHARES OF COMMON STOCK AT $7.85 CASH PER SHARE.
/ / CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OF SCHEDULE AND THE DATE OF ITS FILING.
</TABLE>
<TABLE>
<S> <C>
AMOUNT PREVIOUSLY PAID: NONE FILING PARTY: NOT
APPLICABLE
FORM OR REGISTRATION NO.: NOT DATE FILED: NOT APPLICABLE
APPLICABLE
</TABLE>
PAGE 1 OF PAGES.
EXHIBIT INDEX ON PAGE 8.
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<PAGE>
14D-1
<TABLE>
<S> <C>
CUSIP NO. 437264 10 4
</TABLE>
<TABLE>
<CAPTION>
PAGE 2 OF PAGES
<C> <S> <C>
1 NAME OF REPORTING PERSON:
S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON
COMPANY N MERGER CORP. (65-0470289)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCES OF FUNDS*
AF, WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS /X/
IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW JERSEY
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
0
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) / /
EXCLUDES CERTAIN SHARES*
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
10 TYPE OF REPORTING PERSON*
CO
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
14D-1
<TABLE>
<S> <C>
CUSIP NO. 437264 10 4
</TABLE>
<TABLE>
<CAPTION>
PAGE 3 OF PAGES
<C> <S> <C>
1 NAME OF REPORTING PERSON:
S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON
W. R. GRACE & CO. (13-3461988)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCES OF FUNDS*
WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS /X/
IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
0
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) / /
EXCLUDES CERTAIN SHARES*
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
10 TYPE OF REPORTING PERSON*
CO
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
This Schedule 14D-1 relates to the offer by Company N Merger Corp., a New
Jersey corporation (the "Purchaser") wholly owned by W. R. Grace & Co., a New
York corporation ("Parent"), to purchase all outstanding shares of Common Stock,
no par value (collectively, the "Shares"), of Home Nutritional Services, Inc., a
New Jersey corporation (the "Company"), at $7.85 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated March 10, 1994 (the "Offer to Purchase") and the related Letter
of Transmittal (which together constitute the "Offer"), copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Home Nutritional Services, Inc., a
New Jersey corporation, which has its principal executive offices at 1850
Parkway Place, Marietta, Georgia 30067.
(b) The information set forth in the Introduction and Section 1 of the Offer
to Purchase is incorporated herein by reference.
(c) The information concerning the principal market for, and the prices of,
the Shares set forth under "Price Range of the Shares; Dividends" in Section 6
of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) The Purchaser is a New Jersey corporation and a wholly owned subsidiary
of Parent, a New York corporation. The names of the directors and executive
officers of the Purchaser and Parent are set forth in Schedule I to the Offer to
Purchase and are incorporated herein by reference.
(b) The addresses of the principal offices of the Purchaser and Parent are
set forth under "Certain Information Concerning the Purchaser and Parent" in
Section 9 of the Offer to Purchase and are incorporated herein by reference. The
residence or business addresses of the directors and executive officers of the
Purchaser and Parent are set forth in Schedule I to the Offer to Purchase and
are incorporated herein by reference.
(c) A description of the principal businesses of the Purchaser and Parent is
contained under "Certain Information Concerning the Purchaser and Parent" in
Section 9 of the Offer to Purchase and is incorporated herein by reference. The
present principal occupation or employment of each of the directors and
executive officers of the Purchaser and Parent, and the name, principal business
and address of any corporation or other organization in which such occupation or
employment is conducted, are set forth in Schedule I to the Offer to Purchase
and are incorporated herein by reference.
(d) The material occupations, positions, offices or employments during the
last five years of each of the directors and executive officers of the Purchaser
and Parent, and the name, principal business of any business corporation or
other organization in which such occupation, position, office or employment was
carried on, are set forth in Schedule I to the Offer to Purchase and are
incorporated herein by reference.
(e) Except as set forth under "Certain Information Concerning the Purchaser
and Parent" in Section 9 of the Offer to Purchase or in Schedule I thereto,
which are incorporated herein by reference, during the last five years, neither
the Purchaser nor Parent and, to the best knowledge of the Purchaser and Parent,
none of the directors or executive officers of the Purchaser or Parent has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(f) During the last five years, neither the Purchaser nor Parent and, to the
best knowledge of the Purchaser and Parent, none of the directors or executive
officers of the Purchaser or Parent was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, Federal or state
securities laws or finding any violation of such laws.
4
<PAGE>
(g) The citizenship of each of the directors and executive officers of the
Purchaser and Parent is contained in the Schedule I to the Offer to Purchase and
is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) Not applicable.
(b) The information set forth under "Contacts with the Company; Background
of the Offer" in Section 11 of the Offer to Purchase is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth under "Source and Amount of Funds" in
Section 10 of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth under "Purpose of the Offer; The Merger
Agreement; The Stock Purchase Agreement" in Section 12 of the Offer to Purchase
is incorporated herein by reference.
(f)-(g) The information set forth under "Effect of the Offer and the Merger
on the Market for the Shares, Stock Quotation, Exchange Act Registration and
Margin Regulations" in Section 7 of the Offer to Purchase is incorporated herein
by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction and under "Certain
Information Concerning the Purchaser and Parent" in Section 9 of the Offer to
Purchase and in Schedule II to the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth under "Contacts with the Company; Background of
the Offer" in Section 11 of the Offer to Purchase is incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction of the Offer to Purchase and
under "Fees and Expenses" in Section 16 of the Offer to Purchase is incorporated
herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Although the Purchaser and Parent do not believe that their financial
condition or the financial condition of their affiliates is material to a
decision by a security holder of the Company whether to sell, tender or hold
Shares, summary consolidated financial information with respect to Parent is
included under "Certain Information Concerning the Purchaser and Parent" in
Section 9 of the Offer to Purchase and such financial information is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
(b)-(c) The information set forth under "Certain Legal Matters" in Section
15 of the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) None.
(f) Reference is hereby made to the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of March 4, 1994 among
the Purchaser, Parent and the Company, and the Stock Purchase Agreement dated as
of March 4, 1994 among Parent, the Purchaser and Healthdyne, Inc., copies of
which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and (c)(2),
respectively, and are incorporated in their entirety herein by reference.
5
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated March 10, 1994.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Summary Advertisement dated March 10, 1994.
(a)(7) Text of Press Release dated March 4, 1994 issued by the Company and
Parent.
(a)(8) Text of Press Release dated March 10, 1994 issued by Parent.
(b) None.
(c)(1) Agreement and Plan of Merger dated as of March 4, 1994 among the
Purchaser, Parent and the Company.
(c)(2) Stock Purchase Agreement dated as of March 4, 1994 among the
Purchaser, Parent and Healthdyne.
(c)(3) Confidentiality Agreement dated February 9, 1994 between Parent and
Dillon Read.
(c)(4) Exclusivity Agreement dated February 22, 1994 between Parent and
Healthdyne.
(c)(5) Exclusivity Agreement dated February 24, 1994 between Parent and the
Company.
(d) None.
(e) Not applicable.
(f) None.
6
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
COMPANY N MERGER CORP.,
By: ________/s/ ROBERT B. LAMM________
Name: Robert B. Lamm
Title: Vice President and Secretary
W. R. GRACE & CO.,
By: ________/s/ ROBERT B. LAMM________
Name: Robert B. Lamm
Title: Vice President and Secretary
Dated: March 10, 1994
7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT NAME PAGE
- --------- ------------------------------------------------------------------------------------------- -------------
<C> <S> <C>
(a)(1) Offer to Purchase dated March 10, 1994.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(6) Summary Advertisement dated March 10, 1994.
(a)(7) Text of Press Release dated March 4, 1994, issued by the Company and Parent.
(a)(8) Text of Press Release dated March 10, 1994, issued by Parent.
(b) None.
(c)(1) Agreement and Plan of Merger dated as of March 4, 1994, among the Purchaser, Parent and the
Company.
(c)(2) Stock Purchase Agreement dated as of March 4, 1994, among the Purchaser, Parent and
Healthdyne.
(c)(3) Confidentiality Agreement dated February 9, 1994 between Parent and Dillon, Read.
(c)(4) Exclusivity Agreement dated February 22, 1994 between Parent and Healthdyne.
(c)(5) Exclusivity Agreement dated February 24, 1994 between Parent and the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
8
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HOME NUTRITIONAL SERVICES, INC.
AT
$7.85 NET PER SHARE
BY
COMPANY N MERGER CORP.
A WHOLLY OWNED SUBSIDIARY
OF
W. R. GRACE & CO.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, APRIL 6, 1994, UNLESS EXTENDED.
THE BOARD OF DIRECTORS OF HOME NUTRITIONAL SERVICES, INC.,
BY UNANIMOUS VOTE OF THE DIRECTORS PRESENT,
HAS DETERMINED THAT THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER, ARE FAIR TO AND IN THE BEST
INTEREST OF HOME NUTRITIONAL SERVICES, INC. AND ITS
SHAREHOLDERS, HAS APPROVED THE OFFER AND
THE MERGER AND RECOMMENDS THAT THE SHAREHOLDERS OF
HOME NUTRITIONAL SERVICES, INC. ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
------------------------
HEALTHDYNE, INC., THE BENEFICIAL OWNER OF 7,800,000 SHARES, CONSTITUTING
APPROXIMATELY 66% OF THE FULLY DILUTED SHARES (AS DEFINED BELOW), HAS
AGREED, UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE STOCK
PURCHASE AGREEMENT DESCRIBED HEREIN, TO SELL SUCH SHARES TO THE
PURCHASER AND TO TENDER SUCH SHARES PURSUANT TO THE OFFER.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, EITHER THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE FULLY DILUTED SHARES,
OR ALL OF THE CONDITIONS TO THE CLOSING UNDER THE STOCK PURCHASE AGREEMENT BEING
SATISFIED OR IRREVOCABLY WAIVED AND THE PARTIES THERETO CONFIRMING THAT THE
TRANSACTIONS CONTEMPLATED THEREUNDER WILL CLOSE IMMEDIATELY AFTER CONSUMMATION
OF THE OFFER. SEE SECTION 14.
------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of his Shares should
either (a) complete and sign the Letter of Transmittal or a facsimile copy
thereof in accordance with the instructions in the Letter of Transmittal, mail
or deliver it and any other required documents to the Depositary and either
deliver the certificates for such Shares to the Depositary together with the
Letter of Transmittal or deliver such Shares pursuant to the procedures for
book-entry transfer set forth in Section 2 hereof or (b) request his broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for him. A shareholder 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 he
desires to tender such Shares.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent at its address and telephone number set
forth on the back cover of this Offer to Purchase.
------------------------
THE INFORMATION AGENT FOR THE OFFER IS:
D. F. KING & CO., INC.
MARCH 10, 1994
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Introduction............................................................................................... 3
1. Terms of the Offer..................................................................................... 4
2. Procedure for Tendering Shares......................................................................... 6
3. Withdrawal Rights...................................................................................... 8
4. Acceptance for Payment and Payment..................................................................... 9
5. Certain Federal Income Tax Consequences................................................................ 10
6. Price Range of the Shares; Dividends................................................................... 11
7. Effect of the Offer and the Merger on the Market for the Shares, Stock Quotation,
Exchange Act Registration and Margin Regulations........................................................ 11
8. Certain Information Concerning the Company............................................................. 12
9. Certain Information Concerning the Purchaser and Parent................................................ 14
10. Source and Amount of Funds............................................................................. 16
11. Contacts with the Company; Background of the Offer..................................................... 17
12. Purpose of the Offer; The Merger Agreement; The Stock Purchase Agreement............................... 17
13. Dividends and Distributions............................................................................ 26
14. Certain Conditions of the Offer........................................................................ 27
15. Certain Legal Matters.................................................................................. 29
16. Fees and Expenses...................................................................................... 31
17. Miscellaneous.......................................................................................... 31
Schedule I -- Directors and Executive Officers of Parent and the Purchaser................................. I-1
Schedule II -- Sale of Shares.............................................................................. II-1
</TABLE>
<PAGE>
INTRODUCTION
Company N Merger Corp., a New Jersey corporation (the "Purchaser") wholly
owned by W. R. Grace & Co., a New York corporation ("Parent"), hereby offers to
purchase all outstanding shares of Common Stock, no par value (the "Shares"), of
Home Nutritional Services, Inc., a New Jersey corporation (the "Company"), at
$7.85 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which together constitute the "Offer"). The Offer is being made
pursuant to an Agreement and Plan of Merger, dated as of March 4, 1994 (the
"Merger Agreement"), by and among the Company, Parent and the Purchaser, which
provides, among other things, for the making of the Offer and, following
consummation of the Offer and the satisfaction or waiver of certain conditions,
the merger of the Purchaser with and into the Company (the "Merger"), with the
Company surviving the Merger as a wholly owned subsidiary of Parent.
THE BOARD OF DIRECTORS OF THE COMPANY, BY UNANIMOUS VOTE OF THE DIRECTORS
PRESENT, HAS DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO AND IN THE
BEST INTEREST OF THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE OFFER AND
THE MERGER, AND RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
HEALTHDYNE, INC. ("HEALTHDYNE"), THE BENEFICIAL OWNER OF 7,800,000 SHARES,
CONSTITUTING APPROXIMATELY 66% OF THE FULLY DILUTED SHARES (THE "HEALTHDYNE
SHARES"), HAS AGREED, UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF A STOCK
PURCHASE AGREEMENT DATED AS OF MARCH 4, 1994, AMONG HEALTHDYNE, THE PURCHASER
AND PARENT (THE "STOCK PURCHASE AGREEMENT"), TO SELL SUCH SHARES TO THE
PURCHASER AND TO TENDER AND SELL SUCH SHARES PURSUANT TO THE OFFER. SEE SECTION
12.
DILLON, READ & CO., INC. ("DILLON, READ"), FINANCIAL ADVISOR TO THE COMPANY,
HAS DELIVERED TO THE BOARD OF DIRECTORS OF THE COMPANY ITS WRITTEN OPINION TO
THE EFFECT THAT THE CONSIDERATION TO BE RECEIVED BY THE HOLDERS OF THE SHARES
PURSUANT TO EACH OF THE OFFER AND THE MERGER IS FAIR TO THE HOLDERS OF SHARES
(OTHER THAN PARENT AND ITS SUBSIDIARIES) FROM A FINANCIAL POINT OF VIEW. A COPY
OF THE OPINION OF DILLON, READ IS CONTAINED IN THE COMPANY'S SOLICITATION/
RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"), WHICH IS
BEING MAILED TO SHAREHOLDERS TOGETHER WITH THIS OFFER TO PURCHASE, AND
SHAREHOLDERS ARE URGED TO READ THE OPINION IN ITS ENTIRETY FOR A DESCRIPTION OF
THE ASSUMPTIONS MADE, FACTORS CONSIDERED AND PROCEDURES FOLLOWED BY DILLON,
READ. SEE SECTION 11.
In connection with the Offer and the Merger, Healthdyne has announced that
it has abandoned its proposed exchange offer for 2,150,000 Shares announced on
January 6, 1994 (the "Exchange Offer"). See Section 11.
The Offer is subject, among other things, to satisfaction of the condition
(the "Minimum Condition") that either there be validly tendered and not
withdrawn prior to the Expiration Date (as defined in Section 1 below) that
number of Shares (the "Minimum Number of Shares") representing at least a
majority of all outstanding Shares, assuming the exercise in full of all options
with exercise prices of less than $7.85 per Share and the issuance of the
maximum number of Shares issuable under the Company's Employee Stock Purchase
Plan ("Fully Diluted Shares"), or all of the conditions to the closing under the
Stock Purchase Agreement shall have been satisfied or irrevocably waived and
Healthdyne, Parent and the Purchaser shall have confirmed that the transactions
contemplated thereunder, including the sale by Healthdyne of the Healthdyne
Shares, will close immediately after consummation of the Offer.
3
<PAGE>
PURSUANT TO THE TERMS OF THE STOCK PURCHASE AGREEMENT AND SUBJECT TO
CONDITIONS CONTAINED THEREIN, THE PURCHASER HAS THE RIGHT (WHICH IT INTENDS TO
EXERCISE) TO REQUIRE HEALTHDYNE TO TENDER THE HEALTHDYNE SHARES INTO THE OFFER,
IN WHICH CASE THE MINIMUM CONDITION WOULD BE MET. SEE SECTION 14 FOR A
DESCRIPTION OF OTHER CONDITIONS TO THE OFFER.
According to the Merger Agreement, as of March 4, 1994, the Company had
issued and outstanding 11,546,232 Shares and outstanding stock options to
purchase an aggregate of 881,470 Shares (the "Options") granted under the
Company's 1989 Stock Option Plan and 1989 Non-Employee Director Stock Option
Plan (the "Stock Option Plans"). According to the Company, 336,135 of the Shares
issuable upon exercise of the Options are included in Fully Diluted Shares (the
"Option Shares"). In addition, according to the Merger Agreement, up to a
maximum of 10,000 Shares (the "Plan Shares") are issuable by the Company on or
prior to March 31, 1994 under the Company's Employee Stock Purchase Plan (the
"Stock Purchase Plan"); the Plan Shares are included in Fully Diluted Shares. In
the Merger Agreement, the Company has agreed to terminate or suspend the Stock
Purchase Plan on or prior to March 31, 1994.
Based on the foregoing, and assuming the issuance prior to the Expiration
Date of all the Option Shares and the Plan Shares, the number of Fully Diluted
Shares would be 11,892,367 and the Minimum Number of Shares would be 5,946,184.
The Purchaser reserves the right (but shall not be obligated), subject to the
rules and regulations of the Securities and Exchange Commission (the
"Commission"), to waive or amend the Minimum Condition and to purchase fewer
than the Minimum Number of Shares pursuant to the Offer. See Section 1.
The Merger Agreement provides that the Offer (or the purchase of the
Healthdyne Shares pursuant to the Stock Purchase Agreement) will be the first
step in the Purchaser's acquisition of all the outstanding Shares. Subsequent to
the consummation of the Offer (or the purchase of the Healthdyne Shares pursuant
to the Stock Purchase Agreement), the Purchaser will be merged with and into the
Company as soon as practicable following the satisfaction or waiver of the
conditions to the Merger (the "Effective Time"). Pursuant to the Merger
Agreement, each Share outstanding immediately prior to the Effective Time will
be converted into the right to receive $7.85 net in cash, without interest.
Pursuant to the Merger Agreement, the Company has agreed not to declare or pay
any dividends on the Shares. The Merger is subject to a number of conditions,
including approval by shareholders of the Company, if such approval is required
by the New Jersey Business Corporation Act (the "NJBCA"). If the Minimum
Condition is satisfied upon the consummation of the Offer, the Purchaser will
have sufficient voting power to approve the Merger without the affirmative vote
of any other shareholder of the Company. In the event the Purchaser acquires 90%
or more of the outstanding Shares pursuant to the Offer or otherwise, the
Purchaser would be able to effect the Merger pursuant to the "short-form" merger
provisions of the NJBCA, without prior notice to, or any action by, any other
shareholder of the Company. See Section 12.
Tendering shareholders will not be obligated to pay brokerage commissions,
solicitation fees or, subject to Instruction 6 of the Letter of Transmittal,
stock transfer taxes on the sale of Shares to the Purchaser pursuant to the
Offer. However, any tendering shareholder or other payee who fails to complete
and sign the Substitute Form W-9 included with the Letter of Transmittal may be
subject to required backup Federal income tax withholding of 31% of the gross
proceeds payable to such shareholder or other payee pursuant to the Offer. See
Section 2. The Purchaser will pay the fees and expenses of Chemical Bank (the
"Depositary") and D. F. King & Co., Inc. (the "Information Agent"), incurred in
connection with the Offer. For a description of the fees and expenses to be paid
by the Purchaser, see Section 16.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION THAT SHAREHOLDERS ARE URGED TO READ CAREFULLY BEFORE MAKING ANY
DECISION WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and conditions
of any extension or amendment), the Purchaser will accept for payment, and pay
for, all Shares that are validly tendered on or prior to the
4
<PAGE>
Expiration Date and not withdrawn in accordance with Section 3. The term
"Expiration Date" means 12:00 Midnight, New York City time, on Wednesday, April
6, 1994, unless and until the Purchaser, in its sole discretion, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date on which the Offer,
as so extended by the Purchaser, shall expire.
Subject to the applicable rules and regulations of the Commission and the
terms of the Merger Agreement, the Purchaser expressly reserves the right, in
its sole discretion, at any time and from time to time, and regardless of
whether or not any of the events set forth in Section 14 hereof shall have
occurred or shall have been determined by the Purchaser to have occurred, to (a)
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral or
written notice of such extension to the Depositary and (b) amend the Offer in
any respect by giving oral or written notice of such amendment to the
Depositary. The Purchaser shall not have any obligation to pay interest on the
purchase price for tendered Shares, whether or not the Purchaser exercises its
right to extend the Offer.
If by 12:00 Midnight, New York City time, on Wednesday, April 6, 1994 (or
any other date or time the Offer is scheduled to expire), any or all conditions
to the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the applicable rules and regulations of
the Commission and the terms of the Merger Agreement, to (a) decline to purchase
any of the Shares tendered and terminate the Offer, (b) waive all the
unsatisfied conditions and, subject to complying with applicable rules and
regulations of the Commission, purchase all Shares validly tendered, (c) extend
the Offer and, subject to the right of shareholders to withdraw Shares until the
Expiration Date, retain the Shares that have been tendered during the period or
periods for which the Offer is extended or (d) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the announcement be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under 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 the Purchaser may choose to
make any public announcement, the Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
making a release to the Dow Jones News Service. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in Section 3. However, the ability of
the Purchaser to delay the payment for Shares that the Purchaser has accepted
for payment is limited by Rule 14e-1 under the Exchange Act, which requires that
a bidder pay the consideration offered or return the securities deposited by or
on behalf of holders of securities promptly after the termination or withdrawal
of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including a waiver of the Minimum Condition), the Purchaser will disseminate
additional tender offer materials and extend the Offer to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during
5
<PAGE>
which an offer must remain open following material changes in the terms of the
offer or information concerning the offer, other than a change in price or a
change in the percentage of securities sought, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. With respect to a change in the percentage of securities
sought of more than 2% of the outstanding Shares or a change in price, a minimum
period of 10 business days is generally required to allow for adequate
dissemination to shareholders and investor response.
Consummation of the Offer is conditioned upon the satisfaction of the
Minimum Condition, the expiration or termination of all waiting periods imposed
by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder (the "HSR Act") and the other conditions set forth in
Section 14 hereof. The Purchaser reserves the right (but shall not be obligated)
to waive any or all such conditions. If the Purchaser waives or amends the
Minimum Condition during the last five business days in which the Offer is open,
in the view of the Commission (with which the Purchaser will comply) the
Purchaser will be required to extend the Offer so that it will remain open for
at least five business days after the announcement of such waiver or amendment
is first published, sent or given to holders of Shares.
The Company has provided to the Purchaser its list of shareholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the shareholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listings, for subsequent transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES. For a shareholder to tender Shares
validly pursuant to the Offer, either (a) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, must be received by the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase on
or prior to the Expiration Date and either (i) certificates for tendered Shares
must be received by the Depositary at one of such addresses prior to the
Expiration Date or (ii) Shares must be delivered pursuant to the procedures for
book-entry transfer set forth below and a Book-Entry Confirmation (as defined
below) must be received by the Depositary prior to the Expiration Date or (b)
the tendering shareholder must comply with the guaranteed delivery procedures
set forth below.
For purposes of the Offer, within two business days after the date of this
Offer to Purchase, the Depositary will establish an account with respect to the
Shares at The Depository Trust Company, the Midwest Securities Trust Company and
the Philadelphia Depository Trust Company, (each a "Book-Entry Transfer
Facility" and collectively the "Book-Entry Transfer Facilities"). Any financial
institution that is a participant in any of the Book-Entry Transfer Facilities'
systems may make book-entry delivery of Shares by causing a Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with that Book-Entry Transfer
Facility's procedure for such transfer. However, although delivery of Shares may
be effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees and
any other required documents, must, in any case, be transmitted to, and received
by, the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase prior to the Expiration Date, or the tendering shareholder
must comply with the guaranteed delivery procedures described below. The
confirmation of a book-entry transfer of Shares into the Depositary's account at
a Book-Entry Transfer Facility as described above is referred to herein as a
"Book-Entry Confirmation". DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
6
<PAGE>
No signature guarantee is required on the Letter of Transmittal (a) if the
Letter of Transmittal is signed by the registered holder of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a firm that is a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. (the
"NASD"), a commercial bank or trust company having an office or correspondent in
the United States or by any other "Eligible Guarantor Institution", as such term
is defined in Rule 17Ad-15 of the Exchange Act (each an "Eligible Institution").
In all other cases, all signatures on Letters of Transmittal must be guaranteed
by an Eligible Institution. See Instructions 1 and 5 to the Letter of
Transmittal. If the certificates for 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 Shares not accepted for payment are to be issued to
a person other than the registered owner of the certificates surrendered, then
the certificates for Shares tendered must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names of
the registered owner or owners appear on the certificates, with the signatures
on the certificates or stock powers guaranteed as aforesaid. See Instruction 5
to the Letter of Transmittal.
If a shareholder desires to tender Shares pursuant to the Offer and such
shareholder's certificates for Shares are not immediately available or the
procedures for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Depositary on or prior to
the Expiration Date, such shareholder's tender may be effected if all the
following conditions are met:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser is received by the
Depositary, as provided below, on or prior to the Expiration Date; and
(c) the certificates for all physically tendered Shares, or a Book-Entry
Confirmation with respect to all Shares tendered by book-entry transfer,
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees and any other
documents required by the Letter of Transmittal, are received by the
Depositary within six Nasdaq Stock Market trading 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.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of certificates for, or a Book-Entry Confirmation with
respect to, such Shares, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by the
Letter of Transmittal. For purposes of the Offer, the Purchaser will be deemed
to have accepted for payment, and thereby purchased, Shares properly tendered to
the Purchaser and not withdrawn as, if and when the Purchaser gives oral or
written notice to the Depositary of the Purchaser's acceptance for payment of
such Shares.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering shareholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
By executing the Letter of Transmittal as set forth above, the tendering
shareholder will irrevocably appoint designees of the Purchaser, and each of
them, as such shareholder's attorneys-in-fact and
7
<PAGE>
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
the Purchaser and with respect to any and all other Shares and other securities
or rights issued or issuable in respect of such Shares on or after March 4,
1994. All such proxies shall be considered coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, the Purchaser accepts for payment Shares tendered by such shareholder as
provided herein. Holders of Shares who tender Shares to the Purchaser pursuant
to the Offer will retain ownership of the economic benefits of such Shares
(i.e., dividends, voting rights, etc.) until such time as the Purchaser accepts
such Shares for payment pursuant to the Offer. Upon such appointment, all prior
powers of attorney and proxies given by such shareholder with respect to such
Shares or other securities or rights will, without further action, be revoked,
and no subsequent powers of attorney and proxies may be given (and, if given,
will not be deemed effective). The designees of the Purchaser will thereby be
empowered to exercise all voting and other rights with respect to such Shares
and other securities or rights in respect of any annual, special or adjourned
meeting of the Company's shareholders, any consent in lieu of any such meeting
or otherwise, as they in their sole discretion deem proper. The Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon the Purchaser's acceptance for payment of such
Shares, the Purchaser must be able to exercise full voting and other rights with
respect to such Shares and other securities or rights, including voting at any
meeting of shareholders then scheduled.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of any tender of Shares will be determined by the
Purchaser in its sole discretion, and its determination will be final and
binding. The Purchaser reserves the absolute right to reject any or all tenders
of any Shares that it determines are not in proper form or the acceptance for
payment of or payment for which may, in the opinion of the Purchaser's counsel,
be unlawful. The Purchaser also reserves the absolute right in its sole
discretion to waive any of the conditions of the Offer or 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. None of the Purchaser, Parent, 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 will incur any liability for failure to
give any such notification. The Purchaser's interpretation of the terms and
conditions of the Offer will be final and binding.
Under Federal tax laws, the Depositary will be required to withhold 31% of
the amount of any payments made to certain shareholders pursuant to the Offer.
To avoid such Federal income tax backup withholding with respect to cash
received by a shareholder pursuant to the Offer, a tendering shareholder must
provide the Depositary with its correct taxpayer identification number or
certify that he is not subject to Federal income tax backup withholding by
completing the Substitute Form W-9 included with the Letter of Transmittal. See
Instruction 10 and the information under the caption "Important Tax Information"
in the Letter of Transmittal.
3. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 3,
tenders of Shares are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after May 8,
1994.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Such notice must specify
the name of the person who tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the name of the registered holder, if different from
the name of the person who tendered the Shares. If certificates for Shares have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and the signatures on the
notice of withdrawal must be guaranteed by an Eligible Institution, except, with
respect to signature guarantees, in the case of Shares tendered by an Eligible
Institution. If Shares have been delivered pursuant to the procedures for
book-entry transfer set forth in Section 2, any notice of withdrawal
8
<PAGE>
must also specify the name and number of the account at the appropriate
Book-Entry Transfer Facility to be credited with the withdrawn Shares and must
otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, and its determination will be final and binding. None of the
Purchaser, Parent, 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 will incur any liability for failure to give any
such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any extension or amendment), the Purchaser will
purchase, by accepting for payment, and will pay for, all Shares validly
tendered prior to the Expiration Date (and not properly withdrawn in accordance
with Section 3 above) promptly after the Expiration Date. Any determination
concerning the satisfaction of such terms and conditions shall be within the
sole discretion of the Purchaser, and such determination shall be final and
binding on all tendering shareholders. See Sections 1 and 14. The Purchaser
expressly reserves the right, in its sole discretion, to delay acceptance for
payment of, or payment for, Shares in order to comply in whole or in part with
any applicable law, including, without limitation, the HSR Act. Any such delays
will be effected in compliance with Rule 14e-1(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after the termination or withdrawal of the Offer).
Parent currently expects to file a Notification and Report Form with respect
to the Offer under the HSR Act during the week of March 14, 1994. The waiting
period under the HSR Act with respect to the Offer will expire at 11:59 p.m.,
New York City time, 15 days after such filing is made. The Federal Trade
Commission (the "FTC") or the Antitrust Division of the Department of Justice
(the "Antitrust Division") may extend the waiting period by requesting
additional information or documentary material from Parent. If such a request is
made, such waiting period will expire at 11:59 p.m., New York City time, on the
10th day after substantial compliance by Parent with such request. See Section
15 hereof for additional information concerning the HSR Act and the
applicability of the antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates for
such Shares (or a timely Book-Entry Confirmation with respect to such Shares), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares. Payment for
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
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting the same to tendering shareholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY EXTENSION
OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If, for any reason whatsoever, acceptance for payment of, or payment for,
Shares tendered pursuant to the Offer is delayed or the Purchaser is unable to
accept for payment or pay for tendered Shares, then, without prejudice to the
Purchaser's rights under this Offer to Purchase (but subject to compliance with
Rule 14e-1(c) under the Exchange Act, which requires that a tender offeror pay
the consideration offered or return the tendered securities promptly after the
termination or withdrawal
9
<PAGE>
of a tender offer), the Depositary may, nevertheless, on behalf of the
Purchaser, retain tendered Shares, and such Shares may not be withdrawn, except
to the extent tendering shareholders are entitled to exercise, and duly
exercise, withdrawal rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates submitted represent more Shares than are tendered,
certificates for Shares not purchased or tendered will be returned, without
expense to the tendering shareholder (or, in the case of Shares delivered by
book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 2, such Shares will be
credited to an account maintained at the appropriate Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of the
Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent or one or more direct or indirect wholly owned
subsidiaries of Parent the right to purchase Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. Sales of Shares pursuant to
the Offer (and the receipt of the right to receive cash pursuant to the Merger)
will be taxable transactions for Federal income tax purposes under the Internal
Revenue Code of 1986, as amended (the "Code"), and may also be taxable
transactions under applicable state, local, foreign and other tax laws. For
Federal income tax purposes, a tendering shareholder will generally recognize
gain or loss equal to the difference between the amount of cash received by the
shareholder pursuant to the Offer (or to be received pursuant to the Merger) and
the aggregate tax basis in the Shares tendered by the shareholder and purchased
pursuant to the Offer (or cancelled pursuant to the Merger). Gain or loss will
be calculated separately for each block of Shares tendered and purchased
pursuant to the Offer.
If tendered Shares are held by a tendering shareholder as capital assets,
gain or loss recognized by the tendering shareholder will be capital gain or
loss, which will be long-term capital gain or loss if the tendering
shareholder's holding period for the Shares exceeds one year.
A shareholder (other than certain exempt shareholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to 31% backup withholding unless the shareholder provides its
taxpayer identification number ("TIN") and certifies that such number is correct
or properly certifies that it is awaiting a TIN. A shareholder that does not
furnish its TIN may be subject to a penalty imposed by the Internal Revenue
Service. Each shareholder should complete and sign the Substitute Form W-9
included with the Letter of Transmittal so as to provide the information and
certification necessary to avoid backup withholding.
