<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
HEALTHDYNE TECHNOLOGIES, INC.
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(Name of Registrant as Specified In Its Charter)
INVACARE CORPORATION
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(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 Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
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 10:30 a.m. local time, on
Wednesday, July 30, 1997 at 1350 Parkway Place, Suite 320, Marietta, Georgia
30067 and at any adjournments or postponements thereof (the "Annual Meeting").
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 (Invacare's "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 OF THE NOMINEES ARE COMMITTED TO TAKING ALL SUCH ACTIONS NECESSARY OR
APPROPRIATE (SUBJECT TO ANY FIDUCIARY DUTIES THEY WOULD HAVE AS DIRECTORS) TO
CONDUCT A PROMPT AUCTION AND SALE OF HEALTHDYNE AT THE BEST AVAILABLE PRICE AND
TERMS (THE "HEALTHDYNE SALE"). ABSENT A DEFINITIVE BONA FIDE OFFER AT A PRICE
AND ON TERMS MORE FAVORABLE TO HEALTHDYNE'S SHAREHOLDERS THAN THE OFFER AND THE
MERGER (AS SUCH TERMS ARE DEFINED HEREIN), THE NOMINEES INTEND TO TAKE ALL SUCH
ACTIONS NECESSARY OR APPROPRIATE (SUBJECT TO ANY FIDUCIARY DUTIES THEY WOULD
HAVE AS DIRECTORS) TO PERMIT THE HEALTHDYNE SHAREHOLDERS TO ACCEPT THE OFFER AND
APPROVE THE MERGER. IF ADOPTED, THE PROPOSALS WILL FURTHER FACILITATE THE
HEALTHDYNE SALE.
THE CURRENT BOARD OF DIRECTORS HAS REPEATEDLY STATED THAT IT OPPOSES THE
OFFER AND THE MERGER AND THAT HEALTHDYNE IS NOT FOR SALE, BUT HAS FAILED TO
PRESENT YOU WITH ANY ALTERNATIVE OTHER THAN HEALTHDYNE REMAINING INDEPENDENT.
ALTHOUGH THEY RECENTLY ANNOUNCED AN INTENTION TO "EXPLORE ALTERNATIVES" TO THE
OFFER AND THE MERGER, THEY ALSO REAFFIRMED THAT HEALTHDYNE IS NOT FOR SALE AND
EXPLICITLY AVOIDED COMMITTING TO SELL, OR EVEN TO SOLICIT OFFERS FOR,
HEALTHDYNE. 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.
<PAGE>
The record date for determining shareholders entitled to notice of and to
vote at the Annual Meeting is Monday, June 23, 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 June 24, 1997 (the
"Healthdyne Proxy Statement"), as of the close of business on the Record Date,
there were 12,828,815 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
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 June 27, 1997. The principal
executive offices of Healthdyne are located at 1255 Kennestone Circle, Marietta,
Georgia 30066.
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<PAGE>
IMPORTANT
At the Annual Meeting, Invacare seeks to elect its seven 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 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. Healthdyne has
indicated that the adoption of each of the Proposals will require that the
number of votes cast in favor of such Proposal exceed the number of votes cast
against such Proposal, assuming a quorum is present or otherwise represented.
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.
INVACARE URGES YOU TO SIGN, DATE AND RETURN THE ENCLOSED GOLD ANNUAL MEETING
PROXY CARD TO VOTE FOR ELECTION OF ITS NOMINEES AND FOR ADOPTION OF ITS
PROPOSALS.
A VOTE FOR THE 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 A PROMPT AUCTION AND SALE OF
HEALTHDYNE AT THE BEST AVAILABLE PRICE AND TERMS. A VOTE FOR THE PROPOSALS WILL
FURTHER FACILITATE THE HEALTHDYNE SALE.
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.
3
<PAGE>
THE NOMINEES AND PROPOSALS WILL
FACILITATE THE PROMPT SALE OF HEALTHDYNE
------------------------
THE EXISTING HEALTHDYNE BOARD OPPOSES THE OFFER AND THE MERGER,
HAS REPEATEDLY REAFFIRMED THAT HEALTHDYNE IS NOT FOR SALE, 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 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 a prompt auction and sale of
Healthdyne at the best available price and terms, which, in the absence of a
definitive BONA FIDE offer at a price and on terms more favorable to
Healthdyne's shareholders than those offered by I.H.H., would be the Offer and
the Merger. Although they have been nominated by Invacare, none of the Nominees
are affiliates of Invacare and all are fully committed to acting independently
as directors in the best interests of, and fulfilling their fiduciary duties to,
all Healthdyne shareholders. If adopted, the Proposals will further facilitate
the Healthdyne Sale.
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
$15.00 PER SHARE FOR ALL OF YOUR SHARES (A PREMIUM OF APPROXIMATELY 70% OVER THE
CLOSING PRICE OF THE SHARES ON DECEMBER 31, 1996, THE TRADING DAY BEFORE
INVACARE MADE ITS INITIAL ACQUISITION PROPOSAL), INVACARE URGES YOU TO VOTE YOUR
GOLD ANNUAL MEETING PROXY CARD FOR EACH OF ITS NOMINEES AND FOR ADOPTION OF EACH
OF ITS PROPOSALS. ALL OF THE NOMINEES WILL TAKE ALL SUCH ACTIONS NECESSARY OR
APPROPRIATE (SUBJECT TO ANY FIDUCIARY DUTIES THEY WOULD HAVE AS DIRECTORS) TO
CONDUCT A PROMPT AUCTION AND SALE OF HEALTHDYNE AT THE BEST AVAILABLE PRICE AND
TERMS. IF ADOPTED, THE PROPOSALS WILL FURTHER FACILITATE THE HEALTHDYNE SALE.
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 $15.00 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 Supplements thereto dated April 4, 1997 and June 6, 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 or any superior Healthdyne Sale, Invacare or any other third-party
acquiror 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 and the Merger or such superior
Healthdyne Sale, (ii) in certain circumstances, approve the Offer and the Merger
or such superior Healthdyne Sale 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 or a superior merger transaction, execute an agreement and
plan of merger (among other things).
4
<PAGE>
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 NOMINEES AND APPROVAL OF THE PROPOSALS IS AN IMPORTANT STEP
IN SECURING THE CONSUMMATION OF THE OFFER AND THE MERGER OR A SUPERIOR
HEALTHDYNE SALE. HOWEVER, YOU MUST TENDER YOUR SHARES PURSUANT TO THE OFFER IF
YOU WISH TO PARTICIPATE IN THE OFFER. YOUR VOTE FOR THE 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 NOMINEES OR ANY OF THE PROPOSALS WILL NOT
PREVENT YOU FROM TENDERING YOUR SHARES PURSUANT TO THE OFFER.
All of the Nominees support the prompt auction and sale of Healthdyne at the
best available price and terms and if elected will, subject to any fiduciary
duties they would have as directors of Healthdyne, seek to cause Healthdyne to
take all steps necessary or appropriate to conduct a prompt auction and sale of
Healthdyne at the best available price and terms. If elected, the Nominees
intend to conduct an auction process in which any parties who (as a result of
Healthdyne's plan to "explore alternatives" or otherwise) have recently
indicated or indicate a BONA FIDE interest in acquiring Healthdyne would have
the opportunity to submit definitive offers during the two-week period following
the date on which the Nominees take office (or such longer period as they may
determine is required by their fiduciary duties in light of inquiries received
at such time). The Nominees would then, subject to any fiduciary duties they
would have as directors, negotiate and enter into an agreement with the party
submitting the offer which in their independent judgment is at a price and on
terms most favorable to the Healthdyne shareholders, and would take all action
necessary or appropriate to permit the Healthdyne shareholders to accept and/or
approve such transaction. Absent a definitive BONA FIDE offer at a price and on
terms more favorable to Healthdyne's shareholders than the Offer and the Merger,
the Nominees intend to take all such actions necessary or appropriate (subject
to any fiduciary duties they would have as directors) to permit the Healthdyne
shareholders to accept the Offer and approve the Merger, 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. (For information about the Rights Condition, the
Georgia Business Combination Statute Condition and the Georgia Fair Price
Statute Condition, see "Terms and Conditions of the Offer" below.) If a
definitive BONA FIDE offer for a Healthdyne Sale superior to the Offer and the
Merger is received, the Nominees would expect to take similar actions in respect
of such transaction.
