<PAGE>
As filed with the Securities and Exchange Commission on June 17, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
under
The Securities Act of 1933
HELLER FINANCIAL, INC.
(Exact name of Registrant as Specified in Its Charter)
Delaware 6153 36-1208070
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction Industrial Identification No.)
of Incorporation or Classification Code
Organization) Number)
500 West Monroe Street, Chicago, Illinois 60661, (312) 441-7000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
DEBRA H. SNIDER, ESQ.
Executive Vice President, Chief Administrative Officer and General Counsel
500 West Monroe Street, Chicago, Illinois 60661, (312) 441-7000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
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Copies to:
LAWRENCE D. LEVIN, ESQ. G. WILLIAM SPEER, ESQ.
MARK D. WOOD, ESQ. SUZANNE ROBERTS, ESQ.
Katten Muchin & Zavis Powell, Goldstein, Frazer & Murphy, LLP
525 West Monroe Street, Suite 1600 191 Peachtree Street, 16th Floor
Chicago, Illinois 60661-3693 Atlanta, Georgia 30303
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the merger of HealthCare Financial Partners, Inc. into HF5, Inc.,
a wholly-owned subsidiary of Heller Financial, Inc., pursuant to the Agreement
and Plan of Merger, dated and amended as of April 19, 1999, among HealthCare,
Heller and HF5, have been satisfied or waived.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities to be Amount to be Offering Price Aggregate Registration
Registered Registered(1) Per Unit Offering Price(2) Fee(3)
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<S> <C> <C> <C> <C>
Class A Common Stock,
$0.25 par value....... 9,453,201 shares N/A $466,773,107 $129,763
</TABLE>
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(1) Represents a maximum number of shares of class A common stock, par value
$0.25 per share, of Heller Financial, Inc. to be issued in exchange for
issued and outstanding shares of common stock of HealthCare Financial
Partners, Inc. pursuant to the Agreement and Plan of Merger, dated and
amended as of April 19, 1999, as amended, among HealthCare, Heller and HF5,
Inc.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1) and 457(c), based on $34.0313, the average of
the high and low prices of HealthCare's common stock as reported on the New
York Stock Exchange on June 14, 1999.
(3) In accordance with Rule 0-11 under the Securities Exchange Act of 1934,
$89,403 of the registration fee was paid on May 12, 1999 in connection with
the filing of preliminary proxy materials relating to the transaction in
which the securities being registered are proposed to be issued. Pursuant
to Rule 457(b) under the Securities Act of 1933, the fee payable upon
filing this Registration Statement has been reduced by the amount
previously paid.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
[HealthCare Logo]
PROXY STATEMENT/PROSPECTUS
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
The board of directors of HealthCare Financial Partners, Inc. has agreed to
a merger in which HealthCare will merge into a wholly-owned subsidiary of
Heller Financial, Inc. This merger will integrate HealthCare into a larger and
more globally diversified organization that offers a broader range of
commercial financial services.
If we complete the merger, you will receive, at your election, cash and/or
Heller class A common stock for your shares of HealthCare common stock. The
value of the consideration you will receive for each of your shares of
HealthCare common stock will be approximately $35.00, subject to adjustment as
described in this proxy statement/ prospectus.
We cannot complete the merger unless (1) we obtain the necessary
governmental approvals and (2) our stockholders approve and adopt the merger
agreement and the merger. We have scheduled a special meeting of stockholders
to vote on approval and adoption of the merger agreement and the merger. Your
vote is very important. Whether or not you plan to attend the special meeting,
please take the time to vote by completing and returning the enclosed proxy
card. If you sign, date and return your proxy card without indicating how you
want to vote, we will vote your proxy in favor of approving and adopting the
merger agreement and the merger. If you mark the abstention box on your proxy
card, don't return your proxy card or don't instruct your broker how to vote
any shares your broker holds for you in its name, this will have the same
effect as a vote against approval and adoption of the merger agreement and the
merger.
The date, time and place of the special meeting are as follows:
July 20, 1999
10:00 a.m., local time
The Four Seasons Hotel
2800 Pennsylvania Avenue
Washington, D.C. 20007
This proxy statement/prospectus serves as (1) a proxy statement for
HealthCare in connection with the solicitation of proxies by the HealthCare
board of directors for use at the special meeting and (2) a prospectus of
Heller relating to its issuance of up to 9,453,201 shares of Heller class A
common stock in the merger. This proxy statement/prospectus provides you with
detailed information about the merger and the special meeting. We encourage you
to read carefully this entire document, along with the enclosed election forms
and letters of transmittal, which include related instructions. In particular,
you should review the "Risk Factors" section beginning on page 13, which
discusses risks that you should consider in deciding whether to vote for
approval and adoption of the merger agreement and the merger. You can also
obtain financial and other information about HealthCare and Heller from
documents that the companies have filed with the Securities and Exchange
Commission.
/s/ John K. Delaney
John K. Delaney
Chairman and Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the Heller class A common stock to be
issued under this proxy statement/prospectus or determined if this proxy
statement/prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
This proxy statement/prospectus is dated June , 1999 and was first mailed
to HealthCare stockholders on June , 1999.
<PAGE>
HEALTHCARE FINANCIAL PARTNERS, INC.
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on July 20, 1999
----------------
To the Stockholders of HEALTHCARE FINANCIAL PARTNERS, INC.:
HealthCare Financial Partners, Inc. will hold a special meeting of
stockholders at The Four Seasons Hotel, 2800 Pennsylvania Avenue, Washington,
D.C., at 10:00 a.m., local time, on Tuesday, July 20, 1999, to vote on:
. Approval and adoption of the agreement and plan of merger, dated and
amended as of April 19, 1999, by and among HealthCare Financial Partners,
Inc., Heller Financial, Inc. and HF5, Inc., a wholly-owned subsidiary of
Heller, and the merger of HealthCare into HF5; and
. Any other matters that properly come before the special meeting and any
adjournments or postponements of the special meeting.
After careful consideration, our board of directors (1) has unanimously
determined that the merger is fair to, and in the best interests of, HealthCare
and its stockholders, (2) has declared the merger advisable and unanimously
approved the merger agreement and the merger and (3) unanimously recommends
that you vote FOR approval and adoption of the merger agreement and the merger.
Only record holders of HealthCare common stock at the close of business on
June 14, 1999 will receive notice of, and may vote at, the special meeting and
any adjournments or postponements of the special meeting. To be approved, a
majority of the outstanding shares of HealthCare common stock must be voted in
favor of the merger agreement and the merger.
You are cordially invited to attend the special meeting. It is important
that your shares be represented at the special meeting, whether or not you plan
to attend in person. Accordingly, please complete, sign, date and return the
enclosed proxy card in the enclosed prepaid white envelope. You may revoke your
proxy in the manner described in the accompanying proxy statement/prospectus at
any time before the proxy has been voted at the special meeting. Also, even if
you return your proxy card, you may vote in person at the special meeting.
By order of the board of directors,
/s/ Steven M. Curwin
Steven M. Curwin
Senior Vice President, General
Counsel and Secretary
Chevy Chase, Maryland
June , 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER.................................... 1
SUMMARY................................................................... 3
The Companies........................................................... 3
Our Reasons for the Merger; Recommendations to Stockholders............. 3
The Special Meeting..................................................... 3
Time, Place and Date.................................................. 3
Purpose............................................................... 3
Record Date and Vote Required......................................... 3
The Merger.............................................................. 4
What You Will Receive................................................. 4
Treatment of Outstanding Options...................................... 4
Fairness Opinion of HealthCare's Financial Advisor.................... 5
What We Need to do to Complete the Merger............................. 5
Terminating the Merger Agreement; Who Pays for What................... 5
Interests of Persons Involved in the Merger That are Different from
Yours................................................................ 5
Tax Consequences for HealthCare Stockholders.......................... 6
Accounting Treatment of the Merger.................................... 6
Governmental and Regulatory Approvals................................. 6
Dissenters' Rights.................................................... 7
Option Agreement........................................................ 7
Comparison of Rights of HealthCare Stockholders and Heller Stockholders. 7
Market Price Data....................................................... 8
Summary Comparative Historical and Pro Forma Per Share Data............. 8
Heller Summary Selected Consolidated Financial Data..................... 9
HealthCare Summary Selected Historical Financial Data................... 11
Summary Unaudited Pro Forma Condensed Selected Combined Financial Data.. 12
RISK FACTORS.............................................................. 13
We May Not Achieve the Expected Benefits of the Merger.................. 13
Various Economic Factors Could Adversely Affect Heller's Business....... 13
Heller's Ability to Raise Capital and Access to Funds May Be Limited.... 15
Fuji Bank Can Control Heller's Business and Affairs..................... 15
Heller's Allowance for Losses of Receivables May Be Inadequate.......... 15
Heller's Quarterly Operating Results May Vary Significantly............. 16
Heller May Be Unable to Attract and Retain Qualified Personnel.......... 16
Heller is Subject to Intense Competition in the Commercial Finance
Market................................................................. 16
Heller is Subject to Extensive Regulation............................... 16
Heller's Ability to Pay Dividends Is Limited............................ 17
Various Risks Specific to the HealthCare Industry Could Adversely Affect
Our Business........................................................... 17
Heller's or Third Parties' Failure to Be Year 2000 Compliant Could
Adversely Affect Heller's Business..................................... 17
Future Sales of Heller Common Stock By Fuji Bank Could Adversely Affect
Heller's Stock Price................................................... 17
Heller's Charter and Bylaws Include Provisions that Could Discourage
Takeovers.............................................................. 18
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS...................... 18
HEALTHCARE SPECIAL MEETING................................................ 19
General................................................................. 19
Matters to be Considered................................................ 19
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Proxies; Solicitation of Proxies........................................ 19
Record Date; Quorum and Voting Rights................................... 20
Vote Required; Abstentions and Broker Non-Votes......................... 20
Recommendation of the HealthCare Board.................................. 20
THE MERGER................................................................ 21
Form of the Merger...................................................... 21
Merger Consideration.................................................... 21
Procedures for Exchange of HealthCare Common Stock...................... 23
Schedule of Important Dates............................................. 23
Stock Options........................................................... 23
Background of the Merger................................................ 25
HealthCare's Reasons for the Merger; Recommendation of the HealthCare
Board of Directors..................................................... 26
Heller's Reasons for the Merger......................................... 28
Fairness Opinion of Financial Advisor................................... 28
Interests of Certain Persons in the Merger; Conflicts of Interest....... 33
Material Federal Income Tax Consequences................................ 34
Accounting Treatment.................................................... 36
Governmental and Regulatory Approvals................................... 37
Resale of Heller Class A Common Stock................................... 38
Listing of Heller Class A Common Stock.................................. 38
Dissenters' Rights of Appraisal......................................... 38
THE MERGER AGREEMENT...................................................... 40
Charter, Bylaws, Directors and Officers After the Merger................ 40
Representations and Warranties.......................................... 40
Covenants and Agreements................................................ 41
Conditions to Consummation of the Merger................................ 43
Termination; Fees and Expenses.......................................... 44
Amendment and Waiver.................................................... 44
OPTION AGREEMENT.......................................................... 45
Effect of Option Agreement.............................................. 45
Exercise and Expiration of the Option................................... 45
Repurchase at the Option of Heller...................................... 46
Registration Rights..................................................... 47
Substitute Option....................................................... 47
Profit Limitations...................................................... 47
INFORMATION ABOUT HEALTHCARE.............................................. 47
Primary Types of Financing.............................................. 48
INFORMATION ABOUT HELLER.................................................. 49
Primary Business Segments............................................... 49
Market Position......................................................... 49
Heller's History and Recent Activities.................................. 50
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION............... 51
Dividend Policy......................................................... 51
COMPARISON OF THE RIGHTS OF HOLDERS OF HELLER COMMON STOCK AND HOLDERS OF
HEALTHCARE COMMON STOCK.................................................. 52
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
DESCRIPTION OF HELLER CAPITAL STOCK....................................... 56
General................................................................. 56
Preferred Stock......................................................... 57
Common Stock............................................................ 59
Certain Charter and Bylaw Provisions.................................... 61
WHERE YOU CAN FIND MORE INFORMATION....................................... 63
EXPERTS................................................................... 64
LEGAL OPINIONS............................................................ 64
STOCKHOLDER PROPOSALS..................................................... 64
LIST OF APPENDICES
Appendix A Composite Copy of the Agreement and Plan of Merger, dated
and amended as of April 19, 1999
Appendix B Stock Option Agreement dated April 19, 1999
Appendix C Fairness Opinion of Financial Advisor
Appendix D Delaware General Corporation Law Section 262--Appraisal
Rights
</TABLE>
iii
<PAGE>
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus about the merger, HealthCare or
Heller. We have not authorized anyone to give you any other information. This
proxy statement/prospectus does not apply to you if you are (1) in a
jurisdiction where the activities covered by this proxy statement/prospectus
are unlawful or (2) a person to whom it is unlawful to direct these activities.
The information contained in this proxy statement/prospectus speaks only as of
the date on the cover of this proxy statement/prospectus unless the information
specifically indicates that another date applies.
HealthCare has supplied all information contained or incorporated by
reference in this proxy statement/prospectus about HealthCare. Heller has
supplied all information contained or incorporated by reference in this proxy
statement/prospectus about Heller.
This proxy statement/prospectus incorporates important business and
financial information about our companies that is not included in, or delivered
with, this document. Heller will provide you with copies of the information
relating to Heller, without charge, upon written or oral request to:
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Treasurer
Telephone number: 312-441-7000
HealthCare will provide you with copies of the information relating to
HealthCare, without charge, upon written or oral request to:
HealthCare Financial Partners, Inc.
2 Wisconsin Circle, Fourth Floor
Chevy Chase, Maryland 20815
Attention: Steven M. Curwin, Senior Vice President, General
Counsel and Secretary
Telephone number: 301-961-1640
In order to receive timely delivery of the documents in advance of the special
meeting, you should make your request no later than July 13, 1999.
If you would like additional copies of this proxy statement/prospectus or
the election forms, or if you have questions about the merger and the merger
consideration, you should contact Corporate Investor Communications, Inc., the
information agent, at:
Corporate Investor Communications, Inc.
111 Commerce Road
Carlstadt, New Jersey 07072-2586
Phone Number: 1-877-460-4349 (toll-free)
This proxy statement/prospectus and the information incorporated by
reference include "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to risks, uncertainties and other factors which could
cause actual results to differ materially from future results expressed in or
implied by these forward-looking statements. Please review the "Cautionary Note
Regarding Forward-Looking Statements" on page 18.
iv
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: Why are HealthCare and Heller proposing to merge? How will I benefit?
A: HealthCare will be integrated into a larger and more globally diversified
organization that offers a broader range of commercial financial services.
We believe that the complementary nature of our financial service businesses
will create a combined company with greater business potential and resources
than either of us has individually. We believe that this merger will allow
us to accelerate long-term growth and enhance stockholder value.
Additionally, the transaction will provide HealthCare stockholders a
significant premium over the market price of HealthCare common stock
immediately prior to the public announcement of the merger. You should
consider, however, that our achieving these anticipated benefits is subject
to risks discussed on pages 13 to 18.
Q: What will I receive for my shares of HealthCare common stock?
A: If we complete the merger, you will receive cash and/or Heller class A
common stock for your shares of HealthCare common stock. The value of the
consideration you will receive for each of your shares of HealthCare common
stock will be approximately $35.00, subject to adjustment as discussed
below. We will compute the average closing price of Heller class A common
stock on the New York Stock Exchange for a specified pricing period. The
pricing period will be the 10 trading days beginning on July 6, 1999 and
ending on, and including, July 19, 1999. If the average closing price of
Heller class A common stock for the pricing period is greater than $21.54
but less than $28.73, the value of the consideration that you receive for
each of your shares of HealthCare common stock will be $35.00 as of the end
of the pricing period. If the average closing price of Heller class A common
stock for the pricing period is equal to or greater than $28.73, the value
of the consideration that you receive for each of your shares of HealthCare
common stock will be greater than $35.00 as of the end of the pricing
period. If the average closing price of Heller class A common stock for the
pricing period is equal to or less than $21.54, the value of the
consideration that you receive for each of your shares of HealthCare common
stock will be less than $35.00 as of the end of the pricing period. For a
discussion of how we would adjust the consideration you receive for each of
your shares of HealthCare common stock, see "The Merger--Merger
Consideration" beginning on page 21. The market price of Heller class A
common stock will fluctuate prior to the merger. Therefore, you should
obtain current stock price quotations for Heller class A common stock from
your stock broker or a major newspaper, such as The Wall Street Journal.
Q: What will determine whether I receive cash or Heller class A common stock in
the merger?
A: On or before July 19, 1999, you may elect to receive the consideration for
your shares of HealthCare common stock in cash, Heller class A common stock
or a combination of the two. However, approximately 41% of the total
consideration value paid to all HealthCare stockholders in the merger must
consist of Heller class A common stock, with the remainder consisting of
cash. Because of this requirement, the elections made by other HealthCare
stockholders may cause the mix of cash and Heller class A common stock which
you receive to be different from what you request.
Example: If you elect to receive only shares of Heller class A common stock
and all other HealthCare stockholders make the same election, 41% of the
value of the consideration paid to you in the merger will be paid in Heller
class A common stock and 59% will be paid in cash. Similarly, even if you
elect to receive only cash, you may receive a mix of cash and Heller class
A common stock in the merger.
Q: What do I need to do now?
A: You should return your completed, signed and dated proxy card in the
enclosed prepaid white
1
<PAGE>
envelope as soon as possible so that your shares can be voted at the special
meeting. The HealthCare board unanimously recommends that you vote FOR
approval and adoption of the merger agreement and the merger.
In addition, we have enclosed with this proxy statement/prospectus election
forms which you can use to inform The Bank of New York, the exchange agent,
whether you wish to receive cash, Heller class A common stock or a
combination of cash and Heller class A common stock for your shares of
HealthCare common stock. Each election form includes a letter of
transmittal with written instructions for exchanging your shares of
HealthCare common stock for cash and/or stock certificates representing
Heller class A common stock. To make an election as to the form of
consideration you wish to receive, you must complete and return these
documents, along with your shares of HealthCare common stock, to the
exchange agent on or before the election deadline on July 19, 1999. For
more information on how this procedure works, see "The Merger--Merger
Consideration" on page 21 and "Procedures for Exchange of HealthCare Common
Stock Certificates" on page 23.
Q: If my shares are held by my broker in its name, will my broker vote my
shares for me?
A: Your broker will vote your shares only if you provide your broker with
instructions on how to vote. You should follow the procedures provided by
your broker regarding how to instruct your broker to vote your shares.
Shares not voted will have the same effect as votes against approval and
adoption of the merger agreement and the merger.
Q: Can I change my vote after I have mailed my signed proxy card?
A: Yes. You can change your vote at any time before your proxy card is voted at
the special meeting by:
. delivering a written notice to the Secretary of HealthCare revoking your
proxy;
. delivering a later-dated, signed proxy card; or
. attending the special meeting and voting in person.
Your attendance alone will not, however, revoke your proxy. If you have
instructed a broker to vote your shares, you must follow the procedures
provided by your broker to change those instructions.
Q: When do you expect to complete the merger?
A: We are working toward completing the merger on July 22, 1999, two days after
the special meeting. However, for various reasons, some of which are outside
our control, we may not be able to meet that schedule.
Q: Where can I find more information about the companies?
A: Both HealthCare and Heller file periodic reports, special reports, proxy
statements and other information with the SEC. You may obtain this
information from the SEC's public reference facilities. This information is
also available on the SEC's web site at http://www.sec.gov and at the
offices of the New York Stock Exchange. For a more detailed description of
the information available, see "Where You Can Find More Information" on page
63.
Q: Who should I contact if I have questions about the merger and the merger
consideration or want to obtain additional copies of this proxy
statement/prospectus or the election forms?
A You should contact Corporate Investor Communications, Inc., the information
agent, at:
Corporate Investor Communications, Inc.
111 Commerce Road
Carlstadt, New Jersey 07072-2586
Phone Number: 1-877-460-4349 (toll-free)
2
<PAGE>
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus. It does not contain all of the information about
HealthCare, Heller and the merger that may be important to you. Therefore, you
should read carefully this entire document and the documents to which we refer
you. We have included page references in parentheses to direct you to more
complete descriptions of the topics presented in this summary.
The Companies
HealthCare Financial Partners, Inc. (page 47)
2 Wisconsin Circle, Fourth Floor
Chevy Chase, Maryland 20815
(301) 961-1640
HealthCare is a specialty finance company offering asset-based and related
financing to healthcare service providers. HealthCare focuses primarily on
clients operating in sub-markets of the healthcare industry, including long-
term care, hospitals and physician practices. HealthCare provides financing to
its clients through its Accounts Receivable and Secured Term Loan Programs.
HealthCare was incorporated in Delaware in 1993.
Heller Financial, Inc. (page 49)
500 West Monroe Street
Chicago, Illinois 60661
(312) 441-7000
Heller is a leading diversified commercial financial services company that
provides a broad array of financial products and services to mid-sized and
small businesses in the U.S. and selected international markets. Heller
delivers its products and services principally through its Domestic Commercial
Finance and International Factoring and Asset Based Finance business segments.
Heller was incorporated in Delaware in 1919.
HF5, Inc.
500 West Monroe Street
Chicago, Illinois 60661
(312) 441-7000
HF5 is a wholly-owned subsidiary of Heller. If we complete the merger,
HealthCare will be merged into HF5. HF5 was incorporated by Heller in Delaware
in 1998 with minimal capitalization. HF5 has conducted no business since its
incorporation, other than executing the merger agreement.
Our Reasons for the Merger; Recommendations to Stockholders (page 26)
The HealthCare board (1) has declared the merger advisable and unanimously
approved the merger agreement and the merger, (2) believes that the merger is
fair to, and in the best interests of, HealthCare and its stockholders and (3)
unanimously recommends that you vote FOR approval and adoption of the merger
agreement and the merger at the special meeting. In reaching its decision, the
HealthCare board considered a variety of information and a number of factors,
including:
. available strategic alternatives and the market risks of remaining a
stand-alone company;
. the opportunity, at least in part, for HealthCare stockholders to
participate in the future growth of a larger, well-managed company;
. the terms and structure of the merger; and
. the fairness opinion of Goldman, Sachs & Co., HealthCare's financial
advisor.
The Special Meeting (page 19)
Time, Place and Date (page 19)
The special meeting will be held on July 20, 1999, at 10:00 a.m., local
time, at The Four Seasons Hotel, 2800 Pennsylvania Avenue, Washington, D.C.
20007.
Purpose (page 19)
At the special meeting, HealthCare will ask the holders of HealthCare common
stock to approve and adopt the merger agreement and the merger. HealthCare
stockholders may also vote upon any other matters that are properly brought
before the meeting.
Record Date and Vote Required (page 20)
You may vote at the special meeting if you were the record owner of
HealthCare common stock
3
<PAGE>
at the close of business on June 14, 1999. You will have one vote for each
share of HealthCare common stock you owned on that date. On June 14, 1999,
there were 13,470,363 shares of HealthCare common stock outstanding. To be
approved and adopted, a majority of the outstanding shares of HealthCare common
stock must be voted in favor of the merger agreement and the merger.
The Merger (page 21)
The merger agreement is the legal document that governs the merger. A
composite copy of the merger agreement, as amended, is included as Appendix A
to this proxy statement/prospectus. We encourage you to read the merger
agreement.
If the holders of a majority of the outstanding shares of HealthCare common
stock approve and adopt the merger agreement and the merger and all other
conditions to the merger are satisfied or, where permissible, waived,
HealthCare will merge into HF5.
What You Will Receive (page 21)
If we complete the merger, the shares of HealthCare common stock that you
own at the time of the merger will convert into the right to receive shares of
Heller class A common stock and/or cash. You will have the opportunity to
select your preferred form of payment. However, for the reasons discussed
below, you may not receive the form of payment you select. Heller will not
issue fractional shares. Instead, you will receive the value of any fractional
share in cash.
The value of the consideration you will receive for each of your shares of
HealthCare common stock will be approximately $35.00, subject to adjustment as
discussed below. We will compute the average closing price of Heller class A
common stock on the New York Stock Exchange for a specified pricing period. The
pricing period will be the 10 trading days beginning on July 6, 1999 and ending
on, and including, July 19, 1999. If the average closing price of Heller class
A common stock for the pricing period is greater than $21.54 but less than
$28.73, the value of the consideration that you receive for each of your shares
of HealthCare common stock will be $35.00 as of the end of the pricing period.
If the average closing price of Heller class A common stock for the pricing
period is equal to or greater than $28.73, the value of the consideration that
you receive for each of your shares of HealthCare common stock will be greater
than $35.00 as of the end of the pricing period. If the average closing price
of Heller class A common stock for the pricing period is equal to or less than
$21.54, the value of the consideration that you receive for each of your shares
of HealthCare common stock will be less than $35.00 as of the end of the
pricing period. In any case, approximately 41% of the total consideration value
paid to all HealthCare stockholders in the merger will consist of Heller class
A common stock, with the remainder consisting of cash. Therefore, the form of
the consideration that you ultimately receive will depend upon your election
and the elections of the other HealthCare stockholders. Accordingly, you may
receive some of your consideration in the form you elected and some in the form
of consideration you did not elect.
Treatment of Outstanding Options (page 23)
When we complete the merger, all outstanding stock options to purchase
HealthCare common stock held by employees, other than options held by John K.
Delaney, HealthCare's Chief Executive Officer and Chairman, Ethan D. Leder,
HealthCare's President and Vice Chairman, and Edward P. Nordberg, Jr.,
HealthCare's Chief Financial Officer and Executive Vice President, whether or
not exercisable, will convert into fully exercisable options to purchase shares
of Heller class A common stock. We will adjust the number of option shares and
the exercise price for the options to reflect the applicable terms of the
merger.
We will cancel each outstanding option to purchase HealthCare common stock
held by directors of HealthCare who are not also officers of HealthCare. Each
of these directors will receive an amount in cash equal to the profit that
would have been realized upon the merger if the director had exercised the
option immediately prior to the merger. We will also cancel options held by
Messrs. Delaney, Leder and Nordberg, and we will pay each of these individuals
an amount in cash in consideration of such cancellation.
4
<PAGE>
Fairness Opinion of HealthCare's Financial Advisor (page 28)
On April 19, 1999, Goldman Sachs delivered their oral opinion to the
HealthCare board that, as of the date of the opinion, the stock consideration
and cash consideration to be received by the holders of the outstanding shares
of HealthCare common stock pursuant to the merger agreement, taken as a unitary
transaction, was fair from a financial point of view to the holders of
HealthCare common stock receiving the consideration. Goldman Sachs subsequently
confirmed their oral opinion by delivery of their written opinion dated April
19, 1999. The opinion of Goldman Sachs does not constitute a recommendation as
to how any holder of HealthCare common stock should vote with respect to the
merger agreement or whether any holder should elect to receive stock
consideration or cash consideration.
The full text of the written opinion of Goldman Sachs, dated April 19, 1999,
which sets forth assumptions made, matters considered and limitations on the
review undertaken in connection with their opinion, is attached as Appendix C.
You should read the opinion in its entirety.
What We Need to do to Complete the Merger (page 43)
The completion of the merger depends on the satisfaction of a number of
conditions. In addition to the parties complying with the merger agreement,
these conditions include the following:
. holders of a majority of the outstanding shares of HealthCare common
stock must approve and adopt the merger agreement and the merger;
. HealthCare and Heller must receive all required regulatory consents and
approvals, including from the Board of Governors of the Federal Reserve
System;
. there must be no governmental or court order blocking completion of the
merger and no proceedings by a governmental body or other person
attempting to block the merger;
. HealthCare and Heller must each receive a legal opinion confirming the
tax-free nature of the merger;
. the New York Stock Exchange must approve for listing the shares of Heller
class A common stock that Heller will issue in the merger; and
. the holders of no more than 5% of the outstanding shares of HealthCare
common stock shall have asserted the right to seek relief as dissenting
stockholders under Delaware corporate law.
Unless prohibited by law, either Heller or HealthCare could elect to waive a
condition that has not been satisfied by the other party and complete the
merger anyway. We cannot be certain whether or when any of these conditions
will be satisfied, or, where permissible, waived or that we will complete the
merger.
Terminating the Merger Agreement; Who Pays for What (page 44)
HealthCare and Heller can agree at any time to terminate the merger
agreement before completing the merger, even if the HealthCare stockholders
have approved it. Under certain circumstances, either HealthCare or Heller may
unilaterally terminate the merger agreement. In addition, HealthCare can
terminate the merger agreement if the average closing price of Heller class A
common stock which we use to compute the value of the per share consideration
to be paid to HealthCare stockholders is less than $20.35. Under this
circumstance, however, the merger agreement will not terminate if Heller elects
to increase the value of the per share consideration to be paid to HealthCare
stockholders to $34.21.
Whether or not we complete the merger, HealthCare and Heller will each pay
their own fees and expenses, except that the companies will each pay one-half
of the costs and expenses incurred in printing and mailing this proxy
statement/prospectus and the related SEC filing fees.
Interests of Persons Involved in the Merger That are Different from Yours (page
33)
In considering the recommendation of the HealthCare board that stockholders
approve and
5
<PAGE>
adopt the merger agreement and the merger, you should be aware of the interests
which executive officers and directors of HealthCare have in the merger that
are different from your interests.
Upon completion of the merger, we will cancel options to purchase HealthCare
common stock held by Messrs. Delaney, Leder and Nordberg, all of whom are also
members of the HealthCare board. For the cancellation of these options, Mr.
Delaney will receive $2,021,492 in cash, Mr. Leder will receive $1,905,503 in
cash and Mr. Nordberg will receive $1,470,504 in cash. These executives will
also receive additional payments if any payments or distributions they receive
in connection with the merger become subject to excise tax. The additional
payments are required to be in an amount sufficient to cover all the excise
tax, interest and penalties and any income taxes payable with respect to the
additional amounts. We will also cancel each outstanding option to purchase
HealthCare common stock held by directors of HealthCare who are not also
officers of HealthCare. Each of these directors will receive an amount in cash
equal to the profit that would have been realized upon the merger if the
director had exercised the option immediately prior to the merger.
If we complete the merger, Messrs. Delaney, Leder and Nordberg will continue
to serve as employees under their current employment agreements. Mr. Delaney
will be appointed as a Group President in charge of Heller's healthcare finance
business unit.
If we complete the merger, Heller has agreed to continue the current
indemnification arrangements, or provide substantially similar indemnification
arrangements, for HealthCare's directors and officers and to maintain
directors' and officers' liability insurance coverage for HealthCare's
directors and officers for a period of six years.
Tax Consequences for HealthCare Stockholders (page 34)
You will not be taxed, for federal income tax purposes, on the value of
Heller class A common stock you receive in the merger, except with respect to
any cash you receive. With respect to any cash you receive, you will be taxed,
for federal income tax purposes, on the lesser of the cash you receive or the
gain you realize on your HealthCare common stock. Your gain will equal the
excess of (1) the total of cash and the fair market value of the Heller class A
common stock you receive in the merger over (2) your tax basis in your
HealthCare common stock that you exchange in the merger. You may not recognize
any loss on the exchange for federal income tax purposes, unless you receive
only cash. Your initial tax basis in the Heller class A common stock that you
receive in the merger will equal your current tax basis in your HealthCare
common stock, decreased by the amount of cash you receive and increased by any
taxable gain you recognize. Generally, any gain taxable to you will be long-
term capital gain taxable, for federal income tax purposes, at a maximum rate
of 20%, if you have held your HealthCare common stock for more than one year
and you would not be treated as receiving a deemed distribution if you had
instead received such cash in redemption of an equivalent number of shares of
Heller class A common stock. None of HealthCare, HF5, Heller or Heller
stockholders will recognize any gain or loss as a result of the merger.
Accounting Treatment of the Merger (page 36)
We will account for the merger as a "purchase." This means that for
accounting and financial reporting purposes, we will treat our companies as one
company beginning as of the date we complete the merger. Additionally, under
this method of accounting, Heller will record the fair market value of
HealthCare's assets and liabilities on its financial statements. Because the
purchase price is greater than the fair market value of HealthCare's net
assets, Heller will record an asset called "goodwill," currently estimated to
be $231 million. Heller will write off this goodwill as an expense over
approximately the next 25 years, reducing its net income during that period.
Governmental and Regulatory Approvals (page 37)
To complete the merger, Heller must receive the approval of the Board of
Governors of the Federal Reserve System pursuant to the Bank Holding Company
Act of 1956.
6
<PAGE>
Dissenters' Rights (page 38)
If the merger is to be completed, but you do not wish to exchange your
shares of HealthCare common stock for the merger consideration, you have the
right under Delaware corporate law to have the "fair value" of your shares
determined by the Delaware Court of Chancery. This "right of appraisal" is
subject to a number of restrictions and technical requirements. Generally, in
order to exercise appraisal rights, you must (1) not vote in favor of the
merger agreement and the merger and (2) make a written demand for appraisal
before the vote on the merger agreement and the merger. You will not protect
your right of appraisal by merely voting against the merger agreement and the
merger. Appendix D to this proxy statement/prospectus contains the relevant
excerpts from the Delaware appraisal statute.
Option Agreement (page 45)
HealthCare has granted Heller an option to acquire, upon the occurrence of
certain events, up to 19.9% of the issued and outstanding shares of HealthCare
common stock at a price of $28.50 per share. Heller can only exercise the
option if HealthCare agrees, without Heller's consent, to engage in a merger or
acquisition transaction with another party or another party acquires 20% or
more of the outstanding shares of HealthCare common stock, within the time
period provided in the option agreement. The option is intended to discourage
third parties from making alternative acquisition proposals. The option
agreement provides that Heller's total profit under the option agreement cannot
be greater than $24,150,000 or less than $14,490,000. The option agreement is
included as Appendix B to this proxy statement/prospectus.
Comparison of Rights of HealthCare Stockholders and Heller Stockholders (page
52)
HealthCare's charter and bylaws and Delaware corporate law govern the rights
of HealthCare stockholders. If you receive Heller class A common stock in the
merger, Heller's charter and bylaws and Delaware corporate law will govern your
rights as a stockholder of Heller. Your rights under Heller's charter and
bylaws will differ in some respects from your rights under HealthCare's charter
and bylaws.
7
<PAGE>
Market Price Data
The table below presents the closing prices per share of Heller class A
common stock and HealthCare common stock on the New York Stock Exchange on
April 19, 1999, the last trading day before the public announcement of the
proposed merger, and on June 15, 1999.
<TABLE>
<CAPTION>
Heller Class A HealthCare
Common Stock Common Stock
-------------- ------------
<S> <C> <C>
April 19, 1999.......................... $26.250 $28.500
June 15, 1999........................... $26.250 $34.438
</TABLE>
The market price of Heller class A common stock will fluctuate between the
date of this proxy statement/prospectus and the date on which the merger
occurs. We urge you to obtain current stock price quotations for Heller class A
common stock. For more information about the trading prices of Heller class A
common stock and HealthCare common stock, see "Comparative Per Share Market
Price and Dividend Information" on page 50.
Summary Comparative Historical and Pro Forma Per Share Data
The table below presents historical diluted net income applicable to common
stock per share, cash dividends on common stock per share and book value
applicable to common stock per share data of Heller and HealthCare. It also
presents unaudited pro forma combined per share data of Heller and unaudited
equivalent pro forma combined per share data of HealthCare. The pro forma
combined per share amounts reflect the merger. The equivalent HealthCare pro
forma combined per share amounts assume an exchange ratio of 1.262 shares of
Heller class A common stock for each share of HealthCare common stock. This
ratio is based on the average closing price of Heller class A common stock on
the New York Stock Exchange during the 10 consecutive trading days ending June
15, 1999. However, this ratio may decrease or increase, depending on the
trading prices of Heller class A common stock during the pricing period prior
to the merger. The unaudited pro forma data does not necessarily indicate
results that we will obtain on a combined basis. You should read the data along
with (1) the historical financial statements and the related notes incorporated
by reference in this proxy statement/prospectus and (2) the summary selected
historical financial data included in this proxy statement/prospectus summary.
<TABLE>
<CAPTION>
Pro Forma
Historical Combined
----------------- -----------------
Equivalent
Heller HealthCare Heller HealthCare
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Diluted Net Income Per Common Share:
Three months ended March 31, 1999......... $ 0.55 $ 0.45 $ 0.54 $ 0.68
Year ended December 31, 1998(1)........... 1.91 1.52 1.78 2.25
Cash Dividends Per Common Share:
Three months ended March 31, 1999......... $ 0.09 -- $ 0.09 $ 0.11
Year ended December 31, 1998.............. 0.09 -- 0.09 0.11
Book Value Per Common Share:
March 31, 1999............................ $17.64 $18.92 $18.43 $23.26
December 31, 1998......................... 17.40 18.45 18.18 22.94
</TABLE>
- --------
(1) Information for Heller is pro forma to adjust for the impact of Heller's
initial public offering of Heller class A common stock in May 1998 and
assumes that shares issued in connection with the offering have been
outstanding since the beginning of 1998.
8
<PAGE>
Heller Summary Selected Consolidated Financial Data
In the table below, Heller derived the following summary selected
consolidated financial data for, and as of the end of, the five years in the
period ended December 31, 1998 from Heller's audited consolidated financial
statements. Heller derived the financial data for the three-month periods
ended, and as of, March 31, 1999 and 1998 from Heller's unaudited consolidated
financial statements. These unaudited consolidated financial statements
include, in Heller's opinion, all adjustments, consisting only of normal
recurring items, necessary for a fair presentation of Heller's financial
position and results of operations for the covered periods. You should read the
following information along with Heller's consolidated financial statements and
related notes incorporated by reference in this proxy statement/prospectus.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
----------------------- ------------------------------------
1999 1998 1998(1)(2) 1997(2) 1996 1995 1994
----------- ----------- ---------- ------- ----- ----- -----
(unaudited) (unaudited)
(in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Results of Operations:
Interest income......... $ 262 $ 254 $1,047 $ 924 $ 807 $ 851 $ 702
Interest expense........ 149 155 624 516 452 464 336
----- ----- ------ ----- ----- ----- -----
Net interest income.... 113 99 423 408 355 387 366
Fees and other income... 74 53 206 206 79 148 117
Factoring commissions... 28 27 124 104 55 50 53
Income of international
joint ventures......... 8 7 30 36 44 35 21
----- ----- ------ ----- ----- ----- -----
Operating revenues..... 223 186 783 754 533 620 557
Operating expenses...... 108 94 399 357 247 216 195
Provision for losses.... 29 15 77 164 103 223 188
Restructuring charge.... -- -- 17 -- -- -- --
----- ----- ------ ----- ----- ----- -----
Income before income
taxes and minority
interest............... 86 77 290 233 183 181 174
Income tax provision.... 29 27 93 66 43 49 51
Minority interest....... -- 2 4 9 7 7 5
----- ----- ------ ----- ----- ----- -----
Net income.............. $ 57 $ 48 $ 193 $ 158 $ 133 $ 125 $ 118
===== ===== ====== ===== ===== ===== =====
Dividends on preferred
stock.................. $ 7 $ 5 $ 21 $ 14 $ 10 $ 10 $ 10
===== ===== ====== ===== ===== ===== =====
Net income applicable to
common stock
--Basic................ $0.56 $0.84 $ 2.23 $2.82 $2.41 $2.25 $2.12
===== ===== ====== ===== ===== ===== =====
--Diluted.............. $0.55 $0.84 $ 2.23 $2.82 $2.41 $2.25 $2.12
===== ===== ====== ===== ===== ===== =====
Pro forma net income
applicable to common
stock(3)
--Basic................ $0.56 $0.48 $ 1.92 $1.60
===== ===== ====== =====
--Diluted.............. $0.55 $0.48 $ 1.91 $1.60
===== ===== ====== =====
</TABLE>
Footnotes appear on following page.
9
<PAGE>
<TABLE>
<CAPTION>
March 31, December 31,
----------------------- ------------------------------------------
1999 1998 1998(1)(2) 1997(2) 1996 1995 1994
----------- ----------- ---------- ------- ------ ------ ------
(unaudited) (unaudited)
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Receivables............. $12,081 $10,676 $11,854 $10,722 $8,529 $8,085 $7,616
Allowance for losses of
receivables............ (277) (261) (271) (261) (225) (229) (231)
Equity and real estate
investment............. 587 544 617 488 419 428 399
Debt securities......... 456 331 400 311 251 152 69
Operating leases........ 361 194 321 195 135 113 166
Investment in
international joint
ventures............... 222 197 235 198 272 233 174
Total assets............ 14,995 12,600 14,366 12,861 9,926 9,638 8,476
======= ======= ======= ======= ====== ====== ======
Commercial paper and
short-term borrowings.. 3,885 3,273 3,681 3,432 2,745 2,223 2,451
Long-term debt.......... 7,220 5,813 6,768 6,004 4,761 5,145 3,930
------- ------- ------- ------- ------ ------ ------
Total senior debt...... $11,105 $ 9,086 $10,449 $ 9,436 $7,506 $7,368 $6,381
======= ======= ======= ======= ====== ====== ======
Total liabilities...... $12,999 $11,250 $12,394 $11,096 $8,402 $8,208 $7,107
Preferred stock......... 400 275 400 275 125 125 125
Common equity........... 1,586 988 1,562 1,403 1,342 1,259 1,205
------- ------- ------- ------- ------ ------ ------
Total stockholders'
equity................. $ 1,986 $ 1,263 $ 1,962 $ 1,678 $1,467 $1,384 $1,330
</TABLE>
- --------
(1) The financial data presented for 1998 reflect Heller's purchase of the
domestic technology leasing assets of the Dealer Products Group of Dana
Commercial Credit Corporation and the stock of the Dealer Products Group's
international subsidiaries in November 1998. As a result of this purchase,
Heller consolidated the acquired assets and international subsidiaries of
the Dealer Products Group as of the date of acquisition. Goodwill related
to this acquisition totaled $187 million and is subject to any purchase
price adjustments, which Heller does not expect to be material, to be
finalized in 1999. The consolidation of the Dealer Products Group assets
and subsidiaries resulted in an increase of approximately $625 million in
total assets as of December 31, 1998 as compared to December 31, 1997. This
acquisition had a minimal favorable impact on Heller's 1998 net income, as
Heller's 1998 results include only one month of Dealer Products Group
operations.
(2) The financial data presented for 1998 and 1997 reflect Heller's purchase,
through its subsidiary, Heller International Group, of Heller's joint
venture partner's interest in Factofance-Heller, S.A. in April 1997 for
$174 million. As a result of this purchase, Factofrance was reported on a
consolidated basis with Heller as of the date of acquisition. The premium
related to this purchase was allocated as follows: $78 million to goodwill
and $18 million to a noncompetition agreement. Heller's consolidation of
Factofrance resulted in increases of $2 billion in total assets, $94
million in operating revenues and $59 million in operating expenses during
1997 as compared to 1996.
(3) Pro forma to adjust for the impact of Heller's initial public offering of
Heller class A common stock in May 1998 and assumes that shares issued in
connection with the offering have been outstanding since the beginning of
1998 and 1997.
10
<PAGE>
HealthCare Summary Selected Historical Financial Data
In the table below, HealthCare derived the summary selected historical
financial data as of, and for each of, the five years in the period ended
December 31, 1998 from HealthCare's audited financial statements. HealthCare
derived the selected historical statements of operations and balance sheet data
presented below from the combined financial statements of HealthCare and
HealthPartners DEL, LP as of, and for the years ended, December 31, 1995 and
1994, and the consolidated financial statements of HealthCare as of, and for
the years ended, December 31, 1998, 1997 and 1996. HealthCare derived the
financial data for the three-month periods ended, and as of, March 31, 1999 and
1998 from HealthCare's unaudited consolidated financial statements. These
unaudited consolidated financial statements include, in HealthCare's opinion,
all adjustments, consisting only of normal recurring items, necessary for a
fair presentation of HealthCare's financial position and results of operations
for the covered periods. You should read the following information along with
HealthCare's consolidated financial statements and related notes incorporated
by reference in this proxy statement/prospectus. When you compare the Heller
and HealthCare selected financial data, you should note that because of
HealthCare's relative small size compared to Heller, the HealthCare data are in
thousands while the Heller data are in millions.
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
----------------------- ------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- -------------- -------------- -------------- ---------- ----------
(unaudited) (unaudited) (consolidated) (consolidated) (consolidated) (combined) (combined)
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data(1):
Total fee and interest
income................. $17,560 $12,492 $57,706 $27,745 $12,016 $ 565 $ 13
Interest expense........ 4,370 3,800 13,629 7,921 3,409 80 4
------- ------- ------- ------- ------- ----- -----
Net fee and interest
income................. 13,190 8,692 44,077 19,824 8,607 485 9
Provision for losses on
receivables............ 862 651 3,953 1,315 656 46 2
------- ------- ------- ------- ------- ----- -----
Net fee and interest
income after provision
for losses on
receivables............ 12,328 8,041 40,124 18,509 7,951 439 7
Other operating income:
Commission on REIT
originations.......... 988 -- 872 -- -- -- --
Asset management
income................ 60 -- 1,577 -- -- -- --
Consulting income...... 114 118 821 1,397 6 625 406
------- ------- ------- ------- ------- ----- -----
Total other operating
income................. 1,162 118 3,270 1,397 6 625 406
------- ------- ------- ------- ------- ----- -----
Total operating income.. 13,490 8,159 43,394 19,906 7,957 1,064 413
Operating expenses...... 3,890 2,614 13,434 7,219 3,326 1,472 440
Other income (loss)..... 553 516 3,112 185 227 597 (299)
------- ------- ------- ------- ------- ----- -----
Income (loss) before
deduction of
reacquisition earnings
and income taxes
(benefit).............. 10,153 6,061 33,072 12,872 4,858 189 (326)
Deduction of
preacquisition
earnings............... -- -- -- -- 4,290 -- --
Income taxes (benefit).. 4,013 2,441 13,264 4,877 39 (6)
------- ------- ------- ------- ------- ----- -----
Net income (loss)....... $ 6,140 $ 3,620 $19,808 $ 7,995 $ 529 $ 195 $(326)
======= ======= ======= ======= ======= ===== =====
Basic earnings per share
(2).................... $ 0.46 $ 0.35 $ 1.57 $ .99 $ .13
Weighted average shares
outstanding............ 13,420 10,283 12,628 8,088 4,030
Diluted earnings per
share.................. $ 0.45 $ 0.34 $ 1.52 $ .96 $ .13
Diluted weighted average
shares outstanding..... 13,676 10,669 13,002 8,310 4,056
</TABLE>
- --------
(1) Historical data have been reformatted to be consistent with the
presentation for the three months ended March 31, 1999.
(2) Historical earnings per share for periods prior to 1996 are not presented
because they are not meaningful due to the partnership reporting basis for
HealthPartners DEL.
11
<PAGE>
<TABLE>
<CAPTION>
March 31, December 31,
----------------------- ------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- -------------- -------------- -------------- ---------- ----------
(unaudited) (unaudited) (consolidated) (consolidated) (consolidated) (combined) (combined)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Gross finance
receivables............ $480,015 $302,368 $437,287 $250,688 $89,329 $2,552 $279
Allowance for losses on
receivables............ 7,098 3,305 6,402 2,654 1,079 67 21
Total assets............ 534,676 329,078 504,671 272,355 101,273 2,670 345
Client holdbacks........ 4,437 5,862 4,209 6,173 11,739 815 112
Line of credit.......... 20,091 19,385 32,503 40,157 21,830 1,434 --
Commercial paper
facility............... 128,208 19,127 114,207 101,179 37,209 -- --
Warehouse facility...... 42,874 44,768 49,633 27,933 -- -- --
CP Conduit facility..... 69,965 -- 42,440 -- -- -- --
Total liabilities....... 280,767 99,233 257,117 184,525 74,552 2,795 559
Total stockholders'
equity (deficit)....... 253,909 229,845 247,554 87,830 26,721 (125) (214)
</TABLE>
Summary Unaudited Pro Forma Condensed Selected Combined Financial Data
The following summary unaudited pro forma condensed selected combined
financial data are intended to give you a better picture of what our businesses
might have looked like if HealthCare and Heller had been combined for the
periods, and as of the dates, presented. The pro forma combined results of
operations data assume that the merger was completed as of the beginning of
each of the periods provided. The pro forma combined balance sheet data assume
that the merger was completed as of each of the dates. We derived this
financial data from our separate historical consolidated financial statements
and other financial information, which include adjustments for goodwill and
financing costs which we believe are immaterial. We have included this
unaudited pro forma condensed combined financial information for comparative
purposes only, and it does not necessarily indicate the results of operations
or financial position which actually would have been obtained if we had
completed the merger at the beginning of the periods or as of the dates
presented. These combined financial data do not represent the results of
operations or financial position that we will experience in the future.
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
March 31, December 31,
1999 1998
------------ ------------
(in millions, except
per share data)
<S> <C> <C>
Pro Forma Combined Results of Operations Data:
Net interest income................................ $ 122 $ 446
Income before taxes................................ 89 293
Pro forma diluted income before taxes per common
share(1).......................................... 0.92 3.02
Diluted net income per common share(1)............. 0.54 1.78
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
(in millions, except
per share data)
<S> <C> <C>
Pro Forma Combined Balance Sheet Data:
Total assets....................................... $15,760 $15,106
Long-term obligations and redeemable preferred
stock............................................. 7,768 7,295
Cash dividends declared per common share........... 0.09 0.09
</TABLE>
- --------
(1) Pro forma to adjust for the impact of Heller's initial public offering of
Heller class A common stock in May 1998 and assumes that shares issued in
connection with the offering have been outstanding since the beginning of
1998.
12
<PAGE>
RISK FACTORS
In addition to the other information contained in this proxy
statement/prospectus, you should carefully consider the following risk factors
before you decide (1) whether to vote in favor of approval and adoption of the
merger agreement and the merger and (2) whether to elect to receive cash and/or
Heller class A common stock. If we complete the merger, even if you elected to
receive only cash consideration, you may also receive Heller class A common
stock and, therefore, be subject to the risks discussed below.
We May Not Achieve the Expected Benefits of the Merger
We expect the merger to create business opportunities and economies of
scale. Following the merger, in order to maintain and increase profitability
and operating efficiencies, we will need to integrate and coordinate the
product and service offerings, marketing and business development efforts and
operational systems of HealthCare and Heller. We may not accomplish the
integration smoothly, expeditiously or successfully. To integrate operations
following the merger, we will need to dedicate management resources which may
temporarily distract attention from our normal operations. Employee uncertainty
and lack of focus during the integration may also disrupt our business. In
addition, the necessity of coordinating our geographically separated
organizations--Heller is based in Chicago, Illinois and HealthCare is based in
Chevy Chase, Maryland--may initially increase the difficulties of the
integration. If we fail to quickly and effectively complete the integration of
our operations, there could be uncertainty in the marketplace or customer
concern regarding the impact of the merger, which could materially adversely
affect our combined business, financial condition and results of operations.
