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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant / /
Filed by a party other than the Registrant /X/
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
HEALTHDYNE TECHNOLOGIES, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
INVACARE CORPORATION
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act 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:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Preliminary Proxy Materials Dated May 29, 1997
1997 ANNUAL MEETING OF SHAREHOLDERS
OF
HEALTHDYNE TECHNOLOGIES, INC.
----------------
PROXY STATEMENT
OF
INVACARE CORPORATION
----------------
PLEASE SIGN, DATE AND RETURN THE ENCLOSED [GOLD] PROXY CARD
This Proxy Statement and the accompanying [GOLD] Annual Meeting proxy
card are being furnished in connection with the solicitation of proxies by
Invacare Corporation ("Invacare") and its wholly owned subsidiary I.H.H. Corp.
("I.H.H."), to be used at the 1997 Annual Meeting of Shareholders of Healthdyne
Technologies, Inc. ("Healthdyne") to be held at [TIME], on Wednesday, July 30,
1997 at [LOCATION], 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 (the "Invacare Nominees") and
the following proposals which would be made by Invacare at the Annual Meeting:
(i) to amend Healthdyne's by-laws to set the maximum number of directors at
seven (as more fully described herein, the "Number of Directors Proposal"); (ii)
to amend Healthdyne's by-laws to limit the authority of the Board of Directors
of Healthdyne to take any action, or omit to take any action the effect of which
is to, impose or permit to exist certain restrictions on the ability of any
future Board to exercise its power and authority, including making it a
violation of Healthdyne's By-Laws if the incumbent Board of Directors (including
any requisite group of "continuing directors") fails to immediately take all
necessary action (prior to the consideration of the election of directors at the
Annual Meeting) to remove the "dead-hand pill" restrictions from Healthdyne's
shareholder rights plan (as more fully described herein, the "Dead-Hand
Elimination Proposal"); (iii) to repeal each and every provision of Healthdyne's
by-laws or amendments thereto which has not been publicly disclosed prior to
March 20, 1997 and was not approved by the shareholders (as more fully described
herein, the "By-Laws Repeal Proposal"); and (iv) to amend Healthdyne's by-laws
to give the holders of 10% or more of the outstanding shares of Healthdyne
Common Stock, par value $0.01 per share (the "Shares"), the right to demand a
special meeting and to provide definitive procedures for any special meeting so
demanded (as more fully described herein, the "Special Meeting Proposal", and,
together with the Number of Directors Proposal, the Dead-Hand Elimination
Proposal and the By-Laws Repeal Proposal, the "Proposals").
ALL INVACARE NOMINEES ARE COMMITTED TO TAKING ALL SUCH ACTIONS
NECESSARY OR APPROPRIATE (SUBJECT TO ANY FIDUCIARY DUTIES THEY WOULD HAVE AS
DIRECTORS) TO APPROVE AND EFFECTUATE THE CONSUMMATION OF THE OFFER AND THE
MERGER (AS SUCH TERMS ARE DEFINED HEREIN). IF ADOPTED, THE PROPOSALS WILL
FURTHER FACILITATE THE OFFER AND THE MERGER.
THE CURRENT BOARD OF DIRECTORS HAS PUBLICLY STATED THAT IT OPPOSES THE
OFFER AND THE MERGER, BUT HAS FAILED TO PRESENT YOU WITH ANY ALTERNATIVE OTHER
THAN HEALTHDYNE REMAINING INDEPENDENT. FURTHERMORE, THE CURRENT BOARD OF
DIRECTORS HAS TRIED TO STRIP YOU OF CRITICAL SHAREHOLDER RIGHTS, INCLUDING THE
RIGHT TO ELECT A FULL BOARD AT EACH ANNUAL MEETING, THE RIGHT TO REMOVE
DIRECTORS AT ANY TIME WITH OR WITHOUT CAUSE AND THE RIGHTS TO ESTABLISH THE SIZE
OF AND LIMIT THE AUTHORITY OF THE BOARD OF DIRECTORS, BY ATTEMPTING TO ENGINEER
DIRECTOR-ENTRENCHING LEGISLATION IN THE GEORGIA GENERAL ASSEMBLY, AND HAS TAKEN
OTHER STEPS TO INCREASE THE OBSTACLES TO YOUR BEING ABLE TO SELL YOUR SHARES IN
THE OFFER OR OTHERWISE EXERCISE YOUR SHAREHOLDER RIGHTS. SEE "BACKGROUND OF
ACQUISITION PROPOSAL", INCLUDING THE SECTION ENTITLED "DIRECTOR-ENTRENCHMENT
LEGISLATION" CONTAINED THEREIN.
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
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the [preliminary] proxy statement of Healthdyne filed with the Securities and
Exchange Commission (the "Commission") on [May 5, 1997] (the "Healthdyne Proxy
Statement"), as of the close of business on the Record Date, there were
_________ Shares issued and outstanding. As of the Record Date, Invacare
beneficially owned an aggregate of 600,000 Shares, which represented
approximately [4.7%] of the Shares reported by Healthdyne to be outstanding as
of the Record Date. Invacare intends to vote such Shares for the election of
the Invacare Nominees and for the Proposals made by it at the Annual Meeting.
------------------------
This Proxy Statement and the [GOLD] Annual Meeting proxy card are
first being furnished to Healthdyne shareholders on or about [ ], 1997. The
principal executive offices of Healthdyne are located at 1255 Kennestone Circle,
Marietta, Georgia 30066.
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3
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IMPORTANT
At the Annual Meeting, Invacare seeks to elect the seven Invacare
Nominees as the directors of Healthdyne and to have the Proposals made by it at
the Annual Meeting adopted by the shareholders.
The election of the Invacare Nominees requires the affirmative vote of
a plurality of votes cast in person or by proxy at the Annual Meeting by the
holders of Shares entitled to vote on the election of directors, assuming a
quorum is present or otherwise represented at the Annual Meeting. A majority of
the Shares entitled to vote, present in person or by proxy, constitutes a
quorum. 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 THE INVACARE NOMINEES AND FOR
ADOPTION OF THE PROPOSALS.
A VOTE FOR THE INVACARE NOMINEES WILL PROVIDE YOU -- AS THE OWNERS OF
HEALTHDYNE -- WITH REPRESENTATIVES ON THE HEALTHDYNE BOARD WHO ARE COMMITTED
(SUBJECT TO ANY FIDUCIARY DUTIES THEY WOULD HAVE AS DIRECTORS) TO EFFECTUATING
THE OFFER AND THE MERGER. A VOTE FOR THE PROPOSALS WILL FURTHER FACILITATE THE
OFFER AND THE MERGER.
INVACARE URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY
HEALTHDYNE. IF YOU HAVE ALREADY DONE SO, YOU MAY REVOKE YOUR PROXY BY
DELIVERING BY MAIL OR FACSIMILE A WRITTEN NOTICE OF REVOCATION OR A LATER DATED
[GOLD] ANNUAL MEETING PROXY CARD FOR THE ANNUAL MEETING TO INVACARE, C/O
MACKENZIE PARTNERS, INC. ("MACKENZIE PARTNERS"), 156 FIFTH AVENUE, NEW YORK, NEW
YORK 10010 (FAX NO. (212) 929-0308) OR TO THE SECRETARY OF HEALTHDYNE, OR BY
VOTING IN PERSON AT THE ANNUAL MEETING. SEE "PROXY PROCEDURES" BELOW.
IF ANY OF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK,
BANK NOMINEE OR OTHER INSTITUTION ON THE RECORD DATE, ONLY IT CAN VOTE SUCH
SHARES AND ONLY UPON RECEIPT OF YOUR SPECIFIC INSTRUCTIONS. ACCORDINGLY, YOU
SHOULD CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND INSTRUCT THAT PERSON
TO EXECUTE ON YOUR BEHALF THE [GOLD] ANNUAL MEETING PROXY CARD AS SOON AS
POSSIBLE.
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4
THE INVACARE NOMINEES AND THE PROPOSALS
WILL FACILITATE THE SALE OF HEALTHDYNE
-------------------------------
THE EXISTING HEALTHDYNE BOARD OPPOSES THE OFFER AND THE MERGER
AND HAS TAKEN NUMEROUS STEPS TO ATTEMPT TO ENTRENCH ITSELF,
TO BLOCK THE OFFER AND THE MERGER AND TO STRIP
YOU OF CRITICAL SHAREHOLDER RIGHTS
-------------------------------
A vote for the Invacare Nominees will provide you -- as the owners of
Healthdyne -- with representatives on the Healthdyne Board who are committed
(subject to any fiduciary duties they would have as directors) to effectuating
the Offer and the Merger described below. If adopted, the Proposals will
further facilitate the Offer and the Merger.
I.H.H. has commenced an offer to purchase all of the outstanding
Shares and the associated Preferred Stock Purchase Rights (the "Rights") at a
purchase price of $13.50 per Share (and associated Right), net to the seller in
cash without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated January 27, 1997, as amended and
supplemented by the Supplement thereto dated April 4, 1997 (as further amended
and supplemented from time to time, the "Offer to Purchase"), and in the related
Letter of Transmittal (which, as amended from time to time, together constitute
the "Offer"). The purpose of the Offer is to acquire control of, and the entire
equity interest in, Healthdyne. I.H.H. intends to propose, and to seek to have
Healthdyne consummate as soon as practicable after consummation of the Offer, a
merger or similar business combination (the "Merger") with I.H.H. or another
direct or indirect subsidiary of Invacare, pursuant to which each then
outstanding Share (other than Shares held by Invacare, I.H.H. or any other
wholly owned subsidiary of Invacare, Shares held in the treasury of Healthdyne
and Shares held by shareholders who properly exercise appraisal rights under
Georgia law) would be converted into the right to receive in cash the price per
Share paid by I.H.H. pursuant to the Offer.
In order to provide a possible method of promptly consummating the
Offer and the Merger, Invacare needs the cooperation of the Healthdyne Board to
(i) redeem the Rights or otherwise make the Rights inapplicable to, or cause the
dilutive provisions thereof not to be triggered by, the Offer or the Merger,
(ii) approve the Offer and the Merger for purposes of satisfying the Georgia
Business Combination Statute Condition and, in certain circumstances, the
Georgia Fair Price Statute Condition (all as described in "Terms and Conditions
of the Offer" below) and, (iii) in the case of the Merger, execute an agreement
and plan of merger (among other things).
THIS PROXY STATEMENT IS NEITHER A REQUEST FOR THE TENDER OF SHARES NOR
AN OFFER WITH RESPECT THERETO. THE OFFER IS BEING MADE ONLY BY MEANS OF THE
OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL. Copies of the Offer to
Purchase and the Letter of Transmittal may be obtained by contacting MacKenzie
Partners (the Information Agent in the Offer) at the address and telephone
numbers set forth on the back cover of this Proxy Statement.
ELECTION OF THE INVACARE NOMINEES AND APPROVAL OF THE PROPOSALS IS AN
IMPORTANT STEP IN SECURING THE CONSUMMATION OF THE OFFER AND THE MERGER.
