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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant /X/
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
HEALTHDYNE TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
INVACARE CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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PRELIMINARY PROXY MATERIALS DATED APRIL 4, 1997
1997 ANNUAL MEETING OF SHAREHOLDERS
OF
HEALTHDYNE TECHNOLOGIES, INC.
------------------------
PROXY STATEMENT
OF
INVACARE CORPORATION
------------------------
PLEASE SIGN, DATE AND RETURN THE ENCLOSED [GOLD] PROXY CARD
This Proxy Statement and the accompanying [GOLD] Annual Meeting proxy card
are being furnished in connection with the solicitation of proxies by Invacare
Corporation ("Invacare") and its wholly owned subsidiary I.H.H. Corp.
("I.H.H."), to be used at the 1997 Annual Meeting of Shareholders of Healthdyne
Technologies, Inc. ("Healthdyne") to be held at [TIME], on [DATE] at [LOCATION],
and at any adjournments or postponements thereof (the "Annual Meeting").
Based on publicly available information, Invacare expects that at the Annual
Meeting seven directors of Healthdyne will be elected for a one-year term
expiring at the 1998 Annual Meeting of Shareholders. Invacare is soliciting your
proxy in support of the election of Invacare's nominees for directors of
Healthdyne named below (the "Invacare Nominees") and the following proposals
which would be made by Invacare at the Annual Meeting: (i) to amend Healthdyne's
by-laws to set the maximum number of directors at seven (as more fully described
herein, the "Number of Directors Proposal"); (ii) to amend Healthdyne's by-laws
to limit the authority of the Board of Directors of Healthdyne to take any
action, or omit to take any action the effect of which is to, impose or permit
to exist certain restrictions on the ability of any future Board to exercise its
power and authority, including making it a violation of Healthdyne's By-Laws if
the incumbent Board of Directors (including any requisite group of "continuing
directors") fails to immediately take all necessary action (prior to the
consideration of the election of directors at the Annual Meeting) to remove the
"dead-hand pill" restrictions from Healthdyne's shareholder rights plan (as more
fully described herein, the "Dead-Hand Elimination Proposal"); (iii) to repeal
each and every provision of Healthdyne's by-laws or amendments thereto which has
not been publicly disclosed prior to March 20, 1997 and was not approved by the
shareholders (as more fully described herein, the "By-Laws Repeal Proposal");
and (iv) to amend Healthdyne's by-laws to give the holders of 10% or more of the
outstanding shares of Healthdyne Common Stock, par value $0.01 per share (the
"Shares"), the right to demand a special meeting and to provide definitive
procedures for any special meeting so demanded (as more fully described herein,
the "Special Meeting Proposal", and, together with the Number of Directors
Proposal, the Dead-Hand Elimination Proposal and the By-Laws Repeal Proposal,
the "Proposals").
ALL INVACARE NOMINEES ARE COMMITTED TO TAKING ALL SUCH ACTIONS NECESSARY OR
APPROPRIATE (SUBJECT TO ANY FIDUCIARY DUTIES THEY WOULD HAVE AS DIRECTORS) TO
APPROVE AND EFFECTUATE THE CONSUMMATION OF THE OFFER AND THE MERGER (AS SUCH
TERMS ARE DEFINED HEREIN). IF ADOPTED, THE PROPOSALS WILL FURTHER FACILITATE THE
OFFER AND THE MERGER.
THE CURRENT BOARD OF DIRECTORS HAS PUBLICLY STATED THAT IT OPPOSES THE OFFER
AND THE MERGER, BUT HAS FAILED TO PRESENT YOU WITH ANY ALTERNATIVE OTHER THAN
HEALTHDYNE REMAINING INDEPENDENT. FURTHERMORE, THE CURRENT BOARD OF DIRECTORS
HAS TRIED TO STRIP YOU OF CRITICAL SHAREHOLDER RIGHTS, INCLUDING THE RIGHT TO
ELECT A FULL BOARD AT EACH ANNUAL MEETING, THE RIGHT TO REMOVE DIRECTORS AT ANY
TIME WITH OR WITHOUT CAUSE AND THE RIGHTS TO ESTABLISH THE SIZE OF AND LIMIT THE
AUTHORITY OF THE BOARD OF DIRECTORS, BY ATTEMPTING TO ENGINEER
DIRECTOR-ENTRENCHING LEGISLATION IN THE GEORGIA GENERAL ASSEMBLY, AND HAS TAKEN
OTHER STEPS TO INCREASE THE OBSTACLES TO YOUR BEING ABLE TO SELL YOUR SHARES IN
THE OFFER OR OTHERWISE EXERCISE YOUR SHAREHOLDER RIGHTS. SEE "BACKGROUND OF
ACQUISITION PROPOSAL", INCLUDING THE SECTION ENTITLED "DIRECTOR-ENTRENCHMENT
LEGISLATION" CONTAINED THEREIN.
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The record date for determining shareholders entitled to notice of and to
vote at the Annual Meeting is [ ], 1997 (the "Record Date"). Shareholders
of record at the close of business on the Record Date will be entitled to one
vote at the Annual Meeting for each Share held on the Record Date. As set forth
in the proxy statement of Healthdyne filed with the Securities and Exchange
Commission (the "Commission") on [ ], 1997 (the "Healthdyne Proxy
Statement"), as of the close of business on the Record Date, there were
Shares issued and outstanding. As of the Record Date, Invacare
beneficially owned an aggregate of 600,000 Shares, which represented
approximately [4.7%] of the Shares reported by Healthdyne to be outstanding as
of the Record Date. Invacare intends to vote such Shares for the election of the
Invacare Nominees and for the Proposals made by it at the Annual Meeting.
------------------------
This Proxy Statement and the [GOLD] Annual Meeting proxy card are first
being furnished to Healthdyne shareholders on or about [ ], 1997. The
principal executive offices of Healthdyne are located at 1255 Kennestone Circle,
Marietta, Georgia 30066.
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IMPORTANT
At the Annual Meeting, Invacare seeks to elect the seven Invacare Nominees
as the directors of Healthdyne and to have the Proposals made by it at the
Annual Meeting adopted by the shareholders.
The election of the Invacare Nominees requires the affirmative vote of a
plurality of votes cast in person or by proxy at the Annual Meeting by the
holders of Shares entitled to vote on the election of directors, assuming a
quorum is present or otherwise represented at the Annual Meeting. A majority of
the Shares entitled to vote, present in person or by proxy, constitutes a
quorum. The adoption of each of the Proposals will require either (i) an
affirmative vote of a majority of all Shares outstanding and entitled to vote
for adoption of any of the Proposals (the "Higher Voting Requirement") or (ii)
the number of votes cast in favor of such Proposal being in excess of the number
of votes cast against such Proposal, assuming a quorum is present or otherwise
represented. Invacare is unable, based on information available to it at this
time, to determine which of the above voting requirements will apply to the
Proposals. See "The Proposals--Voting Procedures". Only Shares that are voted in
favor of a particular nominee or Proposal will be counted toward such nominee's
attaining a plurality of votes or towards such Proposal attaining the necessary
affirmative vote. Abstentions and broker non-votes will be treated as Shares
that are present and entitled to vote for purposes of determining whether a
quorum exists but will not count as a vote either for or against any matter
presented for shareholder approval at the Annual Meeting, except that, if the
Higher Voting Requirement is applicable, abstentions and broker non-votes with
respect to a Proposal will have the same effect as a vote against such Proposal.
INVACARE URGES YOU TO SIGN, DATE AND RETURN THE ENCLOSED [GOLD] ANNUAL
MEETING PROXY CARD TO VOTE FOR ELECTION OF THE INVACARE NOMINEES AND FOR
ADOPTION OF THE PROPOSALS.
A VOTE FOR THE INVACARE NOMINEES WILL PROVIDE YOU--AS THE OWNERS OF
HEALTHDYNE--WITH REPRESENTATIVES ON THE HEALTHDYNE BOARD WHO ARE COMMITTED
(SUBJECT TO ANY FIDUCIARY DUTIES THEY WOULD HAVE AS DIRECTORS) TO EFFECTUATING
THE OFFER AND THE MERGER. A VOTE FOR THE PROPOSALS WILL FURTHER FACILITATE THE
OFFER AND THE MERGER
INVACARE URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY HEALTHDYNE. IF
YOU HAVE ALREADY DONE SO, YOU MAY REVOKE YOUR PROXY BY DELIVERING BY MAIL OR
FACSIMILE A WRITTEN NOTICE OF REVOCATION OR A LATER DATED [GOLD] ANNUAL MEETING
PROXY CARD FOR THE ANNUAL MEETING TO INVACARE, C/O MACKENZIE PARTNERS, INC.
("MACKENZIE PARTNERS"), 156 FIFTH AVENUE, NEW YORK, NEW YORK 10010 (FAX NO.
(212) 929-0308) OR TO THE SECRETARY OF HEALTHDYNE, OR BY VOTING IN PERSON AT THE
ANNUAL MEETING. SEE "PROXY PROCEDURES" BELOW.
IF ANY OF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK, BANK
NOMINEE OR OTHER INSTITUTION ON THE RECORD DATE, ONLY IT CAN VOTE SUCH SHARES
AND ONLY UPON RECEIPT OF YOUR SPECIFIC INSTRUCTIONS. ACCORDINGLY, YOU SHOULD
CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND INSTRUCT THAT PERSON TO
EXECUTE ON YOUR BEHALF THE [GOLD] ANNUAL MEETING PROXY CARD AS SOON AS POSSIBLE.
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THE INVACARE NOMINEES AND THE PROPOSALS
WILL FACILITATE THE SALE OF HEALTHDYNE
------------------------
THE EXISTING HEALTHDYNE BOARD OPPOSES THE OFFER AND THE MERGER
AND HAS TAKEN NUMEROUS STEPS TO ATTEMPT TO ENTRENCH ITSELF,
TO BLOCK THE OFFER AND THE MERGER AND TO STRIP
YOU OF CRITICAL SHAREHOLDER RIGHTS
------------------------
A vote for the Invacare Nominees will provide you--as the owners of
Healthdyne--with representatives on the Healthdyne Board who are committed
(subject to any fiduciary duties they would have as directors) to effectuating
the Offer and the Merger described below. If adopted, the Proposals will further
facilitate the Offer and the Merger.
I.H.H. has commenced an offer to purchase all of the outstanding Shares and
the associated Preferred Stock Purchase Rights (the "Rights") at a purchase
price of $13.50 per Share (and associated Right), net to the seller in cash
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated January 27, 1997, as amended and supplemented by
the Supplement thereto dated April 4, 1997 (as further amended and supplemented
from time to time, the "Offer to Purchase"), and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). The purpose of the Offer is to acquire control of, and the entire
equity interest in, Healthdyne. I.H.H. intends to propose, and to seek to have
Healthdyne consummate as soon as practicable after consummation of the Offer, a
merger or similar business combination (the "Merger") with I.H.H. or another
direct or indirect subsidiary of Invacare, pursuant to which each then
outstanding Share (other than Shares held by Invacare, I.H.H. or any other
wholly owned subsidiary of Invacare, Shares held in the treasury of Healthdyne
and Shares held by shareholders who properly exercise appraisal rights under
Georgia law) would be converted into the right to receive in cash the price per
Share paid by I.H.H. pursuant to the Offer.
In order to provide a possible method of promptly consummating the Offer and
the Merger, Invacare needs the cooperation of the Healthdyne Board to (i) redeem
the Rights or otherwise make the Rights inapplicable to, or cause the dilutive
provisions thereof not to be triggered by, the Offer or the Merger, (ii) approve
the Offer and the Merger for purposes of satisfying the Georgia Business
Combination Statute Condition and the Georgia Fair Price Statute Condition (all
as described in "Terms and Conditions of the Offer" below) and (iii) in the case
of the Merger, execute an agreement and plan of merger (among other things).
THIS PROXY STATEMENT IS NEITHER A REQUEST FOR THE TENDER OF SHARES NOR AN
OFFER WITH RESPECT THERETO. THE OFFER IS BEING MADE ONLY BY MEANS OF THE OFFER
TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL. Copies of the Offer to
Purchase and the Letter of Transmittal may be obtained by contacting MacKenzie
Partners (the Information Agent in the Offer) at the address and telephone
numbers set forth on the back cover of this Proxy Statement.
ELECTION OF THE INVACARE NOMINEES AND APPROVAL OF THE PROPOSALS IS AN
IMPORTANT STEP IN SECURING THE CONSUMMATION OF THE OFFER AND THE MERGER.
HOWEVER, YOU MUST TENDER YOUR SHARES PURSUANT TO THE OFFER IF YOU WISH TO
PARTICIPATE IN THE OFFER. YOUR VOTE FOR THE INVACARE NOMINEES OR FOR ANY OF THE
PROPOSALS WILL NOT OBLIGATE YOU TO TENDER YOUR SHARES PURSUANT TO THE OFFER, AND
YOUR FAILURE TO VOTE FOR THE INVACARE NOMINEES OR ANY OF THE PROPOSALS WILL NOT
PREVENT YOU FROM TENDERING YOUR SHARES PURSUANT TO THE OFFER.
All Invacare Nominees support the Offer and the Merger and if elected will,
subject to any fiduciary duties such nominees would have as directors of
Healthdyne, seek to cause Healthdyne to take all steps necessary or appropriate
to permit the Offer and the Merger to proceed, including without limitation (i)
redeeming the Rights or otherwise making the Rights inapplicable to, or causing
the dilutive provisions
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thereof not to be triggered by, the Offer or the Merger, (ii) adopting a
resolution approving the Offer and the Merger for purposes of the Georgia
Business Combination Statute and the Georgia Fair Price Statute and (iii) in the
case of the Merger, taking action to execute an agreement and plan of merger.
Invacare and the Invacare Nominees are not presently aware of any competing
third-party acquisition proposals. Given the widespread publicity concerning
Invacare's proposal to acquire Healthdyne, the fact that as of the date of this
Proxy Statement there has been no other publicly disclosed proposal to acquire
Healthdyne, and the fact that, if elected, the Invacare Nominees will be elected
by the shareholders to take the actions outlined herein, it is not expected that
the Invacare Nominees would actively solicit additional offers for Healthdyne.
However, all Invacare Nominees recognize the fiduciary duties they would have as
directors of Healthdyne if elected and therefore they would give all
consideration required by such fiduciary duties to any BONA FIDE acquisition
proposals submitted to Healthdyne at a price higher than the Offer and the
Merger. For information about the Minimum Condition, the Rights Condition, the
Georgia Business Combination Statute Condition and the Georgia Fair Price
Statute Condition, see "Terms and Conditions of the Offer" below.
A vote for the Proposals will further facilitate the Offer and the Merger.
Adoption and valid implementation of the Proposals would ensure that (i) the
incumbent Healthdyne directors would not be able to unilaterally increase the
size of the Board of Directors and "pack" it with nominees selected by them,
(ii) the Invacare Nominees, if elected, would be able to redeem Healthdyne's
poison pill or render it inapplicable to the Offer and the Merger, thus
satisfying the Rights Condition, (iii) actions taken by the incumbent Healthdyne
directors to manipulate Healthdyne's By-Laws (the "By-Laws") to their advantage
by adopting amendments without shareholder approval would be nullified, and (iv)
the Healthdyne shareholders would be able to exercise more direct and effective
oversight of the Board of Directors elected at the Annual Meeting. Invacare
believes that these actions, individually and collectively, will assist the
shareholders in expressing their desire that Healthdyne be sold or merged in the
near future.
AS INDICATED UNDER "BACKGROUND OF PROPOSED ACQUISITION" BELOW, THE INCUMBENT
HEALTHDYNE DIRECTORS HAVE REPEATEDLY REJECTED INVACARE'S ACQUISITION PROPOSALS,
INCLUDING THE OFFER AND THE MERGER, WHILE CONSISTENTLY REFUSING TO MEET OR
DISCUSS THE PROPOSED ACQUISITION WITH INVACARE, BUT HAVE NOT PRESENTED YOU WITH
ANY ALTERNATIVE OTHER THAN HEALTHDYNE REMAINING INDEPENDENT. FURTHERMORE, THE
CURRENT BOARD OF DIRECTORS HAS TRIED TO STRIP YOU OF CRITICAL SHAREHOLDER
RIGHTS, INCLUDING THE RIGHT TO ELECT A FULL BOARD AT EACH ANNUAL MEETING, THE
RIGHT TO REMOVE DIRECTORS AT ANY TIME WITH OR WITHOUT CAUSE AND THE RIGHTS TO
ESTABLISH THE SIZE OF AND LIMIT THE AUTHORITY OF THE BOARD OF DIRECTORS, BY
ATTEMPTING TO ENGINEER DIRECTOR-ENTRENCHING LEGISLATION IN THE GEORGIA GENERAL
ASSEMBLY, AND HAS TAKEN OTHER STEPS TO INCREASE THE OBSTACLES TO YOUR BEING ABLE
TO SELL YOUR SHARES IN THE OFFER OR OTHERWISE EXERCISE YOUR SHAREHOLDER RIGHTS.
SEE "BACKGROUND OF ACQUISITION PROPOSAL", INCLUDING THE SECTION ENTITLED
"DIRECTOR-ENTRENCHMENT LEGISLATION" CONTAINED THEREIN. ASSUMING THE INCUMBENT
DIRECTORS DECIDE TO RUN FOR RE-ELECTION AT THE ANNUAL MEETING (OR SELECT
NOMINEES TO RUN IN THEIR PLACES), INVACARE BELIEVES YOU SHOULD SERIOUSLY
QUESTION WHETHER THEY HAVE LEFT YOU WITH ANY REASON TO TRUST THEM AND THEIR
LOYALTY TO YOU IN LIGHT OF THEIR ACTIONS DURING THE PAST FEW MONTHS.
IF, LIKE US, YOU BELIEVE THAT YOU SHOULD HAVE THE OPPORTUNITY TO DECIDE THE
FUTURE OF YOUR COMPANY AND THAT YOU SHOULD HAVE THE CHANCE TO RECEIVE AT LEAST
$13.50 PER SHARE FOR ALL OF YOUR SHARES, INVACARE URGES YOU TO VOTE YOUR [GOLD]
ANNUAL MEETING PROXY CARD FOR EACH OF THE INVACARE NOMINEES AND FOR ADOPTION OF
EACH OF THE PROPOSALS. ALL OF THE INVACARE NOMINEES WILL TAKE ALL SUCH ACTIONS
NECESSARY OR APPROPRIATE (SUBJECT TO ANY FIDUCIARY DUTIES THEY WOULD HAVE AS
DIRECTORS) TO APPROVE AND EFFECTUATE THE CONSUMMATION OF THE OFFER AND THE
MERGER. IF ADOPTED, THE PROPOSALS WILL FURTHER FACILITATE THE OFFER AND THE
MERGER.
ELECTION OF DIRECTORS
According to publicly available information, Healthdyne currently has seven
directors who serve for terms of one year. The terms of the seven
directors--Craig B. Reynolds, Parker H. Petit, J. Terry Dewberry, Alexander H.