Various Economic Factors Could Adversely Affect Heller's Business
An Economic Recession or Downturn Could Adversely Affect Heller's Business
Unfavorable economic conditions may prevent Heller from maintaining its new
business origination volume and the credit quality of new business it does
originate at previous levels. In an economic recession, or other adverse
economic environment, Heller may be unable to achieve growth in finance
receivables. Further, an economic downturn or slowdown in specific industries
that Heller targets could adversely affect demand for its products and the
growth in its finance receivables. For example:
. A downturn in the textile and apparel markets could adversely affect
Heller's U.S. factoring business, which represented 8% of its total
revenues in 1998. The textile apparel market constituted 32% of Heller's
U.S. factoring business revenues in 1998;
. A downturn in the commercial real estate markets, which are cyclical and
often affected by changes in tax regulations and interest rates, could
adversely affect Heller's real estate finance activities. Commercial real
estate finance assets represented 15% of Heller's portfolio of lending
assets and investments in 1998; and
. Volatility in the capital markets could adversely affect the net gains on
Heller's equity investments and the timing and profitability of its
securitization transactions. Net gains on Heller's equity investments
represented 4% of its total revenues in 1998.
Unfavorable economic conditions could also cause an increase in Heller's
nonearning assets and writedowns because debtors may be unable to meet their
payment obligations or other contractual terms. For example, Heller's
nonearning assets and writedowns increased during the U.S. economic recession
in the early 1990's due to the adverse impact of the recession on its pre-1990
corporate and real estate finance portfolios. Heller's allowance for losses of
receivables may provide insufficient protection against potential writedowns in
its portfolio. Adverse economic conditions could also hinder Heller's ability
to realize the value of collateral securing its finance receivables or cause
declines in the value of equipment subject to lease agreements. See "--Heller's
Allowance for Losses of Receivables May Be Inadequate" on page 15.
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<PAGE>
Furthermore, an economic recession or downturn could cause a downgrading of
Heller's credit ratings. This could:
. increase Heller's funding costs;
. decrease Heller's net interest income;
. limit Heller's access to the capital markets; and
. cause lenders under Heller's existing credit facilities to refuse to
extend the credit facilities after their expiration.
Fluctuations in Interest Rates Could Adversely Affect Heller's Business
Heller's operating results and cash flow depend to a great extent upon its
level of net interest income, which is the difference between total interest
income earned on earning assets and total interest expense paid on interest-
bearing liabilities. The following factors could adversely affect Heller's net
interest income:
. a decrease in the volume of Heller's earning assets;
. a decrease in the interest rates earned on Heller's earning assets;
. an adverse change in the mix of Heller's earning assets;
.an increase in the volume of Heller's interest-bearing liabilities; and
.an increase in the interest rates paid on Heller's interest-bearing
liabilities.
A significant increase in market interest rates, or, in the case of floating
rate borrowers, the perception that an increase may occur, could adversely
affect Heller's ability to originate new finance receivables and Heller's
ability to grow. Heller's nonearning assets and writedowns could also increase
because its floating-rate borrowers may be unable to meet higher payment
obligations. Conversely, a decrease in market interest rates could cause an
acceleration in the prepayment of owned and managed finance receivables. In
addition, if there are changes in (1) market interest rates, (2) the
relationship between short- and long-term interest rates or (3) the
relationship between different interest rate indices that affect the interest
rates earned on interest-earning assets differently than the interest paid on
interest-bearing liabilities, Heller may experience an increase in interest
expense relative to interest income.
Fluctuations in Foreign Currency Exchange Rates and Other International
Factors Could Adversely Affect Heller's Business
Foreign currency exchange rate fluctuations, particularly in European
currencies, could materially adversely affect the revenues and income Heller
generates from its international asset-based financing and factoring
operations.
Heller's operations may be adversely affected by other factors inherent in
conducting international business, including the following:
. increased international competition;
. political, economic and financial market instability;
. changes in regulatory requirements and taxes; and
. the unreliability of judicial processes.
In addition, instability or adverse economic conditions in international
markets could adversely affect the businesses of Heller's foreign or domestic
customers. This could adversely affect their demand for Heller's products.
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Heller's Ability to Raise Capital and Access to Funds May Be Limited
Heller depends in large part upon commercial paper borrowings and issuances
of medium-term notes and other debt securities for funds. If Heller suffers a
downgrade in its credit ratings, it could incur increased borrowing costs and
have greater difficulty accessing the commercial paper market and the public
and private debt markets. In such an event, Heller's other sources of funds,
including its bank credit and receivable sale facilities, and cash flow from
operations and portfolio liquidations, may not provide it with adequate
liquidity. Thus, a downgrade in Heller's credit ratings could materially
adversely affect its business, financial position or results of operations.
Fuji Bank Can Control Heller's Business and Affairs
The Fuji Bank, Limited holds all of Heller's outstanding class B common
stock, which currently represents 79% of the voting power and 57% of the
economic interest of Heller's outstanding common stock. If we complete the
merger and assuming that Heller issues approximately 6,969,836 shares of Heller
class A common stock to HealthCare stockholders, Fuji Bank will beneficially
own 77% of the voting power and 53% of the economic interest of Heller's
outstanding common stock. As long as Fuji Bank beneficially owns more than 50%
of the voting power of Heller common stock, Fuji Bank will be able to elect all
of the members of Heller's board of directors and can control Heller's business
and affairs, including decisions regarding:
. mergers or other business combinations;
. acquisitions or other dispositions of assets;
. incurrence of indebtedness;
. issuance of equity securities, including additional shares of Heller
class A common stock; and
. payment of dividends.
As long as Fuji Bank beneficially owns more than 50% of the voting power of
Heller common stock, Fuji Bank will also be able to:
. determine matters submitted to a vote of Heller stockholders without the
consent of other stockholders;
. prevent or cause a change of control of Heller; and
. take other actions that may be favorable to Fuji Bank but not to Heller
or the holders of Heller class A common stock.
Fuji Bank's control may result in various conflicts of interest between Fuji
Bank and Heller or between Fuji Bank and the holders of Heller class A common
stock. Some of Heller's directors and officers own Fuji Bank stock and/or serve
as a director, officer or other employee of Fuji Bank. These people may be
faced with decisions that have different implications for Fuji Bank, on the one
hand, and Heller or the holders of Heller class A common stock, on the other
hand, which could create, or appear to create, potential conflicts of interest.
Heller's Allowance for Losses of Receivables May Be Inadequate
Heller's allowance for losses of receivables may be inadequate to protect
against losses in its receivables portfolio due to:
. misjudgment by Heller's management of the potential losses in its
receivables portfolio;
. unanticipated adverse changes in the economy generally; or
. discrete events that adversely affect specific customers, industries or
markets.
If Heller's allowance for losses of receivables is insufficient to cover losses
in its receivables portfolio, Heller's business, financial position or results
of operations could be materially adversely affected.
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<PAGE>
Heller's Quarterly Operating Results May Vary Significantly
Heller's results of operations may vary significantly from quarter to
quarter based on the timing of certain events and other factors, including the
other risk factors listed in this proxy statement/prospectus. For example, if
Heller realizes a gain on a securitization or net investments in a particular
quarter, its operating revenues and net income may be higher in that quarter
as compared to other quarters in the same fiscal year. Therefore, you should
not rely on Heller's results of operations during any particular quarter as an
indication of its results for a full year or any other quarter. In some
periods, Heller's results of operations may fall below the expectations of
public market analysts or investors. Any such shortfall, even if minor, could
cause the market price of Heller class A common stock to decline.
Heller May Be Unable to Attract and Retain Qualified Personnel
Heller may be unable to attract and retain qualified management, sales and
credit personnel. Demand for qualified personnel with significant industry
experience has intensified due to the strength of the U.S. economy and the
commercial finance market and enhanced competition within the commercial
finance market. If Heller has any difficulty in attracting and retaining
qualified personnel on acceptable terms, Heller's business, financial position
or operating results could be materially adversely affected.
Heller is Subject to Intense Competition in the Commercial Finance Market
The commercial finance market is extremely competitive. If Heller is
unwilling to match its competitors' pricing, terms or transaction structures,
it could lose market share. To the extent Heller does match its competitors'
pricing, terms or structure, Heller may experience decreased net interest
income and increased risk of credit losses.
Competition from traditional competitors and new market entrants has
intensified in recent years due to:
. a strong economy;
. marketplace liquidity;
. increasing recognition of the attractiveness of the commercial finance
market;
. a surge in the consolidation activity in the commercial and investment
banking industries; and
. the rapid expansion of the securitization markets.
Some of Heller's competitors are larger than Heller and may have access to
capital at a lower cost than Heller. Moreover, some of Heller's competitors
may engage in certain activities that are prohibited to Heller because they
are not affiliated with bank holding companies and, therefore, are not subject
to the same extensive federal regulations that govern bank holding companies.
Heller is Subject to Extensive Regulation
Heller is subject to extensive regulation and supervision in the
jurisdictions in which it operates. The regulations and supervision are
primarily for the benefit of Heller's customers, not its investors, and may
adversely affect Heller's discretion in operating its business and limit
Heller's ability to derive profits from its business. For example, state laws
often establish maximum allowable finance charges for certain commercial
loans.
If Heller violates applicable statutes or regulations, Heller's applicable
license or registration may be suspended or revoked in that jurisdiction,
and/or Heller may be subject to civil fines and criminal penalties. Future
legislation, regulations, orders, amendments or interpretations could
materially adversely affect Heller's business, financial condition and
operating results.
Because Heller is a subsidiary of Fuji Bank, Heller and its activities are
subject to the Bank Holding Company Act of 1956 and related regulations. The
Bank Holding Company Act limits the ability of Heller to engage in new
activities or to acquire securities or assets of another company.
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<PAGE>
Heller's Ability to Pay Dividends Is Limited
Heller's ability to pay dividends to the holders of its common stock is
restricted by the terms of its outstanding preferred stock and its credit
agreements. In the future, Heller may agree to further restrictions on its
ability to pay dividends. In addition, to maintain Heller's credit rating,
Heller's ability to pay dividends may be limited so that Heller can maintain an
appropriate level of debt. See "Description of Heller Capital Stock--Common
Stock--Dividends" on page 60 and "Comparative Per Share Market Price and
Dividend Information--Dividend Policy" on page 51.
Various Risks Specific to the HealthCare Industry Could Adversely Affect
Heller's Business
Because Heller provides financing to healthcare service providers, Heller is
subject to specific risks related to the healthcare industry. If we complete
the merger, Heller may be affected by these risks to a greater extent. For
example, federal law generally prohibits payment of amounts owed to healthcare
providers under the Medicare and Medicaid programs to any entity other than
providers. Therefore, Heller is unable to collect receivables payable under
those government programs directly from third-party payors. Heller's customers
in the healthcare industry rely on prompt payments from third-party payors to
enable them to satisfy their obligations to Heller. The trend toward cost
containment in the healthcare industry and the imposition of lower
reimbursement and utilization rates and negotiation of reduced payment
schedules by third-party payors could materially adversely affect the ability
of customers to make payments owed to Heller. Further, there are numerous
federal and state initiatives for comprehensive reforms affecting payment for,
and availability of, healthcare services, including proposals that would:
. limit reimbursement rates under certain government programs;
. reduce funding for certain government programs;
. contain healthcare costs on an interim basis by means that could include
a short-term freeze on prices charged by healthcare providers;
. restructure the way in which Medicare pays for certain services; and
. permit greater flexibility in the states' administration of Medicaid.
We cannot predict what proposals, if any, will be adopted or, if adopted, what
effect the proposals would have on Heller's business. The market prices of
securities of companies in healthcare and related industries have been
adversely affected by concern about the potential effects of proposed reform
measures. After the merger, the price of Heller class A common stock may be
similarly adversely affected.
Heller's or Third Parties' Failure to Be Year 2000 Compliant Could Adversely
Affect Heller's Business
Heller has not fully completed its assessment and remediation of its
information technology systems or those of its material vendors and borrowers
to ensure that they will function properly in the year 2000. Heller has also
not fully completed implementing its year 2000 contingency planning. Heller's
assessment, remediation and implementation of its contingency planning are all
currently scheduled to be completed during 1999. However, if Heller's
remediation and contingency planning fall behind schedule or do not
successfully address year 2000 risks or if third parties with whom Heller has
material relationships do not appropriately address their own year 2000
compliance issues, Heller's business, financial condition and operating result
could be materially adversely affected.
Future Sales of Heller Common Stock By Fuji Bank Could Adversely Affect
Heller's Stock Price
The 51,050,000 shares of Heller class B common stock beneficially owned by
Fuji Bank are convertible into an equal number of shares of Heller class A
common stock. Assuming the conversion of all these shares of Heller class B
common stock into Heller class A common stock and without giving effect to the
issuance of Heller class A common stock in the merger, these converted shares
would represent approximately 57% of the
17
<PAGE>
then-outstanding shares of Heller class A common stock. Therefore, the sale of
a substantial number of shares of Heller common stock by Fuji Bank, or the
perception that such sales could occur, could adversely affect the prevailing
market prices for Heller class A common stock. Fuji Bank may not continue to
maintain its current holdings of Heller common stock.
Heller's Charter and Bylaws Include Provisions that Could Discourage Takeovers
Certain provisions of Heller's charter and bylaws may delay or prevent
unsolicited takeover bids from third parties or the removal of incumbent
management. These provisions have no practical effect while Fuji Bank controls
Heller, but, in the event Fuji Bank's voting power decreases to less than 50%,
the provisions may deprive Heller's stockholders of an opportunity to sell
their shares at a premium over prevailing market prices. See "Description of
Heller Capital Stock--Certain Charter and Bylaw Provisions--Provisions that May
Have an Anti-Takeover Effect" on page 61.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus and the information incorporated by
reference include "forward-looking statements," as such term is defined in
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, that reflect our current expectations regarding the
future results, performance, prospects and opportunities of Heller, HealthCare
and the combined company. These forward-looking statements include any
descriptions of anticipated economies of scale, lower cost of funding or
operating synergies included in this proxy statement/prospectus and any
statements regarding the expected markets for the products and services of
Heller or HealthCare, anticipated regulatory developments, competition and
effects of the merger. We have tried to identify these forward-looking
statements by using words such as "believes," "expects," "anticipates,"
"intends," "estimates," "plans," "will" and similar expressions. These forward-
looking statements are based on information currently available to us and are
subject to certain risks, uncertainties and other factors which could cause the
actual results, performance, prospects or opportunities of Heller, HealthCare
or the combined company for 1999 and beyond to differ materially from those
expressed in, or implied by, these forward-looking statements. These risks,
uncertainties and other factors include the following:
. the possibility that the merger will be delayed or not occur;
. the effect of changes in the healthcare industry, including growth,
consolidation and restructuring of the healthcare industry, and changes
in the demand and expenditures for healthcare services;
. the ability of Heller and HealthCare to integrate their operations;
. the success or failure of Heller's or HealthCare's efforts to implement
its business strategy;
. the effect of economic conditions and the performance of borrowers;
. actions of Heller's or HealthCare's competitors and Heller's or
HealthCare's ability to respond to such actions;
. the cost of Heller's or HealthCare's capital, which depends in part on
Heller's or HealthCare's portfolio quality, ratings, prospects and
outlook and general market conditions;
. changes in governmental regulations, tax rates and similar matters; and
. the other factors discussed under the heading "Risk Factors," beginning
on page 13.
You should not place undue reliance on any forward-looking statements. Except
as otherwise required by federal securities laws, we assume no obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events, changed circumstances or otherwise.
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<PAGE>
HEALTHCARE SPECIAL MEETING
General
This proxy statement/prospectus is being mailed on or about June , 1999 to
the holders of record of HealthCare common stock at the close of business on
June 14, 1999. It is accompanied by a proxy card furnished in connection with
the solicitation of proxies by the HealthCare board for use at the special
meeting and at any adjournments or postponements of the special meeting. The
special meeting will be held on July 20, 1999, at 10:00 a.m., local time, at
The Four Seasons Hotel, 2800 Pennsylvania Avenue, Washington, D.C. 20007.
Matters to be Considered
At the special meeting, HealthCare stockholders will consider a proposal to
approve and adopt the merger agreement and the merger. The HealthCare
stockholders may also vote upon any other business that properly comes before
the special meeting or any adjournments or postponements of the special
meeting, including any proposal to adjourn or postpone the special meeting for
the purpose of allowing additional time for the solicitation of additional
proxies to approve and adopt the merger agreement and the merger.
Proxies; Solicitation of Proxies
All shares represented by valid proxies received prior to the special
meeting pursuant to HealthCare board's solicitation, and not revoked before
they are exercised, will be voted in the manner specified in such proxies. If
you do not specify how your proxy is to be voted, your shares will be voted in
favor of the merger agreement and the merger. Shares represented by your
proxies will be voted in the discretion of the persons named in the proxies
with respect to any other matters that properly come before the special
meeting. The HealthCare board is unaware of any other matters that may be
presented for action at the special meeting.
As a HealthCare stockholder, you may use the accompanying proxy card if you
(1) are unable or do not wish to attend the special meeting in person or (2)
wish to have your shares voted by proxy even if you do attend the special
meeting. You may revoke a proxy before it is voted by:
. delivering to the Secretary of HealthCare at 2 Wisconsin Circle, Fourth
Floor, Chevy Chase, Maryland 20815, before or at the special meeting, a
written notice revoking your proxy;
.delivering a later-dated, executed proxy card relating to the same shares;
or
. attending the special meeting and voting in person. However, if you
attend the special meeting, but do not vote in person, your proxy will
still be voted.
If you require assistance in changing or revoking a proxy, you should contact
the information agent at the address or phone number provided on page iv.
The cost of soliciting your proxies will be paid by HealthCare, except that
Heller has agreed to pay one-half of the printing and mailing costs for this
proxy statement/prospectus and one-half of the related SEC filing fees. In
addition to the solicitation of proxies by mail, directors, officers and
employees of HealthCare may solicit proxies from stockholders personally by
telephone or by facsimile, without receiving additional compensation for these
activities. HealthCare will request banks, brokers and other record holders to
send proxies and proxy materials to the beneficial owners of HealthCare common
stock and secure their voting instructions, if necessary. HealthCare will
reimburse the record holders for their reasonable expenses in forwarding these
materials.
HealthCare has also retained Corporate Investor Communications, Inc.
("CIC"), the information agent, to assist in the solicitation of proxies. We
will pay CIC a fee of $5,800 and $4.00 for each HealthCare stockholder
contacted by CIC and $3.00 for each telephone call received by CIC as proxy
solicitor and information agent and reimburse CIC for related out-of-pocket
expenses. HealthCare has agreed to indemnify CIC against liabilities arising
out of its engagement.
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You should not send in any stock certificates or election forms with your
proxy cards. These certificates and election forms should be sent to The Bank
of New York, as exchange agent, in accordance with the instructions included in
the election forms. See "The Merger--Merger Consideration" on page 21 and "--
Procedures for Exchange of HealthCare Common Stock" on page 23.
Record Date; Quorum and Voting Rights
The HealthCare board has fixed the close of business on June 14, 1999 as the
record date for the determination of the HealthCare stockholders entitled to
receive notice of, and to vote at, the special meeting. At the close of
business on that date, there were 13,470,363 shares of HealthCare common stock
outstanding and entitled to vote at the special meeting. The presence, in
person or by proxy, of shares of HealthCare common stock representing a
majority of shares entitled to vote as of the record date is necessary to
constitute a quorum at the special meeting. The election inspectors will count
abstentions and broker non-votes as present at the special meeting for purposes
of determining the presence of a quorum. Broker non-votes are the shares held
by brokers in their names as to which customer instructions have not been
received. Each share of HealthCare common stock outstanding on the record date
entitles its holder to one vote upon any matter to be considered at the special
meeting.
Vote Required; Abstentions and Broker Non-Votes
Under the Delaware General Corporation Law (DGCL) and HealthCare's charter,
to approve and adopt the merger agreement and the merger, the holders of a
majority of the outstanding shares of HealthCare common stock as of the record
date must vote in favor of the merger agreement and the merger. Therefore, if
you do not submit a proxy card or vote in person at the special meeting, you
are effectively voting against the merger agreement and the merger. Brokers who
hold shares of HealthCare common stock in their name for customers who are the
beneficial owners of such shares are prohibited from giving a proxy to vote
shares held for such customers with respect to the matters to be considered at
the special meeting without specific instructions from the customers. Because
approval and adoption of the merger agreement and the merger requires the
affirmative vote of a majority of the outstanding shares of HealthCare common
stock, abstentions and broker non-votes will have the same effect as votes
against approval of the merger agreement and the merger. Accordingly, the
HealthCare board urges you to complete, date and sign the accompanying proxy
card and return it promptly in the enclosed prepaid white envelope. If you have
shares of HealthCare common stock in the name of your broker, the HealthCare
board urges you to direct your broker as to how to vote such shares.
As of the record date, directors and executive officers of HealthCare
beneficially owned approximately 1,340,401 shares of HealthCare common stock,
or approximately 9.6% of the shares entitled to vote at the special meeting. We
expect that each director and executive officer of HealthCare will vote, or
cause to be voted, his or her shares of HealthCare common stock for approval
and adoption of the merger agreement and the merger.
Recommendation of the HealthCare Board
The HealthCare board has declared the merger advisable and unanimously
approved the merger agreement and the merger, including for purposes of the
anti-takeover provisions of Section 203 of the DGCL. The HealthCare board
believes that the merger is fair to, and in the best interests of, HealthCare
and its stockholders and unanimously recommends that you vote FOR approval and
adoption of the merger agreement and the merger. See "The Merger--HealthCare's
Reasons for the Merger; Recommendation of the HealthCare Board of Directors" on
page 26.
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THE MERGER
Form of the Merger
If the HealthCare stockholders approve and adopt the merger agreement and
the merger and all other conditions to the merger are satisfied or, if
permissible, waived, HealthCare will merge into HF5, which is a wholly-owned
subsidiary of Heller. We currently anticipate that we will complete the merger
on July 22, 1999, which is two days after the special meeting, and, in any
event, as promptly as practicable after the special meeting and all other
conditions of the merger agreement, including receipt of all necessary
regulatory approvals, are satisfied or waived. The merger will become effective
on the date and time of the filing of the certificate of merger relating to the
merger with the Secretary of State of Delaware or at a later time specified in
the certificate.
Merger Consideration
When we complete the merger, outstanding shares of HealthCare common stock,
except for shares owned by HealthCare, Heller or dissenting stockholders, will
convert into the right to receive Heller class A common stock and/or cash. The
value of the consideration that you will receive for each of your shares of
HealthCare common stock will be approximately $35.00, subject to adjustment as
discussed below. We will compute the average closing price of Heller class A
common stock as reported on the New York Stock Exchange for a specified pricing
period. The pricing period is the 10 trading days beginning on July 6, 1999 and
ending on, and including, July 19, 1999. If the average closing price of Heller
class A common stock for the pricing period is greater than $21.54 but less
than $28.73, the value of the consideration that you receive for each of your
shares of HealthCare common stock will be $35.00 as of the end of the pricing
period. If the average closing price of Heller class A common stock for the
pricing period is equal to or greater than $28.73, the value of the
consideration that you receive for each of your shares of HealthCare common
stock will be greater than $35.00 as of the end of the pricing period. If the
average closing price of Heller class A common stock for the pricing period is
equal to or less than $21.54, the value of the consideration that you receive
for each of your shares of HealthCare common stock will be less than $35.00 as
of the end of the pricing period. The following table shows how we will adjust
the value of the consideration that you will receive for each of your shares of
HealthCare common stock, based upon the average closing price of Heller class A
common stock on the New York Stock Exchange during the pricing period:
<TABLE>
<CAPTION>
Average
Closing Price of Heller Class A Value of Consideration per Share
Common Stock During the Pricing Period of HealthCare Common Stock
------------------------------------------ -----------------------------------------------
<S> <C>
$21.54 or less*........................... $20.65 plus 66.62% of the average closing price
during the pricing period
Greater than $21.54, but less than $28.73. $35.00
At least $28.73, but less than $31.12..... $20.65 plus 49.95% of the average closing price
during the pricing period
$31.12 or more............................ $36.19
</TABLE>
--------
*If the average closing price of Heller class A common stock during the pricing
period is less than $20.35, HealthCare has the option to terminate the
merger agreement unless Heller agrees to a per share consideration value of
$34.21.
You may elect to have the value of the consideration for each of your shares
of HealthCare common stock paid in (1) cash or (2) that number of shares of
Heller class A common stock equal to the "exchange ratio." The exchange ratio
is the value of the consideration per share of HealthCare common stock divided
by the average closing price of Heller class A common stock during the pricing
period. You do not have to make the same election for all of your shares and,
therefore, you may elect to receive a combination of cash and Heller class A
common stock as your merger consideration. You may divide your holdings and
make a separate election as to specified shares by including them on a separate
election form. The exchange agent will treat each election form separately in
the allocation process.
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We have enclosed with this proxy statement/prospectus election forms which
you can use to tell the exchange agent whether you wish to receive cash, Heller
class A common stock or a combination of cash and Heller class A common stock
for your shares of HealthCare common stock. You should review these forms,
which contain specific instructions as to how to make an election. If on your
election form you elect to receive Heller class A common stock, your shares of
HealthCare common stock included on that form will be treated as "stock
election shares" in the allocation process described below. If on your election
form you elect to receive cash, your shares of HealthCare common stock included
on that form will be treated as "cash election shares" in the allocation
process. If on your election form you make no election to receive either Heller
class A common stock or cash, or if you fail to return your election form by
the deadline, the shares will be treated as "no election shares" in the
allocation process. To be effective, you must return your election forms, along
with your shares of HealthCare common stock, to The Bank of New York, the
exchange agent. We have enclosed with this proxy statement/prospectus a green
envelope which you may use to submit your election forms and stock certificates
to the exchange agent. The deadline for submitting properly completed election
forms will be 5:00 p.m. on July 19, 1999, or such other time as HealthCare and
Heller agree upon. You may revoke or change your election forms prior to the
election deadline. If you revoke your forms of election prior to the election
deadline, you may request that Heller cause the exchange agent to return your
shares of HealthCare common stock covered by your election forms. Your shares
will also be returned to you if we do not complete the merger. Heller will make
election forms available upon the request of persons who become HealthCare
stockholders between the special meeting record date and the election deadline.
See the discussion below under "Procedures for Exchange of HealthCare Common
Stock" regarding transmission of your HealthCare common stock.
Based upon the election forms, the exchange agent will initially allocate
the cash and Heller class A common stock which will be paid to HealthCare
stockholders. The exchange agent will make this allocation as soon as
practicable after completion of the merger. If the number of shares of Heller
class A common stock which would be issued to holders of stock election shares
is less than the "target number" of shares equal to 41% of the product of (1)
the exchange ratio multiplied by (2) the number of outstanding shares of
HealthCare common stock, then:
. all stock election shares will convert into Heller class A common stock;
. the exchange agent will allocate a sufficient number of shares of Heller
class A common stock pro rata first among the holders of no election
shares, based upon the number of no election shares held by each of them,
and then, if necessary, pro rata among the holders of cash election
shares, based upon the number of cash election shares held by each of
them, so that the number of shares of Heller class A common stock that
will be issued is as close as possible to, but not less than, the target
number of shares, and all such no election shares and cash election
shares will convert into Heller class A common stock; and
. the remaining cash election shares and no election shares will convert
into cash.
If the number of shares of Heller class A common stock which would be issued
to holders of stock election shares is greater than the target number of
shares, then:
. all cash election shares and no election shares will convert into cash;
. the exchange agent will allocate a sufficient number of stock election
shares among the holders of stock election shares, based upon the number
of stock election shares held by each of them, to reduce the number of
shares of Heller class A common stock that will be issued to the target
number of shares, and all such allocated stock election shares will
convert into cash; and
. the remaining stock election shares will convert into Heller class A
common stock.
After the exchange agent makes the allocation described above, the exchange
agent will make an additional calculation to determine if the aggregate value
of Heller class A common stock, based upon the closing price of Heller class A
common stock on the date we complete the merger, constitutes at least 41% of
the total consideration value. For purposes of this calculation, the exchange
agent will assume that all
22
<PAGE>
HealthCare stockholders who have exercised their appraisal rights will be paid
the per share cash consideration for their shares and will add this amount to
the cash consideration to be paid in the merger. If the total stock
consideration value is less than 41% of the total consideration value, the
exchange agent will (1) reduce the aggregate amount of cash consideration to be
paid in the merger and (2) increase the aggregate amount of stock consideration
based upon such value per share until the total stock consideration value
equals 41% of the total consideration value. This final adjustment could affect
the mix of consideration that you receive.
Heller will not issue fractional shares. You will be paid in cash the value
of any fractional share, determined by the average closing price for Heller
class A common stock for the five trading days prior to completion of the
merger.
If you have questions about the merger or the value of the consideration and
allocation of stock consideration and cash consideration, you should contact
the information agent at:
Corporate Investor Communications, Inc.
111 Commerce Road
Carlstadt, New Jersey 07072-2586
Phone Number: 1-877-460-4349 (toll-free)
Procedures for Exchange of HealthCare Common Stock
At the time we complete the merger, Heller will deposit with the exchange
agent certificates representing the shares of Heller class A common stock and
an estimated amount of cash to be paid to HealthCare stockholders in the
merger. Each election form enclosed with this proxy statement/prospectus
includes a letter of transmittal with detailed instructions as to how to
exchange your HealthCare common stock for the consideration you will receive
pursuant to the merger. In addition, as soon as practicable after we complete
the merger, we will send to HealthCare stockholders of record immediately prior
to the time we complete the merger, other than dissenting stockholders and
stockholders who have previously sent their HealthCare common stock to the
exchange agent, transmittal materials for use in exchanging their HealthCare
common stock for the consideration they will receive in the merger. After we
complete the merger, if the exchange agent has received a properly completed
transmittal form and your shares of HealthCare common stock, you will be sent
certificates for the Heller class A common stock to which you are entitled
and/or a check for the cash consideration and any fractional share interests or
dividends or distributions you are entitled to receive. No interest will be
paid on any cash to be paid pursuant to the merger.
Heller will not pay HealthCare stockholders entitled to receive certificates
representing Heller class A common stock any dividends or other distributions
with respect to Heller class A common stock with a record date occurring after
the time we complete the merger until those stockholders have properly
surrendered their HealthCare common stock. The exchange agent will return to
Heller any shares of Heller class A common stock and any cash which remains
undistributed to HealthCare stockholders for 12 months after the completion of
the merger. Any former HealthCare stockholders who have not at that time
surrendered their HealthCare common stock to the exchange agent may look only
to Heller for payment of their stock and cash consideration and unpaid
dividends and distributions, in each case, without any interest.
23
<PAGE>
Schedule of Important Dates
The following schedule shows important dates and events of which you should
take note in connection with the special meeting and the merger.
<TABLE>
<CAPTION>
Dates Events
------------------------------- ---------------------------------------------
<C> <S>
June 14........................ Record date for special meeting
July 6 through July 19......... The pricing period that we will use to
compute the average closing price of Heller
class A common stock and determine the value
of the consideration that you will receive
for each of your shares of HealthCare common
stock
July 19........................ Deadline for HealthCare stockholders to
submit election forms to exchange agent
July 20 (before vote is taken
on the
merger at the special meeting).
Deadline for submittal of written demand for
appraisal by HealthCare stockholders who wish
to exercise dissenters' rights
July 20........................ Special meeting
July 22........................ Anticipated date of completion of the merger
</TABLE>
The exchange agent must allocate cash and stock consideration as soon as
practicable after we complete the merger. As soon as practicable after the
final allocation of consideration, HealthCare stockholders will be advised of
the consideration to be received by them.
Stock Options
On the date we complete the merger, all outstanding options to purchase
HealthCare common stock held by employees, except options held by John K.
Delaney, HealthCare's Chief Executive Officer and Chairman, Ethan D. Leder,
HealthCare's President and Vice Chairman, and Edward P. Nordberg, Jr.,
HealthCare's Chief Financial Officer and Executive Vice President, whether or
not exercisable, will convert automatically into fully exercisable options to
purchase shares of Heller class A common stock. We will adjust the number of
option shares to equal the existing number of option shares multiplied by the
exchange ratio. We will also adjust the exercise price per share under each
option to equal the existing exercise price per share divided by the exchange
ratio.
We will cancel all options to purchase HealthCare common stock issued to
non-officer directors. Each non-officer director will receive cash in an amount
equal to the product of the number of shares of HealthCare common stock
previously subject to the option multiplied by the excess of the value of the
consideration per share of HealthCare common stock paid in the merger over the
exercise price per share previously subject to the option.
Immediately following the completion of the merger, Heller will pay cash
amounts to Messrs. Delaney, Leder and Nordberg as consideration for the
cancellation of their options to acquire HealthCare common stock. The payment
amounts, numbers of shares covered by the options and option grant dates are
set forth in the table below. While Messrs. Delaney, Leder and Nordberg
expressed their willingness to convert these options into Heller options,
Heller considers it appropriate to cancel and cash-out these options because
(1) if these options were to convert into Heller options upon completion of the
merger, these HealthCare officers would hold options to purchase a
significantly greater number of shares of Heller class A common stock than
those held by similarly ranking officers of Heller, and (2) a dilution in
Heller earnings per share could result from the issuance of shares of Heller
common stock upon exercise of these options. The options granted on September
13, 1996 had an exercise price per share of $12.50, and the payment amounts
with respect to those options represent the difference between the exercise
price per share and $35.00. The options granted on May 27, 1998 had exercise
prices per share ranging from $40.00 to $53.00, and the payment amounts with
respect to those
24
<PAGE>
options were based upon the valuation of the options using the Black-Scholes
method of option valuation and assuming the stock issuable upon exercise of
these options would be Heller class A common stock. The number of shares of
Heller class A common stock issuable upon exercise of these options assumed a
conversion of HealthCare common stock into Heller class A common stock using a
conversion ratio determined by dividing $35.00 by $23.94, the closing price for
Heller class A common stock on April 16, 1999.
<TABLE>
<CAPTION>
Number of Shares Payment
Name Underlying Options Date of Grant Amount
---- ------------------ ------------------ ----------
<S> <C> <C> <C>
John K. Delaney......... 204,999 May 27, 1998 $1,188,992
John K. Delaney......... 37,000 September 13, 1996 832,500
Ethan D. Leder.......... 185,001 May 27, 1998 1,073,003
Ethan D. Leder.......... 37,000 September 13, 1996 832,500
Edward P. Nordberg, Jr.. 110,001 May 27, 1998 638,004
Edward P. Nordberg, Jr.. 37,000 September 13, 1996 832,500
</TABLE>
In addition, if any payments or distributions made by Heller, HealthCare or
any of their affiliates to Messrs. Delaney, Leder or Nordberg, whether or not
pursuant to the merger agreement, are subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code or any of those individuals incur any
interest or penalties with respect to the excise tax, Heller will make
additional payments to those individuals to cover all such excise taxes,
interest and penalties and any income taxes payable with respect to these
additional amounts paid by Heller to those individuals.
Background of the Merger
From time to time, the board of directors and various members of the senior
management of HealthCare have discussed strategic alternatives available to
HealthCare. As part of these ongoing reviews, on November 12, 1998, Messrs.
Delaney, Leder and Nordberg met with representatives of Goldman, Sachs & Co. to
discuss the available alternatives, including possible acquisition
opportunities and the possible sale of HealthCare. These senior officers of
HealthCare believed that HealthCare should either make one or more strategic
acquisitions or be acquired because there was too much risk to HealthCare and
its stockholders in remaining a medium-sized specialty finance company focused
exclusively on the healthcare industry. They believed that the investment
community would, over time, apply an increasing discount to the value of
HealthCare as compared to larger, diversified commercial finance companies.
Following that meeting, after consulting with other senior executive
officers and the two outside directors of HealthCare, Messrs. Delaney, Leder
and Nordberg were authorized to explore, with the assistance of Goldman Sachs,
a possible sale of HealthCare. After that date, the senior management of
HealthCare and representatives of Goldman Sachs identified a number of
potential purchasers. However, because senior management of HealthCare was
concerned that widespread knowledge of a possible sale could jeopardize
HealthCare's franchise as a specialty lender to the healthcare industry,
Goldman Sachs was instructed to contact only the most likely potential
purchasers.
Based upon the initial contacts made by Goldman Sachs with the potential
buyers selected by the management of HealthCare after consultation with Goldman
Sachs, meetings were arranged with the three potential purchasers, including
Heller, that expressed the greatest interest in acquiring HealthCare. At these
meetings, beginning in December 1998 and continuing into the first quarter of
1999, senior management of HealthCare made separate presentations regarding the
business and financial condition of HealthCare to representatives of the three
interested parties. Negotiations concerning the terms of an acquisition
agreement with one of these parties ensued, but were discontinued on February
25, 1999 following a decline in the value of the stock consideration being
offered by that party. HealthCare and the party expressed no interest in
continuing these negotiations at that time.
During the week of March 29, 1999, representatives of Heller contacted Mr.
Delaney and orally indicated that Heller was interested in a possible
acquisition of HealthCare. Heller also indicated that it was prepared to
25
<PAGE>
pay cash and issue shares of Heller class A common stock representing a
significant premium to the then-current trading prices of HealthCare common
stock on a per share basis. On April 7, 1999, Heller issued a written
indication of interest to this effect.
Heller was invited by HealthCare to conduct a due diligence investigation of
HealthCare at its offices on April 12 through 14, 1999, following which Heller
was requested to provide its highest and best offer. On April 15, 1999, after
completion of its due diligence investigation, Heller submitted a revised
proposal reflecting a further increase in the value, subject to a collar, of
the stock and cash consideration to be paid for each share of HealthCare common
stock. HealthCare and Heller promptly entered into negotiations regarding the
terms and conditions of definitive transaction agreements. These negotiations
were completed on April 19, 1999 and the boards of directors of both companies
then met to review and consider the various transaction agreements, including
appropriate collars. The HealthCare board unanimously approved the merger
agreement, the option agreement and the related transactions at its meeting on
April 19, 1999. The Heller board ratified and approved those agreements and the
related transactions on April 21, 1999.
The companies jointly announced the proposed merger after the close of
business on April 19, 1999. On May 10, 1999, Heller and HealthCare amended the
merger agreement as of April 19, 1999 to clarify provisions in the merger
agreement.
HealthCare's Reasons for the Merger; Recommendation of the HealthCare Board of
Directors
The HealthCare board (1) has declared the merger advisable and unanimously
approved the merger agreement and the merger, (2) believes that the merger is
fair to, and in the best interests of, HealthCare and its stockholders and (3)
unanimously recommends that the holders of HealthCare common stock approve and
adopt the merger agreement and the merger at the special meeting.
In reaching its conclusion to approve the merger agreement and the merger
and to recommend that HealthCare stockholders approve and adopt the merger
agreement and the merger, the HealthCare board considered a wide variety of
information and a number of factors, including the following:
Strategic Alternatives. As discussed above under "--Background of the
Merger," HealthCare considered, from time to time, various strategic
alternatives. The HealthCare board concluded that HealthCare needed to continue
its growth in revenues, earnings and assets to provide increasing benefits to
its stockholders and to be able to manage the risks of being a medium-sized
specialty finance company focused on lending to the healthcare industry. Risks
associated with continuing HealthCare's business as a stand-alone company
lending to the healthcare industry include the following:
. The risk of nonpayment, including risks related to the financial failure
of HealthCare's clients or third-party payors, client fraud, such as the
pledge of fraudulent receivables from a client, misrepresentation,
conversion of account proceeds by clients in violation of lending terms
and third-party claims with respect to HealthCare's security interests in
client assets;
. Disagreements between HealthCare's clients and third-party payors as to
appropriate reimbursement amounts that increase the risk that HealthCare
will be unable to collect amounts advanced by it to the client;
. The concentration of HealthCare's client base and third-party payor base.
A significant percentage of HealthCare's finance receivables are
concentrated in a small number of clients or groups of affiliated
clients, and approximately 72% of the accounts receivable that HealthCare
had purchased or which were pledged to it at December 31, 1998 were
payable under Medicare and Medicaid programs. Any situation that would
adversely affect any of these clients or result in the inability of
federal and state governments to fully fund such programs could have a
material adverse effect on HealthCare; and
. The risks related to lower credit-grade borrowers as a result of
HealthCare's focus on small and middle market healthcare service
providers that are not always able to utilize traditional credit sources
due to their inadequate equity capitalization, limited operating history
or lack of profitability.
26
<PAGE>
The HealthCare board considered making strategic acquisitions of companies
in the same or related lines of business as a means of achieving HealthCare's
growth objectives. However, the HealthCare board concluded that HealthCare's
ability to successfully make these acquisitions would be difficult because of
the following reasons:
. The recent price levels for HealthCare common stock made the use of
HealthCare common stock less attractive as a currency to pay for
acquisitions;
. HealthCare needed to use cash available to it, from prior sales of its
common stock, internally generated funds or borrowed amounts, to finance
its existing lending business, rather than to pay for acquisitions; and
. The acquisition of companies not engaged in the healthcare lending
business would have required HealthCare's management to focus on managing
businesses with which they had limited prior experience or to seek to
hire persons with such experience, in any event requiring the time and
attention of HealthCare senior management that would not then be devoted
to its existing business.
Therefore, the HealthCare board concluded that a realistic means of
achieving HealthCare's economic and risk management objectives would be to seek
to sell HealthCare on terms acceptable to its stockholders.
Process of Identifying Potential Buyers. As described above under "--
Background of the Merger," with the assistance of Goldman Sachs, HealthCare
identified a limited number of potential buyers, of which three, including
Heller, expressed a high degree of interest in a transaction with HealthCare.
The negotiations with Heller led to the execution of the merger agreement. The
HealthCare board believed that the deal was fair and the best available
transaction at the time.
Opportunity to Participate in Future Growth of a Larger Company. The
HealthCare board was mindful of the fact that only 41% of the total
consideration value will be paid in Heller class A common stock. Nevertheless,
the HealthCare board believes that the exchange of HealthCare common stock for
Heller class A common stock will give those HealthCare stockholders who receive
Heller class A common stock an interest in a larger, more diversified lending
company that would not likely be subject to the same types of risk as
HealthCare, which is focused exclusively on the healthcare industry. As holders
of Heller class A common stock, those HealthCare stockholders would likely have
greater liquidity in their holdings. In addition, those HealthCare stockholders
would have the opportunity to participate in the potential growth of the
combined businesses.
Other Factors Leading to the Selection of Heller. The HealthCare board also
considered the following factors in selecting Heller as a potential acquiror of
HealthCare:
. The business potential of the combined businesses, including the
strategic fit between HealthCare and Heller; and
. The financial strength of Heller and the strength of Heller's management.
In connection with its approval of the merger agreement and the merger and
its recommendation to HealthCare stockholders that they approve and adopt the
merger agreement and the merger, the HealthCare board also considered the
following factors:
. The terms and conditions of the merger agreement and the structure of the
merger, including the fact that HealthCare stockholders can elect to
receive either cash, Heller class A common stock or a combination of
both;
. The analysis presented by Goldman Sachs and the oral opinion of Goldman
Sachs delivered on April 19, 1999. See "--Fairness Opinion of Financial
Advisor" beginning on page 28;
. The expectation that the merger would be treated as a tax-free
reorganization under the Internal Revenue Code. Powell, Goldstein, Frazer
& Murphy LLP, counsel to HealthCare, advised the HealthCare board that it
expected to be able to issue an opinion to HealthCare to that effect;
27
<PAGE>
. The presentations by HealthCare's management and outside legal counsel;
. The risk that the merger will not be consummated;
. The risks associated with HealthCare remaining a stand-alone company;
. The likelihood of the merger being approved by the appropriate regulatory
authorities and HealthCare stockholders;
. The treatment in the merger of options to purchase HealthCare common
stock, including those held by Messrs. Delaney, Leder and Nordberg;
. The terms of the option agreement; and
. The fact that the merger agreement would permit the HealthCare board,
under certain circumstances and subject to certain notices and other
requirements, to provide information to, and to participate in
negotiations and discussions with, any person that makes an unsolicited,
superior acquisition proposal. See "The Merger Agreement--Covenants and
Agreements--No Solicitation" on page 43.
This foregoing discussion of the information and factors considered by the
HealthCare board is not intended to be an exhaustive list of the information
and factors considered by the HealthCare board in connection with its review of
the merger agreement and the proposed merger. In view of the variety of factors
considered in connection with its evaluation of the merger, the HealthCare
board did not find it practicable to, and did not, quantify or otherwise assign
relative weights to the specific factors considered in its determination. In
addition, individual members of the HealthCare board may have given different
weights to different factors. Based upon this analysis, the HealthCare board
determined that the merger was fair to, and in the best interests of,
HealthCare and its stockholders. For a discussion of the interests of certain
members of HealthCare management and the HealthCare board in the merger see "--
Interests of Certain Persons in the Merger; Conflicts of Interest" on page 32.
Heller's Reasons for the Merger
Heller believes that combining HealthCare's business with Heller's existing
healthcare finance activities will create a leading commercial lender to small
and middle market businesses serving the healthcare industry, a large and
growing segment of the economy. Heller believes that, with HealthCare's
excellent reputation in the industry, its experienced and talented management
team and its significant healthcare industry lending expertise, the merger will
give the combined business significant growth opportunities. In addition,
Heller believes that HealthCare's products and sales channels are complementary
to Heller's products and sales channels and that, therefore, the combined
business will be able to offer new financial services and products to both
existing and new customers.
Fairness Opinion of Financial Advisor
On April 19, 1999, Goldman Sachs delivered their oral opinion to the
HealthCare board that as of such date, the stock consideration and cash
consideration to be received by the holders of the outstanding shares of
HealthCare common stock pursuant to the merger agreement, taken as a unitary
transaction, was fair from a financial point of view to the holders of
HealthCare common stock receiving such consideration. Goldman Sachs confirmed
their oral opinion by delivery of their written opinion dated April 19, 1999.
Goldman Sachs subsequently has confirmed to HealthCare that if, as of April
19, 1999, Goldman Sachs' analysis and review had been conducted with respect to
the merger agreement as subsequently amended as of April 19, 1999, Goldman
Sachs would have concluded, as of April 19, 1999 and subject to the assumptions
and qualifications set forth in the opinion delivered on that date, that the
stock consideration and the cash consideration to be received by the holders of
the outstanding shares of HealthCare common stock, taken as a unitary
transaction, was fair from a financial point of view to the holders of
HealthCare common stock receiving such consideration.
28
<PAGE>
The full text of the written opinion of Goldman Sachs, dated April 19, 1999,
which sets forth assumptions made, matters considered and limitations on the
review undertaken in connection with their opinion, is attached as Appendix C
and is incorporated by reference in this proxy statement/prospectus. You should
read the opinion in its entirety.
In connection with their opinion, Goldman Sachs reviewed, among other
things,
. the merger agreement;
. the Registration Statement on Form S-1, dated November 20, 1996, with
respect to the initial public offering of HealthCare common stock,
including the related prospectus;
. Annual Reports to Stockholders and Annual Reports on Form 10-K of
HealthCare for the three years ended December 31, 1998;
. Annual Reports to Stockholders and Annual Reports on Form 10-K of Heller
for the five years ended December 31, 1998;
. certain interim reports to stockholders and Quarterly Reports on Form 10-
Q of HealthCare and Heller;
. certain other communications from HealthCare and Heller to their
respective stockholders; and
. certain internal financial analyses for HealthCare prepared by its
management, certain internal financial analyses for Heller prepared by
its management and certain internal financial analyses for HealthCare on
a pro forma basis prepared by the management of Heller.
Goldman Sachs also held discussions with members of the senior managements
of HealthCare and Heller regarding the strategic rationale for, and the
potential benefits of, the transaction contemplated by the merger agreement and
the past and current business operations, financial condition and future
prospects of their respective companies. In addition, Goldman Sachs:
. reviewed the reported price and trading activity for HealthCare common
stock and Heller class A common stock;
. compared certain financial and stock market information for HealthCare
and Heller with similar information for certain other companies the
securities of which are publicly-traded;
. reviewed the financial terms of certain recent business combinations in
the commercial finance industry specifically and in other industries
generally; and
. performed other studies and analyses as Goldman Sachs deemed appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by Goldman Sachs and assumed the
accuracy and completeness for purposes of rendering their opinion. Goldman
Sachs is not an expert in the evaluation of loan portfolios for the purposes of
assessing the adequacy of allowances for losses with respect to loan portfolios
and Goldman Sachs assumed, with the consent of the HealthCare board, that such
allowances of HealthCare and Heller, respectively, are in the aggregate
adequate to cover such losses. Goldman Sachs did not review individual credit
files or make an independent evaluation or appraisal of the assets and
liabilities of HealthCare or Heller or any of their respective subsidiaries and
were not furnished with any such evaluation or appraisal. Heller did not make
available in writing to Goldman Sachs either financial statements dated
subsequent to December 31, 1998 or projections or forecasts of expected future
financial performance. Accordingly, Goldman Sachs' review of such information
consisted of discussions with Heller's management regarding certain estimates
published by the Institutional Brokers Estimate Service. The advisory services
and opinion of Goldman Sachs referred to in this proxy statement/prospectus
were provided for the information and assistance of the HealthCare board in
connection with its consideration of the transaction contemplated by the merger
agreement, and the opinion does not constitute a recommendation as to how any
holder of the outstanding shares of HealthCare common stock should vote with
respect to the merger agreement or the merger or whether they should elect to
receive stock consideration or cash consideration.
29
<PAGE>
The following is a summary of the material financial analyses used by
Goldman Sachs in connection with providing its opinion to the HealthCare board
on April 19, 1999.
The following summaries of financial analyses include information presented
in tabular format. You should read these tables together with the text of each
summary.
The financial analyses were calculated using the following information:
. publicly available information for HealthCare, Heller and selected
publicly-traded commercial finance companies;
. Institutional Brokers Estimate System estimates of earnings,
price/earnings ratios and long term earnings growth rates for HealthCare,
Heller and selected publicly-traded commercial finance companies;
. financial information provided by the management of HealthCare and
Heller;
. an exchange ratio in the merger of 1.4621 shares of Heller class A common
stock per share of HealthCare common stock; and
. a value of $23.9375 per share of Heller class A common stock, the closing
price of such shares on April 16, 1999.
(1) Historical Stock Trading Analysis. Goldman Sachs reviewed the historical
trading prices and volumes for HealthCare common stock. Goldman Sachs also
analyzed the value of the consideration that holders of HealthCare common stock
would receive under the merger agreement in relation to the closing price of
HealthCare common stock on April 16, 1999 and the average market price of
HealthCare common stock over different time periods ending April 16, 1999.
<TABLE>
<CAPTION>
Consideration
Time Period Premium
---------------------------- -------------
<S> <C>
April 16, 1999 Closing Price 18%
Seven-Day Average Price 30%
30-Day Average Price 40%
</TABLE>
(2) Selected Companies Analysis. Goldman Sachs reviewed and compared certain
financial information for HealthCare to corresponding financial information,
ratios and public market multiples for the following four large capitalization,
publicly-traded commercial finance companies:
. Associates First Capital Corporation;
. The CIT Group, Inc.;
. FINOVA Group Inc.; and
. Heller.
and the following three small capitalization, publicly-traded commercial
finance companies:
. Financial Federal Corporation;
. UniCapital Corporation; and
. DVI, Inc.