HOWEVER, YOU MUST TENDER YOUR SHARES PURSUANT TO THE OFFER IF YOU WISH TO
PARTICIPATE IN THE OFFER. YOUR VOTE FOR THE INVACARE NOMINEES OR FOR ANY OF THE
PROPOSALS WILL NOT OBLIGATE YOU TO TENDER YOUR SHARES PURSUANT TO THE OFFER, AND
YOUR FAILURE TO VOTE FOR THE INVACARE NOMINEES OR ANY OF THE PROPOSALS WILL NOT
PREVENT YOU FROM TENDERING YOUR SHARES PURSUANT TO THE OFFER.
All Invacare Nominees support the Offer and the Merger and if elected
will, subject to any fiduciary duties such nominees would have as directors of
Healthdyne, seek to cause Healthdyne to take all steps necessary or appropriate
to permit the Offer and the Merger to proceed, including without limitation (i)
redeeming the Rights or otherwise making the Rights inapplicable to, or causing
the dilutive provisions thereof not to be triggered by, the Offer or the Merger,
(ii) adopting a resolution approving the Offer and the Merger for purposes of
the Georgia Business Combination Statute and the Georgia Fair Price Statute and
(iii) in the case of the Merger, taking action to execute an agreement and plan
of merger. Invacare and the Invacare Nominees are not presently
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5
aware of any competing third-party acquisition proposals. Given the widespread
publicity concerning Invacare's proposal to acquire Healthdyne, the fact that as
of the date of this Proxy Statement there has been no other publicly disclosed
proposal to acquire Healthdyne, and the fact that, if elected, the Invacare
Nominees will be elected by the shareholders to take the actions outlined
herein, it is not expected that the Invacare Nominees would actively solicit
additional offers for Healthdyne. However, all Invacare Nominees recognize the
fiduciary duties they would have as directors of Healthdyne if elected and
therefore they would give all consideration required by such fiduciary duties to
any BONA FIDE acquisition proposals submitted to Healthdyne at a price higher
than the Offer and the Merger. For information about the Minimum Condition, the
Rights Condition, the Georgia Business Combination Statute Condition and the
Georgia Fair Price Statute Condition, see "Terms and Conditions of the Offer"
below.
A vote for the Proposals will further facilitate the Offer and the
Merger. Adoption and valid implementation of the Proposals would ensure that
(i) the incumbent Healthdyne directors would not be able to unilaterally
increase the size of the Board of Directors and "pack" it with nominees selected
by them, (ii) the Invacare Nominees, if elected, would be able to redeem
Healthdyne's poison pill or render it inapplicable to the Offer and the Merger,
thus satisfying the Rights Condition, (iii) actions taken by the incumbent
Healthdyne directors to manipulate Healthdyne's By-Laws (the "By-Laws";
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. Invacare
believes that these actions, individually and collectively, will assist the
shareholders in expressing their desire that Healthdyne be sold or merged in the
near future.
AS INDICATED UNDER "BACKGROUND OF PROPOSED ACQUISITION" BELOW, THE
INCUMBENT HEALTHDYNE DIRECTORS HAVE REPEATEDLY REJECTED INVACARE'S ACQUISITION
PROPOSALS, INCLUDING THE OFFER AND THE MERGER, WHILE CONSISTENTLY REFUSING TO
MEET OR DISCUSS THE PROPOSED ACQUISITION WITH INVACARE, BUT HAVE NOT PRESENTED
YOU WITH ANY ALTERNATIVE OTHER THAN HEALTHDYNE REMAINING INDEPENDENT.
FURTHERMORE, THE CURRENT BOARD OF DIRECTORS HAS TRIED TO STRIP YOU OF CRITICAL
SHAREHOLDER RIGHTS, INCLUDING THE RIGHT TO ELECT A FULL BOARD AT EACH ANNUAL
MEETING, THE RIGHT TO REMOVE DIRECTORS AT ANY TIME WITH OR WITHOUT CAUSE AND THE
RIGHTS TO ESTABLISH THE SIZE OF AND LIMIT THE AUTHORITY OF THE BOARD OF
DIRECTORS, BY ATTEMPTING TO ENGINEER DIRECTOR-ENTRENCHING LEGISLATION IN THE
GEORGIA GENERAL ASSEMBLY, AND HAS TAKEN OTHER STEPS TO INCREASE THE OBSTACLES TO
YOUR BEING ABLE TO SELL YOUR SHARES IN THE OFFER OR OTHERWISE EXERCISE YOUR
SHAREHOLDER RIGHTS. SEE "BACKGROUND OF ACQUISITION PROPOSAL", INCLUDING THE
SECTION ENTITLED "DIRECTOR-ENTRENCHMENT LEGISLATION" CONTAINED THEREIN.
ASSUMING THE INCUMBENT DIRECTORS DECIDE TO RUN FOR RE-ELECTION AT THE ANNUAL
MEETING (OR SELECT NOMINEES TO RUN IN THEIR PLACES), INVACARE BELIEVES YOU
SHOULD SERIOUSLY QUESTION WHETHER THEY HAVE LEFT YOU WITH ANY REASON TO TRUST
THEM AND THEIR LOYALTY TO YOU IN LIGHT OF THEIR ACTIONS DURING THE PAST FEW
MONTHS.
IF, LIKE US, YOU BELIEVE THAT YOU SHOULD HAVE THE OPPORTUNITY TO
DECIDE THE FUTURE OF YOUR COMPANY AND THAT YOU SHOULD HAVE THE CHANCE TO RECEIVE
AT LEAST $13.50 PER SHARE FOR ALL OF YOUR SHARES, INVACARE URGES YOU TO VOTE
YOUR [GOLD] ANNUAL MEETING PROXY CARD FOR EACH OF THE INVACARE NOMINEES AND FOR
ADOPTION OF EACH OF THE PROPOSALS. ALL OF THE INVACARE NOMINEES WILL TAKE ALL
SUCH ACTIONS NECESSARY OR APPROPRIATE (SUBJECT TO ANY FIDUCIARY DUTIES THEY
WOULD HAVE AS DIRECTORS) TO APPROVE AND EFFECTUATE THE CONSUMMATION OF THE OFFER
AND THE MERGER. IF ADOPTED, THE PROPOSALS WILL FURTHER FACILITATE THE OFFER AND
THE MERGER.
ELECTION OF DIRECTORS
According to publicly available information, Healthdyne currently has
seven directors who serve for terms of one year. The terms of the seven
directors -- Craig B. Reynolds, Parker H. Petit, J. Terry Dewberry, Alexander H.
Lorch, J. Leland Strange, James J. Wellman and J. Paul Yokubinas -- will expire
at the Annual Meeting.
Invacare proposes that the Healthdyne shareholders elect the Invacare
Nominees to be the directors of Healthdyne at the Annual Meeting. The seven
Invacare Nominees are listed below and have furnished the following information
concerning their principal occupations or employment and certain other matters.
Each Invacare Nominee, if elected, would hold office until Healthdyne's 1998
Annual Meeting of Shareholders and until a successor
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6
has been elected and qualified, or until his earlier death, resignation or
removal. Although Invacare has no reason to believe that any of the Invacare
Nominees will be unable to serve as directors, if any one or more of the
Invacare Nominees should not be available for election, the persons named on the
[GOLD] Annual Meeting proxy card have agreed to vote for the election of such
other nominees as may be proposed by Invacare.
The Invacare Nominees for directors are:
NAME, AGE AND PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
PRINCIPAL BUSINESS ADDRESS DURING LAST FIVE YEARS; CURRENT DIRECTORSHIPS
- - -------------------------- ---------------------------------------------
Nicholas J. DiCicco, Jr, 65 President and Chief Executive Officer of
6650 Beta Drive Midwestern National Life Insurance Company of
Mayfield Village, Ohio 44143 Ohio since 1975.
Donald F. Hastings, 68 Chairman of the Board, The Lincoln Electric
22801 St. Claire Avenue Company, a welding products manufacturer,
Cleveland, Ohio 44117 since 1992. Also Chief 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.
Jack Kahl, Jr., 56 Chairman of the Board and Chief Executive
32150 Just Imagine Drive Officer of Manco, Inc., a company
Avon, Ohio 44011-1355 specializing in the production of
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,
55 Public Square, Suite 2150 Gavin, Gerlack & Manos Co., L.P.A., a
Cleveland, Ohio 44113 Cleveland law firm, since 1981.
Jon H. Outcalt, 60 Chairman of the Board of NCS HealthCare,
3201 Enterprise Parkway, #220 Inc. since 1986. Senior Vice President of
Beachwood, Ohio 44122 Alliance Capital Management L.P., a money
management firm, from 1975 to 1995.
Currently a member of the Board of
Directors of Myers Industries, Inc. and
Ohio Savings Financial Corp.
James Allen Rutherford, 51 Chairman and Managing Director of Wingset
15 S. High St. Investments Ltd. and President of Wingset,
P.O. Box 166 Inc., technology venture funds, from 1993
New Albany, Ohio 43054 to present. Former Chairman of
Countrysport, Inc., a sports book
publisher, from 1994 to 1996. Retired
from position of Chairman, Goal Systems
International, Inc., a software vending
company, in 1992. Currently a member of
the Board of Directors of Ciber Inc. and
Symix Systems, Inc.
Bill R. Sanford, 53 Chairman of the Board, President and Chief
5960 Heisley Road Executive Officer of STERIS Corporation,
Mentor, Ohio 44060 an infection prevention and surgical
support company, since 1987. Currently a
member of the Board of Directors of
KeyBank, N.A.
Election of the Invacare Nominees as the directors of Healthdyne
requires the affirmative vote of a plurality of votes cast in person or by proxy
at the Annual Meeting by the holders of Shares entitled to vote on the election
of directors, assuming a quorum is present or otherwise represented at the
Annual Meeting. Consequently, only Shares that are voted in favor of a
particular nominee will be counted toward such nominee's attaining a plurality
of votes. Shares considered present at the Annual Meeting that are not voted
for a particular nominee (including broker non-votes and abstentions), and
Shares present by proxy where the shareholder properly
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7
withheld authority to vote for such nominee, will not be counted either for or
against such nominee's attainment of a plurality.
Invacare believes that it is in your best interests to elect the
Invacare Nominees at the Annual Meeting. ALL INVACARE NOMINEES ARE COMMITTED TO
TAKING ALL SUCH ACTIONS NECESSARY OR APPROPRIATE (SUBJECT TO ANY FIDUCIARY
DUTIES THEY WOULD HAVE AS DIRECTORS) TO APPROVE AND EFFECTUATE THE CONSUMMATION
OF THE OFFER AND THE MERGER.
INVACARE STRONGLY RECOMMENDS A VOTE FOR
ELECTION OF THE INVACARE NOMINEES.
THE PROPOSALS
In order to further facilitate the Offer and the Merger, Invacare is
soliciting proxies in support of the following Proposals which would be
considered and voted upon at the Annual Meeting:
1. NUMBER OF DIRECTORS PROPOSAL
To adopt, prior to the election of directors at the Annual Meeting, a
proposal to amend the By-Laws to fix the maximum number of directors
of Healthdyne at seven (7) and provide that, without the approval of
the shareholders, the Board of Directors may not thereafter amend or
repeal the section of the By-Laws governing the number of directors or
adopt any new By-Law provision which is inconsistent in any manner
with such section.