Lorch, J. Leland Strange, James J. Wellman and J. Paul Yokubinas--will expire at
the Annual Meeting.
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Invacare proposes that the Healthdyne shareholders elect the Invacare
Nominees to be the directors of Healthdyne at the Annual Meeting. The seven
Invacare Nominees are listed below and have furnished the following information
concerning their principal occupations or employment and certain other matters.
Each Invacare Nominee, if elected, would hold office until Healthdyne's 1998
Annual Meeting of Shareholders and until a successor has been elected and
qualified, or until his earlier death, resignation or removal. Although Invacare
has no reason to believe that any of the Invacare Nominees will be unable to
serve as directors, if any one or more of the Invacare Nominees should not be
available for election, the persons named on the [GOLD] Annual Meeting proxy
card have agreed to vote for the election of such other nominees as may be
proposed by Invacare.
The Invacare Nominees for directors are:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
NAME, AGE AND PRINCIPAL BUSINESS ADDRESS DURING LAST FIVE YEARS; CURRENT DIRECTORSHIPS
- ------------------------------------------------ ---------------------------------------------------------------
<S> <C>
Nicholas J. DiCicco, Jr, 65..................... President and Chief Executive Officer of Midwestern National
6650 Beta Drive Life Insurance Company of Ohio since 1975.
Mayfield Village, Ohio 44143
Donald F. Hastings, 68.......................... Chairman of the Board, The Lincoln Electric Company, a welding
22801 St. Claire Avenue products manufacturer, since 1992. Also Chief Executive
Cleveland, Ohio 44117 Officer of The Lincoln Electric Company from 1992 to 1996.
President and Chief Operating Officer of The Lincoln Electric
Company from 1987 to 1992.
Jack Kahl, Jr., 56.............................. Chairman of the Board and Chief Executive Officer of Manco,
32150 Just Imagine Drive Inc., a company specializing in the production of heavy-duty
Avon, Ohio 44011-1355 adhesive tape, since 1971. Currently a member of the Board of
Directors of Royal Appliance MFG. Co. and Applied Industrial
Technologies, Inc.
Ernest Peter Mansour, 66........................ Attorney and Managing Partner of Mansour, Gavin, Gerlack &
55 Public Square, Suite 2150 Manos Co., L.P.A., a Cleveland law firm, since 1981.
Cleveland, Ohio 44113
Jon H. Outcalt, 60.............................. Chairman of the Board of NCS HealthCare, Inc. since 1986.
3201 Enterprise Parkway, #220 Senior Vice President of Alliance Capital Management L.P., a
Beachwood, Ohio 44122 money management firm, from 1975 to 1995. Currently a member
of the Board of Directors of Myers Industries, Inc. and Ohio
Savings Financial Corp.
James Allen Rutherford, 51...................... Chairman and Managing Director of Wingset Investments Ltd. and
15 S. High St. President of Wingset, Inc., technology venture funds, from
P.O. Box 166 New Albany, Ohio 43054 1993 to present. Former Chairman of Countrysport, Inc., a
sports book publisher, from 1994 to 1996. Retired from
position of Chairman, Goal Systems International, Inc., a
software vending company, in 1992. Currently a member of the
Board of Directors of Ciber Inc. and Symix Systems, Inc.
Bill R. Sanford, 53............................. Chairman of the Board, President and Chief Executive Officer of
5960 Heisley Road STERIS Corporation, an infection prevention and surgical
Mentor, Ohio 44060 support company, since 1987. Currently a member of the Board
of Directors of KeyBank, N.A.
</TABLE>
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Election of the Invacare Nominees as the directors of Healthdyne requires
the affirmative vote of a plurality of votes cast in person or by proxy at the
Annual Meeting by the holders of Shares entitled to vote on the election of
directors, assuming a quorum is present or otherwise represented at the Annual
Meeting. Consequently, only Shares that are voted in favor of a particular
nominee will be counted toward such nominee's attaining a plurality of votes.
Shares considered present at the Annual Meeting that are not voted for a
particular nominee (including broker non-votes and abstentions), and Shares
present by proxy where the shareholder properly withheld authority to vote for
such nominee, will not be counted either for or against such nominee's
attainment of a plurality.
Invacare believes that it is in your best interests to elect the Invacare
Nominees at the Annual Meeting. ALL INVACARE NOMINEES ARE COMMITTED TO TAKING
ALL SUCH ACTIONS NECESSARY OR APPROPRIATE (SUBJECT TO ANY FIDUCIARY DUTIES THEY
WOULD HAVE AS DIRECTORS) TO APPROVE AND EFFECTUATE THE CONSUMMATION OF THE OFFER
AND THE MERGER.
INVACARE STRONGLY RECOMMENDS A VOTE
FOR ELECTION OF THE INVACARE NOMINEES.
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THE PROPOSALS
In order to further facilitate the Offer and the Merger, Invacare is
soliciting proxies in support of the following Proposals which would be
considered and voted upon at the Annual Meeting:
1. NUMBER OF DIRECTORS PROPOSAL
To adopt, prior to the election of directors at the Annual Meeting, a
proposal to amend the By-Laws to fix the maximum number of directors of
Healthdyne at seven (7) and provide that, without the approval of the
shareholders, the Board of Directors may not thereafter amend or repeal
the section of the By-Laws governing the number of directors or adopt any
new By-Law provision which is inconsistent in any manner with such
section.
2. DEAD-HAND ELIMINATION PROPOSAL
To adopt, prior to the election of directors at the Annual Meeting, a
proposal to amend the By-Laws to provide that the Board of Directors
shall have no authority to take any action, or omit to take any action,
the effect of which action or omission would be to impose, or permit to
continue or be imposed, any limitation (directly or indirectly, and
including any such limitation imposed by means of a requirement for
concurrence or other action by any particular director or particular type
of director), resulting from or becoming operative in light of, in whole
or in part, a change in the composition of the Board of Directors
(whether or not under specified circumstances), on the exercise by any
future Board of Directors of any power or authority that it would
otherwise have, including any such limitation on the ability of a Board
of Directors to redeem or amend any shareholder rights plan of Healthdyne
which limitation results from or becomes operative in light of, in whole
or in part, a change in the composition of the Board of Directors
(whether or not under specified circumstances). In particular, but not in
limitation, such amendment will also specifically provide that the
incumbent Board of Directors will be in violation of the By-Laws if such
Board, including any requisite group of "continuing directors", fails to
immediately take all necessary action (prior to the consideration of the
election of directors at the Annual Meeting) to amend any shareholder
rights plan of Healthdyne to remove all such limitations. Such amendment
will further provide that such By-Law may not be amended, nor may any new
By-Law provision which is in any manner inconsistent therewith be
adopted, without the approval of the shareholders.
3. BY-LAWS REPEAL PROPOSAL
To adopt a proposal to repeal each and every provision of the By-Laws
of Healthdyne or amendments thereto which was adopted on or after June
30, 1996 and prior to the date of adoption of such proposal, other than
those provisions which were fully disclosed and properly reflected in the
public filings made by Healthdyne with the Commission prior to March 20,
1997 and those provisions which were duly approved by the shareholders;
and to propose that, without the approval of the shareholders, the Board
of Directors may not thereafter amend any section of the By-Laws affected
by such repeal or adopt any new by-law provision in a manner which serves
to reinstate any repealed provision or any similar provision.
4. SPECIAL MEETING PROPOSAL
To adopt a proposal to amend the By-Laws to (i) give the beneficial
owners and/or record holders of 10% or more of the outstanding Shares the
right to demand a special meeting, (ii) require that any such meeting be
held on the date specified in the demand notice, so long as such date is
not less than 45 calendar days after the date such demand notice is
delivered to Healthdyne, (iii) set the record date for purposes of making
such demand to the date the first
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such holder executes the demand and the record date for the meeting to be
the record date specified in the demand notice, so long as such date is
not less than 10 days after the date such demand notice is delivered to
Healthdyne and so long as such record date is otherwise in compliance
with Georgia law (without reference to other provisions of Healthdyne's
By-Laws), (iv) require the Board of Directors to give notice of such
meeting to the shareholders at the earliest possible time following the
record date for such meeting consistent with the requirements of Georgia
law, (v) provide that the only business to be conducted at such meeting
be the business set forth in the demand notice delivered to Healthdyne,
(vi) provide that any such demands which on their face appear to have
been validly made by record holders, or by beneficial owners providing
documentation which on its face establishes their beneficial ownership
(including a certificate of their record holder nominee), shall be
accepted and not challenged by Healthdyne unless there is an affirmative
reasonable basis on which such validity should be questioned, (vii)
require Healthdyne to use its best efforts to resolve any disputes
regarding special meetings as expeditiously as possible, and (viii)
provide that, without the approval of the shareholders, the Board of
Directors may not further amend or repeal the section of the By-Laws
governing special meetings or adopt any new by-law provision which is
inconsistent in any manner with such section.
Schedule IV contains the specific language of the by-law amendments which
would be effected by adoption of the Number of Directors Proposal, the Dead-Hand
Elimination Proposal and the Special Meeting Proposal at the Annual Meeting.
NUMBER OF DIRECTORS PROPOSAL
Healthdyne's By-Laws (the "By-Laws"; discussions in this Proxy Statement of
provisions of the By-Laws are based upon the By-Laws as most recently publicly
disclosed by Healthdyne on March 31, 1997) provide that the size of Healthdyne's
Board of Directors shall be fixed from time to time by the Board of Directors
and shall consist of not less than three (3) or more than nine (9) directors
unless the number of record holders of Shares is less than three. According to
the information made publicly available by Healthdyne as of the date of this
Proxy Statement, there are currently seven directors, all of whom are to be
elected at the Annual Meeting. Adoption of the Number of Directors Proposal
would restrict the number of directors to no more than the present number of
seven.
The Number of Directors Proposal is designed to prevent the current Board of
Directors from frustrating the ability of the shareholders to elect all seven
Invacare Nominees to constitute the entire Board. Invacare is concerned that,
prior to the Annual Meeting, the current Board of Directors might attempt to
expand the size of the Board of Directors beyond the current seven seats,
whether by resolution, amendment of the By-Laws or otherwise, and might attempt
to do so in a manner intended to prevent Invacare from proposing additional
nominees. Indeed, part of the legislation which Healthdyne and its current Board
of Directors sought to have enacted by the Georgia General Assembly (but which
has been resoundingly defeated) would have reserved to the board of directors of
every publicly-held Georgia corporation, including the Board of Directors of
Healthdyne, the sole right to determine the size of the board, eliminating the
rights of the shareholders to control the size of the board through by-law
amendments. See "Background of Acquisition Proposal--Director-Entrenchment
Legislation".
Invacare believes that the Board of Director's ability to attempt to
manipulate the size of the Board is limited by its fiduciary duties. However, by
restricting the maximum number of Board seats to seven, adoption of the Number
of Directors Proposal will ensure that the election contest at the Annual
Meeting will take place on a level playing field, without the incumbent Board or
their nominees gaining an unfair advantage by attempting to run for unopposed
positions. Invacare has notified Healthdyne that it would propose additional
nominees for election if Healthdyne attempts to expand the size of the Board of
Directors above its existing level of seven directors prior to the Annual
Meeting.
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In addition, should the shareholders choose to elect the Invacare Nominees
to a minority of the seats on the Board of Directors, whether because of an
announced intention by the current Board of Directors to pursue a sale of
Healthdyne or otherwise, adoption of the Number of Directors Proposal would have
the purpose of ensuring that the incumbent directors, who would continue to
constitute a majority, could not frustrate the will of the shareholders by
increasing the size of the Board and installing hand-picked allies. Adoption of
the Number of Directors Proposal would thereby prevent an incumbent majority, if
re-elected, from unilaterally "packing" the Board of Directors without
shareholder approval and upsetting the percentage of Invacare Nominees on the
Healthdyne Board desired by the shareholders.
INVACARE STRONGLY RECOMMENDS A VOTE FOR ADOPTION OF THE NUMBER OF DIRECTORS
PROPOSAL.
DEAD-HAND ELIMINATION PROPOSAL
Healthdyne's Rights plan contains unusual provisions, commonly referred to
as "dead-hand pill" restrictions, which, under certain circumstances, purport to
prevent a newly elected Board of Directors from redeeming or amending the Rights
without the consent of the old directors. Among other things, the "dead-hand
pill" restrictions would purport to prevent the Invacare Nominees, if elected at
the Annual Meeting, from redeeming or amending the Rights so as to satisfy the
Rights Condition and permit the Offer and the Merger to proceed, notwithstanding
the mandate Healthdyne's shareholders will have given to the Invacare Nominees
in such election, unless there also remained on the Healthdyne Board one or more
incumbent directors or their hand-picked successors and a majority of them
approved such actions. For a more detailed description of Healthdyne's Rights
plan and the "dead-hand pill" restrictions, see "Terms and Conditions of the
Offer--The Rights Condition", below.
Invacare believes that the "dead-hand pill" restrictions, which were adopted
by Healthdyne's current Board of Directors without shareholder approval, are a
collection of draconian and extreme director-entrenching provisions which, in
purporting to limit the ability of future Boards of Directors of Healthdyne from
acting in the best interests of Healthdyne and its shareholders by redeeming or
otherwise nullifying the Rights in connection with a proposed transaction,
denies the shareholders and future Boards of Directors meaningful access to and
control over the assets of Healthdyne and hinders and prevents the exercise of
fundamental shareholder rights under Georgia law. Invacare believes that such
provisions violate Georgia and federal law and has commenced litigation against
Healthdyne and certain of its directors in the United States District Court for
the Northern District of Georgia (the "Defensive Tactics Litigation") which
seeks, among other things, an order declaring the "dead-hand pill" restrictions
illegal and unenforceable and compelling Healthdyne's Board of Directors to
amend the Rights to remove such restrictions. See "Background of Acquisition
Proposal--Defensive Tactics Litigation", below.
By adopting the Dead-Hand Elimination Proposal, the Healthdyne shareholders
can take action at the Annual Meeting to eliminate the illegal "dead-hand pill"
restrictions of the Rights plan in the event that the court in the Defensive
Tactics Litigation has not yet issued a final order invalidating them. Adoption
and valid implementation of the Dead-Hand Elimination Proposal would eliminate
the authority of the current Healthdyne Board of Directors to keep in place the
director-entrenching "dead-hand pill" restrictions and would make the failure by
the Board to amend the Rights plan to remove the "dead-hand pill" restrictions a
violation of the By-Laws. This will facilitate the Offer and the Merger by
allowing the Invacare Nominees, if elected as directors, to redeem or amend the
Rights so as to satisfy the Rights Condition and permit the Offer and the Merger
to proceed. In addition, a vote in favor of the Dead-Hand Elimination Proposal
will send a strong message to the current Healthdyne Board of Directors that its
efforts to reserve for itself and its hand-picked successors the sole power to
approve extraordinary transactions, while denying such power to any other
directors duly elected by Healthdyne's shareholders, are unacceptable. Adoption
and valid implementation of the Dead-Hand Elimination Proposal would also limit
the authority of the Board of Directors to impose or permit to exist other
restrictions on the ability of
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any future Board to exercise its power and authority which result from or become
operative in light of, in whole or in part, a change in the composition of the
Board of Directors.
Invacare believes that the Dead-Hand Elimination Proposal is valid, legal
and enforceable, particularly because it has been very narrowly crafted so as
only to limit the Board's authority to restrict the ability of future boards
through "dead-hand'-type provisions, and does not otherwise limit the Board's
general authority, including the authority of the Board to consider, in a manner
consistent with its fiduciary duties and applicable law, acquisition proposals.
However, Invacare recognizes that the courts in Georgia have not considered the
validity of the Dead-Hand Elimination Proposal or any similar by-law proposal or
provision. It is possible that the validity, legality or enforceability of the
Dead-Hand Elimination Proposal may be challenged in court, including by
Healthdyne's incumbent Board and/or management, and that, in light of the
absence of legal precedent specifically on point, such a challenge could be
successful. Part of the legislation which Healthdyne and its current Board of
Directors sought to have enacted by the Georgia General Assembly (but which has
been resoundingly defeated) would have attempted to eliminate the rights of
shareholders, explicitly contained in the Georgia Business Corporation Code (the
"GBCC"), to limit the authority of the board of directors. See "Background of
Acquisition Proposal--Director-Entrenchment Legislation".
INVACARE STRONGLY RECOMMENDS A VOTE FOR ADOPTION OF THE DEAD-HAND
ELIMINATION PROPOSAL.
BY-LAWS REPEAL PROPOSAL
Adoption of the By-Laws Repeal Proposal would repeal each and every
provision of the By-Laws, if any, which was not publicly disclosed by Healthdyne
prior to March 20, 1997, the date on which Invacare delivered a notice to
Healthdyne pursuant to the By-Laws notifying Healthdyne of Invacare's intent to
nominate the Invacare Nominees and make the Proposals at the Annual Meeting (the
"Invacare Nomination and Proposal Notice"), or which Healthdyne adopted on or
after such date, other than those provisions duly adopted by the shareholders.
According to documents Healthdyne has filed with the Commission, since publicly
filing its by-laws as of June 30, 1996 with the Commission, Healthdyne's Board
of Directors has, after Invacare made public its interest in an acquisition of
Healthdyne and without shareholder approval, amended Healthdyne's By-Laws to (i)
elect that Healthdyne be governed by the Georgia Fair Price Statute, (ii) remove
from the By-Laws a provision requiring the annual meeting of shareholders of
Healthdyne to be held on the fourth Tuesday in April unless a different date was
set by the Board of Directors and (iii) provide additional onerous procedures
governing special meetings which purport to permit Healthdyne and its Board of
Directors to delay a special meeting for more than four months after receiving
the requisite shareholder demands. Unfortunately, Georgia law does not allow the
Healthdyne shareholders, acting alone, to repeal the By-Law provision opting
into the Georgia Fair Price Statute, and reinstatement of the default annual
meeting date provision at the Annual Meeting would be of little consequence
since the Annual Meeting will already have been scheduled and held. Accordingly,
even though Invacare believes that both of such post-announcement by-law
amendments by the Healthdyne Board were motivated by the incumbent directors'
desire to entrench themselves, Invacare is not seeking repeal of such amendments
in the By-Laws Repeal Proposal.
The By-Laws Proposal is, however, designed to repeal any other by-law
changes that the Board of Directors may have attempted to make yet did not
disclose prior to March 20, 1997. Adoption of the By-Laws Proposal would render
ineffective any further attempted manipulation of the By-Laws by the Healthdyne
Board, whether intended to frustrate the ability of the shareholders to elect
the Invacare Nominees or adopt any of the Proposals, to create new obstacles to
the consummation of the Offer and the Merger, or otherwise. Invacare's objective
in making the By-Laws Proposal is to prevent further manipulation of the By-Laws
by the Board of Directors at the expense of the shareholders and their rights.