A vote for the Proposals will further facilitate the Healthdyne Sale.
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 Nominees, if elected, would be able to redeem Healthdyne's poison pill
or render it inapplicable to the Offer and the Merger or a superior Healthdyne
Sale, thus satisfying the Rights Condition, (iii) actions taken by the incumbent
Healthdyne directors to manipulate 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 amended through March 20, 1997 as most recently publicly
disclosed by Healthdyne on March 31, 1997) 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 (including
Invacare's Nominees). Invacare believes that these actions, individually and
collectively, will assist the shareholders in expressing their desire that
Healthdyne be sold promptly.
AS INDICATED UNDER "BACKGROUND OF ACQUISITION PROPOSAL" BELOW, THE INCUMBENT
HEALTHDYNE DIRECTORS HAVE REPEATEDLY REJECTED INVACARE'S ACQUISITION PROPOSALS,
INCLUDING THE OFFER AND THE MERGER, WHILE
5
<PAGE>
CONSISTENTLY REFUSING TO MEET OR DISCUSS THE PROPOSED ACQUISITION WITH INVACARE
ON REASONABLE TERMS, AND HAVE REPEATEDLY STATED THAT HEALTHDYNE IS NOT FOR SALE,
BUT HAVE NOT PRESENTED YOU WITH ANY ALTERNATIVE OTHER THAN HEALTHDYNE REMAINING
INDEPENDENT. ALTHOUGH HEALTHDYNE'S BOARD RECENTLY ANNOUNCED AN INTENTION TO
"EXPLORE ALTERNATIVES" TO THE OFFER AND THE MERGER, THEY ALSO REAFFIRMED THAT
HEALTHDYNE IS NOT FOR SALE AND EXPLICITLY AVOIDED COMMITTING TO SELL, OR EVEN TO
SOLICIT OFFERS FOR, HEALTHDYNE. 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. INVACARE BELIEVES YOU SHOULD SERIOUSLY QUESTION
WHETHER THE INCUMBENT DIRECTORS HAVE LEFT YOU WITH ANY REASON TO PLACE YOUR
TRUST IN THEM OR THEIR LOYALTY TO YOU IN LIGHT OF THEIR ACTIONS DURING THE PAST
SIX MONTHS.
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.
Invacare proposes that the Healthdyne shareholders elect the Nominees listed
below to be the directors of Healthdyne at the Annual Meeting. The seven
Nominees have furnished the following information concerning their principal
occupations or employment and certain other matters. Although they have been
nominated by Invacare, none of the Nominees are affiliates of Invacare and all
are fully committed to acting independently as directors in the best interests
of, and fulfilling their fiduciary duties to, all Healthdyne shareholders. As
described in detail below, the Nominees are well-qualified to serve as directors
of Healthdyne and preside over its prompt auction and sale.
Each 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 Nominees will be unable to serve as directors, if any
one or more of the 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.
Invacare's Nominees for directors are:
<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
PRINCIPAL BUSINESS ADDRESS DURING LAST FIVE YEARS; CURRENT DIRECTORSHIPS
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Nicholas J. DiCicco, Jr, 65............................. President and Chief Executive Officer of Midwestern
6650 Beta Drive National Life Insurance Company of Ohio since 1975.
Mayfield Village, Ohio 44143
Donald F. Hastings, 68.................................. Chairman of the Board, The Lincoln Electric Company, a
22801 St. Claire Avenue welding products manufacturer, since 1992. Also Chief
Cleveland, Ohio 44117 Executive Officer of The Lincoln Electric Company from
1992 to 1996. President and Chief Operating Officer of
The Lincoln Electric Company from 1987 to 1992.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
PRINCIPAL BUSINESS ADDRESS DURING LAST FIVE YEARS; CURRENT DIRECTORSHIPS
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Jack Kahl, Jr., 56...................................... Chairman of the Board and Chief Executive Officer of
32150 Just Imagine Drive Manco, Inc., a company specializing in the production of
Avon, Ohio 44011-1355 heavy-duty 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, 61...................................... Chairman of the Board of NCS HealthCare, Inc., a
3201 Enterprise Parkway, #220 provider of pharmacy services to long-term care
Beachwood, Ohio 44122 institutions, since 1986. Senior Vice President of
Alliance Capital Management L.P., an investment
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
15 S. High St. Ltd. and President of Wingset, Inc., technology venture
P.O. Box 166 funds, from 1993 to present. Former Chairman of
New Albany, Ohio 43054 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
5960 Heisley Road Officer of STERIS Corporation, an infection prevention
Mentor, Ohio 44060 and surgical support company, since 1987. Currently a
member of the Board of Directors of KeyBank, N.A.
</TABLE>
Election of the 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 its Nominees at
the Annual Meeting. ALL OF THE NOMINEES ARE COMMITTED TO TAKING ALL SUCH ACTIONS
NECESSARY OR APPROPRIATE (SUBJECT TO ANY FIDUCIARY DUTIES THEY WOULD HAVE AS
DIRECTORS) TO CONDUCT A PROMPT AUCTION AND SALE OF HEALTHDYNE AT THE BEST
AVAILABLE PRICE AND TERMS.
INVACARE STRONGLY RECOMMENDS A VOTE FOR
ELECTION OF ITS NOMINEES
7
<PAGE>
THE PROPOSALS
In order to further facilitate the Offer and the Merger or a superior
Healthdyne Sale, 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 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
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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 III 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 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
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". Although Healthdyne denies in the Healthdyne Proxy Statement that
it has ever considered "packing" the Board of Directors or increasing the number
of directors on the Board as a defensive measure to the Offer, it admits that
the size of the Board of Directors may need to increase "for reasons unrelated
to the Invacare Offer".
Invacare believes (and Healthdyne has admitted in the Healthdyne Proxy
Statement) 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.
In addition, should the shareholders choose to elect the 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
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actually 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
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 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, or any other Healthdyne
Sale, to proceed, notwithstanding the mandate Healthdyne's shareholders will
have given to the 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. Invacare has filed a motion for a
preliminary injunction in the Defensive Tactics Litigation seeking an order
declaring the "dead-hand pill" restrictions invalid and ordering the director
defendants to remove such restrictions, and is currently awaiting a decision
from the Court on the matter. 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, or any
superior Healthdyne Sale, by allowing the 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, or such superior Healthdyne Sale, 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
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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 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.
Invacare believes that the Georgia Business Corporation Code (the "GBCC")
specifically authorizes shareholder action such as the Dead-Hand Elimination
Proposal. Section 14-2-206(b) of the GBCC provides: "The bylaws of a corporation
may contain any provision for managing the business and regulating the affairs
of the corporation that is not inconsistent with law or the articles of
incorporation." Section 801(b) of the GBCC provides: "All corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation managed under the direction of, its board of directors, subject to
any limitation set forth in the articles of incorporation, bylaws approved by
the shareholders, or agreements among the shareholders which are otherwise
lawful." Section 14-2-1020(c) provides: "A bylaw limiting the authority of the
board of directors . . . may only be adopted, amended, or repealed by the
shareholders." Since the Dead-Hand Elimination Proposal is a proposal to adopt a
by-law that would impose a limitation on the authority of Healthdyne's Board of
Directors, Invacare believes that these provisions provide express authority for
the Dead-Hand Elimination Proposal. Invacare notes that part of the legislation
which Healthdyne and its current Board of Directors sought to have enacted by
the Georgia General Assembly would have eliminated these rights of the
shareholders to limit the authority of the Board of Directors. See "Background
of Acquisition Proposal--Director-Entrenchment Legislation". The Georgia General
Assembly refused to enact such legislation, however, and thus these explicit
shareholder rights remain in full force and effect.