The selected companies were chosen because they are publicly-traded
commercial finance companies. Goldman Sachs calculated and compared various
financial information, multiples and ratios, including:
. closing share price on April 16, 1999 as a percentage of 52-week high
share price;
. estimated 1999 and 2000 price/earnings ratios;
. Institutional Brokers Estimate System long-term growth estimates;
. ratio of 1999 estimated price/earnings ratio to Institutional Brokers
Estimate System's long-term growth estimate;
30
<PAGE>
. share price to stated book value;
. share price to tangible book value;
. premium to managed accounts receivables;
. return on average equity for last 12 months; and
. return on average assets for last 12 months.
The results of these analyses are summarized as follows:
<TABLE>
<CAPTION>
Selected Small-Cap Selected Large-Cap
Commercial Finance Commercial Finance
Companies Companies
------------------ ------------------
Ratio/Multiple Range Median Range Median HealthCare Heller
-------------- ----------- ------ ----------- ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C>
April 16, 1999 Stock
Price as a Percentage
of 52-Week High........ 35%-59% 50% 73%-91% 83% 48% 76%
Estimated 1999
Price/Earnings Ratio... 5.5x-13.5x 9.6x 10.9x-21.8x 14.7x 15.3x 10.9x
Estimated 2000
Price/Earnings Ratio... 4.7x-11.3x 7.7x 9.4x-18.8x 12.6x 12.1x 9.4x
Institutional Brokers
Estimate System
Estimated Long-Term
Growth Rate............ 15.0%-22.5% 18.5% 15.0%-17.0% 15.5% 27.5% 15.0%
Estimated 1999
Price/Earnings Ratio to
Estimated Five Year
Growth Rate............ 0.37x-0.73x 0.43x 0.73x-1.28x 1.04x 0.55x 0.73x
Share Price/Stated Book
Ratio.................. 0.44x-2.53x 0.98x 1.38x-3.82x 1.95x 1.63x 1.38x
Share Price/Tangible
Book Ratio............. 1.04x-2.53x 1.76x 1.67x-4.91x 3.14x 1.64x 1.67x
Premium to Managed
Accounts Receivables... 0.7%-24.6% 17.4% 6.4%-36.3% 16.3% 36.1% 6.4%
Return on Average Equity
for Last 12 Months..... 4.5%-15.9% 11.5% 8.4%-16.5% 12.6% 11.8% 13.7%
Return on Average Assets
for Last 12 Months..... 1.9%-3.0% 2.7% 1.1%-1.8% 1.6% 5.1% 1.5%
</TABLE>
(3) Selected Transactions Analysis. Goldman Sachs compared certain
information for 30 selected transactions in the commercial finance industry
since 1994 to similar information for the proposed merger, including:
. the premium of the aggregate consideration to the managed receivables of
the acquired company;
. the multiple of the aggregate consideration to the latest 12 months net
income of the target company; and
. the multiple of the aggregate consideration to the common equity of the
target company.
The results of these analyses are summarized as follows:
<TABLE>
<CAPTION>
Selected
Transactions
------------------ Proposed
Ratio/Multiple Range Median Merger
- -------------- ----------- ------ --------
<S> <C> <C> <C>
Premium Paid to Managed Receivables................ 2%-74% 11% 53.8%
Aggregate Consideration to Last 12 Months Net
Income............................................ 10.9x-38.8x 15.3x 23.0x
Aggregate Consideration to Common Equity........... 1.1x-4.9x 2.2x 2.0x
</TABLE>
(4) Relative Valuation Analysis. Goldman Sachs reviewed certain historical
and estimated future financial information for HealthCare and Heller. The
estimated future financial information for Heller was derived from certain
estimates published by the Institutional Brokers Estimate Service. The analysis
indicated that HealthCare stockholders would control 18.3% of the outstanding
common stock of Heller had the merger
31
<PAGE>
consideration been comprised of entirely Heller class A common stock. For
purposes of these analyses, 1998 net income for Heller excludes a $17,000,000
restructuring charge. The analyses also indicated the following contributions
by HealthCare and Heller to the combined company:
<TABLE>
<CAPTION>
HealthCare Heller
---------- ------
<S> <C> <C>
Total Assets............................................ 3.4% 96.6%
Total Debt.............................................. 2.2% 97.8%
Stockholder Equity...................................... 13.7% 86.3%
1998 Revenues........................................... 5.1% 94.9%
1998 Expenses........................................... 3.3% 96.7%
1998 Net Income......................................... 9.8% 90.2%
1999 Estimated Net Income............................... 11.9% 88.1%
2000 Estimated Net Income............................... 12.7% 87.3%
</TABLE>
(5) Sensitivity Analysis. Goldman Sachs performed a sensitivity analysis
using the forecasts of HealthCare's net income prepared by HealthCare's
management for the years 2000 and 2001 and applying multiples ranging from 10.1
to 14.1. These values were then discounted to present value using discount
rates from 13% to 18%. This analysis produced implied net present values for
HealthCare common stock ranging from $23.45 to $39.33 per share.
(6) Pro Forma Merger Analysis. Goldman Sachs prepared pro forma analyses of
the financial impact of the merger. This analyses indicated that the merger
would be accretive to Heller stockholders in 2000.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is directly comparable
to HealthCare or Heller or the contemplated transaction.
The analyses were prepared for purposes of providing an opinion to the
HealthCare board as to the fairness from a financial point of view to the
holders of the outstanding shares of HealthCare common stock of the stock
consideration and cash consideration, taken as a unitary transaction, to be
received by the holders of HealthCare common stock pursuant to the merger
agreement. The analyses do not purport to be appraisals or necessarily reflect
the prices at which businesses or securities actually may be sold. Analyses
based upon forecasts of future results are not necessarily indicative of actual
future results, which may be significantly more or less favorable than
suggested by such analyses. Because such analyses are inherently subject to
uncertainty, being based upon numerous factors or events beyond the control of
the parties or their respective advisors, none of HealthCare, Heller, Goldman
Sachs or any other person assumes responsibility if future results are
materially different from those forecast.
As described above, Goldman Sachs' opinion to the HealthCare board was one
of many factors it took into consideration in making its determination to
approve the merger agreement and the merger and recommend that HealthCare
stockholders approve and adopt the merger agreement and the merger. The
foregoing summary does not purport to be a complete description of the analyses
performed by Goldman Sachs.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with HealthCare, having acted as its financial adviser in connection
with, and having participated in certain of the negotiations leading to, the
merger agreement. Goldman Sachs has also provided certain investment banking
services to Heller from time
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to time, including having acted as a lead manager of Heller's initial public
offering of Heller class A common stock in April 1998, having acted as an agent
for Heller's medium term note programs, and having acted as co-manager of
Heller's public offerings of 6.44% notes due October 2002 in October 1997,
6.25% notes due March 2001 in March 1998 and 6.00% notes due March 2004 in
March 1999, and entered into certain currency swap transactions with Heller.
Goldman Sachs may also provide investment banking services to Heller in the
future.
HealthCare selected Goldman Sachs as its financial advisor because it is a
nationally recognized investment banking firm that has substantial experience
in transactions similar to the merger. Goldman Sachs provides a full range of
financial, advisory and brokerage services and in the course of its normal
trading activities may from time to time effect transactions and hold positions
in the securities or options on securities of HealthCare and/or Heller for its
own account and for the account of customers.
Pursuant to a letter agreement, HealthCare engaged Goldman Sachs to act as
its financial advisor in connection with the possible sale of HealthCare.
Pursuant to the terms of this letter, HealthCare has agreed to pay Goldman
Sachs for its services, including the fairness opinion, a fee of approximately
$8.2 million at the time we complete the merger.
HealthCare has agreed to reimburse Goldman Sachs for its reasonable out-of-
pocket expenses, including attorneys' fees, and to indemnify Goldman Sachs
against certain liabilities, including certain liabilities under the federal
securities laws.
Interests of Certain Persons in the Merger; Conflicts of Interest
In considering the recommendation of the HealthCare board regarding the
merger, you should be aware of the interests which certain executive officers
and directors of HealthCare have in the merger that are different from your
interests.
Options
Upon completion of the merger, we will cancel certain options to purchase
HealthCare's common stock held by Messrs. Delaney, Leder and Nordberg. For
cancellation of these options, Mr. Delaney will receive $2,021,492 in cash, Mr.
Leder will receive $1,905,503 in cash and Mr. Nordberg will receive $1,470,504
in cash. These executives will also receive additional payments if any payments
or distributions they receive in connection with the merger become subject to
excise tax. The additional payments are required to be an amount sufficient to
cover all the excise tax, interest and penalties and any income taxes payable
with respect to the additional amounts paid by Heller to those executives.
We will cancel all options to purchase HealthCare common stock issued to
non-officer directors. Each non-officer director will receive cash in an amount
equal to the product of the number of shares of HealthCare common stock
previously subject to the option multiplied by the excess of the value of the
consideration per share of HealthCare common stock paid in the merger over the
exercise price per share previously subject to the option.
Employment Agreements
If we complete the merger, Messrs. Delaney, Leder and Nordberg will continue
to serve as employees under their current employment agreements. In addition,
Heller will appoint Mr. Delaney as a Group President in charge of its
healthcare finance business unit.
Indemnification and Insurance
If we complete the merger, Heller will indemnify and hold harmless, as and
to the extent presently provided in HealthCare's charter and bylaws and
indemnification agreements, each individual who was on or prior to April 19,
1999, or who becomes prior to the completion of the merger, a director or
officer of
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HealthCare or any of its subsidiaries, from any losses, claims, damages,
liabilities, costs or expenses, judgments, fines and amounts paid in settlement
in connection with any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, in connection with
(1) the fact that such individual is or was a director or officer of HealthCare
or any of its subsidiaries or (2) the merger agreement, the option agreement or
any of the transactions contemplated thereby, whether asserted or arising
before or after completion of the merger.
For six years from the effective time of the merger, or the period of the
applicable statute of limitations, if longer, Heller will maintain in effect
directors' and officers' liability insurance covering those persons who as of
the date of the merger agreement were covered by HealthCare's directors' and
officers' liability insurance. If the cost of the insurance in any year exceeds
250% of the current premium cost, Heller must only maintain the amount of
insurance which can be obtained for that premium amount.
Material Federal Income Tax Consequences
The following general discussion summarizes the material federal income tax
consequences of the merger and is based on the Internal Revenue Code, the
related final, temporary and proposed regulations, administrative
interpretations and court decisions as they currently exist. Future
legislation, regulations, administrative interpretations or court decisions
could significantly change these consequences, either prospectively or
retroactively. The discussion does not address all aspects of federal income
taxation that may be important to particular HealthCare stockholders such as
banks, tax-exempt organizations, mutual funds, insurance companies, dealers in
securities or foreign currency. The discussion also may not be applicable to
HealthCare stockholders who are not citizens or residents of the United States
or who acquired their HealthCare common stock pursuant to the exercise of
employee stock options or otherwise as compensation. Additionally, the
discussion does not address the state or local income tax consequences of the
merger, which may differ from the federal income tax consequences discussed in
this proxy statement/prospectus. This discussion assumes that HealthCare
stockholders hold their shares of stock as capital assets as defined in the
Internal Revenue Code.
None of HealthCare, Heller and HF5 intends to secure a ruling from the
Internal Revenue Service with respect to the tax consequences of the merger.
However, consummation of the merger is conditioned upon the receipt by Heller
of an opinion of Winston & Strawn, counsel to Heller, and the receipt by
HealthCare of an opinion of Powell, Goldstein, Frazer & Murphy LLP, counsel to
HealthCare, dated as of the completion of the merger, substantially to the
effect that, on the basis of facts, representations and assumptions set forth
or referred to in the opinion, the merger will be treated as a tax-free
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code. The tax opinions will not bind the Internal Revenue Service. The Internal
Revenue Service is, therefore, not precluded from challenging the transaction
and contending that the merger is fully taxable to HF5, HealthCare and
HealthCare stockholders. The tax opinions also will be subject to assumptions
and representations made by Heller and HealthCare.
Federal Income Tax Implications of the Merger to HealthCare Stockholders
Assuming the merger is characterized as a tax-free "reorganization" for
federal income tax purposes, you will not recognize any gain or loss when you
exchange your HealthCare common stock for Heller class A common stock pursuant
to the merger, except with respect to any cash you receive, including cash you
receive instead of fractional shares. The amount of gain that will be taxable
to a HealthCare stockholder who receives cash, excluding cash you receive
instead of fractional shares, the tax consequences of which are discussed
below, will equal the lesser of the cash you receive in the merger or the gain
you realize on the exchange of your HealthCare common stock. The gain you
realize on your HealthCare common stock will equal the excess of the total of
the cash, excluding cash you receive instead of fractional shares, plus the
fair market value of the Heller class A common stock that you receive in the
merger over your tax basis in your HealthCare common stock that you surrender
in the merger.
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Whether your gain will be taxed as capital gain, rather than ordinary
income, will depend upon your circumstances. However, that determination will
be made under the assumption that you, and all other HealthCare stockholders,
received only Heller class A common shares in the merger and that a portion of
your Heller class A common shares was then redeemed by Heller for the cash
consideration which you receive. The tests for whether this deemed redemption
results in capital gain or ordinary income are set forth in Internal Revenue
Code Section 302(b)(1), (2), and (3). Pursuant to these tests, if the receipt
of cash in such deemed redemption (1) is not essentially equivalent to a
dividend; (2) is substantially disproportionate with respect to your interest
in Heller class A common stock after the merger; or (3) completely terminates
your interest in Heller class A common stock, which means that you must receive
only cash consideration, then any gain you recognized will be taxed as capital
gain. This capital gain will be subject to a maximum federal capital gains tax
rate of 20% if you have held your HealthCare common stock for more than one
year.
You must individually determine whether you have satisfied one of the
redemption tests and qualify for capital gain treatment. However, in applying
these tests you must take into account not only your receipt of cash
consideration and/or Heller class A common stock, but also the consideration
received by certain persons related to you which the Internal Revenue Code
treats as having been received by you. Nevertheless, given the amount of cash
consideration being paid in the merger and the nature of the transaction, it is
likely that most of you should satisfy at least one of the redemption tests.
If you receive both cash and Heller class A common stock in the merger, then
you may not recognize any loss if your tax basis in HealthCare common stock
exceeds the total of the cash, excluding cash received instead of fractional
shares, plus the fair market value of Heller class A common stock you receive
in the merger. You may recognize loss, however, if you receive only cash
consideration in the merger. If you acquired your shares of HealthCare common
stock in separate transactions, then gain or loss must be computed separately
with respect to each identifiable block of HealthCare common stock that you
surrender in the merger, and loss with respect to one block of such stock
cannot be used to offset taxable gain you recognize with respect to another
block of such stock.
The tax basis of the Heller class A common stock you receive in the merger
will be the same as your tax basis in the HealthCare common stock that you
surrender in the merger, excluding the amount of tax basis allocable to a
fractional share of Heller common stock as discussed below, decreased by the
amount of cash you receive, excluding cash you receive instead of fractional
shares, and increased by the amount of gain taxable to you. The holding period
of the Heller class A common stock that you receive in the merger will include
the period during which you held the HealthCare common stock exchanged in the
merger.
Federal Income Tax Implications of the Merger to HealthCare, Heller and HF5
Assuming the merger is characterized as a tax-free "reorganization" for
federal income tax purposes, none of HealthCare, Heller and HF5 will recognize
any gain or loss for federal income tax purposes as a result of the merger.
Federal Income Tax Implications of the Receipt of Cash by HealthCare
Stockholders Instead of Fractional Shares
Cash you receive instead of a fractional share of Heller class A common
stock will be treated as if the fractional share was issued to you and then
redeemed by Heller. You will recognize gain or loss in an amount equal to the
difference between the cash that you receive and your tax basis in your
HealthCare common stock that is allocable to the fractional share of the Heller
class A common stock that is deemed to be issued to you. Generally, the gain or
loss should be long-term capital gain or loss, if you have held your HealthCare
common stock for more than a year when we complete the merger. If, however, you
fail to meet any of the redemption tests discussed above, the cash that you
receive instead of the fractional share of Heller class A common stock may be
taxed as ordinary dividend income.
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Federal Income Tax Implications of a Failure of the Merger to Qualify as a
Tax-Free "Reorganization"
In the event that the Internal Revenue Service successfully contends that
the merger fails to qualify as a tax-free "reorganization" for federal income
tax purposes, then you will recognize gain or loss in an amount equal to the
difference between the cash consideration plus the fair market value of the
Heller class A common stock that you receive in the merger and your tax basis
in your HealthCare common stock that you surrender in the merger. Generally,
such gain or loss will be long-term capital gain or loss, if the HealthCare
common stock is a capital asset in your hands and you have held your HealthCare
common stock for more than a year when we complete the merger. Moreover, in
such case, HealthCare will be deemed to have sold all of its assets in a
taxable sale to HF5 as of the time of the merger. Accordingly, HealthCare will
recognize gain or loss equal to the difference between (1) the sum of the cash
and the fair market value of the stock given by Heller as consideration in the
merger, plus the amount of HealthCare's liabilities as of the time of the
merger, and (2) the aggregate tax basis that HealthCare has in its assets. The
amount of federal income tax due with respect to any such gain will become a
liability of HF5 after the merger. HF5's aggregate bases in HealthCare's assets
acquired as a result of the merger will equal the sum of the cash and the fair
market value of the stock given by Heller as consideration in the merger, plus
the amount of HealthCare's liabilities as of the time of the merger. This
amount will be allocated among HealthCare's assets based upon their relative
fair market values.
Federal Income Tax Implications of the Merger to Dissenting Stockholders
HealthCare stockholders who exercise their dissenters' rights with respect
to their HealthCare common stock generally will be treated as if the shares
were issued to them and then redeemed by Heller for the amount of cash that
they receive. Accordingly, a dissenting stockholder will recognize gain or loss
equal to the difference between the cash that the stockholder receives and the
stockholder's basis in HealthCare common stock. The nature of the gain will
depend upon a number of factors, including the redemption tests described
above. If you are considering dissenting, you are strongly urged to consult
your tax advisor as to the particular tax consequences of doing so.
The federal income tax discussion set forth above is intended to provide
only a general summary. It does not address tax consequences that may vary with
individual circumstances. Moreover, this discussion does not address any tax
consequences of the disposition of HealthCare common stock before the merger or
the disposition of Heller class A common stock after the merger. Apart from the
federal income tax consequences discussed in this proxy statement/prospectus,
we have made no attempt to determine any tax that may be imposed on a
HealthCare stockholder who is a citizen or resident of a foreign country, or by
any state or other jurisdiction in which a HealthCare stockholder may be
subject to tax. Accordingly, you are strongly urged to consult your tax advisor
to determine the particular tax consequences to you of the merger, including
the applicability and effect of foreign, state, local and other tax laws to and
on you.
Accounting Treatment
We will account for the merger under the "purchase" method of accounting in
accordance with generally accepted accounting principles. This means that for
accounting and financial reporting purposes, we will treat our companies as one
company beginning as of the date we complete the merger. Therefore, the assets
and liabilities and results of operations of HealthCare will be consolidated
into the assets and liabilities and results of operations of Heller after the
completion of the merger. The aggregate merger consideration paid by Heller in
connection with the merger, together with the direct costs of acquisition, will
be allocated to HealthCare's assets and liabilities based on their fair market
values, with any excess being recorded by Heller as goodwill. The goodwill is
currently estimated to be $231 million and is expected to be amortized over a
period of 25 years, reducing Heller's net income in those years.
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Governmental and Regulatory Approvals
On May 24, 1999, Fuji Bank filed a notice with the Board of Governors of the
Federal Reserve System (Federal Reserve Board) seeking approval of the merger
pursuant to the Bank Holding Company Act of 1956, as amended (the BHC Act),
describing, among other things, the following:
. the terms and conditions of the merger;
. the proposed activities of the combined entity;
. the effect of the proposal on competition among entities that engage in
such activities;
. the identity of the parties involved in the transaction;
. a description of the activities of Heller;
. a description of the public benefits that may be expected from the
proposal;
. a description of the terms of the transaction;
. the sources of funds for the transaction; and
. other financial and managerial information.
The information included in the notice and other requests for information will
allow the Federal Reserve Board, when considering approval of the merger, to
take into consideration the financial and managerial resources and prospects of
the existing and proposed institutions and the benefits that may be expected
from the merger.
The merger is subject to prior Federal Reserve Board approval pursuant to
Section 4 of the BHC Act because Heller is an affiliate of Fuji Bank, which is
a bank holding company whose direct and indirect U.S. nonbanking activities are
subject to the jurisdiction of the Federal Reserve Board. In general, the
activities of bank holding companies are limited to banking or managing or
controlling banks and other nonbanking activities that the Federal Reserve
Board determines to be so closely related to banking as to be a proper incident
thereto. More specifically, Section 4 of the BHC Act and the Federal Reserve
Board's implementing regulations, Regulation Y, require Fuji Bank to obtain
prior Federal Reserve Board approval to acquire, directly or indirectly, any
U.S. company and to continue the activities of an acquired company, to the
extent such activities are permissible under the BHC Act. To the extent any
activities currently engaged in, or investments held by, HealthCare are not
permissible under the BHC Act, the Federal Reserve Board may require Fuji Bank
and Heller to commit to cease such activities or divest such investments.
Regulation Y provides for the publication of notice and public comment on
notice applications filed with the Federal Reserve Board. Any negative comments
from the public may delay the Federal Reserve Board's approval of the merger.
Additionally, on May 25, 1999, Fuji Bank and Heller filed a notice with the
Federal Trade Commission (FTC) and the Assistant Attorney General, Antitrust
Division of the Department of Justice (Justice Department), together with a
copy of the notice filed with the Federal Reserve Board and an index of all
information and documents submitted to the Federal Reserve Board. Under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, Fuji Bank and
Heller are required to file this notice with the FTC and Justice Department at
least 30 days prior to consummation of the transaction. At any time before or
after completion of the merger, the Justice Department, the FTC or any State
Attorney General could take such action under the antitrust laws as they deem
necessary or desirable in the public interest, including seeking to enjoin the
completion of the merger. Private parties may also seek to take legal action
under the antitrust laws under certain circumstances.
Heller and HealthCare have agreed to use their reasonable best efforts to
obtain all regulatory approvals required to consummate the merger. However, the
merger cannot proceed in the absence of the required regulatory approvals and
consents. There can be no assurance that the required regulatory approvals and
consents will be obtained and what conditions, if any, may be imposed by any
approval or consent, and, if obtained, there can be no assurance as to the date
of any such approval or consent.
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Resale of Heller Class A Common Stock
The issuance of all shares of Heller class A common stock to be received by
HealthCare stockholders in the merger has been registered under the Securities
Act of 1933. As a result, these shares will be freely transferable by those
persons who are not deemed to be "affiliates," as that term is defined under
the Securities Act, of HealthCare at the time of the special meeting or of
Heller following completion of the merger. Affiliates of HealthCare may resell
shares of Heller class A common stock only in transactions permitted by the
resale provisions of Rule 145 under the Securities Act or pursuant to another
exemption from the registration requirements of the Securities Act, unless the
shares are registered for resale under the Securities Act. Affiliates of Heller
may resell shares of Heller class A common stock only in transactions permitted
by the resale provisions of Rule 144 under the Securities Act or pursuant to
another exemption from the registration requirements of the Securities Act,
unless the shares are registered for resale under the Securities Act. Persons
who may be deemed to be "affiliates" of HealthCare or Heller generally include
individuals or entities that control, are controlled by, or are under common
control with, such company and may include certain executive officers,
directors and principal stockholders. HealthCare has agreed to use its
reasonable best efforts to cause each person who is an "affiliate" of
HealthCare at the time we complete the merger to deliver to Heller a written
agreement intended to ensure compliance by the affiliate with Rule 145 under
the Securities Act.
Listing of Heller Class A Common Stock
Heller will list the shares of Heller class A common stock to be issued in
the merger on the New York Stock Exchange and the Chicago Stock Exchange. If we
complete the merger, HealthCare common stock will no longer be traded on the
New York Stock Exchange and will be deregistered under the Securities Exchange
Act of 1934.
Dissenters' Rights of Appraisal
HealthCare stockholders who follow the procedures specified in Section 262
of the DGCL, are entitled to have their shares of HealthCare common stock
appraised by the Delaware Court of Chancery and to receive the "fair value" of
their shares as determined by the court instead of the merger consideration.
HealthCare stockholders who elect to receive cash in the merger or who elect to
receive Heller class A common stock in the merger and in fact receive Heller
class A common stock, other than cash received instead of fractional shares,
are not entitled to these appraisal rights.
The following is a summary of Section 262 of the DGCL and is qualified in
its entirety by reference to Section 262 of the DGCL, a copy of which is
attached as Appendix D to this proxy statement/prospectus. You should carefully
review Section 262 of the DGCL and, in view of the complexity of these
provisions of Delaware corporate law, you should consult with your legal
advisors to determine your right to an appraisal.
If you wish to exercise your right to an appraisal under Section 262 of the
DGCL, you must do ALL of the following:
. file with HealthCare a written demand for appraisal of your shares of
HealthCare common stock before the vote is taken on the merger agreement
and merger at the special meeting. You must identify yourself in the
written demand and specifically request an appraisal. The written demand
must be in addition to, and separate from, any proxy or vote against
approval of the merger agreement and the merger;
. not vote in favor of approval and adoption of the merger agreement and
the merger. Failing to vote or abstaining from voting will satisfy this
requirement, but voting in favor of approval and adoption of the merger
agreement and the merger, by proxy or in person, or returning a signed
proxy which does not specify a vote against approval and adoption of the
merger agreement and the merger, will constitute a waiver of your right
of appraisal and will nullify any previously filed written demand for
appraisal; and
. continuously hold your shares through the date on which we complete the
merger.
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You must send any written demand for appraisal to Steven M. Curwin, Senior Vice
President, General Counsel and Secretary, HealthCare Financial Partners, Inc.
at 2 Wisconsin Circle, Fourth Floor, Chevy Chase, Maryland 20815.
Within 10 days after the date on which the merger becomes effective, we will
give written notice of the date on which the merger was completed to each
HealthCare dissenting stockholder who has satisfied the requirements of Section
262 of the DGCL and who has not voted for the proposal to approve and adopt the
merger agreement and the merger. In addition, within 120 days after the date on
which the merger becomes effective, we will give a statement setting forth (1)
the aggregate number of shares of HealthCare common stock not voted in favor of
approval of the merger agreement with respect to which demands for appraisal
were made and (2) the number of holders of those shares to any stockholder who
has complied with the applicable provisions of Section 262 and who has
requested such a statement. We will mail the statement within 10 days after the
later of (1) the date on which we received the written request for the
statement and (2) the date on which the period for delivery of demands for
appraisal to us expires.
Within 120 days after the date on which the merger becomes effective, we or
any dissenting stockholder may file a petition in the court demanding a
determination of the fair value of the shares of HealthCare common stock of all
dissenting stockholders. We do not currently intend to file an appraisal
petition, and stockholders seeking to exercise appraisal rights should not
assume that we will file a petition for appraisal or that we will initiate any
negotiations with respect to the fair value of the shares. Accordingly, any
dissenting stockholder who wishes to file a petition for appraisal is advised
to do so on a timely basis unless the stockholder receives notice that the
petition for appraisal has already been filed by us or another dissenting
stockholder.
If a petition for appraisal is timely filed, the court:
. may require dissenting stockholders who hold HealthCare common stock
represented by certificates to submit their certificates to the Register
in Chancery for notation on the certificates of the pendency of the
appraisal proceedings--the court may dismiss the proceedings with respect
to any HealthCare stockholder who fails to comply with this direction;
. will determine which HealthCare stockholders are entitled to appraisal
rights;
. will determine the fair value of the shares of HealthCare common stock
held by dissenting stockholders, exclusive of any element of value
arising from the accomplishment or expectation of the merger, but
together with a fair rate of interest, if any, to be paid on the amount
determined to be fair value. In determining the fair value, the court
will take into account all relevant factors, including market value,
asset value, dividends, earnings prospects, the nature of the business
and any other facts which can be ascertained as of the date of the merger
which throw light on future prospects of the merged corporation, and may
determine the fair value to be more than, less than or equal to the
consideration that the dissenting stockholder would otherwise be entitled
to receive under the merger agreement;
. may, upon the request of any HealthCare stockholder, determine the amount
of interest, if any, to be paid upon the value of the HealthCare common
stock;
. will determine the cost of the appraisal proceeding and divide it among
the parties as it deems fair;
. may, upon the request of a HealthCare stockholder, order all or a portion
of the expenses incurred by any HealthCare stockholder in connection with
the appraisal proceeding, including reasonable attorneys' fees and the
fees and expenses of experts, to be charged pro rata against the value of
all shares entitled to appraisal; and
. direct the payment of the fair value of the shares together with
interest, if any, by Heller to the HealthCare stockholders entitled to
the payment.
Once we complete the merger, dissenting stockholders will no longer have any
rights of HealthCare stockholders with respect to their shares for any purpose,
except to receive payment of their fair value and to receive payment of
dividends or other distributions on the shares, if any, payable to HealthCare
stockholders of record as of a date prior to the date on which the merger
becomes effective.
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If a dissenting stockholder delivers to us a written withdrawal of its
demand for an appraisal within 60 days after the date on which we complete the
merger or with our written approval after such date, then the right of the
dissenting stockholder to an appraisal will cease and the dissenting
stockholder will be entitled to receive only the merger consideration that
holders of no election shares received. Notwithstanding the foregoing, no
appraisal proceeding in the Delaware court may be dismissed as to any
stockholder without the approval of the court, and the approval may be
conditioned upon certain terms that the court deems fair.
If neither we nor any stockholder file a petition for appraisal within 120
days after the date on which the merger becomes effective, then the right of
all of the dissenting stockholders to an appraisal will cease and the
dissenting stockholders will be entitled to receive only the merger
consideration that holders of no election shares received.
Under the terms of the merger agreement, Heller may terminate the merger
agreement if the holders of 5% or more of HealthCare common stock exercise
their rights to an appraisal in accordance with Section 262 of the DGCL.
THE MERGER AGREEMENT
We believe this summary describes all material terms of the merger
agreement, other than the terms previously described under "The Merger."
However, we recommend that you read carefully the complete text of the amended
merger agreement for the precise legal terms of the merger agreement and other
information that may be important to you. A composite copy of the merger
agreement, dated and amended as of April 19, 1999, is included in this proxy
statement/prospectus as Appendix A.
Charter, Bylaws, Directors and Officers After the Merger
Upon completion of the merger, the charter and bylaws of HF5 will be the
charter and bylaws of the surviving corporation. The directors of HF5
immediately prior to the merger will be the initial directors of the surviving
corporation. The officers of HealthCare immediately prior to the merger will be
the initial officers of the surviving corporation.
Representations and Warranties
The merger agreement contains certain representations and warranties by
HealthCare relating to a number of matters, including:
. due incorporation and good standing;
. ownership, due incorporation and good standing of HealthCare's
subsidiaries, and matters regarding joint ventures and other companies
that would be considered "controlled" by HealthCare under the BHC Act if
the BHC Act were applicable to HealthCare;
. capital structure;
. charter, bylaws and corporate records;
. authority to enter into the merger agreement and the option agreement and
to perform its obligations under each and the enforceability of each;
. the absence of breach of its charter or bylaws or other agreements as a
result of the merger, and the consents and approvals required to effect
the contemplated transactions;
. necessary governmental consents and approvals;
. reports filed by it with the SEC;
. its audited consolidated financial statements at December 31, 1998 and
1997 and its unaudited consolidated financial statements at March 31,
1999;
. the absence of certain changes and events since December 31, 1998;
. indebtedness for borrowed money and the absence of undisclosed
liabilities on its audited consolidated balance sheet at December 31,
1998;
. title to assets and the existence of liens on the assets;
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. contracts to which it is a party;
. information regarding financing transactions between it or its
subsidiaries and its clients;
. the securitization and other debt facilities to which it is a party;
. permits and authorizations and compliance with applicable laws;
. employee matters and labor relations, tax matters and environmental
matters;
. intellectual property rights;
. material litigation and governmental proceedings;
. the absence of any untrue statements or omissions of material facts made
by HealthCare in this proxy statement/prospectus and the registration
statement of which it is a part; and
. the recommendation by its board and the vote required to approve the
merger.
The merger agreement also contains representations and warranties by Heller
and HF5 relating to a number of matters, including:
. due incorporation and good standing;
. authority to enter into the merger agreement and to perform the
transactions contemplated by the merger agreement and the enforceability
of the merger agreement;
. the absence of conflicts in entering into the merger agreement and
consummating the transactions contemplated by the merger agreement;
. necessary governmental consents and approvals;
. capital structure;
. the absence of any untrue statements or omissions of material facts made
by Heller or HF5 in this proxy statement/prospectus and the registration
statement of which it is a part;
.reports filed with the SEC;
.the consolidated financial statements of Heller at December 31, 1998 and
1997;
.the absence of certain changes and events since December 31, 1998;
. the absence of claims or actions pending, or to the knowledge of Heller,
threatened against Heller and its subsidiaries;
.compliance with applicable laws; and
. the belief of Heller that it will have all necessary funds to perform its
obligations under the merger agreement.
The representations and warranties of each of the parties are subject to
various qualifications and limitations. None of the representations and
warranties of HealthCare, Heller or HF5 will have any effect after we complete
the merger.
Covenants and Agreements
Conduct of Business of HealthCare
HealthCare has agreed that during the period from the date of the merger
agreement until we complete the merger, except as contemplated by the merger
agreement or to the extent that Heller consents in writing, HealthCare will:
. conduct its business in the ordinary and usual course consistent with
past practices;
. use its reasonable best efforts to maintain and preserve its business
organization, employees and advantageous business relationships;
. retain the services of its officers and key employees; and
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. not take any action which would adversely affect or delay the ability of
either HealthCare or Heller to obtain any necessary regulatory approvals
or to perform their obligations under the merger agreement or, with
respect to HealthCare, the option agreement described under "Option
Agreement."
HealthCare has further agreed that, without the written consent of Heller,
it will not and will not permit any of its subsidiaries to, among other things:
. declare or pay any dividends or other distributions on its capital stock
other than dividends from a wholly-owned subsidiary to HealthCare or to
another wholly-owned subsidiary;
. enter into or amend any collective bargaining agreement or employee
agreement, severance or similar agreement with any director, officer or
employee or modify any of its benefit plans or institute any new benefit
plans, or grant any salary or wage increase or increase any employee
benefit, except normal individual increases in compensation to employees
consistent with past practice and timing or as required by law or
contract;
. authorize, propose or enter into any agreement in principle with respect
to any merger or business combination, or any acquisition or disposition
of a material business or amount of assets;
. other than transactions in the ordinary course of business consistent
with past practice, enter into or modify any material contract or
agreement in a manner adverse to HealthCare or any of its subsidiaries;
. sell, assign or mortgage any of its properties or assets involving
amounts in excess of $100,000, except in the ordinary course of business
consistent with past practice;
. settle any material claim, action or proceeding against it or any of its
subsidiaries involving money damages in excess of $100,000, except in the
ordinary course of business consistent with past practice;
. initiate any litigation or arbitration proceeding, except in the ordinary
course of business;
. propose or adopt any amendments to its charter or bylaws;
. issue, sell or grant options with respect to any of its capital
securities or debt securities having voting rights or purchase or redeem
any capital securities, except for the issuance of HealthCare common
stock (1) upon the exercise of outstanding stock options, (2) pursuant to
the option agreement, (3) in accordance with existing stock option plans
consistent with past practice, (4) as grants of options to purchase not
in excess of 20,000 shares for any individual or 100,000 in the aggregate
to new employees consistent with past hiring practices, or (5) to effect
any stock split or combination;
. other than transactions in the ordinary course of business and
transactions with HealthCare Financial Partners REIT, Inc. on arms length
terms, pay, loan or advance any amount to or sell or transfer any
properties or assets to, or enter into any agreement or arrangement with,
any officer, director or any affiliate or any employee or consultant;
. except as expressly permitted by the merger agreement, directly or
indirectly solicit, encourage or otherwise facilitate any inquiries or
the making of any proposal with respect to a tender offer, merger or
similar transaction involving HealthCare and its subsidiaries or any
purchase of a significant portion of their assets or voting securities;
. take any action that would adversely and materially affect or delay
consummation of the transactions contemplated by the merger agreement and
the option agreement or the ability of HealthCare or Heller to obtain any
required regulatory approvals or their ability to perform their
obligations under the merger agreement and the option agreement or
prevent the merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code;
. other than indebtedness of up to $1 million and use of credit available
under existing lines of credit, incur any indebtedness for borrowed
money, other than certain short-term indebtedness, or guaranty the
obligations of others;
. except in the ordinary course of business through the exercise of
remedies under agreements with its borrowers and upon consultation with
Heller, acquire any business or other entity;
. change any of its accounting principles, practices or methods except as
required by generally accepted accounting principles or regulatory
guidelines;
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. other than in the ordinary course of business consistent with past
practice, materially modify its credit criteria and practices;
. fail to use commercially reasonable efforts to maintain any required
license;
. fail to use commercially reasonable efforts to continue to collect its
accounts receivable and loan payments consistent with past practice;
. make any commitments for capital expenditures in excess of $250,000;
. settle or compromise any material tax liability or file any material tax
return;
. take or omit to take any action reasonably likely to breach any contract
or commitment which would have a material adverse effect on the business,
operations or financial condition of HealthCare and its subsidiaries;
. acquire or agree to acquire any business or assets except materials and
supplies in the ordinary course, consistent with past practice, or in
connection with a foreclosure; or
. agree to take any of these actions.
No Solicitation
The merger agreement provides that HealthCare and its subsidiaries will not,
and will not authorize or permit any of their officers, directors, employees,
investment bankers, attorneys or other advisors, representatives or agents to,
directly or indirectly:
. solicit, initiate, encourage or otherwise facilitate, including by
furnishing non-public information, any inquires or the making of any
"acquisition proposal;" or
. engage in any negotiations regarding, or provide any person any
confidential information with respect to, or facilitate the making of any
proposal that constitutes, an acquisition proposal.
However, prior to the approval of the merger by the HealthCare stockholders,
HealthCare may furnish information to, or enter into unsolicited discussions or
negotiations with, any person or entity if, and only to the extent that:
. after consultation with, and based on the advice of, outside counsel, the
HealthCare board determines in good faith that, in order for the board to
comply with its fiduciary duties to stockholders under applicable law, it
is required to take that action; and
. the HealthCare board determines in good faith, after consultation with
its financial advisor, that the acquisition proposal is reasonably likely
to be consummated and would result in a transaction more favorable to the
HealthCare stockholders from a financial standpoint than that
contemplated by the merger agreement.
The merger agreement requires HealthCare to promptly advise Heller of:
. its receipt, or receipt by any of the other persons referred to above, of
any acquisition proposal;
. the material terms and conditions of that acquisition proposal or
inquiry; and
. the identity of the person making that acquisition proposal or inquiry.
The merger agreement also prohibits HealthCare from terminating, amending or
waiving any provision of any confidentiality or standstill agreement to which
it is a party.
An "acquisition proposal" is any proposal or offer with respect to a tender
offer, merger, consolidation, share exchange, reorganization or similar
transaction involving HealthCare or any of its subsidiaries, or any purchase of
any substantial assets or voting securities of HealthCare and its subsidiaries,
taken as a whole.
Conditions to Consummation of the Merger
The obligations of Heller and HealthCare to complete the merger are subject
to the satisfaction or waiver of certain conditions, including the following:
. obtaining the requisite approval of the HealthCare stockholders;
. obtaining all regulatory approvals and the expiration of all applicable
waiting periods;
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. the absence of any (1) governmental or court order blocking completion of
the merger and (2) proceedings by a governmental body or other person or
entity trying to block the merger;
. effectiveness of the registration statement of which this proxy
statement/prospectus is a part, with no stop order in effect or
threatened;
. authorization for listing on the New York Stock Exchange of the shares of
the Heller class A common stock to be issued in the merger; and
. the receipt of tax opinions from Powell, Goldstein, Frazer & Murphy LLP,
counsel to HealthCare, and Winston & Strawn, counsel to Heller.
In addition, each of HealthCare's and Heller's obligations to complete the
merger are subject to the satisfaction of certain additional conditions,
including the following:
. the accuracy, as of the date of the merger, of the other party's
representations and warranties, subject to certain qualifications; and
. performance in all material respects by the other party of its covenants
and agreements under the merger agreement.
In addition, the obligation of Heller to complete the merger is conditioned
upon the holders of no more than 5% of the outstanding shares of HealthCare
common stock having asserted their right to seek relief as dissenting
stockholders under Delaware corporate law.
Termination; Fees and Expenses
The merger agreement may be terminated at any time prior to completion of
the merger, either before or after approval of the HealthCare stockholders, by:
. the mutual consent of both parties;
. either party in the event of a breach by the other party of any
representation, warranty or agreement contained in the merger agreement,
if the terminating party is not also in material breach of any
representation, warranty or other agreement in the merger agreement;
. either party in the event the merger is not completed by September 30,
1999, except that the failure of the merger to be completed must not have
arisen from the failure of the party seeking to terminate the merger
agreement to perform or observe any agreement of that party in the merger
agreement;
. either party in the event any regulatory approval is not obtained or the
approval of the HealthCare stockholders of the merger is not obtained at
the special meeting; or
. HealthCare if the average closing price of Heller class A common stock
during the pricing period which is used to determine the value of the per
share consideration payable to HealthCare stockholders in the merger is
less than $20.35. However, HealthCare may not terminate the merger
agreement for this reason if, prior to the termination, Heller elects to
increase the per share consideration value to $34.21.
If the merger agreement is terminated for any reason, each party will pay
its own expenses incurred in connection with the merger agreement and the
transactions contemplated by the merger agreement, except that Heller and
HealthCare will each pay one-half of all expenses associated with the printing
and mailing of this proxy statement/prospectus and all related SEC filing fees.
Amendment and Waiver
The parties may amend the merger agreement at any time by a written
instrument executed by HealthCare, Heller and HF5. However, after the approval
of the merger agreement by the HealthCare stockholders, the parties may not
make any amendment that would require the further approval of the HealthCare
stockholders without obtaining their approval.
Any term or provision of the merger agreement may be waived at any time by
the party which is, or whose stockholders are, entitled to the benefits of such
provision. Any such waiver must be set forth in an instrument in writing signed
on behalf of such party.
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OPTION AGREEMENT
As a condition and inducement to entering into the merger agreement,
HealthCare and Heller entered into an option agreement. Pursuant to the option
agreement, HealthCare granted to Heller an option to purchase 2,670,786 shares
of HealthCare common stock, which equaled 19.9% of the outstanding shares of
HealthCare common stock on April 19, 1999. The number of shares of HealthCare
common stock issuable upon exercise of the option is adjusted as additional
shares of HealthCare common stock become or cease to be outstanding so that the
number of option shares always equals 19.9% of the then-outstanding shares of
HealthCare common stock. The exercise price of the option is $28.50 per share.
Because the description of the option agreement contained in this proxy
statement/prospectus is a summary, it does not contain all the information that
may be important to you. You should carefully read the entire option agreement,
which is attached as Appendix B to this proxy statement/prospectus.
Effect of Option Agreement
The option agreement is intended to increase the likelihood that the merger
will be consummated in accordance with the terms of the merger agreement. The
option agreement would have the effect of making an acquisition or other
combination of HealthCare by or with a third party more costly because of the
need in any such transaction to acquire, account for or pay the price of the
shares of HealthCare common stock that would be issued under the option
agreement. We believe the option agreement may discourage a third party from
proposing a competing acquisition or combination even if the offer would
involve a higher price than the consideration to be paid by Heller pursuant to
the merger agreement. We also believe that the exercisability of the option
could prohibit any other acquiror of HealthCare from accounting for any such
acquisition under the pooling-of-interests accounting method. Accordingly, the
option agreement may discourage a third party who might be interested in
effecting such an acquisition or combination from considering or proposing the
transaction or may cause such third party to offer to pay a lower price than
such party would have proposed if pooling-of-interests accounting were
available.
Exercise and Expiration of the Option
Heller may exercise the option, wholly or partially from time to time, but
only if both an "initial triggering event" and a "subsequent triggering event"
have occurred prior to the expiration of the option.
An "initial triggering event" means any of the following:
(1) either HealthCare or any of its subsidiaries, without Heller's prior
written consent, enters into an agreement to engage in an "option
agreement acquisition transaction" with any person other than Heller or
any of Heller's subsidiaries, or the HealthCare board recommends that
its stockholders approve or accept an option agreement acquisition
transaction. An "option agreement acquisition transaction" means (a) a
merger or consolidation, or any similar transaction, involving
HealthCare or any of its subsidiaries, (b) a purchase, lease or other
acquisition or assumption of all or a substantial portion of
HealthCare's assets or deposits or the assets or deposits of any of its
subsidiaries, (c) a purchase or other acquisition, including a merger,
consolidation, share exchange or other similar transaction, of
securities representing 10% or more of the voting power of HealthCare,
or (d) any substantially similar transaction, other than one involving
only HealthCare and one or more of its subsidiaries not in violation of
the merger agreement;
(2) either HealthCare or any of its subsidiaries, without Heller's prior
written consent, authorizes, recommends, proposes or publicly announces
its intention to engage in an option agreement acquisition transaction
with any person other than Heller or one of Heller's subsidiaries, or
the HealthCare board publicly withdraws or modifies or announces its
intention to withdraw or modify in any manner adverse to Heller its
recommendation that the HealthCare stockholders approve the
transactions contemplated by the merger agreement in anticipation of
engaging in an option agreement acquisition transaction;
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(3) any person, other than Heller or a Heller subsidiary or one of
HealthCare's subsidiaries acting in a fiduciary capacity in the
ordinary course of business, acquires beneficial ownership or the right
to acquire beneficial ownership of 10% or more of the outstanding
shares of HealthCare common stock;
(4) any person other than Heller or a Heller subsidiary makes a bona fide
public proposal to HealthCare or the HealthCare stockholders to engage
in an option agreement acquisition transaction;
(5) after an overture is made to HealthCare or the HealthCare stockholders
by a third party to engage in an option agreement acquisition
transaction, HealthCare breaches any covenant or obligation in the
merger agreement that would entitle Heller to terminate the merger
agreement, provided the breach is not cured prior to notice by Heller
of its exercise of the option; or
(6) any person other than Heller or a Heller subsidiary, without Heller's
consent, files an application or notice with the Federal Reserve Board
or other bank regulatory authority for approval to engage in an option
agreement acquisition transaction.
A "subsequent triggering event" means the occurrence of either of the
following:
. the acquisition by any person of 20% or more of the then-outstanding
HealthCare common stock; or
. the occurrence of an initial triggering event described in clause (1)
above, except that the percentage of HealthCare securities acquired must
represent 20% or more of the voting power of HealthCare.
To the extent the option has not been exercised, the option agreement will
expire upon the earliest of:
. the completion of the merger;
. the termination of the merger agreement, other than a termination by
Heller by reason of HealthCare's willful breach of the merger agreement,
prior to the occurrence of an initial triggering event; or
. 12 months, or under certain circumstances, 18 months after the
termination of the merger agreement if such termination occurs after an
initial triggering event or the termination is by Heller by reason of
HealthCare's willful breach of the merger agreement.
Repurchase at the Option of Heller
The option agreement provides that Heller has the right to require
HealthCare to repurchase the option and any outstanding shares acquired upon
exercise of the option upon the occurrence of a "repurchase event" which occurs
prior to expiration of the option agreement. A "repurchase event" is any
merger, consolidation or similar transaction involving HealthCare or any
purchase, lease or other acquisition of all or a substantial portion of
HealthCare's assets which would constitute an option agreement acquisition
transaction described above, or the acquisition by any person of 50% or more of
the outstanding HealthCare common stock. However, no such event will constitute
a repurchase event unless a subsequent triggering event has occurred prior to
expiration of the option agreement.
Heller may require HealthCare to repurchase:
. the option itself at an amount equal to (1) the product of (a) the
"market/offer price" minus the exercise price of the option multiplied by
(b) the number of shares for which the option may then be exercised, plus
(2) Heller's out-of-pocket expenses, not to exceed $750,000, in
connection with the transactions contemplated by the option agreement and
the merger agreement; or
. shares received upon exercise of the option for a price equal to the
market/offer price multiplied by the number of shares acquired upon
exercise of the option requested to be purchased.
"Market/offer price" means the highest of:
. the price per share of HealthCare common stock at which a tender offer or
exchange offer has been made;
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. the price per share of HealthCare common stock to be paid by any third
party pursuant to an agreement with HealthCare;
. the highest closing price for shares of HealthCare common stock within
the six month period immediately preceding the request for repurchase of
the option or the option shares; or
. in the event of a sale of all or a substantial portion of HealthCare's
assets, the sum of (1) the price paid for such assets and (2) the current
market value of the remaining assets, divided by the number of shares of
HealthCare common stock outstanding at the time of such sale.
Registration Rights
The option agreement provides that Heller, upon the occurrence of a
subsequent triggering event, has the right to require HealthCare to file, and
cause to be effective for a period of up to 180 days, up to two shelf
registration statements under the Securities Act in order to permit the sale or
other disposition of any shares acquired upon exercise of the option. If
requested in connection with any such registration, HealthCare will enter into
an underwriting agreement for the offering and provide customary
representations, warranties, covenants, indemnifications and other agreements.
Substitute Option
The option may be converted into a substitute option to purchase shares of
the surviving or acquiring entity if HealthCare enters into an agreement to (1)
consolidate with, or merge into, any person in a transaction in which
HealthCare is not the surviving corporation or in which the previously
outstanding shares of HealthCare common stock represent less than 50% of the
voting securities of the surviving corporation; or (2) sell all or
substantially all of its assets.
The terms of the substitute option would be substantially identical to the
terms of the option, except that the substitute option would be immediately
exercisable and subject to immediate repurchase by HealthCare at the election
of Heller at the price specified in the option agreement.
Profit Limitations
The option agreement provides that Heller's total profit under the option
agreement cannot exceed $24,150,000 or be less than $14,490,000. The total
profit under the option agreement is the sum of any net cash proceeds received
by Heller from the transfer or sale of the option or any shares acquired upon
exercise of the option.
INFORMATION ABOUT HEALTHCARE
HealthCare is a specialty finance company offering asset-based and related
financing to healthcare service providers. HealthCare focuses primarily on
clients operating in sub-markets of the healthcare industry, including:
. long-term care;
. hospitals; and
. physician practices.
HealthCare also provides asset-based financing to clients in other sub-
markets of the healthcare industry, including pharmacies, durable medical
equipment suppliers, home healthcare, mental health providers, contract
research organizations and other providers of finance and management services
to the healthcare industry.
HealthCare targets small and middle market healthcare service providers with
financing needs in the $100,000 to $30 million range in healthcare sub-markets
which have favorable characteristics for working
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capital financing, such as those where growth, consolidation or restructuring
appear likely in the near to medium term.
Primary Types of Financing
HealthCare provides financing to its clients through two main programs:
. Accounts Receivable Program; and
. Secured Term Loan Program.