For example, on March 21, 1997, the day after Invacare delivered the Invacare
Nomination and Proposal Notice to Healthdyne, Healthdyne issued a press release
announcing, among other things, that on
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March 20, 1997 its Board of Directors had adopted amendments to the By-Laws
regarding the procedures governing special meetings (the "Special Meeting
Delaying Amendments") which would enable Healthdyne and its Board of Directors
to challenge the validity of shareholder demands for, and create other delays to
the prompt calling of, special meetings. Among other things, the Special Meeting
Delaying Amendments purport to permit Healthdyne and its Board of Directors to
delay a special meeting for more than four months after receiving the requisite
shareholder demands. Adoption of the By-Laws Proposal would repeal such
amendments, which had not been publicly disclosed prior to the date on which
Invacare delivered its notice.
As of the date of this Proxy Statement, the Board has failed to indicate
that it will take no further actions designed to abrogate the actions of
Healthdyne's shareholders with respect to the Offer or the Merger or create new
obstacles to the Offer and the Merger. In fact, in its Answer to the Complaint
filed by Invacare and I.H.H. in the Defensive Tactics Litigation, Healthdyne
affirmatively stated that it may adopt additional defensive measures. So far the
current Board of Directors has carried out this threat by adopting the Special
Meeting Delaying Amendments described above, as well as by attempting to
engineer director-entrenching legislation in the Georgia General Assembly (see
"Background of Acquisition Proposal--Director-Entrenchment Legislation"), each
time demonstrating the manipulative intentions of the incumbent directors. The
By-Laws Proposal is intended to guarantee that any previously undisclosed By-Law
amendment, including the Special Meeting Delaying Amendments, will be repealed
so as to prevent the Healthdyne Board from manipulatively altering the By-Laws
prior to the Annual Meeting without shareholder approval. In order to prevent
any further similar manipulation by the Board of Directors, the By-Laws Repeal
Proposal would prevent the Board from amending any section of the By-Laws
affected by such repeal or adopting any new by-law provision in a manner which
serves to reinstate any repealed provision or any similar provision.
INVACARE STRONGLY RECOMMENDS A VOTE FOR ADOPTION OF THE BY-LAWS REPEAL
PROPOSAL.
SPECIAL MEETING PROPOSAL
Healthdyne's current charter and By-Laws provide for shareholder action
outside of an annual meeting of shareholders only at a special meeting of
shareholders, which the By-Laws provide can be demanded by the shareholders only
upon action by the holders of 60% or more of the Shares (a percentage level
higher than that needed to approve almost any shareholder action at such a
meeting), or by unanimous written consent. The 60% level required to call a
special meeting would, in light of the diffuse ownership of the Shares and the
federal proxy rules, likely require a time-consuming public solicitation just to
gather the requisite demands for a special meeting followed by a second
time-consuming proxy solicitation with respect to the actual matters to be acted
upon at the special meeting. These solicitations would each require the
potentially lengthy clearance of proxy materials by the Commission and would
require the distribution of two separate sets of proxy materials to the
shareholders.
In addition, Healthdyne and its Board of Directors might attempt to
extensively delay holding a special meeting, even in the face of a valid demand
by the holders of 60% or more of its Shares. Indeed, Healthdyne's current
directors have already tried to hinder demands for special meetings by recently
adopting the Special Meeting Delaying Amendments, which purport to permit
Healthdyne and its Board of Directors to delay a special meeting for more than
four months after receiving the requisite shareholder demands (although the
Special Meeting Delaying Amendments themselves will be repealed if the By-Laws
Repeal Proposal is adopted). Healthdyne's Board of Directors might also attempt
to raise the level of demands needed to call a special meeting beyond the
supermajority 60% threshold currently in effect. Invacare believes that the
Board's ability to attempt any such actions is limited by the Board's fiduciary
duties.
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Invacare believes that Healthdyne shareholders should have the right to
demand a special meeting, without the unnecessary time and expense of
duplicative solicitations, and that Healthdyne should be prevented from
frustrating the will of the shareholders by delaying or otherwise manipulating
such a meeting. Adoption of the Special Meeting Proposal would reduce the
percentage needed to call a special meeting of the shareholders to the holders
(including beneficial owners) of at least 10% of the outstanding Shares (a level
of demands likely to be achievable without the need for a formal solicitation),
down from the 60% level currently required by the By-Laws, and would provide
additional procedural safeguards intended to ensure that such a meeting would be
called promptly and that the Board of Directors would not be able to manipulate
either the record date for such a demand and/or meeting or the business to be
conducted at such meeting so as to disenfranchise the requesting holders or
otherwise frustrate their purposes in calling such a meeting. In addition,
adoption of the Special Meeting Proposal would prevent the Board of Directors
from attempting to interpose additional delay in calling a special meeting by
questioning the validity of a demand without an affirmative reasonable basis. In
order to prevent any further manipulation of special meetings by the Board of
Directors, the Special Meeting Proposal would prevent the Board from amending
any section of the By-Laws governing special meetings or adopt any new by-law
provision which is inconsistent in any manner with such section.
The current Board of Directors of Healthdyne has continually refused to have
any discussions or contacts with Invacare regarding its acquisition proposal and
has repeatedly stated that it is not for sale at this time. If, however, the
incumbent Board of Directors or their nominees are successful in retaining
control of a majority of the seats on the Board of Directors, whether because of
an announced intention to pursue a sale of Healthdyne or otherwise, Invacare
believes that it is critical that Healthdyne's shareholders have the ability to
meaningfully supervise the progress of the Board in its running of the company
or in pursuing such a transaction by gaining the right to call prompt special
meetings of shareholders to take remedial shareholder action. Permitting the
holders of 10% of the outstanding Shares to demand a prompt special meeting will
cause the Healthdyne Board of Directors to be more directly accountable to the
Healthdyne shareholders and will give the Healthdyne shareholders the ability to
quickly remove any or all directors who are not serving the best interests of
the shareholders or to effect any other desired shareholder action. Invacare
notes that 10% is the level required by the Revised Model Business Corporation
Act and is the level required or suggested by the corporation codes of more than
half of the states in the United States for shareholder demands for special
meetings.
It is also worth noting that Article II, Section 2 of Healthdyne's current
By-Laws specifically provide that the shareholders may "remove Directors with or
without cause at any time" (emphasis added). Adoption of the Special Meeting
Proposal would provide a more appropriate mechanism to permit the shareholders
to exercise this right in a timely fashion. In addition, virtually all actions
which shareholders might take at a special meeting would only require the
affirmative vote of more than 50% of the votes cast or the shares outstanding,
depending on the action to be taken. Thus the current provisions of the By-Laws,
which require the holders of at least 60% of all outstanding shares to demand a
special meeting, have the perverse requirement that more shareholders are needed
to demand a special meeting for shareholders to consider taking action than
would actually be needed to take such action at such meeting. Adoption of the
Special Meeting Proposal would remedy this inconsistency as well.
INVACARE STRONGLY RECOMMENDS A VOTE FOR ADOPTION OF THE SPECIAL MEETING
PROPOSAL.
VOTING PROCEDURES
Georgia law generally provides that shareholder action on a matter is
approved if the number of votes cast in favor of such matter exceeds the number
of votes cast against such matter, assuming a quorum is present or otherwise
represented. Healthdyne's By-Laws purport to require an affirmative vote of a
majority of all Shares outstanding and entitled to vote in order for the
shareholders to take any action with respect to the By-Laws, including the
adoption of any of the Proposals. However, Georgia law provides
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that a by-law providing for an increased voting requirement, such as the Higher
Voting Requirement, is only valid if adopted by the shareholders. Because
Invacare does not know if the provision of Healthdyne's By-Laws purporting to
impose the Higher Voting Requirement was adopted by the shareholders, it is
unable to determine at this time whether adoption of each of the Proposals will
require an affirmative vote of a majority of all Shares outstanding and entitled
to vote or simply an excess of votes cast for such Proposal over the votes cast
against such Proposal, assuming a quorum.
Only Shares that are voted in favor of a particular Proposal will be counted
toward such Proposal attaining the necessary affirmative vote. Shares considered
present at the Annual Meeting that are not voted for a particular Proposal
(including broker non-votes and abstentions), and Shares present by proxy where
the shareholder properly withheld authority to vote for such Proposal, will not
be counted either for or against the approval of such Proposal, except that, if
the Higher Voting Requirement is applicable, abstentions and broker non-votes
with respect to a Proposal will have the same effect as a vote against such
Proposal.
OTHER PROPOSALS
Except as set forth above, Invacare is not aware of any proposals to be
brought before the Annual Meeting. Should other proposals be brought before the
Annual Meeting, the persons named on the [GOLD] Annual Meeting proxy card will
abstain from voting on such proposals unless such proposals adversely affect the
interests of Invacare as determined by Invacare in its sole discretion, in which
event such persons will vote on such proposals at their discretion.
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PROXY PROCEDURES
The accompanying [GOLD] Annual Meeting proxy card will be voted at the
Annual Meeting in accordance with your instructions on such card. You may vote
FOR the election of the Invacare Nominees as the directors of Healthdyne and FOR
the adoption of the Proposals or withhold authority to vote for the election of
the Invacare Nominees or for any of the Proposals by marking the proper boxes on
the [GOLD]Annual Meeting proxy card. You may also withhold your vote for any of
the Invacare Nominees by writing the name of such nominee in the space provided
on the [GOLD] Annual Meeting proxy card. If no marking is made, you will be
deemed to have given a direction to vote the Shares represented by the [GOLD]
Annual Meeting proxy card FOR the election of all of the Invacare Nominees and
FOR the adoption of all the Proposals provided that you have signed the proxy
card.
In order for your views on the above-described matters to be represented at
the Annual Meeting, please sign and date the enclosed [GOLD] Annual Meeting
proxy card and return it to Invacare, c/o MacKenzie Partners, Inc., 156 Fifth
Avenue, New York, New York 10010, in the enclosed envelope, or by fax to (212)
929-0308, in time to be voted at the Annual Meeting. Execution of the [GOLD]
Annual Meeting proxy card will not affect your right to attend the Annual
Meeting and vote in person. Any proxy may be revoked at any time prior to the
Annual Meeting by delivering a written notice of revocation or a later dated
proxy for the Annual Meeting to Invacare or to the Secretary of Healthdyne, or
by voting in person at the Annual Meeting. Although a revocation is effective if
delivered to Healthdyne, Invacare requests that either the original or copies of
all revocations be mailed or faxed to Invacare in care of MacKenzie Partners at
the address or facsimile number set forth on the back cover of this Proxy
Statement so that Invacare will be aware of all revocations and can more
accurately determine how many proxies have been received from the holders of
record on the Record Date of outstanding Shares. If you do not vote in person at
the Annual Meeting, ONLY YOUR LATEST DATED PROXY FOR THE ANNUAL MEETING WILL
COUNT.
Only holders of record as of the close of business on the Record Date will
be entitled to vote. If you were a shareholder of record on the Record Date, you
will retain your voting rights for the Annual Meeting even if you sell such
Shares after the Record Date. Accordingly, it is important that you vote the
Shares held by you on the Record Date, or grant a proxy to vote such Shares on
the [GOLD] Annual Meeting proxy card, even if you sell such Shares after the
Record Date.
If any of your Shares are held in the name of a brokerage firm, bank, bank
nominee or other institution on the Record Date, only it can vote such Shares
and only upon receipt of your specific instructions. Accordingly, you should
contact the person responsible for your account and instruct that person to
execute on your behalf the [GOLD] Annual Meeting proxy card as soon as possible.
BACKGROUND OF ACQUISITION PROPOSAL
In the late summer of 1996, Thomas R. Miklich, Chief Financial Officer and
General Counsel of Invacare, contacted Robert Johnson, a Senior Vice President
of Healthdyne, and indicated that Invacare would be interested in discussing a
potential combination of the two entities. Mr. Johnson responded shortly
thereafter that the Board of Directors of Healthdyne had determined that
Healthdyne was not for sale. A brief time later, A. Malachi Mixon, III, Chairman
and Chief Executive Officer of Invacare, called Craig B. Reynolds, President and
Chief Executive Officer of Healthdyne, with the intent of inquiring again about
a potential combination. His call was not returned by Mr. Reynolds. Mr. Mixon
then suggested to an acquaintance who had a business relationship with the
former parent of Healthdyne that a combination of Invacare and Healthdyne would
be beneficial to the shareholders of both, and requested that the acquaintance
let Parker H. Petit, Chairman of the Board of Directors of Healthdyne, know of
Invacare's interest. Within a few days, Mr. Mixon received a terse voice mail
message from Mr. Petit in which Mr. Petit stated and then repeated, that
Healthdyne was not for sale. Less than a week after receiving Mr. Petit's voice
mail message, Mr. Mixon encountered Mr. Reynolds at a trade show and suggested
that Invacare and Healthdyne meet to discuss the potential for a transaction as
he felt it would be beneficial for
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shareholders of both companies. Mr. Reynolds responded that he was not in a
position to schedule such a meeting because the Board of Directors of Healthdyne
had previously decided that Healthdyne was not for sale.
On January 2, 1997, Mr. Mixon called Mr. Reynolds and was told that he was
in a meeting and was unable to take Mr. Mixon's call. Mr. Mixon then indicated
that he was faxing a confidential letter and requested that Mr. Reynolds'
secretary hand the letter directly to Mr. Reynolds. He then asked that Mr.
Reynolds call him once he had the opportunity to review the letter. Mr. Reynolds
did not and has not to date called Mr. Mixon. The text of the January 2, 1997
letter is as follows:
January 2, 1997
Mr. Craig B. Reynolds
President & CEO
Healthdyne Technologies, Inc.
1255 Kennestone Circle
Marietta, GA 30066
Dear Craig:
I am writing this letter to follow up on our communication
several weeks ago, which I am disappointed did not result in more
specific discussions at that time. We believe that there are clear
and compelling advantages to both Invacare Corporation and
Healthdyne Technologies from the combination of our two companies
and that such a transaction would create great value for each of
our companies and our respective stockholders. We therefore
propose that Invacare Corporation acquire Healthdyne Technologies
through a negotiated merger transaction in which Healthdyne
stockholders would receive $12.50 in cash for each share of
outstanding common stock. This price would represent a premium of
more than 40% over your closing stock price on December 31, 1996.
As I am sure you are aware, Invacare is an important
participant in the medical device market, with annual sales in
excess of $600 million. We have, as you do, an enviable reputation
for the quality of our products and service. We are extremely
impressed with the businesses you and your management team have
developed and the manner in which they complement our businesses.
We believe the complementary aspects of our two companies'
products, customers and distribution capabilities would enable the
combined entity to be an even more effective competitor.
We are prepared to meet with you or your representatives at
your earliest convenience to discuss our proposal and begin
negotiations of definitive documentation, which we are confident
could be quickly and successfully concluded. We have committed
bank facilities in place sufficient to fund the proposed
transaction.
Of course, our proposal contemplates, among other things, the
negotiation and execution of mutually acceptable definitive merger
and other agreements containing provisions customary for
transactions of this type, the receipt of any required regulatory
approvals and third-party consents, the operation of Healthdyne in
the ordinary course, and the taking of all necessary actions to
eliminate the applicability of, or to satisfy, any anti-takeover
or other defensive provisions contained in the applicable
corporate statutes or Healthdyne's charter and by-laws (including
Healthdyne's poison pill). We do not expect anti-trust concerns to
provide a significant hurdle to the closing of the transaction.
We hope that you and your Board of Directors will view this
proposal as we do--an excellent opportunity for the stockholders
of Healthdyne to realize full value for their
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shares to an extent not likely to be available to them in the
marketplace. In the context of a negotiated, friendly transaction,
we are prepared to discuss all aspects of our proposal fully with
you, including structure, economics and your views as to the
proper roles for our respective managers and employees in the
combined company. We wish, and are prepared, to enter into
immediate discussions with you and your directors, management and
advisors to answer any questions about our proposal and to proceed
with negotiations leading to the execution of a definitive merger
agreement.
We hope that you will agree that the best way to proceed at
this point would be to begin confidential, non-public discussions
to see if we can negotiate a transaction that can be presented to
your stockholders as the joint effort of Invacare's and
Healthdyne's Board of Directors and management. At this point,
therefore, we hope this letter and its contents will remain
private between us.
We would appreciate it if you and your Board of Directors will
give this proposal prompt and serious consideration. We would
request a response as soon as possible, and preferably no later
than January 10, 1997.
We are enclosing copies of this letter, as well as information
on Invacare, for distribution to Mr. Petit and the other members
of the Board of Directors so they can familiarize themselves with
our proposal and our company.
I hope you and yours had a happy and healthy holiday season
and wish you all the best for the New Year.
Sincerely,
A. Malachi Mixon, III
Chairman and CEO
On January 8, 1997, Mr. Reynolds sent the following letter to Mr. Mixon:
January 8, 1997
A. Malachi Mixon, III
Chairman & CEO
Invacare Corporation
899 Cleveland Street
P.O. Box 4028
Elyria, OH 44036-2125
Dear Mr. Mixon:
Thank you for your letter dated January 2, 1997. I am
forwarding your letter together with enclosures to our Board of
Directors for review. The Board of Directors some time ago
established procedures for reviewing inquiries of this sort. The
Board will review your letter at its next regularly-scheduled
Board Meeting in February, and you can expect the Company's
response thereafter.
Thank you for the kind statements in your letter concerning
the Company's reputation for the quality of our products and
service.
Sincerely,
Craig B. Reynolds
President and Chief Executive
Officer
On January 10, 1997, Invacare issued the following press
release and sent the letter reprinted therein to Healthdyne:
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Elyria, Ohio--(January 10, 1997)--Invacare Corporation
announced today that it has offered to acquire Healthdyne
Technologies, Inc. in a negotiated merger transaction for $12.50
per share in cash. The offer was originally made in a private
letter to Healthdyne delivered on January 2, 1997. After
Healthdyne responded in writing that its Board of Directors would
not consider the offer until its February Board meeting, Invacare
determined to publicly confirm its offer in a letter to Healthdyne
dated January 10, 1997. The offered price represents more than a
40% premium over Healthdyne's closing stock price on December 31,
1996, the last trading day prior to the date the original proposal
was made. Based on the prospects and synergies that can be
identified from publicly available information, Invacare believes
that the acquisition will be accretive to its earnings per share
within 12 to 18 months.
The full text of Invacare's January 10, 1997 letter to Mr.
Craig B. Reynolds, President and CEO of Healthdyne Technologies,
Inc., is as follows:
Thank you for your letter of January 8, 1997 noting that your
Board of Directors will consider our January 2, 1997 acquisition
proposal to acquire Healthdyne Technologies, Inc. at $12.50 per
share in cash at its next regularly scheduled meeting in February.