Nonetheless, Healthdyne has added a counterclaim to its Answer in the
Defensive Tactics Litigation challenging the validity of the Dead-Hand
Elimination Proposal and requesting that Invacare be enjoined from soliciting
proxies in support of it. In response, Invacare has filed a counterclaim seeking
a declaration that the Dead-Hand Elimination Proposal is valid and, if adopted
at the Annual Meeting, will be binding on the Healthdyne Board. Invacare and
Healthdyne have filed cross-motions for summary judgment on their counterclaims,
and are currently awaiting a decision from the Court on the matter. See
"Background of Acquisition Proposal--Defensive Tactics Litigation". Although
Invacare believes that the Dead-Hand Elimination Proposal is valid, legal and
enforceable, it 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. If Healthdyne's challenge to the validity of the Dead-Hand
Elimination Proposal were to be successful, Invacare believes that a vote in
favor of the Dead-Hand Elimination Proposal would not be directly legally
binding upon Healthdyne or its Board of Directors but would nonetheless advise
them of the shareholders' strong desire that the "dead-hand pill" restrictions
be removed.
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 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
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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 Nominees or adopt any of the Proposals, to create new obstacles to the
consummation of the Offer and the Merger or any other Healthdyne Sale, 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 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 what Invacare believes to be 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 and to prevent the Board after the Annual Meeting 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.
Other than as set forth above, Invacare is currently unaware of any specific
By-Law provisions which would be repealed by adoption of the By-Laws Repeal
Proposal. If, prior to the Annual Meeting, Invacare should become aware of any
additional specific material by-law provisions which would be repealed by
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adoption of the By-Laws Repeal Proposal, Invacare will endeavor to disseminate
appropriate information regarding such changes to Healthdyne shareholders prior
to the Annual Meeting.
Although adoption of the By-Laws Repeal Proposal would generally repeal
previously undisclosed By-Law amendments without considering the beneficial
nature, if any, of such amendments to the shareholders and without regard to
whether such amendments related to the acquisition of Healthdyne, it would not
repeal any such amendments which were approved by the shareholders. Accordingly,
if the Board of Directors were to adopt (or to have adopted and not previously
disclosed) By-Law amendments of which it believed the shareholders would
approve, it could seek such approval at the Annual Meeting so as to exclude such
amendments from the effects of the By-Laws Repeal Proposal.
Section 14-2-1020(b) of the GBCC provides: "A corporation's shareholders may
amend or repeal the corporation's bylaws or adopt new bylaws . . ." Section
14-2-1020(a)(2) provides: "The shareholders in amending or repealing a
particular bylaw [may] provide expressly that the board of directors may not
amend or repeal that bylaw." In addition, Article VII of the Company's By-Laws
contains parallel provisions. Although Invacare is unaware of any specific case
law precedent regarding a similar proposal, it believes that, since the By-Laws
Repeal Proposal is a proposal to repeal certain of the Company's By-Laws and
provides that the Board of Directors may not 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 or take
other action that would have the same effect, it is valid under the
aforementioned provisions of the GBCC as well as under the Company's own By-Laws
and, if adopted by the shareholders, will have the effects set forth above.
However, should the By-Laws Repeal Proposal be deemed to be invalid, the By-Laws
in effect at the time of the stockholder vote (with such other changes as may be
approved by the shareholders at the Annual Meeting, including by adoption of any
of the other Proposals) will continue to be the By-Laws of the Company following
the Annual Meeting.
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 adopting 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 on
reasonable terms and has repeatedly stated that it is not for sale. 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 actually 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.
Invacare also believes that it would be beneficial to Healthdyne's shareholders
to have this power of oversight even if its Nominees are elected. Permitting the
holders of 10% of the outstanding Shares to demand a prompt special meeting will
cause the Healthdyne Board of Directors, including the Nominees if elected, 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
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VOTING PROCEDURES
Healthdyne has indicated that each of the Proposals will be approved if the
number of votes cast in favor of such Proposal exceeds the number of votes cast
against such Proposal, assuming a quorum is present or otherwise represented,
which is the general standard for shareholder action under Georgia law.
Healthdyne has further informed Invacare that the section of its By-Laws which
purports 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, is not
operative because it was not adopted by the shareholders as required under
Georgia law.
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.
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.
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 Invacare's Nominees as the directors of Healthdyne and FOR the
adoption of its Proposals or withhold authority to vote for the election of the
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
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 INVACARE'S NOMINEES AND FOR THE ADOPTION
OF ALL ITS 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
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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 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
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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 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
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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:
INVACARE CORPORATION OFFERS TO ACQUIRE
HEALTHDYNE TECHNOLOGIES, INC. FOR $12.50 PER SHARE
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:
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<PAGE>
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.
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
19
<PAGE>
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, 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 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
20
<PAGE>
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 "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 'dead-hand 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."
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<PAGE>
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 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
22
<PAGE>
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 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.
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
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<PAGE>
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.
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.
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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 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
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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 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
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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
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,
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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
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
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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
Invacare's 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, Invacare 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 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.
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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.
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
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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 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.
On April 8, 1997, Invacare issued the following press release:
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INVACARE SEEKING COURT ORDER COMPELLING
HEALTHDYNE TECHNOLOGIES TO HOLD SHAREHOLDERS MEETING
Elyria, Ohio--(April 8, 1997)--Invacare Corporation announced
that it is seeking a court order to compel Healthdyne
Technologies, Inc. to hold its 1997 Annual Meeting of Shareholders
as promptly as possible and in any event by June 30, 1997.
A. Malachi Mixon, III, Chairman and Chief Executive Officer of
Invacare, said "Healthdyne's failure to schedule its annual
meeting is yet another attempt to prevent its shareholders from
exercising their rights to elect directors of their own choosing.
Healthdyne's last two annual meetings were in May and April. Yet
they have not taken any of the public actions, such as announcing
meeting and record dates, sending out broker search cards and
filing preliminary proxy materials, necessary to hold the 1997
meeting consistent with that timetable, and have refused to
publicly disclose when they intend to hold the annual meeting.
Indeed, the only actions the Healthdyne directors have taken so
far with respect to the 1997 annual meeting have been attempts to
end-run their own shareholders by a failed legislative effort to
abolish shareholders' rights to elect a full board and by deletion
of a by-law provision requiring annual meetings to be held on the
fourth Tuesday in April unless otherwise scheduled."
"We are perplexed that Parker H. Petit, Healthdyne's Chairman,
thinks that our demands that Healthdyne hold its meeting in
accordance with Georgia law and past practices will deny
Healthdyne's shareholders an opportunity to make an informed
decision with respect to our premium tender offer. There is no
question that Healthdyne's first-quarter earnings, about which we
have already expressed concern, will be available prior to the
annual meeting, and Mr. Petit is free to make any other
disclosures he thinks will support his rejection of our premium
offer consistent, of course, with his fiduciary duties."
"Unless Mr. Petit believes that he is entitled to delay a
shareholders meeting until some unspecified time more than six
months after Healthdyne's year-end when he decides the company has
finally demonstrated 'progress', we cannot understand his
objection to scheduling and holding the annual meeting promptly.
Perhaps he is concerned that shareholders at the annual meeting
will ask why Healthdyne missed Wall Street estimates for eight
consecutive quarters, why Healthdyne's 1996 earnings dropped from
1995 levels, and why Mr. Petit disposed of approximately one-third
of his Healthdyne stock in May and June while the stock was
trading near its 1996 highs and shortly before its precipitous
decline."
"In any case, we believe that Healthdyne and its Board of
Directors are required by Georgia law, their fiduciary duties and
their own by-laws to hold the annual meeting promptly and not
later than June 30, 1997, and intend to take all actions necessary
to cause them to do so."
As previously announced, Invacare is proposing a slate of
seven director nominees and a set of corporate governance by-law
amendments for consideration by shareholders at the annual
meeting. Invacare's $13.50 per share tender offer for all
outstanding shares of common stock of Healthdyne is currently
scheduled to expire at 6:00 p.m. on Monday, April 28, 1997, unless
extended in the manner described in the Offer to Purchase dated
January 27, 1997, as amended and supplemented by the Supplement
thereto dated April 4, 1997.