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to such shareholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding. If backup withholding results in an overpayment of tax, a refund
can be obtained by the shareholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF OPTIONS OR OTHERWISE AS COMPENSATION OR
WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX TREATMENT UNDER
THE CODE, SUCH AS FOREIGN PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF
SHARES IN LIGHT OF SUCH HOLDER'S INDIVIDUAL CIRCUMSTANCES.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY, IS BASED ON THE LAW AS CURRENTLY IN EFFECT AND IS SUBJECT TO
CHANGE, WHICH MAY BE RETROACTIVELY APPLIED. BECAUSE OF THE INDIVIDUAL NATURE OF
TAX CONSEQUENCES, EACH SHAREHOLDER IS URGED TO CONSULT HIS TAX ADVISOR WITH
RESPECT TO THE TAX CONSEQUENCES TO HIM OF THE OFFER AND THE MERGER, INCLUDING
THE EFFECTS OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND OF CHANGES
IN SUCH TAX LAWS.
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<PAGE>
6. PRICE RANGE OF THE SHARES; DIVIDENDS. The Company has not paid any cash
dividends on the Shares since its initial public offering on December 21, 1989.
The Shares are traded in the over-the-counter market and prices are quoted on
The Nasdaq National Market under the symbol HNSI. The following table sets
forth, for the periods indicated, the high and low last reported sales prices
per Share as reported by The Nasdaq National Market and the Dow Jones News
Retrieval Service:
<TABLE>
<CAPTION>
High Low
--------- ---------
<S> <C> <C>
1992:
First Quarter......................................................... $ 32.25 $ 23.00
Second Quarter........................................................ 24.00 15.75
Third Quarter......................................................... 18.25 7.50
Fourth Quarter........................................................ 9.25 5.75
1993:
First Quarter......................................................... $ 8.50 $ 5.25
Second Quarter........................................................ 7.25 6.00
Third Quarter......................................................... 6.25 4.50
Fourth Quarter........................................................ 5.75 3.50
1994:
First Quarter (through March 9, 1994)................................. $ 7.88 $ 4.25
</TABLE>
On January 4, 1994, the last trading day before the initial filing of the
Registration Statement on Form S-4 by Healthdyne with respect to the Exchange
Offer, the reported closing sales price of the Shares on The Nasdaq National
Market was $4.38 per share.
On March 3, 1994, the last full trading day prior to the date of the
announcement by the Company that it had entered into the Merger Agreement, the
reported closing sales price of the Shares on The Nasdaq National Market was
$6.75 per Share. On March 9, 1994, the last full trading day prior to the
commencement of the Offer, the reported closing sales price of the Shares on The
Nasdaq National Market was $7.75 per Share. Shareholders are urged to obtain
current market quotations for the Shares.
7. EFFECT OF THE OFFER AND THE MERGER ON THE MARKET FOR THE SHARES, STOCK
QUOTATION, EXCHANGE ACT REGISTRATION AND MARGIN REGULATIONS. The purchase of
Shares pursuant to the Offer will reduce the number of Shares that might
otherwise trade publicly and the number of holders of Shares and could adversely
affect the liquidity and market value of the remaining Shares.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NASD for continued inclusion
in The Nasdaq National Market (the top tier market of The Nasdaq Stock Market),
which require that an issuer have at least 200,000 publicly held shares, held by
at least 400 shareholders or 300 holders of round lots, with a market value of
$1 million, and have net tangible assets of at least either $2 million or $4
million, depending on profitability levels during the issuer's four most recent
fiscal years. If these standards are not met, the Shares might nevertheless
continue to be included in The Nasdaq Stock Market with quotations published in
the Nasdaq "additional list" or in one of the "local lists", but if the number
of holders of the Shares were to fall below 300, or if the number of publicly
held Shares were to fall below 100,000 or there were not at least two registered
and active market makers for the Shares, the NASD's rules provide that the
Shares would no longer be "qualified" for Nasdaq reporting and Nasdaq would
cease to provide any quotations. Shares held directly or indirectly by officers,
directors or beneficial owners of more than 10% of the Shares are not considered
as being publicly held for this purpose. As of February 28, 1994, there were
approximately 282 holders of record of Shares. The Company has satisfied the
NASD's requirement for at least 400 shareholders in the past by demonstrating
that it has more than 400 beneficial owners of Shares. The Company estimates it
has in excess of 2,000 beneficial shareholders. If, as a result of the purchase
of Shares pursuant to the Offer, the Shares no longer meet the requirements of
the NASD for continued inclusion in The Nasdaq Stock Market or the Nasdaq
National Market and the Shares are no longer included in The Nasdaq Stock Market
or the
11
<PAGE>
Nasdaq National Market (as the case may be), the market for Shares could be
adversely affected. In the event that the Shares no longer meet the requirements
of the NASD for quotation through Nasdaq and the Shares are no longer included
in The Nasdaq Stock Market, it is possible that the Shares would continue to
trade in the over-the-counter market and that price quotations would be reported
by other sources. The extent of the public market for the Shares and the
availability of quotations reported by other sources would depend upon the
number of holders of Shares remaining at such time, the interest in maintaining
a market in Shares on the part of securities firms, the possible termination of
registration of the Shares under the Exchange Act, as described below, and other
factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange and there are fewer than 300 record holders of the Shares. Termination
of registration of the Shares under the Exchange Act would substantially reduce
the information required to be furnished by the Company to its shareholders and
to the Commission and would make inapplicable to the Company certain provisions
of the Exchange Act, such as the short-swing profit recovery provisions of
Section 16(b), the requirement to furnish proxy statements in connection with
shareholders' meetings pursuant to Section 14(a) and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions.
Furthermore, if the Purchaser acquires a substantial number of Shares, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144 or
144A promulgated under the Securities Act of 1933 (the "Securities Act") may be
impaired or eliminated. It is the present intention of the Purchaser to seek to
cause the Company to make an application for termination of registration of the
Shares under the Exchange Act as soon as possible following the Offer if the
requirements for termination of registration are met.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities" or be eligible for Nasdaq reporting.
In any event, the Shares will cease to be reported on The Nasdaq Stock
Market, and will no longer be registered under the Exchange Act, following the
consummation of the Merger.
8. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company is a New Jersey
corporation with its principal executive offices at 1850 Parkway Place, Eleventh
Floor, Marietta, Georgia 30067. According to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1992 (the "Form 10-K"), the Company
is a national provider of home infusion therapies and related services. Home
infusion therapy primarily involves the intravenous administration of nutrients,
antibiotics or other medications to patients in their homes or specialized
clinic settings. According to the Form 10-K, as of December 31, 1992, the
Company is one of the largest providers of alternative site infusion care. The
Company has advised Parent that as of December 31, 1993 it had 37 regional
centers, 17 satellite facilities and 37 additional sites of service.
Set forth below is certain summary consolidated financial information with
respect to the Company and its subsidiaries excerpted or derived from the
information contained in the Form 10-K and the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 1993 (the "Form 10-Q").
More comprehensive financial information is included in the Form 10-K and the
Form 10-Q and other documents filed by the Company with the Commission, and the
following summary is qualified in its entirety by reference to the Form 10-K and
the Form 10-Q and such other documents and all the financial information
(including any related notes) contained therein. The Form 10-K and the Form 10-Q
and other documents should be available for examination, and copies should be
obtainable, in the manner set forth below under "Additional Information".
12
<PAGE>
HOME NUTRITIONAL SERVICES, INC.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS NINE MONTHS
DECEMBER 31, ENDED ENDED
----------------------------------- SEPTEMBER 30, SEPTEMBER 30,
1992 1991 1990 1993 1992
----------- ----------- --------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................................... $ 128,980 $ 101,320 $ 81,376 $ 103,457 $ 92,755
Net (loss)/income.......................... (2,641) 11,440 9,152 1,153 4,450
Net (loss)/income per common share and
common share equivalent................... $ (0.22) $ 0.97 $ 0.78 $ 0.13 $ 0.58
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets............................... $ 97,796 $ 76,835 $ 61,372 $ 97,773 $ 102,722
Current assets............................. 66,684 67,881 54,114 67,299 71,065
Current liabilities........................ 15,365 9,164 73,990 11,201 9,659
Long-term debt............................. 23,435 715 907 25,901 25,091
Shareholders' equity....................... 58,403 66,896 52,888 59,946 67,642
</TABLE>
1993 EARNINGS. On March 8, 1994, the Company publicly released its
financial results for the year ended December 31, 1993. A summary of such
financial results is as follows:
HOME NUTRITIONAL SERVICES, INC.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Year Ended
December 31, 1993
-----------------
<S> <C>
INCOME STATEMENT DATA:
Revenues.................................................................................. $ 132,030
Net (loss)................................................................................ (340)
Net (loss) per common share and common share equivalent................................... $ (.03)
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets.............................................................................. $ 88,227
Current assets............................................................................ 57,822
Current liabilities....................................................................... 10,567
Long-term debt............................................................................ 18,732
Shareholders' equity...................................................................... 58,144
</TABLE>
Prior to the execution of the Merger Agreement, the Company provided Parent
with preliminary copies of the Company's unaudited 1993 financial statements
(the "Unaudited 1993 Financial Statements"), which included the information
released publicly by the Company on March 8, 1994.
BUDGET FOR 1994. During the course of discussions between Parent and the
Company that led to the execution of the Merger Agreement (see Sections 11 and
12), the Company provided Parent with certain annual and monthly budgets
prepared for planning purposes and not for purposes of forecasting future
operating performance. The Company disclosed to Parent, among other things, that
the Company's budgeted revenues, operating income and net income for the year
ending December 31, 1994 were $136.9 million, $6.7 million and $2.4 million,
respectively. In addition, the Company disclosed to Parent a budgeted
shareholders' equity of $61.6 million at December 31, 1994.
13
<PAGE>
The Company does not as a matter of course make public any projections as to
future performance or earnings. The foregoing budgets were not prepared for
publication or with a view to complying with the published guidelines of the
Commission regarding projections or with the American Institute of Certified
Public Accountants Guide for Prospective Financial Statements, and are included
in this Offer to Purchase only because such information was provided to Parent
by the Company. While presented with numerical specificity, the budgets
described above necessarily reflect numerous assumptions with respect to
industry performance, general business and economic conditions, the availability
and cost of capital and other matters, many of which are inherently uncertain,
difficult or impossible to predict or beyond the Company's control. Accordingly,
one cannot predict whether the assumptions made in preparing such budgets will
prove accurate. Such budgets are inherently imprecise, and there can be no
assurance that they can be realized. Also, it is expected that there will be
differences between actual and budgeted results, and actual results may vary
materially from those contained in such budgets. The inclusion of this
information should not be regarded as an indication that Parent, the Purchaser,
the Company, Dillon, Read, or anyone else who received this information
considered it to predict future events reliably, and this information should not
be relied on as such. None of Parent, the Purchaser, the Company, Dillon, Read
or any other person to whom such budgets were provided assumes any
responsibility for the validity, reasonableness, accuracy or completeness of
such budgets, and the Company has made no representation to Parent or the
Purchaser regarding such budgets.
ADDITIONAL INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning the Company's directors and officers, their remuneration, Options
granted to them, the principal holders of the Company's securities and any
material interest of such persons in transactions with the Company is required
to be disclosed in proxy statements distributed to the Company's Shareholders
and filed with the Commission. Such reports, proxy statements and other
information should be available for inspection at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission located in the Northwestern Atrium
Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661, and Seven
World Trade Center, New York, New York 10048. Copies should be available, by
mail, upon payment of the Commission's customary charges by writing to the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Except as otherwise noted in this Offer to Purchase, the information
concerning the Company contained herein has been taken from, or based upon,
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither the Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT. The Purchaser,
a New Jersey corporation, was recently incorporated for the purpose of acquiring
the Company. The Purchaser has not conducted any activities other than those
incident to its organization and making the Offer. The principal office of the
Purchaser is located at One Town Center Road, Boca Raton, Florida 33486-1010.
All the outstanding shares of the Purchaser are owned by Parent.
Parent, a New York corporation, has its principal office at One Town Center
Road, Boca Raton, Florida 33486-1010. Parent, through its subsidiaries, is
primarily engaged in the specialty chemical business on a worldwide basis and in
specialized health care activities. In its chemical operations, Parent's
subsidiaries develop, manufacture and market specialty chemicals and materials
and related application systems. In health care, Parent's subsidiaries are
primarily engaged in supplying kidney dialysis and home infusion and respiratory
therapy services and products.
14
<PAGE>
The Common Stock of Parent is traded principally on the New York Stock
Exchange, Inc. ("NYSE") and is also traded on the Boston, Chicago, Cincinnati,
Pacific and Philadelphia Stock Exchanges. Parent is subject to the informational
filing requirements of the Exchange Act and, in accordance therewith, is
obligated to file reports and other information with the Commission relating to
its business, financial condition and other matters. Information, as of
particular dates, concerning Parent's directors and officers, their
remuneration, options granted to them, the principal holders of Parent's
securities and any material interest of such persons in transactions with Parent
is disclosed in proxy statements distributed to Parent's Shareholders and filed
with the Commission. Such reports, proxy statements and other information may be
inspected at the Commission, and copies thereof may be obtained from the
Commission, in the same manner as set forth with respect to information
concerning the Company in Section 8. Such material should also be available for
inspection at the libraries of the NYSE at 20 Broad Street, New York, New York
and the Chicago Stock Exchange, Inc. at 440 South LaSalle Street, Chicago,
Illinois.
Except as set forth in Schedule I to this Offer to Purchase, during the last
five years, none of Parent, any of its subsidiaries or any person listed therein
(a) has been convicted in a criminal proceeding (excluding traffic violations
and similar misdemeanors) or (b) has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws. The
name, business address, present principal occupation or employment, five-year
employment history and citizenship of each of the directors and executive
officers of Parent and the Purchaser are set forth in Schedule I hereto.
Set forth below is a summary of certain consolidated financial information
with respect to Parent and its subsidiaries excerpted from the financial
statements incorporated by reference in Parent's 1992 Annual Report on Form 10-K
(as amended by Parent's Current Report on Form 8-K dated August 27, 1993) and
Parent's Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1993. More comprehensive financial information is included in such reports
and other documents filed by Parent with the Commission. The summary financial
information set forth below is qualified in its entirety by reference to such
reports and other documents, and the financial statements and related notes
contained therein, which are incorporated herein by reference. Such reports and
other documents filed with the Commission may also be inspected and copies
thereof obtained from the offices of the Commission, or from the offices of the
NYSE or the Chicago Stock Exchange, Inc. in the manner set forth above.
15
<PAGE>
W. R. GRACE & CO.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------- -------------------------
1992 1991 1990 1993 1992
------------ -------- -------- ------------ --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales and revenues.......... $4,337.0 $4,386.6 $4,309.7 $3,216.4 $3,116.1
Income/(loss) from
continuing operations...... 57.7(1) 201.7 174.6 (150.8)(2) (16.4)
Net (loss)/income........... (294.5)(1) 218.6 202.8 (259.2)(2) (370.4)
Earnings/(loss) per share:
Continuing operations..... $ .64 $ 2.31 $ 2.03 $(1.66 ) $ (.19 )
Net (loss)/earnings....... (3.29 ) 2.50 2.36 (2.86 ) (4.14 )
Fully diluted earnings per
share:
Continuing operations..... .62 2.23 2.01 -- (3) -- (3)
Net income................ -- (3) 2.40 2.32 -- (3) -- (3)
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets................ $5,598.6 $6,007.1 $5,813.2
Current assets.............. 2,091.4 1,990.0 2,231.3
Current liabilities......... 1,639.6 1,622.1 2,013.8
Total long-term debt........ 1,354.5 1,793.1 1,164.6
Shareholders' equity........ 1,545.0 2,025.2 1,227.3
<FN>
- ------------------------
(1) Includes a provision of $140 million covering a plant in Belgium.
(2) Includes a provision of $300 million after taxes relating to
asbestos-related insurance coverage. In the fourth quarter of 1993, $200
million of this after-tax provision was reversed.
(3) Not presented as the effect is anti-dilutive.
</TABLE>
For the year ended December 31, 1993, Parent reported consolidated sales and
revenues of $4,408.4 million; income from continuing operations of $134.4
million; net income of $26.0 million; earnings per share for continuing
operations of $1.46 ($1.45 on a fully diluted basis); and earnings per share of
$.28 ($.28 on a fully diluted basis).
Except as set forth in Schedule I to this Offer to Purchase, none of Parent,
the Purchaser or, to the best knowledge of the Purchaser, any of the persons
listed therein or any associate or subsidiary of Parent, the Purchaser or any of
the persons so listed, beneficially owns any equity securities of the Company,
and except as set forth in Schedule II to this Offer to Purchase, none of
Parent, the Purchaser or, to the best knowledge of the Purchaser, any of the
other persons referred to above, or any of the respective directors, executive
officers or subsidiaries of any of the foregoing, has effected any transactions
in any equity securities of the Company during the past 60 days.
Except as described in this Offer to Purchase, (a) there have not been any
contacts, transactions or negotiations between Parent, the Purchaser, any of
their respective subsidiaries, or, to the best knowledge of Parent and the
Purchaser, any of the persons listed in Schedule I hereto, on the one hand, and
the Company or any of its directors, officers or affiliates, on the other hand,
that are required to be disclosed pursuant to the rules and regulations of the
Commission and (b) none of Parent, the Purchaser or, to the best knowledge of
Parent and the Purchaser, any of the persons listed in Schedule I hereto has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
10. SOURCE AND AMOUNT OF FUNDS. If all Fully Diluted Shares are purchased
pursuant to the Offer, the amount required by the Purchaser to purchase such
Shares and to pay related fees and
16
<PAGE>
expenses will be approximately $116 million. The Purchaser plans to obtain all
such funds through capital contributions or advances made by Parent or its other
subsidiaries. Parent plans to obtain the funds for such capital contributions or
advances from its available cash and working capital. The Purchaser has not
conditioned the Offer on obtaining financing.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER. On February 4,
1994, Dillon, Read contacted Peter Spears, President of Parent's home health
care subsidiary, to ascertain whether Parent would be interested in acquiring
the Company. On February 9, 1994, Parent and Dillon, Read, as agent for
Healthdyne, entered into a confidentiality agreement pursuant to which Parent,
among other things, agreed to keep certain information concerning the Company
confidential and to use such information solely for the purpose of evaluating a
possible transaction between Parent and the Company. On February 10 and 11,
1994, Parent received a management presentation from Healthdyne and the chief
executive and chief financial officers of the Company and was given access to a
data room to conduct preliminary due diligence. Based on such due diligence, on
February 16, 1994, Grace submitted to Dillon, Read a non-binding indication of
interest to acquire the Company. On February 17, 1994, the Board of Directors of
Healthdyne authorized its management to proceed with further negotiations with
Parent and authorized Healthdyne to agree with Parent that Healthdyne would not
solicit or negotiate any other proposal or enter into any agreement with any
other person providing for the sale of the Company or the sale of the Healthdyne
Shares through March 11, 1994. On February 24, 1994, the Board of Directors of
the Company authorized the Company to proceed with the negotiation of a
transaction providing for the sale of the Company to Parent. The Company also
agreed with Parent that the Company would not solicit or negotiate any other
proposal or enter into any agreement with any other person providing for the
sale of the Company through March 11, 1994.
During the weeks of February 21 and 28, 1994, while Parent continued its due
diligence investigation of the Company, Parent, Healthdyne and the Company
negotiated the final purchase price and structure of the transaction. During
these negotiations, Healthdyne advised Parent that it had filed a registration
statement with the Commission on January 5, 1994 with respect to the Exchange
Offer, in which Healthdyne would acquire approximately 2.15 million Shares
(approximately 18% of the Company's outstanding Shares) by exchanging .8 of a
share of Healthdyne common stock for each Share tendered and accepted. The
Boards of Directors of each of Parent and the Purchaser authorized the
transactions contemplated by the Merger Agreement and the Stock Purchase
Agreement on March 3, 1994, subject to satisfactory resolution of the remaining
contractual issues. On March 4, 1994, the parties reached final agreement on all
terms and conditions of the Merger Agreement and the Stock Purchase Agreement,
the Boards of Directors of the Company and Healthdyne approved the Merger
Agreement and the Stock Purchase Agreement, respectively, and the parties
entered into such Agreements and announced that they had done so. In view of the
execution of the Merger Agreement and the Stock Purchase Agreement, Healthdyne
also announced on March 4, 1994 that it would not pursue the Exchange Offer.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCK PURCHASE
AGREEMENT.
The purpose of the Offer and the Merger is to acquire control of the Company
and the entire equity interest in the Company. The Purchaser intends, pursuant
to the terms and conditions of the Merger Agreement, to consummate the Merger.
Parent and Purchaser reserve the right to acquire additional Shares
following the expiration of the Offer through private purchases, market
transactions, tender or exchange offers or otherwise on terms and at prices that
may be more or less favorable than those of the Offer or, subject to any
applicable legal requirements, to dispose of any or all Shares acquired by
Parent and the Purchaser.
THE MERGER AGREEMENT
THE MERGER. The Merger Agreement provides that, as soon as practicable
following the satisfaction or waiver of all conditions described below under
"Conditions to the Merger", the Purchaser will
17
<PAGE>
be merged with and into the Company, which shall be the surviving corporation in
the Merger (the "Surviving Corporation"), and each Share then outstanding (other
than Shares owned by Parent or the Purchaser or any other direct or indirect
subsidiary of Parent immediately prior to the Effective Time) will be converted
into the right to receive from the Surviving Corporation $7.85 per share in
cash, without interest, or any higher price per Share paid pursuant to the
Offer.
VOTE REQUIRED TO APPROVE MERGER. The NJBCA requires, among other things,
that any plan of merger or consolidation of the Company must generally be
approved by the Board of Directors of the Company and by the holders of the
Company's outstanding voting securities. The Board of Directors of the Company
has approved the Offer and the Merger; consequently, the only additional action
that may be necessary to effect the Merger is approval by such shareholders, if
the "short-form" merger procedure described below is not available. Under the
NJBCA, the affirmative vote of the holders of a majority of the outstanding
Shares (including any Shares owned by the Purchaser), is generally required to
approve the Merger. If the Purchaser acquires, through the Offer, the Stock
Purchase Agreement or otherwise, voting power with respect to at least a
majority of the outstanding Shares, which would be the case if the Minimum
Condition is satisfied, it will have sufficient voting power to effect the
Merger without the vote of any other shareholder of the Company. Healthdyne is
the beneficial holder of 7,800,000 Shares, constituting approximately 66% of the
Fully Diluted Shares and, subject to certain conditions, has agreed to tender
and sell such shares pursuant to the Offer. The NJBCA also provides that if a
parent company owns at least 90% of each class of stock of a subsidiary, the
parent company can effect a "short-form" merger with that subsidiary without the
authorization of the other shareholders of the subsidiary. Accordingly, if,
pursuant to the Offer, the Stock Purchase Agreement or otherwise the Purchaser
acquires or controls the voting power of at least 90% of the outstanding Shares,
the Purchaser could, and intends to, effect the Merger without the approval of
any other shareholder of the Company.
The Company has agreed in the Merger Agreement to cause a meeting of its
shareholders to be duly called and held as soon as reasonably practicable
following consummation of the Offer for the purpose of voting on the approval of
the Merger Agreement and the Merger, unless the Merger may be consummated
unilaterally by the Purchaser pursuant to the "short-form" merger provisions of
the NJBCA. The Merger Agreement also provides that the Board of Directors of the
Company will (except to the extent that, upon advice of counsel, the Board of
Directors reasonably believes is otherwise required by its fiduciary duties)
recommend approval of the Merger Agreement and the Merger by the Company's
shareholders and that the Company will use its best efforts to obtain the
necessary approvals of the Merger Agreement and the Merger by the Company's
shareholders. The Purchaser has agreed to vote all outstanding Shares
beneficially owned by it in favor of the approval of the Merger Agreement and
the Merger.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the respective
obligations of the Company, Parent and the Purchaser to effect the Merger are
subject to the satisfaction of the following conditions: (a) the waiting period
(or any extension thereof) applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated, (b) if required under the
NJBCA, the Merger Agreement and the Merger shall have been approved by the
holders of a majority of the Shares (including Shares beneficially owned by
Parent) and (c) no temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Merger shall have
been issued by any Federal or state court.
The Merger Agreement further provides that (a) the obligation of the Company
to effect the Merger is subject to the condition that each of the Purchaser and
Parent shall in all material respects have performed each obligation and
agreement and complied with each covenant to be performed and complied with by
it under the Merger Agreement at or prior to the Effective Time and (b) the
obligations of Parent and the Purchaser to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following conditions: (i)
the Company shall in all material respects have performed each obligation and
agreement and complied with each covenant to be performed and complied with by
it under the Merger Agreement, (ii) Parent (or any of its subsidiaries) shall
have
18
<PAGE>
purchased Shares pursuant to the Offer and the transactions contemplated by the
Stock Purchase Agreement shall have been consummated and (iii) all Options shall
have been surrendered or cancelled.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement provides for
termination at any time prior to the Effective Time, whether prior to or after
approval by the shareholders of the Company: (a) by mutual consent of Parent and
the Company; (b) by either Parent or the Company if the Merger shall not have
been consummated by June 30, 1994; (c) by Parent if (i) neither Parent nor any
subsidiary of Parent shall have purchased any Shares pursuant to the Offer by
May 31, 1994 or (ii) Parent has properly terminated the Offer in accordance with
its terms; (d) by the Company if neither Parent nor any subsidiary of Parent
shall have commenced (within the meaning of the Exchange Act) the Offer by March
10, 1994; (e) by the Company if the Board of Directors of the Company shall have
properly exercised its rights with respect to a superior takeover proposal, as
described under "Other Offers" below; (f) by Parent, if the Board of Directors
of the Company shall have (i) exercised its rights with respect to a superior
takeover proposal as described under "Other Offers" below, or (ii) provided any
information to any party prior to the acceptance for payment of Shares pursuant
to the Offer, as described under "Other Offers" below; PROVIDED, HOWEVER, that
Parent shall not terminate the Merger Agreement pursuant to clause (i) if, as a
result of the Company's receipt of a takeover proposal from a third party, the
Company, as required by applicable law, takes and discloses to the Company's
shareholders a position contemplated by Rule 14e-2(a)(2) or (3) promulgated
under the Exchange Act with respect to such proposal or the transactions
contemplated thereby and if within five business days after taking and
disclosing to its shareholders the aforementioned position the Company publicly
reconfirms its recommendation of the transactions contemplated by the Merger
Agreement; (g) by the Company, if there shall have been any material breach of a
material obligation of Parent or the Purchaser under the Merger Agreement and
such default shall have not been remedied within five days after receipt by
Parent or the Purchaser, as the case may be, of notice in writing from the
Company specifying such breach and requesting that it be remedied; (h) by Parent
and the Purchaser if there shall have been any material breach of a material
obligation of the Company thereunder and such default shall not have been
remedied within five days after receipt by the Company of notice in writing from
Parent or the Purchaser specifying such breach and requesting that it be
remedied; or (i) by Parent and the Purchaser, if the Stock Purchase Agreement
shall have been terminated.
In the event of termination of the Merger Agreement, the Merger Agreement
will become void and there will be no liability on the part of Parent, the
Purchaser or the Company, except that (a) the provisions of the Merger Agreement
with respect to expenses and the treatment and return of confidential
information shall survive any such termination, and (b) no party to the Merger
Agreement will be relieved of liability for any willful breach of any
representation or warranty or any breach prior to such termination of any
covenant or agreement contained therein.
OTHER OFFERS. The Merger Agreement provides that the Company shall not, nor
shall it permit any of its subsidiaries or affiliates to, nor shall it authorize
or permit any officer, director or employee of, or any investment banker,
attorney or other advisor or representative of, the Company or any of its
subsidiaries to, (a) solicit or initiate, or knowingly encourage any submission
of, any takeover proposal (as defined below) (b) participate in any discussions
or negotiations regarding, or furnish to any person any information with respect
to, any takeover proposal (except for (i) non-confidential information furnished
in response to inquiries by securities analysts or institutional investors
concerning the Offer or the Merger or (ii) information the Company is required
to furnish pursuant to Section 14A:5-28 of the NJBCA); PROVIDED, HOWEVER, that
prior to the acceptance for payment of Shares pursuant to the Offer, to the
extent required by the fiduciary obligations of the Board of Directors of the
Company, as determined in good faith by the Board of Directors based on the
written advice of outside counsel, the Company may (A) in response to an
unsolicited request therefor, furnish information with respect to the Company
(pursuant to a customary confidentiality agreement at least as restrictive as
the Company's Confidentiality Agreement with the Parent (as determined by the
19
<PAGE>
Company's outside counsel)) to any person who has indicated to the Company that
it is interested in pursuing a qualified takeover proposal (as defined below)
and discuss such information (but not the terms of any possible takeover
proposal) with such person and (B) upon receipt by the Company of a qualified
takeover proposal, following delivery to Parent of notice stating the identity
of the person making such qualified takeover proposal and the material terms of
such qualified takeover proposal, participate in negotiations regarding such
qualified takeover proposal. Without limiting the foregoing, any violation of
the restrictions set forth in the preceding sentence by any officer of the
Company or any of its subsidiaries or any investment banker, attorney or other
advisor or representative of the Company or any of its subsidiaries, whether or
not such person is purporting to act on behalf of the Company or any of its
subsidiaries or otherwise, shall be deemed to be a breach by the Company of such
provision. For purposes of the Merger Agreement, "takeover proposal" means any
proposal for a merger or other business combination involving the Company or any
subsidiary or any proposal or offer to acquire in any manner, directly or
indirectly, a substantial portion of the assets of the Company, any equity
interest in or voting securities of the Company (other than pursuant to the
Stock Option Plans or the Stock Purchase Plan), and a "qualified takeover
proposal" means a proposal to acquire all the Shares by merger, tender offer or
otherwise at a purchase price that includes cash consideration in excess of
$7.85 per share, which in the good faith determination of the Board of Directors
of the Company is reasonably likely to be fully financed.
The Merger Agreement also provides that neither the Board of Directors of
the Company nor any committee thereof shall (a) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent or the Purchaser, the
approval or recommendation by the Board of Directors or any such committee of
the Offer, the Merger Agreement or the Merger, (b) approve or recommend, or
propose to approve or recommend, any takeover proposal or (c) enter into any
agreement with respect to any takeover proposal. Notwithstanding the foregoing,
in the event the Board of Directors of the Company receives a superior takeover
proposal (as defined below), the Board of Directors may (subject to certain
limitations contained in the Merger Agreement) withdraw or modify its approval
or recommendation of the Offer, the Merger Agreement or the Merger, approve or
recommend any such superior takeover proposal, enter into an agreement with
respect to any such superior takeover proposal or terminate the Merger
Agreement, in each case at any time after 48 hours following the Purchaser's
receipt of written notice (a "Notice of Superior Takeover Proposal") advising
Parent that the Board of Directors of the Company has received a superior
takeover proposal, specifying the material terms and conditions of such superior
takeover proposal and identifying the person making such superior takeover
proposal. The Company may take any of the foregoing actions pursuant to the
preceding sentence only if the Purchaser shall not have accepted Shares for
payment pursuant to the Offer. In addition, if the Company proposes to enter
into an agreement with respect to any takeover proposal, terminate the Merger
Agreement, approve or recommend a superior takeover proposal or withdraw or
modify its approval or recommendation of the Offer, the Merger Agreement or the
Merger, it is required, within two business days following the taking of any
such action, to pay or cause to be paid to Parent the Termination Fee (as
defined under "Costs and Expenses" below). Nothing contained in the Merger
Agreement shall prohibit the Company from taking and disclosing to its
shareholders a position contemplated by Rule 14e-2(a) following Parent's receipt
of a Notice of Superior Takeover Proposal, provided that the Company does not
withdraw or modify its position with respect to the Offer or the Merger or
approve or recommend a takeover proposal. For purposes of the Merger Agreement,
a "superior takeover proposal" means a qualified takeover proposal having terms
which the Board of Directors of the Company determines in its good faith
reasonable judgment (based on advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's shareholders than
the Offer and the Merger.
The Company has agreed to promptly advise Parent orally and in writing of
any request for information or of any takeover proposal, or any inquiry with
respect to any takeover proposal, the material terms and conditions of such
request, takeover proposal or inquiry, and the identity of the person making
such takeover proposal or inquiry. The Company has agreed to keep Parent fully
informed of the status and details of any such request, takeover proposal or
inquiry.
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COSTS AND EXPENSES. The Merger Agreement provides that all fees and
expenses incurred in connection with the Offer, the Merger, the Merger Agreement
and the transactions contemplated thereby shall be paid by the party incurring
such fees or expenses, whether or not the Offer or the Merger is consummated.
Notwithstanding the foregoing, the Company is required to pay to Parent
within two business days of demand therefor a fee of $4,553,000 (the
"Termination Fee"), payable in same day funds, if a takeover proposal is
commenced, publicly proposed, publicly disclosed or communicated to the Company
(or the willingness of any person to make a takeover proposal is publicly
disclosed or communicated to the Company) and the Board of Directors of the
Company, pursuant to the terms of the Merger Agreement, withdraws or modifies
its approval or recommendation of the Merger Agreement, the Offer or the Merger,
approves or recommends such other takeover proposal, enters into an agreement
with respect to such other takeover proposal or terminates the Merger Agreement.