We are pleased that Healthdyne's Board of Directors plans to
consider our proposal, but we are disappointed that Healthdyne has
chosen to defer its consideration for such a long time without
seeking any discussions with us. We had expected that an
acquisition proposal offering a 40% premium over your year-end
stock price would have encouraged a prompt and constructive
dialogue. We continue to believe that there are clear and
compelling advantages to both Invacare Corporation and Healthdyne
from the combination of our two companies and that such a
transaction would create great value for each of our companies and
our respective stockholders. As a result, we feel obligated and
are fully committed to pursue this matter more expeditiously.
We hereby reiterate our offer to acquire Healthdyne
Technologies, Inc. through a negotiated merger transaction in
which Healthdyne stockholders would receive $12.50 in cash for
each share of outstanding common stock.
Because of the critical importance of our offer to the
stockholders of both Healthdyne and Invacare, and because of the
length of time until your Board of Directors may consider our
offer, particularly in light of the recent unusual trading volumes
in Healthdyne's stock, we feel compelled to release this letter
publicly. We believe that the stockholders of Healthdyne will
enthusiastically support our offer, and that your Board of
Directors should have the benefit of the reaction of Healthdyne's
stockholders in evaluating our offer. We continue to be interested
in meeting with you to give you the opportunity to discuss our
offer and to begin negotiations of definitive documentation, which
we are confident could be quickly and successfully concluded.
We have committed bank facilities in place sufficient to fund
the proposed transaction. We are the owners of approximately 4.9%
of Healthdyne's outstanding common stock.
As we have said before, Invacare is an important participant
in the medical device market with annual sales in excess of $600
million. We have, as you do, an enviable reputation for the
quality of our products and services. We are extremely impressed
with the businesses you and your management team have developed
and the manner in which they complement our businesses. We believe
the complementary aspects of our two companies' products,
customers and distribution capabilities would enable the combined
entity to be an even more effective competitor.
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Of course, this offer is subject to, among other things, the
negotiation and execution of mutually acceptable definitive merger
and other agreements containing provisions customary for
transactions of this type, the receipt of any required regulatory
approvals and third-party consents, the operation of Healthdyne in
the ordinary course, the taking of all necessary actions to
eliminate the applicability of, or to satisfy, any anti-takeover
or other defensive provisions contained in the applicable
corporate statutes or Healthdyne's charter and by-laws (including
Healthdyne's poison pill) and the absence of any actions by
Healthdyne's Board which would seek to frustrate our offer. We do
not expect anti-trust concerns to provide a significant hurdle to
the closing of the transaction.
We note from your public filings that Healthdyne has in place
a number of provisions that may be fairly characterized as
defensive in nature. We would request that you satisfy or
eliminate their applicability to our offer and that you not
implement or take any action to trigger any additional defensive
measures that could adversely affect the ability of your
stockholders to ultimately express their views on, or receive the
benefits of, our offer, or enter into any significant transactions
or take any other actions that could impede or necessitate an
adjustment to the terms of our offer.
We believe that you and your Board of Directors should
carefully and promptly consider this offer and view it as we
do--an excellent opportunity for the stockholders of Healthdyne to
realize full value for their shares to an extent not likely to be
available to them in the marketplace absent our offer. We are
certain that, upon reflection, you and your fellow members of the
Board of Directors will recognize the extraordinary opportunity
that our offer presents Healthdyne and its stockholders. In the
context of a negotiated, friendly transaction, we would be
prepared to discuss all aspects of our offer fully with you.
We hope that you and your Board of Directors will give our
offer prompt and serious consideration so that we may move
forward, in our preferred course, to a negotiated transaction
which can be presented to your stockholders as the joint effort of
Invacare's and Healthdyne's Board of Directors and management. We
would request that you accelerate your Board of Directors' review
of our offer and confirm to us as soon as possible that your Board
of Directors will consider our offer shortly.
Following Invacare's January 10 press release, Healthdyne issued a press
release on January 10, 1997 in which it stated that its Board of Directors would
consider Invacare's proposal in due course.
On Friday, January 24, 1997, Healthdyne issued a press release stating that
its Board of Directors had "unanimously rejected" Invacare's January 10 offer,
adding that "[t]he Board has not been and is not seeking to sell Healthdyne."
Healthdyne also stated that it had received the opinion of its investment
bankers that the $12.50 per Share offer was "grossly inadequate", and indicated
that Healthdyne planned to release in early February information concerning
various developments and potential developments which Mr. Reynolds asserted had
not been "fully appreciated by the investment community." Later that day,
Healthdyne filed with the Commission a Current Report on Form 8-K which
disclosed that on January 23, 1997, after Invacare had made public its interest
in an acquisition of Healthdyne, Healthdyne's Board of Directors had amended the
By-Laws to (i) elect that Healthdyne be governed by the Georgia Fair Price
Statute and (ii) remove from the By-Laws a provision requiring the annual
meeting of shareholders to be held on the fourth Tuesday in April unless a
different date was set by the Board of Directors. Neither action was disclosed
in Healthdyne's press release issued earlier that day.
On the following Monday, January 27, 1997, Invacare and I.H.H. commenced the
Offer at an offer price of $13 per Share (the "Original Offer"), delivered to
Healthdyne letters making requests for
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shareholder information under federal securities law and Georgia law, commenced
the Defensive Tactics Litigation and issued the following press release:
INVACARE CORPORATION LAUNCHES TENDER OFFER FOR HEALTHDYNE
TECHNOLOGIES, INC. AT INCREASED PRICE OF $13 PER SHARE
AND COMMENCES LITIGATION
Elyria, Ohio--(January 27, 1997)--Invacare Corporation
announced today that its wholly owned subsidiary I.H.H. Corp. has
commenced an all-cash tender offer for all outstanding shares of
common stock of Healthdyne Technologies, Inc. at $13 per share, to
be followed by a second-step merger in which holders of shares not
validly tendered would receive the same per share price as in the
offer.
The tender offer price represents more than a 45% premium over
Healthdyne's closing stock price on December 31, 1996, the trading
day prior to Invacare's making its original acquisition proposal
to Healthdyne on January 2, 1997, and reflects a $.50 per share
increase over Invacare's previous offer to Healthdyne.
A. Malachi Mixon, III, Chairman and Chief Executive Officer of
Invacare, said: "We are surprised and disappointed that
Healthdyne's Board of Directors has rejected our offer without
even calling us or seeking any discussions with us whatsoever. We
have difficulty understanding how our original offer, which
represented more than a 40% premium over the prevailing market
price, could have been viewed by Healthdyne, its Board of
Directors or its financial advisors as 'grossly inadequate',
especially since the Company's Chairman sold approximately
one-third of his shares at prices ranging from $13.00 to $14.25 as
recently as last May and June. While we, like Healthdyne's other
stockholders, would certainly be interested in seeing and
understanding the detailed information which the Company's
management has claimed will improve its prospects and has promised
for release in early February, we note that in recent periods the
Company has disappointed its stockholders by failing to meet
analysts' published expectations. However, because we remain fully
committed to this acquisition on terms that bring value to the
stockholders of both companies, we are increasing our offer price
from $12.50 to $13 in the interests of completing this transaction
expeditiously.
"Although we would have preferred to have conducted
discussions with Healthdyne regarding our offer and continue to
look forward to the opportunity to do so, their rejection of our
prior offer and continued refusal to have any discussions or
contacts with us force us to make our offer directly to the
stockholders in a manner which, under the tender offer rules, will
require Healthdyne's Board to provide a prompt and more thorough
response.
"We hope that when Healthdyne's Board considers our increased
offer it will view it as we do--an excellent opportunity for the
stockholders of Healthdyne to realize full value for their shares
to an extent not otherwise likely to be available to them. We
continue to be interested in meeting with Healthdyne to discuss
our offer in the hopes of promptly negotiating a mutually
agreeable transaction. In the context of a negotiated transaction,
we would consider discussing our offer price if Healthdyne's
management is able to substantiate significant additional values
to Invacare's satisfaction, and are prepared to discuss all other
aspects of our offer fully with Healthdyne, including structure,
form of consideration and the proper roles for our respective
managers and employees in the combined company."
Invacare also announced that it was commencing litigation
against Healthdyne and certain of its directors to declare various
defensive mechanisms, including Healthdyne's
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"poison pill" rights plan, illegal and to require Healthdyne and
its Board of Directors to take certain actions to permit its
stockholders to effectively consider the Invacare offer. Thomas R.
Miklich, Chief Financial Officer and General Counsel of Invacare,
said: "We regret the necessity of commencing litigation. However,
among other defensive tactics, Healthdyne has a 'poison pill'
containing certain unusual and draconian director-entrenching
provisions, commonly referred to as 'deadhand pill' restrictions,
which purport, under certain circumstances, to prevent future
directors from redeeming or otherwise nullifying the pill in
connection with a proposed transaction which the future Board
determines to be in the best interests of the Company and its
stockholders. We believe that such restrictions are illegal and
that Healthdyne has a duty to take actions to permit its
stockholders to effectively consider our offer free of these and
Healthdyne's other defensive provisions."
On January 31, 1997, Healthdyne issued a press release and filed a
Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
with the Commission, stating the recommendation by the Healthdyne Board that
shareholders reject the Original Offer and the belief by the Healthdyne Board
that the best means for providing value to shareholders was for Healthdyne to
pursue its "strategic plan" and not be put up for sale. Healthdyne also stated
in the Schedule 14D-9 that it had received a recommendation by Cowen & Company,
Healthdyne's financial advisor, to the effect that the price offered pursuant to
the Original Offer was "grossly inadequate".
On February 3, 1997, Healthdyne issued a press release announcing its
fourth-quarter earnings information and purporting to "describe in more detail"
Healthdyne's "strategic plan".
On February 13, 1997, Mr. Petit sent a letter to Healthdyne shareholders
again urging them to reject the Original Offer and put their trust in
Healthdyne's management to execute the "strategic plan". Among other things, Mr.
Petit claimed that the Original Offer was being made at a "bargain price" which
was "more than $1 a share less than the price at which [Healthdyne] stock was
trading at the time Invacare made its tender offer. . .", but failed to mention
that the trading price he was referring to already reflected the public
announcement of Invacare's interest in an acquisition of Healthdyne.
On February 14, 1997, the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, with respect to the Offer
expired.
On February 25, 1997, Invacare issued the following press release:
INVACARE CORPORATION ANNOUNCES EXTENSION OF
TENDER OFFER FOR HEALTHDYNE TECHNOLOGIES
Elyria, Ohio--(February 25, 1997)--Invacare Corporation
announced today that its wholly owned subsidiary I.H.H. Corp. has
extended its $13 per share tender offer to purchase all the
outstanding shares of common stock of Healthdyne Technologies,
Inc. until 6:00 p.m., New York City time, on Monday, March 24,
1997, unless further extended in the manner described in the Offer
to Purchase dated January 27, 1997. The offer had been scheduled
to expire at midnight, New York City time, on Monday, February 24,
1997. Through such date approximately 2,018,145 shares of
Healthdyne common stock had been validly tendered in connection
with the offer, which, together with the 600,000 shares owned by
Invacare, constitutes more than 20% of outstanding Healthdyne
common stock, based on the most recent information provided by
Healthdyne.
A. Malachi Mixon, III, Chairman and Chief Executive Officer of
Invacare, said: "We are pleased at the support we have received so
far from Healthdyne's shareholders, a number of whom have tendered
at this preliminary stage despite the fact that
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Healthdyne has to date refused to remove its defensive mechanisms
and allow its shareholders a chance to take advantage of our
offer.
"Our offer represents a more than 45% premium over Healthdyne
stock's closing price on the trading day before we made our
initial acquisition proposal. We believe that recent market prices
reflect the continued existence of our offer, as well as possible
speculation that an increased price will ultimately be paid for
Healthdyne by us or a third party. However, in the more than seven
weeks since we made our first acquisition proposal to Healthdyne,
there has been no indication of any other party expressing an
interest in the acquisition of Healthdyne (which may partly
explain the steady decline in the spread of the trading price over
our offer price). Of course, if Healthdyne should decide to
conduct discussions with potential acquirors, as we presume they
have so far failed to do since they have not provided any such
disclosure in an amendment to their tender offer recommendation,
we believe that they would be obligated to include us in order to
fulfill their fiduciary duties to their shareholders.
"As for us, we have stated repeatedly that we would be
interested in meeting with Healthdyne and would be prepared to
discuss our offer price, among other things, if Healthdyne's
management is able to substantiate significant additional values
to our satisfaction, but only on terms that bring value to the
shareholders of both Invacare and Healthdyne. We're confident that
over time even more shareholders will appreciate our offer as the
best way to maximize value and will tender their shares."
On March 4, 1997, Mr. Reynolds and Mr. Petit sent yet another letter to
Healthdyne shareholders repeating the information regarding the level of tenders
already provided in Invacare's February 25, 1997 press release, stating that
they "fully expect[ed]" Invacare to continue its attempt to acquire Healthdyne,
advising shareholders that they "may be receiving additional mailings and
telephone calls from Invacare", and repeating previous suggestions that
tendering shareholders withdraw from the Original Offer, among other things.
However, Messrs. Reynolds and Petit also stated in their March 4 letter that
they "hope[d] to minimize the volume of mail sent" to Healthdyne shareholders
and "plann[ed] to minimize the cost" of mailings to the shareholders by
"avoiding unnecessary communications."
On Thursday, March 20, 1997, Invacare, as a shareholder of Healthdyne,
delivered the Invacare Nomination and Proposal Notice to Healthdyne pursuant to
the By-Laws notifying Healthdyne of Invacare's intent to nominate the Invacare
Nominees and make the Proposals at the Annual Meeting, and issued the following
press release:
INVACARE SUBMITS BOARD SLATE AND PROPOSALS TO
HEALTHDYNE TECHNOLOGIES FOR ANNUAL MEETING
Elyria, Ohio--(March 20, 1997)--Invacare Corporation announced
today that it has provided notice to Healthdyne Technologies, Inc.
of its intention to nominate seven director candidates at
Healthdyne's upcoming (but as yet unscheduled) 1997 annual
meeting.
In the notice given to Healthdyne, Invacare also submitted a
set of corporate governance bylaw amendments for consideration by
shareholders at the annual meeting. The proposed amendments are
designed to facilitate the change in the Board and the
consummation of Invacare's fully-financed, premium tender offer;
prevent manipulation by the current Board of Healthdyne's by-laws
and of the size of the Board to be elected at the annual meeting;
allow for a special meeting to be called by shareholders owning
10% of the Company's stock; and cause the existing Board to
eliminate the Company's "dead-hand" pill provisions.
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<PAGE>
Invacare has submitted the slate and proposals to Healthdyne
at this time in order to comply with the Company's advance
notification bylaw, which requires notifying Healthdyne prior to
Tuesday, March 25, 1997.
A. Malachi Mixon, III, Chairman and Chief Executive Officer of
Invacare, said, "We are very proud to assemble this exceptionally
strong slate of seven well-qualified, independent candidates.
Given the Company's refusal to date to sit down and talk to us
regarding our fully-financed, premium tender offer, we are forced
to take this action now to preserve our rights to seek replacement
of the Board and make related proposals at the annual meeting."
"We urge the Board of Healthdyne to spare their shareholders
the expense and delay of proceeding with a proxy contest, abandon
their 'not-for-sale' position and begin discussions with us so
that all shareholders can receive immediate value for their
investment."
Although Healthdyne held last year's annual meeting on May 23
and the previous year's meeting in April, it has yet to announce
either a record date or meeting date for the 1997 annual meeting.
Thomas R. Miklich, Chief Financial Officer and General Counsel of
Invacare, said, "Shortly after we announced our interest in
acquiring Healthdyne, their Board of Directors amended their
bylaws to eliminate the long-standing provision that set the
fourth Tuesday in April as the date for annual meetings unless an
alternative date was designated by the Board. Invacare believes
that the Healthdyne Board is obligated by its fiduciary duties and
Georgia law to hold its annual meeting promptly and intends to
request the courts to order the meeting to be held if Healthdyne
does not call the meeting on a timely basis."
The Invacare candidates nominated for election at the annual
meeting are Messrs. Nicholas J. DiCicco, Jr., Donald F. Hastings,
Jack Kahl, Jr., Ernest Peter Mansour, Jon H. Outcalt, James Allen
Rutherford and Bill R. Sanford.
Mr. DiCicco has been President and Chief Executive Officer of
Midwestern National Life Insurance Company of Ohio since 1975.
Mr. Hastings has been Chairman of the Board of the Lincoln
Electric Company, a welding products manufacturer, since 1992, and
was also Chief Executive Officer of The Lincoln Electric Company
from 1992 to 1996.
Mr. Kahl has been Chairman of the Board and Chief Executive
Officer of Manco, Inc., a company specializing in the production
of heavy duty adhesive tape, since 1971. He is currently a member
of the Board of Directors of Royal Appliance MFG. Co. and Applied
Industrial Technologies, Inc.
Mr. Mansour is managing partner of the Cleveland law firm of
Mansour, Gavin, Gerlack & Manos Co., L.P.A.
Mr. Outcalt has been Chairman of the Board of NCS Healthcare,
Inc. since 1986 and Senior Vice President of Alliance Capital
Management from 1975 until 1995. He serves on the Boards of Myers
Industries, Inc. and Ohio Savings Financial Corp.
Mr. Rutherford is Chairman and Managing Director of Wingset
Investments Ltd., a technology venture fund. He is a member of the
of the Boards of Ciber, Inc. and Symix Systems, Inc.
Mr. Sanford is Chairman, President and Chief Executive Officer
of STERIS Corporation, an infection prevention and surgical
support company. He is a Board member of KeyBank, N.A.
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Invacare's $13 per share tender offer is currently scheduled
to expire at 6:00 p.m. on Monday, March 24, 1997, unless extended.
Shortly after delivering the Invacare Nomination and Proposal Notice and
issuing the above press release on March 20, Invacare learned of proposed
legislation (the "Director-Entrenchment Legislation") introduced in the Georgia
state Senate in the late afternoon of that day (and which, Invacare later
confirmed, had been engineered by Healthdyne and its Board of Directors) which,
if adopted, would amend the GBCC to provide, among other things, that every
publicly-held corporation incorporated in the State of Georgia, including
Healthdyne, would be required to have a "staggered" board of directors and that
the shareholders of such corporations would only be permitted to remove
directors for extreme circumstances unrelated to Healthdyne's performance. See
"Director-Entrenchment Legislation", below. Invacare then engaged additional
advisors to assist in communicating to the Georgia legislative community its
opposition to the Director-Entrenchment Legislation and, in the morning of
Friday, March 21, 1997, issued the following press release:
INVACARE FAULTS PROPOSED GEORGIA LAW MANDATING STAGGERED BOARDS FOR GEORGIA
COMPANIES; SUSPECTS HEALTHDYNE TECHNOLOGIES BEHIND PROPOSAL
Elyria, Ohio--(March 21, 1997)--A. Malachi Mixon, III,
Chairman and Chief Executive Officer of Invacare Corporation made
the following comment regarding an anti-takeover proposal
introduced yesterday as a last minute amendment to a routine bill
in the Georgia legislature. This bill could be passed as early as
today and, if adopted, would have a substantial adverse impact on
shareholders of Healthdyne Technologies, Inc. and other public
Georgia companies which elect their entire Board of Directors
annually:
"We are incredulous to find out that an eleventh hour bill has
been introduced that would impose a 'staggered board' scheme on
all publicly-held Georgia companies. Under a staggered board
scheme only one third of a board would stand for election each
year, thus entrenching the remaining two thirds. Virtually every
state in America requires a shareholder vote to approve a
staggered board. The effect of this proposed bill would be to
deprive all investors in Georgia publicly traded companies of
their right to decide whether they should be able to elect an
entire board at each year's meeting. The bill also contains other
provisions that would entrench management at the expense of
shareholders, including stripping shareholders of their current
right to remove directors for any reason."