On April 8, 1997, Healthdyne issued a press release announcing its
first-quarter earnings information.
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On April 14, 1997, Healthdyne issued a press release announcing that its
Board of Directors would be asked to schedule the Annual Meeting for late July
and that it would seek a court ruling on the validity of the Dead-Hand
Elimination Proposal. In the press release, Mr. Petit stated, among other
things, that a meeting in late July would give shareholders the opportunity to
consider Healthdyne's second-quarter results. On April 17, 1997, Healthdyne
issued a press release announcing that it had scheduled its Annual Meeting for
July 30, 1997.
On April 28, 1997, Invacare issued the following press release:
INVACARE ACCEPTS BINDING JULY 30 DATE
FOR HEALTHDYNE TECHNOLOGIES ANNUAL MEETING
Elyria, Ohio--(April 28, 1997)--Invacare Corporation announced
today that Healthdyne Technologies, Inc. and Invacare have agreed
to a consent order regarding Healthdyne's Annual Meeting. The
consent order, which has been entered by the judge in the Georgia
litigation, requires Healthdyne to hold its Annual Meeting on July
30, 1997, without any further extension or delay, so long as
Invacare does not change the price or form of consideration
offered in its tender offer within fifteen days before the meeting
date. If Invacare changes the price or form of consideration in
its offer, the consent order limits any delay of the Annual
Meeting to no more than fifteen days after such change.
A. Malachi Mixon, III, Invacare's Chairman and Chief Executive
Officer said, "We are pleased that we could come to an agreement
with Healthdyne regarding the scheduling of the Annual Meeting
which allows both sides to avoid further, unnecessary legal
expenses with respect to this issue. Our primary interest in
initiating this part of the litigation was to have Healthdyne
schedule the Annual Meeting so that shareholders could act on our
offer."
"Since, as we have said before, our $13.50 offer--which
represents a more than 52% premium over the trading price at the
time our original acquisition proposal was made and reflects a
multiple substantially in excess of those that exist for
comparable companies in the industry--is based on Healthdyne's
potential to achieve a turnaround and perform at a considerably
higher level than it has over its last two fiscal years, we
welcome the opportunity to review Healthdyne's second quarter
results."
"This agreement with respect to the Annual Meeting
demonstrates that an open dialogue on issues can lead to a
resolution acceptable to both Invacare and Healthdyne. Therefore,
I once again invite Mr. Petit to sit down with us to discuss all
aspects of our proposal so that we can reach agreement on a
transaction that creates value for the shareholders of both
companies."
As previously announced, Invacare is proposing a slate of
seven director nominees and a set of corporate governance by-law
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; to 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; to allow for a special
meeting to be called by shareholders owning 10% of the Company's
stock; and to cause the existing Board to eliminate the Company's
"dead-hand" pill provisions.
Invacare's $13.50 per share tender offer for all outstanding
shares of Healthdyne common stock is currently scheduled to expire
at 6:00 p.m. on Monday, April 28, 1997,
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unless extended in the manner described in the Offer to Purchase
dated January 27, 1997, as amended and supplemented by the
Supplement thereto dated April 4, 1997.
On April 29, Invacare issued a press release announcing that I.H.H. had
extended the Offer until 6:00 p.m., New York City time, on Tuesday, May 27,
1997, unless further extended in the manner described in the Offer to Purchase
and that, as of April 28, 1997, approximately 2,580,313 Shares had been
tendered, which, together with the 600,000 Shares owned by Invacare, constituted
approximately 25% of the outstanding Shares, based on the most recent
information provided by Healthdyne.
Between May 12, 1997 and May 28, 1997, Simpson Thacher & Bartlett, counsel
to Invacare and I.H.H ("Invacare's Counsel"), exchanged correspondence with
Skadden, Arps, Slate, Meagher & Flom LLP, counsel to Healthdyne ("Healthdyne's
Counsel"), regarding allegations made by Healthdyne in Healthdyne's Preliminary
Proxy Statement filed with the Commission on May 5, 1997 that Invacare's
Nominees, if elected as directors of Healthdyne at the Annual Meeting, may not
be considered "continuing directors" empowered to approve the Offer and the
Merger for purposes of the Georgia Fair Price Statute in order to satisfy the
Georgia Fair Price Statute Condition. Copies of the correspondence have been
previously filed as exhibits to Invacare and I.H.H.'s Tender Offer Statement on
Schedule 14D-1 or to Healthdyne's Schedule 14D-9. As expressed by Healthdyne's
Counsel, Healthdyne contends that Invacare and I.H.H. would, prior to the Annual
Meeting, be deemed to be "beneficial owners", as such term is used in the
Georgia Fair Price Statute, of the Shares tendered to I.H.H. in the Offer and/or
for which proxies are given to Invacare's representatives for the Annual
Meeting, notwithstanding that such tenders may be withdrawn at any time prior to
acceptance for purchase and that such proxies are fully revocable at any time.
Consequently, under Healthdyne's interpretation, Invacare and I.H.H. would
become "interested shareholders" prior to the Annual Meeting and thus the
directors nominated by them for election at that meeting could not be
"continuing directors" unless recommended by the current Board of Directors. See
"Terms and Conditions of the Offer--The Georgia Fair Price Statute Condition",
below. Invacare strongly disagrees with Healthdyne's allegations. King &
Spalding, Georgia counsel to Invacare and I.H.H., has rendered its written
opinion (a copy of which has been filed as part of an exhibit to the Schedule
14D-1) that Invacare and I.H.H. are not the "beneficial owners" (within the
meaning of the Georgia Fair Price Statute) of Shares tendered in the Offer prior
to acceptance for purchase, nor will they be the "beneficial owners" of Shares
for which revocable proxies are granted to them or voted at the Annual Meeting,
although the opinion recognized that there is no controlling Georgia judicial
precedent and thus it is not possible to predict with absolute certainty how a
Georgia court would rule. Accordingly, Invacare and I.H.H. intend to vigorously
oppose any assertion that the Nominees, if elected as directors of Healthdyne at
the Annual Meeting, will not be "continuing directors" empowered to approve the
Offer and the Merger in order to satisfy the Georgia Fair Price Statute
Condition.
On May 21, 1997, Mr. Mixon sent the following letter to Mr. Petit:
May 21, 1997
Mr. Parker H. Petit
Chairman
Healthdyne Technologies, Inc.
Kennestone Circle
Marietta, GA 30066
Dear Mr. Petit:
I would like to reiterate my suggestion that you and I find a
way to avoid expensive and contentious litigation and other
needless costs and promptly meet to discuss a transaction we can
both support.
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As we have stated repeatedly, in the context of a negotiated
transaction, we 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.
Of course, if you should decide to conduct discussions
regarding a potential acquisition or strategic combination
involving Healthdyne with any other party, we would expect to be
included in that process and believe your board's fiduciary duties
to the Healthdyne shareholders would mandate our inclusion. We
note that we have seen no public indications of any other party
interested in a transaction at the level of our offer or
otherwise, and we continue to presume based on your lack of
disclosure to the contrary that you have not had discussions with
any such parties.
Our goal is, as it has always been, to engage in a transaction
on terms that bring value to the shareholders of both Invacare and
Healthdyne. Since you believe our offer does not accomplish this,
I once again invite you to sit down with me to discuss a
transaction which you would be willing to recommend to your
shareholders.
Sincerely,
A. Malachi Mixon, III
Chairman of the Board &
Chief Executive Officer
On May 28, 1997, Invacare issued a press release announcing that I.H.H. had
extended the Offer until 12:00 midnight, New York City time, on Friday, June 20,
1997, unless further extended, and that, as of May 27, 1997, approximately
1,608,554 Shares had been tendered, which, together with the 600,000 Shares
owned by Invacare, constituted approximately 17% of the outstanding Shares,
based on the most recent information provided by Healthdyne.