Accounts Receivable Program
The Accounts Receivable Program consists of revolving lines of credit
secured by, and advances against, accounts receivable. Under this program, the
accounts receivable are obligations of third-party payors, which include:
. federal and state Medicare and Medicaid programs and other government
financed programs;
. commercial insurance companies;
. health maintenance organizations and other managed healthcare concerns;
. self-insured corporations; and
. other healthcare service providers.
Revolving lines of credit offered through the Accounts Receivable Program
permit a client to borrow, on a revolving basis, 65% to 85% of the estimated
net collectible value of the client's accounts receivable due from third-party
payors, which are pledged to HealthCare. HealthCare charges its clients a base
floating interest rate ranging from 1% to 3% above the then applicable prime
rate and a variety of other fees, which may include a loan management fee, a
commitment fee, a set-up fee and an unused line fee, which fees collectively
range from 1% to 4%. HealthCare targets larger healthcare service providers for
these revolving lines of credit secured by accounts receivable, for which the
minimum commitment amount is generally $1 million and the maximum commitment
amount is generally $30 million. These financings are recourse to the client
and generally have a term of one to three years.
In connection with advances against receivables under the Accounts
Receivable Program, HealthCare purchases, on a revolving basis, a specified
batch of a client's accounts receivable owed to the client from third-party
payors. The purchase price for each batch of receivables is the estimated net
collectible value of the batch less a purchase discount, comprised of funding
and servicing fees. The purchase discount can be either a one-time fee for each
batch of receivables purchased or a periodic fee based on the average
outstanding balance of a batch of receivables ranging from 1% to 5% of the net
collectible value of the batch.
Secured Term Loan Program
Under the Secured Term Loan Program, HealthCare provides its clients with
term loans for up to three years secured by first or second liens on real
estate, accounts receivable or other assets, such as equipment, inventory and
stock. HealthCare introduced the Secured Term Loan Program in late 1996 in an
effort to service clients' financing needs which HealthCare could not provide
through its Accounts Receivable Program. The loans have been made to clients to
finance acquisitions and expansions of existing healthcare facilities, as well
as to provide working capital, and are generally provided to clients in
conjunction with financing under the Accounts Receivable Program. The loans are
generally recourse to the borrower.
As a result of HealthCare's expansion of the Secured Term Loan Program,
loans under that program comprised 33.7% of finance receivables at December 31,
1998. While yields on Secured Term Loan Program loans are generally lower than
the yields generated from the Accounts Receivable Program, some Secured Term
Loan Program loans also include warrants and other fees that may enhance their
effective yields.
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General
From its inception in 1993 through December 31, 1998, HealthCare advanced
$4.3 billion to its clients in over 1,064 transactions, including $2.4 billion
advanced during the year ended December 31, 1998. HealthCare had 209 clients as
of December 31, 1998, of which 68 were affiliates of one or more other clients.
The average amount outstanding per client or affiliated client group at
December 31, 1998 was approximately $2.7 million. For the year ended December
31, 1998, HealthCare's yield on finance receivables (total interest and fee
income divided by average finance receivables for the period) was 16.2%. At
December 31, 1998, HealthCare had $289.7 million of financing outstanding under
its Accounts Receivable Program and $147.6 million of financing outstanding
under its Secured Term Loan Program.
HealthCare's principal executive offices are located at 2 Wisconsin Circle,
Fourth Floor, Chevy Chase, Maryland 20815 and its telephone number at that
address is (301) 961-1640.
INFORMATION ABOUT HELLER
Heller is a leading diversified commercial financial services company.
Heller provides a broad array of financial products and services to mid-sized
and small businesses in the U.S. and selected international markets.
Primary Business Segments
Heller delivers its products and services principally through two business
segments:
. Domestic Commercial Finance; and
. International Factoring and Asset Based Finance.
Domestic Business
Heller's Domestic Commercial Finance segment is made up of the following
five business units:
. Corporate Finance, which provides collateralized cash flow and asset
based lending;
. Real Estate Finance, which primarily provides secured real estate
financing;
. Leasing Services, which provides debt and lease financing of small and
large ticket equipment sourced directly or through manufacturers,
distributors and dealers;
. Small Business Finance, which provides financing to small businesses,
primarily under U.S. SBA loan programs; and
. Commercial Services, which provides factoring and receivables management
services.
International Business
Heller's International Factoring and Asset Based Finance segment, known as
Heller International Group, provides factoring services and financings secured
primarily by receivables, inventory and equipment. It does so through wholly-
owned subsidiaries and joint ventures which provide financing to small and mid-
sized companies primarily in Europe, but also in Asia and Latin America.
Market Position
Heller concentrates primarily on senior secured lending, with 87% of its
lending assets and investments at December 31, 1998 made on that basis. To a
more limited extent, Heller makes subordinated loans and invests in select debt
and equity instruments.
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Heller believes that, based upon information as of December 31, 1998, it is
the largest factoring operation worldwide in terms of factoring volume.
Heller's subsidiary, Factofrance-Heller, is the largest factoring operation in
France and its Commercial Services unit is the fourth largest factoring
operation in the U.S. Heller believes it is the third largest originator of
U.S. SBA 7(a) guaranteed small business loans, with leadership positions in
California, Texas, Florida and Illinois. Heller is among the largest lenders to
private equity-sponsored companies in the U.S. middle market. Additionally,
Heller is a recognized leader in real estate finance, vacation ownership
lending, vendor finance and middle-market equipment finance and leasing in the
U.S.
Heller has built its portfolio through:
. effective asset origination capabilities;
. effective portfolio management;
. disciplined underwriting and credit approval processes; and
. to a lesser extent, acquisitions.
Heller's business groups have the ability to manage asset, client and
industry concentrations and enhance profitability by distributing assets
through securitizations, syndications and loan sales.
Heller's History and Recent Activities
Heller was founded in 1919. From its inception, Heller has primarily
targeted its commercial financing activities at mid-sized and small businesses
in the U.S. Since 1964, Heller has also competed in selected international
markets through its consolidated subsidiaries and investments in international
joint ventures.
A subsidiary of Fuji Bank purchased Heller in 1984. From that time through
April 1998, Fuji Bank beneficially owned 100% of Heller common stock. In May
1998, Heller issued 38,525,000 shares of class A common stock in an initial
public offering. The IPO reduced Fuji Bank's ownership, through its direct
subsidiary Fuji America Holdings, Inc., to 79% of the voting interest and 57%
of the economic interest of issued Heller common stock.
From the time of Fuji Bank's purchase of Heller through 1990, the
substantial majority of Heller's portfolio consisted of Corporate Finance and
Real Estate Finance assets. These assets collectively represented 76% of
Heller's lending assets and investments at December 31, 1990. Since 1990,
Heller has diversified its portfolio. While continuing to build its Corporate
Finance and Real Estate Finance franchises, Heller also invested major
resources in building other secured lending businesses through start-ups of new
business units, acquisitions and the expansion of smaller existing operations.
Products included asset based working capital and term financings secured by
accounts receivable and inventory and various types of equipment finance and
leasing product offerings. In the past several years, Heller selectively
expanded its overseas operations, most significantly by completing the
acquisition, in April 1997, of the interest of its joint venture partner in
Factofrance-Heller. In addition, Heller further expanded its leasing operations
by acquiring certain U.S. assets of the Dealer Products Group of Dana
Commercial Credit Corporation and the stock of the Dealer Products Group's
international subsidiaries in November 1998. As the result of these activities,
Heller believes that it has built a lending portfolio that is well diversified,
has strong asset collateralization and provides it with a diversified income
stream.
Heller's principal executive offices are located at 500 West Monroe Street,
Chicago, Illinois 60661 and its telephone number at that address is (312) 441-
7000.
50
<PAGE>
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
Since the initial public offering of Heller class A common stock in May
1998, Heller class A common stock has been traded on the New York Stock
Exchange and Chicago Stock Exchange under the symbol "HF." Since December 31,
1998, HealthCare common stock has traded on the New York Stock Exchange under
the symbol "HCF." From November 21, 1996, the date of the initial public
offering of HealthCare common stock, through December 31, 1998, HealthCare
common stock was listed for trading on the Nasdaq National Market under the
symbol "HCFP." The following table sets forth for the periods indicated the
high and low closing prices of shares of HealthCare common stock and Heller
class A common stock as reported by the New York Stock Exchange or Nasdaq, as
applicable, and the dividends declared on HealthCare common stock and Heller
class A common stock.
<TABLE>
<CAPTION>
HealthCare Heller
common stock class A common stock
------------------------ ------------------------
High Low Dividend High Low Dividend
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1997
First Quarter............... $18.500 $12.375 -- -- -- --
Second Quarter.............. 20.375 10.750 -- -- -- --
Third Quarter............... 30.875 19.500 -- -- -- --
Fourth Quarter.............. 36.500 29.500 -- -- -- --
1998
First Quarter............... 48.625 33.000 -- -- -- --
Second Quarter (beginning
May 1, 1998 for Heller).... 61.313 46.875 -- $30.813 $26.500 --
Third Quarter............... 58.250 34.250 -- 30.750 19.750 $0.09
Fourth Quarter.............. 39.875 27.000 -- 29.125 17.000 0.09
1999
First Quarter............... 39.188 24.063 -- 30.313 22.625 0.09
Second Quarter (through June
15, 1999).................. 34.438 22.625 -- 31.188 23.313 *
</TABLE>
- --------
*As of June 15, 1999, Heller had not declared a dividend on its class A common
stock for the second quarter of 1999.
On April 19, 1999, the last full trading day prior to the public
announcement of the proposed merger, (1) the reported closing price of
HealthCare common stock on the New York Stock Exchange was $28.50 per share and
(2) the reported closing price of Heller class A common stock on the New York
Stock Exchange was $26.25 per share.
On June 15, 1999, (1) the reported closing price of HealthCare common stock
on the New York Stock Exchange was $34.438 per share and (2) the reported
closing price of Heller class A common stock on the New York Stock Exchange was
$26.250 per share.
The market price of Heller class A common stock may fluctuate between the
date of this proxy statement/prospectus and the date on which the merger
occurs. We urge you to obtain current stock price quotations for Heller class A
common stock.
As of June 14, 1999, the record date for the special meeting, there were 42
record holders of HealthCare common stock, as shown on the records of
HealthCare's transfer agent for its common stock. However, HealthCare has been
informed that there were in excess of approximately 3,000 beneficial owners as
of such date.
Dividend Policy
The holders of the Heller class A common and class B common stock share
ratably on a per share basis in all dividends and other distributions on Heller
common stock declared by the Heller board. Heller cannot pay cash dividends on
Heller common stock unless (1) all declared dividends on all outstanding shares
of its series C preferred stock and series D preferred stock have been paid and
(2) full cumulative dividends on all outstanding shares of its series A
preferred stock have been paid. The Heller board currently intends to declare
and pay quarterly dividends on the Heller class A common stock and class B
common stock.
51
<PAGE>
On April 23, 1999, the Heller board declared a quarterly dividend of:
. $0.09 per share on the Heller class A common stock and class B common
stock;
. $0.5078125 per share on the Heller series A preferred stock;
. $1.67175 per share on the Heller series C preferred stock; and
. $1.7375 per share on the Heller series D preferred stock.
Heller paid these dividends on May 15, 1999.
HealthCare has never paid cash dividends on the HealthCare common stock.
COMPARISON OF THE RIGHTS OF HOLDERS OF HELLER COMMON
STOCK AND HOLDERS OF HEALTHCARE COMMON STOCK
HealthCare stockholders' rights are currently governed by HealthCare's
charter and bylaws and applicable provisions of the DGCL. Heller stockholders'
rights are currently governed by Heller's charter and bylaws and the same
provisions of the DGCL. If we complete the merger, HealthCare stockholders who
receive some or all of their consideration in the form of Heller class A common
stock will become Heller stockholders and their rights will likewise be
governed by Heller's charter and bylaws and applicable provisions of the DGCL.
Because HealthCare and Heller are both organized under the laws of the state
of Delaware, any differences in your rights as a stockholder of HealthCare and
Heller will arise solely from differences in the charters and bylaws of
HealthCare and Heller rather than from differences of law. The following
summary highlights important similarities and differences between the rights of
current holders of Heller class A common stock and current holders of
HealthCare common stock. This summary does not purport to be a complete
discussion of the charters and bylaws of HealthCare and Heller. It is qualified
in its entirety by reference to these documents, copies of which are on file
with the SEC.
AUTHORIZED CAPITAL STOCK
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Heller HealthCare
- ------------------------------------------------------------------------------------------
<S> <C>
HealthCare's charter authorizes
HealthCare to issue 70,000,000
shares of capital stock, of which:
Heller's charter authorizes Heller
to issue 852,000,000 shares of
capital stock, of which:
. 60,000,000 shares are designated
common stock, $0.01 par value per
share; and
. 500,000,000 shares are designated
class A common stock, $0.25 par
value per share;
. 10,000,000 shares are designated
preferred stock, $0.01 par value
per share.
. 300,000,000 shares are designated
class B common stock, $0.25 par
value per share;
As of May 31, 1999, there were:
. 50,000,000 shares are designated . 13,460,313 shares of common stock
senior preferred stock, $0.01 par issued and outstanding;
value per share; and
. 1,706,878 shares of common stock
reserved for issuance under
HealthCare's 1996 stock incentive
plan;
. 2,000,000 shares are designated
junior preferred stock, no par
value per share.
. 100,000 shares of common stock
As of May 31, 1999, there were: reserved for issuance under
HealthCare's 1996 director stock
option plan; and
. 39,034,019 shares of class A
common stock issued and 38,814,233
shares outstanding;
. no shares of preferred stock
issued and outstanding.
. 51,050,000 shares of class B
common stock issued and
outstanding;
. 51,050,000 shares of class A
common stock reserved for issuance
upon conversion of shares of class
B common stock;
</TABLE>
52
<PAGE>
AUTHORIZED CAPITAL STOCK
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Heller HealthCare
- ------------------------------------------------------------------------------------------
<S> <C>
. shares of class A common
stock reserved for issuance under
Heller's 1998 stock incentive
plan;
. 5,000,000 shares of series A
preferred stock, a series of
senior preferred stock, issued and
outstanding;
. 1,500,000 shares of series C
preferred stock, a series of
senior preferred stock, issued and
outstanding;
. 1,250,000 shares of series D
preferred stock, a series of
senior preferred stock, issued and
outstanding; and
. 100,000 shares of NW preferred
stock, a series of junior
preferred stock, authorized and
reserved for issuance.
DIVIDENDS
- ------------------------------------------------------------------------------------------
Heller HealthCare
- ------------------------------------------------------------------------------------------
Holders of common stock are Same.
entitled, when declared by the
Heller board, to receive dividends
payable in cash, stock or otherwise,
subject to the rights of holders of
preferred stock.
VOTING RIGHTS
- ------------------------------------------------------------------------------------------
Heller HealthCare
- ------------------------------------------------------------------------------------------
Holders of Heller class A common Holders of HealthCare common stock
stock have one vote per share and have one vote per share on all
holders of Heller class B common matters to be voted on by
stock have three votes per share on stockholders.
all matters to be voted on by
stockholders. However, the holders
of Heller class B common stock
cannot hold greater than 79% of the
voting power of all Heller common
stock. Currently, Fuji Bank holds
all outstanding shares of Heller
class B common stock.
- ------------------------------------------------------------------------------------------
Holders of common stock may not Same.
cumulate their votes for the
election of directors.
- ------------------------------------------------------------------------------------------
Presence, in person or by proxy, of Same.
holders of a majority of shares
entitled to vote on a matter
constitutes a quorum for the
transaction of business.
- --------------------------------------------------------------------------------
Except as otherwise required by the Except as otherwise required by the
DGCL, all matters to be voted on by DGCL, all matters to be voted on by
stockholders must be approved by a stockholders must be approved by a
majority of the votes entitled to be majority of the votes entitled to be
cast by all holders of Heller class cast by all holders of shares of
A common stock and Heller class B HealthCare common stock present in
common stock present in person or by person or by proxy.
proxy, voting together as a single
class, subject to any voting rights
granted to holders of Heller
preferred stock.
</TABLE>
53
<PAGE>
MEETINGS OF STOCKHOLDERS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Heller HealthCare
- ------------------------------------------------------------------------------------------
<S> <C>
The chairman of the board, the vice The chairman of the board, a
chairman of the board, a majority of majority of the board of directors
the board of directors or the or the holders of at least 40% of
president may call a special meeting any class of outstanding HealthCare
of Heller stockholders at any time. capital stock may call a special
meeting at any time.
- ------------------------------------------------------------------------------------------
Heller stockholders must deliver HealthCare stockholders must deliver
timely notice regarding business to timely notice regarding business to
be conducted at an annual or special be conducted at an annual or special
meeting of stockholders, including meeting of stockholders, including
the nomination of candidates for the nomination of candidates for
election as directors, to Heller's election as directors, to
principal office. HealthCare's secretary.
. Generally, stockholders must . Stockholders must deliver notice
deliver notice regarding business regarding business to be conducted
to be conducted at an annual at an annual meeting at least 120
meeting at least 90 days before days before the first anniversary
the first anniversary of the prior of the prior year's annual
year's annual meeting. meeting.
. Stockholders must deliver notice . Stockholders must deliver notice
regarding business to be conducted regarding business to be conducted
at a special meeting by the later at a special meeting no later than
of (a) 60 days before the meeting ten days after the earlier of (a)
or (b) ten days after the day on the day on which notice of the
which public notification of the meeting was mailed or (b) the day
meeting was made. on which public notification of
the meeting was made.
- ------------------------------------------------------------------------------------------
Stockholders having the right to Same.
vote at a meeting of stockholders
may vote either in person or by
proxy executed in writing and signed
by the stockholder. Proxies are
valid for three years and,
generally, are revocable.
ACTION BY STOCKHOLDERS WITHOUT A MEETING
- ------------------------------------------------------------------------------------------
Heller HealthCare
- ------------------------------------------------------------------------------------------
As long as Fuji Bank or its transferee, as HealthCare stockholders may take any action
the case may be, continues to hold a required or permitted to be taken at a
majority of the total voting power of all meeting without a meeting, without prior
outstanding classes of Heller common stock, notice and without a vote if a consent in
voting together as a single class, Heller writing setting forth the action to be
stockholders may take any action required taken is signed by the holders of
or permitted to be taken at a meeting outstanding voting stock having not less
without a meeting, without prior notice and than the minimum number of votes that would
without a vote if a consent in writing be necessary to take that action at a
setting forth the action to be taken is meeting at which all shares entitled to
signed by the holders of outstanding voting vote on that action were present and voted.
stock having not less than the minimum
number of votes that would be necessary to
take that action at a meeting at which all
shares entitled to vote on that action were
present and voted.
</TABLE>
54
<PAGE>
BOARD OF DIRECTORS
<TABLE>
- ------------------------------------------------------------------------------------------
<CAPTION>
Heller HealthCare
- ------------------------------------------------------------------------------------------
<S> <C>
There are currently 12 Heller directors. There are currently five HealthCare
directors.
- ------------------------------------------------------------------------------------------
There can be no less than eight and no more There can be no less than three and no more
than 16 Heller directors, plus directors than 10 HealthCare directors.
that may be elected from time to time
pursuant to the terms of the Heller senior
preferred stock.
- ------------------------------------------------------------------------------------------
Each Heller director serves a one-year Each HealthCare director serves a three-
term. Heller stockholders elect all Heller year term. HealthCare stockholders elect
directors at each annual meeting of approximately one-third of the HealthCare
stockholders. directors at each annual meeting of
stockholders.
- ------------------------------------------------------------------------------------------
A majority of stockholders entitled to vote Stockholders may remove a director only for
at an election of directors may remove any cause.
director or directors, with or without
cause, at any special meeting of
stockholders or by a written consent of
stockholders.
- ------------------------------------------------------------------------------------------
The Heller board fixes the number of Heller The HealthCare board fixes the number of
directors and fills vacancies, except those HealthCare directors and fills all
created by removal of directors by vacancies.
stockholders.
- ------------------------------------------------------------------------------------------
The Heller board or any stockholder may Same.
nominate persons for election to the Heller
board.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
- ------------------------------------------------------------------------------------------
<CAPTION>
Heller HealthCare
- ------------------------------------------------------------------------------------------
<S> <C>
No director will be liable to the company Same.
or its stockholders for monetary damages
for breach of fiduciary duty as a director,
except for liability:
.for breach of his or her duty of loyalty;
. for acts or omissions not in good faith
or which involve intentional misconduct
or a knowing violation of law;
. in respect of certain unlawful dividend
payments or stock redemptions or
repurchases; or
. for any transaction from which he or she
derived an improper personal benefit.
- ------------------------------------------------------------------------------------------
If the DGCL is amended to authorize the Same.
further elimination or limitation of the
liability of a director, then the company
will eliminate or limit the liability of
its directors to the fullest extent
permitted.
</TABLE>
55
<PAGE>
AMENDMENT OF CHARTER AND BYLAWS
<TABLE>
- ------------------------------------------------------------------------------------------
<CAPTION>
Heller HealthCare
- ------------------------------------------------------------------------------------------
<S> <C>
Generally, amendments to Heller's charter HealthCare's charter may be amended by the
must be approved by a majority of all affirmative vote of a majority of shares of
shares of Heller class A common stock and the outstanding HealthCare common stock.
Heller class B common stock, voting
together as a single class, subject to any
voting rights granted to holders of Heller
preferred stock. However, amendments to
Heller's charter that would change the
powers, preferences or privileges of a
class of Heller common stock must be
approved by a majority of shares of the
class adversely affected, voting as a
separate class, and amendments that change
certain provisions of the charter regarding
vacancies in the board of directors,
special meetings of stockholders and
amendments to the certificate of
incorporation must be approved by 66 2/3%
of the total voting power of outstanding
Heller common stock, voting together as a
single class.
- ------------------------------------------------------------------------------------------
The Heller board or stockholders holding at A majority of the members of the HealthCare
least 66 2/3% of the total voting power of board or stockholders holding a majority of
outstanding Heller common stock, voting the outstanding shares of HealthCare
together as a single class, may repeal or capital stock may adopt, alter, amend or
amend Heller's bylaws. repeal HealthCare's bylaws.
</TABLE>
DELAWARE TAKEOVER LAW
<TABLE>
- -------------------------------------------------------------------------------------
<CAPTION>
Heller HealthCare
- -------------------------------------------------------------------------------------
<S> <C>
Heller is subject to the anti-takeover HealthCare is also subject to the anti-
provisions of Section 203 of the DGCL. See takeover provisions of the DGCL.
"Description of Heller Capital Stock--
Certain Charter and Bylaw Provisions--
Provisions that May Have an Anti-Takeover
Effect" on page 62.
</TABLE>
DESCRIPTION OF HELLER CAPITAL STOCK
The following summary of Heller's capital stock is not complete and is
qualified in its entirety by reference to the charter of Heller, the bylaws of
Heller, the DGCL and the applicable certificate of designation relating to a
series of Heller preferred stock. Copies of Heller's charter, bylaws and
certificates of designation are on file with the SEC.
General
Heller's charter authorizes it to issue 852,000,000 shares of capital stock,
of which:
. 500,000,000 shares are designated class A common stock, $0.25 par value
per share;
. 300,000,000 shares are designated class B common stock, $0.25 par value
per share;
. 50,000,000 shares are designated senior preferred stock, $0.01 par value
per share; and
. 2,000,000 shares are designated junior preferred stock, no par value per
share.
As of May 31, 1999 there were:
. 39,034,019 shares of class A common stock issued and 38,814,233 shares
outstanding;
. 51,050,000 shares of class B common stock issued and outstanding;
56
<PAGE>
. 51,050,000 shares of class A common stock reserved for issuance upon
conversion of shares of class B common stock;
. 3,932,312 shares of class A common stock reserved for issuance under
Heller's 1998 stock incentive plan;
. 5,000,000 shares of series A preferred stock, a series of senior
preferred stock, issued and outstanding;
. 1,500,000 shares of series C preferred stock, a series of senior
preferred stock, issued and outstanding;
. 1,250,000 shares of series D preferred stock, a series of senior
preferred stock, issued and outstanding; and
. 100,000 shares of NW preferred stock, a series of junior preferred stock,
authorized and reserved for issuance.
All outstanding shares of Heller common stock and preferred stock are, and any
shares of Heller class A common stock issued to HealthCare stockholders in the
merger will be, fully paid and nonassessable.
Preferred Stock
Heller's charter authorizes its board of directors to issue preferred stock
in one or more series from time to time. The Heller board may fix the rights,
preferences, privileges and restrictions, including dividend rights, voting
rights, conversion rights, redemption rights and liquidation preferences, of
the preferred stock in a certificate of designation without any further vote or
action by the stockholders, except as may be required by the terms of
outstanding Heller preferred stock. Heller's currently authorized preferred
stock is described below.
Series A Preferred Stock
Heller pays cumulative, quarterly dividends on its series A preferred stock
at an annual rate of 8.125%. Heller may not declare or pay cash dividends on
its common, junior preferred or other series of senior preferred stock ranking
equal with the series A preferred stock unless it has paid full cumulative
dividends on all outstanding shares of its series A preferred stock for all
past dividend periods. Heller may redeem in whole or in part its series A
preferred stock on or after September 22, 2000 at a price of $25 per share plus
accrued and unpaid dividends.
Except as required by law and as described below, the holders of Heller
series A preferred stock have no voting rights. If Heller fails to pay six
consecutive quarterly dividends on its series A preferred stock, the holders of
the series A preferred stock, voting separately as a class, may elect two
additional directors beyond the number to be elected by Heller's other
stockholders at the next annual meeting and at every subsequent annual meeting
at which the terms of the directors they elected expire so long as Heller is in
arrears. The directors elected by the holders of series A preferred stock shall
serve until the dividend default no longer exists. In addition, without the
vote of the holders of at least two-thirds of the outstanding shares of its
series A preferred stock, Heller will not:
. issue any shares of stock ranking senior to the outstanding shares of
series A preferred stock as to the payment of dividends or upon
liquidation; or
. amend its charter or bylaws to change the par value of the shares of
series A preferred stock, the aggregate number of authorized shares of
series A preferred stock or the powers, preferences or special rights of
the series A preferred stock in a manner that adversely affects the
holders of series A preferred stock.
Heller's series A preferred stock carries a liquidation preference of $25
per share plus accrued and unpaid dividends. Heller's series A preferred stock
ranks senior with respect to payment of dividends and liquidation preferences
to its common stock and junior preferred stock.
57
<PAGE>
Series C Preferred Stock
Dividends on Heller's series C preferred stock are noncumulative.
Accordingly, if Heller's board of directors fails to declare a dividend on its
series C preferred stock payable on a dividend payment date, then holders of
series C preferred stock have no right to receive a dividend for the dividend
period ending on that dividend payment date. Heller has no obligation to pay
any dividend accrued for that period, whether or not dividends on its series C
preferred stock are declared payable on any future dividend payment date. If
declared by Heller's board of directors, dividends are payable quarterly at an
annual rate of 6.687%. Heller will adjust the amount of dividends payable on
its series C preferred stock in the event of certain amendments to the Internal
Revenue Code in respect of the dividends received reduction. Heller may not
declare or pay cash dividends on its common stock, junior preferred stock or
other series of senior preferred stock ranking equal with its series C
preferred stock unless it has paid all declared dividends on all outstanding
shares of series C preferred stock for all past dividend periods. Heller may
redeem in whole or in part its series C preferred stock on or after August 15,
2007 at a price of $100 per share plus accrued and unpaid dividends, whether or
not declared, for the then-current dividend period and, if declared, accrued
and unpaid dividends for prior dividend periods.
Except as required by law and as described below, the holders of Heller's
series C preferred stock have no voting rights. If Heller has not paid or
declared and set aside dividends payable on shares of its series C preferred
stock or on any other class or its series of senior preferred stock for which
dividends are noncumulative ranking equal with its series C preferred stock and
upon which like voting rights have been conferred and are exercisable for the
equivalent of six full quarterly dividend periods, whether or not consecutive,
the holders of its series C preferred stock, voting as a single class with the
holders of the other noncumulative voting stock, may elect two additional
directors beyond the number to be elected by Heller's other stockholders,
including holders of its series A preferred stock. The holders of the series C
preferred stock may elect these additional directors at the next annual meeting
and at every subsequent annual meeting at which the terms of the directors they
elected expire so long as Heller is in arrears. The right of holders of series
C preferred stock to elect directors will continue until Heller pays or
declares and sets aside dividends on the series C preferred stock for at least
four consecutive full quarterly dividend periods. In addition, Heller will not:
. without the vote of the holders of at least two-thirds of the outstanding
shares of its series C preferred stock, amend, alter or repeal any
provision of its charter in a manner that would adversely affect the
powers, privileges or rights of its series C preferred stock; and
. without the vote of the holders of at least two-thirds of the outstanding
shares of its series C preferred stock and any other series of its
noncumulative preferred stock ranking equal with the series C preferred
stock either as to dividends or upon liquidation, voting as a single
class without regard to series, (1) issue, authorize or increase the
authorized amount of, (2) issue or authorize any obligation or security
convertible into or evidencing a right to purchase, or (3) reclassify any
of its authorized stock into an additional class or series of stock
ranking prior to, its series C preferred stock as to dividends or upon
liquidation.
Heller's series C preferred stock carries a liquidation preference of $100
per share plus an amount equal to the sum of accrued and unpaid dividends,
whether or not earned or declared, for the then-current dividend period to the
date of the final distribution that ranks:
. senior to payments to holders of its common stock, junior preferred stock
and any other class or series of stock ranking junior to its series C
preferred stock; and
. equal with payments to holders of each other series of its senior
preferred stock outstanding on the date of original issue of its series C
preferred stock.
Series D Preferred Stock
Heller's series D preferred stock is identical to its series C preferred
stock, except that:
. if declared by Heller's board of directors, dividends are payable
quarterly on the series D preferred stock at an annual rate of 6.95%; and
58
<PAGE>
. Heller may redeem in whole or in part its series D preferred stock on or
after February 15, 2009 at a price of $100 per share plus accrued and
unpaid dividends, whether or not declared, for the then-current dividend
period and, if declared, accrued and unpaid dividends for prior dividend
periods.
NW Preferred Stock
Heller authorized the issuance of 100,000 shares of NW preferred stock
pursuant to its keep well agreement with Fuji Bank. In the keep well agreement,
Fuji Bank has agreed to purchase NW preferred stock in an amount required to
maintain Heller's net worth at $500 million. At March 31, 1999, Heller's net
worth was approximately $2 billion. To date, Heller has not issued any NW
preferred stock to Fuji Bank. If Heller issues NW preferred stock, it will pay
dividends at a rate of 1% per annum above the three-month rate at which Fuji
Bank offers deposits in U.S. dollars in London, England to prime banks in the
London interbank market. The dividends will be noncumulative and payable, if
declared, quarterly. If the NW preferred stock is issued, Heller will not pay
cash dividends on its common stock unless Heller has declared and paid or set
aside full dividends for the then-current dividend period on all outstanding
shares of NW preferred stock.
Subject to specified conditions, within a specified period of time after the
end of a calendar quarter, Heller will redeem outstanding shares of NW
preferred stock, in whole or in part, at the option of the holder, in an
aggregate amount not greater than the excess of (1) its net worth as of the end
of the quarter over (2) $500 million, at a price equal to the price Heller
received upon the issuance of the NW preferred stock plus accrued and unpaid
dividends for the then-current dividend period.
Except as required by law, the holders of the NW preferred stock will have
no voting rights. The NW preferred stock will have a liquidation preference
equal to the price that Heller received for each share upon the issuance of the
NW preferred stock plus accrued and unpaid dividends for the then-current
dividend period. The NW preferred stock will rank senior to Heller's common
stock and junior to Heller's senior preferred stock with respect to payment of
dividends and liquidation preference.
Common Stock
Voting Rights
Holders of Heller class A common stock and class B common stock generally
have identical rights, except that holders of its class A common stock have one
vote per share and holders of its class B common stock have three votes per
share on all matters to be voted on by stockholders. Fuji Bank beneficially
owns all of outstanding shares of Heller class B common stock. Fuji Bank, or
certain of its transferees, may reduce from time to time the number of votes
per share of class B common stock and may not hold shares of class B common
stock representing more than 79% of the combined voting power of all
outstanding classes of voting stock. Holders of class A common stock and class
B common stock may not cumulate their votes for the election of directors.
Generally, except as otherwise required by the DGCL, all matters to be voted
on by stockholders must be approved by a majority of the votes entitled to be
cast by all holders of shares of Heller class A common stock and class B common
stock present in person or represented by proxy, voting together as a single
class, subject to any voting rights granted to holders of its preferred stock.
However, except as otherwise provided by law or Heller's charter and subject to
any voting rights granted to holders of Heller's preferred stock, amendments to
Heller's charter that change certain provisions regarding vacancies in the
board of directors, special meetings of stockholders and amendments to the
charter must be approved by a majority of all shares of Heller class A common
stock and class B common stock, voting together as a single class. In addition,
amendments to Heller's charter that would change the powers, preferences or
special rights of a class of common stock in a manner that adversely affects
the holders of shares of that class of common stock must be approved by a
majority of the votes entitled to be cast by the holders of shares of the class
adversely affected by the amendment, voting as a separate class.
59
<PAGE>
Dividends
Holders of Heller class A common stock and class B common stock share
ratably on a per share basis in any dividends declared by Heller's board,
subject to any preferential rights of Heller's preferred stock. Heller may not
pay dividends on its common stock unless it has paid all declared dividends on
all outstanding shares of its series C preferred stock and series D preferred
stock and full cumulative dividends on all outstanding shares of its class A
common stock. If Heller pays dividends or makes other distributions payable in
common stock, including distributions pursuant to stock splits or divisions of
common stock, Heller will pay or distribute only shares of class A common
stock to holders of class A common stock and only shares of class B common
stock to holders of class B common stock. Heller may not reclassify, subdivide
or combine shares of one class of its common stock without at the same time
proportionally reclassifying, subdividing or combining shares of the other
series of its common stock.
Conversion
Holders of Heller class A common stock have no conversion rights. Fuji
Bank, its subsidiary or certain unaffiliated transferees can, at their option,
convert each share of class B common stock that it holds into one share of
Heller class A common stock.
If Fuji Bank and/or its subsidiaries transfer shares of its class B common
stock, the shares will automatically convert into shares of Heller class A
common stock, unless:
. the transferee is Fuji Bank or a subsidiary of Fuji Bank; or
. the transferee is an unaffiliated party and it and its subsidiaries
receive shares of Heller class B common stock representing more than a
50% voting interest in the outstanding shares of Heller's common stock,
in which case, the shares retained by Fuji Bank and its subsidiaries will
automatically convert into shares of Heller class A common stock.
In addition, all shares of Heller class B common stock will automatically
convert into shares of Heller class A common stock if the number of
outstanding shares of Heller class B common stock beneficially owned by Fuji
Bank and its subsidiaries or such unaffiliated party and its subsidiaries, as
the case may be, falls below 30% of the aggregate number of outstanding shares
of Heller common stock. This automatic conversion will ensure that Fuji Bank
and its subsidiaries or such unaffiliated party and its subsidiaries, as the
case may be, retain voting control over Heller only if they continue to have a
significant economic interest in Heller.
Other Rights
If Heller engages in a merger, reorganization or consolidation with, or
into, another entity and, as a result, its common stock is exchanged for cash
or property, Heller will exchange each share of its common stock, regardless
of class, for the same amount of cash or property. If Heller common stock is
exchanged for stock or other securities, Heller may convert or exchange shares
of Heller class A common stock and shares of Heller class B common stock into,
or with, stock or other securities that differ to the extent that the Heller
class A common stock and class B common stock differ in Heller's charter. If
Heller liquidates, dissolves or winds up its business, it will pay in full the
amounts required to be paid to holders of its preferred stock, then distribute
ratably any remaining assets to holders of its common stock.
If Heller issues additional shares of Heller class A common stock, or other
securities convertible into class A common stock, each holder of Heller class
B common stock has preemptive rights to purchase the amount of Heller class A
common stock or other securities convertible into Heller class A common stock,
as the case may be, that will allow the holder to maintain the percentage of
beneficial ownership it had before the issuance. Holders of Heller class A
common stock do not have preemptive rights to purchase additional securities.
Transfer Agent and Registrar
The Bank of New York serves as the transfer agent and registrar for the
Heller class A common stock.
60
<PAGE>
Certain Charter and Bylaw Provisions
Corporate Opportunities
Heller's charter allows Fuji Bank to engage in activities or lines of
business that are the same as, or similar to, the activities and lines of
business in which Heller engages. Neither Fuji Bank nor any of its directors,
officers or other employees will be liable to Heller or its stockholders for
breach of any fiduciary duty because it does so.
If Fuji Bank knows of a potential transaction or matter that may be a
corporate opportunity for it and for Heller, it has no duty to communicate or
offer the transaction or matter to Heller. Fuji Bank will not be liable to
Heller or its stockholders for breach of any fiduciary duty as a stockholder
because it pursues or acquires the opportunity for itself, directs the
opportunity to another person or does not communicate information regarding the
opportunity to Heller. If one of Heller's directors, officers or employees who
is also a director, officer or employee of Fuji Bank knows of a potential
transaction or matter which may be a corporate opportunity for both Heller and
Fuji Bank, he or she may fully satisfy his or her fiduciary duty if he or she
acts in a manner consistent with the following policies:
. a corporate opportunity offered to one of Heller's officers or employees
who is also a director, but not an officer, or employee of Fuji Bank is
Heller's corporate opportunity;
. a corporate opportunity offered to one of Heller's officers or employees
who is also an officer or employee of Fuji Bank is Heller's corporate
opportunity only if it is expressly offered in writing to the person in
his or her capacity as Heller's officer or employee; and
. a corporate opportunity offered to one of Heller's directors who is not
one of Heller's officers or employees, but who is a director, officer or
employee of Fuji Bank, is Heller's corporate opportunity only if it is
expressly offered in writing to the person in his or her capacity as
director.
If Fuji Bank's beneficial ownership of Heller common stock falls below 30% of
the voting power of all classes of Heller's outstanding common stock and none
of Heller's directors, officers or other employees is also a director, officer
or other employee of Fuji Bank or any of its other subsidiaries, these
provisions of Heller's charter and bylaws will expire. Any person who purchases
or otherwise acquires Heller common stock is deemed to know about and consent
to the above-described provisions of Heller's charter.
Provisions that May Have an Anti-Takeover Effect
The following provisions in Heller's charter and bylaws may have an anti-
takeover effect and may delay, deter or prevent a tender offer or takeover
attempt that a stockholder might consider to be in its best interest:
. Heller's bylaws and charter provide that, subject to the rights of
holders of preferred stock to elect additional directors under specified
circumstances, only the board of directors (1) fixes the number of
directors and (2) fills vacancies, other than those occurring by reason
of removal of a director by its stockholders;
. Heller's bylaws provide that a stockholder must provide advance written
notice of its intent to nominate a director or raise a matter at an
annual meeting;
. Heller's bylaws and charter provide that only specified officers, or its
secretary at the request of a majority of its directors, may call special
meetings of stockholders;
. Heller's bylaws provide that stockholders may take any action required or
permitted to be taken by stockholders by written consent only so long as
Fuji Bank and its subsidiaries or a certain unaffiliated transferee and
its subsidiaries, as the case may be, beneficially own more than 50% of
the total voting power of Heller's outstanding common stock;
61
<PAGE>
. Heller's charter requires, subject to the rights of the holders of
Heller's preferred stock, the affirmative vote of at least 66 2/3% of the
total voting power of Heller's outstanding common stock, voting together
as a single class, to amend, repeal or adopt any provision inconsistent
with any of the foregoing provisions of Heller's charter; and
. Heller's charter and bylaws requires, subject to the rights of the
holders of Heller's preferred stock, the affirmative vote of a majority
of directors or the holders of at least 66 2/3% of the total voting power
of Heller's outstanding common stock, voting together as a single class,
to alter, amend or repeal Heller's bylaws.
Heller is subject to Section 203 of the DGCL. In general, this statute
prevents Heller from engaging, under certain circumstances, in a "business
combination" with an "interested stockholder" for three years after the date on
which the entity becomes an interested stockholder, unless either:
. the stockholder acquires more than 85% of Heller's outstanding voting
stock upon consummation of the transaction in which the stockholder
becomes an interested stockholder;
. Heller's board approved the business combination or the transaction in
which the person becomes an interested stockholder before the date on
which the stockholder becomes an interested stockholder; or
. Heller's board and holders of two-thirds of its outstanding voting stock
at a stockholder meeting held on or subsequent to the date of the
business combination approve the business combination.
An "interested stockholder" owns, or at any time in the prior three years did
own, 15% or more of a corporation's voting stock. A "business combination" is,
among other things, a merger, consolidation, stock sale, asset-based
transaction or other transaction resulting in financial benefit to the
interested stockholder.
Limitations on Directors' Liability
Heller's charter provides that none of its directors will be liable to
Heller or its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability:
. for breach of the director's duty of loyalty;
. for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. in respect of certain unlawful dividend payments or stock redemptions or
repurchases; or
. for any transaction from which the director derived an improper personal
benefit.
62
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We each file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements
or other information that we file with the SEC at:
. the public reference room of the SEC, Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549;
. the public reference facilities of the SEC's regional offices at Seven
World Trade Center, 13th Floor, New York, New York 10048 or Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661;
. the office of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005; or
. in the case of Heller, the office of the Chicago Stock Exchange, One
Financial Plaza, 440 South LaSalle Street, Chicago, Illinois 60605.
Some of these locations may charge a prescribed or modest fee for copies. You
may obtain information on the operation of the SEC public reference room in
Washington, D.C. by calling the SEC at 1-800-SEC-0330. In addition, you may
access any document we file with the SEC on its web site at http://www.sec.gov.
Heller filed a Registration Statement on Form S-4 to register shares of
Heller class A common stock to be issued to HealthCare stockholders in the
merger under the Securities Act. This proxy statement/prospectus constitutes a
prospectus of Heller that is filed as a part of the registration statement. As
allowed by SEC rules, this proxy statement/prospectus does not contain all of
the information you can find in the registration statement or the exhibits to
the registration statement.
The SEC allows us to "incorporate by reference" certain documents we file
with it. This means that we can disclose important information to you by
referring you to another document we file separately with the SEC. The
information incorporated by reference is considered to be part of this proxy
statement/prospectus, except for any information superseded by information in
this proxy statement/prospectus or in any later filed document which is also
incorporated by reference. The information that we file with the SEC after the
date of this proxy statement/prospectus will automatically update and supersede
the information contained or incorporated by reference in this proxy
statement/prospectus.
HealthCare incorporates by reference into this proxy statement/prospectus
the following documents:
. HealthCare's Annual Report on Form 10-K for its fiscal year ended
December 31, 1998, as amended by HealthCare's Form 10-K/A filed April 29,
1999;
. HealthCare's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998; and
. HealthCare's Current Reports on Form 8-K dated February 8, 1999, April
19, 1999, April 20, 1999, April 23, 1999 and May 13, 1999.
HealthCare also incorporates by reference any future filings it makes with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
before the special meeting.
Heller incorporates by reference into this proxy statement/prospectus the
following documents:
. Heller's Annual Report on Form 10-K for its fiscal year ended December
31, 1998, as amended by Heller's Form 10-K/A filed March 12, 1999;
. Heller's Quarterly Report on Form 10-Q for the quarter ended March 31,
1999;
. Heller's Current Reports on Form 8-K dated January 20, 1999 (two), April
20, 1999 (two, one of which was amended by Heller's 8-K/A filed on April
21, 1999), April 22, 1999 and April 23, 1999; and
. the description of Heller class A common stock contained in Heller's
Registration Statements on Form 8-A filed April 1, 1998 and May 7, 1998
pursuant to Section 12 of the Securities Exchange Act and all amendments
and reports that Heller files to update the description.
Heller also incorporates, by reference any future filings it makes with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
before the special meeting.
63
<PAGE>
EXPERTS
The consolidated financial statements of HealthCare at December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998,
included in HealthCare's Annual Report on Form 10-K/A for the year ended
December 31, 1998, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated by reference in this proxy statement/prospectus in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of Heller at December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998,
included in Heller's Annual Report on Form 10-K/A for the year ended December
31, 1998, have been audited by Arthur Andersen LLP, independent auditors, as
set forth in their report with respect thereto, and are incorporated by
reference in this proxy statement/prospectus in reliance upon that report,
given on the authority of the firm as experts in accounting and auditing.
LEGAL OPINIONS
Katten Muchin & Zavis, Chicago, Illinois, will pass upon the legality of the
Heller class A common stock issuable in connection with the merger. A limited
number of Katten Muchin & Zavis attorneys own, in the aggregate, less than one
percent of the outstanding shares of Heller class A common stock. Winston &
Strawn, Chicago, Illinois, will pass upon certain federal income tax
consequences of the merger for Heller. Powell, Goldstein, Frazer & Murphy LLP,
Atlanta, Georgia, will pass upon certain federal income tax consequences of the
merger for HealthCare. A limited number of Powell, Goldstein, Frazer & Murphy
LLP attorneys own, in the aggregate, less than one percent of the outstanding
shares of HealthCare common stock.
STOCKHOLDER PROPOSALS
HealthCare will hold a 1999 Annual Meeting of Stockholders only if we do not
complete the merger. If such a meeting is held, the Secretary of HealthCare
must have received any proposals of HealthCare stockholders prior to January 6,
1999 to be considered at the 1999 Annual Meeting of stockholders and to be
included in the HealthCare 1999 proxy materials.
64
<PAGE>
Appendix A
COMPOSITE COPY OF THE
AGREEMENT AND PLAN OF MERGER
among
HELLER FINANCIAL, INC.,
HEALTHCARE FINANCIAL PARTNERS, INC.
and
HF5, INC.
Dated and amended as of April 19, 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE MERGER
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1.1 The Merger.......................................................... A-1
1.2 Closing............................................................. A-1
1.3 Effective Time...................................................... A-1
1.4 Effects of the Merger............................................... A-1
1.5 Certificate of Incorporation........................................ A-1
1.6 Bylaws.............................................................. A-2
1.7 Directors and Officers.............................................. A-2
1.8 Tax Consequences.................................................... A-2
ARTICLE II
MERGER CONSIDERATION; EXCHANGE PROCEDURES
2.1 Merger Consideration................................................ A-2
2.2 Election Procedures................................................. A-3
2.3 Rights as Stockholders; Stock Transfers............................. A-5
2.4 Fractional Shares................................................... A-5
2.5 Exchange Procedures................................................. A-5
2.6 Dissenting Stockholders............................................. A-6
2.7 Anti-Dilution Provisions............................................ A-6
2.8 Treasury Shares..................................................... A-6
2.9 Options............................................................. A-6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HFP
3.1 [Reserved].......................................................... A-7
3.2 HFP Material Adverse Effect......................................... A-7
3.3 Representations and Warranties of HFP............................... A-7
3.4 Organization, Powers and Qualifications............................. A-7
3.5 Subsidiaries........................................................ A-7
3.6 Capital Stock....................................................... A-8
3.7 Certificate, Bylaws, Minute Books and Records....................... A-9
3.8 Authority; Binding Effect........................................... A-9
3.9 No Conflict; Approvals.............................................. A-9
3.10 Governmental Consents and Approvals................................. A-9
3.11 SEC Reports......................................................... A-10
3.12 Financial Statements................................................ A-10
3.13 Absence of Certain Changes.......................................... A-11
3.14 Indebtedness; Absence of Undisclosed Liabilities.................... A-11
3.15 Assets.............................................................. A-11
3.16 Contracts........................................................... A-12
3.17 Financing Transactions.............................................. A-12
3.18 Securitization and Other Debt Facilities............................ A-13
3.19 Authorizations; Compliance with Law................................. A-14
3.20 Taxes............................................................... A-14
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
3.21 Absence of Litigation; Claims....................................... A-16
3.22 Employee Benefit Plans; Employment Agreements....................... A-16
3.23 Labor Matters....................................................... A-17
3.24 Environmental Liability............................................. A-18
3.25 No Default.......................................................... A-20
3.26 Intellectual Property............................................... A-20
3.27 Regulatory Matters.................................................. A-20
3.28 Registration Statement; Proxy Statement/Prospectus.................. A-20
3.29 Board Action; Vote Required......................................... A-21
3.30 Year 2000........................................................... A-21
3.31 Affiliates.......................................................... A-22
3.32 Opinion of Financial Advisor........................................ A-22
3.33 Brokers and Finders................................................. A-22
3.34 Investment Company Act.............................................. A-22
3.35 HealthCare Financial Partners REIT.................................. A-22
3.36 Tax and Regulatory Matters.......................................... A-22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HELLER AND MERGER CO.
4.1 [Reserved].......................................................... A-23
4.2 Heller Material Adverse Effect...................................... A-23
4.3 Representations and Warranties of Heller and Merger Co.............. A-23
4.4 Organization and Powers............................................. A-23
4.5 Authority; Binding Effect........................................... A-23
4.6 No Conflict; Approvals.............................................. A-23
4.7 Governmental Consents and Approvals................................. A-24
4.8 Capital Stock....................................................... A-24
4.9 Registration Statement; Proxy Statement/Prospectus.................. A-24
4.10 SEC Reports......................................................... A-25
4.11 Financial Statements................................................ A-25
4.12 Absence of Certain Changes.......................................... A-25
4.13 Absence of Litigation; Claims....................................... A-25
4.14 Compliance with Law................................................. A-25
4.15 Brokers and Finders................................................. A-25
4.16 Accounting, Tax and Regulatory Matters.............................. A-25
4.17 Financing........................................................... A-25
ARTICLE V
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of Business Prior to the Effective Time..................... A-26
5.2 Forbearances........................................................ A-26
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Access and Information.............................................. A-28
6.2 Registration Statement; Regulatory Matters.......................... A-28
6.3 Stockholder Approval................................................ A-29
6.4 Current Information................................................. A-29
</TABLE>
A-ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
6.5 Agreements of Affiliates............................................ A-30
6.6 Expenses............................................................ A-30
6.7 Miscellaneous Agreements and Consents............................... A-30
6.8 Employee Matters.................................................... A-30
6.9 D&O Indemnification................................................. A-31
6.10 Press Releases...................................................... A-32
6.11 Insurance........................................................... A-32
6.12 Additional Actions.................................................. A-32
6.13 No Solicitation..................................................... A-32
6.14 Year 2000 Compliance................................................ A-33
6.15 Continuation of Management.......................................... A-33
ARTICLE VII
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger.......... A-33
7.2 Conditions to Obligations of HFP to Effect the Merger............... A-34
7.3 Conditions to Obligations of Heller to Effect the Merger............ A-34
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination......................................................... A-35
8.2 Effect of Termination and Abandonment............................... A-36
8.3 Amendment........................................................... A-36
8.4 Severability........................................................ A-36
8.5 Waiver.............................................................. A-36
ARTICLE IX
GENERAL PROVISIONS
9.1 Non-Survival of Representations, Warranties and Agreements.......... A-36
9.2 Notices............................................................. A-36
9.3 Interpretation...................................................... A-37
9.4 Miscellaneous....................................................... A-37
9.5 Legal Fees and Costs................................................ A-38
</TABLE>
EXHIBITS
<TABLE>
<C> <S> <C>
Exhibit A Form of Option Agreement
Exhibit B Form of HFP Affiliate Letter
</TABLE>
A-iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of April 19, 1999 by and among Heller Financial Inc., a Delaware
corporation ("Heller"), HealthCare Financial Partners, Inc., a Delaware
corporation ("HFP"), and HF5, Inc. ("Merger Co."), a Delaware corporation and a
wholly-owned subsidiary of Heller.