"We strongly suspect that Healthdyne's board and management,
who are the most obvious beneficiaries of this bill, are behind
this proposal. This proposed bill was introduced on the same day
that Healthdyne received Invacare's notice of nomination of
directors to replace the entire Healthdyne board of directors at
their upcoming annual meeting."
"Without this bill Healthdyne's entire Board must stand for
re-election at the upcoming 1997 Annual Meeting. This bill, if
passed, would entrench the Board well into 1998 and permit the
Board to frustrate the wishes of the rightful owners of
Healthdyne. Shareholders of Georgia corporations like Healthdyne
should continue to have the right to make this basic governance
decision, not the state legislature."
"We hope the Georgia legislature will recognize this last
minute bill for what it is: an attempt to entrench the incumbent
management of one company at the expense of shareholders of all
Georgia companies."
"Shareholders of all Georgia companies who elect their entire
Board annually, including Healthdyne, should be outraged at this
bill and should contact the Georgia
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legislature and Governor and the management of their companies as
soon as possible to express their opposition."
As previously announced, Invacare is proposing a slate of
seven director nominees and set of corporate governance bylaw
amendments for consideration by shareholders at the annual
meeting.
The Invacare candidates nominated for election at the annual
meeting are Messrs. Nicholas J. DiCicco, Jr., Donald F. Hastings,
Jack Kahl, Jr., Ernest Peter Mansour, Jon H. Outcalt, James Allen
Rutherford and Bill R. Sanford. The proposed amendments are
designed to facilitate the change in the Board and the
consummation of Invacare's fully-financed, premium tender offer;
prevent manipulation by the current Board of Healthdyne's by-laws
and of the size of the Board to be elected at the annual meeting;
allow for a special meeting to be called by shareholders owning
10% of the Company's stock; and cause the existing Board to
eliminate the Company's "dead-hand" pill provisions.
Invacare's $13 per share tender offer is currently scheduled
to expire at 6:00 p.m. on Monday, March 24, 1997, unless extended.
Also on March 21, 1997, following the issuance of Invacare's press release,
Healthdyne announced that on the previous day, March 20, its Board of Directors
had adopted the Special Meeting Delaying Amendments to the By-Laws which, among
other things, purport to permit Healthdyne and its Board of Directors to delay a
special meeting for more than four months after receiving the requisite
shareholder demands. In its announcement, Healthdyne claimed that the By-Law
amendments had been adopted before Healthdyne received the Invacare Nomination
and Proposal Notice, despite the fact that the amendments were not announced
until well into the following day. Healthdyne also announced that on March 20,
just prior to publicly launching its legislative effort to strip its
shareholders of critical rights, the Board of Directors had approved
Healthdyne's entering into indemnification agreements with its directors and
officers, which agreements, among other things, attempt to insulate Healthdyne's
directors and officers from liability for any actions taken or failing to be
taken by them in such capacities, presumably including any actions with respect
to the legislative efforts.
On the same day, Friday, March 21, the Georgia state Senate passed the bill
containing the Director-Entrenching Legislation but scheduled it for a vote for
reconsideration on Monday, March 24. On March 24, Invacare sent the following
letter to the Council of Institutional Investors, which was holding its annual
meeting in Washington, D.C.:
March 24, 1997
Members, Council of Institutional Investors
Ms. Sarah Teslik, Executive Director
Suite 512
1730 Rhode Island Avenue, N.W.
Washington, D.C. 20036
RE: IMPORTANT CORPORATE GOVERNANCE
ALERT--NEGATIVE LEGISLATION PENDING
Dear Members and Ms. Teslik:
As you convene for your spring meeting of the Council of
Institutional Investors in Washington, D.C., we think that it is
important to make you fully aware of a corporate governance battle
that is being waged before the Georgia state legislature even as
you meet. As you may know, Invacare Corporation has made a public
tender offer for all of the outstanding common stock of Healthdyne
Technologies, Inc. In response to the Invacare offer, Healthdyne
and its advisors sponsored an eleventh-hour amendment to
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a routine bill in the Georgia legislature that, if enacted, would
substantially alter the balance of power between shareholders and
boards of directors of publicly held Georgia corporations.
This bill, which was passed by the Georgia state Senate on
Friday, is designed to entrench management at the expense of the
rights of shareholders. Although these amendments were proposed in
the context of one takeover battle, the implications of the bill
affect corporate governance rights for all shareholders in Georgia
public corporations and could signal a dangerous corporate
governance trend in other states as well. The proposed amendment
has not yet been acted upon by the Georgia House of
Representatives but is up for reconsideration by the Georgia state
Senate TODAY. Therefore, we urge you to take immediate action to
make your voice heard in opposition to this legislation.
As explained in more detail in the summary attached to this
letter, the bill as proposed would, among other things, (i)
automatically stagger the terms of the directors of all publicly
traded Georgia corporations, (ii) prevent shareholders from
removing directors of publicly traded Georgia corporations except
for narrowly defined "cause" unrelated to the performance of the
company and (iii) prevent shareholders of publicly traded Georgia
corporations from adopting bylaws that limit the authority of the
board of directors. This bill, if enacted, would substantially
immunize boards of directors of publicly traded Georgia
corporations from accountability to or removal by their own
shareholders. For the next two years, only the board of directors
would have the ability to "opt out." After March 1, 1999, a
supermajority two-thirds would be required for the shareholders to
escape the burden of these provisions on their own.
The proposed bill has implications for you that go far beyond
the proposed transaction between Invacare and Healthdyne or the
effect of this particular director-entrenching measure on Georgia
corporations. Currently, Georgia and virtually every other state
requires shareholder approval to adopt a staggered board. Under
the proposed bill, shareholders of publicly held Georgia
corporations are automatically stripped of their right to decide
whether they can elect an entire board at each annual meeting.
Shareholders, not state legislatures manipulated by individual
local boards of directors, must continue to have the right to make
basic corporate governance decisions. If this type of misuse of
legislative power can happen in Georgia, it can happen anywhere,
substantially undercutting the ability of shareholders to decide
whether to accept acquisition proposals and exercise control over
their boards of directors. Even companies that already have
staggered boards and other anti-takeover protections in place will
be encouraged to influence the local legislature to make other bad
laws for "good friends". State laws should not be amended merely
to further the interests of one party in a private dispute,
especially when the implications are as far-reaching as those of
the proposed Georgia legislation. Unless this process in Georgia
can be stopped immediately, it will set a dangerous precedent and
could undermine the potential value of all your investments,
whether in Georgia or elsewhere.
For the reasons described above, we hope that you agree that
the proposed legislation to amend Georgia corporate law is not in
the best interests of all shareholders of publicly held Georgia
corporations and signals a dangerous trend of state legislators
interfering with shareholder rights to benefit local political
agendas. The Georgia legislation is being considered, and could be
enacted, as early as TODAY. Your immediate help is needed to stop
this extraordinary usurpation of shareholder rights. Please help
us communicate a strong message to the Georgia General Assembly by
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filling in the attached "message" and faxing it back to us TODAY
at (404) 347-9080. We also urge you to call the Georgia
legislators named on the attached list and let them hear your
views against this proposed legislation or call Thomas S.
Chambless (912/436-1548), Pete Robinson (706/649-3080) or Betsey
Weltner (404/347-9860) for more information on how you can help in
the fight against this anti-shareholder, director-entrenching
legislation. Even if the Georgia state Senate fails to reconsider
this legislation today, we will continue to fight and hope that we
can count on your support.
We look forward to your support in our fight of these
outrageous attempts to manipulate the corporate laws of Georgia
for the benefit of seven individuals, the current board of
directors of Healthdyne.
Sincerely,
A. Malachi Mixon, III
Chairman and CEO
Invacare Corporation
Later in the day on March 24, the Georgia state Senate, in a 26-26 tie vote,
failed to decide to reconsider the bill containing the Director-Entrenchment
Legislation. Uncertain of the eventual outcome of the Director-Entrenchment
Legislation and facing a possible technical deadline under the By-Laws for
notification of shareholder proposals, Invacare was forced to submit a
supplemental notice to Healthdyne on March 24 notifying Healthdyne of Invacare's
intent, if the Director-Entrenchment Legislation were to be enacted as law, to
make additional proposals at the Annual Meeting that the shareholders resolve to
demand that Healthdyne and its Board of Directors (i) "opt-out" of the
Director-Entrenchment Legislation or any similar provisions and (ii) immediately
act to permit Healthdyne to be acquired pursuant the Offer and the Merger or
another transaction offering demonstrably greater value; since the Director-
Entrenchment Legislation has been resoundingly defeated, Invacare does not
intend to make such proposals at the Annual Meeting and is not soliciting or
accepting proxies with respect thereto. At the close of business on March 24,
Invacare issued the following press release:
INVACARE CORPORATION ANNOUNCES EXTENSION OF
TENDER OFFER FOR HEALTHDYNE TECHNOLOGIES
Elyria, Ohio--(March 24, 1997)--Invacare Corporation announced
today that its wholly owned subsidiary I.H.H. Corp. has extended
its $13 per share tender offer to purchase all the outstanding
shares of common stock of Healthdyne Technologies, Inc. until 6:00
p.m., New York City time, on Monday, April 7, 1997, unless further
extended in the manner described in the Offer to Purchase dated
January 27, 1997. The offer had been scheduled to expire at 6:00
p.m., New York City time, on Monday, March 24, 1997. As of 5:00
p.m. today, approximately 2,323,395 shares of Healthdyne common
stock had been validly tendered in connection with the offer,
which, together with the 600,000 shares owned by Invacare,
constitutes 23% of outstanding Healthdyne common stock, based on
the most recent information provided by Healthdyne.
A. Malachi Mixon, III, Chairman and Chief Executive Officer of
Invacare, said: "We are pleased at the support we have received so
far from Healthdyne's shareholders, and trust that our
announcement of our seven highly-qualified director nominees and
our shareholder proposals will further garner that support."
"Based on Healthdyne's delay in calling their annual meeting
and their desperate and extraordinary attempt to do an end-run
around their own shareholders--by trying to manipulate the Georgia
legislature to strip Healthdyne's shareholders of critical
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shareholder rights by mandating staggered boards and other
director-entrenching measures--we can only assume that Healthdyne
and its board are scared of what their own shareholders may say
and do at the upcoming annual meeting."
"If the Healthdyne shareholders want a staggered board, they
can always approve one at the annual meeting on their own. We
challenge Healthdyne to stop trying to hide behind the skirts of
the Georgia legislature, schedule their annual meeting promptly,
and let their own shareholders exercise their right to elect the
entire board of directors and thereby decide who should run the
company and whether it should be sold. In light of the attempts of
Healthdyne's board and management to disenfranchise them, the
Healthdyne shareholders should seriously consider whether they
have any reason to place their trust and loyalty in the current
directors and management team."
"Nearly three months have passed, and unfortunately for
Healthdyne shareholders, the company has done nothing to maximize
shareholder value and no one has come forward with a better offer
than ours. Given the recent precipitous drop in Healthdyne's stock
price on news of the proposed legislation, the market price is
clearly in response to our fully financed, premium tender offer,
not to the Company's rosy suggestions about future performance. As
we have stated repeatedly, we continue to be interested in meeting
with Healthdyne in the hopes of promptly negotiating a mutually
agreeable transaction and in that context would be prepared to
discuss all aspects of our offer fully, including, if Healthdyne's
management is able to substantiate additional value to our
satisfaction, our offer price. We are frankly tired of Parker H.
Petit, Healthdyne's Chairman, criticizing us as 'bargain-hunters'
when he refuses to provide us any information which would justify
a higher price."
On Tuesday, March 25, 1997, the Georgia state House of Representatives voted
overwhelmingly, by a more than 2-to-1 margin, to reject the
Director-Entrenchment Legislation. After the Senate and the House of
Representatives each voted to insist on their own actions, a joint conference
committee was appointed to try to suggest a means to remedy the inconsistency.
On Friday, March 28, 1997, Mr. Petit, despite his March 4 pledge to
Healthdyne shareholders "to minimize the volume . . . [and] the cost" of
mailings to them by "avoiding unnecessary communications," sent yet another
letter to the shareholders in which he: reiterated his belief that Invacare's
offer price was too low; repeated the information regarding the level of tenders
already provided in Invacare's March 24, 1997 press release; stated that the
Invacare Nominees could be expected to facilitate the Offer and the Merger;
claimed that Healthdyne's efforts to engineer the Director-Entrenching
Legislation were not "aimed at entrenching management"; pledged that if
Healthdyne could not demonstrate greater shareholder value than Invacare's offer
price that he would ask the Board of Directors "to take other action to enhance
shareholder value"; and promised that shareholders would be pleased with first
quarter results.
Late in the evening on March 28, the joint conference committee rejected the
Director-Entrenchment Legislation, following which the Georgia General Assembly
recessed for the remainder of 1997.
On Monday, March 31, 1997, the Parent issued the following press release and
sent the letter reprinted therein from Mr. Mixon to Mr. Petit:
INVACARE ANNOUNCES INCREASE IN OFFER PRICE FOR
HEALTHDYNE TECHNOLOGIES TO $13.50 AND EXTENDS OFFER
Elyria, Ohio--(March 31, 1997) -- Invacare Corporation
announced today that its wholly owned subsidiary I.H.H. Corp. has
increased the price in its tender offer for all outstanding shares
of common stock of Healthdyne Technologies, Inc. to $13.50 per
share, net to the seller in cash without interest thereon, upon
the other terms and subject to the conditions set forth in the
Offer to Purchase dated January 27, 1997 and
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the related Letter of Transmittal, and has extended the tender
offer to 6:00 p.m., New York City time, on Monday, April 28, 1997,
unless further extended in the manner described in the Offer to
Purchase. The increased offer represents a 52% premium over
Healthdyne's stock price on the trading day before Invacare made
its initial acquisition proposal.
In addition, Invacare announced that A. Malachi Mixon, III,
Chairman and Chief Executive Officer of Invacare Corporation,
today sent a letter to Parker H. Petit, Chairman of the Board of
Directors of Healthdyne, urging a meeting of the companies and,
among other things, expressing concern about certain recent
extraordinary actions taken by Healthdyne. The full text of the
letter follows:
Mr. Parker H. Petit
Chairman
Healthdyne Technologies, Inc.
Kennestone Circle
Marietta, GA 30066
Dear Mr. Petit:
I have read with interest your March 28 letter to your
shareholders in which you again refer to our $13 per share tender
offer as "grossly inadequate" and point to the fact that first
quarter results will reflect improved performance. In fact,
Invacare's offer is based on our hope that you can accomplish a
turnaround in operating performance and meet estimates of $.70 per
share for 1997. Frankly, however, we are concerned about
Healthdyne management's ability to do so, not only because
Healthdyne has failed to meet analysts' estimates in the past
eight quarters, but also because we have heard in the marketplace
that Healthdyne may have taken extraordinary actions meant to
provide a short-term boost to first quarter earnings. For example,
we have been informed that certain of your major independent sales
representatives had their commissions summarily reduced by
Healthdyne in early January, shortly after we made our offer to
you. We have also been informed that some of your major customers
were persuaded to purchase not only their first quarter
requirements, but also future requirements through an extended
dating payment program, with Healthdyne paying the storage costs
of this channel-loading strategy. I fear the balance of
Healthdyne's year will be penalized by such actions. We can only
justify our offer if, in fact, your management team can produce
consistent earnings, not one "window-dressed" quarter.
Frankly, I hope that you will agree immediately to meet with me to
discuss our offer. I am a reasonable and logical CEO whose first
interest is in creating shareholder value; I hope you are too.
Invacare is the world leader in the manufacture and distribution
of home medical equipment. In fact, the January 1997 issue of
FINANCIAL WORLD listed Invacare as one of America's fastest
growing corporations out of a 10,000 public company universe. No
other home medical equipment manufacturer was listed. Invacare
management has met 28 consecutive quarters and seven consecutive
years of Wall Street estimates. Even with that track record,
Invacare currently trades at 16X 1997 forecasted earnings. How can
you so cavalierly reject our $13 per share offer that already
represents almost 30X your 1996 earnings and 19X your highest
current 1997 analyst estimate? Even if you meet that optimistic
estimate, it's hard to see how your shares can trade at or above
our offer price in the absence of our bid. Furthermore, our bid is
available today, unlike the speculative future trading value.
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Your unsuccessful attempt to hide behind the skirts of the Georgia
legislation was clever but ill-conceived, resulting in tremendous
and wasteful expense on both sides. Let's not continue to waste
time and money on legal maneuvers.
Under Georgia law, the Company must promptly hold an Annual
Meeting of its shareholders. At this time the Company appears to
have failed to take the customary steps necessary to hold its
Annual Meeting in compliance with law and its fiduciary duties. We
urge you to take such steps promptly so that we can avoid having
to get the courts further involved.
We both know that a shareholder meeting is imminent. Instead of
spending money on a proxy fight and legal maneuvering, isn't now
the time for us together to explore the combination of two
excellent companies? Perhaps there are values or synergies about
which I am unaware. As we have said repeatedly, if there are, we
would consider adjusting our price upward. In any event, to show
good faith, and in the hopes of accelerating this process, we are
today increasing our offer price to $13.50 per share, a premium of
52% over the stock price before we made our first proposal to you.
As a result of this increase, we are extending the expiration date
of our tender offer to 6:00 p.m., New York City time, Monday,
April 28, 1997, unless further extended.
Please give this letter your most serious consideration.
Sincerely,
A. Malachi Mixon, III
Chairman of the Board &
Chief Executive Officer
As previously announced, Invacare is proposing a slate of seven
director nominees and a set of corporate governance bylaw
amendments for consideration by shareholders at the annual
meeting. Invacare's nominees are committed to taking all such
actions necessary or appropriate (subject to any fiduciary duties
they would have as directors) to approve and effectuate the
consummation of Invacare's fully-financed, premium tender offer
and proposed merger. The proposed amendments are designed to
facilitate the change in the board and the consummation of
Invacare's tender offer and proposed merger; prevent manipulation
by the current board of Healthdyne's by-laws and of the size of
the board to be elected at the annual meeting; allow for special
meetings to be called by shareholders owning 10% of Healthdyne's
stock; and cause the existing board to eliminate Healthdyne's
"dead-hand" pill provisions.