On June 4, 1997, Invacare issued the following press release:
INVACARE ANNOUNCES "BEST AND FINAL" INCREASE IN OFFER PRICE
FOR HEALTHDYNE TECHNOLOGIES TO $15
Elyria, Ohio--(June 4, 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. from $13.50 to $15.00 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, as amended and
supplemented by the Supplement thereto dated April 4, 1997, and
the related Letter of Transmittal. The increased offer represents
a premium of approximately 70% over Healthdyne's $8.88 stock price
on the trading day before Invacare made its initial acquisition
proposal.
A. Malachi Mixon, III, Invacare's Chairman and Chief Executive
Officer, said, "This substantial increase--made in the interest of
bringing this unnecessarily drawn-out process to an
end--represents our best and final offer for Healthdyne. Absent a
negotiated transaction in which Healthdyne's management is able to
substantiate additional value to our satisfaction, we do not
intend to raise our price again."
"Let me add that if Healthdyne's shareholders do not elect our
nominees at the upcoming July 30 annual meeting so as to permit
our transaction to go forward, we fully intend to evaluate all our
options at that time, including withdrawing our offer and/or
disposing of some or all of our 600,000 shares of Healthdyne
stock."
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"In light of our increased offer, which fully reflects current
market estimates of Healthdyne's future performance, I once again
call on Chairman Parker H. Petit and the rest of Healthdyne's
management to meet with us promptly to discuss a mutually
agreeable transaction. Alternatively, we urge them to take the
necessary actions to remove Healthdyne's defensive measures with
respect to our transaction to permit their shareholders to take
immediate advantage of our premium offer, which we are confident
is simply too compelling to pass up."
The tender offer is currently scheduled to expire at 12:00
midnight, New York City time, on Friday, June 20, 1997, unless
further extended in the manner described in the above-described
Offer to Purchase and Supplement.
On June 11, 1997, Healthdyne issued a press release and Mr. Petit sent yet
another letter to the Healthdyne shareholders, each stating that the Board of
Directors had once again rejected the increased Offer and that Cowen & Company
had once again advised that the Offer was "grossly inadequate" despite the $1.50
per share price increase and the aggregate increase of $2.50 per share over
Invacare's initial proposal. Both the letter and the press release stated that
Healthdyne believed it was "making progress on its strategic plan". The press
release stated that the Healthdyne Board has "reaffirmed its decision not to
sell or merge the Company." Although Mr. Petit's letter urged the shareholders
to review Healthdyne's second quarter results in mid-July and then "decide for
yourself whether you agree with your Board's conclusion that $15 is too low a
price for your Company", it failed to point out that the "dead-hand pill"
restrictions which Healthdyne was defending in the Defensive Tactics Litigation
attempt to prevent the Healthdyne shareholders from making any such choice. See
"Terms and Conditions of the Offer--The Rights Condition", below.
On June 23, 1997, Invacare issued the following press release:
INVACARE CORPORATION ANNOUNCES EXTENSION OF
TENDER OFFER FOR HEALTHDYNE TECHNOLOGIES
Elyria, Ohio--(June 23, 1997)--Invacare Corporation announced
today that its wholly owned subsidiary I.H.H. Corp. has extended
its $15 per share tender offer to purchase all outstanding shares
of common stock of Healthdyne Technologies, Inc. until 6:00 p.m.,
New York City time, Friday, August 1, 1997, unless further
extended in the manner described in the Offer to Purchase dated
January 27, 1997, as amended and supplemented by the Supplements
thereto dated April 4, 1997 and June 6, 1997. The offer had been
scheduled to expire on June 20, 1997.
As of June 20, 1997, 3,902,107 shares of Healthdyne common
stock had been tendered in the offer, which, together with the
600,000 shares owned by Invacare, constitutes over 35% of
outstanding Healthdyne common stock, based on the most recent
information provided by Healthdyne.
As previously announced, on June 4, 1997, Invacare raised its
offer for Healthdyne to $15 per share, representing its best and
final price. At that time, Invacare emphasized that, absent a
negotiated transaction in which Healthdyne management
substantiated additional value, Invacare did not intend to raise
its offer again.
A. Malachi Mixon, III, Invacare's Chairman and Chief Executive
Officer, said, "We are pleased with the growing shareholder
support our offer is receiving. Thirty-five percent represents the
highest level to date, which is particularly impressive in light
of the fact that significant conditions to the tender offer remain
to be satisfied. As the July 30 annual meeting approaches and with
Healthdyne continuing to stonewall, we are confident that even
more shareholders will express their support for our $15 per share
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premium offer through tendering their shares and voting to elect a
new board of directors."
Invacare's $15 per share tender offer represents a premium of
approximately 70% over Healthdyne's $8.88 stock price on the
trading day before Invacare made its initial acquisition proposal.
Also on June 23, 1997, Healthdyne issued a press release announcing that,
while the Board of Directors had "reaffirmed its decision not to sell or merge"
Healthdyne, it had instructed Healthdyne's management and financial advisors to
"explore alternatives to the offer of Invacare Corporation, including a possible
merger or acquisition of Healthdyne Technologies with or by another party and
possible transactions employing leverage to deliver value to shareholders." The
press release included the text of a letter sent by Mr. Petit to Mr. Mixon on
June 23 responding to Mr. Mixon's request to be included in any discussions. In
the letter, Mr. Petit informed Mr. Mixon that Invacare would only be permitted
to participate in Healthdyne's so-called "process" and receive non-public
information concerning Healthdyne if Invacare withdrew the Offer, stopped
soliciting proxies and signed a confidentiality provisions including "customary
standstill provisions". Mr. Petit claimed that Healthdyne would not furnish
non-public information to Invacare while the Offer or proxy solicitation was
ongoing for fear that "Invacare would have a legal duty to publicly disclose
such information in its tender offer and proxy soliciting material." Mr. Petit
also specifically promised that "if Healthdyne's Board determines to sell the
Company to the highest bidder, Invacare would be invited to make a proposal to
the Board, which the Board would consider along with any other proposals we have
received." This latter pledge was not apparently conditioned on any action by
Invacare regarding the Offer or the proxy solicitation.
On June 25, 1997, Invacare issued the following press release, which
included the text of a letter sent by Mr. Mixon to Mr. Petit on June 24, 1997:
INVACARE CALLS HEALTHDYNE'S PLANS
TO "EXPLORE ALTERNATIVES" A SHAM
Elyria, Ohio--(June 25, 1997) --- Invacare Corporation
announced today that it considers Healthdyne Technologies, Inc.'s
offer to "explore alternatives" to Invacare's $15 all-cash tender
offer nothing more than a "sham" designed to win votes in the
proxy contest at the upcoming, July 30, annual meeting. Invacare
also stated that it has rejected out-of-hand the onerous
restrictions that Healthdyne has demanded for Invacare to
participate in its self-serving process.
A. Malachi Mixon, III, Invacare's Chairman and Chief Executive
Officer, stated, "We will not drop our tender offer and proxy
solicitation, nor will we sign a confidentiality agreement which
involves standstill provisions in order to participate in their
process."
Mr. Mixon emphasized, "If Healthdyne's board were serious
about third party transactions it would declare the company for
sale to the highest bidder and commence an auction. The so-called
process referred to in Healthdyne's letter falls far short of
this. Healthdyne's letter once again makes it clear that
regardless of the wishes of Healthdyne's shareholders, Healthdyne
is not for sale."
The complete text of Mr. Mixon's letter responding to the
letter from Healthdyne's Chairman, Parker H. Petit, dated June 23,
1997, is reprinted below.
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June 24, 1997
Personal & Confidential
Mr. Parker Petit
Chairman of the Board
Healthdyne Technologies, Inc.
1255 Kennestone Circle
Marietta, GA 30066
Dear Mr. Petit:
I am writing this letter in response to your letter dated June
23, 1997. I am extremely disappointed that the Healthdyne Board of
Directors is only willing to include Invacare in possible
discussions regarding a potential acquisition or strategic
combination if Invacare withdraws its tender offer, stops
soliciting proxies and signs a confidentiality agreement with
standstill provisions. As I am sure you understand, Invacare is
unable to accept these restrictions because they would take away
from Healthdyne's shareholders the opportunity to decide for
themselves at the upcoming annual meeting what is in their own
best interest.