WITNESSETH:
WHEREAS, the Boards of Directors of Heller, HFP and Merger Co. have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the business combination transaction provided
for herein in which HFP will, subject to the terms and conditions set forth
herein, merge with and into Merger Co. (the "Merger") so that Merger Co. is the
surviving corporation in the Merger; and
WHEREAS, in connection with and immediately prior to the execution and
delivery of this Agreement, and as a condition to Heller's willingness to enter
into this Agreement, HFP and Heller are entering into a Stock Option Agreement
(the "Option Agreement"); and
WHEREAS, the parties desire to provide for certain conditions,
representations, warranties and covenants in connection with the transactions
contemplated by this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, and intending to be legally bound
thereby, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. The Merger Subject to the terms and conditions of
this Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time (as defined in Section 1.3 of this Agreement)
HFP shall merge with and into Merger Co. Merger Co. shall be the surviving
corporation in the Merger, and shall be governed by the laws of the State of
Delaware. Upon consummation of the Merger, the separate corporate existence of
HFP shall terminate. Merger Co., in its capacity as the corporation surviving
the Merger, is hereinafter sometimes referred to as the "Surviving
Corporation." Merger Co. will own all rights to the name "HealthCare Financial
Partners" after the Closing (as defined in Section 1.2), and reserves the right
to change the name of the Surviving Corporation at the Closing or immediately
thereafter.
Section 1.2. Closing. Closing The closing of the Merger (the "Closing") will
take place two business days after the satisfaction or waiver (subject to
applicable law) of the conditions (excluding conditions that, by their terms,
cannot be satisfied until the Closing) set forth in Article VII (the "Closing
Date") or at such other time and date as the parties may agree. The Closing
shall be held at 10:00 a.m. at the offices of Wachtell, Lipton, Rosen & Katz or
such other place as the parties may agree.
Section 1.3. Effective Time. Effective Time The Merger shall become
effective as set forth in the certificate of merger (the "Certificate of
Merger") which shall be filed with the Secretary of State of the State of
Delaware on the Closing Date. The term "Effective Time" shall be the date and
time when the Merger becomes effective, as agreed by the parties and set forth
in the Certificate of Merger.
Section 1.4. Effects of the Merger. Effects of the Merger At and after the
Effective Time, the Merger shall have the effects set forth in Sections 259 and
261 of the DGCL.
Section 1.5. Certificate of Incorporation. Certificate of Incorporation The
Certificate of Incorporation of Merger Co. as in effect immediately prior to
the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, until amended in accordance thereto and with applicable law.
A-1
<PAGE>
Section 1.6. Bylaws. The bylaws of Merger Co. as in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving Corporation
until amended thereto, in accordance with the Certificate of Incorporation of
the Surviving Corporation and with applicable law.
Section 1.7. Directors and Officers. Directors and Officers From and after
the Effective Time, the directors of Merger Co. shall be the directors of the
Surviving Corporation and the officers of HFP shall be the officers of the
Surviving Corporation, in each case until their respective successors are duly
elected and qualified. Prior to the Effective Time, HFP shall deliver to
Heller evidence satisfactory to Heller of the resignations of each of the
directors of HFP, such resignations to be effective as of the Effective Time.
Section 1.8. Tax Consequences. It is intended that the Merger shall
constitute a "reorganization" within the meaning of Section 368(a) of the
Code.
ARTICLE II
MERGER CONSIDERATION; EXCHANGE PROCEDURES
Section 2.1. Merger Consideration. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any party or stockholder:
(a) Outstanding HFP Company Stock. (i) Each share (excluding (i) shares
held by HFP or any of its Subsidiaries or by Heller or any of its
Subsidiaries, in each case other than shares held in a fiduciary capacity that
are beneficially owned by third parties, shares held as a result of debts
previously contracted, or treasury shares (collectively, "Treasury Shares")
and (ii) Dissenting Shares (as defined herein)) of the common stock, par value
$.01 per share, of HFP ("HFP Common Stock"), issued and outstanding
immediately prior to the Effective Time shall become and be converted into the
right to receive, at the election of the holder thereof as provided in Section
2.2 (and subject to the provisions thereof), either:
(A) the Per Share Consideration Value payable in cash (the "Per Share
Cash Consideration"), or
(B) that number of shares of common stock, Class A, par value $0.25 per
share ("Heller Common Stock"), of Heller equal to the Exchange Ratio (the
"Per Share Stock Consideration").
(ii) "Exchange Ratio" shall, subject to Section 2.7, equal the Per Share
Consideration Value divided by the Average NYSE Closing Price.
(iii) "Average NYSE Closing Price" shall mean the arithmetic mean (carried
to four decimal places) of the closing prices per share of Heller Common Stock
as reported on the NYSE Common Tape (as reported in The Wall Street Journal
or, if not reported therein, in another mutually agreed upon authoritative
source) for the ten NYSE trading days ending on (and including) the trading
day immediately preceding the date of the Stockholders Meeting.
(iv) "Per Share Consideration Value" shall be equal to:
(A) if the Average NYSE Closing Price is $31.12 or more, $36.19;
(B) if the Average NYSE Closing Price is at least $28.73 but less than
$31.12:
(0.59 * 35) + (0.41 * Average NYSE Closing Price * $35);
------
$28.73
(C) if the Average NYSE Closing Price is less than $28.73 but greater
than $21.54, $35; or
(D) if the Average NYSE Closing Price is $21.54 or less:
(0.59 * 35) + (0.41 * Average NYSE Closing Price * $35).
------
$21.54
A-2
<PAGE>
(b) Outstanding Merger Co. Common Stock. Each share of the common stock of
Merger Co. ("Merger Co. Common Stock") issued and outstanding immediately prior
to the Effective Time shall be unchanged and shall remain issued and
outstanding as common stock of the Surviving Corporation.
Section 2.2. Election Procedures. (a) Holders of the HFP Common Stock shall
be provided with an opportunity to elect to receive, in respect of each issued
and outstanding share of HFP Common Stock held by such holder immediately prior
to the Effective Time other than Dissenting Shares, either the Per Share Cash
Consideration or the Per Share Stock Consideration, in accordance with and
subject to the election and proration procedures set forth below in this
Section 2.2.
(b) Such number of election forms as the parties hereto may mutually agree
prior to the Mailing Date (as defined herein) and other appropriate and
customary transmittal materials (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing HFP Common Stock ("Old Certificates") shall pass, only upon proper
delivery of such Old Certificates to an exchange agent designated by Heller and
reasonably acceptable to HFP (the "Exchange Agent")) in such form as Heller and
HFP shall mutually agree ("Election Form") shall be mailed at least 25 days
prior to the anticipated Effective Time (the "Mailing Date") to each holder of
record of HFP Common Stock as of the record date set for determining the
holders of HFP Common Stock entitled to notice of and to vote at the
Stockholders Meeting ("Election Form Record Date"). Each Election Form shall
permit a holder (or the beneficial owner through appropriate and customary
documentation and instructions) of HFP Common Stock to elect to receive the Per
Share Stock Consideration with respect to all of such holder's HFP Common Stock
listed on such Election Form ("Stock Election Shares"), to elect to receive the
Per Share Cash Consideration with respect to all of such holder's HFP Common
Stock listed on such Election Form ("Cash Election Shares") or to indicate that
such holder makes no election with respect to all such holder's HFP Common
Stock listed on such Election Form ("No Election Shares").
(c) Any shares of HFP Common Stock with respect to which the holder (or the
beneficial owner, as the case may be) shall not have submitted to the Exchange
Agent an effective, properly completed Election Form on or before 5:00 p.m. on
the NYSE trading day immediately preceding the date of the Stockholders Meeting
(or such other time and date as Heller and HFP may mutually agree) (the
"Election Deadline") shall be deemed to be No Election Shares.
(d) Heller shall make available one or more Election Forms as may be
reasonably requested by all persons who become holders (or beneficial owners)
of HFP Common Stock between the Election Form Record Date and the close of
business on the business day prior to the Election Deadline, and HFP shall
provide to the Exchange Agent all information reasonably necessary for it to
perform as specified herein.
(e) Any election contemplated by Section 2.2(a) shall have been properly
made only if the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. An Election Form shall be
deemed properly completed only if accompanied by one or more certificates (or
customary affidavits and indemnification regarding the loss or destruction of
such certificates or the guaranteed delivery of such certificates) representing
all shares of the HFP Common Stock covered by such Election Form, together with
duly executed transmittal materials included in the Election Form. Any Election
Form may be revoked or changed by the person submitting such Election Form at
or prior to the Election Deadline. In the event an Election Form is revoked
prior to the Election Deadline, the shares of HFP Common Stock represented by
such Election Form shall become No Election Shares and Heller shall cause the
certificates representing HFP Common Stock to be promptly returned without
charge to the person submitting the Election Form upon written request to that
effect from the person who submitted the Election Form. Subject to the terms of
this Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or change
has been properly or timely made and to disregard immaterial defects in the
Election Forms, and any good faith decisions of the Exchange Agent regarding
such matters shall be binding and conclusive. Neither HFP nor the Exchange
Agent shall be under any obligation to notify any person of any defect in an
Election Form.
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(f) Within five business days after the Election Deadline, unless the
Effective Time has not yet occurred, in which case as soon after the Effective
Time as practicable, Heller shall cause the Exchange Agent to effect the
allocation among the holders of HFP Common Stock in accordance with the
Election Forms as follows:
(i) Stock Elections Less Than the Stock Amount. If the number of shares
of Heller Common Stock that would be issued, upon conversion in the Merger
of the Stock Election Shares, is less than the product of (A) 0.41, (B) the
Exchange Ratio as determined according to Section 2.1 and (C) the number of
shares of HFP Common Stock issued and outstanding as of the trading day
immediately preceding the Closing Date (the "Target Share Number"), then:
1. all Stock Election Shares shall be converted into the right to
receive the Per Share Stock Consideration,
2. the Exchange Agent shall allocate pro rata first among the holders
of No Election Shares (based upon the number of No Election Shares
held by each of such holders) and then (if necessary) pro rata among
the holders of the Cash Election Shares (based upon the number of
Cash Election Shares held by each of such holders) (such No Election
Shares and Cash Election Shares, if any, being referred to as the
"Stock Designated Shares") a sufficient number of shares of Heller
Common Stock such that the number of shares of Heller Common Stock
that will be issued in the Merger equals as closely as practicable,
but in no event less than, the Target Share Number, and all Stock
Designated Shares shall be converted into the right to receive the
Per Share Stock Consideration pursuant to the procedures applicable
to Stock Election Shares, and
3. the Cash Election Shares and the No Election Shares which are not
Stock Designated Shares shall be converted into the right to receive
the Per Share Cash Consideration.
(ii) Stock Elections More Than the Stock Amount. If the number of shares
of Heller Common Stock that would be issued upon the conversion in the
Merger of the Stock Election Shares is greater than the Target Share
Number, then:
1. all Cash Election Shares and No Election Shares shall be converted
into the right to receive the Per Share Cash Consideration,
2. the Exchange Agent shall allocate pro rata among the holders of
Stock Election Shares (based upon the number of Stock Election
Shares held by each of such holders) a sufficient number of Stock
Election Shares (such Stock Election Shares being referred to as the
"Cash Designated Shares") such that the number of shares of Heller
Common Stock that will be issued in the Merger shall be reduced to
the Target Share Number, and all Cash Designated Shares shall be
converted into the right to receive the Per Share Cash Consideration
pursuant to the procedures applicable to Cash Election Shares, and
3. the Stock Election Shares which are not Cash Designated Shares shall
be converted into the right to receive the Per Share Stock
Consideration.
(iii) Stock Elections Equal to the Stock Amount. If the number of shares
of Heller Common Stock that would be issued upon conversion in the Merger
of the Stock Election Shares equals the Target Share Number, all Stock
Election Shares shall be converted into the right to receive the Per Share
Stock Consideration and all Cash Election Shares and No Election Shares
shall be converted into the right to receive the Per Share Cash
Consideration.
(g) Notwithstanding anything in this Article II to the contrary, the number
of shares of HFP Common Stock to be converted into the right to receive the Per
Share Stock Consideration in the Merger shall be that which is sufficient in
order for the ratio of (i) the closing price per share of Heller Common Stock
on the Closing Date times the aggregate number of shares of Heller Common Stock
to be issued as Per Share Stock Consideration pursuant to Section 2.2(f) , to
(ii) the sum of (x) the amount set forth in the preceding clause (i) plus (y)
the aggregate Per Share Cash Consideration to be issued pursuant to Section
2.2(f) plus (z) the number of Dissenting Shares times the Per Share Cash
Consideration, to be not less than 41%; provided, however, that
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to the extent any additional shares of Heller Common Stock are required to be
issued pursuant to this Section 2.2(g), such shares shall be issued (A) as Per
Share Stock Consideration in respect of shares that would otherwise be Cash
Designated Shares (x) first, pro rata in respect of Stock Election Shares and
(y) second, to the extent necessary, pro rata in respect of No Election Shares,
and (B) to the extent necessary, as Per Share Stock Consideration pro rata in
respect of Cash Election Shares. Any such Stock Election Shares, No Election
Shares and Cash Election Shares shall henceforth be deemed to be Stock
Designated Shares.
Section 2.3. Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of HFP Common Stock shall cease to be, and shall have no rights as,
stockholders of HFP, other than to receive any dividend or other distribution
with respect to such HFP Common Stock with a record date occurring prior to the
Effective Time and the consideration provided under this Article II. After the
Effective Time, there shall be no transfers on the stock transfer books of HFP
or the Surviving Corporation of shares of HFP Common Stock.
Section 2.4. Fractional Shares. Notwithstanding any other provision hereof,
no fractional shares of Heller Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, Heller shall pay to each holder of Company Common Stock who would
otherwise be entitled to a fractional share of Heller Common Stock (after
taking into account all Old Certificates delivered by such holder) an amount in
cash (without interest) determined by multiplying such fraction by the average
of the last sale prices of Heller Common Stock, as reported by the NYSE
Composite Transactions reporting system (as reported in The Wall Street Journal
or, if not reported therein, in another authoritative source), for the five
NYSE trading days immediately preceding the date on which the Effective Time
occurs the ("Effective Date").
Section 2.5. Exchange Procedures. (a) At or prior to the Effective Time,
Heller shall deposit, or shall cause to be deposited, with the Exchange Agent,
for the benefit of the holders of Old Certificates, for exchange in accordance
with this Article II, certificates representing the shares of Heller Common
Stock ("New Certificates") and an estimated amount of cash (such cash and New
Certificates, together with any dividends or distributions with respect thereto
(without any interest thereon), being hereinafter referred to as the "Exchange
Fund") to be paid pursuant to this Article II in exchange for outstanding
shares of HFP Common Stock.
(b) As promptly as practicable after the Effective Date, Heller shall send
or cause to be sent to each former holder of record of shares (other than Cash
Designated Shares or Dissenting Shares) of HFP Common Stock immediately prior
to the Effective Time transmittal materials for use in exchanging such
stockholder's Old Certificates for the consideration set forth in this Article
II. Heller shall cause the New Certificates into which shares of a
stockholder's HFP Common Stock are converted on the Effective Date and/or any
check in respect of the Per Share Cash Consideration and any fractional share
interests or dividends or distributions which such person shall be entitled to
receive to be delivered to such stockholder upon delivery to the Exchange Agent
of Old Certificates representing such shares of HFP Common Stock (or indemnity
reasonably satisfactory to Heller and the Exchange Agent, if any of such
certificates are lost, stolen or destroyed) owned by such stockholder. No
interest will be paid on any such cash to be paid pursuant to this Article II
upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to any former holder of HFP Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) No dividends or other distributions with respect to Heller Common Stock
with a record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificate representing shares of HFP Common
Stock converted in the Merger into Cash Designated Shares or Stock Designated
Shares until the holder thereof shall surrender such Old Certificate in
accordance with this Article II. After the surrender of an Old Certificate in
accordance with this Article II, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest
thereon, which theretofore had become payable with respect to shares of Heller
Common Stock represented by such Old Certificate.
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(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of HFP for twelve months after the Effective Time shall be paid to
Heller. Any stockholders of HFP who have not theretofore complied with this
Article II shall thereafter look only to Heller for payment of the shares of
Heller Common Stock, cash in lieu of any fractional shares and unpaid dividends
and distributions on the Heller Common Stock deliverable in respect of each
share of HFP Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
Section 2.6. Dissenting Stockholders. (a) "Dissenting Shares" means any
shares held by any holder of HFP Common Stock who becomes entitled to payment
of the fair value of such shares under the DGCL. Any holders of Dissenting
Shares shall be entitled to payment for such shares only to the extent
permitted by and in accordance with the provisions of the DGCL; provided,
however, that if, in accordance with the DGCL, any holder of Dissenting Shares
shall forfeit such right to payment of the fair value of such shares, such
shares shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the
consideration provided in this Article II (as No Election Shares).
(b) HFP shall give Heller (i) prompt notice of any written objections to the
Merger and any written demands for the payment of the fair value of any shares,
withdrawals of such demands, and any other instruments served pursuant to the
DGCL received by HFP and (ii) the opportunity to direct all negotiations and
proceedings with respect to such demands under the DGCL. HFP shall not
voluntarily make any payment with respect to any demands for payment of fair
value and shall not, except with the prior written consent of Heller, settle or
offer to settle any such demands.
Section 2.7. Anti-Dilution Provisions. In the event Heller changes (or
establishes a record date for changing) the number of shares of Heller Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding Heller Common Stock and the record date therefor shall be prior
to the Effective Date, the Exchange Ratio shall be proportionately adjusted.
Section 2.8. Treasury Shares. Each of the shares of HFP Common Stock held as
Treasury Shares immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
Section 2.9. Options. Except with respect to those HFP Options (as defined
herein) described in Section A of the schedule attached hereto (the "HFP
Schedule"), at the Effective Time, all employee stock options to purchase
shares of HFP Common Stock (each, a "HFP Option"), which are then outstanding
and unexercised, shall cease to represent a right to acquire shares of HFP
Common Stock and shall be converted automatically into options to purchase
shares of Heller Common Stock, and Heller shall assume each such HFP Option
subject to the terms of any of the stock option plans listed under Section 3.6
of the HFP Schedule (collectively, the "HFP Stock Plans"), and the agreements
evidencing grants thereunder, including but not limited to the accelerated
vesting of such options which shall occur in connection with and by virtue of
the Merger as and to the extent required by such plans and agreements;
provided, however, that from and after the Effective Time, (i) the number of
shares of Heller Common Stock purchasable upon exercise of such HFP Option
shall be equal to the number of shares of HFP Common Stock that were
purchasable under such HFP Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, and rounding to the nearest whole share, and
(ii) the per share exercise price under each such HFP Option shall be adjusted
by dividing the per share exercise price of each such HFP Option by the
Exchange Ratio, and rounding down to the nearest cent, and (iii) each HFP
Option that is so assumed by Heller shall be converted automatically into non-
incentive options to purchase shares of Heller Common Stock, from options that
are intended to be "incentive stock options" (as defined in Section 422 of the
Code). The terms of each HFP Option shall, in accordance with its terms, be
subject to further adjustment as appropriate to reflect any stock split, stock
dividend, recapitalization or other similar transaction with respect to Heller
Common Stock on or subsequent to the Effective Date. Notwithstanding the
foregoing, each HFP Option which is intended to be an "incentive stock option"
(as defined in Section 422 of the Code) shall be adjusted in accordance with
the requirements of Section 424 of the
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Code. Accordingly, with respect to any incentive stock options, fractional
shares shall be rounded down to the nearest whole number of shares and where
necessary the per share exercise price shall be rounded down to the nearest
cent. All options to purchase shares of HFP Common Stock, which are then
outstanding under the 1996 Director Stock Option Plan and unexercised (each a
"HFP Director Option"), shall be canceled and each holder of a canceled HFP
Director Option shall be entitled to receive, in consideration for the
cancellation of such HFP Director Option, an amount in cash equal to the
product of (x) the number of shares of HFP Common Stock previously subject to
such Option and (y) the excess, if any, of the Per Share Consideration Value
over the exercise price per share previously subject to such HFP Director
Option.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HFP
Section 3.1. [Reserved]
Section 3.2. HFP Material Adverse Effect. As used in this Agreement, "HFP
Material Adverse Effect" shall mean, with respect to HFP, any change or effect
that (x) is, or is reasonably likely to be, materially adverse to the business,
results of operations, or financial condition of HFP and its Subsidiaries,
taken as a whole or (y) would, or is reasonably likely to, materially impair
the ability of HFP to perform its obligations under this Agreement or otherwise
materially threaten or impede the consummation of the Merger and the other
transactions contemplated by this Agreement, in either case other than any
change, event or occurrence (to the extent that they do not, in any case,
disproportionately affect HFP) relating to (i) the United States or global
economic or financial services industry conditions generally, (ii) the United
States or global securities markets in general, (iii) this Agreement or the
transactions contemplated hereby or the announcement thereof, (iv) changes in
legal or regulatory conditions that affect generally the businesses in which
HFP and its Subsidiaries are engaged, (v) the general level of interest rates,
or (vi) financial institutions or the credit market generally.
Section 3.3. Representations and Warranties of HFP. Subject to the foregoing
and except as set forth in the HFP Schedule, HFP hereby represents and warrants
to Heller and Merger Co. as of the date of this Agreement and as of the Closing
Date as set forth in Section 3.4 through 3.36 inclusive:
Section 3.4. Organization, Powers and Qualifications. HFP is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. HFP has all requisite corporate power and authority to carry
on its business as it has been and is now being conducted and to own, lease and
operate the properties and assets used in connection therewith, except where
any failure to have such power and authority would not, individually or in the
aggregate, have a HFP Material Adverse Effect. HFP is duly qualified as a
foreign corporation authorized to do business and is in good standing in every
jurisdiction in which such qualification is required, all of which
jurisdictions are listed in Section 3.4 of the HFP Schedule, except when any
failure to be so qualified or in good standing would not, individually or in
the aggregate, have a HFP Material Adverse Effect.
Section 3.5. Subsidiaries.
(a) "Subsidiary" means, with respect to any party, any corporation,
limited liability company, partnership, joint venture, or other business
association or entity, at least a majority of the voting securities or
economic interests of which is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, except where such
ownership or control results solely from such party's ownership or control
of unexercised warrants or convertible debt instruments issued by such
entity. As used in this Agreement, "Joint Venture" means, with respect to
any party, any corporation, limited liability company, partnership, joint
venture or other business association or entity in which either (i) such
party or any one or more of its Subsidiaries, directly or indirectly, owns
or controls more than ten percent (10%) and less than a majority of any
class of the outstanding voting securities or economic interests and such
securities or interests have a value of more than $1 million individually,
or (ii) such party or a Subsidiary of such party is a general partner or
manager.
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(b) Section 3.5 of the HFP Schedule lists each Subsidiary and each Joint
Venture of HFP, the jurisdiction of its organization and the amount of its
equity securities outstanding and the owners thereof. Each Subsidiary is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Each such Subsidiary has all requisite
power and authority to carry on its business as it has been and is now
being conducted and to own, lease and operate the assets and properties
used in connection therewith except as would not have, individually or in
the aggregate, a HFP Material Adverse Effect. Each such Subsidiary is duly
qualified as a foreign corporation authorized to do business and is in good
standing in every jurisdiction in which such qualification is required, all
of which jurisdictions are disclosed in the Section 3.5 of the HFP Schedule
except as would not have, individually or in the aggregate, a HFP Material
Adverse Effect. All issued and outstanding shares of capital stock or other
equity instruments of each such Subsidiary have been duly authorized, are
validly issued and outstanding, are fully paid and nonassessable and were
issued in compliance with all applicable federal and state securities laws,
and, except as set forth in Section 3.5 of the HFP Schedule, are lawfully
owned of record and beneficially by HFP or another Subsidiary free and
clear of all pledges, liens, claims, security interests and other charges
or defects in title of any nature whatsoever ("Liens").
(c) Every "company" under the "control" of HFP, as such quoted terms are
defined for purposes of 12 U.S.C. (S)(S) 1841(a)(2)(A) and 1841(a)(2)(B)
and the rules and regulations of the Board of Governors of the Federal
Reserve System thereunder, all as amended and heretofore judicially and
administratively interpreted, other than Subsidiaries and Joint Ventures of
HFP, is listed in Section 3.5 of the HFP Schedule. HFP has previously
furnished to Heller a written description of the activities of each such
company that is true and correct in all material respects. The aggregate
value of all securities and interests in such companies (other than
Subsidiaries or Joint Ventures) owned by HFP or any of its Subsidiaries as
of March 31, 1999 does not exceed $2,000,000.
Section 3.6. Capital Stock. HFP has authorized capital stock consisting of
60,000,000 shares of HFP Common Stock and 10,000,000 shares of preferred stock,
par value $.01 per share ("HFP Preferred Stock"). As of April 14, 1999: (i)
13,421,039 shares of HFP Common Stock were issued and outstanding, (ii) no
shares of HFP Common Stock were held as treasury shares, (iii) 1,746,152 shares
of HFP Common Stock were reserved for issuance under the HFP Stock Plans, and
(iv) no shares of HFP Preferred Stock were issued and outstanding. Section 3.6
of the HFP Schedule lists all holders of HFP Options, the date each HFP Option
was granted, the HFP Stock Plan under which such HFP Options were granted, the
number of shares of HFP Common Stock subject to each such HFP Option, the
expiration date of each such HFP Option and the price at which such HFP Option
may be exercised under the applicable HFP Stock Plan. Since April 14, 1999, (i)
no additional shares of capital stock have been reserved for issuance by HFP,
(ii) except for issuances of HFP Common Stock upon the exercise of outstanding
HFP Options listed in Section 3.6 of the HFP Schedule, there are no other
shares of capital stock of HFP authorized, issued or outstanding, and (iii) no
shares of HFP Common Stock came to be held by HFP as treasury shares. All of
the issued and outstanding shares of HFP Common Stock have been duly authorized
and are validly issued and outstanding, fully paid and nonassessable, and were
issued in compliance with all applicable Federal and state securities laws. No
shares of capital stock issued by HFP are or were at the time of their issuance
subject to preemptive rights. There are no existing subscriptions, options,
warrants, convertible securities, calls, commitments, agreements, conversion
rights or other rights of any character (contingent or otherwise) calling for
or requiring the issuance, transfer, sale or other disposition of any shares of
the capital stock of HFP ("HFP Capital Stock") or of any Subsidiary of HFP, or
calling for or requiring the issuance of any securities or rights convertible
into or exchangeable for shares of HFP Capital Stock or the capital stock of
any Subsidiary of HFP, nor is HFP or any Subsidiary of HFP subject to any
obligation (contingent or otherwise) to repurchase, redeem or otherwise acquire
shares of capital stock of HFP or any such Subsidiary, in any case except as
set forth in Section 3.6 of the HFP Schedule. There are no voting trusts or
other agreements or understandings to which HFP is a party, nor, to the
Knowledge (as hereinafter defined) of HFP, to which any stockholder of HFP is a
party, with respect to the voting of HFP Capital Stock, other than this
Agreement. The term "Knowledge" with respect to HFP or Heller means the actual
knowledge of any executive officer of HFP or its Subsidiaries or of Heller or
its Subsidiaries, as the case may be.
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Section 3.7. Certificate, Bylaws, Minute Books and Records. The copies of
the amended and restated Certificate of Incorporation, as amended to date, of
HFP (the "HFP Charter") and the bylaws of HFP (the "HFP Bylaws") as in effect
on the date hereof, and the articles of incorporation and bylaws of its
Subsidiaries, which have been made available to Heller, are true, correct and
complete copies thereof as in effect on the date hereof. The minute books of
HFP and its Subsidiaries, which have been made available for inspection by
Heller are accurate and complete in all material respects and contain minutes
of all meetings and consents in lieu of meetings of the Board of Directors (the
"HFP Board") of HFP (and any committee thereof) and of the holders ("HFP
Stockholders") of HFP Common Stock and the stockholders or other equity holders
of the Subsidiaries of HFP since the respective dates of formation of HFP and
such Subsidiaries. The books and records of HFP and each such Subsidiary, which
have been made available by HFP to Heller, accurately reflect the transactions
to which HFP or such Subsidiary is a party or by which their properties are
subject or bound.
Section 3.8. Authority; Binding Effect. HFP has all requisite corporate
power and authority to execute and deliver this Agreement and the Option
Agreement and to consummate the transactions contemplated hereby and thereby.
All necessary action, corporate or otherwise, required to have been taken by or
on behalf of it by applicable law, the HFP Charter or otherwise to authorize
(i) the approval, execution and delivery on its behalf of this Agreement and
the Option Agreement and (ii) its performance of its obligations under this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby, has been taken, including the receipt of the
unanimous approval by the HFP Board, except that the adoption of this Agreement
must be approved by the affirmative vote of a majority of the votes of all
outstanding shares of HFP Common Stock of record on the record date for the
Stockholders Meeting. Each of this Agreement and the Option Agreement
constitutes HFP's valid and binding agreement, enforceable against it in
accordance with its terms, except (A) as the same may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws of general application
relating to or affecting creditors' rights, including without limitation, the
effect of statutory or other laws regarding fraudulent conveyances and
preferential transfers, and (B) for the limitations imposed by general
principles of equity.
Section 3.9. No Conflict; Approvals. Except as set forth in Section 3.9 of
the HFP Schedule, the execution and delivery of this Agreement and the Option
Agreement does not, and the consummation of the transactions contemplated
hereby and thereby will not, (i) violate or conflict with the HFP Charter or
HFP Bylaws or the comparable organizational documents of any of its
Subsidiaries, or (ii) constitute a breach or default (or an event that, with
notice or lapse of time or both, would become a breach or default), require any
filing, waiver, permit, approval or consent under, or give rise to any Lien,
third party right of termination, cancellation, material modification or
acceleration, or loss of any benefit, under any Contract (as defined in Section
3.16) to which HFP or any Subsidiary of HFP is a party or by which it or any
such Subsidiary is bound or (iii) subject to the consents, approvals, orders,
authorizations, filings, declarations and registrations specified in Section
3.10 or in Section 3.10 of the HFP Schedule, conflict with or result in a
violation of any permit, concession, franchise or license or any law, statute,
rule or regulation applicable to HFP or any of its Subsidiaries or any of their
properties or assets, except, in the case of clauses (ii) and (iii), as would
not, individually or in the aggregate, have a HFP Material Adverse Effect.
Section 3.10. Governmental Consents and Approvals. Except as set forth in
Section 3.10 of the HFP Schedule, neither the execution and delivery of this
Agreement and the Option Agreement nor the consummation of the transactions
contemplated hereby and thereby will require any consent, approval, order,
authorization, or permit of, or filing with or notification to, any local
state, federal or foreign court, administrative agency, commission or other
governmental or regulatory authority, agency or instrumentality ("Governmental
Entity"), except as contemplated by the Option Agreement and except for (i) the
filing of the registration statement (the "Registration Statement") of Heller
on Form S-4 pursuant to which shares of Heller Common Stock to be issued in the
Merger will be registered with the Securities and Exchange Commission (the
"SEC") in accordance with the Securities Act of 1933, as amended, and the rules
and regulations thereunder (the "Securities Act"), the entry of an order by the
SEC permitting such Registration Statement to become effective, and compliance
with applicable state securities laws, (ii) the filing of the proxy statement
or
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any supplement thereto (the "Proxy Statement") and related proxy materials with
the SEC in accordance with the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder (the "Exchange Act"), (iii) notification
pursuant to, and expiration or termination of the waiting period under, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), (iv) the filing and recording of
the Certificate of Merger in accordance with the DGCL and (v) consents,
approvals, orders, authorizations or permits the failure to obtain, or filings
or notifications the failure to make, will not, individually or in the
aggregate, have a HFP Material Adverse Effect.
Section 3.11. SEC Reports. HFP has filed all required forms, reports and
documents with the SEC since January 1, 1997 (collectively, "HFP's SEC
Reports"), including, without limitation, HFP's Annual Report on Form 10-K for
the year ended December 31, 1998, (the "HFP 1998 Form 10-K"). HFP's SEC Reports
have complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act. As of their respective dates, none of
HFP's SEC Reports, including, without limitation, any financial statements or
schedules included or incorporated by reference therein, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. There have been filed as exhibits to, or incorporated by reference
in, the HFP 1998 Form 10-K all contracts which, as of the date thereof, were
material as described in Item 601(b) (10) of Regulation S-K, except as set
forth in Section 3.11 of the HFP Schedule. HFP has heretofore delivered to
Heller, in the form filed with the SEC, all of HFP's SEC Reports filed prior to
the date of this Agreement. Each of the financial statements (including the
related notes) included in HFP's SEC Reports presents fairly, in all material
respects, the consolidated financial position and consolidated results of
operations and cash flows of HFP and its Subsidiaries as of the respective
dates or for the respective periods set forth therein, all in conformity with
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved except as otherwise noted therein, and subject, in the
case of the unaudited interim financial statements, to normal and recurring
adjustments that have not been and are not expected to be material in amount.
Section 3.12. Financial Statements.
(a) HFP has delivered to Heller true and complete copies of consolidated
balance sheets of HFP and its Subsidiaries at December 31, 1998 (the "Audit
Date") and at December 31, 1997 and the related consolidated statements of
income changes in shareholders' equity and statements of cash flow for the
years then ended, together with the notes thereto, audited by Ernst & Young
LLP, which have been prepared in accordance with GAAP consistently applied
throughout the periods involved. Such balance sheets, including the related
notes, fairly present the consolidated financial position, assets and
liabilities (whether accrued, absolute, contingent or otherwise) of HFP and
its Subsidiaries at the dates indicated and such consolidated statements of
income, changes in shareholders' equity and statements of cash flow fairly
present the consolidated results of operations, changes in shareholders'
equity and cash flow of HFP and its Subsidiaries for the periods indicated.
(b) HFP has delivered to Heller true and complete copies of consolidated
balance sheets of HFP and its Subsidiaries at March 31, 1999 and the
related consolidated statements of income, changes in shareholders' equity
and statements of cash flow for the three months then ended, which have
been prepared in accordance with GAAP consistently applied throughout the
periods involved. Such balance sheets, including the related notes, fairly
present the consolidated financial position, assets and liabilities
(whether accrued, absolute, contingent or otherwise) of HFP and its
Subsidiaries at the dates indicated and such consolidated statements of
income, changes in shareholders' equity and statements of cash flow fairly
present the consolidated results of operations, changes in shareholders'
equity and cash flow of HFP and its Subsidiaries for the period indicated,
subject to normal and recurring adjustments that have not been and are not
expected to be material in amount.
(c) HFP's reserves for possible loan losses, including its allowances
for losses on receivables and its specific loss reserves, shown on the
audited consolidated balance sheets of HFP and its Subsidiaries at December
31, 1998, filed as part of HFP's annual report to the SEC on Form 10-K for
its fiscal year
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ended December 31, 1998 (the "HFP 1998 Balance Sheet"), and on the
consolidated balance sheet of HFP and its Subsidiaries as at March 31, 1999
(the "HFP Interim 1999 Balance Sheet") were adequate in all material
respects under the requirements of GAAP to provide at such dates for
possible losses, net of recoveries relating to loans previously charged
off, on loans outstanding at such dates, and, to HFP's Knowledge at such
dates, HFP's loan portfolio as at each of the date of the HFP 1998 Balance
Sheet and the date of the HFP Interim 1999 Balance Sheet were collectible
in excess of the allowances for loan losses shown thereon. To HFP's
Knowledge, the reserves shown on the HFP Interim 1999 Balance Sheet,
expressed as a percent of loans, neither have been nor, applying the same
criteria used to determine the adequacy of the reserves shown on the HFP
1998 Balance Sheet, should be or have been materially increased since March
31, 1999, and the loans outstanding as of March 31, 1999 were, and to the
extent still outstanding or added to, are, collectible in excess of the
allowances for loan losses, except where the failure to collect any such
loans, individually or in the aggregate, would not have a HFP Material
Adverse Effect.
Section 3.13. Absence of Certain Changes. Since December 31, 1998, HFP and
its Subsidiaries have conducted their business solely in the ordinary course
consistent with past practice and policies and procedures. Since December 31,
1998, (i) HFP has not made any change to its or any of its Subsidiaries'
accounting methods, principles or practices other than as required by GAAP nor
suffered any material deterioration in the quality of its loan portfolio
measured in terms of the likelihood of full and timely repayment of the loans
that comprise such portfolio; and (ii) except in the ordinary course of
business, consistent with past practice, neither HFP nor any of its
Subsidiaries has (a) authorized, declared, set aside or paid any dividend or
distribution or capital return in respect of any stock of, or other equity
interest in HFP or any of its Subsidiaries; (b) increased or established any
bonus, insurance, deferred compensation, severance, pension, profit sharing,
stock option (including, without limitation, the granting of stock options,
stock appreciation rights, performance awards or restricted stock awards),
stock purchase or other employee benefit plan or increased any other
compensation payable or to become payable to any employees, officers, directors
or consultants of HFP or any of its Subsidiaries, which increase or
establishment will result in a material liability; or (c) taken or agreed to
take any other action or been subject to any other event that would, if taken
after the date of this Agreement, require the prior written consent of Heller
pursuant to Section 5.2 of this Agreement. Since December 31, 1998, HFP and its
Subsidiaries have not been subject to any events or conditions of any character
that would have a HFP Material Adverse Effect or impair the ability of HFP to
perform its obligations under this Agreement or the Option Agreement or prevent
or delay the consummation of any of the transactions contemplated hereby or
thereby.
Section 3.14. Indebtedness; Absence of Undisclosed Liabilities. Section 3.14
of the HFP Schedule discloses all material indebtedness for money borrowed by
HFP or any Subsidiary thereof as of the date hereof, accurately disclosing for
each such indebtedness the payee, the original principal amount of the loan,
the current unpaid balance of the loan, the interest rate, the maturity date
and amount of any prepayment, early termination or similar penalties that would
be incurred if the loan were repaid on the date hereof. Except as set forth in
Section 3.14 of the HFP Schedule, neither HFP nor its Subsidiaries has any
material indebtedness, liability or obligation of any kind (whether known or
unknown, accrued, absolute, asserted or unasserted, contingent or otherwise)
except (i) as and to the extent reflected, reserved against or otherwise
disclosed in Section 3.14 of the HFP 1998 Balance Sheet, or (ii) for
liabilities and obligations incurred subsequent to the Audit Date in the
ordinary course of business consistent with past practice and policies and
procedures.
Section 3.15. Assets. Except as described in Section 3.15 of the HFP
Schedule, HFP and its Subsidiaries have good and marketable title to all of
their real and personal properties and assets, including, without limitation,
those assets and properties reflected in the HFP 1998 Balance Sheet in the
amounts and categories reflected therein, free and clear of all Liens, except
(i) the lien of current taxes not yet due and payable, (ii) properties,
interests, and assets disposed of by HFP or any Subsidiary since the Audit Date
solely in the ordinary course of business consistent with past practice and
policies and procedures, (iii) such secured indebtedness as is disclosed in the
HFP 1998 Balance Sheet covering the properties referred to therein, (iv)
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such imperfections of title, easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value, or interfere with the present or proposed use, of the properties
subject thereto; or (v) where any failure to have such title, individually or
in the aggregate, would not have a HFP Material Adverse Effect.
Section 3.16. Contracts.
(a) Section 3.16 of the HFP Schedule lists each contract, agreement,
arrangement, lease, instrument, mortgage or commitment to which HFP or any
of its Subsidiaries is a party or may be bound or to which their respective
properties or assets may be subject, excluding Financing Documents (as
hereinafter defined) entered into in the ordinary course of business
("Contract"), (i) which is with any present or former employee or for the
employment of any person or consultant or which is a non-compete
arrangement with any employee of HFP or any of its Subsidiaries; (ii) which
is a severance agreement, program or policy of HFP or any such Subsidiary
with or relating to its employees; (iii) under the terms of which any of
the rights or obligations of a party thereto will be accelerated as a
result of the transactions contemplated hereby or which contain change in
control provisions; (iv) which involves a material license, or other
material arrangement which relates in whole or in part to any material
software, patent, trademark, trade name, service mark or copyright used by
HFP or any of its Subsidiaries in the conduct of its business; (v) which is
an arrangement limiting or restraining HFP or any of its Subsidiaries or
any successor thereto from engaging or competing in any manner or in any
business; or (vi) under which HFP or any of its Subsidiaries guarantees the
payment or performance by others or in any way is or will be liable with
respect to material obligations of any other person. Except for this
Agreement and the Option Agreement and as listed in the HFP 1998 Form 10-K,
there are no contracts or agreements other than the Contracts and the
Financing Documents that are material to the business properties, assets,
financial condition or results of operations of HFP, taken as a whole.
(b) All Contracts are valid and binding and in full force and effect as
to HFP on the date of this Agreement except to the extent they have
previously expired in accordance with their terms. None of HFP, any of its
Subsidiaries or, to HFP's Knowledge, any other parties, have violated any
provision of, or committed or failed to perform any act which with notice,
lapse of time or both would constitute a default under the provisions of,
any Contract, except as would not have, individually or in the aggregate, a
HFP Material Adverse Effect. True and complete copies of all Contracts
listed in Section 3.16 of the HFP Schedule or listed in the HFP 1998 Form
10-K, together with all amendments thereto through the date hereof, have
been delivered or made available to Heller.
Section 3.17. Financing Transactions.
(a) The written list of counterparties to Financing Documents
("Borrowers") of HFP and its Subsidiaries as of April 16, 1999, previously
furnished by HFP to Heller is a complete and accurate list of Borrowers of
HFP and its Subsidiaries as of such date. Said list correctly and
accurately sets forth as of such date the respective total lines and
outstanding extensions of credit available to and made by HFP and its
Subsidiaries to such Borrowers and the dates upon which HFP's and its
Subsidiaries' financing contracts with such Borrowers expire.
(b) Except as previously disclosed by HFP to Heller, HFP, directly or
indirectly through its Subsidiaries, has neither extended credit nor
committed to extend credit to any person which extension of credit or
commitment to extend credit, together with any and all extensions of credit
and commitments to extend credit by HFP and its Subsidiaries to persons
related to such person, exceed $30 million. A person shall be considered
related to another person if he controls, is controlled by, or is under
common control with such other person, control meaning for this purpose the
power to direct the management or policies of such other person, whether
through the exercise of voting rights, by management contract, or
otherwise.
(c) Accurate and complete copies of the agreements, contracts, and other
instruments including all modifications, waivers and amendments thereto
(the "Financing Documents") entered into by HFP or any of its Subsidiaries,
as the case may be, with respect to financing transactions entered into by
HFP or any
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of its Subsidiaries with its or their clients (the "Financing
Transactions"), are in the files of HFP located in its Chevy Chase,
Maryland headquarters, and have been made available to Heller. Except in
respect of the Financing Transactions described in Section 3.17 of the HFP
Schedule, no Financing Documents deviate in any material respect from the
standard forms of such Financing Documents previously furnished by HFP to
Heller, and lockbox account agreements that conform in all material
respects to the forms of the lockbox account agreements previously
furnished by HFP to Heller are, to HFP's Knowledge, after due periodic
investigation by HFP and its Subsidiaries consistent with their past
practices, in full force and effect in respect of all outstanding Financing
Transactions secured by, in whole or in part, items or services
reimbursable by Medicare and/or Medicaid. The original execution copy of
the Financing Documents are in the possession of HFP, a trustee under a
securitization transaction, or a secured lender to HFP. HFP has caused to
be filed UCC-1 financing statements or real property mortgages with respect
to all or substantially all of the property pledged to HFP.
(d) Each of the Financing Documents is valid and enforceable in
accordance with its terms except as may be limited by bankruptcy laws or
other similar laws affecting rights of creditors generally or general
principles of commercial reasonableness; HFP and its Subsidiaries which are
parties thereto are in compliance in all material respects with the
provisions thereof; neither HFP nor any such Subsidiary is in default in
the performance, observance or fulfillment of any material obligation,
covenant or condition contained therein, except as disclosed in Section
3.17 of the HFP Schedule; and, to HFP's Knowledge, no event has occurred
which with or without the giving of notice or lapse of time, or both, would
constitute a default by HFP or any such Subsidiary thereunder except as
would not have, individually or in the aggregate, a HFP Material Adverse
Effect. Each of the Financing Documents accurately and completely describes
the terms of such Financing Transaction and there have been no amendments,
modifications or waivers that are not reflected therein.
(e) With respect to each Financing Transaction in which HFP or any of
its Subsidiaries has been issued securities or warrants to acquire
securities, to HFP's Knowledge, each such security was issued in compliance
with the requirements of the Securities Act and neither HFP nor any
Subsidiary of HFP has taken any actions which would violate the
restrictions imposed upon HFP or any Subsidiary of HFP in connection with
such securities under the applicable securities laws, pursuant to contract
or otherwise.
(f) Each of the loans included in the Financing Transactions has been
assigned a rating in accordance with HFP's internal loan rating system,
which system has been made available to Heller. The weighted average loan
rating under such system of all of the loans included in the Financing
Transactions is 3.18 as of April 16, 1999.
(g) Except as previously disclosed by HFP to Heller in writing, to HFP's
Knowledge, (i) no Borrower (A) has petitioned or applied for, otherwise
sought, consented in writing to, or filed an answer seeking the appointment
of a receiver, trustee, or liquidator for itself or any substantial part of
its property, or relief, including liquidation, under the Bankruptcy Code
or any other insolvency law or law affecting the rights of creditors
generally, (B) is unable or has admitted in writing its inability to pay
its debts as they become due, (C) has made a general assignment for the
benefit or creditors or offered or sought from its creditors a composition
or extension, or (D) has failed to obtain within 60 days of the
commencement thereof against the Borrower discharge of a petition or
proceeding in bankruptcy or under any other insolvency law or law affecting
the rights of creditors generally, and (ii) except as would not,
individually or in the aggregate, have a HFP Material Adverse Effect, no
claim, action, suit or proceeding concluded or pending against any Borrower
has resulted, or, upon the written advice of counsel, is likely to result,
in the invalidation, in whole or in part, of the Borrower's obligations to
HFP or its Subsidiaries or the security therefor.
Section 3.18. Securitization and Other Debt Facilities. Section 3.18 of the
HFP Schedule identifies each of the principal agreements evidencing the
arrangements pursuant to which HFP has caused certain of its loans to be
conveyed to trusts for purposes of selling securities issued by such trusts
(collectively, the "Securitization Agreements") and all agreements with respect
to all other debt facilities and commitments used by or available to HFP or any
of its Subsidiaries for the financing of HFP's or any of its Subsidiaries'
operations (collectively, the "Other Debt Agreements"). Each of the
representations and warranties made at any time and from time to
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time by HFP or any Subsidiary of HFP in the Securitization Agreements and Other
Debt Agreements was true and correct when made or deemed to have been made
thereunder. All loans and other assets conveyed by HFP or any of its
Subsidiaries to the trusts under applicable agreements satisfy the applicable
eligibility criteria and conditions set forth in the Securitization Agreements.
Each of HFP and its Subsidiaries that are parties to the Securitization
Agreements and Other Debt Agreements has performed its obligations and has
observed and complied with those conditions and requirements applicable to it
or its properties under the Securitization Agreements. No default or breach by
HFP or any such Subsidiary under the Securitization Agreements and Other Debt
Agreements has occurred and neither HFP nor any such Subsidiary has received
notice from any party to the Securitization Agreements or Other Debt Agreements
asserting or otherwise indicating that such default or breach has occurred
except in each case as would not have, individually or in the aggregate, a HFP
Material Adverse Effect. Neither HFP nor any Subsidiary of HFP has been
required to repurchase any loans or other assets under the terms of the
Securitization Agreements.
Section 3.19. Authorizations; Compliance with Law.
(a) Except as would not have, individually or in the aggregate, a HFP
Material Adverse Effect, HFP, its Subsidiaries, and all their employees,
and, to HFP's Knowledge, Health Charge Corporation and its employees, in
respect of services furnished by such employees for HFP, its Subsidiaries
or Health Charge Corporation hold all licenses, franchises, certificates,
consents, permits, approvals, certificates of public convenience and
necessity, and authorizations ("Authorizations") from all Governmental
Entities and other persons which are necessary for the lawful conduct in
respect of HFP, its Subsidiaries and Health Charge Corporation and their
respective businesses and their use and occupancy of their assets and
properties in the manner heretofore and currently conducted, used and
occupied and, in the case of their respective employees, such employees'
services for HFP, its Subsidiaries or Health Charge Corporation. All of
such Authorizations possessed by HFP, its Subsidiaries and, to the
Knowledge of HFP, Health Charge Corporation are listed in Section 3.19 of
the HFP Schedule and, except as would not have, individually or in the
aggregate, a HFP Material Adverse Effect, are valid, in good standing and
in full force and effect and HFP, its Subsidiaries and, to the Knowledge of
HFP, Health Charge Corporation have duly performed all of their respective
obligations under such Authorizations. Except as would not have,
individually or in the aggregate, a HFP Material Adverse Effect, no event
has occurred with respect to any Authorization which permits, or after
notice or lapse of time or both would permit, revocation or termination
thereof or would result in any other impairment of the rights of the holder
of such Authorization, and no termination thereof has been, to the
Knowledge of HFP, threatened; provided that with respect to Health Charge
Corporation, the representation in this sentence is made to HFP's
Knowledge.
(b) Except as would not have, individually or in the aggregate, a HFP
Material Adverse Effect, each of HFP, its Subsidiaries and, to the
Knowledge of HFP, Health Charge Corporation is in compliance with all
applicable laws, statutes, ordinances, codes, rules, regulations, orders or
directives of all Governmental Entities (collectively, "Laws"), and HFP has
not received any notice from any Governmental Entity within three years of
the date hereof of any violation of any Law except as would not have,
individually or in the aggregate, a HFP Material Adverse Effect. To HFP's
Knowledge, the entities identified in Section 3.19(b) of the HFP Schedule
have not been compensated for reimbursement consulting services in a manner
that varies with the volume or dollar value of reimbursement in respect of
such consulting services.
Section 3.20. Taxes.