The Company is required to pay to Parent within two business days after demand
therefor all Expenses (up to but not in excess of $500,000), but not the
Termination Fee, if Parent terminates the Merger Agreement pursuant to clause
(f)(ii) set forth herein under "Termination of the Merger Agreement". For
purposes of this paragraph, "Expenses" shall mean all out-of-pocket fees and
expenses incurred or paid by or on behalf of the Parent in connection with the
Offer, the Merger or the consummation of any of the transactions contemplated by
the Merger Agreement, including all fees and expenses of counsel, investment
banking firms, accountants, experts and consultants to Parent.
CONDUCT OF THE COMPANY'S BUSINESS UNTIL THE EFFECTIVE TIME. The Merger
Agreement provides that from the date of the Merger Agreement until the
Effective Time, except as consented to by Parent, or as expressly provided in
the Merger Agreement, the businesses of the Company and its subsidiaries shall
be conducted only in, and the Company and its subsidiaries shall not take any
action except in, the ordinary course of business and consistent with past
practice. In addition, the Company has agreed to use reasonable business efforts
to preserve intact the business organization of the Company and its
subsidiaries, to keep available the services of its and their present officers
and key employees, and to preserve the good will of those having business
relationships with it and their respective subsidiaries.
The Merger Agreement further provides that from the date of the Merger
Agreement until the Effective Time, except as consented to by Parent, or as
expressly provided in the Merger Agreement, (a) the Company shall not, (i) sell
or pledge or agree to sell or pledge any stock owned by it in any of its
subsidiaries; (ii) amend its Certificate of Incorporation or By-Laws; or (iii)
split, combine or reclassify any shares of its outstanding capital stock,
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property, or redeem or otherwise acquire any shares of its capital
stock or shares of the capital stock of any of its subsidiaries; (b) the Company
shall not, and shall cause each of its subsidiaries not to, (i) authorize for
issuance, issue or sell any additional shares of, or rights of any kind to
acquire any shares of, its capital stock of any class (whether through the
issuance or granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise), except for unissued Shares reserved for issuance upon
the exercise of Options in accordance with their existing terms, as such Options
may be accelerated pursuant to their existing terms, and except with respect to
the Stock Purchase Plan; (ii) acquire, dispose of, transfer, lease, license,
mortgage, pledge or encumber any fixed or other substantial assets other than in
the ordinary course of business and consistent with past practice; (iii) incur,
assume or prepay any material indebtedness or any other material liabilities
other than in the ordinary course of business under the Company's existing
credit agreement and consistent with past practice, (iv) assume, endorse (other
than in the ordinary course of business consistent with past practice),
guarantee or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the material obligations of any other person
(other than a subsidiary); (v) make any material loans, advances or capital
contributions to, or investments in, any
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other person, other than a subsidiary, or otherwise enter into any material
contract other than in the ordinary course of business and consistent with past
practice; (vi) make any loans to employees, other than travel advances in the
ordinary course of business; (vii) fail to maintain adequate insurance
consistent with past practice for their businesses and properties; (viii) other
than commitments previously disclosed in writing by the Company to Parent and
other than the acquisition of equipment in the ordinary course of business,
undertake, make or commit to undertake or make any capital expenditures in an
amount greater than $10,000 per individual capital expenditure and no more than
$100,000 per month in the aggregate (on a combined basis for the Company and
subsidiaries); or (ix) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing; (c) the Company shall not, and
shall cause its subsidiaries not to, (i) enter into any new agreements (other
than, in its ordinary course of business consistent with past practice,
agreements substantially in the form of the Company's standard form Management
Agreement having a provision requiring not more than thirty (30) days notice to
terminate any such agreement (the "Management Agreements")), or amend or modify
any existing agreements (other than Management Agreements in its ordinary course
of business consistent with past practice) with any of their respective
officers, directors or employees or with any "disqualified individuals" (as
defined in Section 280G(c) of the Code), (ii) grant any increases in the
compensation of their respective directors, officers and employees or any
"disqualified individuals", other than increases in the ordinary course of
business and consistent with past practice to persons who are not directors or
corporate officers of or "disqualified individuals" with respect to the Company
or any subsidiary, (iii) enter into, adopt, amend or terminate, or grant any new
benefit not presently provided for under, any employee benefit plan or
arrangement, except as required by law or to maintain the tax-qualified status
of the plan; PROVIDED, HOWEVER, that the Company is permitted to pay bonuses
pursuant to its 1993 corporate bonus plan and additional bonuses not to exceed
in the aggregate amounts accrued with respect thereto in the Unaudited 1993
Financial Statements; or (iv) take any action with respect to the grant of any
severance or termination pay other than in the ordinary course of business and
consistent with past practice and pursuant to policies in effect on the date of
the Merger Agreement; (d) the Company shall not, and shall not permit any
subsidiary to, acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets (other than equipment, inventory and supplies in the ordinary course of
business) that are material, individually or in the aggregate, to the Company
and its subsidiaries taken as a whole and (e) the Company will not call any
meeting of its shareholders to be held prior to June 30, 1994 other than as
required by law or the Merger Agreement.
BOARD OF DIRECTORS. The Merger Agreement provides that, subject to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, effective upon
the acceptance for payment of, and payment for, any Shares by the Purchaser
pursuant to the Offer or the Stock Purchase Agreement that represent at least a
majority of the Fully Diluted Shares, the Purchaser shall be entitled to
designate the directors serving on the Board of Directors of the Company, and
the Company shall, at such time, promptly increase the size of the Board of
Directors of the Company to the extent necessary to enable the Purchaser's
designees to be elected to, and to constitute a majority of, the Board of
Directors of the Company and shall cause the Purchaser's designees to be so
elected. The Company has agreed to cooperate with Parent and the Purchaser with
respect to such election of directors, including without limitation (a)
cooperating in satisfying the requirements of Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder, and (b) amending, prior to the Expiration
Date, any provisions of its By-Laws or any agreement by which the Company is
bound that could delay
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or hinder the ability of the Purchaser to elect its designees to a majority of
the directorships constituting the Board of Directors. The Company has agreed
not to take any action to delay or hinder such election.
Certain information required to be delivered by Rule 14f-1 of the Exchange
Act in connection with Parent's designation of members of the Board of Directors
is included as an Annex to the Company's Schedule 14D-9 and in Schedule I
hereto.
BENEFIT PLANS AND CERTAIN CONTRACTS. The Merger Agreement provides that,
for at least two years following the consummation of the Merger, employees of
the Company will be provided with employee benefits that in the aggregate are
not less favorable than those provided by National Medical Care, Inc. (a
subsidiary of Parent) to its employees who are similarly situated. Parent is not
obligated under the Merger Agreement to continue the employment of any employee
of the Company or to continue the Stock Option Plans or the Stock Purchase Plan
maintained by the Company. All employees of the Company who continue their
employment with the Company or any subsidiary of Parent after the closing date
under the Stock Purchase Agreement or the purchase of the Healthdyne Shares
under the Offer (the "Cut-Off Date") will be given credit for their service with
the Company prior to the Cut-Off Date for purposes of determining eligibility
and vesting (other than with respect to National Medical Care, Inc.'s retirement
plan) under benefit plans sponsored by the Company, Parent or any subsidiary of
Parent applicable to such employees after the Cut-Off Date.
INDEMNIFICATION. Pursuant to the Merger Agreement, Parent has agreed to
cause the Surviving Corporation to (a) either (i) purchase and maintain for
three years after the Effective Time a directors' and officers' insurance and
indemnification policy, substantially equivalent to the Company's policy for all
officers and directors of the Company in effect on the date of the Merger
Agreement, to cover acts and omissions of directors and officers of the Company
occurring prior to the Effective Time or (ii) request Healthdyne to obtain such
coverage and provide reimbursement to Healthdyne for the cost thereof; and (b)
maintain in effect the current provisions of the By-Laws of the Company (which
shall be contained in the By-Laws of the Purchaser and the Surviving
Corporation) relating to the rights to indemnification of officers and directors
with respect to indemnification for acts and omissions occurring prior to the
Effective Time.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the Company (which will not survive
consummation of the Merger) relating to, among other things, (a) the
organization of the Company and its subsidiaries and similar corporate matters,
(b) the capital structure of the Company and its subsidiaries, (c) the
authorization, execution and delivery of the Merger Agreement, the consummation
of the transactions contemplated thereby and related matters, (d) consent and
approvals, including matters relating to state takeover laws, (e) documents
filed by the Company with the Commission and the accuracy of information
contained therein, (f) the accuracy of information supplied by the Company for
use in documents filed with the Commission in connection with the Offer and the
Merger, (g) the absence of certain material changes or events, (h) broker's and
finder's fees, (i) litigation, (j) employee benefits plans and matters relating
to ERISA, (k) tax, licensing and insurance matters, (l) contracts, (m)
compliance with applicable laws, (n) earnout payments, (o) title to properties
and (p) labor matters.
ADDITIONAL AGREEMENTS. The Merger Agreement provides that, subject to the
terms and conditions thereof, each of Parent, the Purchaser and the Company will
use all reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by the Offer and the Merger
Agreement, including filing a Certificate of Merger, using reasonable efforts to
remove any legal impediment to the consummation or effectiveness of such
transactions and using all reasonable efforts to obtain all necessary waivers,
consents and approvals, and to effect all necessary registrations and filings.
Each of the Company, Parent and the Purchaser has agreed in the Merger Agreement
to make as promptly as practicable all filings and submissions as may be
reasonably required under the HSR Act. Subject to the terms of the Merger
Agreement, the Company has agreed to furnish to Parent and the Purchaser, and
Parent and the Purchaser will furnish to the Company, such information and
assistance as the
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other may reasonably request in connection with the preparation of any such
filings or submissions. Subject to the terms of the Merger Agreement, and to the
preservation of attorney-client privilege and work-product doctrine, the Company
will provide Parent and the Purchaser, and Parent and the Purchaser will provide
the Company, with copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof) between such party or any of its
representatives, on the one hand, and any governmental agency or authority or
members of their respective staffs, on the other hand, with respect to the
Merger Agreement and the transactions contemplated thereby; PROVIDED, HOWEVER,
that Parent and the Purchaser are not required to provide the Company with
copies of confidential documents or information included in Parent's filings and
submissions under the HSR Act.
AMENDMENTS; WAIVERS. The Merger Agreement provides that it may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
Pursuant to the Merger Agreement, at any time prior to the Effective Time
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the parties or (b) waive compliance with any of the
agreements or conditions contained in the Merger Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party.
STOCK PURCHASE AGREEMENT
Parent, the Purchaser and Healthdyne have entered into the Stock Purchase
Agreement pursuant to which, upon the terms and subject to the conditions set
forth therein, Parent may direct Healthdyne to tender all, but not part, of the
Healthdyne Shares pursuant to and in accordance with the Offer. In the event the
Healthdyne Shares shall not have been purchased previously pursuant to the
Offer, Healthdyne has agreed to sell the Healthdyne Shares to Parent, upon the
satisfaction or waiver of the conditions set forth in the Stock Purchase
Agreement.
CONDITIONS. Pursuant to the Stock Purchase Agreement, the obligation of
Parent to purchase, and of Healthdyne to sell, the Healthdyne Shares is subject
to the fulfillment or waiver of the following conditions: (a) the Merger
Agreement shall not have been terminated by Parent (other than due to a breach
of the Merger Agreement by the Company) or by the Company; (b) the Offer shall
not have been terminated by Parent (other than due to a breach of the Merger
Agreement by the Company); (c) the waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated; (d) no temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
such sale and purchase or the Merger shall have been issued by any Federal or
state court and shall remain in effect; (e) Healthdyne shall have caused
Perinatal Services, Inc., a subsidiary of Healthdyne ("PSI"), and Parent shall
have caused the Company, to enter into an agreement pursuant to which PSI will
purchase certain medical supplies from the Company; (f) the Company and
Healthdyne shall have terminated the Administrative Services Agreement between
the Company and Healthdyne, and Parent and Healthdyne shall have executed and
delivered to each other a Management Services and Transition Agreement in
substantially the form attached to the Stock Purchase Agreement; and (g) the
Healthdyne Shares shall have been released from all liens and encumbrances
thereon arising out of Healthdyne's guaranty of the obligations of PSI under the
a Credit Agreement of PSI's (the "Perinatal Credit Agreement") and Healthdyne
shall have obtained any consent of the lender required under the Perinatal
Credit Agreement.
TERMINATION. The Stock Purchase Agreement provides that Parent or the
Purchaser may terminate the Stock Purchase Agreement if (a) the Company shall
have breached the Merger Agreement in any material respect, or (b) any
representation or warranty of the Company contained in the Merger Agreement
shall be untrue or incomplete in any material respect when made or at and as of
any time thereafter, or (c) any representation or warranty of Healthdyne
contained in the Stock Purchase Agreement shall be untrue or incomplete in any
material respect when made or at and as of any time thereafter, or (d) Parent
shall have terminated the Offer in accordance with its terms, or the Merger
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Agreement shall have been terminated by Parent in accordance with its terms, or
(e) any conditions to Parent's obligations to purchase the Healthdyne Shares
thereunder have not been satisfied or waived by June 30, 1994.
The Stock Purchase Agreement further provides that Healthdyne may terminate
the Stock Purchase Agreement if (a) any representation or warranty of Parent
contained in the Stock Purchase Agreement or the Merger Agreement shall be
untrue or incomplete in any material respect when made or at any time
thereafter, or (b) Parent shall have terminated the Offer or terminated or
breached any material obligation of Parent under the Merger Agreement, or (c)
the Board of Directors of the Company shall have exercised its rights described
in the second sentence of the second paragraph under "The Merger
Agreement--Other Offers" in this Section 12, or (d) any conditions to
Healthdyne's obligations to sell the Healthdyne Shares shall not have been
satisfied or waived on or before June 30, 1994.
NEGOTIATIONS. The Stock Purchase Agreement provides that until the earlier
to occur of the purchase of the Healthdyne Shares or the termination of the
Stock Purchase Agreement or the Merger Agreement, Healthdyne shall not, directly
or indirectly, solicit, encourage, or initiate or engage in any discussions or
negotiations with, or provide any information to, any corporation, partnership,
agent, financial adviser, person, or other entity or group (other than Parent or
an affiliate or an associate of Parent or an officer, employee or other
authorized representative of Parent or such affiliate or associate) concerning
any merger, sale of substantial assets, sale of substantial amounts of
securities, or similar transactions involving the Company or any sale of the
Healthdyne Shares. In addition, pursuant to the terms of the Stock Purchase
Agreement, Healthdyne has acknowledged and consented to the provisions of the
Merger Agreement described herein under "The Merger Agreement--Other Offers" and
has agreed to comply with such provisions as though it were bound thereby.
PROXY. Pursuant to the Stock Purchase Agreement, Healthdyne has irrevocably
appointed, during the term of the Stock Purchase Agreement, Parent as proxy for
Healthdyne to vote the Healthdyne Shares which Healthdyne is entitled to vote,
for and in the name, place and stead of Healthdyne at any annual, special or
other meeting of the shareholders of the Company and at any adjournments thereof
or pursuant to any consent in lieu of a meeting, or otherwise, with respect to
all matters, except as may be prohibited by applicable law at the time of such
vote.
NON-COMPETITION. Pursuant to the terms of the Stock Purchase Agreement,
neither Healthdyne nor any Healthdyne affiliate shall, for a period of five
years from the date of the acquisition by the Purchaser of the Healthdyne
Shares: (a) engage, directly or indirectly, in or control, directly or
indirectly, any Competitive Business in the United States, whether such
engagement or control be as an employer, owner, partner, consultant or other
participant in any Competitive Business; or (b) assist others in engaging in any
Competitive Business in the United States; PROVIDED, HOWEVER, that Healthdyne or
any Healthdyne affiliate may engage in a Competitive Business to the extent that
such Competitive Business arises from the acquisition by Healthdyne or any
Healthdyne affiliate of any person engaged in a Competitive Business and such
Competitive Business engaged in by such acquired person amounts to only 10% of
the total revenue received by such acquired person in the fiscal year prior to
such acquisition. Notwithstanding the foregoing, Healthdyne or any Healthdyne
affiliate may contract or join with other persons in one or more groups or
alliances that provide a variety of medical services, including Infusion Care,
as long as neither Healthdyne nor any Healthdyne affiliate provides any Infusion
Care to or on behalf of such group or alliance. "Competitive Business" generally
means any business engaged wholly or partly in providing Infusion Care,
including but not limited to any planning, research, or licensing activities
related thereto (but excluding Infusion Care relating to obstetrics, gynecology
and perinatal care). "Infusion Care" means the business of supplying
pharmaceuticals or medical nutritional therapies to patients, doctors,
hospitals, insurance companies or other persons for use on patients in a
facility other than a hospital or critical care setting.
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PLANS FOR THE COMPANY
Parent intends to conduct a detailed review of the Company and its assets,
corporate structure, dividend policy, capitalization, operations, properties,
policies, management and personnel and to consider what, if any, changes would
be desirable in light of the circumstances then existing, and reserves the right
to take such actions or effect such changes as it deems desirable. Such changes
could include changes in the Company's business, corporate structure,
Certificate of Incorporation, By-Laws, capitalization, Board of Directors,
management or dividend policy. Upon consummation of the Offer or the closing
under the Stock Purchase Agreement, the Purchaser intends to elect its
representatives in sufficient numbers to constitute a majority of the Board of
Directors, as provided for in the Merger Agreement. The Merger Agreement
provides that from and after the Effective Time, the directors of the Purchaser
at the Effective Time shall be the directors of the Surviving Corporation, and
the officers of the Company at the Effective Time shall be the officers of the
Surviving Corporation, and the Certificate of Incorporation and By-Laws of the
Company will be the Certificate of Incorporation and By-Laws of the Surviving
Corporation.
Except as otherwise described in this Offer to Purchase, Parent and the
Purchaser have no current plans or proposals that would relate to, or result in,
any extraordinary corporate transaction involving the Company, such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries,
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries, any change in the Company's capitalization or dividend policy or
any other material change in the Company's business, corporate structure or
personnel.
APPRAISAL RIGHTS AND OTHER MATTERS
Appraisal rights are not available in connection with the Offer and will not
be available in connection with the Merger. The NJBCA provides a right of
dissent with respect to a plan of merger or consolidation or a sale of all, or
substantially all, of the assets of the corporation; however, no such right
exists with respect to shares (a) of a class listed on a national securities
exchange or which is held of record by not less than 1,000 holders or (b) for
which, pursuant to the plan of merger or consolidation or a plan of dissolution,
the shareholder will receive cash, shares which will be listed on a national
securities exchange or held by not less than 1,000 holders, or a combination of
such shares and cash.
The Merger would have to comply with any applicable Federal law operative at
the time of its consummation. Rule 13e-3 under the Exchange Act is applicable to
certain "going private" transactions. The Purchaser does not believe that Rule
13e-3 will be applicable to the Merger unless the Merger is consummated more
than one year after the termination of the Offer or provides for the payment of
consideration with respect to the Shares that is less than that paid pursuant to
the Offer. If applicable, Rule 13e-3 would require, among other things, that
certain financial information concerning the Company and certain information
relating to the fairness of the Merger and the consideration offered to minority
shareholders be filed with the Commission and disclosed to minority shareholders
prior to consummation of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS. If, on or after the date of the Merger
Agreement, the Company should (a) split, combine or otherwise change the Shares
or its capitalization, (b) acquire currently outstanding Shares or otherwise
cause a reduction in the number of outstanding Shares or (c) issue or sell
additional Shares (other than Shares reserved for issuance as of the date of the
Merger Agreement under the Options and up to 10,000 Plan Shares), shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, then, subject to the provisions of Section 14
below, the Purchaser, in its sole discretion, may make such adjustments as it
deems appropriate in the Offer price and other terms of the Offer, including,
without limitation, the number or type of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should declare
or pay any cash dividend on the Shares or other distribution on the Shares, or
issue with respect to the Shares any additional Shares, shares of any other
class of capital stock, other voting securities or any securities
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convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, payable or distributable to shareholders of
record on a date prior to the transfer of the Shares purchased pursuant to the
Offer to the Purchaser or its nominee or transferee on the Company's stock
transfer records, then, subject to the provisions of Section 14 below and the
terms of the Merger Agreement, (a) the price per Share payable by the Purchaser
pursuant to the Offer may, in the sole discretion of the Purchaser, be reduced
by the amount of any such cash dividend or cash distribution and (b) the whole
of any such noncash dividend, distribution or issuance to be received by the
tendering shareholders will (i) be received and held by the tendering
shareholders for the account of the Purchaser and will be required to be
promptly remitted and transferred by each tendering shareholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer, or (ii) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will promptly be remitted to the Purchaser. Pending such remittance and
subject to applicable law, the Purchaser will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance or
proceeds and may withhold the entire Offer price or deduct from the Offer price
the amount or value thereof, as determined by the Purchaser in its sole
discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceding paragraphs, and
nothing herein shall constitute a waiver by Parent or the Purchaser of any of
its rights under the Merger Agreement or a limitation of remedies available to
Parent or Purchaser for any breach of the Merger Agreement, including
termination thereof.
14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term of the
Offer or the Merger Agreement, neither Parent nor the Purchaser will be required
to accept for payment or to pay for any Shares tendered pursuant to the Offer,
and may terminate or amend the Offer, and may postpone the acceptance for
payment of Shares pursuant thereto, unless on the Expiration Date (a) the
Minimum Condition shall have been satisfied, and (b) any waiting period under
the HSR Act applicable to the purchase of Shares pursuant to the Offer shall
have expired or been terminated. Furthermore, notwithstanding any other term of
the Offer or the Merger Agreement, Parent or the Purchaser shall not be required
to accept for payment or to pay for any Shares not theretofore accepted for
payment or paid for, and may terminate or amend the Offer and may postpone the
acceptance for payment of Shares pursuant thereto if, at any time on or after
the date of the Merger Agreement and before the acceptance of such Shares for
payment or the payment therefor, any of the following conditions exists:
(a) any statute, rule, regulation or order shall be proposed, enacted,
entered or deemed applicable to the Offer or the Merger (i) making the
purchase of, or payment for, some or all of the Shares pursuant to the
Offer, the Merger Agreement or the Stock Purchase Agreement illegal, or
resulting in a material delay in the ability of Parent or the Purchaser to
accept for payment or pay for some or all of the Shares, or to consummate
the Offer or Merger or seeking to obtain from the Company, Parent or the
Purchaser damages that would have a material adverse effect on the Company
and its subsidiaries taken as a whole or a material adverse effect on
National Medical Care, Inc. and its subsidiaries taken as a whole, (ii)
imposing material limitations on the ability of the Parent or the Purchaser
effectively to acquire or hold or to exercise full rights of ownership of
the Shares acquired by it, including the right to vote the Shares purchased
by it on all matters properly presented to the shareholders of the Company,
(iii) which would require Parent or the Purchaser to dispose of or hold
separate any of the Shares or all or any material portion of the assets or
business of the Company and its subsidiaries taken as a whole, or National
Medical Care, Inc. and its subsidiaries taken as a whole; or (iv) prohibit
or materially limit the ability of the Parent or any direct or indirect
subsidiary of Parent to own, control or operate the Company, National
Medical Care, Inc., or any of their respective subsidiaries or all or any
material portion of the businesses, operations or assets of the Company and
its subsidiaries taken as a whole or National Medical Care, Inc. and its
subsidiaries taken as a whole; or
27
<PAGE>
(b) any governmental or regulatory action or proceeding by or before any
court, government or governmental or regulatory authority, domestic or
foreign, shall be threatened, instituted or pending, or any action or
proceeding by any other person, domestic or foreign, shall be instituted or
pending, which would reasonably be expected to result in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a) above;
or
(c) the Company shall not have complied in all material respects with
its agreements and covenants in the Merger Agreement, or its representations
and warranties in the Merger Agreement, when made or at and as of any time
thereafter, are untrue or incomplete in any material respect; or
(d) Healthdyne shall not have complied in all material respects with its
agreements and covenants in the Stock Purchase Agreement, or its
representations and warranties in the Stock Purchase Agreement, when made or
at and as of any time thereafter, are untrue or incomplete in any material
respect; or
(e) an offer shall have been publicly proposed to be made or have been
made on or after the date of this Offer to Purchase by another person or by
a "group" of persons as defined in Section 13(d)(3) of the Exchange Act,
individually or in the aggregate, to purchase or exchange for cash or other
consideration 20% or more of the Shares, or it shall have been publicly
disclosed or the Purchaser shall have learned that 20% or more of the Shares
have been or are proposed to be acquired by another person or by a group of
persons; or
(f) any change (or any development involving a prospective change) shall
have occurred in the business, financial condition, results of operations or
prospects of the Company or any of its subsidiaries that is materially
adverse to the Company and its subsidiaries as a whole (other than as a
result of changes in conditions, including economic or political
developments, applicable to the business of health care generally or the
business of home infusion therapy generally not having a disproportionate
effect on the Company's business relative to the effect of any such change
on other entities in the business of home infusion therapy); or
(g) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the NYSE or in the
over-the-counter market, (ii) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iii) the
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iv) any event
which, in the sole judgment of Parent, affects the extension of credit by
banks or other financial institutions, (v) a material adverse change in the
United States exchange rates or a suspension of, or limitation on, the
markets therefor, (vi) a decrease of more than 25% in the Dow Jones
Industrial Average, or (vii) in the case of any of the foregoing existing at
the time of the commencement of the Offer, a material acceleration or
worsening thereof; or
(h) the Merger Agreement shall have been terminated or amended to
provide for the amendment or termination of the Offer; or
(i) the Company's audited financial statements for the year ended
December 31, 1993, to be included in the Company's 1993 Annual Report on
Form 10-K, shall be materially and adversely different from the Company's
Unaudited 1993 Financial Statements;
which in the reasonable good faith judgment of Parent, in any such case
regardless of the circumstances (including any action or omission by Parent)
giving rise to any such conditions, makes it inadvisable to proceed with such
acceptance for payment or makes it advisable to terminate or amend the Offer.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent and the Purchaser regardless of the
circumstances giving rise to any such conditions or may be waived by Parent or
the Purchaser in whole or in part, at any time and from time to time in their
28
<PAGE>
sole discretion. The failure by Parent or the Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each right shall be deemed an on-going right that may be asserted at any time
and from time to time. Any determination by Parent or the Purchaser concerning
any events described in this Section 14 will be final and binding upon tendering
shareholders.
15. CERTAIN LEGAL MATTERS. Except as described in this Section 15, based
on a review of publicly available filings made by the Company with the
Commission and other publicly available information concerning the Company,
neither Parent nor the Purchaser is aware of any license or regulatory permit
that appears to be material to the business of the Company and its subsidiaries,
taken as a whole, and that might be adversely affected by the Purchaser's
acquisition of Shares (and the indirect acquisition of the stock of the
Company's subsidiaries) as contemplated herein or, except as set forth below, of
any approval or other action by any governmental authority or agency, domestic
or foreign, that would be required for the acquisition or ownership of Shares
(or the indirect acquisition of the stock of the Company's subsidiaries) by the
Purchaser as contemplated herein. Should any such approval or other action be
required, Parent and the Purchaser currently contemplate that such approval or
other action will be sought. While the Purchaser does not currently intend to
delay the acceptance for payment of, or payment for, Shares tendered pursuant to
the Offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of or other substantial conditions complied with in the
event that such approvals were not obtained or such other actions were not taken
or in order to obtain any such approval or other action. If certain types of
adverse action are taken with respect to the matters discussed below, the
Purchaser could decline to accept for payment or pay for any Shares tendered.
See Section 14 for certain conditions to the Offer, including conditions with
respect to litigation and governmental actions.
HEALTH CARE REGULATORY MATTERS. The Federal government and all states in
which the Company and its subsidiaries currently operate regulate various
aspects of the business of the Company and its subsidiaries. The Company and its
subsidiaries hold a number of federal and state licenses with respect to the
operation of home health agencies and pharmacies and the possession and sale of
controlled substances. The purchase of Shares pursuant to the Offer may
constitute an event giving rise to notice and/or new licensing application
requirements, and certain States may require that the Purchaser meet specified
notice periods prior to consummation of the Offer. It is not anticipated that
any such notice and/or new licensing requirements will delay the consummation of
the Offer.
STATE TAKEOVER STATUTES. The Company and certain of its subsidiaries
conduct business in a number of states throughout the United States, some of
which have enacted "takeover" statutes that purport, in varying degrees, to be
applicable to attempts to acquire securities of corporations that are
incorporated or have assets, shareholders, executive offices or places of
business in such states.
In EDGAR V. MITE CORP., 457 U.S. 624 (1982), the Supreme Court of the United
States held that the Illinois Business Takeover Act, which involved state
securities laws that made the takeover of certain corporations more difficult,
imposed a substantial burden on interstate commerce and therefore was
unconstitutional. However, in CTS CORP. V. DYNAMICS CORP. OF AMERICA, 107 S. Ct.
1637 (1987), the Supreme Court of the United States held that a state may, as a
matter of corporate law and, in particular, those laws concerning corporate
governance, constitutionally disqualify a potential acquiror from voting on the
affairs of a target corporation without the prior approval of the remaining
shareholders, provided that such laws were applicable only under certain
conditions.
The New Jersey Corporation Takeover Bid Disclosure Law (the "New Jersey
Takeover Law") purports to prohibit any "takeover bid" to purchase any equity
security of a "target company" (which is defined to mean a corporation either
organized under the laws of New Jersey or having its principal place of business
or substantial portion of its total assets located within New Jersey) unless at
least
29
<PAGE>
20 days before such takeover bid is made the offeror has filed with the New
Jersey Bureau of Securities and sent to the target company a disclosure
statement and such takeover bid has been permitted to proceed by the Bureau
chief. A "takeover bid" does not include an offer as to which the target
company, acting through its board of directors, recommends acceptance to its
shareholders, provided that the terms thereof, including any inducements to
officers and directors that are not made available to all shareholders, have
been furnished to shareholders. The New Jersey Takeover Law was declared
unconstitutional in major part by the United States District Court for the
District of New Jersey in KENNECOTT CORP. and KC DEVELOPMENT INC. V. SMITH, ET
AL., and the chief of the New Jersey Bureau of Securities has stated that the
Bureau is no longer enforcing any provisions of the New Jersey Takeover Law
except for the anti-fraud provisions. In any event, the Purchaser believes that
the New Jersey Takeover Law does not by its terms apply to the Offer because the
Board of Directors of the Company has unanimously recommended acceptance of the
Offer to the shareholders and the terms of the Offer, including any inducements
to officers or directors of the Company that have not been made available to all
shareholders of the Company, have been furnished to the shareholders of the
Company.
To the extent that other state takeover statutes might purport to apply to
the Offer or the Merger, the Purchaser believes that there are reasonable bases
for contesting such statutes. If any person should seek to apply any such state
takeover statute, the Purchaser would take such action as then appears
desirable, which action may include challenging the validity or applicability of
any such statute in appropriate court proceedings. If it is asserted that one or
more takeover statutes apply to the Offer, and it is not determined by an
appropriate court that such statute or statutes do not apply or are invalid as
applied to the Offer, the Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities, and
the Purchaser might be unable to purchase or pay for the Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer.
See Section 14.
BUSINESS COMBINATIONS. The New Jersey Shareholders Protection Act (the "New
Jersey Act") has the effect of prohibiting an "interested shareholder" from
engaging in a business combination (including a merger) with a "resident
domestic corporation" for five years after the person becomes an interested
shareholder, unless the resident domestic corporation's board of directors
approved the business combination before the person became an interested
shareholder. After the five-year period has elapsed, a business combination with
the interested shareholder may be effected only if in compliance with certain
additional provisions of the New Jersey Act. A "resident domestic corporation"
is defined in the New Jersey Act as a corporation organized under New Jersey law
that has its principal executive offices in New Jersey or significant business
operations in New Jersey. The Purchaser believes that the Company presently
qualifies as a "resident domestic corporation." A person who has acquired 10% or
more of the voting power of any such corporation is an "interested shareholder"
under the New Jersey Act. The Purchaser believes that it presently qualifies as
an "interested shareholder" since Healthdyne has granted, pursuant to the Stock
Purchase Agreement, an irrevocable proxy to Parent to vote all Healthdyne Shares
with respect to all matters. Parent believes that the New Jersey Act does not
prohibit the Merger since the Board of Directors of the Company unanimously
approved the Offer and the Merger prior to the date on which Parent became an
"interested shareholder" of the Company.
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar day waiting period following the filing by Parent, unless
Parent receives a request for additional information or documentary material
from the Antitrust Division or the FTC. Parent expects to make such filing
during the week of March 14, 1994. See "Section 12 -- Additional Agreements."
If, within the initial 15-day waiting period, either the Antitrust Division or
the FTC requests additional information or material from Parent concerning the
Offer, the waiting period will be extended and would expire at 11:59 p.m., New
York City time, on the tenth day after the date of substantial compliance by
Parent with such request. Only one extension of the waiting period pursuant to a
request for additional information is authorized by the HSR Act. Thereafter,
such waiting period may be extended only by court order or with the consent of
Parent.