Your letter suggests that withdrawal of our offer and
participation in the so-called third party discussion "process"
would create a "level playing field." We strongly disagree. This
so-called "process" reflects no commitment on the part of your
board to proceed with or even solicit a third party transaction
and is yet another thinly disguised entrenchment effort intended
to dupe the shareholders into reelecting the current board. In
reality, the only level playing field available to the Healthdyne
shareholders is the opportunity to vote their shares at the annual
meeting. In light of the fact that our offer has been outstanding
for almost six months, we think it unlikely that a serious
competing bidder will emerge. Nonetheless, if your board were
serious about third party transactions it would declare the
company for sale to the highest bidder and commence an auction.
The so-called "process" referred to in your letter falls far short
of this. Your letter once again makes it clear that, regardless of
the wishes of your shareholders, Healthdyne is not for sale.
According to your letter, your basis for requiring these
restrictions upon discussions with Invacare is that Invacare would
have a legal duty to publicly disclose any material non-public
information furnished by Healthdyne. We cannot understand how
information you yourself have not deemed material enough to
disclose to your shareholders could suddenly become "material" in
our hands. If there is any material non-public information your
shareholders should know in order to fully evaluate our tender
offer, nominees and proposals, you should tell them. Of course,
Healthdyne and any other third party would have the same
disclosure obligations if they were to proceed with a third party
transaction.
Your recent actions only serve to reaffirm your unwillingness
to sell the company and your willingness to confuse your
shareholders on the eve of the proxy contest. Your suggestion that
you will consider alternatives at this late date, without any
obligation to actually sell the company, is disingenuous. We are
confident that your shareholders will see your empty statements
for what they are--a last-ditch attempt to retain control of the
company.
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We intend to pursue our tender offer and the election of a new
board of directors who will carry out the wishes of the
shareholders by selling the company at the best available price.
Sincerely,
A. Malachi Mixon, III
Chairman and Chief Executive Officer
Invacare's $15 per share tender offer for all outstanding
shares of Healthdyne common stock is currently scheduled to expire
at 6:00 p.m., New York City time, on Friday, August 1, 1997 unless
further extended in the manner described in the Offer to Purchase
dated January 27, 1997 and the Supplements thereto dated April 4,
1997 and June 6, 1997.
Despite the constant refusal of Healthdyne and its Board of Directors to
have any contacts or discussions with Invacare on reasonable terms 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, all of the Nominees support
the prompt auction and sale of Healthdyne at the best available price and terms
and if elected will, subject to any fiduciary duties they would have as
directors of Healthdyne, seek to cause Healthdyne to take all steps necessary or
appropriate to conduct a prompt auction and sale of Healthdyne at the best
available price and terms. Absent a definitive BONA FIDE offer at a price and on
terms more favorable to Healthdyne's shareholders than the Offer and the Merger,
the Nominees intend to take all such actions necessary or appropriate (subject
to any fiduciary duties they would have as directors) to permit the Healthdyne
shareholders to accept the Offer and approve the Merger, 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. See "Terms and Conditions of the Offer", below. If
a definitive bona fide third-party offer for a Healthdyne Sale superior to the
Offer and the Merger is received, the Nominees would expect to take similar
actions in respect of such transaction.
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.
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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. 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.
On April 7, 1997, Invacare and I.H.H. filed a Motion for Preliminary
Injunction (the "Annual Meeting Motion") claiming, among other things, that (i)
as part of a scheme of extreme defensive and director-entrenching measures, the
defendants were delaying Healthdyne's 1997 Annual Meeting of Shareholders in
violation of their fiduciary duties and Healthdyne's By-Laws and (ii) the GBCC
required the defendants to hold the Annual Meeting by no later than June 30,
1997. The Annual Meeting Motion sought an order requiring the defendants to take
all steps necessary to cause Healthdyne to hold the Annual Meeting promptly and
in any event by no later than June 30, 1997.
On April 14, 1997, Healthdyne filed a Motion to Amend its Answer to add a
counterclaim ("Healthdyne's Dead-Hand Elimination Proposal Counterclaim")
alleging that, among other things, the Dead-Hand Elimination Proposal would be
in violation of Georgia law and requesting that Invacare be enjoined from
soliciting proxies in support of such Proposal. Healthdyne also filed a Motion
for Summary Judgment on Healthdyne's Dead-Hand Elimination Proposal Counterclaim
on the same day.
On April 21, 1997, Healthdyne filed a Response Brief in Opposition to the
Annual Meeting Motion.
On April 28, 1997, Healthdyne and I.H.H. agreed to, and the Court entered, a
consent order (the "Annual Meeting Consent Order") requiring Healthdyne to hold
the Annual Meeting on July 30, 1997 so long as Invacare and I.H.H. do not change
the price or form of consideration offered in the Offer within fifteen days
before the meeting date. The Annual Meeting Consent Order further provides that,
if such a change in the Offer is made, Healthdyne may delay the Annual Meeting
to no more than fifteen days after
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the date of such change, and also permits the parties to petition the Court for
relief from the order. As a result of the Annual Meeting Consent Order, Invacare
and I.H.H. withdrew the Annual Meeting Motion.
On May 1, 1997, the Court granted leave to Healthdyne to file Healthdyne's
Dead-Hand Elimination Proposal Counterclaim and the related Motion for Summary
Judgment.
On May 16, 1997, Invacare and I.H.H. filed a Motion for a Preliminary
Injunction (the "Dead-Hand Motion") seeking an order declaring the "dead-hand
pill" restrictions of the Rights Agreement invalid and ordering the director
defendants to amend the Rights Agreement to remove such restrictions.
On May 28, 1997, Invacare and I.H.H. filed a reply to Healthdyne's Dead-Hand
Elimination Proposal Counterclaim and a counterclaim seeking declaratory and
injunctive relief in connection with the Dead-Hand Elimination Proposal
("Invacare's Dead-Hand Elimination Proposal Counterclaim"). Invacare's Dead-Hand
Elimination Proposal Counterclaim asks the Court to (A) declare that the
Dead-Hand Elimination Proposal (i) is valid under Georgia law, (ii) proposes an
amendment to the By-Laws that, if approved by the shareholders, is valid,
binding and enforceable under Georgia law in accordance with its terms, (iii)
shall be submitted to the Healthdyne shareholders for a vote at the Annual
Meeting at a time and in a manner such that, if adopted by the shareholders, it
will result in the elimination of the "dead-hand pill" restrictions and (iv) if
adopted, requires the Board of Directors to act immediately to eliminate the
"dead-hand pill" restrictions of the Rights Agreement and (B) enjoin Healthdyne
from interfering with the consideration of the Dead-Hand Elimination Proposal at
the Annual Meeting.
On June 2, 1997, Invacare and I.H.H. filed a Motion for Summary Judgment on
Invacare's Dead-Hand Elimination Proposal Counterclaim and a memorandum opposing
Healthdyne's motion for summary judgment on Healthdyne's Dead-Hand Elimination
Proposal Counterclaim and in support of the Motion for Summary Judgment on
Invacare and I.H.H.'s Dead-Hand Elimination Proposal Counterclaim.
On June 9, 1997, Healthdyne filed a brief in opposition to the Dead-Hand
Elimination Motion.
On June 11, 1997, Healthdyne filed a reply brief in support of the summary
judgment motion on Healthdyne's Dead-Hand Elimination Proposal Counterclaim and
in opposition to the summary judgment motion on Invacare's Dead-Hand Elimination
Proposal Counterclaim.
On June 12, 1997, Invacare and I.H.H. filed a reply memorandum in support of
the summary judgment motion on Invacare's Dead-Hand Elimination Proposal
Counterclaim and in opposition to the summary judgment motion on Healthdyne's
Dead-Hand Elimination Proposal Counterclaim.