The tender offer had been scheduled to expire at 6:00 p.m., New
York City time, on Monday, April 7, 1997. As of 4:00 p.m. today,
approximately 2,195,978 shares had been tendered in connection
with the offer, which, together with the 600,000 shares owned by
Invacare, constitutes approximately 22% of outstanding Healthdyne
common stock based on the most recent information provided by
Healthdyne.
On April 2, 1997, Mr. Petit sent a letter to Mr. Mixon stating that the
Board of Directors had rejected the increased Offer and that Cowen & Company had
advised that the Offer was "grossly inadequate" despite the price increase. Mr.
Petit further stated that Healthdyne expected to have "excellent" first quarter
earnings. In addition, Mr. Petit said that Healthdyne expected its stock to be
valued in excess of the increased Offer price, suggested that Invacare drop the
Defensive Tactics Litigation and claimed that Healthdyne was complying with all
legal requirements regarding the scheduling of the Annual Meeting. The letter
was included in an April 3, 1997 press release by Healthdyne which reiterated
much of the same information and in which Mr. Petit claimed that the concerns
raised by Invacare in its March 31 press release were "misinformation", "false"
and "manipulative". Mr. Petit also stated in the press release that it was
"clear that Invacare wants to force an early meeting" of shareholders, but did
not indicate when the
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Annual Meeting would be held or why Healthdyne had not yet taken action
necessary to hold the Annual Meeting in the same time period as its two previous
annual meetings.
Despite the constant refusal of Healthdyne and its Board of Directors to
have any contacts or discussions with Invacare and the extreme and extraordinary
attempts by Healthdyne and its Board of Directors to block the Offer and the
Merger and disenfranchise their own shareholders through the
Director-Entrenchment Legislation, Invacare intends to continue to seek the
opportunity to negotiate with Healthdyne with respect to its acquisition
proposal. If such negotiations result in a definitive merger or other agreement
between Healthdyne and Invacare, such negotiations could result in termination
of this proxy solicitation. As indicated elsewhere in this Proxy Statement, if
elected, the Invacare Nominees will, subject to any fiduciary duties they would
have as directors of Healthdyne, seek to cause Healthdyne to take all steps
necessary to permit the Offer and the Merger to proceed, including without
limitation (i) redeeming the Rights or otherwise making the Rights inapplicable
to, or causing the dilutive provisions thereof not to be triggered by, the Offer
or the Merger, (ii) adopting a resolution approving the Offer and the Merger for
purposes of the Georgia Business Combination Statute and the Georgia Fair Price
Statute and (iii), in the case of the Merger, taking action to execute an
agreement and plan of merger. However, all Invacare Nominees recognize the
fiduciary responsibilities they would have as directors of Healthdyne if elected
and therefore they would give all consideration required by such fiduciary
duties to any BONA FIDE acquisition proposals submitted to Healthdyne at a price
higher than the Offer and the Merger.
If Invacare and I.H.H. should withdraw or materially amend the terms of the
Offer and/or the Merger prior to the Annual Meeting, Invacare will disseminate
such information regarding such changes to Healthdyne shareholders and in
appropriate circumstances will provide shareholders with a reasonable
opportunity to revoke their proxies prior to the Annual Meeting.
DEFENSIVE TACTICS LITIGATION
On January 27, 1997, Invacare and I.H.H. commenced the Defensive Tactics
Litigation in the United States District Court for the Northern District of
Georgia, which names Healthdyne and certain of its directors as defendants and
seeks declaratory and injunctive relief in connection with the Offer and the
Merger. The Defensive Tactics Litigation asks the Court either to invalidate or
cause Healthdyne and its Board of Directors to remove several defensive
mechanisms embodied in the GBCC and the By-Laws which, absent the relief sought,
could effectively prevent I.H.H. from consummating the Offer and the Merger. In
particular, the Defensive Tactics Litigation seeks relief including: (i)
invalidating and requiring the removal of the "dead-hand pill" restrictions (see
"Terms and Conditions of the Offer--The Rights Condition", below) on the grounds
that they violate the director defendants' fiduciary duties and violate Georgia
law, or, if not, that the Georgia law violates the United States Constitution;
(ii) requiring the director defendants to fulfill their fiduciary duties by
redeeming the Rights or amending the Rights Agreement to make them inapplicable
to the Offer and the Merger; (iii) compelling the director defendants to fulfill
their fiduciary duties by approving the Offer and the Merger for the purposes of
the Georgia Business Combination Statute and the Georgia Fair Price Statute;
(iv) declaring that the application of the Georgia Fair Price Statute to the
Offer and the Merger would violate the Georgia and United States Constitutions;
(v) declaring that the Georgia laws referred to above, as implemented and
applied together to the Offer and the Merger, would violate the United States
Constitution; (vi) declaring that the Offer and Merger comply with all
applicable laws, obligations and agreements; and (vii) preventing Healthdyne,
the director defendants and Healthdyne's other agents from taking any steps to
interfere with the Offer and the Merger, including the commencement of judicial
proceedings.
On February 27, 1997, Healthdyne filed its Answer to the Complaint in the
Defensive Tactics Litigation. In its Answer, Healthdyne denied the material
allegations of the Complaint and made a number of substantive averments,
including that: (i) its Board of Directors fully considered I.H.H.'s proposed
acquisition before rejecting it on January 24, 1997; (ii) the Original Offer
price of $13 per share was grossly inadequate; and (iii) the Healthdyne Board of
Directors may in the future adopt other defensive measures.
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By way of defenses, Healthdyne alleged that Invacare and I.H.H. lack standing to
assert a breach of fiduciary claim and that the Complaint fails to state a claim
for which relief can be granted. Healthdyne requested, among other things, that
the Court dismiss the Complaint with prejudice and enter judgment for Healthdyne
on all issues.
Invacare has been advised that three shareholder lawsuits have been filed
against Healthdyne and its directors since the Defensive Tactics Litigation
began. In each of these lawsuits, shareholders have alleged, among other things,
that the directors of Healthdyne (i) have wrongfully refused to take the steps
necessary to maximize shareholder value, including considering the Offer, (ii)
are wrongfully using their fiduciary positions of control over Healthdyne and
unreasonable and extreme defensive tactics to thwart others in their attempts to
acquire Healthdyne, and (iii) have wrongfully relied upon various anti-takeover
devices, including the Rights and the Georgia Business Combination Statute, to
improperly block the Offer and entrench themselves in office. In addition, the
plaintiff shareholders have alleged that the Healthdyne directors have taken
defensive actions in response to Invacare's BONA FIDE Offer which are wholly
unreasonable in light of any perceived threat posed by the Offer and violate the
directors' fiduciary duties. Each of the lawsuits seeks relief substantially
similar to that sought in the Defensive Tactics Litigation.
DIRECTOR-ENTRENCHMENT LEGISLATION
Late in the afternoon of March 20, 1997, the same day on which Healthdyne
received the Invacare Nomination and Proposal Notice notifying Healthdyne of
Invacare's intent to nominate the Invacare Nominees and make the Proposals at
the Annual Meeting, Georgia state Senator Steve Thompson (whose district
includes Healthdyne's headquarters location, on behalf of Healthdyne, introduced
legislation in the Georgia state Senate which would have stripped the
shareholders of Healthdyne and many other publicly-held Georgia corporations of
critical shareholder rights, including the rights to elect a full board at each
annual meeting and to remove directors at any time.
Specifically, the Director-Entrenchment Legislation would have amended the
GBCC to provide, among other things, that (i) every publicly-held corporation
incorporated in the State of Georgia, including Healthdyne, would be required to
have a "staggered" board of directors scheme in which only approximately
one-third of the directors would stand for election each year to serve for a
three-year term, (ii) the rights of shareholders to remove directors of such
corporations for any or no reason would instead be severely limited to removals
only for extreme circumstances unrelated to the corporation's performance, such
as felony conviction, insanity or gross dereliction of duty, (iii) the number of
directors of such corporations would be fixed solely by action of the board of
directors and (iv) bylaws could not be amended or adopted which restricted the
discretion or power of the board of directors in its management of the business
and affairs of such corporations. Until March 1, 1999, the Director-Entrenchment
Legislation would have permitted only the board of directors of the corporation
to choose not be governed by its provisions. By contrast, the GBCC provides that
shareholder approval is required to adopt a "staggered" board scheme in the
first place or to restrict the rights of the shareholders to remove directors
(as do the corporation codes of virtually all other states in the United
States), and provides for shareholder amendment or approval of bylaw provisions
regarding the number of directors and limitations of board authority. Under the
Director-Entrenchment Legislation shareholders would only have been able to take
action to opt-out of the Director-Entrenchment Legislation provisions after
March 1, 1999, and then only upon a two-thirds supermajority vote.
The Director-Entrenchment Legislation was introduced as an eleventh-hour
amendment to a bill (the "GBCC Bill") which contained various technical and
essentially non-controversial amendments and refinements to the GBCC. Prior to
the introduction of the Director-Entrenchment Legislation amendment, the GBCC
Bill had been thoroughly reviewed by the Georgia Corporation Code Revisions
Committee of the Corporate and Banking Law Section of the State Bar of Georgia,
had been recommended by such committee to the Georgia state House of
Representatives and Senate, and had been voted on and passed by the House of
Representatives. In an extremely unusual maneuver for an amendment of
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such significance, the Director-Entrenchment Legislation was introduced only
immediately prior to the consideration by the full Senate of the GBCC Bill and
at a time when there were only five full workdays left in the legislative
session. There was no advance warning of the proposal of the
Director-Entrenchment Legislation; indeed, the Atlanta Constitution, Georgia's
pre-eminent morning newspaper, in a March 25 editorial strongly condemning the
Director-Entrenchment Legislation and the process by which its proponents sought
to have it adopted, termed it a "stealth amendment" which was gathering momentum
like a "runaway train". Shortly thereafter, Atlanta's other major newspaper, the
Atlanta Journal, also lambasted the Director-Entrenchment Legislation.
Because of the timing of and circumstances surrounding the proposal of the
Director-Entrenchment Legislation, Invacare strongly suspected that Healthdyne's
board and management, who would have been its most obvious and immediate
beneficiaries, were involved in its introduction. In the days following the
Director-Entrenchment Legislation's introduction, this suspicion was confirmed
by various newspaper articles attributing to Parker H. Petit, Chairman of the
Board of Directors of Healthdyne, statements that he had sought Senator
Thompson's help in proposing the Director-Entrenchment Legislation, and by a few
legislators supportive of the Director-Entrenchment Legislation indicating that
its main purpose was to benefit Healthdyne and its Board of Directors. However,
adoption of the Director-Entrenchment Legislation would have clearly affected
the shareholders not only of Healthdyne, but of virtually every other
publicly-held Georgia corporation, especially corporations whose shareholders
had not already approved a "staggered" board scheme. In those cases, the
shareholders would have been deprived of their rights to decide whether they
should be able to elect an entire board at each annual meeting, and whether to
replace the directors at any time in between annual meetings, as well as being
stripped of other critical shareholder rights.
The Georgia state Senate adopted the Director-Entrenchment Legislation
amendment to the GBCC Bill on Thursday, March 20, 1997 with little discussion.
On Friday, March 21, 1997, in an attempt to slow the ill-considered runaway pace
of the Director-Entrenchment Legislation, an amendment to the Director-
Entrenchment Legislation was proposed which would have delayed the effective
date of its provisions until July 1, 1998; that amendment received a tie vote of
26 to 26, and so failed to be adopted by one vote. The Senate then passed the
GBCC Bill, including the Director-Entrenching Legislation, on March 21, 1997,
but scheduled it for a vote for reconsideration on Monday, March 24. On March
24, following intensive efforts by Invacare and various corporations, investors,
investor groups and others within Georgia and across the United States to
explain the far-reaching and potentially disastrous implications to the State of
Georgia and its citizens of the Director-Entrenchment Legislation, the Senate,
in another 26-26 tie vote, failed to decide to reconsider the bill containing
the Director-Entrenchment Legislation, again by only one vote.
The GBCC Bill, including the Director-Entrenchment Legislation, was then
submitted to the Georgia state House of Representatives, which had passed the
initial, non-controversial version of the GBCC Bill but had never considered the
Director-Entrenchment Legislation. On Tuesday, March 25, 1997, the House of
Representatives, having had more time than the Senate to consider the negative
implications of the Director-Entrenchment Legislation, voted resoundingly (115
to 52) to reject it by a more than 2-to-1 margin.
After the Senate and the House of Representatives each voted to insist on
their own versions of the GBCC Bill, a joint conference committee was appointed
to try to suggest a means to remedy the inconsistency. Late in the evening on
March 28, the joint conference committee rejected the Director-Entrenchment
Legislation and recommended the remainder of the GBCC Bill to the Georgia
General Assembly. The Georgia General Assembly then passed the GBCC Bill,
without the Director-Entrenchment Legislation amendment, and recessed for the
remainder of 1997.
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TERMS AND CONDITIONS OF THE OFFER
Terms used but not otherwise defined herein have the meaning set forth in
the Offer to Purchase.
On January 27, 1997, I.H.H. commenced the Offer. As stated in the Offer to
Purchase, the purpose of the Offer is to acquire control of, and the entire
equity interest in, Healthdyne. I.H.H. currently intends, as soon as practicable
following completion of the Offer, to propose and seek to have Healthdyne
consummate the Merger pursuant to which Healthdyne would become a wholly owned
subsidiary of Invacare.
The Offer is conditioned, among other things, upon the following:
(1) THE MINIMUM CONDITION. Under the Minimum Condition, I.H.H. must be
satisfied, in its sole discretion, that there has been validly tendered and
not properly withdrawn on or prior to the Expiration Date a number of Shares
which, when added to the Shares beneficially owned by I.H.H. and its
affiliates (including Invacare), constitute at least 51% of the voting power
(determined on a fully diluted basis) on the date of purchase of all
securities of Healthdyne entitled to vote generally in the election of
directors and in a merger.
(2) THE RIGHTS CONDITION. Under the Rights Condition, I.H.H. must be
satisfied, in its sole discretion, that the Rights have been redeemed by
Healthdyne's Board of Directors or that such Rights have been invalidated or
are otherwise inapplicable to, or the dilutive provisions thereof will not
be triggered by, the Offer or the Merger. The Rights are described in
Healthdyne's Form 8-A dated May 19, 1995 (the "May 19 Form 8-A") and in
Healthdyne's Current Report on Form 8-K dated February 3, 1997 describing
Amendment No. 1 to the Rights Agreement, dated as of May 22, 1995 (as so
amended, the "Rights Agreement"), between Healthdyne and SunTrust Bank,
Atlanta (formerly Trust Company Bank), as Rights Agent. The following
discussion, including the summary of certain aspects of the Rights, is based
in part on information contained in such documents and is qualified by
reference to such information. Although Invacare does not have any knowledge
that would indicate that any statements contained herein based upon such
documents are untrue, Invacare does not assume any responsibility for the
accuracy or completeness of the information contained in such documents, or
for any failure by Healthdyne to disclose events that may have occurred and
may affect the significance or accuracy of any such information but which
are unknown to Invacare.
According to publicly available information, in the event that at any
time following a Distribution Date (as defined below), (i), a person or
group of affiliated or associated persons becomes the beneficial owner of
20% or more of the then outstanding Shares (except pursuant to a tender
offer or exchange offer for all outstanding Shares determined by a majority
of the Continuing Directors (as defined below) to be fair to shareholders
and otherwise in the best interests of Healthdyne and its shareholders) or
(ii) certain other transactions take place involving an Acquiring Person (as
defined below), or between an Acquiring Person or an affiliate of an
Acquiring Person and Healthdyne, each holder of a Right will thereafter have
the right to receive, upon exercise, Shares (or, in certain circumstances,
cash, property or other securities of Healthdyne) having a value equal to
two times the exercise price of the Right (the "Flip-In"). However, Rights
are not exercisable following the occurrence of any of the events set forth
above until such time as the Rights are no longer redeemable by Healthdyne
as set forth below. If at any time following the Stock Acquisition Date (as
defined below), (i) Healthdyne is acquired in a merger or other business
combination transaction in which Healthdyne is not the surviving corporation
or in which all or part of its Shares are changed or exchanged (unless such
transaction follows a tender offer or exchange offer approved by the
Continuing Directors as set forth above) or (ii) 50% or more of Healthdyne's
assets or earning power is sold or transferred, each holder of a Right shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of
the Right (the "Flip-Over"). The events described in the Flip-In and
Flip-Over are referred to as the "Triggering Events." Notwithstanding any of
the foregoing, following the occurrence of any of the
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Triggering Events, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person will be null and void.
A "Distribution Date" for the Rights will occur upon the earlier of (i)
the tenth business day following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15% or
more of the outstanding Shares (the "Stock Acquisition Date") or (ii) such
time, as Healthdyne's Board of Directors may designate, after the
commencement of a tender offer or exchange offer if upon consummation
thereof the person or group proposing such offer would be the beneficial
owner of 20% or more of the outstanding Shares. The term "Continuing
Director" means any member of Healthdyne's Board of Directors who was a
member of the Board prior to May 22, 1995 (the date of the Rights Agreement)
or has been subsequently elected to the Board if such person was recommended
or approved by a majority of the Continuing Directors, but does not include
an Acquiring Person or any representative thereof.
Invacare believes that, unless the Rights are redeemed or amended, or a
majority of the current Board of Directors approves the Offer for the purposes
of the determination described above, the consummation of the Offer likely would
cause I.H.H. to become an Acquiring Person and trigger the Flip-In and, as a
result, could permit significant dilution to I.H.H.'s and Invacare's interest in
Healthdyne, rendering the Offer and the Merger economically unattractive for
I.H.H. and Invacare.
Except as set forth in the next sentence, Healthdyne may redeem the Rights
in whole, but not in part, at a price of $.01 per Right at any time until the
tenth day following the Stock Acquisition Date (as such period may be extended
by Healthdyne). However, the Rights Agreement contains unusual provisions,
commonly referred to as "dead-hand pill" restrictions, which, under certain
circumstances, purport to prevent a newly elected Board of Directors from
redeeming or amending the Rights without the consent of the old directors. Among
other things, the "dead-hand pill" restrictions purport to require the
concurrence of a majority of the Continuing Directors to redeem the Rights on or
after the time a person becomes an Acquiring Person or on or after a change
(resulting from a proxy or consent solicitation) in a majority of Healthdyne's
directors if any person who participates in such solicitation states or a
majority of the Board of Directors of Healthdyne determines in good faith that
such person (or any of its affiliates or associates) intends to take, or may
consider taking, any action which would result in such person becoming an
Acquiring Person or which would cause the occurrence of a Triggering Event.