(a) All federal, state, local and foreign tax returns, reports,
statements and other similar filings required to be filed by HFP or its
Subsidiaries (the "Tax Returns") on or prior to the date hereof or with
respect to taxable periods ending on or prior to the date hereof with
respect to any federal, state, local or foreign taxes, assessments,
deficiencies, fees and other governmental charges or impositions
(including, without limitation, all net or gross income tax, unemployment
compensation, social security, payroll, sales and use, excise, privilege,
property, ad valorem, transfer, franchise, license, school, capital gains,
gross
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receipts, withholding, property, premium, stamp, occupation, severance and
any other tax or similar governmental charge or imposition (including
interest, penalties or additions with respect thereto) under the laws of
the United States or any state or municipal or political subdivision
thereof or any foreign country or political subdivision thereof ("Taxes"))
have been timely filed with the appropriate Governmental Entities in all
jurisdictions in which such Tax Returns are required to be filed except as
would not have, individually or in the aggregate, a HFP Material Adverse
Effect; all such Tax Returns are true, correct and complete except as would
not have, individually or in the aggregate, a HFP Material Adverse Effect;
and HFP or its Subsidiaries have paid all amounts shown as due on such Tax
Returns except as would not have, individually or in the aggregate, a HFP
Material Adverse Effect.
(b) The HFP 1998 Balance Sheet contains adequate accruals in accordance
with GAAP for all unpaid tax liabilities of HFP and its Subsidiaries as of
its Audit Date and include provision in accordance with GAAP for all
deferred taxes as of such date, except as would not have, individually or
in the aggregate, a HFP Material Adverse Effect.
(c) Neither HFP nor any of its Subsidiaries has received any written
notice of assessment in connection with any Taxes or Tax Returns and there
are no pending Tax examinations of or Tax claims asserted against HFP or
any of its Subsidiaries or any of their respective assets or properties.
(d) Neither HFP nor any of its Subsidiaries has been a member of an
affiliated group of corporations, within the meaning of Section 1504 of the
Code (other than the group the common parent of which is HFP), or a member
of a combined, consolidated or unitary group for state, local or foreign
tax purposes (other than a group the common parent of which is HFP or any
of its Subsidiaries) and neither HFP nor any of its Subsidiaries has any
liability for Taxes of any person (other than HFP and its Subsidiaries),
whether under Treasury Regulations Section 1.1502-6 (or any corresponding
provision of state, local or foreign law), as transferee or successor, or
by reason of any tax sharing or tax allocation agreement, except in each
case as would not have, individually or in the aggregate, a HFP Material
Adverse Effect.
(e) The United States federal income Tax Returns which include HFP and
its Subsidiaries have been examined, and such examinations have been
completed, by the Internal Revenue Service (or the applicable statutes of
limitation for the assessment of federal income Taxes for such periods have
expired) for all periods through and including 1996.
(f) Neither HFP nor any of its Subsidiaries is a party to any agreement,
contract or arrangement that would result, on account of the transactions
contemplated hereby, separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G of the Code
or any payment that would be nondeductible under Section 162(m) of the
Code, except as would not have, individually or in the aggregate, a HFP
Material Adverse Effect.
(g) HFP and each of its Subsidiaries has (i) withheld all required
amounts from its employees, agents, contractors and nonresidents and
remitted such amounts to the proper agencies; (ii) paid all employer
contributions and premiums; and (iii) filed all federal, state, local and
foreign returns and reports with respect to employee income Tax
withholding, social security unemployment Taxes and premiums, all in
compliance with the withholding Tax provisions of the Code as in effect for
the applicable year and other applicable federal, state, local or foreign
laws, and, in the case of clauses (i) through (iii), except as would not
have, individually or in the aggregate, a HFP Material Adverse Effect.
(h) None of HFP and its Subsidiaries has executed or filed with any
taxing authority (whether federal, state, local or foreign) any agreement
or other document extending or having the effect of extending the period
for assessment, reassessment or collection of any Taxes, except as would
not have, individually or in the aggregate, a HFP Material Adverse Effect.
(i) None of HFP and its Subsidiaries has agreed to make any adjustment
by reason of a change in accounting methods that affects any taxable year
ending after the Effective Time, except as would not have, individually or
in the aggregate, a HFP Material Adverse Effect. Neither the Internal
Revenue Service (the "IRS") nor any other agency has proposed in writing
any such adjustment or change in accounting methods that affects any
taxable year ending after the Effective Time. None of HFP and its
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Subsidiaries has any application pending with any taxing authority
requesting permission for any changes in accounting methods that related to
its business or operations and that affects any taxable year ending after
the Effective Time.
(j) None of HFP and its Subsidiaries has consented to the application of
Code Section 341(f).
(k) In the past five years, none of HFP and its Subsidiaries has been a
party to a transaction that has been reported as a reorganization within
the meaning of Section 368, distributed a corporation in a transaction that
is reported to qualify under Code Section 355 or been distributed in a
transaction that is reported to qualify under Code Section 355.
(l) None of HFP and its Subsidiaries is or ever has been a party to any
tax sharing agreement or similar agreement for the sharing of tax
liabilities or benefits.
(m) None of HFP and its Subsidiaries currently has or has ever had a
permanent establishment in a foreign country.
(n) HFP is not, and during the preceding 5-year period has not been, a
"United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code, and at or prior to the Effective Time HFP
will provide Heller a certificate to that effect meeting the requirements
of Treasury Regulations Sections 1.897-2(h) and 1.4445-2(c)(3).
(o) HFP agrees to provide Heller in writing, within seven days of the
date hereof, such information with respect to tax matters as is set forth
on Section 3.20 of the HFP Schedule.
Section 3.21. Absence of Litigation; Claims. Except as set forth in Section
3.21 of the HFP Schedule or as would not have, individually and in the
aggregate, a HFP Material Adverse Effect, there are no claims, actions, suits,
proceedings or investigations pending or, to the Knowledge of HFP, threatened
against HFP, any of its Subsidiaries or, to HFP's Knowledge, Health Charge
Corporation, or any properties or rights of HFP, its Subsidiaries or, to HFP's
Knowledge, Health Charge Corporation, or with respect to which any director,
officer, employee or agent of HFP or any of its Subsidiaries is or may be
entitled to claim indemnification from HFP, any of its Subsidiaries or, to
HFP's Knowledge, Health Charge Corporation, before any Governmental Entity or
arbitrator which could materially impair the ability of HFP to perform its
obligations under this Agreement or prevent or materially delay the
consummation of any of the transactions contemplated hereby, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against HFP or any of its Subsidiaries having or which,
insofar as reasonably can be foreseen, in the future would have such effect,
nor, to the Knowledge of HFP, are there any state of facts which could give
rise to such a claim.
Section 3.22. Employee Benefit Plans; Employment Agreements.
(a) Section 3.22 of the HFP Schedule sets forth a true and complete list
of each employee or director benefit plan, arrangement or agreement,
whether or not written, including, without limitation, any employee welfare
benefit plan within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), any employee pension
benefit plan within the meaning of Section 3(2) of ERISA (whether or not
such plan is subject to ERISA) and any bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance, retiree
medical, employment, change of control or fringe benefit plan, program or
agreement (the "HFP Benefit Plans") that is or has been sponsored,
maintained or contributed to by HFP or any of its Subsidiaries or by any
trade or business, whether or not incorporated (a "HFP ERISA Affiliate"),
all of which together with HFP would be deemed a "single employer" within
the meaning of Section 4001 of ERISA.
(b) HFP has heretofore made available to Heller true and complete copies
of each of the HFP Benefit Plans and all material related documents,
including, but not limited to, (i) each writing constituting a part of such
HFP Benefit Plan, including all amendments thereto; (ii) the three most
recent Annual Reports (Form 5500 Series) and accompanying schedules, if
any; and (iii) the most recent determination letter from the Internal
Revenue Service (if applicable) for such HFP Benefit Plan.
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(c) (i) Each of the HFP Benefit Plans has been operated and administered
in all material respects with applicable laws, including, but not limited
to, ERISA, the Code and, in each case, the regulations thereunder; (ii)
each of the HFP Benefit Plans intended to be "qualified" within the meaning
of Section 401(a) of the Code has received a favorable determination letter
from the IRS and is so qualified, and there are no existing circumstances
or any events that have occurred that could reasonably be expected to
adversely affect the qualified status of any such plan; (iii) no HFP
Benefit Plan is subject to Title IV or Section 302 of ERISA or Section 412
or 4971 of the Code; (iv) no HFP Benefit Plan provides benefits, including,
without limitation, death or medical benefits (whether or not insured),
with respect to current or former employees or directors of HFP or its
Subsidiaries beyond their retirement or other termination of service, other
than (A) coverage mandated by applicable law or (B) death benefits or
retirement benefits under any "employee pension plan" (as such term is
defined in Section 3(2) of ERISA); (v) no liability under Title IV of ERISA
has been incurred by HFP, its Subsidiaries or any HFP ERISA Affiliate that
has not been satisfied in full, and no condition exists that presents a
risk to HFP, its Subsidiaries or any HFP ERISA Affiliate of incurring a
liability thereunder except as would not have, individually or in the
aggregate, a HFP Material Adverse Effect; (vi) no HFP Benefit Plan is a
"multiemployer pension plan" (as such term is defined in Section 3(37) of
ERISA) or a plan that has two or more contributing sponsors at least two of
whom are not under common control, within the meaning of Section 4063 of
ERISA; (vii) all contributions or other amounts payable by HFP or its
Subsidiaries as of the Effective Time with respect to each HFP Benefit Plan
in respect of current or prior plan years have been timely paid, or accrued
in accordance with GAAP except as would not have, individually or in the
aggregate, a HFP Material Adverse Effect; (viii) neither HFP nor its
Subsidiaries has engaged in a transaction in connection with which HFP or
its Subsidiaries reasonably could be subject to either a civil penalty
assessed pursuant to Section 409, 502(i) or 502(l) of ERISA or a material
tax imposed pursuant to Section 4975 or 4976 of the Code; (ix) there are no
pending, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the HFP Benefit Plans or any
trusts related thereto which could reasonably be expected to result in any
liability of HFP or any of its Subsidiaries except as would not have,
individually or in the aggregate, a HFP Material Adverse Effect; (x) no HFP
Benefit Plan impairs the sponsoring employer from amending or modifying
such HFP Benefit Plan except as constrained by ERISA, the Code, the terms
of such plan or the need to obtain any required participant consent; and
(xi) no HFP Benefit Plan provides for the reimbursement of any excise taxes
under Section 4999 of the Code or any income taxes under the Code.
(d) There does not now exist, nor do any circumstances exist that would
reasonably be expected to result in, any Controlled Group Liability that
would be a material liability to HFP following the Effective Date.
"Controlled Group Liability" means any and all liabilities under (A) Title
IV of ERISA, (B) section 302 of ERISA, (C) sections 412 and 4971 of the
Code, (D) the continuation coverage requirements of section 601 et seq. of
ERISA and section 4980B of the Code, and (E) corresponding or similar
provisions of foreign laws or regulations, other than such liabilities that
arise solely out of, or relate solely to, the HFP Benefit Plans.
(e) Except as set forth in Section 3.22 of the HFP Schedule, all
employment and consulting agreements to which HFP is a party as of the date
hereof have been made available to Heller, and as of the date hereof there
are no other written agreements obligating HFP to employee any individual.
Section 3.23. Labor Matters. The written lists of employees of HFP and its
Subsidiaries as of December 31, 1998, and as of April 16, 1999, previously
furnished by HFP to Heller are each complete and accurate lists of employees of
HFP and its Subsidiaries as of such dates for purposes of the Code and ERISA.
Said lists correctly and accurately set forth the respective hire dates and, as
of December 31, 1998, and April 16, 1999, respectively, salaries of the
employees of HFP and its Subsidiaries listed thereon. Except as disclosed in
Section 3.23 of the HFP Schedule or as would not have, individually or in the
aggregate, a HFP Material Adverse Effect, there are no controversies pending
or, to the Knowledge of HFP, threatened, between HFP or any of its Subsidiaries
and any of their respective current or former employees. Neither HFP nor any of
its Subsidiaries is party to any collective bargaining agreement or other labor
agreement with any union or labor
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organization and no union or labor organization has been recognized by HFP or
any of its Subsidiaries as an exclusive bargaining representative for employees
of HFP or any of its Subsidiaries. There is no current union representation
question involving employees of HFP or any of its Subsidiaries, nor does HFP
have Knowledge of any significant activity or proceeding of any labor
organization (or representative thereof) or employee group to organize any such
employees. Except as would not have, individually or in the aggregate, a HFP
Material Adverse Effect, there is (i) no unfair labor practice, grievance,
employment discrimination or other labor or employment related charge,
complaint or claim against HFP or any of its Subsidiaries pending before any
court, arbitrator, mediator or governmental agency or tribunal, or, to HFP's
Knowledge, threatened, (ii) no strike, picketing or work stoppage by, or any
lockout of, employees of HFP or any of its Subsidiaries pending, or to HFP's
Knowledge, threatened, against or involving HFP or any of its Subsidiaries, and
(iii) no active arbitration involving HFP or any of its Subsidiaries regarding
the employer's right to move work from one location or entity to another, or to
consolidate work locations, or involving other similar restrictions on business
operations. Except as disclosed in Section 3.23 of the HFP Schedule, there is
no proceeding, claim, suit, action or governmental investigation pending or, to
the Knowledge of HFP, threatened, relating to labor matters in respect of which
any director, officer, employee or agent of HFP or any of its Subsidiaries is
or may be entitled to claim indemnification from HFP or a Subsidiary pursuant
to their respective charters or bylaws or under any indemnification agreements.
Section 3.24. Environmental Liability.
(a) HFP and each of its Subsidiaries are in material compliance with all
Environmental Laws (as hereinafter defined) and neither HFP nor any of its
Subsidiaries has received any written or, to HFP's Knowledge, oral,
communication from any person or Governmental Entity that alleges that HFP
or any of its Subsidiaries is not in compliance with Environmental Laws.
HFP has no Knowledge of any past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans that may
interfere with, or prevent, future continued material compliance on the
part of HFP or any of the Subsidiaries with Environmental Laws.
(b) HFP and each of its Subsidiaries have obtained or applied for all
material environmental permits necessary for the construction of their
facilities or the conduct of their operations, and all such environmental
permits are effective or, where applicable, a renewal application has been
timely filed and is pending agency approval, and HFP and its Subsidiaries
are in material compliance with all terms and conditions of such
environmental permits. HFP has no Knowledge of any past or present events,
conditions, circumstances, activities, practices, incidents, actions or
plans that may interfere with, or prevent, future continued compliance on
the part of HFP or any of the Subsidiaries with the environmental permits.
HFP has no Knowledge of matters or conditions that would preclude
reissuance or transfer of any environmental permit, including amendment of
such instrument, to Heller or one of its Subsidiaries where such action is
necessary to maintain compliance with Environmental Laws in all material
respects.
(c) HFP has no Knowledge of any current Environmental Law or
environmental permit imposing any future requirement which could reasonably
be expected to result in the accrual of a material cost.
(d) Except as would not have, individually or in the aggregate, a HFP
Material Adverse Effect, there is no Environmental Claim (as hereinafter
defined) pending or, to the Knowledge of HFP, threatened (i) against HFP or
any of its Subsidiaries, (ii) against any person or entity whose liability
for any Environmental Claim HFP or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law, or (iii)
against any real or personal property or operations which HFP or any of its
Subsidiaries owns, leases or manages, in whole or in part.
(e) HFP has no Knowledge of any Release (as hereinafter defined) of any
Hazardous Material (as hereinafter defined) that would be reasonably likely
to form the basis of any Environmental Claim against HFP or any of its
Subsidiaries, against any person or entity whose liability for any
Environmental Claim HFP or any of its Subsidiaries has or may have retained
or assumed either contractually or by operation of law, against any person
or entity that has executed a guarantee in favor of HFP or in which HFP has
an equity interest or affecting any assets that are pledged as collateral
to HFP.
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(f) HFP has no Knowledge, with respect to any predecessor of HFP or any
of its Subsidiaries, of any Environmental Claim pending or threatened, or
of any Release of Hazardous Materials that would be reasonably likely to
form the basis of any Environmental Claim against HFP or any of its
Subsidiaries.
(g) HFP has disclosed to Heller all facts which HFP reasonably believes
form the basis of a material current or future cost relating to any
environmental matter affecting HFP and the Subsidiaries.
(h) Neither HFP nor any of its Subsidiaries, nor, to the Knowledge of
HFP, any owner of premises leased or operated by HFP or any of its
Subsidiaries has received any notice with respect to such premises under
federal, state, local or foreign law indicating past or present treatment,
storage or disposal of Hazardous Materials or is engaging or has engaged in
business operations involving the generation, transportation, treatment,
recycling or disposal of any waste regulated under the Environmental Laws
including radioactive materials or the nuclear power industry.
(i) None of the properties owned, leased or operated by HFP, any of its
Subsidiaries or, to the Knowledge of HFP, any predecessor thereof (i) is
now or was in the past, listed on the National Priorities list of Superfund
Sites, the CERCLIS Information System, or any other comparable state or
local environmental database or (ii) contains any above ground or
underground storage tanks.
(j) The Merger will not require any governmental approvals under the
Environmental Laws, including those that are triggered by sales or
transfers of businesses or real property.
(k) As used in this Section 3.24:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation (written or oral) by any person or entity
(including any federal, state, local or foreign Governmental Entity
having jurisdiction over HFP or any of its Subsidiaries) alleging
potential liability of HFP or its Subsidiaries (including, without
limitation, potential responsibility for or liability for enforcement,
investigatory costs, cleanup costs, governmental response costs,
removal costs, remedial costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or
resulting from (A) the presence, or Release or threatened Release into
the environment, of any Hazardous Materials at any location, whether or
not owned, operated, leased or managed by HFP or any of its
Subsidiaries (including but not limited to obligations to clean up
contamination resulting from leaking underground storage tanks); or (B)
circumstances forming the basis of any violation or alleged violation
by HFP or any of its Subsidiaries of any Environmental Law or any
environmental permit; or (C) any and all claims by any third party
against HFP or any of its Subsidiaries seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
resulting from the presence or Release of any Hazardous Materials.
(ii) "Environmental Law" means all applicable foreign, federal,
state and local laws (including the common law), rules, requirements
and regulations relating to (A) pollution, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or protection of human health as it
relates to the environment including, without limitation, laws and
regulations relating to Release of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials and (B)
ownership or operation of facilities.
(iii) "Hazardous Materials" means (A) any petroleum or any by
products or fractions thereof, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, any form of natural
gas, explosives, and polychlorinated biphenyls; (B) any chemicals,
materials or substances, whether waste materials, raw materials or
finished products, which are now defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous substances", "restricted hazardous
wastes", "toxic substances", "toxic pollutants", "pollutants",
"contaminants", or words of similar import under any Environmental Law;
and (C) any other chemical, material or substance, whether waste
materials, raw materials or finished products, by-products or other
materials, regulated or forming the basis of liability under any
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Environmental Law in a jurisdiction in which HFP or any of its
Subsidiaries operates or with the potential to cause harm to human
health or the environment.
(iv) "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the environment (including without limitation ambient
air, atmosphere, soil, surface water, groundwater or property).
Section 3.25. No Default. Except as set forth in Section 3.25 of the HFP
Schedule, neither HFP nor any of its Subsidiaries is in breach, default or
violation (and no event has occurred through the action or inaction of HFP or
any of its Subsidiaries which with notice or the lapse of time or both would
constitute a breach, default or violation) of any term, condition or provision
of (i) the HFP Charter, HFP Bylaws or the charter and bylaws of the
Subsidiaries, (ii) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation (including, without
limitation, any Contract or Financing Document) to which HFP or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound, (iii) any order, writ, injunction or decree
applicable to HFP or any of its Subsidiaries or any of their respective
properties or assets, or (iv) any law, statute, rule or regulation applicable
to HFP or any of its Subsidiaries or any of their respective properties or
assets except, with respect to clauses (ii) through (iv), as would not have,
individually or in the aggregate, a HFP Material Adverse Effect.
Section 3.26. Intellectual Property. HFP and each of its Subsidiaries owns,
or is licensed or otherwise possesses legally enforceable rights to use, all
patents, trademarks, trade names, service marks, copyrights and any
applications therefor, technology, know-how, computer software programs or
applications (including, without limitation, the receivables tracking system
used in monitoring Financing Transactions and software used in the business of
Health Charge Corporation), and tangible or intangible proprietary information
or materials that are used in HFP's or any of its Subsidiaries' business as
currently conducted, and to the Knowledge of HFP all patents, trademarks, trade
names, service marks and copyrights held by HFP and its Subsidiaries are valid
and subsisting.
Section 3.27. Regulatory Matters.
(a) Except as disclosed in Section 3.27 of the HFP Schedule or as would
not have, individually or in the aggregate, a HFP Material Adverse Effect,
there are no proceedings or investigations pending or, to HFP's Knowledge,
threatened, by or before any domestic or foreign court, administrative,
governmental, quasi-governmental or regulatory body against or affecting
HFP, and of its Subsidiaries or, to the Knowledge of HFP, Health Charge
Corporation nor has HFP or any of its Subsidiaries received written notice
or inquiry from any such body, indicating that any such proceeding or
investigation is being considered or that it may become the object of
consideration.
(b) Except as disclosed in Section 3.27 of the HFP Schedule or as would
not have, individually or in the aggregate, a HFP Material Adverse Effect,
none of HFP, any of its Subsidiaries or, to HFP's Knowledge, Health Charge
Corporation has any outstanding regulatory commitments to or is the subject
of any order or directive by any domestic or foreign court, administrative,
governmental, quasi-governmental or regulatory body, government official,
or similar organization.
(c) As of the date hereof and to the Knowledge of HFP, there are no
proposed or pending changes in any laws or regulations related to the
businesses in which HFP and its Subsidiaries are engaged which, if adopted,
would have, individually or in the aggregate, a HFP Material Adverse
Effect.
Section 3.28. Registration Statement; Proxy Statement/Prospectus. The
information supplied or to be supplied by HFP for inclusion in the Registration
Statement does not and will not contain, at the time the information is
supplied and when the Registration Statement is declared effective by the SEC
or at the time any amendment thereto becomes effective, any untrue statement of
a material fact nor does or will it omit to state any material fact required to
be stated in the Registration Statement or necessary in order to make the
statements in the Registration Statement not misleading. The information
supplied by HFP for inclusion in the Proxy Statement to be sent to the
shareholders of HFP in connection with the special meeting of HFP's
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shareholders to consider this Agreement and the Merger (the "Stockholders
Meeting") does not and will not, at the time the Proxy Statement or any
amendment or supplement thereto is mailed to shareholders, at the time of the
Stockholders Meeting, or at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it was made, is false
or misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements made in the Proxy Statement not
false or misleading or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders Meeting which has become false or misleading;
provided, however, that no representation or warranty is made by HFP with
respect to information related to, or supplied by, Heller, of any of its
affiliates or advisors. If at any time prior to the Effective Time any event
relating to HFP or any of its affiliates which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement
should be discovered by HFP, HFP shall promptly inform Heller. The Proxy
Statement will comply as to form in all material respects with the provisions
of the Securities Exchange Act of 1934.
Section 3.29. Board Action; Vote Required. The HFP Board has determined that
the transactions contemplated by this Agreement are in the best interests of
HFP and its stockholders and has approved such transactions and resolved to
recommend to such stockholders that they vote in favor thereof and such
approval constitutes approval of the transactions contemplated by this
Agreement by the HFP Board under the provisions of Section 203 of the DGCL and
Article V of the HFP Charter such that Section 203 of the DGCL and Article V of
the HFP Charter do not apply to this Agreement or the Option Agreement or the
transactions contemplated hereby or thereby. No other "fair price,"
"moratorium," "control share acquisition" or other form of antitakeover statute
or regulation as in effect on the date hereof or any antitakeover provision in
the HFP Charter or HFP Bylaws is applicable to HFP, the shares of HFP Common
Stock, the Merger or the other transactions contemplated by this Agreement or
the Option Agreement.
Section 3.30. Year 2000. HFP and each of its Subsidiaries has taken steps
described in Section 3.30 of the HFP Schedule that are reasonably designed to
identify and analyze both internally developed and acquired software which is
material to its operations and utilizes date embedded codes that may experience
operations problems when or before the year 2000 is reached and, where problems
have arisen, HFP and its Subsidiaries have made, or have coordinated with
customers, suppliers, financial institutions and others with which it has
business relationships that are material to HFP's business to make, all
necessary modifications to the identified software to make such software Year
2000 Compliant (as defined herein). To HFP's Knowledge, there is as of the date
hereof no fact that would reasonably be expected to render HFP unable to
resolve any such software problems on the timetable described in Section 3.30
of the HFP Schedule (and in any event on a timely basis in order to be resolved
before the year 2000). Except as disclosed in HFP's SEC Reports, HFP and its
Subsidiaries have not incurred, and do not expect to incur, significant
operating expenses to be Year 2000 Compliant, and their business operations
have not been disrupted and, to HFP's Knowledge, its customers have not
experienced any material interruption of service as a result of making such
software Year 2000 Compliant except as would not have, individually or in the
aggregate, a HFP Material Adverse Effect. "Year 2000 Compliant" means, with
respect to HFP's and each of its Subsidiaries' information technology, the
information technology designed to be used prior to, during and after the
calendar Year 2000 A.D., and the information technology used during each such
time period will accurately receive, provide and process date/time data
(including, without limitation, calculating, comparing and sequencing) from,
into and between the 20th and 21st centuries, including the years 1999 and 2000
and leap-year calculations, and will not materially malfunction, cease to
function, or provide invalid or incorrect results as a result of date/time
data, to the extent that other information technology, used in combination with
the Information Technology being acquired, properly exchanges date/time data
with it (and the term "Year 2000 Compliance" shall have a correlative meaning).
"Information Technology," means computer software, computer firmware, computer
hardware (whether general or specific purpose), and other similar or related
items of automated, computerized, or software system(s) that are used or relied
on by HFP or any of its Subsidiaries in the conduct of their business.
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Section 3.31. Affiliates. Except for the persons listed in Section 3.31 of
the HFP Schedule, there are no persons who, to the Knowledge of HFP, may be
deemed to be affiliates of HFP under Rule 145 under the Securities Act.
Section 3.32. Opinion of Financial Advisor. HFP has received the opinion of
Goldman Sachs & Co. ("Goldman Sachs"), as of the date hereof, to the effect
that, as of such date, the Per Share Consideration Value is fair from a
financial point of view to the holders of HFP Common Stock and a copy of such
opinion has been made available to Heller.
Section 3.33. Brokers and Finders. Section 3.33 of the HFP Schedule lists
all those financial advisors employed or retained by HFP and the amounts that
are due such persons in connection with this Agreement and the transactions
contemplated hereby. Neither HFP nor any of its Subsidiaries nor any of their
respective officers, directors or employees has employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finder's fees
in connection with the transactions contemplated by this Agreement, except that
HFP has employed those financial advisors listed in Section 3.33 of the HFP
Schedule.
Section 3.34. Investment Company Act. HFP is not an "Investment Company"
within the meaning of the Investment Company Act of 1940.
Section 3.35. HealthCare Financial Partners REIT. (a) HFP and HealthCare
Financial Partners REIT, Inc. ("HFP REIT") have terminated the Management
Agreement, dated as of May 5, 1998, between HFP REIT and HCFP REIT Origination,
Inc. (the "Manager"). All amounts payable to HFP as a result of termination of
the Management Agreement have been fully paid. HFP has no outstanding liability
to HFP REIT or any other party (including the Manager) in connection with
termination of the Management Agreement. The Origination Agreement, dated as of
December 11, 1998, between HFP and HFP REIT (the "Origination Agreement"), is
in full force and effect, and neither HFP, nor to the Knowledge of HFP, HFP
REIT has violated any provision of the Origination Agreement, or committed or
failed to perform any act that with notice, lapse of time or both, would
constitute a default thereunder. Except as set forth in Section 3.35 of the HFP
Schedule, neither HFP nor any of its Subsidiaries is subject to any
restrictions or limitations on its business operations (including the types of
assets in which it may invest and the types of loans it may extend) under the
Origination Agreement.
(b) To the Knowledge of HFP, HFP REIT is duly organized, validly existing
and in good standing under the laws of the State of Maryland and has all
requisite power to carry on its business as it has been and is now being
conducted and to own, lease and operate the assets and property used in
connection therewith.
(c) To the Knowledge of HFP, all issued and outstanding shares of capital
stock or other equity instruments of HFP REIT have been duly authorized, are
validly issued and outstanding, are fully paid and nonassessable and were
issued in compliance with all applicable federal and state securities laws.
(d) Section 3.35 of the HFP Schedule sets forth a list of (a) all contracts,
arrangements, agreements or understandings between or among directors, officers
and employees of HFP and its Subsidiaries, on the one hand, and HFP REIT on the
other hand, and (b) all other contracts, arrangements, agreements or
understandings that would be required to be described pursuant to Item 404 of
Regulation S-K of the Securities Act of 1993, as amended, except for those
contracts, arrangements, agreements or understandings disclosed in HFP's 1998
10-K.
Section 3.36. Tax and Regulatory Matters. HFP nor any of its Subsidiaries
has taken or agreed to take any action nor has HFP any Knowledge of any fact or
circumstance that would (i) prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code or (ii)
materially impede or delay receipt of any approval referred to in Section
7.1(b) or the consummation of the transactions contemplated by this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HELLER AND MERGER CO.
Section 4.1. [Reserved]
Section 4.2. Heller Material Adverse Effect. As used in this Agreement,
"Heller Material Adverse Effect" shall mean, with respect to Heller, any change
or effect that (x) is, or is reasonably likely to be, materially adverse to the
business, results of operations, or financial condition of Heller and its
Subsidiaries, taken as a whole or (y) would, or is reasonably likely to,
materially impair the ability of Heller to perform its obligations under this
Agreement or otherwise materially threaten or impede the consummation of the
Merger and the other transactions contemplated by this Agreement, in either
case other than any change, event or occurrence (to the extent that they do
not, in any case, disproportionately affect Heller) relating to (i) the United
States or global economic or industry conditions generally, (ii) the United
States or global securities markets in general, (iii) this Agreement or the
transactions contemplated hereby or the announcement thereof, (iv) changes in
legal or regulatory conditions that affect generally the businesses in which
Heller and its Subsidiaries are engaged, (v) the general level of interest
rates, or (vi) financial institutions or the credit market generally.
Section 4.3. Representations and Warranties of Heller and Merger Co. Heller
and Merger Co. represent and warrant to HFP as of the date of this Agreement
and as of the Closing Date as set forth in Sections 4.4 through 4.17,
inclusive.
Section 4.4. Organization and Powers. Heller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Merger Co. is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Heller and the
Merger Co. has all requisite corporate power and authority to carry on its
business as it has been and is now being conducted and to own, lease and
operate the properties and assets used in connection therewith, except when any
failure to be so qualified or in good standing would not, individually or in
the aggregate, have a Heller Material Adverse Effect.
Section 4.5. Authority; Binding Effect. Each of Heller and Merger Co. has
all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. All necessary
action, corporate or otherwise, required to have been taken by or on behalf of
each of Heller and Merger Co. by applicable law (but subject to Section 4.7
hereof), each of their respective charter document(s) or otherwise (other than
approval by Heller's Board of Directors) to authorize (i) the approval,
execution and delivery on their behalf of this Agreement and (ii) their
performance of their obligations under this Agreement and the consummation of
the transactions contemplated hereby has been taken. This Agreement constitutes
a valid and binding agreement of each of Heller and Merger Co., enforceable
against each of Heller and Merger Co. in accordance with its terms, except (A)
as the same may be limited by applicable bankruptcy, insolvency, moratorium or
similar laws of general application relating to or affecting creditors' rights,
including, without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers, and (B) for the limitations
imposed by general principles of equity and commercial reasonableness. Heller
reasonably anticipates that this Agreement and the transactions contemplated
hereby will be approved by its Board of Directors on or before April 22, 1999.
Section 4.6. No Conflict; Approvals. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
will not, (i) violate or conflict with Heller's or Merger Co.'s charter or
bylaws, or (ii) constitute a breach or default (or an event that with notice or
lapse of time or both would become a breach or default) or give rise to any
lien, third party right of termination, cancellation, material modification or
acceleration, or loss of any benefit, under any contract to which Heller or any
subsidiary is a party or by which it is bound, or (iii) conflict with or result
in a violation of any permit, concession, franchise or license or any law, rule
or regulation applicable to Heller or any of its Subsidiaries or any of their
properties or assets except, in the case of clauses (ii) and (iii), as would
not, individually or in the aggregate, have a Heller Material Adverse Effect.
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Section 4.7. Governmental Consents and Approvals. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will require any consent, approval, order, authorization,
or permit of, or filing with or notification to, any Governmental Entity,
except (i) the filing of the Registration Statement with the SEC in accordance
with the Securities Act and the entry of an order by the SEC permitting such
Registration Statement to become effective, and compliance with applicable
state securities laws, (ii) the filing of a registration statement with the SEC
in an appropriate form with respect to the shares of Heller Common Stock
subject to options to acquire Heller Common Stock pursuant to the exercise of
options assumed by Heller under Section 1.6 hereof, (iii) notification pursuant
to, and expiration or termination of the waiting period under the HSR Act, (iv)
the filing of a supplemental listing application with, and approval for listing
of all shares of Heller Common Stock to be issued in the Merger and upon the
exercise of options assumed by Heller under Section 1.6 of this Agreement by,
the NYSE, (v) all requisite regulatory approvals under the Federal Bank Holding
Company Act of 1956, as amended (the "Bank Holding Company Act") and (vi) the
filing and recording of the Certificate of Merger in accordance with the DGCL.
Section 4.8. Capital Stock.
(a) Heller has authorized capital stock consisting of (i) 800,000,000
shares of Heller Common Stock, of which 500,000,000 are designated Class A
Common Stock and 300,000,000 shares are designated Class B Common Stock,
and (ii) 52,000,000 shares of preferred stock of which 2,000,000 shares, no
par value per share, are designated Preferred Stock (the "Junior Preferred
Stock") and (ii) 50,000,000 shares, $.01 par value per share, are
designated Senior Preferred Stock (the "Senior Preferred Stock" and
together with the Junior Preferred Stock, the "Heller Preferred Stock"). As
of March 1, 1999: (i) 39,009,606 shares of Heller Common Stock were issued
and outstanding, (ii) 12,500 shares of Heller Common Stock were held as
treasury shares and 7,750,000 shares of Heller Preferred Stock were issued
and outstanding. All of the issued and outstanding shares of Heller Common
Stock and Heller Preferred Stock have been duly authorized and are validly
issued and outstanding, fully paid and nonassessable, and were issued in
compliance with all applicable Federal and state securities laws. No shares
of capital stock issued by Heller are or were, at the time of their
issuance, subject to preemptive rights. The shares of Heller Common Stock
to be issued to HFP Stockholders in the Merger, when delivered in
accordance with the terms of this Agreement, will be valid and legally
issued shares of Heller capital stock, fully paid and nonassessable.
(b) The authorized capital stock of Merger Co. consists of 1,000 shares
of common stock, of which 1,000 shares are outstanding. All of the issued
and outstanding shares of Merger Co. are owned beneficially, and of record
by Heller. Merger Co. does not have any subsidiaries or material
investments of any kind in any entity. Merger Co. has not engaged in any
business activity other than, and has conducted its operations only as,
contemplated hereby.
Section 4.9. Registration Statement; Proxy Statement/Prospectus. The
information supplied or to be supplied by Heller for inclusion in the
Registration Statement shall not contain, at the time the Registration
Statement is declared effective by the SEC or at the time any amendment thereto
becomes effective, any untrue statement of a material fact or omit to state any
material fact required to be stated in the Registration Statement or necessary
in order to make the statements in the Registration Statement not misleading.
The information supplied by Heller for inclusion in the Proxy Statement or any
amendment or supplement thereto shall not, at the time the Proxy Statement or
any amendment or supplement thereto is first mailed to HFP Stockholders, at the
time of the Stockholders Meeting, or at the Effective Time, contain any
statement which, at such time and in light of the circumstances under which it
was made, is false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements made in the
Proxy Statement not false or misleading or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders Meeting which has become false
or misleading; provided, however, that no representation or warranty is made by
Heller with respect to information related to, or supplied by, HFP, its
affiliates or advisors. If at any time prior to the Effective Time any event
relating to Heller or any of its affiliates which should be set forth in an
amendment to the
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Registration Statement or a supplement to the Proxy Statement should be
discovered by Heller, Heller shall promptly inform HFP.
Section 4.10. SEC Reports. Heller has filed all required forms, reports and
documents with the SEC since January 1, 1997 (collectively, "Heller's SEC
Reports"), including without limitation Heller's Annual Report on Form 10-K for
the year ended December 31, 1998. Heller's SEC Reports have complied in all
material respects with all applicable requirements of the Securities Act and
the Exchange Act. As of their respective dates, none of Heller's SEC Reports,
including, without limitation, any financial statements or schedules included
or incorporated by reference therein, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Section 4.11. Financial Statements. Heller has delivered to HFP true and
complete copies of consolidated balance sheets of Heller and its subsidiaries
at December 31, 1998 and 1997 and the related consolidated statements of
income, changes in stockholders' equity and cash flows for the years then
ended, together with the notes thereto, audited by Arthur Andersen LLP ("Arthur
Andersen"). Such balance sheets, including the related notes, fairly present
the consolidated financial position, assets and liabilities (whether accrued,
absolute, contingent or otherwise) of Heller and its Subsidiaries at the dates
indicated and such consolidated statements of income, changes in stockholders'
equity and cash flows fairly present the consolidated results of operations,
changes in stockholders' equity and cash flows of Heller and its Subsidiaries
for the periods indicated. The audited consolidated balance sheet of Heller and
its subsidiaries at December 31, 1998 described above is referred to herein as
the "Heller 1998 Balance Sheet."
Section 4.12. Absence of Certain Changes. Since December 31, 1998, Heller
and its Subsidiaries have not been subject to any events or conditions of any
character that would have a Heller Material Adverse Effect or impair the
ability of Heller to perform its obligations under this Agreement or prevent or
delay the consummation of any of the transactions contemplated by this
Agreement.
Section 4.13. Absence of Litigation; Claims. There are no claims, actions,
suits, proceedings or investigations pending or, to the Knowledge of Heller,
threatened against Heller or any of its Subsidiaries, or any properties or
rights of Heller or any of its Subsidiaries, before any Governmental Entity or
arbitrator which would impair the ability of Heller to perform its obligations
under this Agreement or prevent or delay the consummation of any of the
transactions contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Heller or any of its Subsidiaries having or which, insofar as
reasonably can be foreseen, in the future would have such effect. The term
"Knowledge" with respect to Heller means the actual Knowledge of any executive
officer of Heller.
Section 4.14. Compliance with Law. Except as would not have, individually or
in the aggregate, a Heller Material Adverse Effect, Heller and each of its
Subsidiaries is in compliance with all applicable Laws.
Section 4.15. Brokers and Finders. Neither Heller nor any of its respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated herein.
Section 4.16. Accounting, Tax and Regulatory Matters. Neither Heller nor any
of its Subsidiaries has taken or agreed to take any action or has any Knowledge
of any fact or circumstance that would (i) prevent the Merger from qualifying
as a "reorganization" within the meaning of Section 368(a) of the Code, or (ii)
materially impede or delay receipt of any approval referred to in Section
7.1(b) or the consummation of the transactions contemplated by this Agreement.
Section 4.17. Financing. Heller has no reason to believe that at the
Effective Time it will not have available all the funds necessary to perform
its obligations under this Agreement, including consummating the transactions
contemplated by this Agreement on the terms contemplated hereby and the payment
of all fees and expenses relating to such transactions.
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ARTICLE V
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME
Section 5.1. Conduct of Businesses Prior to the Effective Time. Except as
provided for in Section 5.2 of this Agreement, during the period from the date
of this Agreement to the Effective Time, each of Heller and HFP shall, and
shall cause each of their respective Subsidiaries to, (i) conduct its business
according to the ordinary and usual course consistent with past practices, (ii)
use its reasonable best efforts to maintain and preserve its business
organization, employees and advantageous business relationships and retain the
services of its officers and key employees, and (iii) take no action which
would adversely affect or delay the ability of either HFP or Heller to obtain
any necessary approvals of Regulatory Authorities (as defined in Section 5.2)
required for the transactions contemplated hereby or to perform its covenants
and agreements under this Agreement or the Option Agreement or to consummate
the transactions contemplated hereby or thereby.
Section 5.2. Forbearances. Except as set forth in this Section 5.2 or in
Section 5.2 of the HFP Schedule, or as otherwise expressly contemplated or
permitted by this Agreement or the Option Agreement, during the period from the
date of this Agreement to the Effective Time, HFP shall not and shall not
permit any of its Subsidiaries to, without the prior written consent of Heller
(which consent shall not be unreasonably withheld):
(a) declare, set aside or pay any dividends or other distributions,
directly or indirectly, in respect of its capital stock (other than
dividends from a wholly-owned Subsidiary of HFP to HFP or another wholly-
owned Subsidiary of HFP);
(b) enter into or amend any collective bargaining agreement or
employment, severance or similar agreement or arrangement with any director
or officer or employee or modify any of the HFP Benefit Plans or institute
any new HFP Benefit Plans or grant any salary or wage increase or increase
any employee benefit (including incentive or bonus payments), except (i)
normal individual increases in compensation or bonuses to employees
consistent with past practice and timing or (ii) as required by law or
contract;
(c) authorize, recommend, propose, or announce an intention to
authorize, recommend or propose, or enter into an agreement in principle
with respect to, any merger, consolidation or business combination, any
acquisition or disposition of a business that would be material to HFP or a
material amount of assets, including loan servicing rights, loans or
securities as well as any release or relinquishment of any material
contract rights provided, however, that the foregoing shall not prohibit
internal reorganizations or consolidations involving existing Subsidiaries;
(d) other than for transactions in the ordinary course of business
consistent with past practice, enter into any material contract or
agreement, or modify any Contract or Financing Document in a manner adverse
to HFP or any of its Subsidiaries;
(e) sell, transfer, convey, assign, mortgage or pledge any of its
properties or assets involving amounts in excess of $100,000, except in the
ordinary course of business consistent with past practice;
(f) settle any material claim, action or proceeding against HFP or any
of its Subsidiaries involving money damages in excess of $100,000, except
in the ordinary course of business consistent with past practice;
(g) initiate any litigation or arbitration proceeding, except in the
ordinary course of business;
(h) propose or adopt any amendments to the HFP Charter or HFP Bylaws, or
the charter or bylaws of any Subsidiary;
(i) issue, sell, grant, confer or award any of its capital securities or
any debt securities having the right to vote on matters on which
stockholders may vote, or rights to acquire such securities, or purchase,
redeem, retire, repurchase, or exchange, or otherwise acquire or dispose
of, directly or indirectly, any of its capital securities, whether pursuant
to the terms of such capital securities or otherwise (except for (i) shares
of HFP Common Stock issued upon exercise of options outstanding on the date
of this Agreement or issued in accordance with this paragraph (i), (ii)
pursuant to the Option Agreement, (iii) any
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transactions between HFP and a Subsidiary, (iv) in accordance with the HFP
Stock Plans consistent with past practice, or (v) as grants of options to
purchase HFP Common Stock to new employees, consistent with past hiring
practices, provided that the number of shares subject to such options shall
not exceed 20,000 for any individual or 100,000 in the aggregate) or effect
any stock split or adjust, combine, reclassify or otherwise change its
equity capitalization as it exists on the date of this Agreement;
(j) other than for transactions in the ordinary course of business and
transactions with HFP REIT on arms-length terms, pay, loan or advance
(other than the payment of compensation) any amount to, or sell or transfer
any properties or assets to, or enter into any agreement or arrangement
with any officer, director or any affiliate or any employee or consultant;
(k) except as permitted by Section 6.13 hereof, directly or indirectly
initiate, solicit, encourage or otherwise facilitate (including by way of
furnishing non-public information) any inquiries or the making of any
proposal or offer with respect to a tender offer, merger, reorganization,
share exchange, consolidation or similar transaction involving, or any
purchase of a significant portion of the assets or voting securities of,
HFP and its Subsidiaries;
(l) take any action that would (i) adversely affect, impede or delay in
any material respect the consummation of the transactions contemplated by
this Agreement and the Option Agreement or the ability of Heller or HFP to
obtain any approval of any Federal, state, municipal, local or foreign
government, securities, banking, savings and loan, insurance and other
governmental or regulatory authority (each a "Regulatory Authority" and
collectively, "Regulatory Authorities") required for the transactions
contemplated by this Agreement and the Option Agreement or to perform its
covenants and agreements under this Agreement and the Option Agreement, or
(ii) prevent the Merger from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code;
(m) other than indebtedness of up to $1,000,000 and use of credit
available under existing lines of credit (as set forth in Section 3.14 of
the HFP Schedule), incur any indebtedness for borrowed money (other than
short-term indebtedness incurred to refinance short-term indebtedness and
indebtedness of HFP or any of its wholly-owned Subsidiaries to HFP or any
of its wholly-owned Subsidiaries), assume, guarantee, endorse or otherwise
as an accommodation become responsible or liable for the obligations of any
other individual, corporation or other entity;
(n) except in the ordinary course of business through the exercise of
remedies available under applicable Financing Documents and upon
consultation with Heller, acquire (by merger, consolidation or acquisition
of stock or assets) any corporation, partnership, limited liability company
or other business organization or division thereof or enter into or acquire
any interest in any Joint Venture;
(o) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or regulatory
guidelines;
(p) other than in the ordinary course of business, consistent with past
practice, modify its credit criteria and practices in any material respect;
(q) fail to use commercially reasonable efforts to maintain any license
required for the conduct of its business;
(r) fail to use commercially reasonable efforts to continue to collect
its accounts receivable and loan payments consistent with past practices;
(s) make any commitments or agreements for capital expenditures or
capital additions or betterments exceeding in the aggregate $250,000,
except such as may be involved in ordinary repair, maintenance or
replacement of its assets;
(t) settle or compromise any material liability for Taxes, or file any
material Tax Return;
(u) take or omit to take any action that is reasonably likely to result
in a breach of any contract, commitment or obligation if the result would,
individually or in the aggregate, have a HFP Material Adverse Effect;
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(v) acquire, or agree to acquire, in a single transaction or in a series
of related transactions, any business or assets (other than materials and
supplies purchased in the ordinary course, consistent with past practice or
in connection with a foreclosure); or
(w) agree in writing or otherwise to take any of the foregoing actions.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1. Access and Information. Subject to the confidentiality
agreement between the parties dated December 23, 1998 (the "Confidentiality
Agreement") and upon reasonable notice and subject to applicable laws relating
to the exchange of information, HFP and its Subsidiaries shall afford to Heller
and to Heller's accountants, counsel and other representatives, access during
normal business hours, during the period prior to the Effective Time, to all of
their respective employees, properties, books, contracts, commitments and
records and, during such period, shall furnish reasonably promptly to Heller
(i) a copy of each report, schedule and other document filed or received by it
during such period pursuant to the requirements of federal and state securities
and other laws (other than any such documents which such party is not permitted
to disclose under applicable laws), (ii) all other existing or regularly
produced information concerning its business, properties and personnel and
(iii) such other information as Heller may reasonably request. Neither HFP nor
any of its Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would, in the opinion of counsel to
HFP, violate the rights of HFP's clients, jeopardize the attorney-client
privilege of the entity in possession or control of such information or
contravene any law, rule, regulation, order, judgment, decree, fiduciary duty
or binding agreement entered into prior to the date of this Agreement. The
parties hereto will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
Section 6.2. Registration Statement; Regulatory Matters.
(a) The parties and their respective counsel shall prepare and file with
the SEC as soon as is reasonably practicable preliminary proxy materials of
HFP under the Exchange Act with respect to the Merger and a preliminary
prospectus of Heller with respect to the Heller Common Stock to be issued
in the Merger, and will thereafter use their respective best efforts to
respond to any comments of the SEC with respect thereto and to cause the
Registration Statement to become effective and the Proxy Statement and
proxy to be mailed to HFP's stockholders as promptly as practicable.
Subject to Section 6.13, the Proxy Statement shall include the unqualified
recommendation of the HFP Board that the HFP Stockholders vote in favor of
the approval and adoption of this Agreement and the transactions
contemplated by this Agreement. Heller shall apply to the NYSE to list the
shares of Heller Common Stock to be issued in connection with the
transactions contemplated by this Agreement as soon as reasonably
practicable. Heller shall also take any action required to be taken under
any applicable state blue sky or securities laws in connection with the
issuance of the shares of Heller Common Stock to be issued in the Merger
and HFP and Heller shall furnish all information concerning their
respective Subsidiaries and the stockholders thereof as may reasonably be
requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings,
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Regulatory Authorities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement, and to comply with the terms and conditions of all such permits,
consents, approvals and authorizations of all such Regulatory Authorities.
Heller and HFP shall, to the extent practicable, consult with the other on,
in each case subject to applicable laws relating to the exchange of
information, all the information relating to Heller or HFP, as the case may
be, and any of their respective Subsidiaries, which appear in any filing
made with, or written materials submitted to, any
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third party or any Regulatory Authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of
the parties hereto shall act reasonably and as promptly as practicable. The
parties hereto agree that they will consult with each other with respect to
the obtaining of all permits, consents, approvals and authorizations of all
third parties and Regulatory Authorities necessary or advisable to
consummate the transactions contemplated by this Agreement and each party
will keep the other apprised of the status of matters relating to the
completion of the transactions contemplated herein.
(c) Heller and HFP shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Proxy Statement, the Registration
Statement or any other statement, filing, notice or application made by or
on behalf of Heller, HFP or any of their respective Subsidiaries to any
Regulatory Authority in connection with the Merger and the other
transactions contemplated by this Agreement.
(d) Heller and HFP shall use commercially reasonable efforts to inform
each other and their respective counsel of any communication from any
Regulatory Authority whose consent or approval is required for the
consummation of the transactions contemplated by this Agreement, including
any requests by any Regulatory Authority for additional information, or
with respect to any filing made with any Regulatory Authority, will consult
with such party and their counsel before submitting any response to the
Regulatory Authority with respect thereto.
(e) Heller and HFP shall each use its best efforts to cause to be
delivered to the other party and its directors a letter of its independent
auditors, dated the date on which the S-4 Registration Statement shall
become effective, and addressed to the other party and its directors, in
form and substance customary for "comfort" letters delivered by independent
public accountants in connection with registration statements similar to
the S-4 Registration Statement.
(f) Notwithstanding anything to the contrary contained herein, none of
Heller or any of its Subsidiaries shall be required to share with HFP any
information furnished or to be furnished by or on behalf of Heller, as part
of or in connection with any application, notice or related correspondence
to or received from the Board of Governors of the Federal Reserve System on
a confidential basis or concerning or related to or that would effectively
disclose any information so furnished or received.
Section 6.3. Stockholder Approval. In accordance with applicable law, the
rules of the NYSE, the HFP Charter and the HFP Bylaws, HFP shall call the
Stockholders Meeting to be held as soon as practicable after the Registration
Statement is declared effective for the purpose of voting upon the Merger and
to take any other action for HFP Stockholders to authorize the transactions
contemplated by this Agreement. In connection therewith, HFP shall prepare the
Proxy Statement and the Proxy Statement shall be filed with the SEC and mailed
to the HFP Stockholders. The HFP Board shall submit for approval of the HFP
Stockholders the matters to be voted upon in order to authorize the Merger.
Subject to Section 6.13 hereof, the HFP Board shall use its reasonable best
efforts to obtain any vote of the HFP Stockholders that is necessary for the
approval and adoption of this Agreement and consummation of the transactions
contemplated hereby.