30
<PAGE>
The provisions of the HSR Act would similarly apply to any purchase of the
Healthdyne Shares pursuant to the Stock Purchase Agreement (other than purchases
effected through a tender pursuant to the Offer), except that the initial
waiting period would expire 30 days following the filing of HSR Act Notification
Forms by Parent and the Company and a request for additional information or
material from Parent or the Company during the initial 30-day waiting period
would extend the waiting period until 11:59 p.m. New York City Time on the 20th
day after the date of substantial compliance by Parent and the Company with such
request. Parent and the Company expect to file HSR Notification Forms with
respect to the Stock Purchase Agreement during the week of March 14, 1994. If,
as is expected, the purchase of Shares contemplated by the Stock Purchase
Agreement is effected through a tender of such Shares pursuant to the Offer, the
HSR requirements applicable to the Offer described in the prior paragraph would
apply rather than the requirements described in this paragraph.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of Parent or
its subsidiaries, or the Company or its subsidiaries. Private parties may also
bring legal actions under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer on antitrust grounds will not
be made or, if such a challenge is made, of the result thereof. See Section 14
for certain conditions of the Offer, including conditions with respect to court
and governmental actions.
16. FEES AND EXPENSES. The Purchaser has retained D. F. King & Co., Inc.
to act as the Information Agent and Chemical Bank to act as the Depositary in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, be reimbursed
for certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
under the Federal securities laws.
Neither Parent nor the Purchaser will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent) for
soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial
banks and trust companies will be reimbursed by the Purchaser 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 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. Neither the Purchaser nor Parent is aware of
any jurisdiction in which the making of the Offer or the tender of Shares in
connection therewith would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser or Parent becomes aware of any state
law that would limit the class of offerees in the Offer, the Purchaser will
amend the Offer and, depending on the timing of such amendment, if any, will
extend the Offer to provide adequate dissemination of such information to
holders of Shares prior to the expiration of the Offer.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser or Parent not contained herein or in
the Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
------------------------
Parent and the Purchaser have filed with the Commission a Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the
31
<PAGE>
Offer. The Company has filed with the Commission a Solicitation/Recommendation
Statement on Schedule 14D-9, together with exhibits, pursuant to Rule 14d-9
under the Exchange Act, setting forth its recommendation with respect to the
Offer and the reasons for such recommendation, and furnishing certain additional
related information. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be examined, and copies may be obtained, in the manner set forth
in Section 9 hereof (except that they will not be available at the regional
offices of the Commission).
COMPANY N MERGER CORP.
March 10, 1994
32
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PARENT AND THE PURCHASER
Set forth below are the names, addresses, present principal occupations and
five-year employment histories of each director and executive officer of Parent;
in addition, Messrs. Bolduc, Robbins and Smith and Dr. Hampers are directors
and/or executive officers of the Purchaser. Except as otherwise indicated, (1)
each person has either occupied the position listed, and/or other management or
executive positions with Parent or one of its subsidiaries, for at least five
years; (2) the address of each person is One Town Center Road, Boca Raton,
Florida 33486-1010; and (3) to the best knowledge of Parent, except for Mr.
Robbins (who beneficially owns 9,000 Shares), no person beneficially owns any
equity securities, or rights to acquire any equity securities, of the Company or
has been involved in any transactions with the Company or any of its directors,
executive officers or affiliates that are required to be disclosed pursuant to
the rules and regulations of the Commission. Except for Sir Ronald Grierson (who
is a citizen of the United Kingdom) and Mr. Greze (who is a French citizen),
each person listed below is a citizen of the United States.
Pursuant to the Merger Agreement, the Purchaser will have the right,
following completion of the Offer, to designate persons for election as
directors of the Company to the extent necessary to enable such designees to
constitute a majority of the Board of Directors (see Section 12). The persons
who may be so designated are indicated by an asterisk (*), and the age of each
such person appears in parentheses following his name.
<TABLE>
<CAPTION>
NAME AND ADDRESS OCCUPATION AND EMPLOYMENT HISTORY
- ---------------------------------------- ---------------------------------------------------------------------
<S> <C>
DIRECTORS
J.P. Bolduc* (54) ...................... President and Chief Executive Officer
George C. Dacey ........................ Retired; formerly President, Sandia National Laboratories, research
3256 Montara Drive
Bonita Springs, FL 33923
Edward W. Duffy ........................ Retired; formerly Chairman and Chief Executive Officer, Marine
23 Fernleigh Drive Midland Banks, Inc., banking
Cooperstown, NY 13326
Harold A. Eckmann ...................... Retired; formerly Chairman and Chief Executive Officer, The Atlantic
P.O. Box 231 Companies, insurance
Blackstone, VA 23824
Charles H. Erhart, Jr. ................. Retired; formerly President (to August 1990)
149 East 73rd Street
New York, NY 10021
James W. Frick ......................... President, James W. Frick Associates, educational consulting
1410 Society Bank Building
South Bend, IN 46601
J. Peter Grace* (80) ................... Chairman, formerly Chief Executive Officer (to December 31, 1992)
Sir Ronald Grierson .................... Retired; formerly Vice Chairman, The General Electric Co., p.1.c.,
1 Stanhope Gate manufacturing (to 1991)
London, England W1A 1EH
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OCCUPATION AND EMPLOYMENT HISTORY
- ---------------------------------------- ---------------------------------------------------------------------
<S> <C>
Constantine L. Hampers* (61) ........... Executive Vice President; Chairman and Chief Executive Officer,
Reservoir Place National Medical Care, Inc. (a subsidiary of Parent), health care
1601 Trapelo Road services; consented in 1990 to entry of misdemeanor finding and
Waltham, MA 02154 payment of fine for importation of skins of endangered species in
violation of Federal law
Thomas A. Holmes ....................... Retired; formerly Chairman, President and Chief Executive Officer,
200 Chestnut Ridge Road Ingersoll-Rand Company, manufacturing
Woodcliff Lake, NJ 07675
Gordon J. Humphrey ..................... Former United States Senator (1979 to 1990); founder, The Humphrey
Box 1461 Group, Inc., international trade (since 1990)
Concord, NH 03302
George P. Jenkins ...................... Consultant to Parent
1114 Avenue of the Americas
New York, NY 10036-7794
Virginia A. Kamsky ..................... President and Chief Executive Officer, Kamsky Associates, Inc., Far
780 Third Avenue East consulting and investment banking
New York, NY 10017
Peter S. Lynch ......................... Vice Chairman, Fidelity Management & Research Company, financial
82 Devonshire Street S8 services (since January 1992); portfolio manager, Fidelity Magellan
Boston, MA 02109 Fund (prior to 1990)
Robert C. Macauley ..................... Chairman, Virginia Fibre Corporation, packaging
161 Cherry Street
New Canaan, CT 06840
Roger Milliken ......................... Chief Executive Officer, Milliken & Co., textiles
P.O. Box 3167
Spartanburg, SC 29304
John E. Phipps ......................... Private Investor
P.O. Box 3048
Tallahassee, FL 32315
John A. Puelicher ...................... Retired; formerly Chairman, Marshall & Ilsley Corp., banking (to
770 North Water Street December 1992)
Milwaukee, WI 53202
Eben W. Pyne ........................... Retired; formerly Senior Vice President of Citibank, N.A., banking
1114 Avenue of the Americas
New York, NY 10036-7794
D. Walter Robbins, Jr.* (74) ........... Consultant to Parent
Eugene J. Sullivan ..................... Retired; formerly Chairman and Chief Executive Officer, Borden, Inc.,
272 Park Avenue food products
New York, NY 10172
Grace Sloane Vance ..................... Various educational, cultural and philanthropic activities
2 East 93rd Street
New York, NY 10128
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OCCUPATION AND EMPLOYMENT HISTORY
- ---------------------------------------- ---------------------------------------------------------------------
<S> <C>
William Wood Prince .................... Vice Chairman, F.H. Prince & Co., Inc., investments
10 South Wacker Drive
Suite 1575
Chicago, IL 60606
David L. Yunich ........................ Consultant to Parent
1114 Avenue of the Americas
New York, NY 10036-7794
EXECUTIVE OFFICERS
(OTHER THAN THOSE WHO ARE ALSO DIRECTORS)
Robert H. Beber* (60) .................. Executive Vice President and General Counsel
F. Peter Boer* (53) .................... Executive Vice President
Hugh L. Carey* (74) .................... Executive Vice President
Jean-Louis Greze* (62) ................. Executive Vice President
Donald H. Kohnken* (59) ................ Executive Vice President
James P. Neeves* (56) .................. Executive Vice President
Brian J. Smith* (49) ................... Executive Vice President and Chief Financial Officer
</TABLE>
I-3
<PAGE>
SCHEDULE II
SALES OF SHARES
The following table sets forth sales of Shares within the past 60 days by D.
Walter Robbins, Jr. (See Schedule I). All transactions were effected on the
Nasdaq Stock Market.
<TABLE>
<CAPTION>
PRICE PER
SHARE
NUMBER OF EXCLUDING
DATE SHARES SOLD COMMISSIONS
- ---------------------- ----------- -------------
<S> <C> <C>
January 21, 1994 4,000 $ 4.75
February 1, 1994 2,000 $ 4.625
February 3, 1994 2,000 $ 4.625
February 4, 1994 2,000 $ 4.625
February 7, 1994 2,000 $ 4.625
February 10, 1994 1,000 $ 5.50
</TABLE>
II-1
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or his broker, dealer, commercial bank, trust company or other nominee
to the Depositary at one of its addresses set forth below.
THE DEPOSITARY:
CHEMICAL BANK
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION BY HAND OR OVERNIGHT DELIVERY:
Chemical Bank (FOR ELIGIBLE INSTITUTIONS Chemical Bank
Reorganization Department ONLY): 55 Water Street
P.O. Box 3085 (212) 629-8015 Second Floor -- Room 234
G.P.O. Station (212) 629-8016 New York, NY 10041
New York, NY 10116-3085 Confirm by telephone: Attn: Reorganization
(212) 613-7137 Department
FOR INFORMATION TELEPHONE:
(800) 648-8169
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent at its telephone numbers and locations
listed below. You may also contact your local broker, dealer, commercial bank,
trust company or nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
D. F. KING & CO., INC.
<TABLE>
<S> <C>
77 Water Street 37 Sun Street
New York, NY 10005 London, England EC2 2PY
(800) 669-5550 (Toll Free) 011-4471-247-8263 (Collect)
</TABLE>
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
HOME NUTRITIONAL SERVICES, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED MARCH 10, 1994
OF
COMPANY N MERGER CORP.
A WHOLLY OWNED SUBSIDIARY OF
W. R. GRACE & CO.
---------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, APRIL 6, 1994, UNLESS EXTENDED.
------------------------
THE DEPOSITARY FOR THE OFFER IS:
<TABLE>
<S> <C> <C>
CHEMICAL BANK
FOR INFORMATION TELEPHONE:
(800) 648-8169
BY MAIL: BY FACSIMILE TRANSMISSION BY HAND OR OVERNIGHT DELIVERY:
Chemical Bank (FOR ELIGIBLE INSTITUTIONS ONLY): Chemical Bank
Reorganization Department (212) 629-8015 55 Water Street
P.O. Box 3085 (212) 629-8016 Second Floor -- Room 234
G.P.O. station CONFIRM BY TELEPHONE: New York, NY 10041
New York, NY 10116-3085 (212) 613-7137 Attn: Reorganization Department
</TABLE>
Delivery of this Letter of Transmittal to an address other than as set forth
above, or transmission of instructions via a facsimile number other than as
listed above, will not constitute a valid delivery.
The instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
SHAREHOLDERS WHO HAVE PROPERLY TENDERED SHARES (AS DEFINED BELOW) AND NOT
VALIDLY WITHDRAWN THE TENDERED SHARES AND WHO WISH TO HAVE THOSE SHARES
PURCHASED PURSUANT TO THE OFFER (AS DEFINED BELOW) NEED NOT TAKE ANY FURTHER
ACTION EXCEPT FOR COMPLYING WITH THE PROCEDURE FOR GUARANTEED DELIVERY IF THAT
PROCEDURE IS BEING USED.
This Letter of Transmittal is to be completed by holders of Shares either if
certificates are to be forwarded herewith or if delivery is to be made by
book-entry transfer to the account maintained by the Depositary at The
Depository Trust Company, the Midwest Securities Trust Company or the
Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility" and
collectively the "Book-Entry Transfer Facilities") pursuant to the procedures
set forth in "Section 2 -- Procedure for Tendering Shares" of the Offer to
Purchase (as defined below). Holders of Shares whose certificates are not
immediately available, or who are unable to deliver their certificates or
confirmation of the book-entry tender of their Shares into the Depositary's
account at a Book-Entry Transfer Facility ("Book-Entry Confirmation") and all
other documents required by this Letter of Transmittal to the Depositary on or
prior to the Expiration Date (as defined in "Section 1 -- Terms of the Offer" of
the Offer to Purchase), must tender their Shares according to the guaranteed
delivery procedures set forth in "Section 2 -- Procedure for Tendering Shares"
of the Offer to Purchase. See Instruction 2. Delivery of documents to a Book-
Entry Transfer Facility does not constitute delivery to the Depositary.
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF TENDERED SHARES
NAME(S) AND ADDRESS(ES) OF CERTIFICATE(S) TENDERED
REGISTERED OWNER(S) (ATTACH ADDITIONAL SIGNED LIST IF
(PLEASE FILL IN, IF BLANK) NECESSARY)
TOTAL NUMBER
OF SHARES
CERTIFICATE REPRESENTED BY NUMBER OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
TOTAL SHARES
(1) Need not be completed by shareholders tendering by book-entry transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares described above are being
tendered. See Instruction 4.
</TABLE>
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution _____________________________________________
Check Box of Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number ____________________________________________________________
Transaction Code Number ___________________________________________________
/ / CHECK HERE IF TENDERED SHARES WILL BE DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) _________________________________________________
Window Ticket Number (if any) __________________________________________________
Date of Execution of Notice of Guaranteed Delivery _____________________________
Name of Institution which Guaranteed Delivery __________________________________
If Delivered by Book-Entry Transfer, Check Box of Applicable Book-Entry Transfer
Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number (If Delivered by Book-Entry Transfer)
- --------------------------------------------------------------------------------
Transaction Code Number (If Delivered by Book-Entry Transfer)
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Company N Merger Corp., a New Jersey
corporation ("Purchaser") wholly owned by W. R. Grace & Co., a New York
corporation ("Grace"), the above described shares of common stock (the "Shares")
of Home Nutritional Services, Inc., a New Jersey corporation (the "Company"),
pursuant to Purchaser's offer to purchase all outstanding Shares at a price of
$7.85 per Share, net to the seller in cash (the "Purchase Price"), upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
March 10, 1994 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute the
"Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms and subject to the conditions of
the Offer, the undersigned hereby sells, assigns and transfers to or upon the
order of Purchaser, all right, title and interest in and to all the Shares
tendered hereby (and any and all other Shares, dividends, distributions, rights
and other securities and property issued or issuable or distributed or
distributable in respect thereof on or after March 4, 1994 (collectively,
"Distributions")), and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares (and any Distributions) with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest)
to: (i) deliver certificates for such Shares (and any Distributions), or
transfer ownership of such Shares (and any Distributions) on the account books
maintained by a Book-Entry Transfer Facility, together in either such case with
all accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, upon receipt by the Depositary, as the undersigned's agent, of the
Purchase Price; (ii) present such Shares (and any Distributions) for transfer on
the books of the Company; and (iii) receive all benefits and otherwise exercise
all rights of beneficial ownership of such Shares (and any Distributions), all
in accordance with the terms of the Offer. Purchaser expressly reserves the
right to transfer or assign to Purchaser or one or more of Purchaser's
subsidiaries or affiliates the right to purchase all or any portion of the
Shares tendered hereby (and any Distributions), but no such transfer or
assignment will relieve Purchaser of its obligations hereunder or prejudice the
rights of the undersigned to receive payment for Shares validly tendered hereby
and accepted for payment pursuant to the Offer.
The undersigned hereby irrevocably appoints Brian J. Smith and Robert B.
Lamm, and each of them, attorneys-in-fact and proxies of the undersigned, each
with full power of substitution, to vote in such manner as each such attorney
and proxy or the substitute for any such attorney and proxy shall in the sole
discretion of each such attorney and proxy deem proper and otherwise act
(including pursuant to written consent) with respect to all the Shares tendered
hereby (and any Distributions) that have been accepted for payment by Purchaser
prior to the time of such vote or other action that the undersigned is entitled
to vote at any meeting of shareholders (whether annual or special and whether or
not an adjourned meeting) of the Company, or consent in lieu of any such
meeting, or otherwise. This proxy is irrevocable and is granted in consideration
of, and is effective upon, Purchaser's oral or written notice to the Depositary
of its acceptance for payment of such Shares in accordance with the terms of the
Offer. Such acceptance for payment shall revoke all prior proxies given by the
undersigned at any time with respect to such Shares (and any Distributions), and
no subsequent proxies may be given (and if given will not be effective) with
respect thereto by the undersigned. Purchaser expressly reserves the right to
require that, in order for Shares to be validly tendered, immediately upon the
acceptance for payment of such Shares (and any Distributions), Purchaser is able
to exercise full voting rights with respect to such Shares (and any
Distributions).
The undersigned hereby represents and warrants that: (i) the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distributions) and (ii) when the same are accepted for
payment by Purchaser, Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances, and the same will not be subject to any adverse claim. The
undersigned, upon request, will execute and deliver any signature guarantee or
additional documents deemed by the Depositary or Purchaser to be necessary or
desirable to complete or confirm the sale, assignment and transfer of the Shares
tendered hereby (and any Distributions).
In addition, the undersigned shall promptly remit and transfer to the
Depositary for the account of Purchaser any Distributions, accompanied by
appropriate documentation of transfer, and pending such remittance or
appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of such Distributions and may withhold the entire Purchase
Price or deduct from the Purchase Price the amount or value thereof, as
determined by Purchaser in its sole discretion.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned, and any obligation of the undersigned hereunder shall be
binding upon the successors, assigns, heirs, executors, administrators, trustees
in bankruptcy and legal representatives of the undersigned. Except as stated in
the Offer to Purchase, this tender is irrevocable, provided that Shares tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration Date
and, unless theretofore accepted for payment by the Purchaser as provided
herein, may also be withdrawn at any time after May 8, 1994.
The undersigned understands that the acceptance for payment of tendered
Shares by Purchaser pursuant to any of the procedures described in "Section 2 --
Procedure for Tendering Shares" of the Offer to Purchase and in the instructions
hereto will constitute a binding agreement between the undersigned and Purchaser
upon the terms and subject to the conditions of the Offer. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
Purchaser may not be required to accept for payment any of the Shares tendered
hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the Purchase Price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the undersigned.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the Purchase Price and/or return any certificates for
Shares not tendered or accepted for payment (and accompanying documents, as
appropriate) to the undersigned at the address shown above under "Description of
Tendered Shares." In the event that both the Special Delivery Instructions and
the Special Payment Instructions are completed, please issue the check for the
Purchase Price and/or return any certificates for Shares not tendered or
accepted for payment in the name of, and deliver said check and/or return such
certificates to, the person or persons so indicated. Unless otherwise indicated
under "Special Payment Instructions," in the case of delivery of shares by
book-entry transfer, please credit the account maintained at the Book
Entry-Transfer Facility indicated above with any Shares not accepted for
payment. The undersigned recognizes that Purchaser has no obligation pursuant to
the Special Payment Instructions to transfer any Shares from the name of the
registered holder thereof if Purchaser does not accept for payment any of the
Shares so tendered.
<PAGE>
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SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 (SEE INSTRUCTIONS 1, 5, 6 AND
AND 7) 7)
To be completed ONLY if To be completed ONLY if certificates
certificates for Shares not tendered for Shares not tendered or not
or not purchased and/or the check purchased and/or the check for the
for the Purchase Price for Shares Purchase Price for Shares purchased
purchased are to be issued in the are to be sent to someone other than
name of someone other than the the undersigned, or to the
undersigned. undersigned at an address other than
Issue: check/certificates to: that shown above.
Name Mail: check and/or certificates to:
(Please print) Name
(Please print)
Address Address
(Include Zip Code) (Include Zip Code)
(Tax Identification
(Tax or Social Security No.)
Identification or
Social Security No.)
(See Substitute Form W-9 on reverse side)
</TABLE>
IMPORTANT
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
(Signature(s) of Stockholder(s))
Dated , 1994
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificate(s) and documents transmitted
herewith. If signature is by an officer on behalf of a corporation,
attorney-in-fact, executor, administrator, trustee, guardian, agent or any other
person(s) acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 5).
Name(s)
(Please Print)
Capacity (Full Title)
Address
(Include Zip Code)
Area Code and Telephone Number
Tax Identification or
Social Security No.
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature(s)
Name
(Please Print)
Name of Firm
Address
(Include Zip Code)
(Area Code and Telephone Number)
Dated: , 1994
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder of the Shares (which term, for purposes of this document,
shall include any participant in a Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered
herewith, unless such holder has completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on the
reverse hereof, or (ii) if such Shares are tendered for the account of a member
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in the United States (collectively, "Eligible Institutions").
In all other cases, all signatures on this Letter of Transmittal must be
guaranteed as aforesaid. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES: GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by shareholders
either if certificates are to be forwarded herewith or if tenders are to be made
pursuant to the procedures for delivery by book-entry transfer set forth in
"Section 2 -- Procedure for Tendering Shares" of the Offer to Purchase.
Certificates for all physically tendered Shares, or Book-Entry Confirmation, as
the case may be, as well as a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile hereof) and any other documents
required by this Letter of Transmittal, must be received by the Depositary on or
prior to the Expiration Date.
Shareholders whose certificates are not immediately available or who cannot
deliver their certificates and all other required documents to the Depositary on
or prior to the Expiration Date, or who cannot complete the procedure for
book-entry transfer on a timely basis, may tender their Shares pursuant to the
guaranteed delivery procedures set forth "Section 2 -- Procedure for Tendering
Shares" of the Offer to Purchase. Pursuant to such procedures, (i) such tender
must be made by or through an Eligible Institution, (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form
provided by Purchaser, must be received by the Depositary, either by hand
delivery, mail, telegram, or facsimile transmission, on or prior to the
Expiration Date, and (iii) the certificates for all physically tendered Shares
in proper form for transfer, or Book-Entry Confirmation, as the case may be,
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile hereof) and any other documents required by this
Letter of Transmittal, must be received by the Depositary within five New York
Stock Exchange, Inc. trading days after the date of such Notice of Guaranteed
Delivery, all as provided in "Section 2 -- Procedure for Tendering Shares" of
the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATES FOR
SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. AMPLE TIME SHOULD BE
ALLOWED FOR SUCH DOCUMENTS TO REACH THE DEPOSITARY. EXCEPT AS OTHERWISE PROVIDED
IN THIS INSTRUCTION 2, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE DEPOSITARY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal (or facsimile hereof), waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS (not applicable to shareholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares that are to be tendered in the
box entitled "Number of Shares Tendered." In such case, as soon as practicable
after the Expiration Date, new certificate(s) for the remainder of the Shares
that were evidenced by your old certificate(s) will be sent to you, unless
otherwise provided in the appropriate box of this Letter of Transmittal. All
Shares represented by certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
5. SIGNATURE ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered owner(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority to so act must be
submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate powers are required unless payment or certificates for Shares not
tendered or purchased are to be issued to a person other than the registered
owner(s), in which case signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed other than by the registered
owner(s) of the Shares listed, the certificates must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name or names
of the registered owner or owners appear on the certificates, and signatures on
such certificates or stock powers are required and must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of Shares to it, or its order, pursuant to the Offer. If
payment of the Purchase Price is to be made to, or if certificates for Shares
not tendered or purchased are to be registered in the name of, any person other
than the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered owner or such other person)
payable on account of the transfer to such other person will be deducted from
Purchase Price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or
certificates for unpurchased Shares are to be issued in the name of a person
other than the signer of this Letter of Transmittal, or if a check is to be sent
and/ or such certificates are to be returned to someone other than the signer of
this Letter of Transmittal or to an address other than that shown above, the
appropriate box(es) on this Letter of Transmittal should be completed.
Shareholders tendering Shares by book-entry transfer may request that Shares not
purchased be credited to such account maintained at a Book-Entry Transfer
Facility as such shareholder may designate hereon. If no such instructions are
given, such Shares not purchased will be returned by crediting the account at a
Book-Entry Transfer Facility designated above.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Information Agent at its address set forth below.
Additional copies of the Offer to Purchase and this Letter of Transmittal may be
obtained from the Information Agent at its address set forth below or from your
broker, dealer, commercial bank, trust company or other nominee.
9. WAIVER OF CONDITIONS. Purchaser reserves the absolute right in its sole
discretion to waive any of the specified conditions of the Offer, in whole or in
part, in the case of any Shares tendered.
10. SUBSTITUTE FORM W-9. The tendering shareholder (or other payee) is
required to provide the Depositary with a correct taxpayer identification number
("TIN"), generally the shareholder's social security or Federal employer
identification number, and with certain other information, on Substitute Form
W-9, which is provided under "Important Tax Information" below, and to certify
that the shareholder (or other payee) is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering shareholder (or other payee) to 31% Federal income tax withholding on
the payment of the Purchase Price. The box in Part 3 of the Substitute Form W-9
may be checked if the tendering shareholder (or other payee) has not been issued
a TIN and has applied for a TIN or intends to apply for a TIN in the near
future. If the box in Part 3 is checked and the Depositary is not provided with
a TIN by the time of payment, the Depositary will withhold 31% on all payments
of the Purchase Price.
11. LOST OR DESTROYED CERTIFICATES. If any certificate representing Shares
has been lost or destroyed, the stockholder should promptly notify Trust Company
Bank at (404) 588-7817. The shareholder will then be instructed as to the
procedure to be followed in order to replace the certificate(s). This Letter of
Transmittal and related documents cannot be processed until procedures for
replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER WITH
CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE
DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
shareholder's current TIN on Substitute Form W-9 below. If such shareholder is
an individual, the TIN is his social security number. If the Depositary is not
provided with the correct TIN, the shareholder or other payee may be subject to
a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such shareholder or other payee with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that shareholder must submit to the Depositary a properly completed
Internal Revenue Service Form W-8, signed under penalties of perjury, attesting
to that shareholder's exempt status. A Form W-8 can be obtained from the
Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payment made to the shareholder or other payee. Backup withholding is not an
additional tax. Rather, the Federal income tax liability of persons subject to
backup withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made to a shareholder or other
payee with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of the shareholder's current TIN (or the TIN
of any other payee) by completing the form below, certifying that the TIN
provided on the Substitute Form W-9 is correct (or that such shareholder is
awaiting a TIN), and that (i) the shareholder has not been notified by the
Internal Revenue Service that the shareholder is subject to backup withholding
as a result of failure to report all interest or dividends or (ii) the Internal
Revenue Service has notified the shareholder that the shareholder is no longer
subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the TIN (e.g., the social
security number or Federal employer identification number) of the record owner
of the Shares. If the Shares are registered in more than one name or are not
registered in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidelines on which number to report.
PAYER'S NAME: CHEMICAL BANK
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PART 1--PLEASE PROVIDE YOUR TIN IN Social Security Number
THE BOX AT RIGHT AND CERTIFY BY OR
SIGNING AND DATING BELOW Employer ID Number
SUBSTITUTE
FORM W-9 PART 2
DEPARTMENT OF THE TREASURY CERTIFICATION--Under penalties of perjury, I PART 3
INTERNAL REVENUE SERVICE certify that: Awaiting TIN / /
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me) and
(2) I am not subject to backup withholding
either because (a) I am exempt from backup
withholding, or (b) I have not been
PAYER'S REQUEST FOR TAXPAYER notified by the Internal Revenue Service
IDENTIFICATION NUMBER (TIN) (IRS) that I am subject to backup
withholding as a result of failure to
report all interest or dividends, or (c)
the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you
have been notified by the IRS that you are currently subject to
backup withholding because of underreporting interest or dividends on
your tax return. However, if after being notified by the IRS that you
were subject to backup withholding you received another notification
from the IRS that you are no longer subject to backup withholding, do
not cross out item (2).
Signature Date
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number, 31% of all reportable
payments made to me will be withheld, but that such amounts will be refunded to
me if I then provide a Taxpayer Identification Number within sixty (60) days.
Signature Date
THE INFORMATION AGENT FOR THE OFFER IS:
D. F. KING & CO., INC.
77 Water Street 37 Sun Street
New York, NY 10005 London, England EC2 2PY
(800) 669-5550 (Toll Free) 011-4471-247-8263 (Collect)
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
HOME NUTRITIONAL SERVICES, INC.
As set forth in the Offer to Purchase (as defined below), this form or one
substantially equivalent hereto must be used to accept the Offer (as defined
below) if certificates for shares of common stock (the "Shares") of Home
Nutritional Services, Inc., a New Jersey corporation (the "Company"), are not
immediately available or time will not permit all required documents to reach
the Depositary at or prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase) or the procedures for book-entry transfer cannot be
completed on a timely basis. Such form may be delivered by hand or sent by
telegram, facsimile transmission or mail to the Depositary. See "Section 2 --
Procedure for Tendering Shares" of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
CHEMICAL BANK
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FOR INFORMATION TELEPHONE:
(800) 648-8169
BY MAIL: BY FACSIMILE TRANSMISSION BY HAND OR OVERNIGHT DELIVERY:
Chemical Bank (FOR ELIGIBLE INSTITUTIONS Chemical Bank
Reorganization Department ONLY): 55 Water Street
P.O. Box 3085 (212) 629-8015 Second Floor -- Room 234
G.P.O. Station (212) 629-8016 New York, NY 10041
New York, NY 10116-3085 CONFIRM BY TELEPHONE: Attn: Reorganization Department
(212) 613-7137
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS LISTED ABOVE,
WILL NOT CONSTITUTE VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Company N Merger Corp., a New Jersey
corporation wholly owned by W. R. Grace & Co., a New York corporation, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
March 10, 1994 (the "Offer to Purchase"), and any supplements or amendments
thereto, and the related Letter of Transmittal (which together constitute the
"Offer"), receipt of which is hereby acknowledged, Shares pursuant to the
guaranteed delivery procedures set forth in "Section 2 -- Procedure for
Tendering Shares" of the Offer to Purchase.
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Share Certificate Nos. (if available): Name(s) of Record Holder(s):
- ------------------------------------------ --------------------------------------
- ------------------------------------------ --------------------------------------
If Shares will be delivered by book-entry PLEASE TYPE OR PRINT
transfer, check one box: Address(es) ---------------------------
/ / The Depository Trust Company --------------------------------------
/ / Midwest Securities Trust Company ZIP CODE
/ / Philadelphia Depository Trust Company Area Code and Telephone Number:
Account Number ------------------------- --------------------------------------
Dated: , 1994 --------------------------------------
--------------------------------------
--------------------------------------
SIGNATURE(S)
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange,
a member of the National Association of Securities Dealers, Inc. or a commercial
bank or trust company having an office or correspondent in the United States
(each, an "Eligible Institution"), hereby guarantees that either the
certificates representing the Shares tendered hereby in proper form for
transfer, or timely confirmation of a book-entry transfer of such Shares into
the Depositary's account at The Depository Trust Company, the Midwest Securities
Trust Company or the Philadelphia Depository Trust Company (pursuant to the
procedures set forth in "Section 2 -- Procedure for Tendering Shares" of the
Offer to Purchase), together with a properly completed and duly executed Letter
of Transmittal (or manually signed facsimile thereof), with any required
signature guarantee and any other required documents, will be received by the
Depositary at one of its addresses set forth above within five (5) New York
Stock Exchange, Inc. trading days after the date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary or a confirmation to the Depositary
that the Shares have been delivered by book-entry transfer within the time
period shown herein. Failure to do so could result in a financial loss to such
Eligible Institution.
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Name of Firm: ------------------------------ --------------------------------------------
AUTHORIZED SIGNATURE
Address: ------------------------------------ Name: -------------------------------------
PLEASE TYPE OR PRINT
Title:
---------------------------------------
- --------------------------------------------
ZIP CODE
Area Code and
Tel. No.:
------------------------------------ Dated: , 1994
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM. SHARE CERTIFICATES ARE
TO BE DELIVERED WITH THE LETTER OF TRANSMITTAL.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HOME NUTRITIONAL SERVICES, INC.
AT
$7.85 NET PER SHARE
BY
COMPANY N MERGER CORP.