2. DEAD-HAND ELIMINATION PROPOSAL
To adopt, prior to the election of directors at the Annual Meeting, a
proposal to amend the By-Laws to provide that the Board of Directors
shall have no authority to take any action, or omit to take any
action, the effect of which action or omission would be to impose, or
permit to continue or be imposed, any limitation (directly or
indirectly, and including any such limitation imposed by means of a
requirement for concurrence or other action by any particular director
or particular type of director), resulting from or becoming operative
in light of, in whole or in part, a change in the composition of the
Board of Directors (whether or not under specified circumstances), on
the exercise by any future Board of Directors of any power or
authority that it would otherwise have, including any such limitation
on the ability of a Board of Directors to redeem or amend any
shareholder rights plan of Healthdyne which limitation results from or
becomes operative in light of, in whole or in part, a change in the
composition of the Board of Directors (whether or not under specified
circumstances). In particular, but not in limitation, such amendment
will also specifically provide that the incumbent Board of Directors
will be in violation of the By-Laws if such Board, including any
requisite group of "continuing directors", fails to immediately take
all necessary action (prior to the consideration of the election of
directors at the Annual Meeting) to amend any shareholder rights plan
of Healthdyne to remove all such limitations. Such amendment will
further provide that such By-Law may not be amended, nor may any new
By-Law provision which is in any manner inconsistent therewith be
adopted, without the approval of the shareholders.
3. BY-LAWS REPEAL PROPOSAL
To adopt a proposal to repeal each and every provision of the By-Laws
of Healthdyne or amendments thereto which was adopted on or after June
30, 1996 and prior to the date of adoption of such proposal, other
than those provisions which were fully disclosed and properly
reflected in the public filings made by Healthdyne with the Commission
prior to March 20, 1997 and those provisions which were duly approved
by the shareholders; and to propose that, without the approval of the
shareholders, the Board of Directors may not thereafter amend any
section of the By-Laws
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8
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 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 Invacare Nominees to constitute the entire Board. Invacare is concerned
that, prior to the Annual Meeting, the current Board of Directors might attempt
to expand the size of the Board of Directors beyond the current seven seats,
whether by resolution, amendment of the By-Laws or otherwise, and might attempt
to do so in a manner intended to prevent Invacare from proposing additional
nominees. Indeed, part of the legislation which Healthdyne and its current
Board of Directors sought to have enacted by the Georgia General Assembly (but
which has been resoundingly defeated) would have reserved to the board of
directors of every publicly-held Georgia corporation, including the Board of
Directors of Healthdyne, the sole right to determine the size of the board,
eliminating the rights of the shareholders to control the size of the board
through by-law amendments. See "Background of Acquisition Proposal --
Director-Entrenchment Legislation". 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".
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9
Invacare believes that the Board of Director's ability to attempt to
manipulate the size of the Board is limited by its fiduciary duties. However,
by restricting the maximum number of Board seats to seven, adoption of the
Number of Directors Proposal will ensure that the election contest at the Annual
Meeting will take place on a level playing field, without the incumbent Board or
their nominees gaining an unfair advantage by attempting to run for unopposed
positions. Invacare has notified Healthdyne that it would propose additional
nominees for election if Healthdyne attempts to expand the size of the Board of
Directors above its existing level of seven directors prior to the Annual
Meeting.
In addition, should the shareholders choose to elect the Invacare
Nominees to a minority of the seats on the Board of Directors, whether because
of an announced intention by the current Board of Directors to pursue a sale of
Healthdyne or otherwise, adoption of the Number of Directors Proposal would have
the purpose of ensuring that the incumbent directors, who would continue to
constitute a majority, could not frustrate the will of the shareholders by
increasing the size of the Board and installing hand-picked allies. Adoption of
the Number of Directors Proposal would thereby prevent an incumbent majority, if
re-elected, from unilaterally "packing" the Board of Directors without
shareholder approval and upsetting the percentage of Invacare Nominees on the
Healthdyne Board desired by the shareholders.
INVACARE STRONGLY RECOMMENDS A VOTE FOR
ADOPTION OF THE NUMBER OF DIRECTORS PROPOSAL.
DEAD-HAND ELIMINATION PROPOSAL
Healthdyne's Rights plan contains unusual provisions, commonly
referred to as "dead-hand pill" restrictions, which, under certain
circumstances, purport to prevent a newly elected Board of Directors from
redeeming or amending the Rights without the consent of the old directors.
Among other things, the "dead-hand pill" restrictions would purport to prevent
the Invacare Nominees, if elected at the Annual Meeting, from redeeming or
amending the Rights so as to satisfy the Rights Condition and permit the Offer
and the Merger to proceed, notwithstanding the mandate Healthdyne's shareholders
will have given to the Invacare Nominees in such election, unless there also
remained on the Healthdyne Board one or more incumbent directors or their
hand-picked successors and a majority of them approved such actions. For a more
detailed description of Healthdyne's Rights plan and the "dead-hand pill"
restrictions, see "Terms and Conditions of the Offer--The Rights Condition",
below.
Invacare believes that the "dead-hand pill" restrictions, which were
adopted by Healthdyne's current Board of Directors without shareholder approval,
are a collection of draconian and extreme director-entrenching provisions which,
in purporting to limit the ability of future Boards of Directors of Healthdyne
from acting in the best interests of Healthdyne and its shareholders by
redeeming or otherwise nullifying the Rights in connection with a proposed
transaction, denies the shareholders and future Boards of Directors meaningful
access to and control over the assets of Healthdyne and hinders and prevents the
exercise of fundamental shareholder rights under Georgia law. Invacare believes
that such provisions violate Georgia and federal law and has commenced
litigation against Healthdyne and certain of its directors in the United States
District Court for the Northern District of Georgia (the "Defensive Tactics
Litigation") which seeks, among other things, an order declaring the "dead-hand
pill" restrictions illegal and unenforceable and compelling Healthdyne's Board
of Directors to amend the Rights to remove such restrictions. See "Background
of Acquisition Proposal -- Defensive Tactics Litigation", below.
By adopting the Dead-Hand Elimination Proposal, the Healthdyne
shareholders can take action at the Annual Meeting to eliminate the illegal
"dead-hand pill" restrictions of the Rights plan in the event that the court in
the Defensive Tactics Litigation has not yet issued a final order invalidating
them. Adoption and valid implementation of the Dead-Hand Elimination Proposal
would eliminate the authority of the current Healthdyne Board of Directors to
keep in place the director-entrenching "dead-hand pill" restrictions and would
make the failure by the Board to amend the Rights plan to remove the "dead-hand
pill" restrictions a violation of the By-Laws. This will facilitate the Offer
and the Merger by allowing the Invacare Nominees, if elected as directors, to
redeem or amend the Rights so as to satisfy the Rights Condition and permit the
Offer and the Merger to proceed. In addition, a vote in favor of the Dead-Hand
Elimination Proposal will send a strong message to the current Healthdyne Board
of Directors that its efforts to reserve for itself and its hand-picked
successors the sole power to approve extraordinary transactions, while denying
such power to any other directors duly elected by Healthdyne's
<PAGE>
10
shareholders, are unacceptable. Adoption and valid implementation of the
Dead-Hand Elimination Proposal would also limit the authority of the Board of
Directors to impose or permit to exist other restrictions on the ability of 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. 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 Invacare Nominees and make the Proposals at the Annual Meeting (the
"Invacare Nomination and Proposal Notice"), or which Healthdyne adopted on or
after such date, other than those provisions duly adopted by the shareholders.
According to documents Healthdyne has filed with the Commission, since publicly
filing its by-laws as of June 30, 1996 with the Commission, Healthdyne's Board
of Directors has, after Invacare made public its interest in an acquisition of
Healthdyne and without shareholder approval, amended Healthdyne's By-Laws to (i)
elect that Healthdyne be governed by the Georgia Fair Price Statute, (ii) remove
from the By-Laws a provision requiring the annual meeting of shareholders of
Healthdyne to be held on the fourth Tuesday in April unless a different date was
set by the Board of Directors and (iii) provide additional onerous procedures
governing special meetings which purport to permit Healthdyne and its Board of
Directors to delay a special meeting for more than four months after receiving
the requisite shareholder demands. Unfortunately, Georgia law does not allow
the Healthdyne shareholders, acting alone, to repeal the By-Law provision opting
into the Georgia Fair Price Statute, and reinstatement of the
<PAGE>
11
default annual meeting date provision at the Annual Meeting would be of little
consequence since the Annual Meeting will already have been scheduled and held.
Accordingly, even though Invacare believes that both of such post-announcement
by-law amendments by the Healthdyne Board were motivated by the incumbent
directors' desire to entrench themselves, Invacare is not seeking repeal of such
amendments in the By-Laws Repeal Proposal.
The By-Laws Proposal is, however, designed to repeal any other by-law
changes that the Board of Directors may have attempted to make yet did not
disclose prior to March 20, 1997. Adoption of the By-Laws Proposal would render
ineffective any further attempted manipulation of the By-Laws by the Healthdyne
Board, whether intended to frustrate the ability of the shareholders to elect
the Invacare Nominees or adopt any of the Proposals, to create new obstacles to
the consummation of the Offer and the Merger, or otherwise. Invacare's
objective in making the By-Laws Proposal is to prevent further manipulation of
the By-Laws by the Board of Directors at the expense of the shareholders and
their rights. For example, on March 21, 1997, the day after Invacare delivered
the Invacare Nomination and Proposal Notice to Healthdyne, Healthdyne issued a
press release announcing, among other things, that on 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
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
<PAGE>
12
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.
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 and has repeatedly stated that it is not for sale at this time. If,
however, the incumbent Board of Directors or their nominees are successful in
retaining control of a majority of the seats on the Board of Directors, whether
because of an announced intention to pursue a sale of Healthdyne or otherwise,
Invacare believes that it is critical that Healthdyne's shareholders have the
ability to meaningfully supervise the progress of the Board in its running of
the company or in pursuing such a transaction by gaining the right to call
prompt special meetings of shareholders to take remedial shareholder action.
Permitting the holders of
<PAGE>
13
10% of the outstanding Shares to demand a prompt special meeting will cause the
Healthdyne Board of Directors to be more directly accountable to the Healthdyne
shareholders and will give the Healthdyne shareholders the ability to quickly
remove any or all directors who are not serving the best interests of the
shareholders or to effect any other desired shareholder action. Invacare notes
that 10% is the level required by the Revised Model Business Corporation Act and
is the level required or suggested by the corporation codes of more than half of
the states in the United States for shareholder demands for special meetings.
It is also worth noting that Article II, Section 2 of Healthdyne's
current By-Laws specifically provide that the shareholders may "remove Directors
with or without cause AT ANY TIME" (emphasis added). Adoption of the Special
Meeting Proposal would provide a more appropriate mechanism to permit the
shareholders to exercise this right in a timely fashion. In addition, virtually
all actions which shareholders might take at a special meeting would only
require the affirmative vote of more than 50% of the votes cast or the shares
outstanding, depending on the action to be taken. Thus the current provisions
of the By-Laws, which require the holders of at least 60% of all outstanding
shares to demand a special meeting, have the perverse requirement that more
shareholders are needed to demand a special meeting for shareholders to consider
taking action than would actually be needed to take such action at such meeting.