After the initial redemption period, the right of redemption may be reinstated
if an Acquiring Person reduces his beneficial ownership to 10% or less of the
outstanding Shares in a transaction or series of transactions not involving
Healthdyne and there are no other Acquiring Persons. In addition, from the end
of the initial redemption period until the occurrence of a Triggering Event,
Healthdyne may redeem the Rights provided that such redemption is incidental to
a merger, consolidation or other business combination involving Healthdyne or a
reorganization or restructuring of Healthdyne which is approved by a majority of
the Continuing Directors. The "dead-hand pill" restrictions further purport to
require the concurrence of a majority of the Continuing Directors for any
supplement or amendment to the Rights Agreement.
Invacare and I.H.H. believe that the "dead-hand pill" restrictions, which
were adopted by Healthdyne's current Board of Directors of Healthdyne without
shareholder approval, are a collection of draconian and extreme
director-entrenching provisions which, in purporting to limit the ability of
future Boards of Directors of Healthdyne (including any nominated by Invacare or
I.H.H.) from acting in the best interests of Healthdyne and its shareholders by
redeeming or otherwise nullifying the Rights in connection with a proposed
transaction, denies the shareholders and future Boards of Directors meaningful
access to and control over the assets of Healthdyne and hinders and prevents the
exercise of fundamental shareholder rights under Georgia law. Invacare and
I.H.H. believe that such provisions violate Georgia and federal law and have
commenced the Defensive Tactics Litigation in the United States District Court
for the Northern District of Georgia (the "Court") seeking, among other things,
(i) an order declaring the "dead-hand pill" restrictions of the Rights Agreement
illegal and unenforceable and compelling
35
<PAGE>
Healthdyne's Board of Directors to amend the Rights Agreement to remove such
restrictions and (ii) an order compelling Healthdyne's Board of Directors to
fulfill their fiduciary duties by redeeming the Rights or amending the Rights
Agreement to make the Rights inapplicable to the Offer and the Merger. A more
detailed description of the claims made by Invacare and I.H.H. in the Defensive
Tactics Litigation is contained under "Background of Acquisition
Proposal--Defensive Tactics Litigation", above.
Invacare and I.H.H. intend to request, among other things, that the Court
adjudicate the issues relating to the "dead-hand pill" restrictions of the
Rights Agreement sufficiently prior to the Annual Meeting to permit Healthdyne's
shareholders to make an informed decision regarding election of directors at the
Annual Meeting. Invacare has nominated the seven Invacare Nominees and is
soliciting your proxy with respect thereto on the assumption that the "dead-hand
pill" restrictions will be invalidated or removed (whether by judicial action,
adoption and valid implementation of the Dead-Hand Elimination Proposal or
otherwise) in order to permit the Invacare Nominees, if elected, to take all
necessary actions to satisfy the Rights Condition.
If elected, the Invacare Nominees will, subject to any fiduciary duties they
would have as directors of Healthdyne, take action to redeem the Rights or take
such other action to invalidate the Rights or render the dilutive provisions
thereof inapplicable to the Offer and the Merger.
(3) THE GEORGIA BUSINESS COMBINATION STATUTE CONDITION. Under the
Georgia Business Combination Statute Condition, I.H.H. must be satisfied, in
its sole discretion, that the restrictions on business combinations
contained in Sections 14-2-1131 through 14-2-1133 of the GBCC (collectively,
the "Georgia Business Combination Statute") would not apply to I.H.H. or
Invacare in connection with the Offer or the Merger (as a result of action
by Healthdyne's Board of Directors, the ownership by I.H.H. upon
consummation of the Offer of at least 90% of the outstanding voting stock of
Healthdyne (other than Shares held by directors, officers and certain
employee stock plans of Healthdyne) or otherwise).
In general, the Georgia Business Combination Statute prohibits any
person who is defined to be an "Interested Shareholder", including a
beneficial owner of 10% or more of the voting power of the outstanding
voting shares of a corporation, from engaging in certain business
combinations (including business combinations such as the Merger) with such
corporation for a period of five years following the date on which such
person became an Interested Shareholder, unless (i) either the transaction
by which such person became an Interested Shareholder or the business
combination is approved by the board of directors of the corporation prior
to the date on which such person became an Interested Shareholder, (ii) upon
consummation of the transaction which resulted in such person becoming an
Interested Shareholder, such person owned at least 90% of the voting stock
outstanding at the time the transaction commenced, excluding shares owned by
(a) persons who are officers or directors of the corporation and their
affiliates or associates, (b) subsidiaries of the corporation and (c) any
employee stock plan under which employee participants do not have the right
to determine confidentially the extent to which shares held subject to the
plan will be tendered in a tender or exchange offer (all such non-excluded
voting stock, "Eligible Voting Stock"), or (iii) subsequent to the date on
which such person became an Interested Shareholder, the Interested
Shareholder becomes the owner of 90% of the outstanding voting stock of the
corporation and the business combination is approved by the board of
directors of the corporation and authorized by the affirmative vote, at an
annual meeting or a special meeting of the shareholders of at least a
majority of the outstanding voting stock not beneficially owned by the
Interested Shareholder or any of its affiliates or associates or by persons
who are directors or officers of the Interested Shareholder. The
requirements of the Georgia Business Combination Statute do not apply unless
the corporation adopts a by-law expressly electing to be governed thereby.
According to Healthdyne's Answer in the Defensive Tactics Litigation,
Healthdyne's By-Laws have included such a provision since April 1995.
Accordingly, the requirements of the Georgia Business Combination Statute
apply to Healthdyne. Consequently, under the Georgia Business Combination
Statute, unless the Board of Directors of Healthdyne approves the Offer and
36
<PAGE>
the Merger in advance of the consummation of the Offer or I.H.H. and
Invacare own 90% of the Eligible Voting Stock upon consummation of the
Offer, the Merger could not occur for five years following the consummation
of the Offer unless Invacare and its affiliates acquire 90% of the
outstanding Shares and the Merger is approved by the Board of Directors of
Healthdyne and by a majority of the outstanding Shares not owned by Invacare
or its affiliates.
If elected, the Invacare Nominees will, subject to any fiduciary duties they
would have as directors of Healthdyne, take action to approve the Offer and the
Merger in order to satisfy the Georgia Business Combination Statute Condition.
(4) THE GEORGIA FAIR PRICE STATUTE CONDITION. Under the Georgia Fair
Price Statute Condition, I.H.H. must be satisfied, in its sole discretion,
that the restrictions on business combinations contained in Sections
14-2-1110 through 14-2-1113 of the GBCC (collectively, the "Georgia Fair
Price Statute") would not apply to I.H.H. or Invacare in connection with the
Offer or the Merger or are invalid (in either case, as a result of action by
Healthdyne's Board of Directors, judicial action or otherwise) or that the
Merger may be consummated without any approval required under the Georgia
Fair Price Statute at a price per Share not in excess of the price per Share
to be paid in the Offer and the Merger.
The requirements of the Georgia Fair Price Statute do not apply unless
the corporation adopts a by-law expressly electing to be governed thereby.
According to publicly available information and Healthdyne's Answer in the
Defensive Tactics Litigation, Healthdyne's By-Laws did not include such a
provision until January 23, 1997, when Healthdyne's Board of Directors,
after Invacare had made public its interest in an acquisition of Healthdyne,
amended the By-Laws to include such a provision. Accordingly, the
requirements of the Georgia Fair Price Statute now purport to apply to
Healthdyne.
In general, except as provided below, the Georgia Fair Price Statute
requires that certain business combinations (including business combinations
such as the Merger) between a Georgia corporation and an Interested
Shareholder, including a beneficial owner of 10% or more of the voting power
of the outstanding voting shares of the corporation, be either (i)
unanimously approved by the continuing directors, provided that the
continuing directors constitute at least three members of the board of
directors at the time of such approval, or (ii) recommended by at least
two-thirds of the continuing directors and approved by a majority of the
votes entitled to be cast by holders of voting shares, other than voting
shares beneficially owned by the Interested Shareholder. As used with
respect to the Georgia Fair Price Statute, a "continuing director" means any
member of the corporation's board of directors who is not an affiliate or
associate of the Interested Shareholder or any of its affiliates (other than
the corporation or any of its subsidiaries) and who was a director of the
corporation prior to the date on which the Interested Shareholder first
became such, and any successor to such continuing director who is not an
affiliate or an associate of the Interested Shareholder or any of its
affiliates (other than the corporation or its subsidiaries) and is
recommended or elected by a majority of all the continuing directors.
However, the board and shareholder approval requirements of the Georgia
Fair Price Statute do not apply to a business combination in which the only
outstanding securities of the corporation are common shares of the same
class for which cash consideration only will be paid if each of the
following conditions (the "Merger Price Provisions") is met:
(i) the aggregate amount of cash to be received per share by
shareholders is at least equal to the highest of:
(a) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid by the
Interested Shareholder for any common shares acquired by it (1)
within the two-year period immediately prior to the first general
public
37
<PAGE>
announcement of the proposal of the business combination (the
"Announcement Date"), or (2) in the transaction in which it became an
Interested Shareholder, whichever is higher, or
(b) the "fair market value" (defined as the highest closing sale
price during the 30-day period including and immediately preceding
the date in question) per share as determined (x) on the Announcement
Date or (y) the date on which an Interested Shareholder first became
such, whichever fair market value is higher;
(ii) after the Interested Shareholder has become such and prior to
the consummation of such business combination, unless approved by a
majority of the continuing directors, (x) there has been no effective
change in the dividend policy of the corporation which adversely affects
the shareholders and (y) there has been no increase in the Interested
Shareholder's percentage ownership of common shares by more than 1% in
any twelve-month period; and
(iii) after the Interested Shareholder has become such, the
Interested Shareholder has not received any direct or indirect benefit
from the corporation not received by all other shareholders
proportionately.
The Georgia Fair Price Statute is designed to protect shareholders against
the inequities of certain takeover tactics, such as so-called "two-tiered"
transactions in which lesser consideration is paid in the second-step merger
than in the first-step tender offer, which result in minority shareholders who
do not participate in the initial tender offer receiving a lower price or less
desirable form of consideration than the tendering shareholders. Because holders
of Shares are to receive the same cash consideration per Share in the Merger as
that paid by I.H.H. pursuant to the Offer (the "Offer Price"), Invacare and
I.H.H. believe that the Offer and the Merger are in accord with the purpose and
intent of the Georgia Fair Price Statute. Moreover, the Offer Price is higher
than both (i) the highest per share price paid by Invacare and I.H.H. for any
Shares acquired by them and (ii) the fair market value of the Shares as of the
relevant Announcement Date, January 10, 1997, the date on which Invacare first
publicly announced its proposed acquisition of Healthdyne in a merger
transaction. Therefore, if the highest closing stock price for the Shares during
the 30-day period including and immediately preceding the date of consummation
of the Offer (the "Pre-Takedown Period") is not in excess of the Offer Price and
the other procedural requirements of the Merger Price Provisions are met, the
terms of the Merger Price Provisions would not require a higher price to be paid
in the Merger than in the Offer, and the Georgia Fair Price Statute Condition
would be satisfied without the need for any action or approval of the Board of
the Directors or the shareholders of Healthdyne. However, Invacare and I.H.H.
are unable to predict whether the closing stock price for the Shares on any day
in the Pre-Takedown Period will be in excess of the Offer Price, whether as a
result of anomalous or manipulative trading activity or otherwise, and thus in
order to facilitate the Offer and the Merger are seeking action of the
Healthdyne Board of Directors to satisfy the Georgia Fair Price Statute
Condition.
------------------------
If elected, the Invacare Nominees will, subject to any fiduciary duties they
would have as directors of Healthdyne, take action to approve the Offer and the
Merger in order to satisfy the Georgia Fair Price Statute Condition.
The Offer is also subject to the other terms and conditions which are
described in the Offer to Purchase and the related Letter of Transmittal, copies
of which are available from MacKenzie Partners (the Information Agent in the
Offer) at the addresses and telephone numbers set forth on the back cover of
this Proxy Statement. If you have not already received them, Invacare urges you
to obtain a copy of the Offer to Purchase, Letter of Transmittal and other Offer
documents. THIS PROXY STATEMENT IS NEITHER A REQUEST FOR THE TENDER OF SHARES
NOR AN OFFER WITH RESPECT THERETO. THE OFFER IS BEING MADE ONLY BY MEANS OF THE
OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL.
38
<PAGE>
Invacare has requested the Healthdyne Board (i) to satisfy the Rights
Condition by redeeming the Rights or otherwise making the Rights inapplicable
to, or causing the dilutive provisions thereof not to be triggered by, the Offer
or the Merger and (ii) to satisfy the Georgia Business Combination Statute
Condition and the Georgia Fair Price Statute Condition by adopting a resolution
approving the Offer and the Merger for purposes of the Georgia Business
Combination Statute and the Georgia Fair Price Statute. To date, the Healthdyne
Board has refused to take any such action.
ACCORDINGLY, ALL INVACARE NOMINEES ARE COMMITTED TO TAKING ALL SUCH ACTIONS
NECESSARY OR APPROPRIATE (SUBJECT TO ANY FIDUCIARY DUTIES THEY WOULD HAVE AS
DIRECTORS), INCLUDING THE ACTIONS SPECIFIED ABOVE, TO APPROVE AND EFFECTUATE THE
CONSUMMATION OF THE OFFER AND THE MERGER.
SOLICITATION OF PROXIES
Proxies may be solicited by mail, advertisement, telephone or telecopier and
in person. Solicitations may be made by directors, officers, investor relations
personnel and other employees of Invacare, none of whom will receive additional
compensation for such solicitations. Invacare will request banks, brokerage
houses and other custodians, nominees and fiduciaries to forward all of its
solicitation materials to the beneficial owners of the Shares they hold of
record. Invacare will reimburse these record holders for customary clerical and
mailing expenses incurred by them in forwarding these materials to their
customers.
Invacare has retained MacKenzie Partners for solicitation and advisory
services in connection with the solicitation, for which MacKenzie Partners is to
receive a fee of not more than $ , together with reimbursement for its
reasonable out-of-pocket expenses. Invacare has also agreed to indemnify
MacKenzie Partners against certain liabilities and expenses, including
liabilities and expenses under the federal securities laws. MacKenzie Partners
will solicit proxies for the Annual Meeting from individuals, brokers, banks,
bank nominees and other institutional holders. It is anticipated that MacKenzie
will employ approximately persons to solicit shareholders for the Annual
Meeting. MacKenzie Partners is also acting as Information Agent in connection
with the Offer, for which MacKenzie Partners will be paid customary compensation
in addition to reimbursement of reasonable out-of-pocket expenses.
Salomon Brothers Inc ("Salomon Brothers") is acting as dealer manager in
connection with the Offer and serving as financial advisor to Invacare and
I.H.H. in connection with the proposed acquisition of Healthdyne. To date,
Invacare has paid Salomon Brothers a fee of $350,000. Upon the acquisition by
Invacare, I.H.H. or another subsidiary of Invacare of Healthdyne, or all or a
significant portion of the assets of Healthdyne or more than 10% of the equity
securities of Healthdyne, Invacare has agreed to pay Salomon Brothers an
additional fee of $1,650,000. Invacare and I.H.H. will also reimburse Salomon
Brothers for reasonable out-of-pocket expenses, including reasonable attorneys'
fees and expenses, and have also agreed to indemnify Salomon Brothers against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws. In connection with Salomon
Brothers' engagement as financial advisor, Invacare anticipates that employees
of Salomon Brothers may communicate in person, by telephone or otherwise with a
limited number of institutions, brokers or other persons who are Healthdyne
shareholders for the purpose of assisting in the solicitation of proxies for the
Annual Meeting. Salomon Brothers will not receive any additional fee for or in
connection with such activities apart from the fees which it is otherwise
entitled to receive as described above.
The entire expense of soliciting proxies for the Annual Meeting is being
borne by Invacare. Invacare will not seek reimbursement for such expenses from
Healthdyne. Costs incidental to these solicitations of proxies include
expenditures for printing, postage, legal, accounting, public relations,
soliciting, advertising and related expenses and are expected to be
approximately $ million in addition to the fees of Salomon Brothers
described above. Total costs incurred to date in furtherance of or in connection
with these solicitations of proxies are approximately $ .
39
<PAGE>
OTHER INFORMATION
I.H.H., a Delaware corporation and a wholly owned subsidiary of Invacare,
was organized in connection with the proposed acquisition of Healthdyne and has
not carried on any unrelated activities to date other than those incident to its
formation.
Invacare is the leading home medical equipment manufacturer in the world
based upon its distribution channels, the breadth of its product line and sales.
Invacare designs, manufactures and distributes an extensive line of medical
equipment for the home health care and extended care markets. Invacare
continuously revises and expands its product lines to meet changing market
demands. Its products are sold principally to over 10,000 home health care and
medical equipment provider locations throughout the world. Products are sold
through its world-wide distribution network by its sale force, telemarketing
employees and various organizations of independent manufacturer's
representatives. Invacare also uses its extensive distribution network to
distribute medical equipment and related supplies manufactured by others.
Certain information about the directors and executive officers of Invacare
and certain employees and other representatives of Invacare and I.H.H. who may
also assist MacKenzie Partners in soliciting proxies is set forth in the
attached Schedule I. Schedule II sets forth certain information relating to
Shares owned by Invacare, such individuals and the Invacare Nominees and certain
other information regarding such persons.
Schedule III of this Proxy Statement sets forth information regarding Shares
held by certain beneficial owners, directors, nominees and executive officers of
Healthdyne. The information concerning Healthdyne and such other persons
contained in this Proxy Statement and the Schedules attached hereto has been
taken from, or is based upon, publicly available information. To date, Invacare
has not had access to the books and records of Healthdyne.
Invacare assumes no responsibility for the accuracy or completeness of any
information contained herein which is based on, or incorporated by reference to,
Healthdyne's public filings.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Invacare anticipates that the Healthdyne Proxy Statement will indicate that
proposals of Healthdyne's shareholders that are intended to be presented by such
shareholders at Healthdyne's 1998 Annual Meeting of Shareholders must be
received by Healthdyne not less than 120 calendar days in advance of the
anniversary date of the Healthdyne Proxy Statement in order to be considered for
inclusion in the proxy statement and form of proxy relating to that meeting.
------------------------
PLEASE INDICATE YOUR SUPPORT OF THE INVACARE NOMINEES AND THE PROPOSALS BY
COMPLETING, SIGNING AND DATING THE ENCLOSED [GOLD]ANNUAL MEETING PROXY CARD AND
RETURNING IT PROMPTLY TO INVACARE, C/O MACKENZIE PARTNERS, INC., 156 FIFTH
AVENUE, NEW YORK, NEW YORK 10010, IN THE ENCLOSED ENVELOPE, OR BY FAX TO (212)
929-0308. NO POSTAGE IS NECESSARY IF THE ENVELOPE IS MAILED IN THE UNITED
STATES.
INVACARE CORPORATION
, 1997
40
<PAGE>
SCHEDULE I
INFORMATION CONCERNING CERTAIN DIRECTORS AND EXECUTIVE
OFFICERS, AND CERTAIN EMPLOYEES AND OTHER REPRESENTATIVES
OF INVACARE AND I.H.H.