A WHOLLY OWNED SUBSIDIARY OF
W. R. GRACE & CO.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, APRIL 6, 1994, UNLESS EXTENDED.
March 10, 1994
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Company N Merger Corp., a New Jersey corporation
(the "Purchaser") wholly owned by W. R. Grace & Co., a New York corporation
("Grace"), to act as Information Agent in connection with the Purchaser's offer
to purchase all outstanding shares of common stock (the "Shares") of Home
Nutritional Services, Inc., a New Jersey corporation (the "Company"), at a price
of $7.85 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated March 10, 1994 (the "Offer
to Purchase") and the related Letter of Transmittal (which together constitute
the "Offer") enclosed herewith.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following documents:
1. The Offer to Purchase;
2. The Letter of Transmittal to be used by holders of Shares of the Company
in accepting the Offer (facsimile copies of the Letter of Transmittal may be
used to tender Shares);
3. A Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available, the procedures for
delivery by book-entry transfer may not be made on a timely basis or time will
not permit all required documents to reach the Depositary on a timely basis;
4. The Solicitation/Recommendation Statement on Schedule 14D-9 of the
Company;
5. A form of letter that may be sent to your clients for whose accounts you
hold Shares in your name or in the name of a nominee, with space provided for
obtaining such clients' instructions with regard to the Offer;
<PAGE>
6. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9; and
7. A return envelope addressed to Chemical Bank, the Depositary.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF MARCH 4, 1993 (THE "MERGER AGREEMENT"), BY AND AMONG THE COMPANY, THE
PURCHASER AND GRACE, WHICH PROVIDES, AMONG OTHER THINGS, FOR THE MAKING OF THE
OFFER AND, FOLLOWING CONSUMMATION OF THE OFFER AND THE SATISFACTION OR WAIVER OF
CERTAIN CONDITIONS, THE MERGER OF THE PURCHASER WITH AND INTO THE COMPANY (THE
"MERGER"), WITH THE COMPANY SURVIVING THE MERGER AS A WHOLLY OWNED SUBSIDIARY OF
GRACE.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES REPRESENTING AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING
SHARES ON A FULLY DILUTED BASIS, OR ALL OF THE CONDITIONS TO THE CLOSING UNDER
THE STOCK PURCHASE AGREEMENT (AS DEFINED IN THE OFFER TO PURCHASE) BEING
SATISFIED OR IRREVOCABLY WAIVED AND THE PARTIES THERETO CONFIRMING THAT THE
TRANSACTIONS CONTEMPLATED THEREUNDER WILL CLOSE IMMEDIATELY AFTER CONSUMMATION
OF THE OFFER. THE BOARD OF DIRECTORS OF THE COMPANY, BY UNANIMOUS VOTE OF THE
DIRECTORS PRESENT, HAS DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO AND IN THE
BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE OFFER AND
THE MERGER AND RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER. PURSUANT TO THE TERMS AND SUBJECT
TO THE CONDITIONS SET FORTH IN THE STOCK PURCHASE AGREEMENT, HEALTHDYNE, INC.,
THE BENEFICIAL OWNER OF 7,800,000 SHARES, CONSTITUTING APPROXIMATELY 66% OF THE
TOTAL NUMBER OF THE FULLY DILUTED SHARES (AS DEFINED IN THE OFFER TO PURCHASE),
HAS AGREED TO SELL SUCH SHARES TO PURCHASER AND, AT THE REQUEST OF PURCHASER,
SHALL TENDER SUCH SHARES IN THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will be deemed to have accepted for payment (and
thereby purchased), and will pay for, all Shares validly tendered prior to the
Expiration Date (as defined in the Offer to Purchase) and not properly withdrawn
if, as and when the Purchaser gives oral or written notice to the Depositary of
the Purchaser's acceptance of such Shares for payment pursuant to the Offer. In
all cases, payment for Shares purchased pursuant to the Offer will be made only
after timely receipt by the Depositary of certificates evidencing such Shares,
or timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, the Midwest Securities
Trust Company or the Philadelphia Depository Trust Company, pursuant to the
procedures described in "Section 2 -- Procedure for Tendering Shares" of the
Offer to Purchase, a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and all other required documents.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal, with any required signature guarantees and any
other required documents, should be sent to the Depositary, and certificates
representing the tendered Shares should be delivered, or delivery by book-entry
transfer shall be made, all in accordance with the instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to deliver their certificates on or prior to the Expiration Date, to
comply with the book-entry transfer procedures or deliver all required documents
to the Depositary on a timely basis, a tender may be effected by following the
guaranteed delivery procedures specified in "Section 2 -- Procedure for
Tendering Shares" of the Offer to Purchase.
The Purchaser will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs incurred by them in
forwarding the Offer to Purchase and related documents to the beneficial owners
of Shares held by them as nominee or in a fiduciary capacity. The Purchaser will
pay or cause to be paid all stock transfer taxes applicable to the purchase of
Shares pursuant to the Offer, except as set forth in Instruction 6 to the Letter
of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, APRIL 6, 1994, UNLESS EXTENDED.
<PAGE>
Additional copies of the enclosed materials may be obtained by contacting
the Information Agent at the addresses and telephone numbers set forth on the
back cover of the enclosed Offer to Purchase.
Very truly yours,
D. F. King & Co., Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF THE PURCHASER, AN AFFILIATE OF THE PURCHASER, THE
COMPANY, AN AFFILIATE OF THE COMPANY, THE INFORMATION AGENT OR THE DEPOSITARY,
OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY
OF THEM IN CONNECTION WITH THE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HOME NUTRITIONAL SERVICES, INC.
AT
$7.85 NET PER SHARE
BY
COMPANY N MERGER CORP.
A WHOLLY OWNED SUBSIDIARY OF
W. R. GRACE & CO.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, APRIL 6, 1994, UNLESS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated March 10,
1994, and the related Letter of Transmittal (which together constitute the
"Offer") relating to the offer by Company N Merger Corp., a New Jersey
corporation (the "Purchaser") wholly owned by W. R. Grace & Co., a New York
corporation ("Grace"), to purchase for cash all outstanding shares of common
stock (the "Shares") of Home Nutritional Services, Inc. (the "Company"), a New
Jersey corporation, at a price of $7.85 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer. This
material is being sent to you as the beneficial owner of Shares held by us for
your account but not registered in your name. A TENDER OF SUCH SHARES MAY ONLY
BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE
LETTER OF TRANSMITTAL ACCOMPANYING THIS LETTER IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender any of or all of the Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $7.85 per Share, net to the seller in cash.
2. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Wednesday, April 6, 1994, unless extended.
3. The Board of Directors of the Company has determined, by unanimous
vote of the directors present, that the Merger Agreement (as defined in the
Offer to Purchase) and the transactions contemplated thereby, including the
Offer and the Merger (as defined in the Offer to Purchase), are fair to and
in the best interest of the Company and its shareholders, has approved the
Offer and the Merger and recommends that the shareholders of the Company
accept the Offer and tender their Shares pursuant to the Offer.
<PAGE>
4. Pursuant to the terms and subject to the conditions set forth in the
Stock Purchase Agreement (as defined in the Offer to Purchase), Healthdyne,
Inc., the beneficial owner of 7,800,000 Shares, constituting approximately
66% of the Fully Diluted Shares (as defined in the Offer to Purchase), has
agreed to sell such Shares to Purchaser, and, at the request of Purchaser,
shall tender such Shares in the Offer.
5. The Offer is being made for all outstanding Shares. The Offer is
conditioned upon, among other things, there being validly tendered and not
withdrawn prior to the expiration of the Offer that number of Shares
representing at least a majority of the total number of outstanding Shares
on a fully diluted basis, or all of the conditions to the closing under the
Stock Purchase Agreement being satisfied or irrevocably waived and the
parties thereto confirming that the transactions contemplated thereunder
will close immediately after consummation of the Offer.
6. Shareholders who tender Shares will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in
Instruction 6 to the Letter of Transmittal, transfer taxes on the purchase
of Shares by the Purchaser pursuant to the Offer.
The Offer is being made to all holders of Shares. The Purchaser is not aware
of any jurisdiction where the making of the Offer is not in compliance with the
laws of such jurisdiction. If the Purchaser becomes aware of any jurisdiction
where the making of the Offer would not be in compliance with such laws, the
Purchaser will make a good faith effort to comply with such laws or seek to have
such laws declared inapplicable to the Offer. If, after such good faith effort,
the Purchaser cannot comply with any applicable laws, the Offer will not be made
to (nor will tenders be accepted from or on behalf of) holders of Shares
residing in any such jurisdiction.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing and returning to us the
instruction form set forth below. Please forward your instructions to us in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer. IF YOU AUTHORIZE THE TENDER OF YOUR SHARES, ALL SUCH
SHARES WILL BE TENDERED UNLESS OTHERWISE SPECIFIED ON THE INSTRUCTION FORM SET
FORTH BELOW.
INSTRUCTIONS WITH RESPECT TO OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING
SHARES OF COMMON STOCK
OF
HOME NUTRITIONAL SERVICES, INC.
AT
$7.85 NET PER SHARE
BY
COMPANY N MERGER CORP.
A WHOLLY OWNED SUBSIDIARY OF
W. R. GRACE & CO.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer to
Purchase dated March 10, 1994 and the related Letter of Transmittal (which
together constitute the "Offer"), relating to the offer by Company N Merger
Corp., a New Jersey corporation wholly owned by W. R. Grace & Co., a New York
corporation, to purchase all outstanding shares of common stock (the "Shares")
of Home Nutritional Services, Inc., a New Jersey corporation.
<PAGE>
This will instruct you to tender the number of Shares indicated below (or if
no number is indicated below, all Shares) that are held by you for the account
of the undersigned, on the terms and subject to the conditions in the Offer.
Dated: , 1994
NUMBER OF SHARES TO BE TENDERED:
SHARES (1)
------------------------------------------------------------------
------------------------------------------------------------------
Signature(s)
------------------------------------------------------------------
Please Print Name(s)
------------------------------------------------------------------
------------------------------------------------------------------
Please Print Address(es)
------------------------------------------------------------------
Area Code and Telephone Number(s)
------------------------------------------------------------------
Tax Identification or Social Security Number(s)
- ------------------------
(1) I (we) understand that if I (we) sign this instruction form without
indicating a lesser number of Shares in the space above, all Shares held by
you for my (our) account will be tendered.
<PAGE>
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN
OFFER TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE DATED
MARCH 10, 1994 AND THE RELATED LETTER OF TRANSMITTAL AND IS NOT BEING MADE TO
(NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF 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.
Notice of Offer To Purchase for Cash
All Outstanding Shares of Common Stock
of
HOME NUTRITIONAL
SERVICES, INC.
at
$7.85 Net Per Share
by
COMPANY N MERGER CORP.
a wholly owned subsidiary of
W. R. GRACE & CO.
Company N Merger Corp., a New Jersey corporation (the "Purchaser") wholly
owned by W. R. Grace & Co., a New York corporation ("Parent"), is offering to
purchase all outstanding shares of Common Stock, no par value ("Shares"), of
Home Nutritional Services, Inc., a New Jersey corporation (the "Company"), at
$7.85 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated March 10, 1994 and in the
related Letter of Transmittal (which together constitute the "Offer").
THE OFFER EXPIRES AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, April 6, 1994, UNLESS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES REPRESENTING AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING
SHARES, ASSUMING FULL EXERCISE OF ALL OPTIONS WITH AN EXERCISE PRICE OF LESS
THAN $7.85 PER SHARE AND ISSUANCE OF 10,000 SHARES PURSUANT TO THE COMPANY'S
EMPLOYEE STOCK PURCHASE PLAN, OR ALL OF THE CONDITIONS TO CLOSING UNDER
THE STOCK PURCHASE AGREEMENT (AS DEFINED BELOW) BEING SATISFIED OR IRREVOCABLY
WAIVED AND THE PARTIES THERETO AGREEING TO CLOSE THE TRANSACTIONS CONTEMPLATED
THEREUNDER IMMEDIATELY AFTER CONSUMMATION OF THE OFFER. THE BOARD OF DIRECTORS
OF THE COMPANY, BY UNANIMOUS VOTE OF THE DIRECTORS PRESENT, HAS DETERMINED
THAT THE MERGER AGREEMENT (AS DEFINED BELOW) AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER (AS DEFINED BELOW), ARE FAIR TO
AND IN THE BEST INTEREST OF THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE
OFFER AND THE MERGER AND RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of March 4, 1994 (the "Merger Agreement") by and among the Company, the
Purchaser and Parent, which provides, among other things, for the making of
the Offer and, following consummation of the Offer and the satisfaction or
waiver of certain conditions, the merger of the Purchaser with and into the
Company (the "Merger"), with the Company surviving the Merger as a wholly
owned subsidiary of Parent. On the effective date of the Merger, each
outstanding Share will be converted into the right to receive $7.85 in cash,
without interest. Pursuant to the terms and subject to the conditions set
forth in a Stock Purchase Agreement dated as of March 4, 1994 (the "Stock
Purchase Agreement"), by and among the Purchaser, Healthdyne, Inc.
("Healthdyne") and Parent, Healthdyne, the beneficial owner of 7,800,000
Shares, constituting approximately 65% of the total number of outstanding
Shares, has agreed to sell such Shares to the Purchaser, and, at the request
of the Purchaser, shall tender such Shares in the Offer.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice
to the Depositary of the Purchaser's acceptance for payment of such Shares.
Upon the terms and subject to the conditions of the Offer, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering
shareholders for the purpose of receiving payment from the Purchaser and
transmitting payment to tendering shareholders. Under no circumstances will
interest be paid by the Purchaser on the purchase price of the Shares,
regardless of any delay in making such payment. In all cases, payment for
Shares purchased pursuant to the Offer will be made only after timely receipt
by the Depositary of (a) certificates for such Shares or confirmation of
book-entry transfer of such Shares into the Depositary's account at a
Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant to
the procedures set forth in Section 2 of the Offer to Purchase, (b) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantees and(c) any other documents required by the
Letter of Transmittal.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Wednesday, April 6, 1994, unless and until the Purchaser, in its sole
discretion, shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date on which the Offer, as so extended by the Purchaser, shall expire. The
Purchaser expressly reserves the right, in its sole discretion, at any time or
from time to time and regardless of whether or not any of the events set forth
in Section 14 of the Offer to Purchase shall have occurred or shall have been
determined by the Purchaser to have occurred, to extend the period of time
during which the Offer is open and thereby delay acceptance for payment of,
and the payment for, any Shares, by giving oral or written notice of such
extension to the Depositary. The Purchaser shall not have any obligation to
pay interest on the purchase price for tendered Shares in the event the
Purchaser exercises its right to extend the period of time during which the
Offer is open. There can be no assurance that the Purchaser will exercise its
right to extend the Offer. Any such extension will be followed by a public
announcement thereof no later than 9:00 A.M., New York City time, on the next
business day after the previously scheduled Expiration Date. During any such
extension, 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, as set forth in the Offer to Purchase.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
12:00 Midnight, New York City time, on Wednesday, April 6, 1994 (or, if the
Purchaser shall have extended the period of time during which the Offer is
open, the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire) and, unless theretofore accepted for payment and paid
for, may also be withdrawn after May 8, 1994. For a withdrawal to be
effective, a written or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the
back cover of the Offer to Purchase and must specify the name of the person
having tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder, if different from the name of
the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and the signatures on the
notice of withdrawal must be guaranteed by an Eligible Institution (as defined
in Section 2 of the Offer to Purchase) except, with respect to signature
guarantees, in the case of Shares tendered by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer
as set forth in Section 2 of the Offer to Purchase, any notice of withdrawal
must also specify the name and number of the account at the appropriate
Book-Entry Transfer Facility (as defined in Section 2 of the Offer to
Purchase) to be credited with the withdrawn Shares and must otherwise comply
with such Book-Entry Transfer Facility's procedures. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will thereafter
be deemed not validly tendered for purposes of the Offer. However, withdrawn
Shares may be retendered by again following one of the procedures described in
Section 2 of the Offer to Purchase at any time prior to the expiration of the
Offer. All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Purchaser in its sole
discretion, and its determination will be final and binding.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the shareholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listings, for subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO
THE OFFER.
Requests for copies of the Offer to Purchase and the Letter of Transmittal
may be directed to the Information Agent as set forth below, and copies will
be furnished promptly at the Purchaser's expense.
The Information Agent is:
D. F. KING & CO., INC.
77 Water Street 37 Sun Street
New York, NY 10005 London, England EC2 2PY
(800) 669-5550 (Toll Free) 011-4471-247-8263 (Collect)
March 10, 1994
<PAGE>
CONTACT: Chuck Suits, W. R. Grace & Co.
407-362-2600 or
800-GRACE99
GRACE COMMENCES TENDER OFFER
FOR HOME NUTRITIONAL SERVICES AT $7.85 PER SHARE
BOCA RATON, Fla., March 10, 1994--W. R. Grace & Co. (NYSE: GRA) today
announced that a subsidiary has commenced a previously announced tender offer
for all of the outstanding shares of Home Nutritional Services, Inc. (HNS)
(OTC: HNSI) for $7.85 per share in cash. Completion of the tender offer is
subject to customary conditions, including the tender of a majority of the
outstanding shares of HNS on a fully diluted basis.
In connection with the tender offer, Healthdyne, Inc., owner of
approximately 68 percent of the outstanding shares of HNS, has agreed to tender
in the offer and sell its shares to Grace, subject to certain conditions.
The tender offer will expire at midnight, on Wednesday, April 6, 1994
unless extended. The tender offer is being made pursuant to offering documents
being filed today with the Securities and Exchange Commission. D. F. King &
Co., Inc. is acting as the information agent for the offer.
Following completion of the tender offer, HNS will become a wholly
owned Grace subsidiary through a merger in which any remaining holders of HNS
shares will receive the same $7.85 price per share in cash.
Grace is the world's largest specialty chemicals company with a
leadership position in specialized health care.
HNS is a national provider of home infusion therapy services.
###
(more)
<PAGE>
CONTACTS: Chuck Suits, W. R. Grace & Co.
407-362-2600 or
800-GRACE99
Don Millard, Home Nutritional Services, Inc.
404-423-4500
GRACE AGREES TO ACQUIRE HOME NUTRITIONAL SERVICES
FOR $7.85 PER SHARE
BOCA RATON, Fla. and MARIETTA, Ga., March 4, 1994--W. R. Grace & Co.
(NYSE: GRA) and Home Nutritional Services, Inc. (OTC: HNSI), a national
provider of home infusion therapy services, jointly announced that they have
entered into a definitive agreement under which a Grace subsidiary would acquire
all of the outstanding shares of Home Nutritional Services (HNS) for $7.85 per
share in cash. There are approximately 11.5 million HNS shares currently
outstanding.
In accordance with the agreement, Grace will commence a tender offer
for all HNS shares by Thursday, March 10, 1994. Completion of the tender offer
will be subject to customary conditions, including the tender of a majority of
the outstanding shares of HNS on a fully diluted basis. Following completion of
the tender offer, Grace will acquire the remaining shares through a merger in
which any remaining holders of HNS shares will receive the same $7.85 price
per share.
In connection with the tender offer and merger, Healthdyne, Inc.,
owner of approximately 68% of the outstanding shares of HNS, has entered into a
separate agreement to tender in the offer and sell its shares to Grace, subject
to certain conditions. As a result of this transaction, Healthdyne has
abandoned its plans to commence a partial exchange offer for 2.15 million shares
of HNS stock.
(more)
<PAGE>
-2-
The Board of Directors of HNS has approved the offer and determined
that the price to be paid in the transaction is fair to its stockholders, and
has recommended that HNS' stockholders accept the offer and tender their shares.
The Board had been advised by Dillon, Read & Co. Inc. that the $7.85 per share
price is fair to the stockholders of HNS from a financial point of view.
Following completion of the transaction, HNS will operate as part of
Grace's NMC Homecare unit, the third largest national provider of home infusion
services. As an integrated home care provider, NMC Homecare also offers
respiratory therapy nationwide and home nursing in California.
According to Peter Spears, NMC Homecare president, "The addition of
HNS represents a significant opportunity to expand our services and improve our
operating efficiency to more successfully compete in the growing managed care
environment." The acquisition will strengthen a number of NMC Homecare's
approximately one hundred infusion locations while adding locations in 15 new
markets.
Grace, based in Boca Raton, Fla., is the world's largest specialty
chemicals company with a leadership position in specialized health care.
Home Nutritional Services, a national provider of home infusion
therapies and related alternate site services, is one of the oldest and largest
providers of home infusion care. It conducts its business through 37 regional
centers, 17 satellite facilities, and 37 additional sites of services. HNS is
recognized as a leader in quality care and clinical sophistication.
###
(more)
<PAGE>
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement"), dated as of
March 4, 1994, is among W. R. Grace & Co., a New York corporation (the
"Purchaser"), Company N. Merger Corp., a New Jersey corporation and wholly owned
subsidiary of the Purchaser ("Merger Sub"), and Home Nutritional Services, Inc.,
a New Jersey corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Purchaser and the Board of Directors
of the Company have each determined that it is advisable to merge the Company
with Merger Sub (the "Merger") pursuant to this Merger Agreement, with the
result that the holders of the outstanding Common Stock of the Company, no par
value (the "Shares"), shall receive a payment in cash for each Share as provided
in this Merger Agreement and the Company shall become a wholly owned subsidiary
of the Purchaser; and
WHEREAS, the Purchaser and Healthdyne, Inc. (the "Seller") have entered
into a Stock Purchase Agreement dated the date hereof (the "Stock Purchase
Agreement"), providing for the sale by the Seller to the Purchaser of certain
Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Purchaser, Merger Sub and the Company hereby agree as
follows:
1. THE OFFER
1.1 THE OFFER. Provided that nothing shall have occurred which would
result in a failure to satisfy any of the conditions set forth in the Appendix
hereto, the Purchaser (or a direct or indirect wholly owned subsidiary of the
Purchaser, which may include Merger Sub) shall promptly, and in no event later
than one business day after the date hereof, publicly announce, and within five
business days thereafter commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer
for any and all Shares at a price of $7.85 per Share net to the seller in cash
(the "Offer") and, subject to the conditions set forth in such Appendix, shall
consummate the Offer in accordance with its terms. The Offer shall be made by
means of an Offer to Purchase having only the conditions set forth in the
Appendix hereto, which may be asserted by the Purchaser in its sole discretion.
The Purchaser may at any time, at its sole discretion, increase the price per
Share payable in the Offer.
<PAGE>
1.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company, at a meeting duly called
and held, duly and unanimously adopted resolutions approving this Merger
Agreement, the Offer and the Merger, determining that the terms of the Offer and
the Merger are fair to, and in the best interests of, the Company's stockholders
and recommending that the Company's stockholders approve and adopt this Merger
Agreement, if a vote is required by applicable law, and that the Company's
stockholders accept the Offer and tender their Shares pursuant to the Offer. The
Company represents that its Board of Directors has received the opinion of
Dillon, Read & Co. Inc. (and such opinion has not been withdrawn) that the
proposed consideration to be received by the holders of Shares pursuant to the
Offer and the Merger is fair to such holders from a financial point of view, and
a complete and correct signed copy of such opinion has been delivered by the
Company to the Purchaser.
(b) Concurrently with the commencement of the Offer, the Company
shall file with the Securities and Exchange Commission (the "SEC") and mail to
the holders of Shares a Solicitation/ Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9"), which shall reflect the recommendations described in the
preceding paragraph (a). The Company agrees that the Schedule 14D-9, including
all amendments and supplements thereto, shall, (i) in all material respects,
comply with the requirements of the Exchange Act and the rules and regulations
thereunder and other applicable laws; (ii) include all information required by
Rule 14f-1 of the Exchange Act; and (iii) not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the foregoing representation shall not apply with respect to the accuracy
of information furnished in writing by the Purchaser specifically for inclusion
in the Schedule 14D-9 or taken from reports filed by the Purchaser under the
Exchange Act. None of the information furnished in writing or confirmed in
writing by the Company for inclusion in the Offer Documents (as defined in
Section 3.4), will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Purchaser and Merger Sub and their counsel shall be
given an opportunity to review the Schedule 14D-9 prior to it being filed with
the SEC. The Company agrees promptly to correct any information provided by it
for use in the Offer Documents if and to the extent that it shall have become
false or misleading in any material respect.
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(c) The Company will promptly furnish the Purchaser with mailing
labels containing the names and addresses of the record holders of Shares and
lists of securities positions of Shares held in stock depositories, each as of a
recent date, and shall furnish the Purchaser with such additional information
(including updated lists of shareholders, mailing labels and lists of securities
positions) and assistance as the Purchaser may reasonably request to communicate
the Offer to the shareholders of the Company.
2. THE MERGER
2.1 THE MERGER. At the Effective Time (as defined in Section 2.3 hereof),
in accordance with this Merger Agreement and the New Jersey Business Corporation
Act (the "New Jersey Law"), Merger Sub shall be merged with and into the Company
(the "Merger"), the separate existence of Merger Sub (except as may be continued
by operation of law) shall cease, and the Company shall continue as the
surviving corporation. The Company hereinafter sometimes is referred to as the
"Surviving Corporation."
2.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth in
Section 14A:10-6 of the New Jersey Law.
2.3 CONSUMMATION OF THE MERGER. As soon as is practicable after the
satisfaction or waiver of the conditions hereinafter set forth, the parties
hereto will cause the Merger to be consummated by filing a Certificate of Merger
with the Secretary of State of the State of New Jersey, in such form as required
by, and executed in accordance with, the relevant provisions of applicable law.
The time of the filing of the Certificate of Merger with the Secretary of State
of the State of New Jersey is referred to herein as the "Effective Time."
2.4 CERTIFICATE OF INCORPORATION; BY-LAWS. The Certificate of
Incorporation and By-Laws of the Company, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and By-Laws of the
Surviving Corporation, and thereafter shall continue to be its Certificate of
Incorporation and By-Laws until amended as provided therein and under New Jersey
Law.
2.5 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.
(a) The directors of Merger Sub shall be the initial directors of the
Surviving Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualify in the manner
provided in the Certificate of Incorporation and By-Laws of the Surviving
Corporation, or as otherwise provided by law.
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(b) The officers of the Company at the Effective Time shall be the
initial officers of the Surviving Corporation and shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualify in the manner provided in the Certificate of Incorporation and
By-Laws of the Surviving Corporation, or as otherwise provided by law.
2.6 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holder of any of the securities of the Company or Merger Sub:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be cancelled pursuant to Section 2.6(b)
hereof), shall be cancelled and extinguished and be converted into and represent
the right to receive $7.85 in cash, without interest, or such higher price per
Share as may have been paid pursuant to the Offer (the "Merger Consideration").
All such Shares, by virtue of the Merger and without any action on the part of
the holders thereof, shall no longer be outstanding and shall be cancelled and
retired and shall cease to exist, and each holder of a certificate representing
any such Shares shall thereafter cease to have any rights with respect to such
Shares, except the right to receive the Merger Consideration for such Shares
upon the surrender of such certificate in accordance with Section 2.7.
(b) Each Share issued and outstanding immediately prior to the
Effective Time and held in the treasury of the Company or owned by the Purchaser
or any direct or indirect subsidiary of the Purchaser (including the Merger Sub)
shall be cancelled and retired and no payment shall be made with respect
thereto.
(c) Each share of Common Stock, par value $1.00 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of Common Stock, no par value, of the Surviving Corporation.
2.7 PAYMENT OF CASH FOR SHARES. Each holder of a certificate or
certificates representing Shares cancelled upon the Merger pursuant to Section
2.6(a) hereof may thereafter surrender such certificate to a disbursing agent to
be designated by the Purchaser and reasonably satisfactory to the Company (the
"Disbursing Agent"), as agent for such holders of Shares, to effect the
surrender of such certificates on their behalf for a period ending six months
after the Effective Time. The Purchaser agrees that promptly after the
Effective Time it will distribute to such holders a form of letter of
transmittal and instructions for use in effecting the surrender of the
certificates which,
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<PAGE>
immediately prior to the Effective Time, represented Shares in exchange for
payment therefor. Each such holder shall be entitled upon surrender of one or
more certificates formerly representing Shares, together with a letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, to receive in exchange therefor a check representing the amount to
which such holder is entitled in respect of the cancelled Shares represented by
such certificates after giving effect to any required tax withholding. Until so
surrendered and exchanged, each such certificate shall, after the Effective
Time, be deemed to represent only the right to receive such amount. If payment
is to be made to a person other than the person in whose name a surrendered
certificate is registered, it shall be a condition to such payment that the
certificate so surrendered shall be endorsed or shall be otherwise in proper
form for transfer, with the registered owner's signature guaranteed by a firm
which is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc. or by a commercial bank or
trust company having an office or correspondent in the United States, and that
the person requesting such payment shall have paid any transfer and other taxes
required by reason of such payment in a name other than that of the registered
holder of the certificate surrendered or shall have established to the
satisfaction of the Purchaser or the Disbursing Agent that such tax either has
been paid or is not payable. If any cash is deposited with the Disbursing Agent
for purposes of payment in exchange for such Shares and remains unclaimed
following the expiration of six months after the Effective Time, such cash shall
be delivered to the Purchaser by the Disbursing Agent, and thereafter the
Disbursing Agent shall not be liable to any persons claiming any amount of such
cash and the surrender and exchange shall be effected directly with the
Purchaser. No interest shall accrue or be payable with respect to any amounts
which any holder shall be entitled to receive. The Purchaser or the Disbursing
Agent shall be authorized to pay the cash attributable to any certificate
theretofore issued which has been lost or destroyed, but only upon receipt of
satisfactory evidence of ownership of the Shares represented thereby and of
appropriate indemnification. From and after the Effective Time, the holders of
certificates evidencing ownership of Shares outstanding immediately prior to the
Merger shall cease to have any rights with respect to such Shares except as
otherwise provided herein or by law.
2.8 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Merger Agreement and to vest the Surviving Corporation with
full rights, title and possession to all assets, properties, rights, privileges,
immunities and franchises of either the Company or Merger Sub, the officers and
directors of each such corporation
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<PAGE>
are fully authorized in the name of such corporation or otherwise to take, and
shall take, all such lawful and necessary action.
2.9 CLOSING. The closing of the Merger shall take place at the offices
of W. R. Grace & Co., One Town Center Road, Sixth Floor, Boca Raton, Florida
33486 at 9:00 a.m., local time on the second business day after the satisfaction
or waiver of the conditions set forth in Article 7.
2.10 TRANSFER OF SHARES AFTER EFFECTIVE DATE. No transfers of Shares shall
be made on the stock transfer books of the Surviving Corporation at or after the
Effective Time.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
3.1 ORGANIZATION AND QUALIFICATION. Each of the Purchaser and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has the requisite corporate power
to carry on its respective business as now conducted. The Purchaser is duly
qualified as a foreign corporation to do business and is in good standing in
each jurisdiction where the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on the
Purchaser and its subsidiaries taken as a whole.
3.2 AUTHORITY RELATIVE TO THIS MERGER AGREEMENT. Each of the Purchaser
and Merger Sub has the requisite corporate power and authority to enter into
this Merger Agreement and to carry out its respective obligations hereunder. The
execution and delivery of this Merger Agreement by the Purchaser and Merger Sub
and the consummation by the Purchaser and Merger Sub of the transactions
contemplated hereby have been duly authorized by the respective Boards of
Directors of the Purchaser and Merger Sub and by the Purchaser as the sole
shareholder of Merger Sub, and no other corporate proceedings on the part of the
Purchaser or Merger Sub are necessary to authorize this Merger Agreement and the
transactions contemplated hereby. This Merger Agreement has been duly executed
and delivered by the Purchaser and Merger Sub and constitutes a valid and
binding obligation of each such company. Neither the Purchaser nor Merger Sub
is subject to or obligated under any provision of (i) its respective Certificate
of Incorporation or By-Laws, (ii) any contract, (iii) any license, franchise or
permit or (iv) any law, regulation, order, judgment or decree, which would be
breached or violated or in respect of which a right of termination or
acceleration or any encumbrance on any of its assets would be created by its
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<PAGE>
execution and performance of this Merger Agreement, except (as to (ii), (iii) or
(iv) above) where such breach, violation or right which would not individually,
or in the aggregate, prevent or materially delay the Purchaser or Merger Sub
from performing its obligations under this Merger Agreement. The consummation
of the Offer and the Merger by the Purchaser and Merger Sub will not require the
consent or approval of any party other than (i) approval by the Purchaser as the
sole shareholder of Merger Sub, (ii) applicable requirements, if any, of the
Exchange Act, state "blue sky" or takeover laws and the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), (iii) filing and recordation
of appropriate merger documents as required by the New Jersey Law and (iv) where
failure to obtain such consents or approvals would not prevent or materially
delay the Purchaser or Merger Sub from performing its obligations under this
Merger Agreement.
3.3 FINANCING. The Purchaser has cash, marketable securities and lines of
credit available for use in connection with the acquisition of the Company in an
aggregate amount necessary to consummate the Offer and the Merger.
3.4 TENDER OFFER DOCUMENTS. The Tender Offer Statement on Schedule 14D-1
filed with the SEC, which shall contain the Offer to Purchase and a related
letter of transmittal and summary advertisement (such Schedule 14D-1 and the
documents therein pursuant to which the Offer will be made, together with any
supplement or amendment thereto, are hereafter referred to as the "Offer
Documents"), will comply in all material respects as to form with the applicable
provisions of the Exchange Act. Such Offer Documents will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which made, not misleading; provided, however, that
the foregoing representation shall not apply with respect to the accuracy of
information furnished in writing by the Company specifically for inclusion in
the Offer Documents or which is taken from reports filed by the Company under
the Exchange Act, which accuracy shall be the sole responsibility of the
Company.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Purchaser and Merger Sub
as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and has the requisite corporate power to carry on its business as it
is now being conducted. The Company is duly qualified as a foreign
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<PAGE>
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not have a "Material Adverse Effect". As used in this Merger Agreement,
the term "Material Adverse Effect" shall mean a material adverse effect in the
business, financial condition, results of operations, properties, assets or
liabilities or, to the Company's knowledge, prospects, of the Company and its
Subsidiaries (as defined below) and shall be measured by reference to the
Company and its Subsidiaries, taken as a whole, and the size of the transactions
contemplated by the Offer and the Merger, taken together, and shall not be
determined solely by reference to accounting concepts of materiality unless the
matter involves accounting matters or the context of this Merger Agreement
otherwise requires.
4.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of
Incorporation and By-Laws in the form attached hereto as Exhibits 1 and 2,
respectively, are the Certificate of Incorporation and By-Laws of the Company as
in effect on the date of this Merger Agreement.