Adoption of the Special Meeting Proposal would remedy this inconsistency as
well.
INVACARE STRONGLY RECOMMENDS A VOTE FOR
ADOPTION OF THE SPECIAL MEETING PROPOSAL.
VOTING PROCEDURES
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.
<PAGE>
14
PROXY PROCEDURES
The accompanying [GOLD] Annual Meeting proxy card will be voted at the
Annual Meeting in accordance with your instructions on such card. You may vote
FOR the election of the Invacare Nominees as the directors of Healthdyne and FOR
the adoption of the Proposals or withhold authority to vote for the election of
the Invacare Nominees or for any of the Proposals by marking the proper boxes on
the [GOLD] Annual Meeting proxy card. You may also withhold your vote for any
of the Invacare Nominees by writing the name of such nominee in the space
provided on the [GOLD] Annual Meeting proxy card. IF NO MARKING IS MADE, YOU
WILL BE DEEMED TO HAVE GIVEN A DIRECTION TO VOTE THE SHARES REPRESENTED BY THE
[GOLD] ANNUAL MEETING PROXY CARD FOR THE ELECTION OF ALL OF THE INVACARE
NOMINEES AND FOR THE ADOPTION OF ALL THE PROPOSALS PROVIDED THAT YOU HAVE SIGNED
THE PROXY CARD.
IN ORDER FOR YOUR VIEWS ON THE ABOVE-DESCRIBED MATTERS TO BE
REPRESENTED AT THE ANNUAL MEETING, PLEASE SIGN AND DATE THE ENCLOSED [GOLD]
ANNUAL MEETING PROXY CARD AND RETURN IT TO INVACARE, C/O MACKENZIE PARTNERS,
INC., 156 FIFTH AVENUE, NEW YORK, NEW YORK 10010, IN THE ENCLOSED ENVELOPE, OR
BY FAX TO (212) 929-0308, IN TIME TO BE VOTED AT THE ANNUAL MEETING. EXECUTION
OF THE [GOLD] ANNUAL MEETING PROXY CARD WILL NOT AFFECT YOUR RIGHT TO ATTEND THE
ANNUAL MEETING AND VOTE IN PERSON. ANY PROXY MAY BE REVOKED AT ANY TIME PRIOR
TO THE ANNUAL MEETING BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER
DATED PROXY FOR THE ANNUAL MEETING TO INVACARE OR TO THE SECRETARY OF
HEALTHDYNE, OR BY VOTING IN PERSON AT THE ANNUAL MEETING. ALTHOUGH A REVOCATION
IS EFFECTIVE IF DELIVERED TO HEALTHDYNE, INVACARE REQUESTS THAT EITHER THE
ORIGINAL OR COPIES OF ALL REVOCATIONS BE MAILED OR FAXED TO INVACARE IN CARE OF
MACKENZIE PARTNERS AT THE ADDRESS OR FACSIMILE NUMBER SET FORTH ON THE BACK
COVER OF THIS PROXY STATEMENT SO THAT INVACARE WILL BE AWARE OF ALL REVOCATIONS
AND CAN MORE ACCURATELY DETERMINE HOW MANY PROXIES HAVE BEEN RECEIVED FROM THE
HOLDERS OF RECORD ON THE RECORD DATE OF OUTSTANDING SHARES. IF YOU DO NOT VOTE
IN PERSON AT THE ANNUAL MEETING, ONLY YOUR LATEST DATED PROXY FOR THE ANNUAL
MEETING WILL COUNT.
Only holders of record as of the close of business on the Record Date
will be entitled to vote. If you were a shareholder of record on the Record
Date, you will retain your voting rights for the Annual Meeting even if you sell
such Shares after the Record Date. Accordingly, it is important that you vote
the Shares held by you on the Record Date, or grant a proxy to vote such Shares
on the [GOLD] Annual Meeting proxy card, even if you sell such Shares after the
Record Date.
If any of your Shares are held in the name of a brokerage firm, bank,
bank nominee or other institution on the Record Date, only it can vote such
Shares and ONLY UPON RECEIPT OF YOUR SPECIFIC INSTRUCTIONS. Accordingly, you
should contact the person responsible for your account and instruct that person
to execute on your behalf the [GOLD] Annual Meeting proxy card as soon as
possible.
BACKGROUND OF ACQUISITION PROPOSAL
In the late summer of 1996, Thomas R. Miklich, Chief Financial Officer
and General Counsel of Invacare, contacted Robert Johnson, a Senior Vice
President of Healthdyne, and indicated that Invacare would be interested in
discussing a potential combination of the two entities. Mr. Johnson responded
shortly thereafter that the Board of Directors of Healthdyne had determined that
Healthdyne was not for sale. A brief time later, A. Malachi Mixon, III,
Chairman and Chief Executive Officer of Invacare, called Craig B. Reynolds,
President and Chief Executive Officer of Healthdyne, with the intent of
inquiring again about a potential combination. His call was not returned by Mr.
Reynolds. Mr. Mixon then suggested to an acquaintance who had a business
relationship with the former parent of Healthdyne that a combination of Invacare
and Healthdyne would be beneficial to the shareholders of both, and requested
that the acquaintance let Parker H. Petit, Chairman of the Board of Directors of
Healthdyne, know of Invacare's interest. Within a few days, Mr. Mixon received
a terse voice mail message from Mr. Petit in which Mr. Petit stated and then
repeated, that Healthdyne was not for sale. Less than a week after receiving
Mr. Petit's voice mail message, Mr. Mixon encountered Mr. Reynolds at a trade
show and suggested that Invacare and Healthdyne meet to discuss the potential
for a transaction as he felt it would be beneficial for 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.
<PAGE>
15
On January 2, 1997, Mr. Mixon called Mr. Reynolds and was told that he
was in a meeting and was unable to take Mr. Mixon's call. Mr. Mixon then
indicated that he was faxing a confidential letter and requested that Mr.
Reynolds' secretary hand the letter directly to Mr. Reynolds. He then asked
that Mr. Reynolds call him once he had the opportunity to review the letter.
Mr. Reynolds did not and has not to date called Mr. Mixon. The text of the
January 2, 1997 letter is as follows:
January 2, 1997
Mr. Craig B. Reynolds
President & CEO
Healthdyne Technologies, Inc.
1255 Kennestone Circle
Marietta, GA 30066
Dear Craig:
I am writing this letter to follow up on our communication several
weeks ago, which I am disappointed did not result in more specific
discussions at that time. We believe that there are clear and compelling
advantages to both Invacare Corporation and Healthdyne Technologies from
the combination of our two companies and that such a transaction would
create great value for each of our companies and our respective
stockholders. We therefore propose that Invacare Corporation acquire
Healthdyne Technologies through a negotiated merger transaction in which
Healthdyne stockholders would receive $12.50 in cash for each share of
outstanding common stock. This price would represent a premium of more
than 40% over your closing stock price on December 31, 1996.
As I am sure you are aware, Invacare is an important participant in
the medical device market, with annual sales in excess of $600 million. We
have, as you do, an enviable reputation for the quality of our products and
service. We are extremely impressed with the businesses you and your
management team have developed and the manner in which they complement our
businesses. We believe the complementary aspects of our two companies'
products, customers and distribution capabilities would enable the combined
entity to be an even more effective competitor.
We are prepared to meet with you or your representatives at your
earliest convenience to discuss our proposal and begin negotiations of
definitive documentation, which we are confident could be quickly and
successfully concluded. We have committed bank facilities in place
sufficient to fund the proposed transaction.
Of course, our proposal contemplates, among other things, the
negotiation and execution of mutually acceptable definitive merger and
other agreements containing provisions customary for transactions of this
type, the receipt of any required regulatory approvals and third-party
consents, the operation of Healthdyne in the ordinary course, and the
taking of all necessary actions to eliminate the applicability of, or to
satisfy, any anti-takeover or other defensive provisions contained in the
applicable corporate statutes or Healthdyne's charter and by-laws
(including Healthdyne's poison pill). We do not expect anti-trust concerns
to provide a significant hurdle to the closing of the transaction.
We hope that you and your Board of Directors will view this proposal
as we do -- an excellent opportunity for the stockholders of Healthdyne to
realize full value for their 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.
<PAGE>
16
We hope that you will agree that the best way to proceed at this point
would be to begin confidential, non-public discussions to see if we can
negotiate a transaction that can be presented to your stockholders as the
joint effort of Invacare's and Healthdyne's Board of Directors and
management. At this point, therefore, we hope this letter and its contents
will remain private between us.
We would appreciate it if you and your Board of Directors will give
this proposal prompt and serious consideration. We would request a
response as soon as possible, and preferably no later than January 10,
1997.
We are enclosing copies of this letter, as well as information on
Invacare, for distribution to Mr. Petit and the other members of the Board
of Directors so they can familiarize themselves with our proposal and our
company.
I hope you and yours had a happy and healthy holiday season and wish
you all the best for the New Year.
Sincerely,
A. Malachi Mixon, III
Chairman and CEO
On January 8, 1997, Mr. Reynolds sent the following letter to Mr.
Mixon:
January 8, 1997
A. Malachi Mixon, III
Chairman & CEO
Invacare Corporation
899 Cleveland Street
P.O. Box 4028
Elyria, OH 44036-2125
Dear Mr. Mixon:
Thank you for your letter dated January 2, 1997. I am forwarding your
letter together with enclosures to our Board of Directors for review. The
Board of Directors some time ago established procedures for reviewing
inquiries of this sort. The Board will review your letter at its next
regularly-scheduled Board Meeting in February, and you can expect the
Company's response thereafter.
Thank you for the kind statements in your letter concerning the
Company's reputation for the quality of our products and service.
Sincerely,
Craig B. Reynolds
President and Chief Executive Officer
On January 10, 1997, Invacare issued the following press release and
sent the letter reprinted therein to Healthdyne:
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
<PAGE>
17
offer until its February Board meeting, Invacare determined to publicly
confirm its offer in a letter to Healthdyne dated January 10, 1997. The
offered price represents more than a 40% premium over Healthdyne's closing
stock price on December 31, 1996, the last trading day prior to the date
the original proposal was made. Based on the prospects and synergies that
can be identified from publicly available information, Invacare believes
that the acquisition will be accretive to its earnings per share within 12
to 18 months.
The full text of Invacare's January 10, 1997 letter to Mr. Craig B.
Reynolds, President and CEO of Healthdyne Technologies, Inc., is as
follows:
Thank you for your letter of January 8, 1997 noting that your Board of
Directors will consider our January 2, 1997 acquisition proposal to acquire
Healthdyne Technologies, Inc. at $12.50 per share in cash at its next
regularly scheduled meeting in February. We are pleased that Healthdyne's
Board of Directors plans to consider our proposal, but we are disappointed
that Healthdyne has chosen to defer its consideration for such a long time
without seeking any discussions with us. We had expected that an
acquisition proposal offering a 40% premium over your year-end stock price
would have encouraged a prompt and constructive dialogue. We continue to
believe that there are clear and compelling advantages to both Invacare
Corporation and Healthdyne from the combination of our two companies and
that such a transaction would create great value for each of our companies
and our respective stockholders. As a result, we feel obligated and are
fully committed to pursue this matter more expeditiously.