The following tables set forth the name and the present principal occupation
or employment, and the name, principal business and address of any corporation
or other organization in which such employment is carried on, of (1) certain
directors and executive officers of Invacare and I.H.H. and (2) certain
employees and other representatives of Invacare who in each case may assist
MacKenzie Partners in soliciting proxies from Healthdyne shareholders. The
principal business address of each director, executive officer, employee or
representative of Invacare, and each director or executive officer of I.H.H.,
named below is 899 Cleveland Street, Elyria, Ohio 44035.
DIRECTORS AND EXECUTIVE OFFICERS OF INVACARE AND I.H.H.
<TABLE>
<CAPTION>
PRESENT OFFICE OR OTHER PRINCIPAL
NAME AND PRINCIPAL BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
A. Malachi Mixon, III................................... Chairman, Chief Executive Officer and Director of
Invacare
Gerald B. Blouch........................................ President, Chief Operating Officer and Director of
Invacare; Vice President, Secretary and Assistant
Treasurer of I.H.H.
Thomas R. Miklich....................................... Chief Financial Officer, Secretary, General Counsel and
Treasurer of Invacare; Director, President, Treasurer
and Assistant Secretary of I.H.H.
Joseph B. Richey, II.................................... Senior Vice President--Total Quality Management and
Director of Invacare;
President--Invacare Technologies
Donald P. Andersen...................................... Group Vice President--Respiratory Products of Invacare
Louis F.J. Slangen...................................... Senior Vice President--Sales & Marketing of Invacare
</TABLE>
OTHER REPRESENTATIVES OF INVACARE WHO MAY ALSO ASSIST IN THE SOLICITATION OF
PROXIES
Although Salomon Brothers does not admit that it or any of its directors,
officers, employees or affiliates is a "participant", as defined in Schedule 14A
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, or that such Schedule 14A requires the
disclosure of certain information concerning them, the following employees of
Salomon Brothers may assist MacKenzie Partners in soliciting proxies from
Healthdyne shareholders. The principal business address of each Salomon Brothers
employee named below is Salomon Brothers Inc, Seven World Trade Center, New
York, NY 10048.
<TABLE>
<CAPTION>
PRESENT OFFICE OR OTHER PRINCIPAL
NAME AND PRINCIPAL BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Scott Wilson............................................ Managing Director--Investment Banking Group
Wilder Fulford.......................................... Managing Director--Investment Banking Group
John Fowler............................................. Managing Director--Investment Banking Group
John Chambers........................................... Director--Investment Banking Group
Sarah Barnes............................................ Vice President--Investment Banking Group
</TABLE>
<PAGE>
SCHEDULE II
SHARES HELD BY INVACARE, ITS DIRECTORS AND
EXECUTIVE OFFICERS, CERTAIN EMPLOYEES AND OTHER
REPRESENTATIVES OF INVACARE AND THE INVACARE NOMINEES
AND CERTAIN OTHER INFORMATION REGARDING SUCH PERSONS
Invacare beneficially owns an aggregate of 600,000 Shares, of which 100 are
held of record in its own name, 100 are held of record in the name of I.H.H.
(which shares were contributed by the Parent on January 2, 1997 in exchange for
100 shares of common stock, par value $.01 per share, of I.H.H.), and the
remainder are held of record in the name of Cede & Co. Such Shares were
purchased by Invacare for cash in open market transactions as follows:
<TABLE>
<CAPTION>
DATE NUMBER OF SHARES PRICE PER SHARE
- --------- ------------------ ---------------
<S> <C> <C>
9/12/96 15,000 $ 8.2500
9/12/96 10,000 8.3125
9/13/96 35,000 8.2500
9/16/93 50,000 8.6250
9/24/96 40,000 8.2500
9/30/96 50,000 8.5000
10/3/96 15,000 7.8750
10/7/96 10,000 8.0000
10/8/96 60,000 8.0000
10/22/96 25,000 9.1250
10/23/96 65,000 9.2500
10/24/96 10,000 9.1250
10/30/96 70,000 9.1250
11/1/96 10,000 9.0000
11/4/96 10,000 9.1250
11/11/96 32,000 9.0781
11/20/96 10,000 9.1250
12/9/96 13,000 8.8750
12/11/96 31,000 9.1450
12/13/96 16,000 9.2500
12/16/96 20,000 9.2500
12/16/96 3,000 9.1250
---------
TOTAL: 600,000.00
</TABLE>
Gerald B. Blouch, Thomas R. Miklich and Joseph B. Richey, II have agreed to
serve as the proxies on the [GOLD] Annual Meeting proxy card.
Except as disclosed in this Schedule, none of Invacare, any of its directors
or executive officers, I.H.H., any of its directors or executive officers, the
employees or other representatives of Invacare named in Schedule I or the
Invacare Nominees owns any securities of Healthdyne or any subsidiary of
Healthdyne, beneficially or of record, has purchased or sold any of such
securities within the past two years or is or was within the past year a party
to any contract, arrangement or understanding with any person with respect to
any such securities. Except as disclosed in this Schedule, to the best knowledge
of Invacare, its directors and executive officers, the employees and other
representatives of Invacare named in Schedule I and the Invacare Nominees, none
of their associates beneficially owns, directly or indirectly, any securities of
Healthdyne.
Salomon Brothers engages in a full range of investment banking, securities
trading, market-making and brokerage services for institutional and individual
clients. In the ordinary course of its business, Salomon Brothers maintains
customary arrangements and effects transactions in the securities of Healthdyne
for the accounts of its customers. As a result of its engagement by Invacare,
Salomon Brothers restricted its proprietary trading in the securities of
Healthdyne (although it may still execute trades for customers on an unsolicited
agency basis).
<PAGE>
Other than as disclosed in this Schedule and in the Proxy Statement, to the
knowledge of Invacare, none of Invacare, any of its directors or executive
officers, I.H.H., any of its directors or executive officers, the employees or
other representatives of Invacare named in Schedule I or the Invacare Nominees
has any substantial interest, direct or indirect, by security holdings or
otherwise, in any matter to be acted upon at the Annual Meeting. None of the
Invacare Nominees owns any Shares. As a group, the Invacare Nominees own in the
aggregate less than 1/2% of the total number of shares of Invacare common stock
outstanding as of , 1997.
Other than as disclosed in this Schedule and in the Proxy Statement, to the
knowledge of Invacare, none of Invacare, any of its directors or executive
officers, I.H.H., any of its directors or executive officers, the employees or
other representatives of Invacare named in Schedule I or the Invacare Nominees
is, or has been within the past year, a party to any contract, arrangement or
understanding with any person with respect to any class of securities of
Healthdyne, including but not limited to joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies.
Other than as set forth in this Schedule and except for the Offer, to the
knowledge of Invacare, none of Invacare, any of its directors or executive
officers, I.H.H., any of its directors or executive officers, the employees or
other representatives of Invacare named in Schedule I or the Invacare Nominees
or any of their associates have had or will have a direct or indirect material
interest in any transaction or series of similar transactions since the
beginning of Invacare's last fiscal year or any currently proposed transactions,
or series of similar transactions, to which Healthdyne or any of its
subsidiaries was or is to be a party in which the amount involved exceeds
$60,000.
Upon the filing by Invacare with the Commission of a definitive proxy
statement with respect to the election of the Invacare Nominees to the Board of
Directors of Healthdyne, Invacare has agreed to pay each Invacare Nominee a fee
in the amount of $10,000. Invacare has also agreed to indemnify each of the
Invacare Nominees against any expenses (including legal fees) and liabilities
arising out of participation in the proxy solicitation.
According to Healthdyne's public filings with the Commission, if elected as
directors of Healthdyne, each Invacare Nominee would receive from Healthdyne a
director's fee of $3,000 per quarter, plus $1,000 for each Board meeting and
$750 for each committee meeting attended, and would be reimbursed for any travel
expense incurred. Invacare also believes that, if elected, the Invacare Nominees
would be indemnified by Healthdyne to the extent indemnification is provided in
Healthdyne's Articles of Incorporation and By-Laws. Invacare disclaims any
responsibility for the accuracy of the foregoing information, which has been
extracted from Healthdyne's public filings.
Other than as set forth in this Schedule and in the Proxy Statement, to the
knowledge of Invacare, none of Invacare, any of its directors or executive
officers, I.H.H., any of its directors or executive officers, the employees or
other representatives of Invacare named in Schedule I or the Invacare Nominees,
or any of their associates, have any arrangements or understandings with any
person or persons with respect to any future employment by Healthdyne or its
affiliates or with respect to any future transactions to which Healthdyne or any
of its affiliates will or may be a party.
To the knowledge of Invacare: no occupation or employment was carried on by
any of the Invacare Nominees with Healthdyne or any corporation or organization
which is or was a subsidiary or other affiliate of Healthdyne during the past
five years and none of the Invacare Nominees have ever served on the Healthdyne
Board; there are no material proceedings in which any of the Invacare Nominees
or any of their associates is a party adverse to Healthdyne or any of its
subsidiaries, or proceedings in which such nominees or associates have a
material interest adverse to Healthdyne or any of its subsidiaries; each of the
Invacare Nominees is a citizen of the United States; and within the past ten
years, none of Invacare, any of its directors or executive officers, I.H.H., any
of its directors or executive officers, the employees or other representatives
of Invacare named in Schedule I or the Invacare Nominees has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors).
2
<PAGE>
SCHEDULE III
INFORMATION REGARDING SHARES HELD BY CERTAIN
BENEFICIAL OWNERS, DIRECTORS, NOMINEES AND
EXECUTIVE OFFICERS OF HEALTHDYNE
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the beneficial ownership of persons, other than
Parker H. Petit, known to Invacare based on publicly available information to be
the beneficial owners of more than five percent of the Shares as of December 31,
1996. Information regarding ownership of Shares by Mr. Petit is set forth below
under "Security Ownership of Directors and Management".
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- -------------------------------------------------------------------------------- ---------------------- -----------
<S> <C> <C>
Wellington Management Company................................................... 1,325,587(1) 10.5%
75 State Street
Boston, Massachusetts 02109
Gruber & McBaine Capital Management, Inc. ...................................... 569,770(2) 5.2%
50 Osgood Place
San Francisco, California 94133
Cowen Incorporated.............................................................. 647,493(3) 5.1%
Financial Square
New York, NY 10005
</TABLE>
- ------------------------
(1) Based on information set forth in a Schedule 13G dated January 24, 1997
providing information as of December 31, 1996. Wellington Management Company
("Wellington") may be deemed to be the beneficial owner of 1,325,587 Shares
owned by numerous investment counseling clients. Wellington has shared
voting power as to 254,349 of such Shares and shared dispositive power as to
all of such Shares.
(2) Based on information set forth in a CDA/Spectrum 13(f) Filing Report of
Ownership by Major Institutions dated February 10, 1997 for the quarter
ended December 31, 1996. Gruber & McBaine Capital Management, Inc. has
shared voting power as to all of the 569,770 Shares.
(3) Based on information set forth in a Schedule 13G dated February 12, 1997
providing information as of December 31, 1996. Cowen Incorporated has shared
voting power as to 638,660 of such Shares and shared dispositive power as to
all of such Shares.
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table shows as of March 15, 1996 (except as noted below) the
beneficial ownership of Shares by each director and executive officer named in
Healthdyne's 1996 Proxy Statement, dated April 23, 1996 and by the directors and
executive officers as a group, to the extent known to Invacare based on publicly
available information.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
- ---------------------------------------------------------------- ------------------ -----------
<S> <C> <C>
Parker H. Petit................................................. 886,859(2) 6.8%
Craig B. Reynolds............................................... 111,134 *
J. Terry Dewberry............................................... 136,771 1.0%
Alexander H. Lorch.............................................. 18,109 *
J. Leland Strange............................................... 4,445 *
James J. Wellman, M.D........................................... 0 0
J. Paul Yokubinas............................................... 142,379 1.1%
Robert M. Johnson............................................... 15,396 *
Jeffrey A. North................................................ 35,790 *
Vincent J. Persano.............................................. 28,453 *
Robert E. Tucker................................................ 85,862 *
All directors and executive officers as a group (14 persons).... 1,533,597 12.0%
</TABLE>
- ------------------------
* Less than 1%
(1) All Shares are owned directly. All information in the table, except with
respect to Mr. Petit, is taken from Healthdyne's 1996 Proxy Statement dated
April 23, 1996.
(2) Mr. Petit's address is c/o Matria Healthcare, Inc., 1850 Parkway Place, 12th
Floor, Marietta, Georgia 30067. Information with respect to Mr. Petit is
taken from a Schedule 13G dated February 12, 1997 providing information as
of December 31, 1996.
2
<PAGE>
SCHEDULE IV
SPECIFIC LANGUAGE OF BY-LAW AMENDMENTS TO BE EFFECTED BY ADOPTION OF THE
PROPOSALS AT HEALTHDYNE'S 1997 ANNUAL MEETING OF SHAREHOLDERS
<PAGE>
IMPORTANT
Your proxy is important. No matter how many Shares you own, please give Invacare
your proxy FOR the election of the Invacare Nominees by:
SIGNING the enclosed [GOLD] Annual Meeting proxy card,
DATING the enclosed [GOLD] Annual Meeting proxy card and
MAILING the enclosed [GOLD] Annual Meeting proxy card TODAY in the envelope
provided (no postage is required if mailed in the United States) or FAXING BOTH
SIDES of the enclosed [GOLD] Annual Meeting proxy card TODAY to the number
provided below.
If you have already submitted a proxy to Healthdyne for the Annual Meeting, you
may change your vote to a vote FOR the election of the Invacare Nominees and
vote FOR the Proposals by signing, dating and returning the enclosed [GOLD]
proxy card for the Annual Meeting, which must be dated after any proxy you may
have submitted to Healthdyne. Only your latest dated proxy for the Annual
Meeting will count at such meeting.
If you have any questions or require any additional information concerning this
Proxy Statement or the proposal by Invacare to acquire Healthdyne, please
contact MacKenzie Partners, Inc. at the address set forth below. IF ANY OF YOUR
SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK, BANK NOMINEE OR OTHER
INSTITUTION, ONLY IT CAN VOTE SUCH SHARES AND ONLY UPON RECEIPT OF YOUR SPECIFIC
INSTRUCTIONS. ACCORDINGLY, YOU SHOULD CONTACT THE PERSON RESPONSIBLE FOR YOUR
ACCOUNT AND INSTRUCT THAT PERSON TO EXECUTE THE [GOLD] ANNUAL MEETING PROXY CARD
AS SOON AS POSSIBLE.
MACKENZIE PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NY 10010
(212) 929-5500 (CALL COLLECT)
OR
CALL TOLL FREE (800) 322-2885
FACSIMILE (212) 929-0308
<PAGE>
PRELIMINARY COPIES HEALTHDYNE TECHNOLOGIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY INVACARE CORPORATION
The undersigned shareholder of Healthdyne Technologies, Inc. hereby appoints
Gerald B. Blouch, Thomas R. Miklich and Joseph B. Richey, II and each of them
with full power of substitution, for and in the name of the undersigned, to
represent and to vote, as designated below, all shares of Common Stock, par
value $0.01 per share, of Healthdyne Technologies, Inc. that the undersigned is
entitled to vote if personally present at the 1997 Annual Meeting of
Shareholders of Healthdyne Technologies, Inc., to be held at [ ], at
[ a.m.][ ] time, on [ ,] 1997, and including at any
adjournments or postponements thereof. The undersigned hereby revokes any
previous proxies with respect to the matters covered by this Proxy.
INVACARE CORPORATION RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, 4 AND 5.
(Please mark each proposal with an "X" in the appropriate box)
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS:
Election of Nicholas J. DiCicco, Jr., Donald F. Hastings, Jack Kahl, Jr., Ernest Peter Mansour, Jon H.
Outcalt, James Allen Rutherford and Bill R. Sanford as Directors whose terms expire in 1998.
/ / FOR ALL NOMINEES EXCEPT AS MARKED BELOW / / WITHHOLD AUTHORITY FOR ALL NOMINEES
(INSTRUCTION: To withhold authority to vote for one or more nominees, mark FOR above and print the
name(s) of the person(s) with respect to whom you wish to withhold authority to vote in the space
provided below):
------------------------------------------------------------------------------------------------------
2. AMEND HEALTHDYNE TECHNOLOGIES, INC.'S BY-LAWS TO SET THE MAXIMUM NUMBER OF DIRECTORS AT SEVEN:
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
3. AMEND HEALTHDYNE TECHNOLOGIES, INC.'S BY-LAWS TO LIMIT AUTHORITY OF HEALTHDYNE'S BOARD OF DIRECTORS TO
IMPOSE OR PERMIT TO EXIST "DEAD-HAND PILL" AND SIMILAR RESTRICTIONS, AND TO REQUIRE IMMEDIATE REMOVAL
OF SUCH RESTRICTIONS:
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
4. REPEAL CERTAIN PROVISIONS OF HEALTHDYNE TECHNOLOGIES, INC.'S BY-LAWS:
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
5. AMEND HEALTHDYNE TECHNOLOGIES, INC.'S BY-LAWS TO GIVE THE HOLDERS OF 10% OF THE OUTSTANDING SHARES OF
HEALTHDYNE TECHNOLOGIES, INC.'S COMMON STOCK THE RIGHT TO DEMAND A SPECIAL MEETING AND TO PROVIDE
CERTAIN PROCEDURAL REQUIREMENTS FOR SPECIAL MEETINGS:
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED ON OTHER SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
<TABLE>
<S> <C> <C> <C>
6. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF, IF SUCH OTHER BUSINESS ADVERSELY AFFECTS INVACARE
CORPORATION.
</TABLE>
This Proxy, when properly executed, will be voted in the manner marked
herein by the undersigned shareholder. IF NO MARKING IS MADE, THIS PROXY WILL BE
DEEMED TO BE A DIRECTION TO VOTE FOR PROPOSALS 1, 2, 3, 4 AND 5.
Please date and sign this
proxy exactly as your
name appears hereon.
-------------------------------
(Signature)
-------------------------------
(Signature, if held jointly)
-------------------------------
(Title)
Dated:
-------------------------------
<TABLE>
<S> <C>
TO VOTE IN ACCORDANCE WITH THE INVACARE When shares are held by joint tenants, both
CORPORATION'S RECOMMENDATION, JUST SIGN AND should sign. When signing as attorney-in-fact,
DATE THIS PROXY; NO BOXES NEED TO BE CHECKED. executor, administrator, trustee, guardian,
corporate officer or partner, please give full
title as such. If a corporation, please sign in
corporate name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
</TABLE>
IMPORTANT: PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE OR FAX BOTH SIDES OF THIS PROXY TO
MACKENZIE PARTNERS, INC. AT (212) 929-0308
IF YOU NEED ASSISTANCE WITH THIS PROXY CARD, PLEASE CALL
MACKENZIE PARTNERS, INC. TOLL-FREE (800) 322-2885 - (212) 929-5500 (CALL
COLLECT)