4.3 SUBSIDIARIES. Each subsidiary of the Company (each a "Subsidiary" and
collectively the "Subsidiaries") is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power to carry on its business as
it is now being conducted. Each Subsidiary is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not have a Material Adverse Effect. All of the outstanding shares of
capital stock of each of the Subsidiaries are validly issued, fully paid and
nonassessable and are owned by the Company or by a wholly owned Subsidiary of
the Company, free and clear of all liens, claims, charges or encumbrances, and
there are no proxies outstanding with respect to such shares. The Company has
delivered to the Purchaser a true and complete list of the ownership interests
of the Company in the Subsidiaries and in any other corporation, partnership,
joint venture or other business association or entity.
4.4 CAPITALIZATION. The authorized capital stock of the Company consists
of 50,000,000 Shares and 10,000,000 shares of preferred stock, no par value (the
"Preferred Stock"). As of the date hereof, (i) 11,546,232 Shares were
outstanding, all of which were validly issued, fully paid and nonassessable,
(ii) no Shares were held in the treasury of the Company or any of its
Subsidiaries, (iii) 1,108,707 Shares were reserved for issuance
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<PAGE>
pursuant to the Company's 1989 Stock Option Plan and the 1989 Non-Employee
Director Stock Option Plan (the "Stock Option Plans"), copies of which have
heretofore been furnished to the Purchaser, and 200,000 Shares were reserved for
issuance pursuant to the Company's Stock Purchase Plan (the "Stock Purchase
Plan"), (iv) options to purchase 881,470 Shares (the "Stock Options") were
outstanding pursuant to the Stock Option Plans, (v) no shares of the Preferred
Stock were outstanding in the aggregate, and (vi) ten notes with $35,712.50 in
principal amounts outstanding in the aggregate and convertible in the aggregate
into 1,536 Shares was outstanding (the "Convertible Notes"). The Company has
previously provided to the Purchaser a true and complete listing of all Stock
Options, the number of Stock Options so held and the exercise prices of such
Stock Options. All Stock Options are, or will become as a result of the
transactions contemplated by this Agreement, immediately exercisable. A maximum
of 10,000 Shares will be issued during the calendar quarter ending March 31,
1994, under the Company's Stock Purchase Plan. The Company has taken such
actions (including obtaining any required consents) as may be necessary such
that at the Effective Time each Stock Option outstanding pursuant to the Stock
Option Plans or otherwise, whether or not then vested or exercisable or subject
to stockholder approval, shall by operation of the Stock Option Plans be
cancelled and will entitle the holder thereof, upon surrender thereof, to
receive an amount in cash equal to the excess, if any, of the Merger
Consideration over the exercise price per Share of such Stock Option multiplied
by the number of Shares previously subject to such Stock Option. Except as set
forth above or pursuant to the Stock Purchase Plan, there are not now, and at
the Effective Time there will not be, any shares of capital stock or other
equity securities of the Company issued or outstanding or any options, warrants
or other rights, agreements, arrangements or commitments obligating the Company
or any of its Subsidiaries to issue or sell any shares of capital stock of the
Company or of any Subsidiary. There are no outstanding contracts of the Company
or any Subsidiary to repurchase, redeem or otherwise acquire any capital stock
or other equity securities of the Company or any Subsidiary.
4.5 AUTHORITY RELATIVE TO THIS MERGER AGREEMENT. The Company has the
requisite corporate power and authority to enter into this Merger Agreement and
to perform its obligations hereunder. The execution and delivery of this Merger
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Merger Agreement and the transactions contemplated
hereby, except for any required approval of the Merger by the Company's
shareholders as set forth in Section 6.2 of this Merger
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<PAGE>
Agreement. This Merger Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company. Except
as disclosed on SCHEDULE 4.5 to this Merger Agreement, neither the Company nor
any Subsidiary is subject to or obligated under any provision of (i) its
respective Certificate or Articles of Incorporation or By-Laws, (ii) any
contract (excluding all contracts which are terminable upon 90 days or less
notice without premium or penalty or contracts involving not more than $50,000
per fiscal year in payments expected to be paid by the Company or any
Subsidiary), (iii) any license, franchise or permit, or (iv) any law,
regulation, order, judgment or decree, which would be breached, violated or
defaulted (with or without due notice or lapse of time or both) or in respect of
which a right of termination or acceleration or a loss of a material benefit or
any encumbrance on any of its assets would be created or suffered by its
execution and performance of this Merger Agreement, except (as to clauses (ii),
(iii) or (iv) above) where such breach, violation, right of termination or
acceleration, or encumbrance, individually or in the aggregate, would not have a
Material Adverse Effect. Except as disclosed on SCHEDULE 4.5 to this Merger
Agreement, the consummation of the Offer and the Merger by the Company will not
require the consent or approval of or registration or filing with any Federal,
state or local government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign, other
than (i) approval of the holders of Shares if required by applicable law or by
the Company's Certificate of Incorporation or By-Laws, (ii) applicable
requirements, if any, of the Exchange Act, state "blue sky" or takeover laws and
the HSR Act, (iii) filing and recordation of appropriate merger documents as
required by the New Jersey Law and (iv) where failure to obtain such consents or
approvals or to make such registration or filing would not have individually or
in the aggregate a Material Adverse Effect on or prevent or materially delay the
Company from performing its obligations under this Merger Agreement. The Board
of Directors of the Company has approved the Offer, the Merger and this Merger
Agreement and such approval is sufficient to render inapplicable to the Offer,
the Merger and this Merger Agreement and the transactions contemplated by this
Merger Agreement, the provisions of the New Jersey Corporation Takeover Bid and
Disclosure Law (Sections 49:5-1 through 49:5-19 of the New Jersey Law) and the
New Jersey Shareholder Protection Act (Sections 14A:10A-1 through 14A:10A-6 of
the New Jersey Law). To the best of the Company's knowledge, no other state
takeover statute or similar statute or regulation applies or purports to apply
to the Offer, the Merger, this Merger Agreement or any of the transactions
contemplated hereby.
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4.6 COMMISSION FILINGS. The Company has heretofore delivered to the
Purchaser its (i) Annual Reports on Form 10-K for the years ended December 31,
1990, December 31, 1991 and December 31, 1992, as filed with the SEC, (ii)
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993, June 30,
1993, and September 30, 1993, (iii) proxy statements relating to the Company's
meetings of shareholders (whether annual or special) during 1991, 1992 and 1993,
and (iv) all other reports filed by the Company with the SEC since September 30,
1993 (collectively, the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder and
applicable to such SEC Documents, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents previously provided to
the Purchaser comply as to form in all material respects with applicable
accounting requirements and published rules of the SEC with respect thereto,
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto and except, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC) and fairly present the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations, changes in
shareholders' equity and statements of cash flow for the periods then ended,
subject, in the case of the unaudited consolidated interim financial statements,
to normal year-end adjustments and any other adjustments described therein. The
unaudited financial statements of the Company for the year ended December 31,
1993 (the "Unaudited 1993 Financial Statements"), previously provided to
Purchaser have been prepared using the same accounting principles and policies
and in a manner consistent with the financial statements of the Company and its
Subsidiaries for the period ended September 30, 1993 and fairly present the
consolidated financial position of the Company and its consolidated Subsidiaries
as of December 31, 1993, and the consolidated results of their operations,
changes in shareholders' equity and statements of cash flow for the year ended
December 31, 1993. Except as set forth in the SEC Documents or in the Unaudited
1993 Financial Statements, and except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice, since
December 31, 1993, neither the Company nor any Subsidiary has any material
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by generally accepted accounting principles to be set
forth on the
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consolidated balance sheet of the Company and its consolidated Subsidiaries
included in the Unaudited 1993 Financial Statements or in the notes thereto.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1993,
except as previously disclosed in writing to the Purchaser, neither the Company
nor any Subsidiary has: (a) suffered any Material Adverse Effect or any event,
change or condition, known as of the date hereof, likely to cause or have any
such Material Adverse Effect, other than as a result of changes in conditions,
including economic or political developments, applicable to the business of
health care generally or the business of home infusion therapy generally not
having a disproportionate effect on the Company's business relative to the
effect of any such change on other entities in the business of home infusion
therapy; or (b) conducted its business and operations other than in the ordinary
course of business and consistent with past practices except, subsequent to the
date hereof, as permitted by Section 5.1 hereof.
4.8 LITIGATION AND LIABILITIES. Except as disclosed in the SEC Documents
and except as previously disclosed in writing to the Purchaser, there are no
actions, suits or proceedings pending or, to the knowledge of the management of
the Company, threatened against the Company or any of the Subsidiaries that are
reasonably likely, in the aggregate, to have a Material Adverse Effect or that
would be required to be disclosed in an Annual Report or Form 10-K of the
Company.
4.9 EMPLOYEE BENEFITS. (a) True and complete copies of all documents
comprising Benefit Plans have been provided to the Purchaser. For purposes of
this Merger Agreement, the term "Benefit Plan" includes any plan, contract or
arrangement (regardless of whether funded or unfunded, or foreign or domestic)
which is sponsored by the Company or any of the Subsidiaries, or to which the
Company or any of the Subsidiaries makes contributions or which covers any
Employee of the Company or any Subsidiary in his or her capacity as an Employee
or to which the Company or any Subsidiary has any obligation with respect to any
current or former employee, and which is (i) an "Employee Benefit Plan" within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), (ii) a severance contract with (an) employee(s) or
any severance plan applicable to employees, or (iii) a stock option plan or any
other plan of deferred compensation.
(b) All Benefit Plans are valid and binding and in full force and
effect and there are no defaults thereunder. Each Benefit Plan complies
currently, and has complied in the past, in all material respects and in form
and operation, with all applicable provisions of ERISA, the Internal Revenue
Code of
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1986, as amended (the "Code"), and other applicable law. Except as disclosed on
SCHEDULE 4.9 hereto, the Company does not sponsor any "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") which is
intended to be qualified under Section 401(a) of the Code or any retiree
health and life benefits under any Benefit Plan (excluding (i) continuation
coverage required under the Consolidated Omnibus Budget Reconciliation Act of
1985 and (ii) to the extent not material, any written arrangements for post-
termination of employment medical or life coverage between the Company and any
individual). There is no pending or, to the best knowledge of the Company,
threatened litigation relating to the Benefit Plans, except for pending or
threatened litigation that is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect. Neither the Company nor any of the
Subsidiaries has engaged in, or failed to engage in, a transaction with respect
to any Benefit Plan that is reasonably likely to subject the Company or any of
the Subsidiaries to a tax or penalty imposed by either Section 4975 or 4980B of
the Code or Section 502(i), 502(c), 502(l) and 601 through 608 of ERISA in an
amount which would have a Material Adverse Effect.
(c) No Benefit Plan subject to Title IV of ERISA (including any
"multiemployer plan" as defined in ERISA) has been sponsored or contributed to
by the Company or any Subsidiary during the six year period immediately
preceding the date of this Merger Agreement.
(d) All contributions required to be made, and claims to be paid,
under the terms of any Benefit Plan have been timely made or reserves therefor
on the balance sheet of the Company have been established, which reserves are
adequate in all material respects.
4.10 TAXES. (a) Each of the Company and the Subsidiaries has timely
filed (subject to extensions), all Tax Returns (as hereinafter defined) required
to be filed by it except for state or local Tax Returns in which the failure to
file would not be reasonably expected to, in the aggregate, have a Material
Adverse Effect, and has duly paid or caused to be paid on its behalf or made or
caused to be made adequate provision for the payment of all Taxes (as
hereinafter defined) shown to be due on such returns. The information shown on
all Tax Returns of the Company and the Subsidiaries is true and complete, except
where failure to be so true or complete would not have a Material Adverse
Effect. The accruals made for Taxes on the Unaudited 1993 Financial Statements
and, since December 31, 1993, on the Company's and the Subsidiaries' books and
records are sufficient for the payment of all unpaid Taxes payable by the
Company or the Subsidiaries attributable to all periods ending on or before the
date hereof. Neither the Company nor the Subsidiaries have
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incurred, nor are there accruable, any liabilities (whether absolute, contingent
or otherwise, and whether due or to become due) on account of Taxes other than
on account of the kinds of taxes in respect of which accruals have been made on
the Unaudited 1993 Financial Statements and at rates not in excess of the rates
reflected in such accruals unless such higher rate is attributable to a change
in law. The Company and each of its Subsidiaries has delivered to Purchaser (A)
complete and correct copies of all income Tax Returns and all gross receipts and
franchise Tax returns to the extent such gross receipts and franchise Taxes are
based upon the income of the Company or any of its Subsidiaries with respect to
tax years for which the statute of limitations has not run, (B) complete and
accurate copies of all ruling requests, private letter rulings, deficiency
notices or notices of proposed deficiencies, closing agreements, settlement
agreements, revenue agent reports, information document requests and responses
thereto, protests, petitions and any other similar documents submitted on behalf
of the Company and/or its Subsidiaries and (C) a complete and correct list of
all states, localities and foreign jurisdictions with which the Company and/or
its Subsidiaries has a business establishment. Except as previously disclosed
in writing to the Purchaser, (A) no written claims for U.S. Federal income Taxes
have been or, to the knowledge of the Company and its Subsidiaries, are likely
to be asserted against the Company or any of the Subsidiaries, or any
affiliated, consolidated or unitary group of which the Company and/or the
Subsidiaries is or was a member, and no deficiency for any U.S. Federal income
Taxes has been proposed, asserted or assessed which has not been resolved or
paid in full with respect to the Company, the Subsidiaries or any affiliated,
consolidated or unitary group of which the Company and/or the Subsidiaries is
or was a member, (B) no written claims for Taxes other than U.S. Federal income
taxes have been or, to the knowledge of the Company and its Subsidiaries, are
likely to be asserted against the Company or any of the Subsidiaries or any
affiliated, consolidated or unitary group of which the Company and/or the
Subsidiaries is or was a member, and no deficiency for any Taxes other than
U.S. Federal income Taxes has been proposed, asserted or assessed which has not
been resolved or paid in full, which is reasonably likely to have a Material
Adverse Effect with respect to the Company, the Subsidiaries or any affiliated,
consolidated or unitary group of which the Company and/or the Subsidiaries is
or was a member, (C) no Tax Return or taxable period of the Company or any of
the Subsidiaries or any affiliated, consolidated or unitary group of which the
Company and/or the Subsidiaries is or was a member, is under examination and
neither the Company nor any of the Subsidiaries has received written notice of
any pending audit (D) there are no outstanding agreements or waivers extending
the statutory period of limitation applicable to any Tax Return or Taxes for
any period of the Company or the Subsidiaries, or any affiliated,
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consolidated or unitary group of which the Company and/or the Subsidiaries is
or was a member, and the Company and the Subsidiaries have not entered into any
closing agreements or settlement agreement with any tax authority, (E) the
Company and the Subsidiaries collectively have no obligation or liability to
pay Taxes of or attributable to any other person or entity or any affiliated,
consolidated or unitary group of which the Company and/or the Subsidiaries is
or was a member, other than those obligations or liabilities that would not
individually or in the aggregate have a Material Adverse Effect, (F) no issue
or claim has been asserted in writing or, to the Company's knowledge, is
threatened or pending by any taxing authority for Taxes for any prior period,
the adverse determination of which could result in deficiencies which could,
individually or in the aggregate, have a Material Adverse Effect, (G) there are
no tax liens other than statutory liens for Taxes not yet due, (H) neither the
Company nor any Subsidiary is a party to any agreement or contract which would
result in payment of any "excess parachute payment" within the meaning of
Section 28OG of the Code or which would result in the disallowance of a
deduction under Section 162(m) of the Code, (I) neither the Company nor any of
the Subsidiaries has been a member of any affiliated, consolidated, combined,
unitary or aggregate groups for purposes of filing Tax Returns or paying Taxes
at any time, (J) neither the Company nor any of the Subsidiaries will be
required to make any adjustment under Section 481 of the Code (or any analogous
provisions of state, local or foreign law), by reason of a change in accounting
methods or otherwise, in a taxable period beginning on or after the Closing
Date as a result of actions taken prior to the Closing, (K) neither the Company
nor any of the Subsidiaries will be required to include in a taxable period on
or after the Closing Date taxable income attributable to income that
economically accrued in a taxable period ending on or before the Closing Date,
including, without limitation, as a result of the installment method of
accounting, the completed contract method of accounting or the cash method of
accounting and (L) the Company and the Subsidiaries have withheld or collected
from each payment made to their employees the amount of all taxes (including,
but not limited to, federal income taxes, Federal Insurance Contribution Act
taxes and foreign, state and local income, payroll and wage taxes) required to
be withheld or collected therefrom and has paid the same to the proper tax
receiving officers.
(b) The Company and the Subsidiaries have not filed any consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset owned by the Company
or any of the Subsidiaries.
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(c) The Company has not been and is not a United States real property
holding company (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(d) There are no tax sharing agreements between the Company and
Seller or any of its direct or indirect subsidiaries, whether or not wholly
owned, which will be binding on the Company after the Closing.
(e) For purposes of this Agreement, "Taxes" shall mean all taxes,
fees, levies, duties, charges or other like assessments including, without
limitation, income, withholding, gross receipts, excise, real or personal
property, asset, sales, use, license, payroll, transaction, capital, net worth
and franchise taxes imposed by or payable to any Federal, state, county, local
or foreign government, taxing authority, subdivision or agency thereof,
including interest, penalties, additions to tax or additional amounts thereto.
For purposes of this Agreement, "Tax Return" shall mean any report, return,
declaration or other information required to be supplied to a taxing authority
in connection with Taxes.
4.11 INFORMATION SUPPLIED. Any proxy statement mailed by the Company to
the holders of Shares after the date hereof and all amendments and supplements
thereto will comply as to form in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder and
will not, at the time of (a) the first mailing thereof or (b) the meeting called
pursuant to Section 6.2 contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by the Company
with respect to (i) information supplied by the Purchaser or Merger Sub
expressly for inclusion in such proxy statement or (ii) any proxy statement
prepared and mailed after Purchaser has obtained a majority of seats on the
Company's Board of Directors.
4.12 LICENSES AND PERMITS. (a) The Company and the Subsidiaries have
obtained all licenses and permits necessary to conduct its business and to own
and operate its assets and such licenses and permits are valid and in full force
and effect except where the failure to obtain such licenses and permits would
not individually or in the aggregate have a Material Adverse Effect. The
Company and the Subsidiaries have all supplier numbers or authorizations
necessary to receive payment for its services from and covered by Part B of the
Medicare Program; Continue Care of Wyoming, Inc., a wholly-owned subsidiary of
HNS Quality Home Care, Inc., a wholly-owned subsidiary of the Company, has all
provider numbers or authorizations necessary to receive payment for its services
from
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and covered by Part A of the Medicare Program as a Medicare certified home
health agency (collectively, "Medicare Authorizations"). No defaults or
violations exist or have been recorded in respect of any license or permit of
the Company and the Subsidiaries other than defaults or violations which would
not reasonably be expected individually or in the aggregate to have a Material
Adverse Effect. No proceeding is pending or, to the best knowledge of the
Company, threatened looking toward the revocation, limitation or non-renewal of
any such license, permit or Medicare Authorizations, except for pending or
threatened proceedings that would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(b) The Company has delivered or made available for inspection to the
Purchaser a true and complete list of each material license and permit, and each
material pending application for any license or permit, relating to the Company
and the Subsidiaries. All of such pending applications are in good standing and
without challenge of any kind, and each statement, application and other
document submitted or filed by the Company or any Subsidiary to or with any
Federal, state or other governmental agency or authority, or to or with any
other person or entity, for purposes of obtaining a new or renewed license,
permit or Medicare Authorization of any type described in this Section 4.12 in
connection with the transactions contemplated hereby is true and complete, and
except as disclosed on SCHEDULE 4.5, none of the rights of the Company or any
Subsidiary under any license, permit or Medicare Authorization will be impaired
by the consummation of the transactions contemplated hereby, except, as to the
foregoing matters, for such challenges, incompletenesses or inaccuracies,
nondisclosures or impairments which would not, individually or taken in the
aggregate, have a Material Adverse Effect.
(c) Since December 31, 1992, the Company has not received any written
notice from and has not been made a party to any proceeding brought by any
governmental authority alleging that (a) the Company is, or may be in violation
of, any such law, governmental regulation or order, (b) the Company must change
any of its business practices to remain in compliance with such law,
governmental regulation or order, (c) the Company has failed to obtain any
license, permit or Medicare Authorization required for the conduct of its
business, or (d) the Company is in default under or violation of any license,
permit or Medicare Authorization.
(d) Nothing which has been disclosed in writing to the Purchaser on
or prior to the date hereof in connection with its investigation of the matters
covered by this Section 4.12 and which is identified as specifically related to
this Section shall be deemed to be a breach of this Section 4.12.
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4.13 COMPLIANCE WITH LAWS. The Company and the Subsidiaries have complied
in a timely manner with all laws and governmental regulations and orders
relating to any of the property owned, leased or used by them, or applicable to
their business, including, but not limited to, the labor, equal employment
opportunity, occupational safety and health, environmental, hazardous or medical
waste disposal and antitrust laws, except where the failure to so comply would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Nothing which has been disclosed in writing to the Purchaser in
connection with its investigation of the matters covered by this Section 4.13
and identified as specifically related to this Section shall be deemed to be a
breach of this Section 4.13. Since December 31, 1992, neither the Company nor
any of its Subsidiaries has been charged or, to the Company's knowledge,
investigated or received any inquiries in or relating to any violations of any
state or federal statute or regulation involving fraudulent or abusive practices
relating to its reimbursement from third party payors or its participation in
state or federally sponsored reimbursement programs, including but not limited
to fraudulent billing practices. No significant amount of funds are now or, to
the Company's knowledge, are expected to be withheld by any Medicare carrier,
state agency or third party payor, other than pursuant to practices or policies
of applicability to multiple parties within the industry.
4.14 INSURANCE. As of the date hereof, the Company and each of its
Subsidiaries are covered under insurance policies and programs of Seller which
provide coverage to the Company by insurers, reasonably believed by the Company
to be of recognized financial responsibility and solvency, against such losses
and risks and in such amounts as are customary in the businesses in which they
are engaged. All material policies of insurance and fidelity or surety bonds
insuring the Company or any of its Subsidiaries or their respective businesses,
assets, employees, officers and directors of which Seller or the Company have
copies have previously been made available for inspection by the Purchaser and
are in full force and effect. Except as otherwise disclosed pursuant to Section
4.8, as of the date hereof, there are no material claims by the Company or any
Subsidiary under any such policy or instrument as to which any insurance company
is denying liability or defending under a reservation of rights clause. All
necessary notifications of claims have been made to insurance carriers other
than those where the failure to so notify will not have a Material Adverse
Effect.
4.15 CONTRACTS. All material contracts, agreements, commitments and other
documents to which the Company or any Subsidiary is a party or by which the
Company, any Subsidiary, or any of their assets is in any way affected or bound,
including all amendments and supplements thereto and modifications thereof
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(collectively, the "Material Contracts"), are legally valid and binding and in
full force and effect, except where failure to be legally valid and binding and
in full force and effect would not have a Material Adverse Effect or results
from changes in applicable laws or legal interpretations after the date hereof,
and there are no defaults thereunder, except (i) those defaults that would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect and (ii) those defaults that based on the general experience of
the Company's industry do not create a material risk of termination. The
Company has previously made available for inspection by the Purchaser all
written Material Contracts. The Company has previously provided the Purchaser
with copies of any agreement with any executive officer or other key employee of
the Company or any Subsidiary (A) the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a transaction
involving the Company or any Subsidiary of the nature of any of the transactions
contemplated by this Merger Agreement, (B) providing any term of employment or
compensation guarantee extending for a period longer than three years or
(C) providing severance benefits or other benefits after the termination of
employment of such executive officer or key employee not comparable to benefits
available to employees generally.
4.16 EARNOUT PAYMENTS. SCHEDULE 4.16 sets forth a list of contingent
payment obligations presently in effect which the Company has previously paid
and the Company's best estimate based upon current operating performance of its
projected contingent payments for the life of such contingent payment
obligations under agreements pursuant to which the Company has acquired other
businesses.
4.17 TITLE TO PROPERTIES. Neither the Company nor the Subsidiaries own
any real property. Except as previously disclosed in a writing delivered to the
Purchaser, the Company and the Subsidiaries have good title to all personal and
intangible property reflected in the Company's December 31, 1993 balance sheet
previously delivered to Purchaser (except as disposed of since such date in the
ordinary course of business), free and clear of all security interests, liens,
encumbrances, restrictions and other burdens ("Liens") other than Liens under
the Credit Agreement (as defined in Section 6.5) and such other liens which in
the aggregate do not and will not materially interfere with its ability to
conduct its business as presently conducted.
4.18 LABOR MATTERS. There are no collective bargaining or other labor
union agreements to which the Company or any of its Subsidiaries is a party or
by which any of them is bound. To the best knowledge of the Company, since
September 30, 1993, neither
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the Company nor any of its Subsidiaries has encountered any labor union
organizing activity, or had any actual or threatened employee strikes, work
stoppages, slowdowns or lockouts.
5. CONDUCT OF BUSINESS PENDING THE MERGER
5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The Company
covenants and agrees that, prior to the Effective Time, unless the Purchaser
shall otherwise agree in writing or as otherwise expressly contemplated by this
Merger Agreement:
(a) The businesses of the Company and its Subsidiaries shall be
conducted only in, and the Company and the Subsidiaries shall not take any
action except in, the ordinary course of business and consistent with past
practice;
(b) the Company shall not (i) sell or pledge or agree to sell or
pledge any stock owned by it in any of its Subsidiaries; (ii) amend its
Certificate of Incorporation or By-Laws; or (iii) split, combine or reclassify
any shares of its outstanding capital stock or declare, set aside or pay any
dividend or other distribution payable in cash, stock or property or redeem or
otherwise acquire any shares of its capital stock or shares of the capital stock
of any of its Subsidiaries;
(c) the Company shall not, and shall cause each of its Subsidiaries
not to (i) authorize for issuance, issue or sell any additional shares of, or
rights of any kind to acquire any shares of, its capital stock of any class
(whether through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise), except for unissued Shares
reserved for issuance upon the exercise of Stock Options in accordance with
their existing terms, as such Stock Options may be accelerated pursuant to their
existing terms and except with respect to the Stock Purchase Plan; (ii) acquire,
dispose of, transfer, lease, license, mortgage, pledge or encumber any fixed or
other substantial assets other than in the ordinary course of business and
consistent with past practices; (iii) incur, assume or prepay any material
indebtedness or any other material liabilities other than in the ordinary course
of business under the Credit Agreement and consistent with past practices,
provided that the Company may borrow money for use in the ordinary course of
business under the Credit Agreement on terms reasonably acceptable to the
Purchaser; (iv) assume, endorse (other than in the ordinary course of business
consistent with past practices), guarantee or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the material
obligations of any other person (other than a Subsidiary); (v) make any material
loans, advances or capital contributions to, or investments in, any other
person, other than to Subsidiaries, or otherwise enter into any Material
Contract
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other than in the ordinary course of business and consistent with past
practices; (vi) make any loans to employees, other than travel advances in the
ordinary course of business; (vii) fail to maintain adequate insurance
consistent with past practices for their businesses and properties; (viii) other
than commitments previously disclosed in writing by the Company to the Purchaser
and other than the acquisition of equipment in the ordinary course of business,
undertake, make or commit to undertake or make any capital expenditures in an
amount greater than $10,000 per individual capital expenditure and no more than
$100,000 per month in the aggregate (on a combined basis for the Company and the
Subsidiaries); or (ix) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(d) the Company shall use reasonable business efforts to preserve
intact the business organization of the Company and its Subsidiaries to keep
available the services of its and their present officers and key employees, and
to preserve the goodwill of those having business relationships with it and
their respective Subsidiaries;
(e) the Company shall not and shall cause its Subsidiaries not to
(i) enter into any new agreements (other than in its ordinary course of business
consistent with past practice agreements substantially in the form of the
Company's standard form Management Agreement having a provision requiring not
more than thirty (30) days notice to terminate such agreement (the "Management
Agreements")) or amend or modify any existing agreements (other than Management
Agreements in its ordinary course of business consistent with past practice)
with any of their respective officers, directors or employees or with any
"disqualified individuals" (as defined in Section 28OG(c) of the Code),
(ii) grant any increases in the compensation of their respective directors,
officers and employees or any "disqualified individuals" (as defined in
Section 28OG(c) of the Code) other than increases in the ordinary course of
business and consistent with past practice to persons who are not directors or
corporate officers of or "disqualified individuals" with respect to the Company
or any Subsidiary, (iii) enter into, adopt, amend or terminate, or grant any new
benefit not presently provided for under, any employee benefit plan or
arrangement, except as required by law or to maintain the tax qualified status
of the plan; provided, however, it is understood that the Company is permitted
to pay bonuses pursuant to its 1993 corporate bonus plan and additional bonuses
not to exceed in the aggregate amounts accrued therefor in the Unaudited 1993
Financial Statements; or (iv) take any action with respect to the grant of any
severance or termination pay other than in the ordinary course of business and
consistent with past practice and pursuant to policies in effect on the date of
this Merger Agreement;
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(f) the Company shall not, and shall not permit any Subsidiary to,
acquire or agree to acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets (other than
equipment, inventory and supplies in the ordinary course of business) that are
material, individually or in the aggregate, to the Company and its Subsidiaries
taken as a whole;
(g) the Company shall take all actions reasonably necessary so that
the conditions to the Purchaser's or Merger Sub's obligations to consummate the
Offer and the Merger are satisfied on a timely basis, except as contemplated by
this Merger Agreement; and
(h) the Company will not call any meeting of its shareholders to be
held prior to June 30, 1994 other than as required by law or this Merger
Agreement.
5.2 ACTIONS BY THE PURCHASER AND MERGER SUB PENDING THE MERGER. None of
the provisions contained in Section 5.1 of this Merger Agreement shall prohibit
the Purchaser or Merger Sub (or any of their respective subsidiaries), during
the period between the payment for Shares pursuant to the Offer or the Stock
Purchase Agreement and the Effective Time, from taking or causing to be taken
any action with respect to the business of the Company and the Subsidiaries that
the Purchaser or Merger Sub (or any of their respective subsidiaries) would
legally be permitted to take or cause to be taken with respect to a majority
owned subsidiary of Purchaser or Merger Sub (or any of their respective
subsidiaries), provided that Purchaser shall not take any action in violation of
the terms of this Merger Agreement that would cause the Purchaser's obligations
to effect the Merger hereunder to not be satisfied.
6. ADDITIONAL AGREEMENTS
6.1 PROXY STATEMENT. Promptly after expiration of the Offer, the Company
shall prepare and (subject to the Purchaser's approval) file with the SEC under
the Exchange Act, and shall use all reasonable efforts to have cleared by the
SEC, a proxy statement or information statement, as appropriate (the "Proxy
Statement"), with respect to the meeting of the Company's shareholders referred
to in Section 6.2. The information provided and to be provided by the Purchaser
or Merger Sub for use in the Proxy Statement shall be true and correct in all
material respects with respect to such party or as to information known to such
party and shall not omit to state any material fact with respect to such party
or as to information known to such
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party necessary in order to make such information and the Proxy Statement not
misleading as of the date of the Proxy Statement. The Proxy Statement shall
contain the recommendation of the Board of Directors of the Company in favor of
the Merger and for approval and adoption of this Merger Agreement.
6.2 MEETING OF SHAREHOLDERS OF THE COMPANY. (a) Promptly after expiration
of the Offer, the Company shall take all action necessary in accordance with New
Jersey Law and its Certificate of Incorporation and By-Laws to convene a meeting
of its shareholders promptly to consider and vote upon the Merger, if such
meeting is required by New Jersey Law. The Board of Directors of the Company
will recommend that the shareholders of the Company vote to adopt and approve
the Merger and this Merger Agreement, if such vote is required or sought, and
the Company shall use all reasonable efforts to solicit from shareholders of the
Company proxies in favor of such adoption and approval unless, in either case,
the Board of Directors of the Company shall have properly exercised its rights
set forth in the second sentence of Section 6.7(b). At any such meeting, the
Purchaser shall vote, or cause to be voted, all of the Shares then owned by the
Purchaser or any subsidiary of the Purchaser in favor of the Merger.
(b) If permitted by applicable law the Purchaser may elect to effect
the Merger without the holding of a meeting of the shareholders of the Company.
6.3 STOCK OPTIONS; STOCK PURCHASE PLAN. Within three (3) business days
after the commencement of the Offer the Company will notify in writing each
holder of an option under the Stock Option Plans of the effect of the Merger on
the rights of the option holder as described above. The Company covenants and
agrees to suspend or terminate the Stock Purchase Plan on or prior to March 31,
1994.
6.4 EXPENSES. (a) Except as provided below, all fees and expenses
incurred in connection with the Offer, the Merger, this Merger Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees
or expenses, whether or not the Offer or the Merger is consummated.