Section 6.4. Current Information. During the period from the date of this
Agreement to the Effective Time, HFP shall promptly furnish Heller with copies
of all monthly and quarterly financial statements and all monthly and quarterly
management reports showing, among other things, portfolio changes, including,
but not limited to, the unaudited consolidated balance sheet of HFP and its
Subsidiaries at March 31, 1999 and the related consolidated statement of
income, equity and cash flow for the period ended March 31, 1999 as the same
become available and shall cause one or more of its designated representatives
to confer on a regular and frequent basis with representatives of Heller. HFP
shall promptly notify Heller of any material change in its business or
operations and of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the
institution or, to HFP's Knowledge, the threat of material litigation involving
HFP, and shall keep Heller fully informed of such events.
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Section 6.5. Agreements of Affiliates.
(a) Set forth in Section 3.31 of the HFP Schedule are the names of each
person that, to the Knowledge of HFP, is or is reasonably likely to be, as
of the date of the Effective Time, deemed to be an "affiliate" of HFP
(each, an "Affiliate") as that term is used in Rule 145 under the
Securities Act.
(b) HFP shall use its reasonable best efforts to cause each person who
may be deemed to be an Affiliate of HFP to execute and deliver to HFP and
Heller on or before the date of the Stockholders Meeting an agreement to
comply with Rule 145 under the Securities Act. Such agreements shall be
substantially in the form set forth in Exhibit C hereto.
(c) Heller shall not be required to maintain the effectiveness of the S-
4 Registration Statement or any other registration statement under the
Securities Act for the purposes of resale of Heller Common Stock by such
affiliates received in the Merger and the certificates representing Heller
Common Stock received by such affiliates shall bear a customary legend
regarding applicable Securities Act restrictions and the provisions of this
Section.
Section 6.6. Expenses. Each party hereto shall bear its own expenses
incident to preparing, entering into and carrying out this Agreement and to
consummating the Merger, provided that the registration fee with respect to the
Registration Statement and expenses related to the printing and mailing of the
Proxy Statement and the Registration Statement and all SEC filing fees relating
the Registration Statement shall be shared equally by Heller and HFP.
Section 6.7. Miscellaneous Agreements and Consents. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
respective reasonable best efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as possible,
including, without limitation, using its respective reasonable best efforts to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated hereby. Each party shall, and shall cause each of its respective
Subsidiaries to, use its reasonable best efforts to obtain consents of all
third parties necessary or, as agreed by the parties, desirable for the
consummation of the transactions contemplated by this Agreement.
Section 6.8. Employee Matters. (a) From and after the Effective Time, the
employee benefit plans and programs to be provided to employees of HFP as of
the Effective Time ("HFP Employees") shall be the benefit plans and programs
provided to similarly situated employees of Heller. For purposes of all
employee benefit plans, programs or arrangements maintained, sponsored or
contributed to by Heller or its affiliates, in which HFP Employees shall be
eligible to participate, Heller shall cause each such plan, program or
arrangement to treat the prior service of each HFP Employee with HFP or its
affiliates as service rendered to Heller or its affiliates for purposes of
eligibility, vesting and benefits accruals (but not for purposes of benefit
accruals under any defined benefit pension plan). From and after the Effective
Time, Heller shall (i) cause any pre-existing conditions or limitations and
eligibility waiting periods under any group health plans of Heller or its
affiliates to be waived with respect to HFP Employees and their eligible
dependents and (ii) give each HFP Employee credit for the plan year in which
the Effective Time (or the transition from HFP Benefit Plans to the Plans of
Heller or its affiliates) occurs towards applicable deductibles and annual out-
of-pocket limits for expenses incurred prior to the Effective Time (or such
other transition date). From and after the Effective Time, Heller shall, or
shall cause the Surviving Corporation, to honor, pursuant to the terms of the
HFP Benefit Plans, all accrued or vested benefit obligations to current and
former employees of HFP or its affiliates under the HFP Benefit Plans. From and
after the Effective Time, Heller will or will cause the Surviving Corporation
to retain those existing employees reasonably required by management of HFP for
the conduct of the business of the Surviving Corporation after the Effective
Time. Notwithstanding anything contained in this Agreement to the contrary,
Heller or the Surviving Corporation, as the case may be, shall take or cause to
be taken all actions necessary to effectuate the items set forth in Schedule A
of the HFP Schedule.
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Section 6.9. D&O Indemnification.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any individual who is now, or has been at any time
prior to the date of this Agreement, or who becomes prior to the Effective
Time, a director or officer of HFP or any of its Subsidiaries (the
"Indemnified Parties"), is, or is threatened to be, made a party based in
whole or in part on, or arising in whole or in part out of, or pertaining
to (i) the fact that he is or was a director or officer of HFP or any of
its Subsidiaries or (ii) this Agreement, the Option Agreement or any of the
transactions contemplated hereby or thereby, whether in any case asserted
or arising before or after the Effective Time, the parties hereto agree to
cooperate and use their best efforts to defend against and respond thereto.
It is understood and agreed that after the Effective Time, the Surviving
Corporation shall, and Heller shall cause the Surviving Corporation to,
indemnify and hold harmless, as and to the extent presently provided in the
HFP Charter, the HFP Bylaws and the indemnification agreements entered into
by HFP as of the date hereof, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claims, action,
suit, proceeding or investigation, and in the event of any such threatened
or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time); and Heller, after
consultation with an Indemnified Party, shall retain counsel and direct the
defense thereof, provided, however, that by virtue of the obligations
herein set forth, (A) neither Heller nor the Surviving Corporation shall be
liable to any Indemnified Party for any legal expenses of other counsel or
any other expenses incurred by any Indemnified Party in connection with the
defense thereof, except that if Heller fails or elects not to assume such
defense, or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are issues which raise conflicts of interest
between Heller and the Indemnified Parties, the Indemnified Parties may
retain counsel reasonably satisfactory to them and Heller after
consultation with Heller, and Heller shall pay the reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received, (B) Heller shall be obligated pursuant to this
paragraph to pay for only one firm of counsel (in addition to a single firm
of local counsel in each applicable jurisdiction) for all Indemnified
Parties, unless an Indemnified Party shall have reasonably concluded, based
on the advice of counsel and after consultation with Heller, that in order
to be adequately represented, separate counsel is necessary for such
Indemnified Party, in which case, Heller shall be obligated to pay for such
separate counsel reasonably satisfactory to the Indemnified Parties, (C)
neither Heller nor the Surviving Corporation shall be liable for any
settlement effected without its prior written consent (which consent shall
not be unreasonably withheld) and (D) neither Heller nor the Surviving
Corporation shall have any obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law. Heller shall, to the fullest extent
permitted by law, advance expenses to such Indemnified Parties prior to
final disposition of any claim, suit, proceeding, or investigation upon
receipt of an undertaking to repay any such advances of fees and expenses
if such person is ultimately found not to be entitled to indemnification
therefor. Any Indemnified Party wishing to claim Indemnification under this
Section 6.9, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Heller thereof, in writing, provided
that the failure to so notify shall not affect the obligations of Heller
under this Section 6.9 except to the extent such failure to notify
materially prejudices Heller. Heller's obligations under this Section 6.9
shall continue in full force and effect for a period of six years from the
Effective Time; provided, however, that all rights to indemnification in
respect of any claim (a "Claim") asserted or made within such period shall
continue until the final disposition of such Claim.
(b) From and after the Effective Time, Heller or the Surviving
Corporation shall cause the individuals serving as officers and directors
of HFP, its Subsidiaries or any entity specified in Section 3.5 of the HFP
Schedule immediately prior to the Effective Time to be covered for a period
of six (6) years from the Effective Time (or the period of the applicable
statute of limitations, if longer) by a directors' and officers'
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liability insurance policy maintained or purchased by Heller (provided that
Heller may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are not less advantageous
than either of such policies) with respect to acts or omissions occurring
prior to the Effective Time which were committed by such officers and
directors in their capacity as such; provided, however, that in no event
shall Heller be required to expend more than 250% of the current amount
expended by HFP (the "Insurance Amount") to maintain or procure insurance
coverage pursuant hereto and provided further that if Heller is unable to
maintain or obtain the insurance called for in this Section 6.9(b), Heller
shall use its reasonable best efforts to obtain as much comparable
insurance as available for the Insurance Amount.
(c) In the event Heller or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Heller assume the obligations set forth in this section.
(d) The provisions of this Section 6.9 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
Section 6.10. Press Releases. HFP and Heller shall consult with each other
before issuing any press release or otherwise making any public statements with
any news media with respect to this Agreement or any of the transactions
contemplated hereby and shall not issue any such press release or make any such
public statement without the prior consent of the other party, which consent
shall not be unreasonably withheld; provided, however, that a party may,
without the prior consent of the other party, issue such press release or make
such public statement as may be required by law or the applicable rules of any
stock exchange, including the NYSE, if it has used its commercially reasonable
efforts to consult wit the other party and to obtain such party's consent but
has been unable to do so in a timely manner; provided further, that nothing
contained herein shall prevent any party from promptly making all filings with
Regulatory Authorities and all disclosure as may in its good faith judgment,
but required or advisable in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby (in which
case this disclosing party shall advise the other parties and provide them with
a copy of the proposed disclosure or filing prior to making the disclosure or
filing). In this regard, the parties shall make a joint public announcement of
the proposed Merger and the transactions contemplated by this Agreement
immediately upon the signing of this Agreement.
Section 6.11. Insurance. Each of Heller and HFP shall, and shall cause its
respective Subsidiaries to, use its reasonably best efforts to maintain its
existing insurance.
Section 6.12. Additional Actions. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, as the case may be, the proper officers and directors of
each party to this Agreement and their respective Subsidiaries shall take all
such action as may be reasonably necessary.
Section 6.13. No Solicitation. HFP will not, and will not permit or cause
any of its Subsidiaries or any of the officers and directors of it or its
Subsidiaries to, and shall direct and cause its and its Subsidiaries'
employees, agents and representatives (including any advisor, investment
banker, attorney or accountant retained by it or any of its Subsidiaries)
("Representatives") not to, directly or indirectly, initiate, solicit,
encourage or otherwise facilitate (including by way of furnishing non-public
information) any inquiries or the making of any proposal or offer with respect
to a tender offer, merger, reorganization, share exchange, consolidation or
similar transaction involving, or any purchase of any substantial assets or
voting securities of, HFP and its Subsidiaries taken as a whole (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal")).
HFP will not, and will not permit or cause any of its Subsidiaries or any of
the officers and directors of it or its Subsidiaries to and shall direct and
cause its and its Subsidiaries' employees, agents and Representatives not to,
directly or indirectly, engage in any negotiations concerning, or provide any
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confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, whether made before or after the date of
this Agreement, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; provided, however, that prior to the
approval of the Merger by the HFP Stockholders HFP may, and may authorize and
permit its employees, agents and Representatives to, furnish or cause to be
furnished confidential information and may participate in unsolicited
negotiations and discussions if the HFP Board (a) determines in good faith
(after consultation with and based upon the advice of outside legal counsel)
that such action is necessary in order for its directors to comply with their
respective fiduciary duties under applicable law, and (b) determines in good
faith, after consultation with its financial advisor, that such Acquisition
Proposal is reasonably likely to be consummated, taking into account all legal,
financial and regulatory aspects of the proposal and the person making the
proposal, and would, if consummated, result in a transaction more favorable to
HFP's shareholders from a financial point of view than the transaction
contemplated by this Agreement, but only if (i) prior to furnishing such
information to, or entering into discussions or negotiations with such person
or entity, HFP receives from such person or entity an executed confidentiality
agreement in substantially the same form as the Confidentiality Agreement and
(ii) HFP is not then in breach of its obligations under this Section such that
Heller would have the right to terminate the Merger Agreement pursuant to
Section 8.1(b) hereof. HFP will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. HFP will notify Heller
immediately if any such inquiries, proposals or offers are received by, any
such information is requested from, or any such discussions or negotiations are
sought to be initiated or continued with, any of its officers, directors or its
Representatives indicating, in connection with such notice, the name of such
person and the material terms and conditions of any proposals or offers. During
the period from the date of this Agreement through the Effective Time, HFP
shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it or any of its Subsidiaries
is a party.
Section 6.14. Year 2000 Compliance. As promptly as reasonably practicable
after the date hereof and in any event before the Effective Time, HFP shall
furnish Heller written evidence that HFP and its Subsidiaries are Year 2000
Compliant, describing in detail reasonably satisfactory to Heller the testing
and remedial process undertaken to determine that HFP and its Subsidiaries are
Year 2000 Compliant.
Section 6.15. Continuation of Management. HFP agrees to cause (other than
terminations for cause or as a result of such individual's death or disability)
Mr. John K. Delaney, Mr. Ethan D. Leder, and Mr. Edward P. Nordberg, Jr. to
remain as directors and officers of HFP at least through the Effective Time.
ARTICLE VII
CONDITIONS
Section 7.1. Conditions to Each Party's Obligation 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 Agreement and the transactions contemplated hereby shall have
been approved by the requisite affirmative vote of the holders of HFP
Common Stock entitled to vote thereon in accordance with the HFP Charter
and applicable law.
(b) All requisite approvals of this Agreement and the transactions
contemplated hereby shall have been received from all Regulatory
Authorities, and all applicable waiting periods shall have expired under
applicable law (other than any such approvals or the expiration of any such
waiting periods which the failure to obtain or satisfy, individually or in
the aggregate, would not reasonably be expected to have a material adverse
effect on the consummation of the Merger, a HFP Material Adverse Effect or
a Heller Material Adverse Effect upon completion of the Merger).
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(c) The Registration Statement shall have been declared effective and
shall not be subject to a stop order or any threatened stop order.
(d) None of HFP, Heller nor Merger Co. shall be subject to any order,
decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Merger or any of the other
transactions contemplated by this Agreement. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated
or enforced by any Regulatory Authority which prohibits, materially
restricts or makes illegal the consummation of the Merger.
(e) Heller shall have received an opinion of Winston & Strawn, and HFP
shall have received an opinion of Powell, Goldstein, Frazer & Murphy, LLP,
in form and substance reasonably satisfactory to Heller and HFP,
respectively, dated the Closing Date, substantially to the effect that, on
the basis of facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing at the
Effective Time:
(i) The Merger will constitute a reorganization under Section 368(a)
of the Code; HFP, Merger Co. and Heller will each be a party to the
reorganization;
(ii) No gain or loss will be recognized by HFP, Merger Co. or Heller
as a result of the Merger; and
(iii) No gain or loss will be recognized by HFP stockholders who
exchange all of their HFP Common Stock solely for Heller Common Stock
pursuant to the Merger (except with respect to cash received in lieu of
a fractional share interest in Heller Common Stock).
In rendering such opinion, counsel may require and rely upon customary
representations contained in certificates of officers of HFP, Merger Co.,
Heller and others.
(f) The shares of Heller Common Stock which shall be issued to the
holders of HFP Common Stock (and, where applicable, shares subject to
options to purchase Heller Common Stock) upon consummation of the Merger
shall have been authorized for listing on the NYSE, subject to official
notice of issuance.
Section 7.2. Conditions to Obligations of HFP to Effect the Merger. The
obligations of HFP to effect the Merger shall be subject to the fulfillment or
waiver by HFP at or prior to the Effective Time of the following additional
conditions:
(a) Representations and Warranties. The representations and warranties
of Heller set forth in Article IV of this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date (as
though made on and as of the Closing Date except to the extent such
representations and warranties are by their express provisions made as of a
specified date or period) and HFP shall have received a certificate of the
chairman, president, executive vice president, or senior vice president of
Heller, on behalf of Heller, to that effect.
(b) Performance of Obligations. Heller shall have performed, in all
material respects, all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and HFP shall have received
a certificate of the chairman, president, executive vice president or
senior vice president of Heller, on behalf of Heller, to that effect.
Section 7.3. Conditions to Obligations of Heller to Effect the Merger. The
obligations of Heller to effect the Merger shall be subject to the fulfillment
or waiver by Heller at or prior to the Effective Time of the following
additional conditions:
(a) Representations and Warranties. The representations and warranties
of HFP set forth in Article III of this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date (as though made
on and as of the Closing Date except to the extent such representations and
warranties are by their express provisions made as of a specific date or
period) and Heller shall have received a certificate of the chairman,
president, executive vice president, or senior vice president of HFP, on
behalf of HFP, to that effect.
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(b) Performance of Obligations. HFP shall have performed, in all
material respects, all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and Heller shall have
received a certificate of the chairman, president, executive vice
president, or senior vice president of HFP, on behalf of HFP, to that
effect.
(c) Dissenters. Holders of no more than 5% of the outstanding shares of
HFP Common Stock shall have asserted the right to seek relief as a
dissenting shareholder under Section 262 and other applicable provisions of
the DGCL.
(d) Board Approval. The Board of Directors of Heller shall have approved
and adopted the Agreement and the transactions contemplated hereby.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1. Termination. This Agreement may be terminated, and the Merger
may be abandoned by:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of Heller and HFP in a written instrument, if the Board of
Directors of each so determines by vote of a majority of the members of its
entire Board.
(b) Breach. At any time prior to the Effective Time, by Heller or HFP
(provided that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein), if
its Board of Directors so determines, in the event of either: (i) a breach
by the other party of any representation or warranty contained herein,
which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach; or (ii) a
material breach by the other party of any of the covenants or agreements
contained herein, which breach cannot be or has not been cured within 30
days after the giving of written notice to the breaching party of such
breach.
(c) Delay. At any time prior to the Effective Time, by Heller or HFP, in
the event that the Merger is not consummated by September 30, 1999, except
to the extent that the failure of the Merger then to be consummated arises
out of or results from the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements of such party
set forth herein.
(d) No Approval. By HFP or Heller, in the event (i) the approval of any
Regulatory Authority required for consummation of the Merger and the other
transactions contemplated by the Merger shall have been denied by final
nonappealable action of such Regulatory Authority; or (ii) the approval of
the HFP Stockholders of the Merger and the transactions contemplated hereby
is not obtained at the Stockholders Meeting.
(e) HFP Option. By the Board of Directors of HFP, upon written notice to
Heller at any time during the four-day period commencing on the date
immediately following the last day of the period during which the Average
NYSE Closing Price is to be determined pursuant to Section 2(b)(iii), if
the Average NYSE Closing Price shall be less than $20.35; subject, however,
to the following provisions.
If HFP elects to exercise its termination right pursuant to the
immediately preceding sentence, it shall give prompt written notice to
Heller; provided, however, that such notice of election to terminate may be
withdrawn at any time within the aforementioned four-day period. During the
four-day period commencing with its receipt of such notice, Heller shall
have the option to elect to increase the Per Share Consideration Value to
equal $34.21. If Heller makes such an election within such four-day period,
it shall give prompt written notice to HFP of such election and the revised
Per Share Consideration Value, whereupon no termination shall have occurred
pursuant to this Section 8.1(e) and this Agreement shall remain in effect
in accordance with its terms (except as the Per Share Consideration Value
shall have been so modified, and any references in this Agreement to "Per
Share Consideration Value" shall thereafter be deemed to refer to the Per
Share Consideration Value as adjusted pursuant to this Section 8.1(e)).
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If Heller declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares or similar
transaction between the last NYSE trading date prior to the execution and
delivery of this Agreement and the date which is the last day in the period
with respect to which the Average NYSE Closing Price is determined pursuant
to Section 2.1(a)(iii), the price of Heller Common Stock shall be
appropriately adjusted for the purposes of applying this Section 8.1(e).
(f) Board Approval. By the Board of Directors of HFP, if the Board of
Directors of Heller shall not have approved and adopted the Agreement and
the transactions contemplated hereby on or before April 26, 1999.
Section 8.2. Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to
this Article VIII, no party to this Agreement shall have any liability or
further obligation to any other party hereunder except (i) as set forth in
Section 9.1 and (ii) that termination will not relieve a breaching party from
liability for any willful breach of this Agreement giving rise to such
termination.
Section 8.3. Amendment. This Agreement may be amended by the parties hereto,
by action taken by or on behalf of their respective Boards of Directors, at any
time before or after approval of this Agreement and the transactions
contemplated hereby by the HFP Stockholders; provided, however, that after any
such approval no such amendment which under applicable law requires further
stockholder approval may be made without such stockholder approval.
Notwithstanding the foregoing, this agreement may be terminated in accordance
with Section 8.1 after approval by the HFP Stockholders of this Agreement and
the transactions contemplated hereby. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of Heller, HFP and Merger
Co.
Section 8.4. Severability. Any term, provision, covenant or restriction
contained in this Agreement held by a court or a Regulatory Authority of
competent jurisdiction or the Board to be invalid, void or unenforceable shall
be ineffective to the extent of such invalidity, voidness or unenforceability,
but neither the remaining terms, provisions, covenants or restrictions
contained in this Agreement nor the validity or enforceability thereof in any
other jurisdiction shall be affected or impaired thereby. Any term, provision,
covenant or restriction contained in this Agreement that is so found to be so
broad as to be unenforceable shall be interpreted to be as broad as is
enforceable.
Section 8.5. Waiver. Any term, condition or provision of this Agreement may
be waived in writing at any time by the party which is, or whose stockholders
are, entitled to the benefits thereof.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1. Non-Survival of Representations, Warranties and Agreements. No
investigation by the parties hereto made heretofore or hereafter shall affect
the representations and warranties of the parties which are contained herein
and each such representation and warranty shall survive such investigation.
Except as set forth below in this Section 9.1, all representations, warranties
and agreements in this Agreement of Heller and HFP or in any instrument
delivered by Heller or HFP pursuant to or in connection with this Agreement
shall expire at the Effective Time or upon termination of this Agreement in
accordance with its terms or, in the case of any other such instrument, in
accordance with the terms of such instrument; provided that, in the event of
consummation of the Merger, the covenants and agreements contained in or
referred to in Sections 6.1, 6.6, 6.8 and 6.9 and those covenants and
agreements contained herein which by their terms apply in whole or in part
after the Effective Time shall survive the Effective Time.
Section 9.2. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to be duly received (i) on the date given if
delivered personally, (ii) upon confirmation of receipt, if by
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facsimile transmission, (iii) on the date received if mailed by registered or
certified mail (return receipt requested), or (iv) on the business date after
being delivered to a reputable overnight delivery service, if by such service,
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(i) if to Heller:
Debra H. Snider
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Telecopier: (312) 441-7456
Copies to:
Terrence R. Brady
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Telecopier: (312) 558-5700
(ii) if to HFP:
Edward P. Nordberg, Jr.
HealthCare Financial Partners, Inc.
2 Wisconsin Circle, 4th Floor
Chevy Chase, Maryland 20815
Telecopier: (301) 664-9880
Copies to:
Edward D. Herlihy
Wachtell, Lipton, Rosen & Katz
51 W. 52nd Street
New York, New York 10019
Telecopier: (212) 403-1000
and
G. William Speer
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E.
16th Floor
Atlanta, Georgia 30303
Telecopier: (404) 572-6999
Section 9.3. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement, unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." No provision of this Agreement shall be construed to require HFP,
Heller, Merger Co. or any of their respective Subsidiaries or affiliates to
take or fail to take any action, including, without limitation, the disclosure
or non-disclosure by either party of any information to its stockholders, which
would (or its failure to have been taken would) reasonably be expected to
violate any applicable law, legal duty, rule or regulation.
Section 9.4. Miscellaneous. This Agreement (including the Schedules and
other written documents referred to herein or provided hereunder) (i)
constitutes the entire agreement and supersedes all other prior
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agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof, other than any
confidentiality agreement between the parties hereto, (ii) except with respect
to Section 6.9 and the last sentence of Section 6.8 (which shall be for the
benefit of and enforceable by the persons listed in Schedule A of the HFP
Schedule) is not intended to confer upon any person not a party hereto any
rights or remedies hereunder, (iii) shall not be assigned by operation of law
or otherwise, except as contemplated by Section 6.9, (iv) may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the
parties and delivered to the other parties, it being understood that all
parties need not sign the same counterparts, and (v) shall be governed in all
respects by the laws of the State of Delaware, except as otherwise specifically
provided herein or required by the DGCL. This Agreement may be delivered by
facsimile. Subject to the preceding clause (iii), this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns. HFP shall not be deemed to have
breached a representation or warranty, as a consequence of the existence of any
fact, event or circumstance, which is disclosed in the HFP Schedule and of
which breach Heller has Knowledge as of the date hereof, by reason of the
failure of HFP to describe such fact, event or circumstance in a particular
Section of the HFP Schedule.
Section 9.5. Legal Fees and Costs. If any party hereto institutes any action
or proceeding, whether before a court or arbitrator, to enforce any provisions
of this Agreement, the prevailing party therein shall be entitled to receive
from the losing party reasonable attorneys' fees and costs incurred in such
action or proceeding, whether or not such action or proceeding is prosecuted to
judgment.
IN WITNESS WHEREOF, Heller, HFP and Merger Co. have caused this Agreement to
be signed as of the date first written above.
Healthcare Financial Partners, Inc.
/s/ John K. Delaney
By: _________________________________
Name: John K. Delaney
Title: Chairman and Chief
Executive Officer
Heller Financial, Inc.
/s/ Robert E. Radway
By: _________________________________
Name: Robert E. Radway
Title: Executive Vice President
HF5, Inc.
/s/ Robert E. Radway
By: _________________________________
Name: Robert E. Radway
Title: Executive Vice President
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Appendix B
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated April 19, 1999, between HealthCare Financial
Partners, Inc., a Delaware corporation ("Issuer"), and Heller Financial, Inc.,
a Delaware corporation ("Grantee").
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Stock Option Agreement
(the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement,
Issuer has agreed to grant Grantee the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 2,670,786 fully
paid and nonassessable shares of Issuer's Common Stock, par value $0.01 per
share ("Common Stock"), at a price of $28.50 per share (the "Option Price");
provided, however, that in no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to any shares subject
to or issued pursuant to the Option. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are
subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are either (i)
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement) or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after the date of this Agreement, the number
of shares of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such issuance, such number equals
19.9% of the number of shares of Common Stock then issued and outstanding
without giving effect to any shares subject or issued pursuant to the Option.
Nothing contained in this Section 1(b) or elsewhere in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in whole
or part, and from time to time, if, but only if, both an Initial Triggering
Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within 90 days following such Subsequent Triggering Event. Each of
the following shall be an "Exercise Termination Event": (i) the Effective Time
(as defined in the Merger Agreement) of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event, except a
termination by Grantee pursuant to Section 8.1(b) of the Merger Agreement based
on a willful breach by Issuer of the Merger Agreement; or (iii) the passage of
12 months after termination of the Merger Agreement if such termination follows
the occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(b) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination is non-volitional) (provided that if
an Initial Triggering Event continues or occurs beyond such termination and
prior to the passage of such 12-month period, the Exercise Termination Event
shall be 12 months from the expiration of the
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Last Triggering Event but in no event more than 18 months after such
termination). The "Last Triggering Event" shall mean the last Initial
Triggering Event to expire. The term "Holder" shall mean the holder or holders
of the Option.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer shall
have recommended that the stockholders of Issuer approve or accept any
Acquisition Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Issuer Subsidiary, (x) a purchase,
lease or other acquisition or assumption of all or a substantial portion of
the assets or deposits of Issuer or any Issuer Subsidiary, (y) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the voting
power of Issuer, or (z) any substantially similar transaction; provided,
however, that in no event shall any merger, consolidation, purchase or
similar transaction involving only the Issuer and one or more Issuer
Subsidiaries or involving only any two or more Issuer Subsidiaries,
provided that any such transaction is not entered into in violation of the
Merger Agreement, be deemed to be an Acquisition Transaction;
(ii) Issuer or any Issuer Subsidiary, without having received Grantee's
prior written consent, shall have authorized, recommended, proposed or
publicly announced its intention to authorize, recommend or propose, to
engage in an Acquisition Transaction with any person other than Grantee or
a Grantee Subsidiary, or the Board of Directors of Issuer shall have
publicly withdrawn or modified, or publicly announced its intention to
withdraw or modify, in any manner adverse to Grantee, its recommendation
that the stockholders of Issuer approve the transactions contemplated by
the Merger Agreement in anticipation of engaging in an Acquisition
Transaction;
(iii) Any person other than Grantee, any Grantee Subsidiary or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the 1934
Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary shall have
made a bona fide proposal to Issuer or its stockholders, by public
announcement or written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
(vi) Any person other than Grantee or any Grantee Subsidiary, other than
in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve Board, or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of 20% or more
of the then outstanding Common Stock; or
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(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any
Initial Triggering Event and/or Subsequent Triggering Event of which it has
notice (together, a "Triggering Event"), it being understood that the giving of
such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares it will purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided
that if prior notification to or approval of the Federal Reserve Board or any
other regulatory agency is required in connection with such purchase, the
Holder shall promptly file the required notice or application for approval and
shall expeditiously process the same and the period of time that otherwise
would run pursuant to this sentence shall run instead from the later of the
date on which any required notification periods have expired or been terminated
or the date on which such approvals have been obtained and any requisite
waiting period or periods shall have passed. Any exercise of the Option shall
be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder, and the
Holder shall deliver to Issuer a copy of this Agreement and a letter agreeing
that the Holder will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities Act of 1933,
as amended. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the provisions to
this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii)
the legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed, subject to the receipt of applicable regulatory
approvals, to be the holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of Common
Stock shall not
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then be actually delivered to the Holder. Issuer shall pay all expenses, and
any and all United States federal, state and local taxes and other charges that
may be payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other outstanding
options, warrants, convertible securities and other rights to purchase Common
Stock; (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. (S) 18a and regulations promulgated
thereunder and (y) in the event prior approval of or notice to the Federal
Reserve Board or to any federal or state regulatory authority is necessary
before the Option may be exercised, cooperating fully with the Holder in
preparing such applications or notices and providing such information to the
Federal Reserve Board or such federal or state regulatory authority as they may
require) in order to permit the Holder to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise
of the Option and the Option Price shall be subject to adjustment from time to
time as provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, distributions on or in respect of the Common Stock, or the
like, the type and number of shares of Common Stock purchasable upon exercise
hereof and the Option Price shall be appropriately adjusted in such manner as
shall fully preserve the economic benefits provided hereunder (including, for
example, whenever the number of shares of Common Stock purchasable upon
exercise of this Option is adjusted as provided in this Section 5, adjusting
the Option Price by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
immediately prior to the adjustment and the denominator of which shall be equal
to the number of shares of Common Stock purchasable immediately after the
adjustment) and proper provision shall be made in any agreement governing any
such transaction to provide for such proper adjustment and the full
satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior to
an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its
own behalf or on behalf of any subsequent holder of this Option (or part
thereof) or any of the
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shares of Common Stock issued pursuant hereto), promptly prepare, file and keep
current a shelf registration statement under the 1933 Act covering this Option
and any shares issued and issuable pursuant to this Option and shall use its
reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition
of this Option and any shares of Common Stock issued upon total or partial
exercise of this Option ("Option Shares") in accordance with any plan of
disposition requested by Grantee. Issuer will use its reasonable best efforts
to cause such registration statement first to become effective and then to
remain effective for such period not in excess of 180 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect such sales or other dispositions. Grantee shall
have the right to demand two such registrations. The foregoing notwithstanding,
if, at the time of any request by Grantee for registration of the Option or
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good
faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the inclusion of
the Holder's Option or Option Shares would interfere with the successful
marketing of the shares of Common Stock offered by Issuer, the number of Option
Shares otherwise to be covered in the registration statement contemplated
hereby may be reduced; provided, however, that after any such required
reduction the number of Option Shares to be included in such offering for the
account of the Holder shall constitute at least 25% of the total number of
shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as practicable and no
reduction shall thereafter occur. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in secondary offering underwriting
agreements for the Issuer. Upon receiving any request under this Section 6 from
any Holder, Issuer agrees to send a copy thereof to any other person known to
Issuer to be entitled to registration rights under this Section 6, in each case
by promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall Issuer be obligated to effect more
than two registrations pursuant to this Section 6.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as defined
below), (i) following a request of the Holder, delivered prior to an Exercise
Termination Event, Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to (x)
the amount by which (A) the Market/Offer Price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised plus (y) Grantee's Out-of-Pocket Expenses (as defined herein)
and (ii) at the request of the owner of Option Shares from time to time (the
"Owner"), delivered within 90 days of such occurrence (or such later period as
provided in Section 10), Issuer shall repurchase such number of the Option
Shares from the Owner as the Owner shall designate at a price (the "Option
Share Repurchase Price") equal to the Market/Offer Price multiplied by the
number of Option Shares so designated. The term "Market/Offer Price" shall mean
the highest of (i) the price per share of Common Stock at which a tender offer
or exchange offer therefor has been made, (ii) the price per share of Common
Stock to be paid by any third party pursuant to an agreement with Issuer, (iii)
the highest closing price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by
the Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer, divided by the number of shares of Common Stock of Issuer outstanding
at the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be,
and reasonably acceptable to the Issuer. The term "Out-of-Pocket Expenses"
shall mean Grantee's reasonably and reasonably documented out-of-pocket
expenses, in no event to exceed $750,000, incurred in connection with
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the transactions contemplated by this Agreement and the Merger Agreement,
including without limitation legal, accounting and investment banking fees.
(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office,
a copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder or the
Owner, as the case may be, elects to require Issuer to repurchase this Option
and/or the Option Shares in accordance with the provisions of this Section 7.
Within the latter to occur of (x) five business days after the surrender of the
Option and/or certificates representing Option Shares and the receipt of such
notice or notices relating thereto and (y) the time that is immediately prior
to the occurrence of a Repurchase Event, Issuer shall deliver or cause to be
delivered to the Holder the Option Repurchase Price and/or to the Owner the
Option Share Repurchase Price therefor or the portion thereof, if any, that
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify the Holder and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7
is prohibited under applicable law or regulation from delivering to the Holder
and/or the Owner, as appropriate, the Option Repurchase Price and the Option
Share Repurchase Price, respectively, in full (and Issuer hereby undertakes to
use its best efforts to obtain all required regulatory and legal approvals and
to file any required notices, in each case as promptly as practicable in order
to accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, Issuer shall promptly (i)
deliver to the Holder and/or the Owner, as appropriate, (x) that portion of the
Option Repurchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering, plus (y) an amount in cash equal to the Out-of-
Pocket Expenses; and (ii) deliver, as appropriate, either (A) to the Holder, a
new Stock Option Agreement evidencing the right of the Holder to purchase that
number of shares of Common Stock obtained by multiplying the number of shares
of Common Stock for which the surrendered Stock Option Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price, or (B) to the Owner, a certificate for the Option Shares it
is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other acquisition of all
or a substantial portion of the assets of Issuer, other than any such
transaction which would not constitute an Acquisition Transaction pursuant to
the proviso to Section 2(b)(i) hereof or (ii) upon the acquisition by any
person of beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event shall constitute a Repurchase Event
unless a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event. The parties hereto agree that Issuer's obligations to
repurchase the Option or Option Shares under this Section 7 shall not terminate
upon the occurrence of an Exercise Termination Event unless no Subsequent
Triggering Event shall have occurred prior to the occurrence of an Exercise
Termination Event.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of Common Stock shall be
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changed into or exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of Common Stock shall
after such merger represent less than 50% of the outstanding voting shares and
voting share equivalents of the merged company, or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person, other than
Grantee or one of its Subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provision so that the Option
shall, upon the consummation of any such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that controls
the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (B) Issuer in a merger in which Issuer is the continuing or
surviving person, and (C) the transferee of all or substantially all of
Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common stock issued by the
issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the Market/Offer Price, as defined in
Section 7.
(iv) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same terms as the Option, provided,
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option is then exercisable and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this clause (e), the issuer of the Substitute Option (the "Substitute
Option Issuer") shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
this clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be.
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
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9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to (x) the amount by which (i) the Highest
Closing Price (as hereinafter defined) exceeds (ii) the exercise price of the
Substitute Option, multiplied by the number of shares of Substitute Common
Stock for which the Substitute Option may then be exercised plus (y) an amount
in cash equal to the Out-of-Pocket Expenses, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner
gives notice of the required repurchase of the Substitute Shares, as
applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the case
may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant
to this Section 9 by surrendering for such purpose to the Substitute Option
Issuer, at its principal office, the agreement for such Substitute Option (or,
in the absence of such an agreement, a copy of this Agreement) and certificates
for Substitute Shares accompanied by a written notice or notices stating that
the Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable, and in any event within five business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase
Price and/or to the Substitute Share Owner the Substitute Share Repurchase
Price therefor or, in either case, the portion thereof which the Substitute
Option Issuer is not then prohibited under applicable law and regulation from
so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer following a
request for repurchase pursuant to this Section 9 shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on which
the Substitute Option Issuer is no longer so prohibited; provided, however,
that if the Substitute Option Issuer is at any time after delivery of a notice
of repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation from delivering to the Substitute Option Holder
and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to obtain all
required regulatory and legal approvals, in each case as promptly as
practicable, in order to accomplish such repurchase), the Substitute Option
Holder or Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the extent of
the prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute Share
Owner, as appropriate, (x) that portion of the Substitute Option Repurchase
Price or the Substitute Share Repurchase Price that the Substitute Option
Issuer is not prohibited from delivering, plus (y) an amount in cash equal to
the Out-of-Pocket Expenses; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
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10. The 90-day or 6-month periods for exercise of certain rights under
Sections 2, 6, 7, and 13 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods; (ii) to the extent necessary to
avoid liability under Section 16(b) of the 1934 Act by reason of such exercise
and (iii) during any period in which Grantee or the Holder, as the case may be,
is precluded from exercising such rights due to an injunction or other legal
restriction, plus in each case such additional period as is reasonably
necessary for the exercise of such rights promptly following the obtaining of
such approvals or the expiration of such periods.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and reserve
and to permit it to issue, and at all times from the date hereof through the
termination of this Agreement in accordance with its terms will have reserved
for issuance upon the exercise of the Option, that number of shares of Common
Stock equal to the maximum number of shares of Common Stock at any time and
from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the 1933 Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application
under the Bank Holding Company Act of 1956, as amended (the "BHCA") relating to
the acquisition by Grantee of the shares of Common Stock subject to the Option,
Grantee may not assign its rights under the Option except in (i) a widely
dispersed public distribution, (ii) a private placement in which no one party
acquires the right to purchase in excess of 2% of the voting shares of Issuer,
(iii) an assignment to a single party (e.g., a broker or investment banker) for
the purpose of conducting a widely dispersed public distribution on Grantee's
behalf, or (iv) any other manner approved by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to make all filings
with, and to obtain consents of, all third parties and governmental authorities
necessary to the consummation of the transactions contemplated
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<PAGE>
by this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the New York Stock Exchange upon
official notice of issuance and applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder.
15. (a) Notwithstanding anything to the contrary contained herein, in no
event shall Grantee's Total Profit (as defined below in Section 15(c) hereof)
exceed $24,150,000.
(b) Notwithstanding anything to the contrary contained herein, the Option
may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below in Section 15(d)
hereof) of more than $24,150,000; provided, that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate amount
(before taxes) of the following: (i) the amount received by Grantee pursuant to
Issuer's repurchase of the Option (or any portion thereof) pursuant to Section
7 hereof, (ii) (x) the amount received by Grantee pursuant to Issuer's
repurchase of Option Shares pursuant to Section 7 hereof, less (y) Grantee's
purchase price for such Option Shares, (iii) (x) the net cash amounts received
by Grantee pursuant to the sale of Option Shares (or any other securities into
which such Option Shares shall be converted or exchanged) to any unaffiliated
party, less (y) Grantee's purchase price of such Option Shares, (iv) any
amounts received by Grantee on the transfer of the Option (or any portion
thereof) to any unaffiliated party, and (v) any equivalent amount with respect
to the Substitute Option.
(d) As used herein, the term "Notional Total Profit" with respect to any
number of shares as to which Grantee may propose to exercise the Option shall
be the Total Profit determined as of the date of such proposed exercise
assuming that the Option were exercised on such date for such number of shares
and assuming that such shares, together with all other Option Shares held by
Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Issuer Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
16. (a) Grantee may in its sole discretion, at any time during which Issuer
would be required to repurchase the Option or any Option Shares pursuant to
Section 7, surrender the Option (together with any Option Shares issued to and
then owned by the Holder) to Issuer in exchange for a cash payment equal to the
Surrender Price (as defined herein); provided, however, the Grantee may not
exercise its rights pursuant to this Section 16 if Issuer has previously
repurchased the Option (or any portion thereof) or any Option Shares pursuant
to Section 7. The "Surrender Price" shall be equal to (i) $14,490,000, plus
(ii) if applicable, the aggregate purchase price previously paid pursuant
hereto to Issuer by Grantee with respect to any Option Shares, minus (iii) if
applicable, the excess of (A) the net cash, if any, received by Grantee
pursuant to the arm's-length sale of Option Shares (or any other securities
into which such Option Shares were converted or exchanged) to any party not
affiliated with Grantee, over (B) the purchase price paid to Issuer by Grantee
with respect to such Option Shares.
(b) Grantee may exercise its right to surrender the Option and any Option
Shares pursuant to this Section 16 by surrendering for such purpose to Issuer,
at its principal office, a copy of this Agreement, together with certificates
for Option Shares, if any, accompanied by a written notice stating (i) that
Grantee elects to surrender the Option and Option Shares, if any, in accordance
with the provisions of this Section 16 and (ii) the Surrender Price. Within
three business days after the surrender of the Option and the Option Shares, if
applicable, Issuer shall deliver or cause to be delivered to Grantee the
Surrender Price in immediately available funds.
(c) To the extent that the Issuer is prohibited under applicable law or
regulation from paying the Surrender Price to Grantee in full, Issuer shall
immediately so notify Grantee and thereafter deliver, or cause to be delivered,
from time to time, to Grantee, that portion of the Surrender Price that Issuer
is not or no longer prohibited from paying, within three business days after
the date on which Issuer is no longer so prohibited;
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<PAGE>
provided, however, that if Issuer at any time after delivery of a notice of
surrender pursuant to Section 16(b) is prohibited under applicable law or
regulation from paying to Grantee the Surrender Price in full, (i) Issuer shall
(A) use its best efforts to obtain all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to make
such payments, (B) within two business days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (C) keep Grantee advised of both the status of any
such request for regulatory and legal approvals and any discussions with any
relevant regulatory or other third party reasonably related to the same, and
(ii) Grantee may revoke such notice or surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such notice of revocation, the date
on which the Exercise Termination Event shall occur shall be extended to a date
six months from the date on which the Exercise Termination Event would have
occurred if not for the provisions of this Section 16(c) (during which period
Grantee may exercise any of its rights hereunder, including any and all rights
pursuant to this Section 16).
(d) Grantee shall have rights substantially identical to those set forth in
paragraphs (a), (b) and (c) of this Section 16 with respect to the Substitute
Option and the Substitute Option Issuer during any period in which the
Substitute Option Issuer would be required to repurchase the Substitute Option
pursuant to Section 9.
17. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
18. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer or
Substitute Option Issuer, as the case may be, is not permitted to repurchase
pursuant to Section 7 or Section 9, as the case may be, the full number of
shares of Common Stock provided in Section 1(a) hereof (as adjusted pursuant to
Section 1(b) or 5 hereof) it is the express intention of Issuer (which shall be
binding on the Substitute Option Issuer) to allow the Holder to acquire or to
require Issuer or Substitute Option Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
19. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
20. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof (except to the
extent that mandatory provisions of federal law apply).
21. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
22. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
23. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to
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<PAGE>
confer upon any party, other than the parties hereto, and their respective
successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
24. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
Healthcare Financial Partners, Inc.
/s/ John K. Delaney
By: _________________________________
Name: John K. Delaney
Title: Chairman and Chief
Executive Officer
Heller Financial, Inc.
/s/ Robert E. Radway
By: _________________________________
Name: Robert E. Radway
Title: Executive Vice President
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<PAGE>
APPENDIX C
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Goldman, Sachs & Co. 85 Broad Street New York, New York 10004
Tel: 212-902-1000
[LOGO OF GOLDMAN SACHS]
- --------------------------------------------------------------------------------
April 19, 1999
PERSONAL AND CONFIDENTIAL
Board of Directors
HealthCare Financial Partners, Inc.
2 Wisconsin Circle
Chevy Chase, MD 20815
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Common Stock, par value $.01
per share (the "Shares"), of HealthCare Financial Partners, Inc. (the
"Company") of the Stock Consideration and the Cash Consideration (as defined
below), taken as a unitary transaction, to be received for Shares pursuant to
the Agreement and Plan of Merger, dated as of April 19, 1999, among Heller
Financial, Inc. ("Heller"), HF5, Inc., a wholly-owned subsidiary of Heller
("Acquisition"), and the Company (the "Agreement"). Pursuant to the Agreement,
the Company will be merged with Acquisition (the "Merger") and each outstanding
Share will be converted into (i) a number of shares of Common Stock, par value
$.25 per share, of Heller (the "Heller Shares") determined by dividing $35 by
the average per share closing price of Heller Shares on the NYSE Common Tape
for the ten trading days ending on the fifth trading day prior to the Election
Deadline (as defined in the Agreement) (the "Stock Consideration") or (ii) $35
in cash (the "Cash Consideration"), in each case subject to the adjustments
provided in the Agreement. Holders of Shares may elect to convert such Shares
into the right to receive either Stock Consideration or Cash Consideration
subject to certain procedures and limitations contained in the Agreement, as to
which procedures and limitations we are expressing no opinion.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having acted as its financial advisor in connection
with, and having participated in certain of the negotiations leading to, the
Agreement. We also have provided certain investment banking services to Heller
and its subsidiaries from time to time, including having acted as lead manager
of the initial public offering of Heller Shares in April 1998, having acted as
an agent for Heller's medium-term note program, having acted as co-manager of
offerings by Heller of 6.44% notes due October 2002 in October 1997, 6.25%
notes due March 2001 in March 1998 and 6.00% notes due March 2004 in March
1999, and having entered into certain currency swap transactions with Heller.
Goldman, Sachs & Co. is a full service securities firm and as such may from
time to time effect transactions, for its own account or the account of
customers, and hold positions in securities or options on securities of the
Company and Heller.
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New York | London | Tokyo | Boston | Chicago | Dallas | Frankfurt | George Town
| Hong Kong | Houston | Los Angeles | Memphis
Miami | Milan | Montreal | Osaka | Paris | Philadelphia | San Francisco |
Singapore | Sydney | Toronto | Vancouver | Zurich
<PAGE>
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Registration Statement on Form S-1, dated November 20, 1996,
with respect to the initial public offering of Shares, including the Prospectus
contained therein; the Registration Statement on Form S-3, dated July 7, 1998,
with respect to the initial public offering of Heller Shares, including the
prospectus contained therein; the Annual Reports to Stockholders and Annual
Reports on Form 10-K of the Company for the three years ended December 31,
1998; the Annual Reports to Stockholders and Annual Reports on Form 10-K of
Heller for the five years ended December 31, 1998; certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of the Company and Heller;
certain other communications from the Company and Heller to their respective
stockholders; certain internal financial analyses and forecasts for the Company
prepared by its management (the "Forecasts"); certain internal financial
analyses for Heller prepared by its management; and certain internal financial
analyses for the Company on a pro forma basis prepared by the management of
Heller. We also have held discussions with members of the senior management of
the Company and Heller regarding the strategic rationale for, and the potential
benefits of, the transaction contemplated by the Agreement and the past and
current business operations, financial condition and future prospects of their
respective companies. In addition, we have reviewed the reported price and
trading activity for the Shares and the Heller Shares, compared certain
financial and stock market information for the Company and Heller with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations in
the commercial finance industry specifically and in other industries generally
and performed such other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. As you are aware, Heller
did not make available in writing to us either (i) financial statements dated
subsequent to December 31, 1998 or (ii) projections or forecasts of the
expected future financial performance of Heller. Accordingly, our review of
such information consisted of discussions with senior management of Heller
regarding certain financial estimates for Heller published by the Institutional
Brokers Estimate Service. We are not experts in the evaluation of loan
portfolios for purposes of assessing the adequacy of allowances for losses with
respect thereto and have assumed, with your consent, that such allowances for
the Company and Heller, respectively, are in the aggregate adequate to cover
such losses. We have not reviewed individual credit files nor have we made an
independent evaluation or appraisal of the assets and liabilities of the
Company or Heller or any of their subsidiaries and we have not been furnished
with any such evaluation or appraisal. Our advisory services and the opinion
expressed herein are provided for the information and assistance of the Board
of Directors of the Company in connection with its consideration of the
transaction contemplated by the Agreement and such opinion does not constitute
a recommendation as to how any holder of Shares should vote with respect to
such transaction or whether any such holder should elect to receive the Stock
Consideration or the Cash Consideration.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the Stock
Consideration and the Cash Consideration to be received by the holders of
Shares, taken as a unitary transaction, are fair from a financial point of view
to the holders of Shares receiving such Consideration.
Very truly yours,
/s/ Goldman Sachs & Co.
--------------------------
Goldman Sachs & Co.
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<PAGE>
APPENDIX D
DELAWARE GENERAL CORPORATION LAW
SECTION 262--APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to (S)228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and
the words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to (S)251 (other than a merger effected pursuant to (S)251(g)
of this title), (S)252, (S)254, (S)257, (S)258, (S)263 or (S)264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of (S)251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
(S)(S)251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
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<PAGE>
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsection (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholder's shares shall deliver
to the corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such stockholder's shares. A proxy or vote against
the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective date of such
merger or consolidation, the surviving or resulting corporation shall
notify each stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or consented to the
merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to (S) 228 or
(S) 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
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<PAGE>
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholder's written request for such a statement is received
by the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted such stockholder's certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of
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uncertificated stock forthwith, and the case of holders of shares represented
by certificates upon the surrender to the corporation of the certificates
representing such stock. The Court's decree may be enforced as other decrees in
the Court of Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court
deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
D-4
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Heller Financial, Inc. ("Heller"), a Delaware corporation, is empowered by
Section 145 of the Delaware General Corporation Law, subject to the procedures
and limitations stated therein, to indemnify any person against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in the defense of any
threatened, pending or completed action, suit or proceeding in which such
person is made a party by reason of his being or having been a director or
officer of Heller. The statute provides that indemnification pursuant to its
provisions is not exclusive of other rights of indemnification to which a
person may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors, or otherwise. Heller's Amended and Restated By-Laws
provide for indemnification by Heller of its directors and officers to the full
extent permitted by the Delaware General Corporation Law. Also, as permitted by
the Delaware General Corporation Law, Heller's Amended and Restated Certificate
of Incorporation eliminates the personal liability of each of its directors to
Heller or its stockholders for monetary damages arising out of or resulting
from any breach of such director's fiduciary duty as a director, except where
such director breached such director's duty of loyalty to Heller or its
stockholders, failed to act in good faith, engaged in intentional misconduct or
a knowing violation of the law, paid an unlawful dividend, approved an unlawful
stock purchase or redemption, or obtained an improper personal benefit. Heller
has purchased a directors' and officers' liability insurance policy which
entitles it to be reimbursed for certain indemnity payments it is required or
permitted to make to its directors and officers.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of April 19, 1999, among HealthCare
Partners, Inc. ("HealthCare"), Heller and HF5, Inc. ("HF5") (incorporated
by reference to Exhibit 99.1 to HealthCare's Current Report on Form 8-K
dated April 23, 1999). The schedules and exhibits to the merger agreement
are omitted pursuant to Item 601(b)(2) of Regulation S-K. Heller agrees to
furnish supplementally to the SEC, upon request, a copy of any omitted
schedule or exhibit.