We hereby reiterate our offer to acquire Healthdyne Technologies, Inc.
through a negotiated merger transaction in which Healthdyne stockholders
would receive $12.50 in cash for each share of outstanding common stock.
Because of the critical importance of our offer to the stockholders of
both Healthdyne and Invacare, and because of the length of time until your
Board of Directors may consider our offer, particularly in light of the
recent unusual trading volumes in Healthdyne's stock, we feel compelled to
release this letter publicly. We believe that the stockholders of
Healthdyne will enthusiastically support our offer, and that your Board of
Directors should have the benefit of the reaction of Healthdyne's
stockholders in evaluating our offer. We continue to be interested in
meeting with you to give you the opportunity to discuss our offer and to
begin negotiations of definitive documentation, which we are confident
could be quickly and successfully concluded.
We have committed bank facilities in place sufficient to fund the
proposed transaction. We are the owners of approximately 4.9% of
Healthdyne's outstanding common stock.
As we have said before, Invacare is an important participant in the
medical device market with annual sales in excess of $600 million. We
have, as you do, an enviable reputation for the quality of our products and
services. We are extremely impressed with the businesses you and your
management team have developed and the manner in which they complement our
businesses. We believe the complementary aspects of our two companies'
products, customers and distribution capabilities would enable the combined
entity to be an even more effective competitor.
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.
<PAGE>
18
We note from your public filings that Healthdyne has in place a number
of provisions that may be fairly characterized as defensive in nature. We
would request that you satisfy or eliminate their applicability to our
offer and that you not implement or take any action to trigger any
additional defensive measures that could adversely affect the ability of
your stockholders to ultimately express their views on, or receive the
benefits of, our offer, or enter into any significant transactions or take
any other actions that could impede or necessitate an adjustment to the
terms of our offer.
We believe that you and your Board of Directors should carefully and
promptly consider this offer and view it as we do -- an excellent
opportunity for the stockholders of Healthdyne to realize full value for
their shares to an extent not likely to be available to them in the
marketplace absent our offer. We are certain that, upon reflection, you
and your fellow members of the Board of Directors will recognize the
extraordinary opportunity that our offer presents Healthdyne and its
stockholders. In the context of a negotiated, friendly transaction, we
would be prepared to discuss all aspects of our offer fully with you.
We hope that you and your Board of Directors will give our offer
prompt and serious consideration so that we may move forward, in our
preferred course, to a negotiated transaction which can be presented to
your stockholders as the joint effort of Invacare's and Healthdyne's Board
of Directors and management. We would request that you accelerate your
Board of Directors' review of our offer and confirm to us as soon as
possible that your Board of Directors will consider our offer shortly.
Following Invacare's January 10 press release, Healthdyne issued a
press release on January 10, 1997 in which it stated that its Board of Directors
would consider Invacare's proposal in due course.
On Friday, January 24, 1997, Healthdyne issued a press release stating
that its Board of Directors had "unanimously rejected" Invacare's January 10
offer, adding that "[t]he Board has not been and is not seeking to sell
Healthdyne." Healthdyne also stated that it had received the opinion of its
investment bankers that the $12.50 per Share offer was "grossly inadequate", and
indicated that Healthdyne planned to release in early February information
concerning various developments and potential developments which Mr. Reynolds
asserted had not been "fully appreciated by the investment community." Later
that day, Healthdyne filed with the Commission a Current Report on Form 8-K
which disclosed that on January 23, 1997, after Invacare had made public its
interest in an acquisition of Healthdyne, Healthdyne's Board of Directors had
amended the By-Laws to (i) elect that Healthdyne be governed by the Georgia Fair
Price Statute and (ii) remove from the By- Laws a provision requiring the annual
meeting of shareholders to be held on the fourth Tuesday in April unless a
different date was set by the Board of Directors. Neither action was disclosed
in Healthdyne's press release issued earlier that day.
On the following Monday, January 27, 1997, Invacare and I.H.H.
commenced the Offer at an offer price of $13 per Share (the "Original Offer"),
delivered to Healthdyne letters making requests for shareholder information
under federal securities law and Georgia law, commenced the Defensive Tactics
Litigation and issued the following press release:
INVACARE CORPORATION LAUNCHES TENDER OFFER FOR HEALTHDYNE
TECHNOLOGIES, INC. AT INCREASED PRICE OF $13 PER SHARE
AND COMMENCES LITIGATION
Elyria, Ohio--(January 27, 1997) -- Invacare Corporation announced
today that its wholly owned subsidiary I.H.H. Corp. has commenced an
all-cash tender offer for all outstanding shares of common stock of
Healthdyne Technologies, Inc. at $13 per share, to be followed by a
second-step merger in which holders of shares not validly tendered would
receive the same per share price as in the offer.
The tender offer price represents more than a 45% premium over
Healthdyne's closing stock price on December 31, 1996, the trading day
prior to Invacare's making its original
<PAGE>
19
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 'deadhand pill' restrictions, which purport, under certain
circumstances, to prevent future directors from redeeming or otherwise
nullifying the pill in connection with a proposed transaction which the
future Board determines to be in the best interests of the Company and its
stockholders. We believe that such restrictions are illegal and that
Healthdyne has a duty to take actions to permit its stockholders to
effectively consider our offer free of these and Healthdyne's other
defensive provisions."
On January 31, 1997, Healthdyne issued a press release and filed a
Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
with the Commission, stating the recommendation by the Healthdyne Board that
shareholders reject the Original Offer and the belief by the Healthdyne Board
that the best means for providing value to shareholders was for Healthdyne to
pursue its "strategic plan" and not be put up for sale. Healthdyne also stated
in the Schedule 14D-9 that it had received a recommendation by Cowen & Company,
Healthdyne's financial advisor, to the effect that the price offered pursuant to
the Original Offer was "grossly inadequate".
<PAGE>
20
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 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
<PAGE>
21
shareholders that they "may be receiving additional mailings and telephone calls
from Invacare", and repeating previous suggestions that tendering shareholders
withdraw from the Original Offer, among other things. However, Messrs. Reynolds
and Petit also stated in their March 4 letter that they "hope[d] to minimize the
volume of mail sent" to Healthdyne shareholders and "plann[ed] to minimize the
cost" of mailings to the shareholders by "avoiding unnecessary communications."
On Thursday, March 20, 1997, Invacare, as a shareholder of Healthdyne,
delivered the Invacare Nomination and Proposal Notice to Healthdyne pursuant to
the By-Laws notifying Healthdyne of Invacare's intent to nominate the Invacare
Nominees and make the Proposals at the Annual Meeting, and issued the following
press release:
INVACARE SUBMITS BOARD SLATE AND PROPOSALS TO
HEALTHDYNE TECHNOLOGIES FOR ANNUAL MEETING
Elyria, Ohio -- (March 20, 1997) -- Invacare Corporation
announced today that it has provided notice to Healthdyne
Technologies, Inc. of its intention to nominate seven director
candidates at Healthdyne's upcoming (but as yet unscheduled) 1997
annual meeting.
In the notice given to Healthdyne, Invacare also submitted a set
of corporate governance bylaw amendments for consideration by
shareholders at the annual meeting. The proposed amendments are
designed to facilitate the change in the Board and the consummation of
Invacare's fully-financed, premium tender offer; prevent manipulation
by the current Board of Healthdyne's by-laws and of the size of the
Board to be elected at the annual meeting; allow for a special meeting
to be called by shareholders owning 10% of the Company's stock; and
cause the existing Board to eliminate the Company's "dead-hand" pill
provisions.
Invacare has submitted the slate and proposals to Healthdyne at
this time in order to comply with the Company's advance notification
bylaw, which requires notifying Healthdyne prior to Tuesday, March 25,
1997.
A. Malachi Mixon, III, Chairman and Chief Executive Officer of
Invacare, said, "We are very proud to assemble this exceptionally
strong slate of seven well-qualified, independent candidates. Given
the Company's refusal to date to sit down and talk to us regarding our
fully-financed, premium tender offer, we are forced to take this
action now to preserve our rights to seek replacement of the Board and
make related proposals at the annual meeting."
"We urge the Board of Healthdyne to spare their shareholders the
expense and delay of proceeding with a proxy contest, abandon their
'not-for-sale' position and begin discussions with us so that all
shareholders can receive immediate value for their investment."
Although Healthdyne held last year's annual meeting on May 23 and
the previous year's meeting in April, it has yet to announce either a
record date or meeting date for the 1997 annual meeting. Thomas R.
Miklich, Chief Financial Officer and General Counsel of Invacare,
said, "Shortly after we announced our interest in acquiring
Healthdyne, their Board of Directors amended their bylaws to eliminate
the long-standing provision that set the fourth Tuesday in April as
the date for annual meetings unless an alternative date was designated
by the Board. Invacare believes that the Healthdyne Board is
obligated by its fiduciary duties and Georgia law to hold its annual
meeting promptly and intends to request the courts to order the
meeting to be held if Healthdyne does not call the meeting on a timely
basis."
The Invacare candidates nominated for election at the annual
meeting are Messrs. Nicholas J. DiCicco, Jr., Donald F. Hastings, Jack
Kahl, Jr., Ernest Peter Mansour, Jon H. Outcalt, James Allen
Rutherford and Bill R. Sanford.
Mr. DiCicco has been President and Chief Executive Officer of
Midwestern National Life Insurance Company of Ohio since 1975.
<PAGE>
22
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. 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
<PAGE>
23
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 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.:
<PAGE>
24
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 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
<PAGE>
25
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, 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.
<PAGE>
26
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 behind the skirts of the Georgia
legislature, schedule their annual meeting promptly, and let their own
shareholders exercise their right to elect the entire board of
directors and thereby decide who should run the company and whether it
should be sold. In light of the attempts of Healthdyne's board and
management to disenfranchise them, the Healthdyne shareholders should
seriously consider whether they have any reason to place their trust
and loyalty in the current directors and management team."
"Nearly three months have passed, and unfortunately for
Healthdyne shareholders, the company has done nothing to maximize
shareholder value and no one has come forward with a better offer than
ours. Given the recent precipitous drop in Healthdyne's stock price
on news of the proposed legislation, the market price is clearly in
response to our fully financed, premium tender offer, not to the
Company's rosy suggestions about future performance. As we have
stated repeatedly, we continue to be interested in meeting with
Healthdyne in the hopes of promptly negotiating a mutually agreeable
transaction and in that context would be prepared to discuss all
aspects of our offer fully, including, if Healthdyne's management is
able to substantiate additional value to our satisfaction, our offer
price. We are frankly tired of Parker H. Petit, Healthdyne's
Chairman, criticizing us as 'bargain-hunters' when he refuses to
provide us any information which would justify a higher price."
On Tuesday, March 25, 1997, the Georgia state House of Representatives
voted overwhelmingly, by a more than 2-to-1 margin, to reject the
Director-Entrenchment Legislation. After the Senate and the House of
Representatives each voted to insist on their own actions, a joint conference
committee was appointed to try to suggest a means to remedy the inconsistency.