(b) The Company shall pay to the Purchaser within two (2) business
days of demand therefor a fee of $4,553,000 (the "Termination Fee"), payable in
same day funds, if a takeover proposal is commenced, publicly proposed, publicly
disclosed or communicated to the Company (or the willingness of any person to
make a takeover proposal is publicly disclosed or communicated to the Company)
and the Board of Directors of the Company pursuant to Section 6.7 withdraws or
modifies its approval or recommendation of this Merger Agreement, the Offer or
the Merger,
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approves or recommends such other takeover proposal, enters into an agreement
with respect to such other takeover proposal or terminates this Merger
Agreement. The Company shall pay to the Purchaser within two business days
after demand therefor all Expenses (up to but not in excess of $500,000) but not
the Termination Fee if the Purchaser terminates this Merger Agreement pursuant
to Section 8.1(f)(ii) of this Merger Agreement. For purposes of this paragraph,
"Expenses" shall mean all out-of-pocket fees and expenses incurred or paid by or
on behalf of the Purchaser in connection with the Offer, the Merger or the
consummation of any of the transactions contemplated by this Merger Agreement,
including all fees and expenses of counsel, investment banking firms,
accountants, experts and consultants to the Purchaser.
6.5 TERMINATION OF CREDIT AGREEMENT. The Purchaser shall provide funds to
the Company sufficient to repay all amounts outstanding under that certain
Revolving Credit and Term Loan Agreement dated as of June 30, 1990, as amended
(the "Credit Agreement"), between the Company, Continental Bank, N.A. and LTCB
Trust Company at the Effective Time or such earlier time as may be required by
the Credit Agreement but not earlier than such time as Purchaser acquires Shares
pursuant to the Offer. Prior to the Effective Time, the Company shall pay in
full the Convertible Note.
6.6 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by the Offer and this
Merger Agreement, including (i) filing the Certificate of Merger referred to in
Section 2.3, (ii) using reasonable efforts to remove any legal impediment to the
consummation or effectiveness of such transactions and (iii) using reasonable
efforts to obtain all necessary waivers, consents and approvals and to effect
all necessary registrations and filings, including, but not limited to, filings
under the HSR Act and submissions of information requested by governmental
authorities.
6.7 NO SOLICITATION. (a) The Company shall not, nor shall it permit any
of its Subsidiaries or affiliates to, nor shall it authorize or permit any
officer, director or employee of, or any investment banker, attorney or other
advisor or representative of, the Company or any of its Subsidiaries to,
(i) solicit or initiate, or knowingly encourage the submission of, any takeover
proposal, (ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to any takeover proposal
(except for (1) non-confidential information which is furnished in response to
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inquiries by securities analysts or institutional investors concerning the Offer
or the Merger, or (2) information which the Company is required to furnish
pursuant to Section 14A:5-28 of the New Jersey Business Corporation Act);
PROVIDED, HOWEVER, that prior to the acceptance for payment of Shares pursuant
to the Offer, to the extent required by the fiduciary obligations of the Board
of Directors of the Company, as determined in good faith by the Board of
Directors based on the written advice of outside counsel, the Company may, (A)
in response to an unsolicited request therefor, furnish information with respect
to the Company (pursuant to a customary confidentiality agreement at least as
restrictive as the Company's Confidentiality Agreement with the Purchaser (as
determined by the Company's outside counsel)) to any person who has indicated to
the Company that it is interested in pursuing a qualified takeover proposal and
discuss such information (but not the terms of any possible takeover proposal)
with such person and (B) upon receipt by the Company of a qualified takeover
proposal, following delivery to the Purchaser of the notice required pursuant to
Section 6.7(c), participate in negotiations regarding such qualified takeover
proposal. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by any officer of the
Company or any of its Subsidiaries or any investment banker, attorney or other
advisor or representative of the Company or any of its Subsidiaries, whether or
not such person is purporting to act on behalf of the Company or any of its
Subsidiaries or otherwise, shall be deemed to be a breach of this Section 6.7(a)
by the Company. For purposes of this Merger Agreement, "takeover proposal"
means any proposal for a merger or other business combination involving the
Company or any Subsidiary or any proposal or offer to acquire in any manner,
directly or indirectly, a substantial portion of the assets of the Company, an
equity interest in or any voting securities of the Company (other than pursuant
to the Stock Option Plans or the Stock Purchase Plan) and "qualified takeover
proposal" means a proposal to acquire all Shares by merger, tender offer or
otherwise at a purchase price which includes cash consideration in excess of
$7.85 per share, which in the good faith determination of the Board of Directors
is reasonably likely to be fully financed.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to the Purchaser or Merger Sub, the approval or recommendation by
such Board of Directors or any such committee of the Offer, this Merger
Agreement or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any takeover proposal or (iii) enter into any agreement with respect
to any takeover proposal. Notwithstanding the foregoing, in the event the Board
of Directors of the Company receives a superior takeover proposal (as defined
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below), the Board of Directors may (subject to the limitations contained in this
Section) withdraw or modify its approval or recommendation of the Offer, this
Merger Agreement or the Merger, approve or recommend any such superior takeover
proposal, enter into an agreement with respect to any such superior takeover
proposal or terminate this Merger Agreement in each case at any time after 48
hours following the Purchaser's receipt of written notice (a "Notice of Superior
Takeover Proposal") advising the Purchaser that the Board of Directors has
received a superior takeover proposal, specifying the material terms and
conditions of such superior takeover proposal and identifying the person making
such superior takeover proposal. The Company may take any of the forgoing
actions pursuant to the preceding sentence only if Merger Sub shall not have
accepted for payment the Shares pursuant to the Offer. In addition, if the
Company proposes to enter into an agreement with respect to any takeover
proposal, terminate the Merger Agreement, approve or recommend a superior
takeover proposal or withdraw or modify its approval or recommendation of the
Offer, this Merger Agreement or the Merger, it shall within two business days of
the taking of any such action pay, or cause to be paid, to the Purchaser the
Termination Fee (in accordance with and as defined in Section 6.4(b)). Nothing
contained herein shall prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) following the Purchaser's
receipt of a Notice of Superior Takeover Proposal provided that the Company does
not withdraw or modify its position with respect to the Offer or Merger or
approve or recommend a takeover proposal. For purposes of this Merger
Agreement, a "superior takeover proposal" means a qualified takeover proposal
having terms which the Board of Directors of the Company determines in its good
faith reasonable judgment (based on advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's stockholders than
the Offer and the Merger.
(c) In addition to the obligations of the Company set forth in
paragraph (b) of this Section, the Company shall promptly advise the Purchaser
orally and in writing of any request for information or of any takeover
proposal, or any inquiry with respect to any takeover proposal, the material
terms and conditions of such request, takeover proposal or inquiry, and the
identity of the person making any such takeover proposal or inquiry. The
Company will keep the Purchaser fully informed of the status and details of any
such request, takeover proposal or inquiry.
6.8 OFFICERS' AND DIRECTORS' INSURANCE; INDEMNIFICATION. The Purchaser
will cause the Surviving Corporation to (i) either (a) purchase and maintain a
directors' and officers' insurance and indemnification policy substantially
equivalent to the Company's current policy for all current officers and
directors
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of the Company on the date of this Merger Agreement, for three years after the
Effective Time to cover acts and omissions of directors and officers of the
Company occurring prior to the Effective Time or (b) request Seller to obtain
such coverage and provide reimbursement to Seller for the cost thereof and
(ii) maintain in effect the current provisions of the By-Laws of the Company
(which shall be contained in the By-Laws of Merger Sub and the Surviving
Corporation) relating to the rights to indemnification of officers and directors
with respect to indemnification for acts and omissions occurring prior to the
Effective Time.
6.9 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt notice
to the Purchaser, and the Purchaser shall give prompt notice to the Company, of
(i) the occurrence, or failure to occur, of any event, which occurrence or
failure would be likely to cause any representation or warranty contained in
this Merger Agreement to be untrue or inaccurate at any time from the date
hereof to the Effective Time, provided that each party's obligation hereunder is
limited to events of which it has knowledge, and (ii) any material failure of
the Company or the Purchaser, as the case may be, or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
6.10 ACCESS TO INFORMATION. The Company shall, and shall cause its
Subsidiaries, officers, directors, employees and agents to, afford the officers,
employees and agents of the Purchaser complete access at all reasonable times,
from the date hereof to the Effective Time, to its officers, employees, agents,
properties, books and records, and shall furnish the Purchaser all financial,
operating and other data and information as the Purchaser, through its officers,
employees or agents, may reasonably request. Subject to applicable law, the
Purchaser shall cause all such information of a non-public nature to be retained
confidentially. If this Merger Agreement is terminated, Purchaser shall
promptly comply with the provisions of the Confidentiality Agreement previously
entered into by the Company and Dillon, Read & Co. Incorporated, as agent for
the Company and Seller, with respect to the return of confidential information
to the Company by the Purchaser.
6.11 EMPLOYEE BENEFITS. For at least two years following the consummation
of the Merger, the Purchaser agrees that the employees of the Company will be
provided with employee benefits which in the aggregate are not less favorable
than those provided by National Medical Care, Inc. to its employees who are
similarly situated. For purposes of this Section 6.11, the Purchaser shall not
be obligated under this Merger Agreement to continue the employment of any
employee of the Company or to continue the
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Stock Option Plans or the Stock Purchase Plan maintained by the Company. All
employees of the Company who continue their employment with the Company or any
subsidiary of the Purchaser after the closing date under the Stock Purchase
Agreement or the purchase of the Seller's shares in the Company under the Offer
(the "Cut-Off Date") shall be given credit for their service with the Company
prior to the Cut-Off Date for purposes of determining eligibility and vesting
(other than with respect to National Medical Care's retirement plan) under
benefit plans sponsored by the Company, the Purchaser or any subsidiary of the
Purchaser applicable to such employees after the Cut-Off Date.
6.12 ANTITRUST LAWS. As promptly as practicable, the Company, the
Purchaser and Merger Sub shall make all filings and submissions under the HSR
Act as may be reasonably required to be made in connection with this Merger
Agreement and the transactions contemplated hereby. Subject to Section 6.10
hereof, the Company will furnish to the Purchaser and Merger Sub, and the
Purchaser and Merger Sub will furnish to the Company, such information and
assistance as the other may reasonably request in connection with the
preparation of any such filings or submissions. Subject to Section 6.10 hereof
and to the preservation of attorney-client privilege and work-product doctrine,
the Company will provide the Purchaser and Merger Sub, and the Purchaser and
Merger Sub will provide the Company, with copies of all correspondence, filings
or communications (or memoranda setting forth the substance thereof) between
such party or any of its representatives, on the one hand, and any governmental
agency or authority or members of their respective staffs, on the other hand,
with respect to this Merger Agreement and the transactions contemplated hereby;
PROVIDED, HOWEVER, that the Purchaser and Merger Sub shall not be required to
provide the Company with copies of confidential documents or information
included in the Purchaser's filings and submissions under the HSR Act.
6.13 PUBLIC ANNOUNCEMENTS. The Purchaser and Merger Sub, on the one hand,
and the Company, on the other hand, agree that they will use reasonable efforts
to consult with the other party prior to issuing any press release or otherwise
making any public statement or responding to any press inquiry with respect to
this Merger Agreement or the transactions contemplated hereby.
6.14 DIRECTORS. Subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder, upon the acceptance for payment of, and payment
for, any Shares by Merger Sub pursuant to the Offer or the Stock Purchase
Agreement which, when taken together with the Shares which the Purchaser
beneficially owns (as such term is defined under the Exchange Act) represent at
least a majority of the then outstanding Shares, Merger Sub shall be entitled to
designate the directors on the Board of
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Directors of the Company, and the Company shall, at such time, promptly increase
the size of the Board of Directors of the Company to the extent necessary to
enable Merger Sub's designees to be elected to, and to constitute a majority of,
the Board of Directors of the Company and shall cause Merger Sub's designees to
be so elected. The Company agrees to cooperate in permitting the exercise by
Merger Sub of its rights under this Section 6.14, including without limitation
(a) cooperating in satisfying the requirements of Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, and (b) amending, prior to the
expiration date of the Offer or the closing under the Stock Purchase Agreement,
any provisions of the By-laws or any agreement by which the Company is bound
that could delay or hinder the ability of Merger Sub or the Purchaser to elect
its designees to a majority of the directorships constituting the Board of
Directors of the Company. The Company will not take any action to delay or
hinder such election.
6.15 AUDITED FINANCIAL STATEMENTS. Prior to March 15, 1994, the Company
shall deliver to the Purchaser the audited financial statement for the year
ended December 31, 1993, to be included in the Company's 1993 Annual Report on
Form 10-K (the "Audited 1993 Financial Statements"). The Audited 1993 Financial
Statements when delivered pursuant hereto will comply as to form in all material
respects with applicable accounting requirements and published rules of the SEC
with respect thereto, will have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and will fairly
present the consolidated financial position of the Company and its consolidated
Subsidiaries as of December 31, 1993 and the consolidated results of their
operations, changes in Shareholders' equity and statements of cash flow for the
year ended December 31, 1993.
6.16 MANAGEMENT SERVICES AGREEMENT. The Company and the Seller shall, not
later than the expiration date of the Offer, terminate the current
Administrative Services Agreement in effect between them and, not later than the
expiration date of the Offer, the Company and the Seller shall execute a
Management Services Agreement in substantially the form attached as Exhibit B to
the Stock Purchase Agreement.
6.17 PERINATAL SUPPLY AGREEMENT. The Seller shall, not later than the
expiration date of the Offer, cause Perinatal Services, Inc. to enter into an
agreement to purchase certain medical supplies from the Company, which agreement
shall be substantially in the form attached as Exhibit A to the Stock Purchase
Agreement.
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7. CONDITIONS
7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) This Merger Agreement and the Merger shall have been approved and
adopted by the requisite vote of the shareholders of the Company if required by
New Jersey Law;
(b) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated; and
(c) No temporary restraining order, preliminary injunction or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any Federal or state court and shall remain in effect.
7.2 ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of
the Company to effect the Merger is also subject to the condition that each of
the Purchaser and Merger Sub shall in all material respects have performed each
obligation and agreement and complied with each covenant to be performed and
complied with by it hereunder at or prior to the Effective Time.
7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE PURCHASER AND MERGER SUB.
The obligations of the Purchaser and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) The Company shall in all material respects have performed each
obligation and agreement and complied with each covenant to be performed and
complied with by it hereunder on or prior to the Effective Time;
(b) The Purchaser or any of its subsidiaries shall have purchased
Shares pursuant to the Offer and the transactions contemplated by Section 1.2 of
the Stock Purchase Agreement shall have been consummated; and
(c) All Stock Options under the Stock Option Plans shall have been
surrendered or cancelled.
8. TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Merger Agreement may be terminated at any time
prior to the Effective Time, whether prior to or after approval by the
shareholders of the Company:
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(a) By mutual consent of the Boards of Directors of the Purchaser and
the Company;
(b) By either the Purchaser or the Company if the Merger shall not
have been consummated by June 30, 1994;
(c) By the Purchaser if (i) neither the Purchaser nor any subsidiary
of the Purchaser shall have purchased any Shares pursuant to the Offer by May
31, 1994 or (ii) the Purchaser has properly terminated the Offer in accordance
with its terms;
(d) By the Company if neither the Purchaser nor any subsidiary of the
Purchaser shall have commenced (within the meaning of the Exchange Act) the
Offer by the date provided in Section 1.1 of this Merger Agreement;
(e) By the Company, if the Board of Directors of the Company shall
have properly exercised its rights set forth in the second sentence of Section
6.7(b);
(f) By the Purchaser, if the Board of Directors of the Company shall
have (i) exercised its rights set forth in the second sentence of Section 6.7(b)
or (ii) provided any information to any party in accordance with the proviso to
Section 6.7(a); PROVIDED, HOWEVER, that the Purchaser shall not terminate this
Merger Agreement pursuant to Section 8.1(f)(i) if, as a result of the Company's
receipt of a takeover proposal from a third party, the Company, as required by
applicable law, takes and discloses to the Company's shareholders a position
contemplated by Rule 14e-2(a)(2) or (3) promulgated under the Exchange Act with
respect to such proposal or the transactions contemplated thereby and if within
five business days of taking and disclosing to its shareholders the
aforementioned position the Company publicly reconfirms its recommendation of
the transactions contemplated as set forth in Section 1.2 hereof.
(g) By the Company, if there shall have been any material breach of a
material obligation of the Purchaser or Merger Sub hereunder and such default
shall have not been remedied within 5 days after receipt by the Purchaser or
Merger Sub, as the case may be, of notice in writing from the Company specifying
such breach and requesting that it be remedied;
(h) By the Purchaser and Merger Sub if there shall have been any
material breach of a material obligation of the Company hereunder and such
default shall not have been remedied within 5 days after receipt by the Company
of notice in writing from the Purchaser or Merger Sub specifying such breach and
requesting that it be remedied; or
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(i) By the Purchaser and Merger Sub, if the Stock Purchase Agreement
shall have been terminated.
8.2 EFFECT OF TERMINATION. In the event of termination of this Merger
Agreement as provided in Section 8.1, this Merger Agreement shall forthwith
become void and there shall be no liability on the part of the Purchaser, Merger
Sub or the Company, except that (i) the provisions of Section 6.4 hereof, and
the last two sentences of Section 6.10 hereof, shall survive any such
termination, and (ii) nothing herein will relieve any party from liability for
any willful breach of any representation or warranty or any breach prior to such
termination of any covenant or agreement contained herein.
8.3 AMENDMENT. This Merger Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
8.4 WAIVER. At any time prior to the Effective Time, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of any other party hereto or (b) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid if set
forth in an instrument in writing signed on behalf of such party by a duly
authorized officer.
9. GENERAL PROVISIONS
9.1 BROKERS. The Company represents and warrants that no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Offer or the Merger based upon arrangements
made by or on behalf of the Company, other than the arrangements with Dillon,
Read & Co. Inc. and that a true and complete copy of the engagement letter
between the Company and Dillon, Read & Co. Inc. has previously been delivered to
the Purchaser. No valid claim exists against the Company or the Surviving
Corporation on or, based on any action by the Company or any Subsidiary, against
the Purchaser or Merger Sub for payment of any "topping", "break-up" or "bust-
up" fee or any similar compensation or payment arrangement as a result of the
transactions contemplated hereby, including the Offer and the Merger.
9.2 SURVIVAL OF REPRESENTATION, WARRANTIES AND AGREEMENTS. No
representations, warranties or agreements contained herein shall survive beyond
the Effective Time except that the agreements contained in Sections 2.6, 2.7 and
2.10 hereof shall survive beyond the Effective Time.
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9.3 NOTICES. All notices and other communications hereunder shall be
given by telephone and immediately confirmed in writing and shall be deemed
given if delivered personally or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to the Purchaser or Merger Sub:
W.R. Grace & Co.
One Town Center Road
Boca Raton, Florida 33486-1010
Attention: Secretary
With copies to:
National Medical Care, Inc.
1601 Trapelo Road
Waltham, Massachusetts 02154
Attention: Peter Spears
and
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attention: Philip A. Gelston, Esq.
(b) if to the Company:
Home Nutritional Services, Inc.
1850 Parkway Place
Marietta, Georgia 30067
Attention: President
With copies to:
Healthdyne, Inc.
1850 Parkway Place
12th Floor
Marietta, Georgia 30067
Attention: J. Brent Burkey, Esq.
and
Troutman Sanders
600 Peachtree Street, N.E.
Suite 5200, NationsBank Plaza
Atlanta, Georgia 30308
Attention: James L. Smith, III, Esq.
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9.4 INTERPRETATION. When a reference is made in this Merger Agreement to
subsidiaries of the Purchaser or the Company, the word "subsidiaries" or
"Subsidiaries" means any corporation more than fifty percent (50%) of whose
outstanding voting securities are directly or indirectly owned by the Purchaser
or the Company, as the case may be. The headings contained in this Merger
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Merger Agreement.
9.5 NO THIRD PARTY BENEFICIARIES. There are no third party beneficiaries
of this Merger Agreement and nothing in this Merger Agreement, express or
implied, is intended to or shall confer upon any person other than the parties
hereto and their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities.
9.6 MISCELLANEOUS. This Merger Agreement (including the documents and
instruments referred to herein) (i) constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof;
(ii) is not intended to confer upon any other person any rights or remedies
hereunder; (iii) shall not be assigned by operation of law or otherwise,
provided that the Purchaser or Merger Sub may assign its rights and obligations
hereunder to a direct or indirect subsidiary of the Purchaser, but no such
assignment shall relieve the Purchaser or Merger Sub, as the case may be, of its
obligations hereunder; and (iv) shall be governed in all respects, including
validity, interpretation and effect, by the internal laws of the State of New
York without giving effect to the principles of conflict of laws thereof (except
to the extent that New Jersey Law governs any procedural matters relating to the
effectuation of the Merger, in which case New Jersey Law shall apply with
respect to such procedural matters). This Merger Agreement may be executed in
one or more counterparts which together shall constitute a single agreement.
9.7 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event any of the provisions of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the Purchaser, Merger Sub and the Company have caused
this Merger Agreement to be executed as of the date first written above by their
respective officers thereunder duly authorized.
W. R. GRACE & CO.
By:_____________________________________
Title:
COMPANY N MERGER CORP.
By:_____________________________________
Title:
HOME NUTRITIONAL SERVICES, INC.
By:_____________________________________
Title: President and Chief
Executive Officer
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APPENDIX
CONDITIONS TO THE OFFER
Notwithstanding any other term of the Offer or this Merger Agreement, the
Purchaser or Merger Sub will not be required to accept for payment or to pay for
any Shares tendered pursuant to the Offer, and may terminate or amend the Offer,
and may postpone the acceptance for payment of Shares pursuant thereto, unless,
(i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer 6,218,852 Shares (the "Minimum Tender Condition") or all
the conditions to the closing of the purchase of Shares under the Stock Purchase
Agreement (other than consummation of the Offer) shall have been satisfied or
waived and the parties hereto have agreed to close thereunder, and (ii) any
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer shall have expired or been terminated (the "HSR Condition").
Furthermore, notwithstanding any other term of the Offer or this Merger
Agreement, the Purchaser or Merger Sub shall not be required to accept for
payment or to pay for any Shares not theretofore accepted for payment or paid
for, and may terminate or amend the Offer and may postpone the acceptance for
payment of Shares pursuant thereto if, at any time on or after the date of this
Merger Agreement and before the acceptance of such Shares for payment or the
payment therefor, any of the following conditions exists:
(a) any statute, rule, regulation or order shall be proposed,
enacted, entered or deemed applicable to the Offer or the Merger (i) making
the purchase of, or payment for, some or all of the Shares pursuant to the
Offer, the Merger Agreement or the Stock Purchase Agreement illegal, or
resulting in a material delay in the ability of the Purchaser to accept for
payment or pay for some or all of the Shares, or to consummate the Offer or
Merger or seeking to obtain from the Company, the Purchaser or Merger Sub
any damages that would have a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole or a material adverse effect on National
Medical Care, Inc. and its Subsidiaries taken as a whole, (ii) imposing
material limitations on the ability of the Purchaser effectively to acquire
or hold or to exercise full rights of ownership of the Shares acquired by
it, including the right to vote the Shares purchased by it on all matters
properly presented to the shareholders of the Company, (iii) which would
require the Purchaser or any direct or indirect subsidiary of the Purchaser
to dispose of or hold separate any of the Shares or all or any material
portion of the assets or business of the Company and the Subsidiaries taken
as a whole, or National Medical Care, Inc. and its subsidiaries taken as a
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<PAGE>
whole; or (iv) prohibit or materially limit the ability of the Purchaser
or any direct or indirect subsidiary of the Purchaser to own, control or
operate the Company, National Medical Care, Inc. or any of their
respective subsidiaries or all or any material portion of the businesses,
operations or assets of the Company and its Subsidiaries taken as a whole
or National Medical Care, Inc. and its subsidiaries taken a whole.
(b) any governmental or regulatory action or proceeding by or before
any court, government or governmental or regulatory authority, domestic or
foreign, shall be threatened, instituted or pending, or any action or
proceeding by any other person, domestic or foreign, shall be instituted or
pending, which would reasonably be expected to result in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a)
above; or
(c) the Company shall not have complied in all material respects with
its agreements and covenants in the Merger Agreement, or its
representations and warranties in the Merger Agreement, when made or at and
as of any time thereafter, are untrue or incomplete in any material
respect; or
(d) Seller shall not have complied in all material respects with its
agreements and covenants in the Stock Purchase Agreement, or its
representations and warranties in the Stock Purchase Agreement, when made
or at and as of any time thereafter are untrue or incomplete in any
material respect; or
(e) an offer shall have been publicly proposed to be made or have
been made on or after the date of this Offer to Purchase by another person
or by a "group" of persons as defined in Section 13(d)(3) of the Exchange
Act, individually or in the aggregate, to purchase or exchange for cash or
other consideration 20% or more of the Shares, or it shall have been
publicly disclosed or the Purchaser shall have learned that 20% or more of
the Shares have been or are proposed to be acquired by another person or by
a group of persons; or
(f) any change (or any development involving a prospective change)
shall have occurred in the business, financial condition, results of
operations or prospects of the Company or any of its Subsidiaries that is
materially adverse to the Company and its Subsidiaries as a whole (other
than as a result of changes in conditions, including economic or political
developments, applicable to the business of health care generally or the
business of home
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<PAGE>
infusion therapy generally not having a disproportionate effect on the
Company's business relative to the effect of any such change on other
entities in the business of home infusion therapy); or
(g) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange
or in the over-the-counter market, (ii) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation by any governmental authority on, or any
other event which, in the sole judgment of the Purchaser, affects the
extension of credit by banks or other financial institutions, (v) a
material adverse change in the United States exchange rates or a suspension
of, or limitation on, the markets therefor, (vi) a decrease of more than
25% in the Dow Jones Industrial Average, or (vii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(h) the Merger Agreement shall have been terminated or amended to
provide for the amendment or termination of the Offer; or
(i) the Audited 1993 Financial Statements shall be materially and
adversely different from the Unaudited 1993 Financial Statements;
which, in the reasonable good faith of the Purchaser, in any such case
regardless of the circumstances (including any action or omission by the
Purchaser) giving rise to any such conditions, makes it inadvisable to proceed
with such acceptance for payment or payment or makes it advisable to terminate
or amend the Offer.
The foregoing conditions are for the sole benefit of the Purchaser and
Merger Sub and may be asserted by the Purchaser and Merger Sub regardless of the
circumstances giving rise to any such conditions or may be waived by the
Purchaser or Merger Sub in whole or in part, at any time and from time to time
in their sole discretion. The failure by the Purchaser or Merger Sub at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each right shall be deemed an on-going right which may be
asserted at any time and from time to time. Any determination by the Purchaser
or Merger Sub concerning any events described in the above conditions shall be
final and binding on all parties.
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of March 4, 1994 (the "Agreement"),
among W.R. GRACE & CO., a New York corporation (the "Purchaser"), COMPANY N
MERGER CORP., a New Jersey corporation and a wholly-owned subsidiary of the
Purchaser (the "Subsidiary"), and HEALTHDYNE, INC., a Georgia corporation (the
"Seller").
W I T N E S S E T H:
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WHEREAS, the Seller owns of record and beneficially 7,800,000 outstanding
shares (the "Shares") of Common Stock, no par value (the "Common Stock"), of
Home Nutritional Services, Inc., a New Jersey corporation (the "Company"); and
WHEREAS, the Purchaser, the Subsidiary and the Company have on the date
hereof entered into an Agreement and Plan of Merger (the "Merger Agreement")
pursuant to which the Purchaser has agreed to acquire by tender offer (the
"Offer") and merger (the "Merger") all outstanding shares of Common Stock at a
net price of $7.85 per Share; and
WHEREAS, the Seller desires to sell the Shares to the Purchaser and the
Purchaser desires to purchase the Shares from the Seller at a net cash price of
$7.85 per Share either under the Offer or otherwise; and
WHEREAS, in formulating the decision to acquire all outstanding shares of
Common Stock of the Company, the Purchaser and the Subsidiary have reviewed and
relied upon the representations and agreements made in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
covenants, representations and warranties contained herein and intending to be
legally bound hereby, the parties hereto agree as follows:
1. SALE OF THE SHARES
1.1 DESIGNATED SUBSIDIARY. It is understood and agreed among the parties
that the Purchaser may cause the Subsidiary or any other wholly-owned subsidiary
of Purchaser to carry out certain of the transactions contemplated by this
Agreement
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(including, without limitation, the purchase and receipt of the Shares);
provided, however, that the Purchaser shall remain liable for all of its
obligations and those of the Subsidiary hereunder.
1.2 SALE AND PURCHASE OF SHARES; TERMINATION.
(a) Unless the Shares shall have been purchased previously pursuant to the
Offer as contemplated by subsection (b) of this Section 1.2, subject to Section
6 hereof, Seller shall, not later than the later of (i) five business days
following the Expiration Date (as defined in the Offer to Purchase with respect
to the Offer) or the date of the termination of the Offer in accordance with the
terms of the Offer to Purchase and (ii) the first business day after all
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act") have expired, transfer, assign and deliver to the
Purchaser, and the Purchaser shall pay for and acquire from the Seller, the
Shares. The Purchaser shall notify the Seller of the date set for the purchase
of the Shares (the "Closing Date"). On the Closing Date, the Seller shall
deliver to the Purchaser certificates representing the Shares together with duly
executed stock powers with respect to the Shares in favor of the Purchaser or
the Subsidiary, if the Purchaser shall so designate (the "Stock Powers"). The
consideration for such purchase shall be made by wire transfer in Federal Funds
or official bank check payable in immediately available funds in the amount of
$61,230,000 (the "Purchase Price").
(b) At any time prior to the Closing Date, and after the commencement, but
prior to the expiration or termination, of the Offer, the Purchaser may direct
the Seller to deliver or the Seller may deliver all, but not part, of the Shares
with related letters of transmittal in accordance with the terms of the Offering
materials used in connection with the Offer, and such delivery shall constitute
a tender by the Seller under the Offer. If Purchaser directs Seller to deliver
Shares for purchase pursuant to the Offer, Seller shall not be required to
deliver such Shares until two business days prior to the Expiration Date. Any
Shares tendered at the direction of Purchaser will not be withdrawn unless the
Merger Agreement or this Agreement is terminated in accordance with its terms.
The acceptance for payment of all the Shares pursuant to the Offer shall
constitute the closing of the sale and purchase contemplated by this Agreement.
(c) Following the purchase of the Shares hereunder, the Purchaser will use
its reasonable best efforts to effect a merger as soon as practicable after the
Closing Date on terms which will provide to the stockholders of the Company cash
consideration per
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share of Common Stock equal to the purchase price per share of Common Stock paid
to the Seller for the Shares.
1.3 NEGATIVE COVENANTS. Except as otherwise provided in this Agreement,
the Seller agrees that, prior to the earlier to occur of the purchase of the
Shares under this Agreement or the termination of this Agreement:
(a) the Seller will not sell or transfer, or agree to sell or transfer,
any of the Shares or any interest in the Shares, or grant, or agree to grant, an
option or other right to acquire any of the Shares or any interest in the
Shares; and
(b) the Seller will not permit any lien, charge or encumbrance, other than
the existing lien under the Perinatal Credit Agreement, to exist or be placed on
the Shares or subject the Shares to any proxy, voting trust or other agreement,
understanding or arrangement with respect to the Shares.
1.4 PROXY. The Seller irrevocably appoints, during the term of this
Agreement, the Purchaser as proxy for the Seller to vote the Shares which the
Seller is entitled to vote, for and in the name, place and stead of the Seller,
at any annual, special or other meeting of the holders of stock of the Company
and at any adjournments thereof or pursuant to any consent in lieu of a meeting,
or otherwise, with respect to all matters except as may be prohibited by
applicable law at the time of such vote.
2. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES BY SELLER. The Seller represents and
warrants to the Purchaser and the Subsidiary that: (a) the execution and
delivery of this Agreement and the performance by the Seller of its obligations
hereunder have been duly authorized by all necessary corporate action of the
Seller (no action by the stockholders of the Seller being required) and this
Agreement is a valid and binding agreement, enforceable against the Seller in
accordance with its terms except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally; (b) neither the execution of this Agreement nor the consummation by
the Seller of the transactions contemplated hereby will constitute a violation
of or default under, or conflict with, the charter documents or By-Laws of the
Seller, the corporation laws of Georgia or any contract, commitment, agreement,
understanding, arrangement or restriction of any kind by which the Seller is
bound (i) except for that certain Secured Revolving Credit Agreement dated as of
August 6, 1992, as amended, between Perinatal Services, Inc., the Seller, LTCB
Trust Company and Continental Bank, N.A. (the "Perinatal Credit Agreement"),
pursuant to which the Shares have been pledged and
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(ii) except where such violation, default or conflict would not, individually or
in the aggregate, prevent or have a material adverse effect on the Seller's
ability to transfer the Shares to the Purchaser under the Offer or pursuant to
this Agreement; (c) no consent, approval, order or authorization of any court,
administrative agency, other governmental entity or any other person is required
by or with respect to the Seller in connection with the execution and delivery
of this Agreement by the Seller or the performance by Seller of its obligations
hereunder other than (i) under the HSR Act, (ii) under or in connection with the
Perinatal Credit Agreement and (iii) where failure to obtain such consent,
approval, order or authorization would not prevent or have a material adverse
effect on the Seller's ability to transfer the Shares to the Purchaser under the
Offer or pursuant to this Agreement or prevent or delay the Seller from
performing its obligations under this Agreement; (d) at the time the Seller
transfers the Shares to the Purchaser such Seller shall have, valid and
marketable title to the Shares, free and clear of all claims, liens, charges,
proxies, encumbrances and security interests; (e) subject to the satisfaction of
the condition set forth in Section 6(g) of this Agreement, the transfer of the
Shares to the Purchaser will pass good and marketable title to the Shares to the
Purchaser, free and clear of all claims, liens, charges, proxies, encumbrances
and security interests; (f) no broker, finder or other independent agent has
acted for the Seller in connection with this Agreement and the transactions
contemplated hereby, except that Dillon, Read & Co. Inc. has acted as investment
banker for the Seller and the Company; (g) the Shares are validly issued, fully
paid and nonassessable; and (h) Seller is the record and beneficial owner of
7,800,000 shares of Common Stock.