On June 16, 1997, the day before the hearing on the various motions
regarding Healthdyne's "dead-hand pill" restrictions, Healthdyne filed a Second
Counterclaim (the "Second Counterclaim") in the Defensive Tactics Litigation
alleging that certain of Invacare's sales representatives had told potential
oxygen concentrator customers that the acquisition of Healthdyne was a "done
deal" and that Invacare would close Healthdyne's Marietta, Georgia oxygen
concentrator manufacturing facility and discontinue Healthdyne's line of oxygen
concentrators. The Second Counterclaim asserts claims for unfair business
practices as well as violations of federal securities laws based on the claim
that Invacare's and I.H.H.'s tender offer and proxy materials do not disclose
such alleged "plans."
On June 17, 1997, the Court heard legal arguments on the Dead-Hand Motion
(and the similar motion in the other stockholder lawsuits; see below) and on the
summary judgment motions regarding the Dead-Hand Elimination Proposal. At the
hearing the Court indicated that it intended to rule on the various motions
within ten days, and the parties are currently awaiting a decision on these
matters.
On June 20, 1997, Invacare and I.H.H. filed a Motion to Strike the Second
Counterclaim on the grounds that Healthdyne failed to seek or obtain leave from
the Court prior to filing the Second Counterclaim. On June 23, 1997, Invacare
and I.H.H. filed an Answer to the Second Counterclaim denying the allegations
and reaffirming that, as fully disclosed in all relevant materials, Invacare has
no present intention to close the Marietta facility or decrease the
manufacturing employment of Healthdyne.
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Invacare has been advised that three other 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.
Invacare has been further advised that the plaintiffs in these lawsuits have
filed a Motion for Preliminary Injunction substantially similar to the Dead-Hand
Motion.
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 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) by-laws 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 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
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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.
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
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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 following description of the Offer is
qualified in its entirety by reference to the Offer to Purchase and 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.
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 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.
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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 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
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or amending the Rights Agreement to make the Rights inapplicable to the Offer
and the Merger. Invacare has filed a motion for a preliminary injunction in the
Defensive Tactics Litigation seeking an order declaring the "dead-hand pill"
restrictions invalid and ordering the director defendants to remove such
restrictions, and is currently awaiting a decision from the Court on the matter.
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 has nominated the seven
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 Nominees, if elected,
to take all necessary actions to satisfy the Rights Condition for the Offer and
the Merger or take similar action in respect of a superior Healthdyne Sale.
If elected, the 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 or a superior Healthdyne Sale.
(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
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
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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 Nominees will, subject to any fiduciary duties they would
have as directors of Healthdyne, take action to approve the Offer and the Merger
or a superior Healthdyne Sale 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 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
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(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 Nominees will, subject to any fiduciary duties they would
have as directors of Healthdyne, take action to approve the Offer and the Merger
or a superior Healthdyne Sale in order to satisfy the Georgia Fair Price Statute
Condition. Healthdyne has alleged that the Nominees, even if elected at a time
when Invacare held less than 10% of the Shares (as it will at the Annual
Meeting), would nonetheless not be "continuing directors" under the Georgia Fair
Price Statute and thus would not be able to satisfy the Georgia Fair Price
Statute Condition. Invacare strongly disagrees with Healthdyne's allegations.
See "Background of the Acquisition Proposal", above.
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.
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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 OF THE NOMINEES ARE COMMITTED TO CONDUCTING A PROMPT
AUCTION OF HEALTHDYNE AND 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 OR ANY SUPERIOR HEALTHDYNE SALE.
SOLICITATION OF PROXIES
Proxies may be solicited by mail, advertisement, telephone or telecopier or
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 such
beneficial owners.
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 $150,000, 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 40 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, less the amount of the acquisition fee payable by
Invacare to The Robinson-Humphrey Company, Inc. ("Robinson-Humphrey") described
below. 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.
In addition, Invacare has retained Robinson-Humphrey, an Atlanta, Georgia
investment banking firm, to provide advice in connection with the Offer. To
date, Invacare has paid Robinson-Humphrey a fee of $100,000. Upon the
acquisition of Healthdyne, Invacare has agreed to pay Robinson-Humphrey an
additional fee of $200,000. Invacare will also reimburse Robinson-Humphrey for
reasonable expenses (including attorneys' fees and expenses) in an amount not to
exceed $15,000, and has also agreed to
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indemnify Robinson-Humphrey against certain liabilities and expenses in
connection with the Offer, including certain liabilities under the federal
securities laws.
The entire expense of soliciting proxies for the Annual Meeting will be
borne by Invacare. Costs incidental to these solicitations of proxies include
expenditures for printing, postage, legal, accounting, public relations,
soliciting, advertising and related expenses. Although no precise estimate can
be made at the present time, it is currently estimated that the aggregate amount
to be spent by Invacare in connection with the solicitation of proxies
(excluding, in any case, (i) the salaries and fees of directors, Nominees,
officers and employees, (ii) the costs that have been or may be incurred in
connection with the Defensive Tactics Litigation and (iii) the expenses that
have been and may be incurred in connection with the Offer and related
transactions) will be approximately $600,000 (including the fees of MacKenzie
Partners described above), of which approximately $250,000 has been incurred to
date. Invacare will not seek reimbursement for such expenses from Healthdyne.
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 sales 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 Nominees and certain other
information regarding such persons.
Information regarding Shares held by certain beneficial owners, directors,
nominees and executive officers of Healthdyne is contained in the Healthdyne
Proxy Statement and is incorporated herein by reference.
Information concerning the date by which proposals of security holders
intended to be presented at the Healthdyne's 1998 Annual Meeting of Shareholders
must be received by Healthdyne for inclusion in Healthdyne's proxy statement and
form of proxy for that meeting is contained in the Healthdyne Proxy Statement
and is incorporated herein by reference.
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.
PLEASE INDICATE YOUR SUPPORT OF THE 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
June 27, 1997
50
<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>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER
BUSINESS ADDRESS PRINCIPAL 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>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER
BUSINESS ADDRESS PRINCIPAL 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 ITS 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>
PRICE PER
DATE NUMBER OF SHARES SHARE
- --------- ------------------- --------------
<C> <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
</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
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 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). As of June 25, 1997, Salomon Brothers neither beneficially owned
any Shares nor owned of record any Shares for customer accounts. Salomon
Brothers neither bought nor sold any securities of the Company for its own
account over the last two years.
<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 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 Nominees owns any
Shares. As a group, the Nominees own in the aggregate less than 1/2% of the
total number of shares of Invacare common stock outstanding as of June 27, 1997.
From time to time, the law firm of Mansour, Gavin, Gerlack & Manos Co., L.P.A.,
of which Mr. Mansour is a partner, has provided legal services to Invacare and
its affiliates and is expected to do so in the future.
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 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 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 Nominees to the Board of Directors
of Healthdyne, Invacare has agreed to pay each Nominee a fee in the amount of
$10,000. Invacare has also agreed to indemnify each of the 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 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 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 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 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 Nominees have ever served on the Healthdyne Board; there are no
material proceedings in which any of the 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 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
Nominees has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors).