On Friday, March 28, 1997, Mr. Petit, despite his March 4 pledge to
Healthdyne shareholders "to minimize the volume . . . [and] the cost" of
mailings to them by "avoiding unnecessary communications," sent yet another
letter to the shareholders in which he: reiterated his belief that Invacare's
offer price was too low; repeated the information regarding the level of tenders
already provided in Invacare's March 24, 1997 press release; stated that the
Invacare Nominees could be expected to facilitate the Offer and the Merger;
claimed that Healthdyne's efforts to engineer the Director-Entrenching
Legislation were not "aimed at entrenching management"; pledged that if
Healthdyne could not demonstrate greater shareholder value than Invacare's offer
price that he would ask the Board of Directors "to take other action to enhance
shareholder value"; and promised that shareholders would be pleased with first
quarter results.
Late in the evening on March 28, the joint conference committee
rejected the Director-Entrenchment Legislation, following which the Georgia
General Assembly recessed for the remainder of 1997.
On Monday, March 31, 1997, the Parent issued the following press
release and sent the letter reprinted therein from Mr. Mixon to Mr. Petit:
<PAGE>
27
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.
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.
<PAGE>
28
Your unsuccessful attempt to hide behind the skirts of the Georgia
legislation was clever but ill-conceived, resulting in tremendous and
wasteful expense on both sides. Let's not continue to waste time and
money on legal maneuvers.
Under Georgia law, the Company must promptly hold an Annual Meeting of
its shareholders. At this time the Company appears to have failed to
take the customary steps necessary to hold its Annual Meeting in
compliance with law and its fiduciary duties. We urge you to take
such steps promptly so that we can avoid having to get the courts
further involved.
We both know that a shareholder meeting is imminent. Instead of
spending money on a proxy fight and legal maneuvering, isn't now the
time for us together to explore the combination of two excellent
companies? Perhaps there are values or synergies about which I am
unaware. As we have said repeatedly, if there are, we would consider
adjusting our price upward. In any event, to show good faith, and in
the hopes of accelerating this process, we are today increasing our
offer price to $13.50 per share, a premium of 52% over the stock price
before we made our first proposal to you. As a result of this
increase, we are extending the expiration date of our tender offer to
6:00 p.m., New York City time, Monday, April 28, 1997, unless further
extended.
Please give this letter your most serious consideration.
Sincerely,
A. Malachi Mixon, III
Chairman of the Board &
Chief Executive Officer
As previously announced, Invacare is proposing a slate of seven
director nominees and a set of corporate governance bylaw amendments
for consideration by shareholders at the annual meeting. Invacare's
nominees are committed to taking all such actions necessary or
appropriate (subject to any fiduciary duties they would have as
directors) to approve and effectuate the consummation of Invacare's
fully-financed, premium tender offer and proposed merger. The
proposed amendments are designed to facilitate the change in the board
and the consummation of Invacare's tender offer and proposed merger;
prevent manipulation by the current board of Healthdyne's by-laws and
of the size of the board to be elected at the annual meeting; allow
for special meetings to be called by shareholders owning 10% of
Healthdyne's stock; and cause the existing board to eliminate
Healthdyne's "dead-hand" pill provisions.
The tender offer had been scheduled to expire at 6:00 p.m., New York
City time, on Monday, April 7, 1997. As of 4:00 p.m. today,
approximately 2,195,978 shares had been tendered in connection with
the offer, which, together with the 600,000 shares owned by Invacare,
constitutes approximately 22% of outstanding Healthdyne common stock
based on the most recent information provided by Healthdyne.
On April 2, 1997, Mr. Petit sent a letter to Mr. Mixon stating that
the Board of Directors had rejected the increased Offer and that Cowen & Company
had advised that the Offer was "grossly inadequate" despite the price increase.
Mr. Petit further stated that Healthdyne expected to have "excellent" first
quarter earnings. In addition, Mr. Petit said that Healthdyne expected its
stock to be valued in excess of the increased Offer price, suggested that
Invacare drop the Defensive Tactics Litigation and claimed that Healthdyne was
complying with all legal requirements regarding the scheduling of the Annual
Meeting. The letter was included in an April 3, 1997 press release by
Healthdyne which reiterated much of the same information and in which Mr. Petit
claimed that the concerns raised by Invacare in its March 31 press release were
"misinformation", "false" and "manipulative". Mr. Petit also stated in the
press release that it was "clear that Invacare wants to force an early meeting"
of shareholders, but did not indicate when the 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, Invacare issued the following press release:
<PAGE>
29
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.
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.
<PAGE>
30
On April 28, 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, 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.
<PAGE>
31
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.
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, 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 in the manner described in the Offer to Purchase
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.
Despite the constant refusal of Healthdyne and its Board of Directors
to have any contacts or discussions with Invacare and the extreme and
extraordinary attempts by Healthdyne and its Board of Directors to block the
Offer and the Merger and disenfranchise their own shareholders through the
Director-Entrenchment Legislation, Invacare intends to continue to seek the
opportunity to negotiate with Healthdyne with respect to its acquisition
proposal. If such negotiations result in a definitive merger or other agreement
between Healthdyne and Invacare, such negotiations could result in termination
of this proxy solicitation. As indicated elsewhere in this Proxy Statement, if
elected, the Invacare Nominees will, subject to any fiduciary duties they would
have as directors of Healthdyne, seek to cause Healthdyne to take all steps
necessary to permit the Offer and the Merger to proceed, including without
limitation (i) redeeming the Rights or otherwise making the Rights inapplicable
to, or causing the dilutive provisions thereof not to be triggered by, the Offer
or the Merger, (ii) adopting a resolution approving the Offer and the Merger for
purposes of the Georgia Business Combination Statute and the Georgia Fair Price
Statute and, (iii) in the case of the Merger, taking action to execute an
agreement and plan of merger. However, all Invacare
<PAGE>
32
Nominees recognize the fiduciary responsibilities they would have as directors
of Healthdyne if elected and therefore they would give all consideration
required by such fiduciary duties to any BONA FIDE acquisition proposals
submitted to Healthdyne at a price higher than the Offer and the Merger.
If Invacare and I.H.H. should withdraw or materially amend the terms
of the Offer and/or the Merger prior to the Annual Meeting, Invacare will
disseminate such information regarding such changes to Healthdyne shareholders
and in appropriate circumstances will provide shareholders with a reasonable
opportunity to revoke their proxies prior to the Annual Meeting.
DEFENSIVE TACTICS LITIGATION
On January 27, 1997, Invacare and I.H.H. commenced the Defensive
Tactics Litigation in the United States District Court for the Northern District
of Georgia, which names Healthdyne and certain of its directors as defendants
and seeks declaratory and injunctive relief in connection with the Offer and the
Merger. The Defensive Tactics Litigation asks the Court either to invalidate or
cause Healthdyne and its Board of Directors to remove several defensive
mechanisms embodied in the GBCC and the By-Laws which, absent the relief sought,
could effectively prevent I.H.H. from consummating the Offer and the Merger. In
particular, the Defensive Tactics Litigation seeks relief including: (i)
invalidating and requiring the removal of the "dead-hand pill" restrictions (see
"Terms and Conditions of the Offer -- The Rights Condition", below) on the
grounds that they violate the director defendants' fiduciary duties and violate
Georgia law, or, if not, that the Georgia law violates the United States
Constitution; (ii) requiring the director defendants to fulfill their fiduciary
duties by redeeming the Rights or amending the Rights Agreement to make them
inapplicable to the Offer and the Merger; (iii) compelling the director
defendants to fulfill their fiduciary duties by approving the Offer and the
Merger for the purposes of the Georgia Business Combination Statute and the
Georgia Fair Price Statute; (iv) declaring that the application of the Georgia
Fair Price Statute to the Offer and the Merger would violate the Georgia and
United States Constitutions; (v) declaring that the Georgia laws referred to
above, as implemented and applied together to the Offer and the Merger, would
violate the United States Constitution; (vi) declaring that the Offer and Merger
comply with all applicable laws, obligations and agreements; and (vii)
preventing Healthdyne, the director defendants and Healthdyne's other agents
from taking any steps to interfere with the Offer and the Merger, including the
commencement of judicial proceedings.
On February 27, 1997, Healthdyne filed its Answer to the Complaint in
the Defensive Tactics Litigation. In its Answer, Healthdyne denied the material
allegations of the Complaint and made a number of substantive averments,
including that: (i) its Board of Directors fully considered I.H.H.'s proposed
acquisition before rejecting it on January 24, 1997; (ii) the Original Offer
price of $13 per share was grossly inadequate; and (iii) the Healthdyne Board of
Directors may in the future adopt other defensive measures. 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.
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33
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 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. The parties have agreed to a schedule for the Dead-Hand
Motion as well as the Motion for Summary Judgment on the Dead-Hand
Elimination Proposal Counterclaim which contemplates a hearing before the
Court on Monday, June 16, 1997.
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-Head
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-Head 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-Head Elimination Proposal at the Annual Meeting.
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, and have requested that such motion also be heard by the
Court on June 16, 1997.
DIRECTOR-ENTRENCHMENT LEGISLATION
Late in the afternoon of March 20, 1997, the same day on which
Healthdyne received the Invacare Nomination and Proposal Notice notifying
Healthdyne of Invacare's intent to nominate the Invacare Nominees and make the
Proposals at the Annual Meeting, Georgia state Senator Steve Thompson (whose
district includes Healthdyne's headquarters location, on behalf of Healthdyne,
introduced legislation in the Georgia state Senate which would have stripped the
shareholders of Healthdyne and many other publicly-held Georgia corporations of
critical shareholder rights, including the rights to elect a full board at each
annual meeting and to remove directors at any time.
Specifically, the Director-Entrenchment Legislation would have amended
the GBCC to provide, among other things, that (i) every publicly-held
corporation incorporated in the State of Georgia, including Healthdyne, would be
required to have a "staggered" board of directors scheme in which only
approximately one-third of the directors would stand for election each year to
serve for a three-year term, (ii) the rights of shareholders to remove directors
of such corporations for any or no reason would instead be severely limited to
removals only
<PAGE>
34
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 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
<PAGE>
35
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 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,
<PAGE>
36
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.
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
<PAGE>
37
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 or amending the Rights Agreement to make the
Rights inapplicable to the Offer and the Merger. A more detailed description of
the claims made by Invacare and I.H.H. in the Defensive Tactics Litigation is
contained under "Background of Acquisition Proposal -- Defensive Tactics
Litigation", above.
Invacare and I.H.H. intend to request, among other things, that the
Court adjudicate the issues relating to the "dead-hand pill" restrictions of the
Rights Agreement sufficiently prior to the Annual Meeting to permit Healthdyne's
shareholders to make an informed decision regarding election of directors at the
Annual Meeting. Invacare has nominated the seven Invacare Nominees and is
soliciting your proxy with respect thereto on the assumption that the "dead-hand
pill" restrictions will be invalidated or removed (whether by judicial action,
adoption and valid implementation of the Dead-Hand Elimination Proposal or
otherwise) in order to permit the Invacare Nominees, if elected, to take all
necessary actions to satisfy the Rights Condition.