2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE SUBSIDIARY.
Each of the Purchaser and the Subsidiary represents and warrants to the Seller
that: (a) it is duly organized, validly existing and in good standing under the
laws of its state of incorporation, and is duly authorized to execute and
deliver this Agreement and this Agreement is a valid and binding agreement,
enforceable against it in accordance with its terms except as enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally; (b) neither the execution of this
Agreement nor the consummation by it of the transactions contemplated hereby
will constitute a violation of or default under, or conflict with, the charter
documents or By-Laws of the Purchaser or the Subsidiary or any contract,
commitment, agreement, understanding, arrangement or restriction of any kind to
which it is a party or by which it is bound except where such violation, default
or conflict would not prevent or materially delay the Purchaser from performing
its obligations under this Agreement; and (c) no consent, approval, order or
authorization
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of any court, administrative agency, other governmental entity or any other
person is required by or with respect to it in connection with its execution and
delivery of this Agreement other than (i) under the HSR Act and (ii) where
failure to obtain such consents, approvals, orders or authorizations would not
prevent or materially delay the Purchaser from performing its obligations under
this Agreement.
3. COVENANTS OF THE PARTIES PRIOR TO THE SALE OF THE SHARES
3.1 NEGOTIATIONS. From the date of this Agreement until the earlier to
occur of the purchase of the Shares hereunder or the termination of this
Agreement or the Merger Agreement, the Seller shall not, directly or indirectly,
solicit, encourage, or initiate or engage in any discussions or negotiations
with, or provide any information to, any corporation, partnership, agent,
financial adviser, person, or other entity or group (other than the Purchaser or
an affiliate or an associate of the Purchaser or an officer, employee or other
authorized representative of the Purchaser or such affiliate or associate)
concerning any merger, sale of substantial assets, sale of substantial amounts
of securities, or similar transactions involving the Company or any sale of the
Shares.
3.2 PUBLIC DISTRIBUTION. Neither the Purchaser nor the Subsidiary will
sell or otherwise dispose of any of the Shares in violation of the Securities
Act of 1933, as amended.
3.3 NEGOTIATIONS WITH OTHERS. The Seller acknowledges and consents to the
provisions of Section 6.7 of the Merger Agreement. In addition to its
obligations hereunder, the Seller will comply with such provisions as though it
were bound thereby, PROVIDED, HOWEVER, that the Seller shall under no
circumstances become liable to Purchaser for any "Expenses" or "Termination
Fee", as those terms are defined in the Merger Agreement.
3.4 PERINATAL CREDIT AGREEMENT. The Seller shall take such actions as may
be necessary to obtain, on or before the Closing Date or the date of purchase of
Shares pursuant to the Offer, the release of the Shares from the pledge and
security interest securing Seller's guaranty of the Perinatal Credit Agreement
and to obtain any consents of the lender required thereunder.
4. COVENANTS OF THE PARTIES FOLLOWING THE SALE OF THE SHARES
In the event the Purchaser purchases the Shares pursuant to the Offer or
this Agreement:
4.1 INSURANCE. With respect to events or occurrences which precede the
earlier of the Closing Date or the date of purchase of Shares pursuant to the
Offer (the "Cut-off Date"),
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the Company shall be entitled to the benefits of insurance coverage under the
Seller's insurance programs (a list of which was previously provided to the
Purchaser), subject to the payment by the Purchaser of any applicable premiums,
deductibles, self-insured retentions, out-of-pocket costs and expenses, or other
charge related to such coverage. To the extent that any policies of insurance
result in additional retrospective or adjusted premium charges relating to the
Company or its employees, or the Seller becomes eligible for credits and refunds
relating to the Company or its employees, the Company shall be responsible for
any such premiums and charges and shall receive the benefits of any such credits
and refunds in accordance with Seller's past practice. The Purchaser and the
Company acknowledge that the actual availability of insurance coverage for any
given event or occurrence will depend upon the specific terms of the applicable
insurance policy and will be subject to the possible prior exhaustion by the
Seller of the coverage under such policies in connection with claims of the
Seller unrelated to the Company. With respect to periods ending prior to
June 1, 1995, the Seller shall use reasonable business efforts to maintain the
scope and levels of coverages and material terms and conditions in the
applicable insurance policies, including but not limited to maintaining current
retroactive dates and prior acts coverage under "claims-made" policies to the
extent it is commercially advisable to Seller to do so. Except as provided in
the immediately preceding sentence, the parties further acknowledge that the
Seller shall be permitted to change its existing levels of insurance coverage or
terms of insurance coverage in connection with future policies of insurance
obtained by the Seller; PROVIDED, HOWEVER, that until June 1, 1997, if Seller
determines that it wishes to make a material change in the levels of its
insurance coverage, deductibles or the retroactive dates thereof, Seller shall
promptly notify Purchaser of such determination and Purchaser shall have the
right to request that Seller maintain the then existing coverage, and Seller
shall use its best efforts to do so, subject to the payment by Purchaser of the
additional premium cost to retain such existing coverage. The Seller shall give
prompt notice to the Purchaser of any notice from any carrier, including any
change in the retroactive date of future insurance policies, that coverage for
events occurring prior to the Closing Date may not be available. To the extent
that the insurance coverage is available, Seller agrees to purchase, at the
written request of the Company and at the sole expense of the Company, extended
reporting period ("tail insurance") coverage for the Company in accordance with
the requirements of the insurance policies with respect to any claims-made
policies insuring the Company. Notwithstanding the foregoing, Seller shall, on
behalf of the Company, use reasonable business efforts to continue to provide
and keep in effect for a period of not less than three (3) years after the
Effective Time (as defined in the Merger Agreement) its currently existing
directors' and officers' liability coverage or other similar
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insurance ("D&O Insurance") for the directors and officers of the Company with
respect to their acts and omissions committed prior to the Cut-off Date,
provided, however, that if between the date hereof and the Cut-off Date, the
Seller is advised by its insurance broker in writing that its currently existing
D&O Insurance, if continued in place on or after the Cut-Off Date, would not
provide coverage to all of the directors and officers of the Company for their
acts or omissions prior to the Cut-off Date, then Purchaser shall obtain such
coverage or Seller shall, at the request of Purchaser, use all reasonable
efforts to obtain for the benefit of Purchaser such coverage, in either case at
the sole cost and expense of Purchaser. In the event that maintaining coverage
for such directors and officers results in premiums in future years which are
greater than the premiums paid by the Seller for such coverage in the current
policy year, then Purchaser agrees to reimburse Seller for such increased
premiums to the extent such increase is attributable to the continued coverage
of the Company's directors and officers.
The Purchaser shall give prompt notice to the Seller of all claims made by
or against the Company that are covered by the Seller's insurance programs as
provided in this Agreement. Upon notice of any such claim, the Seller shall
notify the appropriate insurance carrier under the Seller's insurance programs
and, in conjunction with such insurance carrier, shall have the right to direct
the investigation, negotiation and, if applicable, defense of such claim and to
settle or otherwise dispose of such claim without the consent or approval of the
Purchaser, provided that, to the extent permitted by Seller's insurance
policies, Purchaser shall have the right, at its option and at its own expense,
to direct the investigation, negotiation, defense or settlement of any claim
which, in the reasonable judgment of Purchaser, may be disposed of or settled
for an amount less than the deductible, self-retention or out-of-pocket portion
of the applicable insurance coverage. Purchaser shall, in any event, have the
right to participate in, at its cost and expense, the investigation,
negotiation, or settlement of any claim. The parties shall cooperate with each
other relative to the exchange of records and other information necessary for
the reporting, investigation, negotiation and, if applicable, defense of such
claim. The Purchaser shall make its employees available as may be necessary in
connection with the investigation or defense of any such claim.
4.2 INSURANCE CLAIMS. Seller will assist in administration of claims and
filings with its insurance carriers, subject to the payment terms described in
this Article 4. With respect to medical coverages, the Company shall be
responsible for the costs and expenses of its employees and shall reimburse
Seller for any such unreimbursed charges related to medical expenses incurred by
employees prior to the Cut-off Date.
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4.3 CONTINENTAL CREDIT AGREEMENT. The Purchaser shall, not later than the
Cut-off Date, cause the Company to pay in full all indebtedness outstanding
under the Revolving Credit and Term Loan Agreement dated June 30, 1990 (the
"Credit Agreement") between Continental Bank N.A., LTCB Trust Company and the
Company, as amended to date.
4.4 COOPERATION. Each party to this Agreement shall cooperate with the
other party hereto, including the furnishing of testimony and other evidence, as
reasonably requested by any such other party, relating to the operations of the
Company prior to the Cut-Off Date. If requested by Purchaser in writing, the
Seller shall assist the Purchaser in Purchaser's efforts to obtain consents from
third parties which are required in order to prevent the loss by the Company of
the benefits of contracts between the Company or the Seller (on behalf of the
Company) and such third parties as a result of the transactions contemplated by
this Agreement and the Merger Agreement. In the event the Purchaser is unable
to obtain any such consent and rights under such contract revert to the Seller
or are retained by the Seller after the Cut-off Date, the Seller shall use
reasonable efforts to transfer the benefits thereunder to the Company to the
extent reasonably practicable. Nothing in this paragraph shall be construed to
create any obligation for the Seller to compensate the Purchaser or the Company
for the loss of the benefits of any such contract.
4.5 RECORD RETENTION. For a period of six years after the Cut-off Date,
each party to this Agreement shall preserve all files and records relating to
the Company in its possession or control, shall allow the other party access to
such files and records and the right to make copies and extracts therefrom at
any time during normal business hours, and shall not dispose of any thereof,
provided that commencing three years after the Cut-Off Date, either party may
give the other party written notice of its intention to dispose of any part
thereof, specifying the items to be disposed of in reasonable detail. Such
other party may, within a period of sixty days after receipt of any such notice,
notify the party proposing such disposal of such other party's desire to retain
one or more of the items to be disposed of. The party proposing such disposal
shall, upon receipt of such a notice from the other party, deliver to the other
party, at such other party's expense, the items specified in its notice to such
other party which such other party has elected to retain. Notwithstanding the
foregoing, after the date hereof, if Seller desires to send any files or records
relating to the Company to Purchaser, the Purchaser shall accept delivery of
such files or records.
4.6 RETURNS AND REPORTS. The Seller shall cooperate and cause its
employees to cooperate with the Purchaser in the preparation, in accordance with
the Purchaser's instructions, of
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such financial, tax and other governmental reports and statements relating to
the Company for periods ending on or prior to the Cut-Off Date as the Purchaser
may reasonably request.
4.7 PERINATAL SUPPLY AGREEMENT. The Seller shall, not later than the
Closing Date hereunder, cause Perinatal Services, Inc. ("PSI") to enter into an
agreement to purchase certain medical supplies (the "Perinatal Supply
Agreement") from the Company, which agreement shall be substantially in the form
of EXHIBIT A attached hereto.
4.8 MANAGEMENT SERVICES AGREEMENT. The Company and the Seller shall, not
later than the Closing Date hereunder, terminate the current Administrative
Services Agreement in effect between them and, not later than the Closing Date
hereunder, the Company and the Seller shall execute a Management Services
Agreement (the "Management Services Agreement") in substantially the form
attached hereto as EXHIBIT B.
5. RESTRICTIVE COVENANTS
5.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Affiliate" shall mean any Person in which the Seller, directly or
indirectly owns or controls, on an aggregate basis, including all beneficial
ownership and ownership or control as a trustee, guardian or fiduciary, at least
fifty percent (50%) of the outstanding shares of capital stock having ordinary
voting power to elect a majority of the board of directors or fifty percent
(50%) of the voting power of any management committee or similar body exercising
power over the affairs of any Person. For the purposes of this definition,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of management and policies, whether through the ownership
of voting securities, by contract or otherwise;
(b) "Competitive Business" shall mean and include any business,
individual, corporation or other entity, other than Purchaser or Subsidiary,
which is engaged wholly or partly in the business of providing Infusion Care
including but not limited to any planning, research, or licensing activities
related thereto;
(c) "Confidential Information" shall mean proprietary and confidential
information of Purchaser or Subsidiary which is not publicly available or
generally known in the industry, including, but not limited to, business,
financial and marketing plans and projections;
(d) "Infusion Care" shall mean the business of supplying pharmaceuticals
or medical nutritional therapies or products or
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other infusion or related services to patients, doctors, hospitals, insurance
companies or other Persons for use on patients in a facility other than a
hospital or critical care setting, including, but not limited to, the provision
of enteral and parenteral nutritional feeding, antibiotic therapy, chemotherapy,
pain management therapy, hydration therapy, desferal therapy, growth hormone
therapy or other medical therapy involving the intravenous administration of
hormones, biologicals or medications; PROVIDED, HOWEVER, that the foregoing
definition of Infusion Care shall specifically exclude the Retained Business;
(e) "Person" or "Persons" shall mean and include partnership joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, entity, party or government;
(f) "Restricted Territory" shall mean the area consisting of the United
States of America; and
(g) "Retained Business" shall mean (i) the business of supplying infusion
care therapies, products or services to patients, doctors, hospitals, insurance
companies or other Persons relating to the medical field of obstetrics and
gynecology and perinatal care, including, but not limited to, subcutaneous
terbutaline therapy, hydration, intravenous antibiotic therapy, total parenteral
nutrition or the administration of other hormones, drugs and biologicals
relating to the medical field of obstetrics and gynecology and perinatal care
and (ii) establishing provider networks of physicians and other healthcare
providers, negotiating contracts with payor groups for services of network
members on a prepaid or capitated basis, providing capitated and fee for service
billing services for network members, providing assistance in determining
appropriate utilization of services of network members, and providing practice
management services to physicians; PROVIDED, HOWEVER, that such practice
management services shall not include the provision of home Infusion Care
services through employees of Seller or its Affiliates.
5.2 NON-COMPETITION.
(a) The Seller acknowledges and recognizes the highly competitive nature
of the Infusion Care business and accordingly agrees that, to induce Purchaser
and Subsidiary to consummate the transactions contemplated by this Agreement and
the Merger Agreement, neither the Seller nor any Affiliate shall, for a period
of five (5) years from the earlier to occur of the Closing Date or the sale by
the Seller of the Shares pursuant to the Offer: (i) engage, directly or
indirectly, in or control, directly or indirectly, any Competitive Business in
the Restricted Territory, whether such engagement or control be as an
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employer, owner, partner, consultant or other participant in any Competitive
Business; or (ii) assist others in engaging in any Competitive Business in the
Restricted Territory (such engagement, control or assistance of others in
engaging in any Competitive Business in the Restricted Territory is hereinafter
referred to as "Competitive Activity"); PROVIDED, HOWEVER, that (y) the Seller
or any Affiliate may engage in a Competitive Activity to the extent that such
Competitive Activity arises from the acquisition by Seller or any Affiliate of
any Person engaged in a Competitive Activity and such Competitive Activity
engaged in by such acquired Person amounts to only ten percent (10%) of the
total revenue received by such acquired Person in the fiscal year prior to such
acquisition and (z) nothing in this Section 5.2 shall prevent Seller or any
Affiliate from contracting or joining with other Persons in one or more groups
or alliances which provide a variety of medical services, including Infusion
Care, as long as neither the Seller nor its Affiliates provides any Infusion
Care to or on behalf of such group or alliance.
(b) The restraints of this Section 5.2 shall not prohibit or restrict the
Seller from fulfilling any obligations under the Management Services Agreement
nor shall it prohibit or restrict the Seller or any Affiliate from engaging in
the Retained Business.
5.3 NON-SOLICITATION. The Seller covenants and agrees that for a period
of three (3) years from the earlier to occur of the Closing Date or the sale by
the Seller of the Shares pursuant to the Offer, neither the Seller nor any
Affiliate will, either for themselves or in conjunction with or on behalf of any
other person or entity solicit or attempt to solicit for employment any person
who is now or is as of the Closing Date or the date of purchase of the Shares
under the Offer an employee of the Company; provided, however, that the
restraints of this Section 5.3 shall not prohibit or restrict the Seller or any
Affiliate from hiring any employee of the Company who initiates contact with the
Seller or any Affiliate to request employment.
5.4 NONDISCLOSURE. The Seller agrees that for a period of four (4) years
after the earlier to occur of the Closing Date or the date of the purchase of
the Shares under the Offer, the Seller will not, without the prior written
consent of the Purchaser, disclose any Confidential Information to any third
party (other than as required by any law or regulation; PROVIDED HOWEVER, that
Seller shall use its best efforts to provide Purchaser with prior written notice
of such disclosure). Notwithstanding the foregoing, nothing contained herein
shall (a) prohibit or restrict the Seller from fulfilling any obligations under
the Management Services Agreement; and (b) prohibit or restrict the Seller or
any Affiliate from engaging in the Retained Business or in any other business
engaged in by Seller
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or any Affiliate other than Infusion Care, including, without limitation,
utilizing in the Retained Business or in any such other business, any
Confidential Information of the Company which has been received by the Seller or
any Affiliate prior to the Closing Date or the date of purchase of the Shares
under the Offer.
5.5 GOODWILL COVENANT. The Seller agrees that for a period of four (4)
years after the earlier to occur of the Closing Date or the date of purchase of
the Shares under the Offer, the Seller will refrain from making any disparaging
statements regarding Purchaser or the Company.
5.6 INTERPRETATION. If the scope of any restriction contained in Sections
5.2, 5.3, 5.4 or 5.5 is too broad to permit enforcement of such provisions
hereof to their full extent, then such restriction shall be enforced to the
maximum extent permitted at law and in equity, and in that event Seller hereby
consents that such scope may be judicially modified accordingly in any
proceeding brought to enforce such restriction.
5.7 ACKNOWLEDGEMENT. Seller hereby acknowledges and confirms that the
Seller's business extends at least throughout the Restricted Territory, and that
any activity prohibited by Sections 5.2, 5.3, 5.4 or 5.5 at any place in the
Restricted Territory would cause irreparable injury to the Company, Purchaser
and its Affiliates. Seller also acknowledges and confirms that the length of
the non-competition period hereunder is reasonable and necessary for protection
of the Company, Purchaser and its Affiliates against injurious effects of any
violation of the provisions of Sections 5.2, 5.3, 5.4 or 5.5.
5.8 REMEDIES. Seller acknowledges and confirms that Purchaser's remedy at
law for any breach of any of Seller's obligations under this Article 5 would be
inadequate, and that damages would be difficult or impossible to ascertain, and
consents that temporary and permanent injunctive relief may be granted in
accordance with equity in any proceeding which may be brought to enforce any
provision of this Article 5 without the necessity of proof of actual damage.
Seller acknowledges that Purchaser has reserved and is to have the right to
prove any damages which Purchaser has incurred or suffered resulting from any
breach of any of Seller's obligations under this Article 5.
6. CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of
each party to effect the sale and purchase of the Shares shall be subject to the
fulfillment or waiver on or prior to the Closing Date of the following
conditions:
(a) The Merger Agreement shall not have been terminated by the Purchaser
(other than due to a breach of the Merger Agreement by the Company) or by the
Company;
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(b) The Offer shall not have been terminated by the Purchaser, (other than
due to a breach of the Merger Agreement by the Company);
(c) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated;
(d) No temporary restraining order, preliminary injunction or permanent
injunction or other order preventing the consummation of such sale and purchase
or the Merger shall have been issued by any Federal or state court and shall
remain in effect;
(e) Seller shall have caused PSI and Purchaser shall have caused the
Company to enter into the Perinatal Supply Agreement in substantially the form
attached hereto as EXHIBIT A;
(f) The Company and the Seller shall have terminated the Administrative
Services Agreement between the Company and the Seller, and the Purchaser and the
Seller shall have executed and delivered to each other the Management Services
Agreement in substantially the form attached hereto as EXHIBIT B; and
(g) The Shares shall have been released from all liens and encumbrances
thereon arising out of the Seller's guaranty of the obligations of PSI under the
Perinatal Credit Agreement and Seller shall have obtained any consent of the
lender required under such Perinatal Credit Agreement.
7. SPECIAL TERMINATION OF THE AGREEMENT
7.1 TERMINATION BY PURCHASER. The Purchaser or the Subsidiary may
terminate this Agreement if (a) the Company shall have breached the Merger
Agreement in any material respect, or (b) any representation or warranty of the
Company contained in the Merger Agreement shall be untrue or incomplete in any
material respect when made or at and as of any time thereafter, or (c) any
representation or warranty of the Seller contained in this Agreement shall be
untrue or incomplete in any material respect when made or at or as of any time
thereafter, or (d) the Purchaser shall have terminated the Offer in accordance
with its terms, or the Merger Agreement shall have been terminated by Purchaser
in accordance with its terms, or (e) any conditions to the Purchaser's
obligations to purchase the Shares hereunder have not been satisfied or waived
by June 30, 1994.
7.2 TERMINATION BY SELLER. The Seller may terminate this Agreement if (a)
any representation or warranty of the Purchaser contained in this Agreement or
the Merger Agreement shall be untrue or incomplete in any material respect when
made or at any time thereafter, or (b) Purchaser shall have terminated the Offer
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<PAGE>
or terminated or breached any material obligation of the Purchaser under the
Merger Agreement, or (c) the Board of Directors of the Company shall have
exercised its rights set forth in the second sentence of Section 6.7(b) of the
Merger Agreement, or (d) any conditions to the Seller's obligations to sell the
Shares have not been satisfied or waived on or before June 30, 1994.
7.3 OBLIGATIONS VOIDED. In the event of termination of this Agreement in
accordance with its terms, this Agreement shall forthwith become void and there
shall be no liability or further obligation on the part of any party hereto, or
any of their respective directors or officers if applicable, to any other party
to this Agreement, except that the obligations and agreements contained in
Section 8.4 hereof will survive any termination of this Agreement and except
that nothing herein will relieve any party from liability for any willful breach
of any representation or warranty contained herein or breach of any covenant or
agreement contained herein required to be performed or complied with prior to
the time of such termination.
8. MISCELLANEOUS
8.1 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to the principles of conflict of laws thereof.
8.2 NOTICES. All notices and other communications hereunder shall be
given by telephone and immediately confirmed in writing and shall be deemed
given if delivered personally or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to the Purchaser or Subsidiary:
W.R. Grace & Co.
One Town Center Road
Boca Raton, Florida 33486-1010
Attention: Secretary
With copies to:
National Medical Care, Inc.
1601 Trapelo Road
Waltham, Massachusetts 02154
Attention: Peter Spears
and
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<PAGE>
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attention: Philip A. Gelston, Esq.
(b) if to the Seller:
Healthdyne, Inc.
1850 Parkway Place
12th Floor
Marietta, Georgia 30067
Attention: J. Brent Burkey
With a copy to:
Troutman Sanders
600 Peachtree Street, N.E.
Suite 5200, NationsBank Plaza
Atlanta, Georgia 30308
Attention: James L. Smith, III, Esq.
8.3 SPECIFIC PERFORMANCE. The Seller acknowledges that the Shares are
unique and that the Purchaser and the Subsidiary will not have an adequate
remedy at law if the Seller fails to perform any of the Seller's obligations
hereunder, and the Seller agrees that the Purchaser and the Subsidiary shall
have the right, in addition to any other rights either or both of them may have,
to specific performance or equitable relief by way of injunction if the Seller
fails to perform any of the Seller's obligations hereunder.
8.4 EXPENSES. Each of the parties hereto shall pay all fees and expenses
it incurs in connection with this Agreement.
8.5 ENTIRE AGREEMENT. This Agreement and the other documents referred to
herein including the Merger Agreement set forth the entire agreement and
understanding of the parties with respect to the transactions contemplated
hereby and supersede all prior agreements, arrangements and understandings
relating to the subject matter hereof. No representation, promise, inducement
or statement of intention relating to the transactions contemplated by this
Agreement has been made by either party which is not set forth in this Agreement
or the other documents referred to herein.
8.6 COUNTERPARTS; AMENDMENTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original, but all of which shall
constitute but one agreement. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may be amended only in a writing signed by both parties
hereto. Failure of a party to insist upon strict
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<PAGE>
observance of or compliance with all of the terms of this Agreement in one or
more instances shall not be deemed to be a waiver of its rights to insist upon
such observance or compliance in the future or with the other terms hereof.
8.7 NO THIRD PARTY BENEFICIARIES. There are no third party beneficiaries
of this Agreement and nothing in this Agreement, express or implied, is intended
to or shall confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities.
8.8 HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written.
W. R. GRACE & CO.
By:_____________________________________
Title:
COMPANY N MERGER CORP.
By:_____________________________________
Title:
HEALTHDYNE, INC.
By:_____________________________________
Title: Chairman and Chief
Executive Officer
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<PAGE>
EXHIBIT (c)(3)
[Letterhead of]
DILLON, READ & CO. INC.
PRIVATE AND STRICTLY CONFIDENTIAL
February 9, 1994
W. R. Grace & Co.
One Town Center Road
Boca Raton, FL 33486
Attention: Peter Spears
President, NMC Homecare
A Subsidiary of W. R. Grace & Co.
Gentlemen:
You have advised us of your interest in a possible negotiated transaction
involving Healthdyne, Inc. and Home Nutritional Services, Inc. (the "Company").
In connection with your analysis of a possible negotiated transaction, you have
requested certain oral and written information concerning the Company from
officers, directors, employees and/or agents of the Company (collectively, the
"Information"). As a condition to being furnished with the Information, you
agree (and agree to cause your affiliates) to treat the Information in
accordance with the following conditions.
1. The Information will be used solely for the purpose of
evaluating a possible transaction between the Company
and you, and it will be kept confidential by you and
your advisors; provided, however, that you may disclose
the Information or portions thereof to those of your
directors, officers and employees (including the
directors, officers and employees of your subsidiaries)
and representatives of your advisors (the persons to
whom such disclosure is permissible being collectively
called "Representatives") who need to know such
Information for the purpose of evaluating your possible
<PAGE>
2
transaction with the Company (it being understood that
those Representatives will be informed of the
confidential nature of the Information and will agree
to be bound by this agreement and shall be directed by
you not to disclose the Information to any other
person).
In the event that you are requested or required (by
oral questions, interrogatories, requests for
Information or documents, subpoenas, civil
investigative demands or similar processes) to disclose
any Information supplied to you in the course of your
dealings with the Company or its representatives, it is
agreed that you will provide the Company with prompt
notice of such request(s) and the documents requested
so that the Company may seek an appropriate protective
order and/or waive your compliance with the provisions
of this agreement.
2. The term "Information" does not include any information
which (i) is or becomes generally available to and
known by the public (other than as a result of a
disclosure by you or your Representatives),
(ii) becomes available to you on a non-confidential
basis from a source other than the Company or its
advisors, provided that such source is not known by you
or any of your Representatives, after reasonable
investigation, to be bound by a confidentiality
agreement with or other obligation of secrecy to the
Company or (iii) has already been or is independently
acquired or developed by you without violating any
confidentiality agreement with or other obligation of
secrecy to the Company.
3. If you do not proceed with a transaction with
Healthdyne or the Company and if Healthdyne or the
Company so requests, you will return promptly to the
Company all copies, extracts or other reproductions in
whole or in part of the Information in your possession
or in the possession of your Representatives, except
that you may retain a single copy of any such documents
(other than any of the Company's Management Monthly
Reporting Packages, any CLEAR reports and any
information with respect to referral sources or the
details of contracts between the Company and insurance
companies). It is understood that the single copy will
be maintained at the W. R. Grace & Co. headquarters by
its corporate legal department and that operating
<PAGE>
3
management will not have access to the material. You
will destroy all copies of any memorandum, notes,
analyses, compilations, studies or other documents
prepared by you or for your use based primarily on the
Information and that you will delete information about
and references to the Company to the extent reasonably
practicable in any such documents which are not based
primarily on the Information.
4. Without the prior written consent of the Company, you
will not, and will direct your Representatives not to,
except as may be required by law in the reasonable
opinion of your legal counsel, and only after
contacting the Company, disclose to any person either
the fact that any investigations, discussions, or
negotiations are taking place concerning a possible
transaction between the Company and you, or that you
have requested or received Information from the Company
or, or any of the terms, conditions or other facts with
respect to any such possible transaction, including the
status thereof. The term "person" as used throughout
this agreement will be interpreted broadly to include,
without limitation, any corporation, company,
partnership or individual.
5. Until the earlier of (i) the execution by you of a
definitive transaction agreement ("Transaction
Agreement") or (ii) twelve months from the date of this
agreement, you agree not to knowingly solicit for hire
any of the executive officers or other management-level
employees at or above the level of regional center
manager of the Company identified by you during your
investigation; provided that the prohibitions set forth
in this selection shall not be deemed to be breached if
any such employee initially contacts you for the
purpose of discussing employment without prior
solicitous contact from either you or your agents.
6. You understand and acknowledge that, except as may be
provided in a definitive Transaction Agreement, neither
Healthdyne nor the Company nor their respective
advisors are making any representation or warranty,
express or implied, as to the accuracy or completeness
of the Information, and none of Healthdyne nor the
Company, their respective advisors, or any of their
respective directors, officers, employees,
stockholders, owners, affiliates, or agents will have
any liability to you or any other person resulting from
<PAGE>
4
your use of the Information. Only those
representations or warranties that are made to you in a
definitive Transaction Agreement when, as and if it is
executed, and subject to such limitations and
restrictions as may be specified in such Transaction
Agreement, will have any legal effect.
7. You hereby acknowledge that you are aware, and that you
have advised or will advise your Representatives who
are informed as to the matters which are the subject of
this agreement, that the United States securities laws
prohibit any person who has material, non-public
information concerning the matters which are subject to
this agreement from purchasing or selling securities of
a company which may be a party to a transaction of the
type contemplated by this agreement or from
communicating such information to any other person
under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or
sell such securities.
8. You also understand and agree that unless and until a
definitive Transaction Agreement has been executed and
delivered, no contracts or agreement providing for a
transaction shall be deemed to exist between you and
either Healthdyne or the Company, and neither
Healthdyne nor the Company nor you will be under any
legal obligation of any kind whatsoever with respect to
such transaction by virtue of this or any written or
oral expression thereof, except, in the case of this
agreement, for the matters specifically agreed to
herein. For purposes of this paragraph, the term
definitive "Transaction Agreement" does not include an
executed letter of intent or any other preliminary
written agreement, nor does it include any written or
verbal acceptance or an offer or bid on your part.
9. You agree that Healthdyne and the Company reserve the
right, in their sole and absolute discretion, to reject
any or all proposals, to decline to furnish further
Information and to terminate discussions and
negotiations with you at any time. The exercise by
Healthdyne or the Company of these rights shall not
affect the enforceability of any provision of this
agreement.
10. This agreement is for the benefit of Healthdyne and the
Company and will be governed and construed in
<PAGE>
5
accordance with the laws of the State of Georgia. You
obligations under this agreement will expire two years
from the date of this agreement, except as otherwise
set forth herein.
If you agree with the foregoing, please sign this letter, and return one
executed copy of this letter, which will constitute our agreement with respect
to the subject matter of this letter.
Very truly yours,
HEALTHDYNE, INC.
By:
------------------------
Dillon, Read & Co. Inc.
As Agent
Confirmed and Agreed as of
the date written above:
W. R. Grace & Co.
By:
-------------------------
Title:
----------------------
Date:
-----------------------
<PAGE>
EXHIBIT (c)(4)
[Letterhead of]
HEALTHDYNE
February 22, 1994
W. R. Grace & Company
One Town Center Road
Boca Raton, FL 33486-1010
Attention: Mr. Bernard A. Schulte
Vice President
RE: Project Yellow Jacket
Gentlemen:
As requested in your letter of February 16, 1994 to Dillon Read & Co. Inc., this
will confirm that Healthdyne, Inc. ("Healthdyne") agrees that, from the date
hereof until March 11, 1994, Healthdyne will not solicit or negotiate any
proposal or enter into any agreement providing for (1) the sale of the company
referred to in your proposal letter ("Yellow Jacket") or (2) the sale of the
Common Stock of Yellow Jacket held by Healthdyne. The Board of Directors of
yellow Jacket is meeting on Thursday, February 24, 1994, to consider your
proposal and will also consider at that time providing you with an agreement
similar to this one of behalf of Yellow Jacket.
Sincerely yours,
Parker H. Petit
Chairman/CEO
<PAGE>
EXHIBIT (c)(5)
[Letterhead of]
HOME NUTRITIONAL SERVICES, INC.
February 24, 1994
W. R. Grace & Co.
One Town Center Road
Boca Raton, FL 33486-1010
Attention: Mr. Bernard A. Schulte, Vice President
Gentlemen:
As requested in your letter of February 16, 1994 to Dillon, Read & Co.,
Inc., this will confirm that Home Nutritional Services, Inc. ("HNS") agrees
that, from the date hereof until March 11, 1994, HNS will not solicit or
negotiate any proposal or enter into any agreement providing for (i) the sale of
substantially all of the assets of HNS or (ii) the sale of the Common Stock of
HNS.
Very truly yours,
John W. Anderson
President and Chief Executive
Officer