2
<PAGE>
SCHEDULE III
SPECIFIC LANGUAGE OF BY-LAW AMENDMENTS TO BE EFFECTED BY ADOPTION OF THE
PROPOSALS AT HEALTHDYNE'S 1997 ANNUAL MEETING OF SHAREHOLDERS
The following is the specific language of the resolutions which Invacare
intends to propose for shareholder adoption at the Annual Meeting:
NUMBER OF DIRECTORS PROPOSAL
<TABLE>
<S> <C>
RESOLVED: That the By-Laws of the Corporation be and they hereby are amended,
effective at the time this resolution is approved by the
shareholders, by (i) amending the first sentence of Article II,
Section 2 of the By-Laws to read in its entirety as follows:
The size of the Board of Directors of the Corporation shall
be fixed from time to time by the Board of Directors and
shall consist of not less than (3) nor more than seven (7)
natural persons of the age of eighteen years or over,
except that if all of the shares of the Corporation are
owned beneficially and of record by less than three (3)
shareholders, the number of directors may be less than
three (3) but not less than the number of shareholders.
and (ii) adding the following after the last sentence of Article
II, Section 2 of the By-Laws:
The Board of Directors may not alter, amend or repeal this
Section or adopt any new By-Law provision which is
inconsistent in any manner with this Section.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
DEAD-HAND ELIMINATION PROPOSAL
RESOLVED: That the By-Laws of the Corporation be and they hereby are amended,
effective at the time this resolution is approved by the
shareholders, by adding the following after the last sentence of
Article II, Section 1 of the By-Laws:
Notwithstanding the foregoing, or any other provision of
these By-Laws or the Articles of Incorporation to the
contrary, the Board of Directors shall not have the power
or 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 the Corporation 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). The Board
of Directors will be in violation of these By-Laws if it
fails to immediately following adoption of these provisions
take all necessary action (prior to the consideration of
the election of directors at the annual meeting of
shareholders of the Corporation at which these provisions
were adopted) to amend any shareholder rights plan of the
Corporation to remove all such limitations, including
without limitation the Rights Agreement, dated as of May
22, 1995 between the Corporation and SunTrust Bank, Atlanta
(formerly Trust Company Bank), as amended. The Board of
Directors may not alter, amend or repeal this Section or
adopt any new By-Law provision which is inconsistent in any
manner with this Section.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
BY-LAWS REPEAL PROPOSAL
RESOLVED: That each and every provision of the By-Laws of the Corporation or
amendment thereto adopted on or after June 30, 1996 and prior to
the date of the effectiveness of this resolution, including without
limitation Section 7 of Article I but excluding those amendments
expressly set forth in the Current Report on Form 8-K filed by the
Corporation with the Securities and Exchange Commission on January
24, 1996 and those provisions which were duly approved by the
shareholders of the Corporation, be and hereby is repealed,
effective at the time this resolution is adopted by the
shareholders, and that the Board of Directors may not, without the
approval of the shareholders, alter or amend the By-Laws in any
manner which serves to reinstate any By-Law provision repealed by
this resolution or any similar By-Law provision or provisions.
FURTHER RESOLVED: That the By-Laws of the Corporation be and they hereby are amended,
effective at the time this resolution is approved by the
shareholders, by adding the following new provision as Article X of
the By-Laws:
ARTICLE X
The Board of Directors may not, without the approval of the
shareholders of the Corporation, (a) adopt, alter, amend or
repeal any By-Law which relates to a special meeting of the
shareholders, (b) alter, amend or repeal this Article X, or
(c) adopt, alter, amend or repeal any other By-Law of the
Corporation if such action would have the effect of
reinstating any By-Law repealed by the shareholders of the
Corporation at the 1997 Annual Meeting of the Shareholders
or any similar By-Law.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
SPECIAL MEETING PROPOSAL
RESOLVED: That the By-Laws of the Corporation be and they hereby are amended,
effective at the time this resolution is approved by the
shareholders, by (i) deleting the second, third and fourth
sentences of Article I, Section 2 of the By-Laws and inserting in
lieu thereof the following:
The Corporation shall call and hold a special meeting of
shareholders upon the written demand (the "Demand") of the
beneficial owners (the provisions of Section 3 of Article
IV of these By-Laws notwithstanding) and/or record holders
of at least ten percent (10%) of the outstanding Common
Stock. Any meeting to be held pursuant to a Demand (a
"Demand Meeting") shall be held only at such time and place
as is stated in the Demand; provided, that the time of the
meeting specified in the Demand shall in no event be less
than forty-five (45) calendar days from the date the Demand
is delivered to the Corporation. Notwithstanding the
provisions of Section 4 of Article IV of the By-Laws, the
record date for the purposes of determining the
shareholders who may validly make a Demand shall be the
date as of which the first shareholder executes such Demand
and the record date for the Demand Meeting shall be the
record date specified in the Demand, provided, that the
record date for the Demand Meeting shall in no event be
less than 10 days after the date such Demand is delivered
to the Corporation and shall otherwise be in compliance
with the Georgia Business Corporation Code (without
reference to any other provision of these By-Laws or the
Articles of Incorporation). The only business to be
conducted at any Demand Meeting shall be the business set
forth in the Demand. Any Demand which on its face appears
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 the Corporation unless the
Board of Directors determines by written resolution that
there is an affirmative reasonable basis on which such
validity should be questioned. The Corporation shall use
its best efforts to resolve any disputes regarding Demand
Meetings as expeditiously as possible.
Written notice of each meeting of shareholders, stating the
time and place of the meeting, and the purpose of any
special meeting, shall be mailed to each shareholder
entitled to vote at or to notice of such meeting at his
address shown on the books of the Corporation (i) in the
case of a Demand Meeting, at the earliest possible time
following the record date for such Demand Meeting
consistent with the requirements of the Georgia Business
Corporation Code, and (ii) in the case of any other
meeting, not less than ten (10) nor more than fifty (50)
days prior to such meeting, unless such shareholder waives
notice of the meeting.
and (ii) adding the following sentence after the last sentence of
Article I, Section 2 of the By-Laws:
The Board of Directors may not alter, amend or repeal this
Section or adopt any new By-Law provision which is
inconsistent in any manner with this Section.
</TABLE>
4
<PAGE>
IMPORTANT
Your proxy is important. No matter how many or few Shares you own, please
give Invacare your proxy FOR the election of its Nominees and Proposals 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 Invacare's Nominees and
vote FOR its 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. LOGO]
156 FIFTH AVENUE
NEW YORK, NY 10010
(212) 929-5500 (CALL COLLECT)
OR
CALL TOLL FREE (800) 322-2885
FACSIMILE (212) 929-0308
<PAGE>
GOLD PROXY 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 1350 Parkway Place,
Suite 320, Marietta, Georgia 30067, at 10:30 a.m. local time, on Wednesday, July
30, 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 WILL PROPOSE AND RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, 4
AND 5.
(Please mark each proposal with an "X" in the appropriate box)
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS:
<S> <C>
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:
/ / FOR / / AGAINST
/ / ABSTAIN
AMEND HEALTHDYNE TECHNOLOGIES, INC.'S BY-LAWS TO PROVIDE THAT
3. HEALTHDYNE'S BOARD OF DIRECTORS HAS NO AUTHORITY TO IMPOSE OR
PERMIT TO EXIST "DEAD-HAND PILL" AND SIMILAR LIMITATIONS ON
FUTURE BOARDS OF DIRECTORS, AND TO PROVIDE THAT THE FAILURE
BY THE INCUMBENT BOARD TO REMOVE ALL SUCH LIMITATIONS PRIOR
TO THE ELECTION OF DIRECTORS AT THE 1997 ANNUAL MEETING WILL
BE A VIOLATION OF THE BY-LAWS:
/ / FOR / / AGAINST
/ / ABSTAIN
4. REPEAL CERTAIN PROVISIONS OF HEALTHDYNE TECHNOLOGIES, INC.'S
BY-LAWS:
/ / FOR / / AGAINST
/ / ABSTAIN
AMEND HEALTHDYNE TECHNOLOGIES, INC.'S BY-LAWS TO GIVE THE
5. 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:
/ / FOR / / AGAINST
/ / ABSTAIN
</TABLE>
(CONTINUED ON OTHER SIDE)
<PAGE>
<TABLE>
<S> <C>
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
6. SUCH OTHER BUSINESS, IF ANY, AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF, IF SUCH OTHER BUSINESS
ADVERSELY AFFECTS INVACARE CORPORATION.
<CAPTION>
</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.
<TABLE>
<S> <C>
Please date and sign this proxy exactly as your
name appears hereon.
---------------------------------------------------
(Signature)
---------------------------------------------------
(Signature, if held jointly)
---------------------------------------------------
(Title)
Dated: , 1997
When shares are held by joint tenants, both should
sign. When signing as attorney-in-fact, 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
IF YOU NEED ASSISTANCE, PLEASE CALL MACKENZIE PARTNERS, INC. TOLL-FREE (800)
322-2885