If elected, the Invacare Nominees will, subject to any fiduciary
duties they would have as directors of Healthdyne, take action to redeem the
Rights or take such other action to invalidate the Rights or render the dilutive
provisions thereof inapplicable to the Offer and the Merger.
(3) THE GEORGIA BUSINESS COMBINATION STATUTE CONDITION. Under
the Georgia Business Combination Statute Condition, I.H.H. must be
satisfied, in its sole discretion, that the restrictions on business
combinations contained in Sections 14-2-1131 through 14-2-1133 of the
GBCC (collectively, the "Georgia Business Combination Statute") would
not apply to I.H.H. or Invacare in connection with the Offer or the
Merger (as a result of action by Healthdyne's Board of Directors, the
ownership by I.H.H. upon consummation of the Offer of at least 90% of
the outstanding voting stock of Healthdyne (other than Shares held by
directors, officers and certain employee stock plans of Healthdyne) or
otherwise).
In general, the Georgia Business Combination Statute prohibits
any person who is defined to be an "Interested Shareholder", including
a beneficial owner of 10% or more of the voting power of the
outstanding voting shares of a corporation, from engaging in certain
business combinations (including business combinations such as the
Merger) with such corporation for a period of five years following the
date on which such person became an Interested Shareholder, unless
(i) either the transaction by which such person became an Interested
Shareholder or the business combination is approved by the board of
directors of the corporation prior to the date on which such person
became an Interested Shareholder, (ii) upon consummation of the
transaction which resulted in such person becoming an Interested
Shareholder, such person owned at least 90% of the voting stock
outstanding at the time the transaction commenced, excluding shares
owned by (a) persons who are officers or directors of the corporation
and their affiliates or associates, (b) subsidiaries of the
corporation and (c) any employee stock plan under which employee
participants do not have the right to determine confidentially the
extent to which shares held subject to the plan will be tendered in a
tender or exchange offer (all such non-excluded voting stock,
"Eligible Voting Stock"), or (iii) subsequent to the date on which
such person became an Interested Shareholder, the Interested
Shareholder becomes the owner of 90% of the outstanding voting stock
of the corporation and the business combination is approved by the
board of directors of the corporation and authorized by the
affirmative vote, at an annual meeting or a special meeting of the
shareholders of at least a majority of the outstanding voting stock
not beneficially owned by the Interested Shareholder or any of its
affiliates or associates or by persons who are directors or officers
of the Interested Shareholder. The requirements of the Georgia
Business Combination
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38
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
following the consummation of the Offer unless Invacare and its affiliates
acquire 90% of the outstanding Shares and the Merger is approved by the
Board of Directors of Healthdyne and by a majority of the outstanding
Shares not owned by Invacare or its affiliates.
If elected, the Invacare Nominees will, subject to any fiduciary
duties they would have as directors of Healthdyne, take action to approve the
Offer and the Merger in order to satisfy the Georgia Business Combination
Statute Condition.
(4) THE GEORGIA FAIR PRICE STATUTE CONDITION. Under the Georgia
Fair Price Statute Condition, I.H.H. must be satisfied, in its sole
discretion, that the restrictions on business combinations contained
in Sections 14-2-1110 through 14-2-1113 of the GBCC (collectively, the
"Georgia Fair Price Statute") would not apply to I.H.H. or Invacare in
connection with the Offer or the Merger or are invalid (in either
case, as a result of action by Healthdyne's Board of Directors,
judicial action or otherwise) or that the Merger may be consummated
without any approval required under the Georgia Fair Price Statute at
a price per Share not in excess of the price per Share to be paid in
the Offer and the Merger.
The requirements of the Georgia Fair Price Statute do not apply
unless the corporation adopts a by-law expressly electing to be
governed thereby. According to publicly available information and
Healthdyne's Answer in the Defensive Tactics Litigation, Healthdyne's
By-Laws did not include such a provision until January 23, 1997, when
Healthdyne's Board of Directors, after Invacare had made public its
interest in an acquisition of Healthdyne, amended the By-Laws to
include such a provision. Accordingly, the requirements of the
Georgia Fair Price Statute now purport to apply to Healthdyne.
In general, except as provided below, the Georgia Fair Price
Statute requires that certain business combinations (including
business combinations such as the Merger) between a Georgia
corporation and an Interested Shareholder, including a beneficial
owner of 10% or more of the voting power of the outstanding voting
shares of the corporation, be either (i) unanimously approved by the
continuing directors, provided that the continuing directors
constitute at least three members of the board of directors at the
time of such approval, or (ii) recommended by at least two-thirds of
the continuing directors and approved by a majority of the votes
entitled to be cast by holders of voting shares, other than voting
shares beneficially owned by the Interested Shareholder. As used with
respect to the Georgia Fair Price Statute, a "continuing director"
means any member of the corporation's board of directors who is not an
affiliate or associate of the Interested Shareholder or any of its
affiliates (other than the corporation or any of its subsidiaries) and
who was a director of the corporation prior to the date on which the
Interested Shareholder first became such, and any successor to such
continuing director who is not an affiliate or an associate of the
Interested Shareholder or any of its affiliates (other than the
corporation or its subsidiaries) and is recommended or elected by a
majority of all the continuing directors.
However, the board and shareholder approval requirements of the
Georgia Fair Price Statute do not apply to a business combination in
which the only outstanding securities of the corporation are common
shares of the same class for which cash consideration only will be
paid if each of the following conditions (the "Merger Price
Provisions") is met:
(i) the aggregate amount of cash to be received per share
by shareholders is at least equal to the highest of:
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39
(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
(b) the "fair market value" (defined as the highest
closing sale price during the 30-day period including
and immediately preceding the date in question) per
share as determined (x) on the Announcement Date or (y)
the date on which an Interested Shareholder first
became such, whichever fair market value is higher;
(ii) after the Interested Shareholder has become such and
prior to the consummation of such business combination, unless
approved by a majority of the continuing directors, (x) there has
been no effective change in the dividend policy of the
corporation which adversely affects the shareholders and (y)
there has been no increase in the Interested Shareholder's
percentage ownership of common shares by more than 1% in any
twelve-month period; and
(iii) after the Interested Shareholder has become such, the
Interested Shareholder has not received any direct or indirect
benefit from the corporation not received by all other
shareholders proportionately.
The Georgia Fair Price Statute is designed to protect shareholders
against the inequities of certain takeover tactics, such as so-called
"two-tiered" transactions in which lesser consideration is paid in the
second-step merger than in the first-step tender offer, which result in minority
shareholders who do not participate in the initial tender offer receiving a
lower price or less desirable form of consideration than the tendering
shareholders. Because holders of Shares are to receive the same cash
consideration per Share in the Merger as that paid by I.H.H. pursuant to the
Offer (the "Offer Price"), Invacare and I.H.H. believe that the Offer and the
Merger are in accord with the purpose and intent of the Georgia Fair Price
Statute. Moreover, the Offer Price is higher than both (i) the highest per share
price paid by Invacare and I.H.H. for any Shares acquired by them and (ii) the
fair market value of the Shares as of the relevant Announcement Date, January
10, 1997, the date on which Invacare first publicly announced its proposed
acquisition of Healthdyne in a merger transaction. Therefore, if the highest
closing stock price for the Shares during the 30-day period including and
immediately preceding the date of consummation of the Offer (the "Pre-Takedown
Period") is not in excess of the Offer Price and the other procedural
requirements of the Merger Price Provisions are met, the terms of the Merger
Price Provisions would not require a higher price to be paid in the Merger than
in the Offer, and the Georgia Fair Price Statute Condition would be satisfied
without the need for any action or approval of the Board of the Directors or the
shareholders of Healthdyne. However, Invacare and I.H.H. are unable to predict
whether the closing stock price for the Shares on any day in the Pre-Takedown
Period will be in excess of the Offer Price, whether as a result of anomalous or
manipulative trading activity or otherwise, and thus in order to facilitate the
Offer and the Merger are seeking action of the Healthdyne Board of Directors to
satisfy the Georgia Fair Price Statute Condition.
If elected, the Invacare Nominees will, subject to any fiduciary
duties they would have as directors of Healthdyne, take action to approve the
Offer and the Merger in order to satisfy the Georgia Fair Price Statute
Condition.
------------------------
The Offer is also subject to the other terms and conditions which are
described in the Offer to Purchase and the related Letter of Transmittal, copies
of which are available from MacKenzie Partners (the Information Agent in the
Offer) at the addresses and telephone numbers set forth on the back cover of
this Proxy Statement. If you have not already received them, Invacare urges you
to obtain a copy of the Offer to Purchase,
<PAGE>
40
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.
Invacare has requested the Healthdyne Board (i) to satisfy the Rights
Condition by redeeming the Rights or otherwise making the Rights inapplicable
to, or causing the dilutive provisions thereof not to be triggered by, the Offer
or the Merger and (ii) to satisfy the Georgia Business Combination Statute
Condition and the Georgia Fair Price Statute Condition by adopting a resolution
approving the Offer and the Merger for purposes of the Georgia Business
Combination Statute and the Georgia Fair Price Statute. To date, the Healthdyne
Board has refused to take any such action.
ACCORDINGLY, ALL INVACARE NOMINEES ARE COMMITTED TO TAKING ALL SUCH
ACTIONS NECESSARY OR APPROPRIATE (SUBJECT TO ANY FIDUCIARY DUTIES THEY WOULD
HAVE AS DIRECTORS), INCLUDING THE ACTIONS SPECIFIED ABOVE, TO APPROVE AND
EFFECTUATE THE CONSUMMATION OF THE OFFER AND THE MERGER.
SOLICITATION OF PROXIES
Proxies may be solicited by mail, advertisement, telephone or
telecopier and in person. Solicitations may be made by directors, officers,
investor relations personnel and other employees of Invacare, none of whom will
receive additional compensation for such solicitations. Invacare will request
banks, brokerage houses and other custodians, nominees and fiduciaries to
forward all of its solicitation materials to the beneficial owners of the Shares
they hold of record. Invacare will reimburse these record holders for customary
clerical and mailing expenses incurred by them in forwarding these materials to
their customers.
Invacare has retained MacKenzie Partners for solicitation and advisory
services in connection with the solicitation, for which MacKenzie Partners is to
receive a fee of not more than $__________, together with reimbursement for its
reasonable out-of-pocket expenses. Invacare has also agreed to indemnify
MacKenzie Partners against certain liabilities and expenses, including
liabilities and expenses under the federal securities laws. MacKenzie Partners
will solicit proxies for the Annual Meeting from individuals, brokers, banks,
bank nominees and other institutional holders. It is anticipated that MacKenzie
will employ approximately ___ persons to solicit shareholders for the Annual
Meeting. MacKenzie Partners is also acting as Information Agent in connection
with the Offer, for which MacKenzie Partners will be paid customary compensation
in addition to reimbursement of reasonable out-of-pocket expenses.