2.2 Amendment to the Agreement and Plan of Merger, dated as of April 19, 1999,
among HealthCare, Heller and HF5 (incorporated by reference to Exhibit
99.1 to HealthCare's Current Report on Form 8-K dated May 13, 1999).
2.3 Stock Option Agreement, dated April 19, 1999, between HealthCare and
Heller (included as Appendix B to the proxy statement/prospectus).
4.1 Amended and Restated Certificate of Incorporation of Heller (incorporated
by reference to Exhibit 3.1 to Heller's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998).
4.2 Amended and Restated Bylaws of Heller (incorporated by reference to
Exhibit 3.2 to Heller's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998).
4.3 Specimen stock certificate representing Heller Class A common stock
(incorporated by reference to Exhibit 4 to Heller's Registration Statement
on Form S-2, as amended, File No. 333-46915, initially filed February 26,
1998).
5 Opinion of Katten Muchin & Zavis as to the legality of the securities
being issued.
8.1 Opinion of Winston & Strawn as to certain tax matters.
8.2 Opinion of Powell, Goldstein, Frazer & Murphy, LLP as to certain
tax matters.
23.1 Consent of Katten Muchin & Zavis (included in their opinion filed as
Exhibit 5).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
23.2 Consent of Winston & Strawn (included in their opinion filed as Exhibit
8.1).
23.3 Consent of Powell, Goldstein, Frazer & Murphy, LLP (included in their
opinion filed as Exhibit 8.2).
23.4 Consent of Arthur Andersen, LLP.
23.5 Consent of Ernst & Young LLP.
23.6 Consent of Goldman, Sachs & Co.
24 Power of Attorney (included on the signature page).
99.1 Form of proxy card to be used in soliciting the proxy of stockholders for
its special meeting.
99.2 Election Form and Letter of Transmittal.
</TABLE>
(b) Not applicable
(c) The opinion of Goldman, Sachs & Co. is included as Appendix C to the
proxy statement/prospectus contained in this Registration Statement.
Item 22. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment
II-2
<PAGE>
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(5) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(6) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(7) That every prospectus: (i) that is filed pursuant to paragraph (6)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(8) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(9) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois on the 17th day of June, 1999.
Heller Financial, Inc.
/s/ Richard J. Almeida
By___________________________________
Richard J. Almeida
Chairman and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Lauralee E. Martin, Debra H. Snider and Mark J. Ohringer, and each of them, his
or her true and lawful attorneys-in-fact and agents, with full power of
substitution, to sign on his or her behalf, individually and in each capacity
stated below, all amendments and post-effective amendments to this Registration
Statement on Form S-4 (including any registration statement filed pursuant to
Rule 462(b) under the Securities Act of 1933 and all amendments thereto) and to
file the same, with all exhibits thereto and any other documents in connection
therewith, with the Securities and Exchange Commission under the Securities Act
of 1933, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully and to all intents and
purposes as each might or could do in person, hereby ratifying and confirming
each act that said attorneys-in-fact and agents may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities on June 17, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Richard J. Almeida Chairman, Chief Executive Officer
___________________________________________ (principal executive officer) and
Richard J. Almeida Director
/s/ Michael Conway Director
___________________________________________
Michael Conway
Director
___________________________________________
Tsutomu Hayano
Director
___________________________________________
Soichi Hirabayashi
/s/ Mark Kessel Director
___________________________________________
Mark Kessel
/s/ Tetsuo Kumon Director
___________________________________________
Tetsuo Kumon
Director
___________________________________________
Frank Ptak
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Dennis P. Lockhart Director and President of Heller
___________________________________________ International Group, Inc.
Dennis P. Lockhart
/s/ Masahiro Sawada Director and Senior Vice President
___________________________________________
Masahiro Sawada
Director and Executive Vice President
___________________________________________
Kenichiro Tanaka
/s/ Frederick Wolfert President and Chief Operating Officer and
___________________________________________ Director
Frederick Wolfert
Director
___________________________________________
Terumasa Yamasaki
/s/ Lauralee E. Martin Executive Vice President and Chief
___________________________________________ Financial Officer (principal financial
Lauralee E. Martin officer)
/s/ Lawrence G. Hund Executive Vice President and Controller
___________________________________________ (principal accounting officer)
Lawrence G. Hund
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S> <C>
2.3 Stock Option Agreement, dated April 19, 1999, among HealthCare
Financial Partners, Inc. and Heller Financial, Inc. (included
as Appendix B to the proxy statement/prospectus).
5 Opinion of Katten Muchin & Zavis as to the legality of the
securities being issued.
8.1 Opinion of Winston & Strawn as to certain tax matters.
8.2 Opinion of Powell, Goldstein, Frazer & Murphy, LLP as to
certain tax matters.
23.1 Consent of Katten Muchin & Zavis (included in their opinion
filed as Exhibit 5).
23.2 Consent of Winston & Strawn (included in their opinion filed
as Exhibit 8.1).
23.3 Consent of Powell, Goldstein, Frazer & Murphy, LLP (included
in their opinion filed as Exhibit 8.2).
23.4 Consent of Arthur Andersen, LLP.
23.5 Consent of Ernst & Young LLP.
23.6 Consent of Goldman, Sachs & Co.
24 Power of Attorney (included on the signature page).
99.1 Form of proxy card to be used in soliciting the proxy of
stockholders for its special meeting.
99.2 Election Form and Letter of Transmittal.
</TABLE>
<PAGE>
EXHIBIT 5
[LETTERHEAD OF KATTEN MUCHIN & ZAVIS]
(312) 902-5200
June 16, 1999
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have acted as counsel for Heller Financial, Inc., a Delaware corporation
(the "Company"), in connection with the preparation and filing of a registration
statement on Form S-4 (the "Registration Statement") with the Securities and
Exchange Commission ("Commission") under the Securities Act of 1933, as amended
(the "Act"). The Registration Statement relates to the Company's issuance of up
to 9,453,201 shares of its Class A Common Stock, $0.25 par value per share (the
"Shares"), in accordance with the Agreement and Plan of Merger, dated and
amended as of April 19, 1999 (the "Agreement"), by and among the Company, HF5,
Inc. ("HF5") and HealthCare Financial Partners, Inc. ("HealthCare"), pursuant to
which HealthCare will be merged into HF5 (the "Merger"). This opinion is being
furnished in accordance with the requirements of Item 601(b)(5) of Regulation
S-K under the Act.
In connection with this opinion, we have relied as to matters of fact,
without investigation, upon certificates of public officials and others and upon
affidavits, certificates and written statements of directors, officers and
employees of, and the accountants and transfer agent for, the Company. We have
also examined originals or copies, certified or otherwise identified to our
satisfaction, of such instruments, documents and records as we have deemed
relevant and necessary to examine for the purpose of this opinion, including (a)
the Registration Statement, (b) the Company's Amended and Restated Certificate
of Incorporation, (c) the Company's Amended and Restated By-Laws, (d) minutes of
meetings of the Board of Directors of the Company, (e) the Agreement and (f) a
specimen certificate representing the Class A Common Stock.
In connection with this opinion, we have assumed the legal capacity of all
natural persons, the accuracy and completeness of all documents and records that
we have reviewed, the genuineness of all signatures, the authenticity of the
documents submitted to us as originals and the conformity to authentic original
documents of all documents submitted to us as certified, conformed or reproduced
copies.
<PAGE>
Heller Financial, Inc.
June 16, 1999
Page 2
Based upon and subject to the foregoing, it is our opinion that, when the
Merger is consummated in accordance with the Agreement and the Shares are
delivered in exchange for shares of HealthCare Common Stock as contemplated by
the Agreement, the Shares issued in the Merger will be validly issued, fully
paid and non-assessable.
Our opinion expressed above is limited to the General Corporation Law of
the State of Delaware, and we do not express any opinion concerning any other
laws. This opinion is given as of the date hereof, and we assume no obligation
to advise you of changes that may hereafter be brought to our attention.
We hereby consent to the reference to our name under the heading "Legal
Matters" in the Prospectus forming a part of the Registration Statement and to
use of this opinion for filing as Exhibit 5 to the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
related rules and regulations thereunder.
Very truly yours,
/s/ KATTEN MUCHIN & ZAVIS
KATTEN MUCHIN & ZAVIS
<PAGE>
Exhibit 8.1
[Letterhead of Winston & Strawn]
June 16, 1999
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Re: Federal Income Tax Disclosure Within Proxy Statement/Prospectus
---------------------------------------------------------------
Dear Ladies and Gentlemen:
We have acted as special tax counsel for you in connection with the
transactions contemplated by that certain Agreement and Plan of Merger dated and
amended as of April 19, 1999 by and among Heller Financial, Inc. ("Heller"),
HealthCare Financial Partners, Inc. ("HFP") and HF5, Inc. ("Merger Co.") (a
wholly owned subsidiary of Heller) (the "Agreement"). This letter addresses the
federal income tax issues on which you have requested our opinion. This opinion
is being delivered in connection with the Proxy Statement/Prospectus upon the
express instructions and request of Heller. Capitalized terms not defined herein
shall have the same meaning as set forth in the Agreement.
In connection with our opinion, we have examined the Agreement and the
Proxy Statement/Prospectus to be delivered to the HFP shareholders (the
"Stockholders") in connection with the transactions contemplated by the
Agreement as well as such other documents, records and matters of law deemed
relevant or necessary (the "Relevant Documents"). We have assumed the
authenticity of all documents submitted to us as originals, the conformity to
the originals of all documents submitted to us as copies, and that the
signatures on all documents examined by us are genuine. We have also relied upon
certificates of public officials.
<PAGE>
Heller Financial, Inc.
June 16, 1999
Page 2
As to any facts material to our opinion, we have, with your consent,
relied on the representations, warranties, covenants, and opinions made in the
Relevant Documents by the respective parties thereto. We have also assumed
certain other customary facts upon which this opinion is based, including that
the transactions contemplated by the Relevant Documents will occur as described
in such documents. Whenever our opinion with respect to the existence or absence
of facts is based on our knowledge or awareness, we are referring to the actual
knowledge of Winston & Strawn attorneys who have actively represented Heller
during the course of our representation of such parties with respect to this
opinion. We have not undertaken any independent investigation to determine the
existence or absence of any facts and no inference as to our knowledge
concerning any facts should be drawn as a result of the limited representation
undertaken by us. We have consequently relied upon your factual representation
that the information presented in the Relevant Documents or otherwise furnished
to or assumed by us accurately and completely describes all material facts
relevant to this opinion. Any representation or statement in any document upon
which we rely that is made "to the best of knowledge" or otherwise similarly
qualified is assumed to be correct. Any alteration of such facts may adversely
affect our opinions.
This opinion is rendered only as to the date hereof, and we undertake
no obligation to update this opinion. Pursuant to the analysis described in
Treasury Regulation section 1.6662-4(d)(3)(ii), this opinion is based upon the
current provisions of the Code, as amended, currently applicable Treasury
Regulations promulgated or proposed under the Code, currently published
administrative rulings and procedures, judicial decisions and other applicable
authorities, all as in effect on the date hereof. All of the foregoing
authorities are subject to change or new interpretations, both prospectively and
retroactively, and such changes or interpretations, as well as any change in the
facts as they have been represented to us or assumed by us, could affect our
opinions. Our opinions do not foreclose the possibility of a contrary
determination by the Internal Revenue Service (the "IRS") or by a court of
competent jurisdiction, or of a contrary position by the IRS or Treasury
Department in regulations, rulings, or procedures issued in the future.
Subject to the foregoing, we express the opinion that under
current federal income tax law the discussion in the Proxy Statement/Prospectus
under the heading "Material Federal Income Tax Consequences" to the extent it
constitutes matters of law or legal conclusions is accurate in all material
respects.
<PAGE>
Heller Financial, Inc.
June 16, 1999
Page 3
This opinion is rendered only to you and may not be quoted in whole or
in part or otherwise referred to, used by, or relied upon, nor be filed with, or
furnished to, any other person or entity other than the Shareholders in
connection with the Merger, without our prior written consent. Notwithstanding
the foregoing, we hereby consent to the use of this opinion as an Exhibit to the
Registration Statement and the use of our name in the Proxy Statement/Prospectus
under the section entitled "Material Federal Income Tax Consequences." In giving
this consent, we do not admit that we are included in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ WINSTON & STRAWN
<PAGE>
Exhibit 8.2
[LETTERHEAD OF POWELL, GOLDSTEIN, FRAZER & MURPHY LLP]
June 16, 1999
HealthCare Financial Partners, Inc.
2 Wisconsin Circle, Fourth Floor
Chevy Chase, Maryland 20815
Re: Registration Statement on Form S-4 of Heller Financial, Inc.
("Heller") containing the Proxy Statement/Prospectus of Heller and
HealthCare Financial Partners, Inc. ("HealthCare"), dated June 16,
1999 (the "Proxy Statement/Prospectus")
Gentlemen:
You have requested our opinion concerning certain of the federal income tax
consequences of certain of the transactions described in the Proxy
Statement/Prospectus; specifically, the tax consequences of the merger of
HealthCare with and into HF5, Inc., a wholly owned subsidiary of Heller ("HF5"),
with HF5 as the survivor of the merger (the "Merger"). In connection with
rendering this opinion we have made certain assumptions and relied upon certain
representations, including representations of the management of Heller and
HealthCare, as to the facts upon which this opinion is based.
Based upon the assumptions and the representations, we are of the opinion
that the Merger will constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code. Accordingly, we confirm that the
discussions of the tax consequences resulting therefrom, as set forth in the
Proxy Statement/Prospectus under the subheadings "Federal Income Tax
Implications of the Merger to HealthCare Stockholders" and "Federal Income Tax
Implications of the Merger to HealthCare, Heller and HF5" appearing under "THE
MERGER - The Material Federal Income Tax Consequences," to the extent that they
constitute matters of law or legal conclusions, are accurate in all material
respects.
The opinion addresses only the effect under the federal income tax laws of
the Merger, and we express no opinion with respect to the applicability thereto,
or the effect thereon, of other federal laws, the laws of any state or other
jurisdiction, or as to any matters of municipal law or the laws of any other
local agencies within any state.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to in the caption hereto and the reference to
our firm and the above-mentioned opinion under the heading "THE MERGER -
Material Federal Income Tax Consequences" included in the Proxy
Statement/Prospectus. In giving such consent, we do not thereby admit that we
are acting within the category of persons whose consent is required under
Section 7 of the Securities Act and the rules and regulations of the Securities
and Exchange Commission thereunder.
Very truly yours,
/s/ POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
<PAGE>
[Letterhead of Arthur Andersen LLP]
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 18, 1999
(except with respect to the matters discussed in Note 25, as to which the date
is February 15, 1999) included in Heller Financial, Inc.'s Form 10-K/A for the
year ended December 31, 1998 and to all references to our firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
June 16, 1999
<PAGE>
Exhibit 23.5
Consent of Ernst & Young LLP
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 11, 1999, included in HealthCare Financial
Partners Inc. Annual Report on Form 10-K/A for the year ended December 31, 1998
and incorporated by reference in the Proxy Statement of HealthCare Financial
Partners Inc. that is made part of the Registration Statement (Form S-4) and
Prospectus of Heller Financial, Inc. for the registration of shares of its
common stock.
Washington, D.C.
June 16, 1999
/s/ Ernst & Young LLP
<PAGE>
[LETTERHEAD]
PERSONAL AND CONFIDENTIAL
- -------------------------
June 16, 1999
Board of Directors
HealthCare Financial Partners, Inc.
2 Wisconsin Circle
Chevy Chase, MD 20815
Re: Registration Statement on Form S-4 of Heller Financial, Inc. relating to
the below referenced Agreement
Gentlemen:
Reference is made to our opinion letter dated April 19, 1999 with respect to the
outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of
HealthCare Financial Partners, Inc. (the "Company") of the Stock Consideration
and the Cash Consideration (as defined therein), taken as a unitary transaction,
to be received for Shares pursuant to the Agreement and Plan of Merger, dated as
of April 19, 1999, among Heller Financial, Inc. ("Heller"), HF5, Inc., a wholly-
owned subsidiary of Heller, and the Company (the "Agreement"). You have informed
us that subsequent to the date of such opinion letter the Agreement was amended
effective as of April 19, 1999.
The foregoing opinion letter is provided for the information and assistance of
the Board of Directors of HealthCare in connection with its consideration of the
transaction contemplated therein and is not to be used, circulated, quoted or
otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent. We understand that the Company has determined to include our
opinion in the above-referenced Registration Statement.
In that regard, we hereby consent to the reference to the opinion of our Firm
under the captions "THE MERGER -- Background of the Merger;" "--HealthCare's
Reasons for the Merger; Recommendation of the HealthCare Board of Directors;"
"-- Fairness Opinion of Financial Advisor" and to the inclusion of the foregoing
opinion in the Proxy Statement/Prospectus included in the above-mentioned
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons where consent is required under Section 7 of
the Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission there under.
Very truly yours,
/s/ Goldman, Sachs & Co.
- ------------------------
(GOLDMAN, SACHS & CO.)
[LETTERHEAD]
<PAGE>
EXHIBIT 99.1
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
HEALTHCARE FINANCIAL PARTNERS, INC.
PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 20, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) hereby appoints John K. Delaney, Ethan D.
Leder and Edward P. Nordberg, Jr., and each of them, with full power of
substitution, as attorneys and proxies for, and in the name and place of, the
undersigned, and hereby authorizes each of them to represent and to vote all
of the shares of common stock which the undersigned is entitled to vote at the
special meeting of stockholders of HealthCare Financial Partners, Inc. to be
held at The Four Seasons Hotel, 2800 Pennsylvania Avenue, Washington, D.C.
20007 on Tuesday, July 20, 1999, at 10:00 a.m., local time, and at any
adjournments or postponements of the special meeting, upon the matters as set
forth in the notice of special meeting of stockholders and proxy
statement/prospectus, receipt of which is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE
VOTED AT THE SPECIAL MEETING AND AT ANY ADJOURNMENTS OR POSTPONEMENTS OF THE
SPECIAL MEETING IN THE MANNER DIRECTED IN THIS PROXY BY THE UNDERSIGNED
STOCKHOLDER(S). IF NO CONTRARY INDICATION IS MADE, THE PROXY WILL BE VOTED FOR
PROPOSAL 1, AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS NAMED AS
PROXIES IN THIS PROXY, ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED PREPAID WHITE ENVELOPE.
(continued, and to be signed and dated, on reverse side)
- --------------------------------------------------------------------------------
X FOLD AND DETACH HERE X
<PAGE>
- -------------------------------------------------------------------------------
PLEASE VOTE, SIGN EXACTLY AS NAME APPEARS ABOVE, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED PREPAID WHITE ENVELOPE
X FOLD AND DETACH HERE X
- -------------------------------------------------------------------------------
HEALTHCARE FINANCIAL PARTNERS, INC.
PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY.
The Board of Directors unanimously recommends that you vote FOR Proposal 1.
1. Approval and adoption of the agreement and plan of merger, dated and
amended as of April 19, 1999, by and among HealthCare Financial Partners,
Inc., Heller Financial, Inc., and HF5, Inc., a wholly-owned subsidiary of
Heller, and the merger of HealthCare into HF5.
[_] For [_] Against [_] Abstain
2. Each of the persons named as proxies in this proxy is authorized, in such
person's discretion, to vote upon such other matters as may properly come
before the special meeting and any adjournments or postponements of the
special meeting.
Date ___________________, 1999
------------------------------
Signature
------------------------------
Signature (if held jointly)
Please date this proxy and
sign it exactly as your
name(s) appears hereon. When
stocks are held by joint
tenants, both should sign.
When signing as an attorney,
executor, administrator,
trustee, guardian or other
fiduciary, please indicate
your capacity. If you sign
for a corporation, please
print full corporate name and
indicate capacity of duly
authorized officer executing
on behalf of the corporation.
If you sign for a
partnership, please print
full partnership name and
indicate capacity of duly
authorized person executing
on behalf of the partnership.
<PAGE>
EXHIBIT 99.2
ELECTION FORM AND LETTER OF TRANSMITTAL
to
elect the form of consideration to be received for shares of common stock
of
HEALTHCARE FINANCIAL PARTNERS, INC.
in the merger of HealthCare Financial Partners, Inc. into HF5, Inc., a wholly-
owned subsidiary of Heller Financial, Inc.
Deliver by hand, mail or overnight delivery to
THE BANK OF NEW YORK
as Exchange Agent
at
By Mail:
By Hand or Overnight Delivery:
The Bank of New York
The Bank of New York
Tender & Exchange Department
Tender & Exchange Department
P.O. Box 11248
101 Barclay Street
Church Street Station
Receive and Deliver Window
New York, New York 10286-1248
New York, New York 10286
Delivery of this Election Form to an address other than an address listed above
will not constitute a valid delivery to the Exchange Agent.
If you have questions or want additional copies of this Election Form, please
contact
Corporate Investor Communications, Inc., which is
acting as the Information Agent for the merger,
at the address or phone number listed on the back of this Election Form.
To make a valid election, you must deliver to the Exchange Agent at one of
the addresses listed above (i) this Election Form, completed and signed, (ii)
the certificates representing the shares of HealthCare Common Stock described
in Box A or a confirmation of book-entry transfer of the shares to the Exchange
Agent's account at The Depository Trust Company ("DTC") and (iii) the completed
and signed Substitute Form W-9 included with this Election Form. These
documents must be received by the Exchange Agent before 5:00 p.m., New York
time, on July 19, 1999, unless extended (the "Election Deadline"). The
procedures for making a book-entry transfer of your shares of HealthCare Common
Stock are described in Instruction 4 to this Election Form. If the Exchange
Agent receives your Election Form after the Election Deadline, you will be
deemed to have made no election as to the shares of HealthCare Common Stock
listed on your Election Form, regardless of the election you actually marked.
We have enclosed a green envelope which you may use to submit your Election
Forms and stock certificates to the Exchange Agent.
Before you complete this Election Form, you should carefully read the Proxy
Statement/Prospectus that accompanies this Election Form. A composite copy of
the merger agreement, as amended, relating to the merger of HealthCare into
HF5, is included as Appendix A to the Proxy Statement/Prospectus.
You may revoke this Election Form and withdraw the shares of HealthCare
Common Stock that you tendered with this Election Form or change the election
that you made on this Election Form at any time before the Election Deadline by
complying with the procedures described in Instruction 13 to this Election
Form.
1
<PAGE>
Describe in Box A below, and make an election with respect to, the shares
of HealthCare Common Stock that you intend to tender with this Election Form.
Your choice of election is as follows:
<TABLE>
<CAPTION>
What You Have Elected to Receive for Each of
Election Your Tendered Shares of HealthCare Common Stock
- -------- -----------------------------------------------
<S> <C>
Stock Election.. the number of shares of Heller Class A Common Stock equal to
the Per Share Consideration Value (as defined below) divided
by the average closing price of Heller Class A Common Stock on
the New York Stock Exchange during the Pricing Period (as
defined below)
Cash Election... cash in an amount equal to the Per Share Consideration Value
No-Election..... cash, Heller Class A Common Stock or a combination of both,
depending upon the elections of other HealthCare stockholders,
with a total value equal to the Per Share Consideration Value
</TABLE>
You may make only one election per Election Form. The Exchange Agent will
treat shares of HealthCare Common Stock included on any Election Form with
more than one checked election box or without any checked election box as no-
election shares. You can make different elections for different shares of
HealthCare Common Stock, including shares represented by a single stock
certificate. Therefore, you may elect to receive a combination of Heller Class
A Common Stock and cash as your merger consideration. To divide your holdings
of HealthCare Common Stock and make a separate election as to specified
shares, you will need to submit more than one Election Form.
The Exchange Agent will pay cash instead of any fractional shares of Heller
Class A Common Stock otherwise issuable in the merger.
BOX A: ELECTION AND DESCRIPTION OF TENDERED SHARES OF HEALTHCARE COMMON STOCK
(See Instructions 3, 6 and 13)
- -----------------------------------------------------------------------
Choose ONE:
[_] Stock Election [_] Cash Election [_] No-Election
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
Aggregate
Number
of Shares of
Name(s) and Address(es) of HealthCare Number
Registered Holder(s), Common Stock of Shares of
Exactly as They Appear Represented by HealthCare
on Certificates for HealthCare Certificate(s) Common Stock
Common Stock or Book-Entry or Tendered and
Accounts (please fill in, Certificate Book-Entry Subject to
if blank) Number(s)* Confirmation Election**
- -----------------------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Totals:
- -----------------------------------------------------------------------
</TABLE>
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution __________________________________________
Account No. ____________________________________________________________
Transaction Code No. ___________________________________________________
- -------------------------------------------------------------------------------
* Need not be completed if you are tendering your HealthCare Common
Stock by book-entry transfer.
** Unless you indicate otherwise, you will be deemed to have tendered
and made your election on this Election Form with respect to the
entire number of shares represented by the certificate(s) or book-
entry confirmation.
- -------------------------------------------------------------------------------
[_] Check here if this election represents a revocation of an earlier
election.
2
<PAGE>
If the certificates representing the shares of HealthCare Common Stock
described in Box A have been lost, stolen or destroyed, you should contact the
Exchange Agent for assistance in replacing them. It is critical that you
obtain replacement certificates because your delivery of this Election Form
will not be effective if you do not deliver the certificates representing the
shares of HealthCare Common Stock described in Box A or confirmation of a
book-entry transfer of these shares to the Exchange Agent's account at DTC.
The value of the consideration that you will receive for each of your
shares of HealthCare Common Stock will be approximately $35.00, subject to
adjustment as discussed below. The Exchange Agent will compute the average
closing price of Heller Class A Common Stock as reported on the New York Stock
Exchange for the 10 trading days beginning on July 6, 1999 and ending on, and
including, July 19, 1999 (the "Pricing Period"). If the average closing price
of Heller Class A Common Stock for the Pricing Period is greater than $21.54
but less than $28.73, the value of the consideration that you receive for each
of your shares of HealthCare Common Stock (the "Per Share Consideration
Value") will be $35.00 as of the end of the Pricing Period. If the average
closing price of Heller Class A Common Stock for the Pricing Period is equal
to or greater than $28.73, the Per Share Consideration Value will be greater
than $35.00 as of the end of the Pricing Period. If the average closing price
of Heller Class A Common Stock for the Pricing Period is equal to or less than
$21.54, the Per Share Consideration Value will be less than $35.00 as of the
end of the Pricing Period. The following table shows how we will adjust the
Per Share Consideration Value, based upon the average closing price of Heller
Class A Common Stock on the New York Stock Exchange during the Pricing Period:
<TABLE>
<CAPTION>
Average
Closing Price of Heller
Class A
Common Stock for Per Share Consideration
the Pricing Period Value
----------------------- ----------------------------
<S> <C>
$21.54 or less*............................. $20.65 plus 66.62% of the
average closing price during
the Pricing Period
Greater than $21.54, but less than $28.73... $35.00
At least $28.73, but less than $31.12....... $20.65 plus 49.95% of the
average closing price during
the Pricing Period
$31.12 or more.............................. $36.19
</TABLE>
-------
*If the average closing price of Heller Class A Common Stock during
the Pricing Period is less than $20.35, HealthCare has the option to
terminate the merger agreement unless Heller agrees to a Per Share
Consideration Value of $34.21.
Because of limitations on the aggregate amount of cash consideration and
stock consideration to be issued by Heller in the merger, you may not receive
the form of consideration that you elect. If the elections result in the
oversubscription of either cash consideration or stock consideration, the
procedure for allocating cash and shares of Heller Class A Common Stock set
forth in Article II of the merger agreement and described in the Proxy
Statement/Prospectus under the heading "The Merger--Merger Consideration" will
be followed by the Exchange Agent. All decisions by the Exchange Agent with
respect to this allocation process will be final and binding.
If you wish to make no election, you do not have to submit this Election
Form prior to the Election Deadline, but your shares of HealthCare Common
Stock must be surrendered to the Exchange Agent in order to receive the merger
consideration.
The completion of the merger is subject to the satisfaction of conditions,
and if the merger agreement is terminated, the Exchange Agent will promptly
return shares of HealthCare Common Stock submitted with Election Forms. No
payments related to any surrendered shares of HealthCare Common Stock will be
made before the merger is completed.
3
<PAGE>
Ladies and Gentlemen at The Bank of New York:
The undersigned hereby:
1. tenders to you, as Exchange Agent, certificates representing all of the
shares of HealthCare Common Stock described in Box A or confirmation of book-
entry transfer of these shares to your account at DTC;
2. exchanges, assigns and transfers to, or upon the order of, Heller all
right, title and interest in and to these shares;
3. elects as indicated in Box A to have each of these shares converted into
the right: (a) to receive cash, (b) to receive shares of Heller Class A Common
Stock or (c) to make no election and receive cash, Heller Class A Common Stock
or a combination of both;
4. represents and warrants that the undersigned is as of the date of this
Election Form, and will be as of the date on which the merger is completed,
the registered holder of these shares, with good title and full power and
authority to (a) sell, assign and transfer these shares, free and clear of all
liens, claims and encumbrances, and not subject to any adverse claims, and (b)
make the election indicated in Box A;
5. understands and acknowledges that the merger and the undersigned's
election are subject to the terms, conditions and limitations set forth in the
merger agreement and described in the Proxy Statement/Prospectus;
6. understands and acknowledges that the Exchange Agent will perform
certain prorations set forth in Article II of the merger agreement and
described in the Proxy Statement/Prospectus under the heading "The Merger--
Merger Consideration" that are designed to ensure that approximately, but in
no event less than, 41% of the total consideration that Heller pays in the
merger is in the form of Heller Class A Common Stock, and that these
prorations may result in receipt by the undersigned of consideration in a form
other than that which the undersigned elected in Box A;
7. understands and acknowledges that the Exchange Agent reserves the right
to deem that the undersigned has checked the "no-election" box with respect to
the shares of HealthCare Common Stock described in Box A if:
(a) no election choice is indicated in Box A;
(b) more than one election choice is indicated in Box A;
(c) the undersigned fails to follow the instructions included in this
Election Form, including failure to submit the shares of HealthCare
Common Stock described in Box A, or otherwise fails properly to make an
election; or
(d) the Exchange Agent does not receive a completed Election Form,
including submission of the shares of HealthCare Common Stock described
in Box A, prior to the Election Deadline;
and that Heller reserves the right, which it may delegate in whole or in part
to the Exchange Agent, to waive any flaws in a completed Election Form but is
under no obligation to do so;
8. understands and acknowledges that, to make a valid election concerning
the merger consideration, the undersigned must deliver to the Exchange Agent
at one of the addresses set forth above before the Election Deadline (a) a
completed and signed Election Form and Substitute Form W-9 and (b) the
certificates representing the shares of HealthCare Common Stock described in
Box A or confirmation of a book-entry transfer of these shares to the Exchange
Agent's account at DTC.
9. irrevocably appoints the Exchange Agent, as agent of the undersigned, to
effect the exchange of these shares pursuant to the merger agreement;
10. agrees to, upon request, execute any additional documents necessary or
desirable to complete the tender and exchange of these shares;
4
<PAGE>
11. agrees that authority conferred or agreed to be conferred by this
Election Form will be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and will not be
affected by, and will survive, the death or incapacity of the undersigned;
12. understands and acknowledges that all questions as to the validity,
form and eligibility of any election and surrender of the shares under this
Election Form will be reasonably determined by the Exchange Agent, and that
determination will be final and binding; and
13. acknowledges receipt of the Proxy Statement/Prospectus.
If, and ONLY if, you want the certificate(s) representing Heller Class A
Common Stock and/or the check issued in exchange for the shares of HealthCare
Common Stock tendered with this Election Form to be issued in a name that is
different from the name set forth in Box A, you must complete Box B below and
have the signatures on this Election Form guaranteed in Box E.
BOX B: SPECIAL ISSUANCE AND PAYMENT INSTRUCTIONS
(See Instruction 8)
- -------------------------------------------------------------------------------
Issue the certificate(s) and/or the check to:
Name* ___________________________________________________________________
(Please Print or Type)
Address: ________________________________________________________________
(Please Print or Type)
Tax Identification or Social Security Number: ___________________________
- -------------------------------------------------------------------------------
* Please note that the person named in this Special Issuance and Payment
Instructions must be the person who completes the Substitute Form W-9.
If, and ONLY if, you want the certificates representing Heller Class A
Common Stock and/or the check issued in exchange for the shares of HealthCare
Common Stock tendered with this Election Form to be delivered to an address
that is different from the address set forth in Box A, you must complete Box C
below and have the signatures on this Election Form guaranteed in Box E.
BOX C: SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 9)
- -------------------------------------------------------------------------------
Deliver the certificates and/or the check to:
Name: ___________________________________________________________________
(Please Print or Type)
Address: ________________________________________________________________
(Please Print or Type)
Tax Identification or Social Security Number: ___________________________
- -------------------------------------------------------------------------------
[_] Check this box if this is a permanent change of address.
Unless otherwise indicated in Box B above, please issue any certificates of
Heller Class A Common Stock and/or any check issued in exchange for the shares
of HealthCare Common Stock tendered with this Election Form in the name(s) of
the undersigned as they appear in Box A. Similarly, unless otherwise indicated
in Box C above, please mail or deliver those certificates and/or check to the
undersigned at the address as it appears in Box A.
5
<PAGE>
You MUST sign and date this Election Form in Box D below.
BOX D: DATE AND SIGNATURES
(see Instruction 7)
- --------------------------------------------------------------------------------
Date: ________________________________
Date: ________________________________
Signature*: __________________________
Signature*: __________________________
Printed Name: ________________________
Printed Name: ________________________
Capacity**: __________________________
Capacity**: __________________________
Address: _____________________________
Address: _____________________________
Daytime Telephone Number: ____________
Daytime Telephone Number: ____________
- --------------------------------------------------------------------------------
*Your signature must be exactly as your name appears in Box A.
**The capacity in which you are signing must be indicated if you are signing
as trustee, executor, administrator, guardian, attorney-in-fact, officer
of a corporation or other person acting in a fiduciary or representative
capacity.
BOX E: SIGNATURE GUARANTEE
(see Instructions 7, 8 and 9)
- --------------------------------------------------------------------------------
The undersigned hereby guarantees the signature(s) which appear(s) on this
Election Form.
Name of Firm: ________________________________________________________________
(Please Print or Type)
Name: ________________________________________________________________________
(Please Print or Type)
Authorized Signature: ________________________________________________________
Title: _______________________________________________________________________
(Please Print or Type)
Address: _____________________________________________________________________
Telephone Number: ____________________
Date: ________________________________
Affix Medallion Stamp Here
6
<PAGE>
PAYOR'S NAME: THE BANK OF NEW YORK
- -------------------------------------------------------------------------------
Part I--PLEASE PROVIDE YOUR TIN IN THE
SUBSTITUTE
BOX AT THE RIGHT AND CERTIFY BY
TIN: _______________________
Form W-9 SIGNING AND DATING BELOW. Social Security Number
or Employer
Department of the Identification Number
Treasury, Internal
Revenue Service
------------------------------------------------------------
Part II--For Payees exempt from backup withholding,
Payor's Request see the enclosed Guidelines for Certification of
for Taxpayer Identification Number on Substitute Form W-9
Taxpayer and complete as instructed therein.
Identification ------------------------------------------------------------
Number ("TIN") Certification--Under penalties of perjury, I certify
and Certification that:
(1) The number shown on this form is my correct TIN
(or I am waiting for a number to be issued to
me); and
(2) I am not subject to backup withholding because
(a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
------------------------------------------------------------
SIGNATURE: DATE: __________________________________________
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 were no
longer subject to backup withholding, do not cross out item (2). (Also see the
instructions in the enclosed Guidelines.)
Note: Failure to complete and return this substitute Form W-9 may result in
backup withholding of 31% of any payments made to you in exchange for the
shares of HealthCare Common Stock tendered with this election form.
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 are awaiting your
TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to me,
and either (1) I have mailed or delivered an application to receive a TIN to
the appropriate IRS Center or Social Security Administration Officer or (2)
I intend to mail or deliver an application in the near future. I understand
that if I do not provide a TIN by the time of payment, 31% of all payments
made to me in exchange for the shares of HealthCare Common Stock tendered
with this Election Form after that time will be withheld until I provide a
number.
Signature: Date: ___________________________________________________________
7
<PAGE>
INSTRUCTIONS
1. Election Deadline. The Election Deadline is 5:00 p.m., New York time, on
July 19, 1999. However, if Heller and HealthCare do not expect to complete the
merger within one week after the special meeting of HealthCare stockholders
that is scheduled for July 20, 1999 to approve and adopt the merger agreement
and the merger, they may extend the date of the Election Deadline. Heller and
HealthCare will publicly announce any extension of the Election Deadline.
2. Delivery of this Election Form. You must deliver to the Exchange Agent
at one of the addresses listed above before the Election Deadline (a) this
Election Form, completed and signed, (b) the certificates representing the
shares of HealthCare Common Stock described in Box A or confirmation of a
book-entry transfer of these shares to the Exchange Agent's account at DTC and
(c) the completed and signed Substitute Form W-9 included in this Election
Form. See Instruction 4 below if you choose to deliver shares of HealthCare
Common Stock by book-entry transfer. You choose the method of delivery of this
Election Form and any stock certificates at your own risk. We recommend that
you use an overnight or hand delivery service or registered mail,
appropriately insured, return receipt requested. Delivery of this Election
Form will be deemed effective, and the risk of loss with respect to any shares
of HealthCare Common Stock tendered with this Election Form will pass, only
when the certificates or confirmation of book-entry transfer, as applicable,
are actually received by the Exchange Agent.
3. Tender by Registered Holder. Only the registered holder of the shares of
HealthCare Common Stock described in Box A may tender those shares. Any
beneficial owner that is not the registered holder of those shares and that
wishes to tender those shares should arrange with the registered holder to
execute and deliver this Election Form on behalf of that owner or that owner
must, prior to completing and executing this Election Form and tendering those
shares, either make appropriate arrangements to register ownership of the
shares in that beneficial owner's name or obtain a properly completed stock
power from the registered holder.
4. Book-Entry Delivery. The Exchange Agent will make a request to establish
an account with respect to the shares of HealthCare Common Stock to be
tendered in connection with the merger at DTC within two business days after
the date of the mailing of this Election Form to the HealthCare stockholders.
Any financial institution that is a participant in DTC's system may make a
book-entry transfer of shares of HealthCare Common Stock by causing DTC to
transfer those shares into the Exchange Agent's account at DTC in accordance
with DTC's procedures for transfer. Although you may effect the delivery of
shares of HealthCare Common Stock through book-entry transfer at DTC before
the Election Deadline, you must deliver a completed and signed Election Form
with any required signature guarantees to the Exchange Agent at one of the
addresses listed above before the Election Deadline. You should not send this
Election Form or any of the other required documents included with this
Election Form to DTC because a delivery to DTC of the documents will not
constitute a delivery to the Exchange Agent.
5. Lost, Stolen or Destroyed Certificates. You cannot submit an effective
Election Form without transmitting with the Election Form certificates
representing the shares of HealthCare Common Stock described in Box A or a
confirmation of a book-entry transfer of these shares into the Exchange
Agent's account at DTC. If your HealthCare Common Stock certificates have been
lost, stolen or destroyed, you must call the Exchange Agent for additional
documentation that you must complete to obtain replacement certificates to
tender. You will be required to post an indemnity bond.
6. Partial Tenders. If you choose to tender, and make an election with
respect to, less than the entire number of shares of HealthCare Common Stock
represented by a certificate described in Box A, then you should fill in the
number of shares that you wish to tender and for which you wish to make an
election in the column of Box A entitled "Number of Shares of HealthCare
Common Stock Tendered and Subject to Election." Unless you indicate otherwise,
you will be deemed to have tendered and made an election with respect to the
entire number of shares represented by the certificate. If the entire number
of shares is not tendered, then you must complete and deliver to the Exchange
Agent another Election Form with respect to the remaining shares. If you do
not complete and deliver to the Exchange Agent another Election Form with
respect to the remaining shares, you will be deemed to have made no election
with respect to those shares.
8
<PAGE>
7. Signatures on this Election Form; Stock Powers and Endorsements;
Guarantee of Signatures.
(a) All signatures must correspond exactly with the name on the face of the
certificates representing, or the book-entry account transferring, the shares
of HealthCare Common Stock tendered with this Election Form.
(b) If the shares of HealthCare Common Stock tendered with this Election
Form are held of record by two or more joint holders, each holder must sign
this Election Form.
(c) If the shares of HealthCare Common Stock tendered with this Election
Form are registered in different names on several certificates, each
registered holder must complete and deliver a separate Election Form.
(d) If this Election Form is signed by someone other than the record holder
of the shares of HealthCare Common Stock tendered with this Election Form
(other than as set forth in paragraph (e) below), the certificates
representing those shares must be endorsed or accompanied by appropriate stock
powers signed exactly as the names of the record holders appear on the
certificates.
(e) If this Election Form is signed by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in
a fiduciary or representative capacity and that person is not the record
holder of the shares of HealthCare Common Stock tendered with this Election
Form, he or she must indicate the capacity in which he or she is acting when
signing and must submit proper evidence of his or her authority to act.
(f) If the shares of Heller Class A Common Stock and/or the check to be
issued in exchange for the shares of HealthCare Common Stock tendered with
this Election Form will be issued in the name(s) of the registered holder(s)
as the name(s) appear(s) on the surrendered certificate(s) or the book-entry
account, the signatures on this Election Form need not be guaranteed. If Box B
and/or Box C has been completed and payment is to be made and/or delivered to
someone other than the registered holder(s), then the signatures on this
Election Form must be guaranteed by a financial institution, including most
commercial banks, savings and loan associations and brokerage houses, that is
a participant in a Medallion Signature Guarantee Program. Public notaries
cannot execute acceptable guarantees of signatures.
8. Special Issuance and Payment Instructions. If you wish to have the
certificates representing the shares of Heller Class A Common Stock and/or the
check issued in exchange for the shares of HealthCare Common Stock tendered
with this Election Form issued in a name that is different from the name set
forth in Box A, you should indicate in Box B the name and address of the
person in whose name the shares of Heller Class A Common Stock and/or the
check will be issued and have the signatures on this Election Form guaranteed
in Box E by a financial institution that is a participant in the Medallion
Guarantee Program. If any transfer or other taxes become payable by reason of
the issuance of the merger consideration in any name other than that of the
registered holder of HealthCare Common Stock, the transferee or assignee must
pay these taxes to the Exchange Agent or establish to the Exchange Agent's
satisfaction that these taxes have been paid.
9. Special Delivery Instructions. If you wish to have the certificates
representing the shares of Heller Class A Common Stock and/or the check issued
in exchange for the shares of HealthCare Common Stock tendered with this
Election Form delivered to an address that is different from the address set
forth in Box A, you should indicate in Box C the address to which the shares
of Heller Class A Common Stock and/or the check should be delivered and have
the signatures on this Election Form guaranteed in Box E by a financial
institution that is a participant in the Medallion Guarantee Program.
10. Important Tax Information; Substitute Form W-9. Under federal income
tax law, the Exchange Agent is required to file a report with the Internal
Revenue Service ("IRS") disclosing any payments made to you pursuant to the
merger agreement. The Exchange Agent may also be required to impose 31% backup
withholding (a) if you do not provide the information required on the
Substitute Form W-9 or (b) if you have been notified by the IRS that you are
subject to backup withholding as a result of a failure to report all interest
and dividends. If you do not provide the certifications required on the
Substitute Form W-9, the IRS may impose a $50 penalty on you.
9
<PAGE>
In order to avoid backup withholding resulting from a failure to provide a
correct certification, you must (a) provide the Exchange Agent with your
taxpayer identification number ("TIN") on the Substitute Form W-9 and (b)
certify under penalties of perjury that the TIN that you provided is correct
and that you are not otherwise subject to backup withholding. See the
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 included with this Election Form for instruction regarding the TIN
that you must provide.
A foreign person may qualify as an exempt recipient by submitting to the
Exchange Agent a properly completed IRS Form W-8, signed under penalties of
perjury, attesting to that person's exempt status. Foreign investors should
consult their tax advisors regarding the need to complete IRS Form W-8 and any
other forms that may be required.
If you do not have a TIN, but have applied for a TIN or intend to apply for
a TIN in the near future, you should complete and sign the Certificate of
Awaiting Taxpayer Identification Number on the Substitute Form W-9. If you do
not provide the Exchange Agent with a TIN before the Election Deadline, you
will be subject to 31% backup withholding.
Backup withholding is not an additional federal income tax. Rather, the
federal income tax liability of a person subject to backup withholding will be
reduced by the amount of tax withheld. If backup withholding results in an
overpayment of taxes, a refund may be obtained from the IRS.
Please read the Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 included with this Election Form and consult
your own tax advisors for additional important information on how to complete
the Substitute Form W-9.
For a summary of the federal income tax consequences of the receipt of cash
or Heller Class A Common Stock as the merger consideration, see "The Merger--
Material Federal Income Tax Consequences" in the Proxy Statement/Prospectus.
In addition, you are urged to consult with your tax advisor.
11. Validity of Tenders. Heller has the discretion, which it may delegate
to the Exchange Agent, to determine whether an Election Form has been properly
completed, signed and submitted or revoked and to disregard immaterial defects
in any Election Form. The good faith decision of Heller and/or the Exchange
Agent on these matters will be conclusive and binding. Neither Heller nor the
Exchange Agent is under any duty to notify you of any defects in any Election
Form.
12. Inadequate Space. If the space provided in Box A is inadequate, you may
describe additional certificates on an additional page and attach it to this
Election Form.
13. Revocation or Change of Form of Election. You may revoke an election
made on an Election Form by delivering written notice to the Exchange Agent
before the Election Deadline. If you revoke this Election Form, you may
request the return of the shares of HealthCare Common Stock described in Box A
from the Exchange Agent, and your request will promptly be granted without
charge. You may change your form of election on this Election Form by
delivering a completed replacement Election Form to the Exchange Agent prior
to the Election Deadline. If a completed Election Form is not submitted after
a revocation, but before the Election Deadline, the shares represented by the
revoked Election Form will be deemed no-election shares.
14. Termination of Merger Agreement. If Heller and HealthCare terminate the
merger agreement, all forms of election will be void and of no effect, and the
Exchange Agent will return to you the shares of HealthCare Common Stock that
you tendered with this Election Form without charge as promptly as practicable
by first class, insured mail or by book-entry transfer to your account at DTC.
15. Revocation of Dissenter's Rights. If you deliver an Election Form that
is not revoked, Heller and HealthCare will deem that delivery a revocation of
any objection to the merger that you previously filed for purposes of
exercising dissenter's rights and a waiver of your future rights to exercise
these rights.
16. Information and Additional Copies. You may obtain additional
information regarding, and additional copies of, the Proxy
Statement/Prospectus and this Election Form from the Information Agent at the
address or phone number listed on the back of this Election Form.
10
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
The following table will help you determine which number to provide on the
Substitute Form W-9:
NOTE: Social security numbers have nine digits separated by two hyphens, i.e.,
000-00-000, and employer identification numbers have nine digits
separated by only one hyphen, i.e., 00-0000000.
NOTE: All "Section" references are to the Internal Revenue Code of 1986, as
amended.
<TABLE>
<CAPTION>
Give The
For This Type of Account: Social Security
Number of:
- -----------------------------------------------
<S> <C>
1. Individual The Individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on the
account*
3. Custodian account of a The minor**
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-
savings trust account trustee*
(grantor is also
trustee)
b. So-called trust account The actual owner*
that is not a legal or
valid trust under state
law
5. Sole proprietorship The owner***
</TABLE>
- ----------------------------------------
<TABLE>
<CAPTION>
Give The Employer
For This Type of Account: Identification
Number of:
------
<S> <C>
6. Sole proprietorship The owner***
7. A valid trust, estate, or The legal
pension trust entity****
8. Corporate The corporation
9. Association, club, The organization
religious, charitable
educational, or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered The broker or
nominee nominee
12. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a state
or local government,
school district or
prison) that receives
agricultural program
payments
</TABLE>
-------------------------------------
* List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
** Circle the minor's name and furnish the minor's social security number.
*** You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your social security
number or your employer identification number (if you have one).
**** List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not
designated in the account title.)
NOTE: If no name is circled when there is more than one name listed, the
number will be considered to be that of the first name listed.
11
<PAGE>
Obtaining Number
If you don't have a taxpayer identification number, obtain Form SS-5,
Application for a Social Security Card, at the local Social Security
Administration office, or Form SS-4, Application for Employer Identification
Number, by calling 1 (800) TAX-FORM, and apply for a number.
Holders Exempt From Backup Withholding
Holders specifically exempted from withholding include:
. An organization exempt from tax under Section 501(a), an individual
retirement account (IRA), or a custodial account under Section 403(b)(7),
if the account satisfies the requirements of Section 401(f)(2).
. The United States or a state thereof, the District of Columbia, a
possession of the United States, or a political subdivision or wholly-
owned agency or instrumentality of any one or more of the foregoing.
. An international organization or any agency or instrumentality thereof.
. A foreign government and any political subdivision, agency or
instrumentality thereof.
Holders that may be exempt from backup withholding include:
. A corporation.
. A financial institution.
. A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under Section 584(a).
. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
. A futures commission merchant registered with the Commodity Futures
Trading Commission.
. A foreign central bank of issue.
Payments of dividends and patronage dividends generally exempt from backup
withholding include:
. Payments to nonresident aliens subject to withholding under Section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
. Section 404(k) payments made by an ESOP.
. Payments of interest generally exempt from backup withholding include:
. Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
. Payments described in Section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under Section 1451.
. Payments made by certain foreign organizations.
Certain payments, other than payments of interest, dividends, and patronage
dividends, that are exempt from information reporting are also exempt from
backup withholding. For details, see Sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A and 6050N and the regulations thereunder.
If you are exempt from backup withholding, you should complete the Substitute
Form W-9 to avoid possible erroneous backup withholding.
Privacy Act Notice
Section 6109 requires you to provide your correct TIN to payers who must
report the payments to the IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your return and may also provide
this information to various government agencies for tax enforcement or
litigation purposes. Payers must be given the numbers whether or not recipients
are required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
Penalties
Failure to Furnish Taxpayer Identification Number--If you fail to furnish
your TIN, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
Civil Penalty for False Information with Respect to Withholding--If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
Criminal Penalty for Falsifying Information--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
For Additional Information Contact Your Tax Consultant
Or The Internal Revenue Service.
12
<PAGE>
The Information Agent is:
Corporate Investor Communications, Inc.
111 Commerce Road
Carlstadt, New Jersey 070072-2586
Telephone: 1-877-460-4349 (toll free)