Salomon Brothers Inc ("Salomon Brothers") is acting as dealer manager
in connection with the Offer and serving as financial advisor to Invacare and
I.H.H. in connection with the proposed acquisition of Healthdyne. To date,
Invacare has paid Salomon Brothers a fee of $350,000. Upon the acquisition by
Invacare, I.H.H. or another subsidiary of Invacare of Healthdyne, or all or a
significant portion of the assets of Healthdyne or more than 10% of the equity
securities of Healthdyne, Invacare has agreed to pay Salomon Brothers an
additional fee of $1,650,000, 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
<PAGE>
41
and expenses) in an amount not to exceed $15,000, and has also agreed to
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 is
being borne by Invacare. Invacare will not seek reimbursement for such expenses
from Healthdyne. Costs incidental to these solicitations of proxies include
expenditures for printing, postage, legal, accounting, public relations,
soliciting, advertising and related expenses and are expected to be
approximately $____ million in addition to the fees of Salomon Brothers
described above. Total costs incurred to date in furtherance of or in
connection with these solicitations of proxies are approximately $__________.
OTHER INFORMATION
I.H.H., a Delaware corporation and a wholly owned subsidiary of
Invacare, was organized in connection with the proposed acquisition of
Healthdyne and has not carried on any unrelated activities to date other than
those incident to its formation.
Invacare is the leading home medical equipment manufacturer in the
world based upon its distribution channels, the breadth of its product line and
sales. Invacare designs, manufactures and distributes an extensive line of
medical equipment for the home health care and extended care markets. Invacare
continuously revises and expands its product lines to meet changing market
demands. Its products are sold principally to over 10,000 home health care and
medical equipment provider locations throughout the world. Products are sold
through its world-wide distribution network by its sale force, telemarketing
employees and various organizations of independent manufacturer's
representatives. Invacare also uses its extensive distribution network to
distribute medical equipment and related supplies manufactured by others.
Certain information about the directors and executive officers of
Invacare and certain employees and other representatives of Invacare and I.H.H.
who may also assist MacKenzie Partners in soliciting proxies is set forth in the
attached Schedule I. Schedule II sets forth certain information relating to
Shares owned by Invacare, such individuals and the Invacare Nominees and certain
other information regarding such persons.
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.
-------------------
<PAGE>
42
PLEASE INDICATE YOUR SUPPORT OF THE INVACARE NOMINEES AND THE
PROPOSALS BY COMPLETING, SIGNING AND DATING THE ENCLOSED [GOLD] ANNUAL MEETING
PROXY CARD AND RETURNING IT PROMPTLY TO INVACARE, C/O MACKENZIE PARTNERS, INC.,
156 FIFTH AVENUE, NEW YORK, NEW YORK 10010, IN THE ENCLOSED ENVELOPE, OR BY FAX
TO (212) 929-0308. NO POSTAGE IS NECESSARY IF THE ENVELOPE IS MAILED IN THE
UNITED STATES.
INVACARE CORPORATION
_________, 1997
<PAGE>
43
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.
PRESENT OFFICE OR
NAME AND PRINCIPAL OTHER PRINCIPAL
BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT
- - ----------------- ------------------------
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
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.
NAME AND PRINCIPAL PRESENT OFFICE OR
BUSINESS ADDRESS OTHER PRINCIPAL
- - ---------------- OCCUPATION OR EMPLOYMENT
------------------------
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
<PAGE>
SCHEDULE II
SHARES HELD BY INVACARE, ITS DIRECTORS AND
EXECUTIVE OFFICERS, CERTAIN EMPLOYEES AND OTHER
REPRESENTATIVES OF INVACARE AND THE INVACARE NOMINEES
AND CERTAIN OTHER INFORMATION REGARDING SUCH PERSONS
Invacare beneficially owns an aggregate of 600,000 Shares, of which
100 are held of record in its own name, 100 are held of record in the name of
I.H.H. (which shares were contributed by the Parent on January 2, 1997 in
exchange for 100 shares of common stock, par value $.01 per share, of I.H.H.),
and the remainder are held of record in the name of Cede & Co. Such Shares were
purchased by Invacare for cash in open market transactions as follows:
DATE NUMBER OF SHARES PRICE PER SHARE
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
Gerald B. Blouch, Thomas R. Miklich and Joseph B. Richey, II have agreed to
serve as the proxies on the [GOLD] Annual Meeting proxy card.
Except as disclosed in this Schedule, none of Invacare, any of its
directors or executive officers, I.H.H., any of its directors or executive
officers, the employees or other representatives of Invacare named in Schedule I
or the Invacare Nominees owns any securities of Healthdyne or any subsidiary of
Healthdyne, beneficially or of record, has purchased or sold any of such
securities within the past two years or is or was within the past year a party
to any contract, arrangement or understanding with any person with respect to
any such securities. Except as disclosed in this Schedule, to the best
knowledge of Invacare, its directors and executive officers, the employees and
other representatives of Invacare named in Schedule I and the Invacare Nominees,
none of their associates beneficially owns, directly or indirectly, any
securities of Healthdyne.
Salomon Brothers engages in a full range of investment banking, securities
trading, market-making and brokerage services for institutional and individual
clients. In the ordinary course of its business, Salomon Brothers maintains
customary arrangements and effects transactions in the securities of Healthdyne
for the accounts of its customers. As a result of its engagement by Invacare,
Salomon Brothers restricted its proprietary trading in
<PAGE>
2
the securities of Healthdyne (although it may still execute trades for customers
on an unsolicited agency basis). As of ____________, 1997, Salomon did not
beneficially own any Shares, and owned of record _______ Shares for customer
accounts. Salomon Brothers neither bought or sold any securities of the Company
for its own account over the last two years.
Other than as disclosed in this Schedule and in the Proxy Statement, to the
knowledge of Invacare, none of Invacare, any of its directors or executive
officers, I.H.H., any of its directors or executive officers, the employees or
other representatives of Invacare named in Schedule I or the Invacare Nominees
has any substantial interest, direct or indirect, by security holdings or
otherwise, in any matter to be acted upon at the Annual Meeting. None of the
Invacare Nominees owns any Shares. As a group, the Invacare Nominees own in the
aggregate less than 1/2% of the total number of shares of Invacare common stock
outstanding as of ________, 1997. 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 Invacare Nominees
is, or has been within the past year, a party to any contract, arrangement or
understanding with any person with respect to any class of securities of
Healthdyne, including but not limited to joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies.
Other than as set forth in this Schedule and except for the Offer, to the
knowledge of Invacare, none of Invacare, any of its directors or executive
officers, I.H.H., any of its directors or executive officers, the employees or
other representatives of Invacare named in Schedule I or the Invacare Nominees
or any of their associates have had or will have a direct or indirect material
interest in any transaction or series of similar transactions since the
beginning of Invacare's last fiscal year or any currently proposed transactions,
or series of similar transactions, to which Healthdyne or any of its
subsidiaries was or is to be a party in which the amount involved exceeds
$60,000.
Upon the filing by Invacare with the Commission of a definitive proxy
statement with respect to the election of the Invacare Nominees to the Board of
Directors of Healthdyne, Invacare has agreed to pay each Invacare Nominee a fee
in the amount of $10,000. Invacare has also agreed to indemnify each of the
Invacare Nominees against any expenses (including legal fees) and liabilities
arising out of participation in the proxy solicitation.
According to Healthdyne's public filings with the Commission, if elected as
directors of Healthdyne, each Invacare Nominee would receive from Healthdyne a
director's fee of $3,000 per quarter, plus $1,000 for each Board meeting and
$750 for each committee meeting attended, and would be reimbursed for any travel
expense incurred. Invacare also believes that, if elected, the Invacare
Nominees would be indemnified by Healthdyne to the extent indemnification is
provided in Healthdyne's Articles of Incorporation and By-Laws. Invacare
disclaims any responsibility for the accuracy of the foregoing information,
which has been extracted from Healthdyne's public filings.
Other than as set forth in this Schedule and in the Proxy Statement, to the
knowledge of Invacare, none of Invacare, any of its directors or executive
officers, I.H.H., any of its directors or executive officers, the employees or
other representatives of Invacare named in Schedule I or the Invacare Nominees,
or any of their associates, have any arrangements or understandings with any
person or persons with respect to any future employment by Healthdyne or its
affiliates or with respect to any future transactions to which Healthdyne or any
of its affiliates will or may be a party.
To the knowledge of Invacare: no occupation or employment was carried on by
any of the Invacare Nominees with Healthdyne or any corporation or organization
which is or was a subsidiary or other affiliate of Healthdyne during the past
five years and none of the Invacare Nominees have ever served on the Healthdyne
Board; there are no material proceedings in which any of the Invacare Nominees
or any of their associates is a party adverse to Healthdyne or any of its
subsidiaries, or proceedings in which such nominees or associates have a
material interest adverse to Healthdyne or any of its subsidiaries; each of the
Invacare Nominees is a citizen of the United States; and within the past ten
years, none of Invacare, any of its directors or executive officers, I.H.H., any
of its directors or
<PAGE>
3
executive officers, the employees or other representatives of Invacare named in
Schedule I or the Invacare Nominees has been convicted in a criminal proceeding
(excluding traffic violations and similar misdemeanors).
<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
- - ---------------------------
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.
<PAGE>
2
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.
<PAGE>
3
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.
<PAGE>
4
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.
<PAGE>
IMPORTANT
Your proxy is important. No matter how many Shares you own, please give
Invacare your proxy FOR the election of the Invacare Nominees by:
SIGNING the enclosed [GOLD] Annual Meeting proxy card,
DATING the enclosed [GOLD] Annual Meeting proxy card and
MAILING the enclosed [GOLD] Annual Meeting proxy card TODAY in the envelope
provided (no postage is required if mailed in the United States) OR FAXING BOTH
SIDES of the enclosed [GOLD] Annual Meeting proxy card TODAY to the number
provided below.
If you have already submitted a proxy to Healthdyne for the Annual Meeting, you
may change your vote to a vote FOR the election of the Invacare Nominees and
vote FOR the Proposals by signing, dating and returning the enclosed [GOLD]
proxy card for the Annual Meeting, which must be dated after any proxy you may
have submitted to Healthdyne. Only your latest dated proxy for the Annual
Meeting will count at such meeting.
If you have any questions or require any additional information concerning this
Proxy Statement or the proposal by Invacare to acquire Healthdyne, please
contact MacKenzie Partners, Inc. at the address set forth below. IF ANY OF YOUR
SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK, BANK NOMINEE OR OTHER
INSTITUTION, ONLY IT CAN VOTE SUCH SHARES AND ONLY UPON RECEIPT OF YOUR SPECIFIC
INSTRUCTIONS. ACCORDINGLY, YOU SHOULD CONTACT THE PERSON RESPONSIBLE FOR YOUR
ACCOUNT AND INSTRUCT THAT PERSON TO EXECUTE THE [GOLD] ANNUAL MEETING PROXY CARD
AS SOON AS POSSIBLE.
MACKENZIE PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NY 10010
(212) 929-5500 (CALL COLLECT)
OR
CALL TOLL FREE (800) 322-2885
FACSIMILE (212) 929-0308
<PAGE>
PRELIMINARY COPIES HEALTHDYNE TECHNOLOGIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY INVACARE CORPORATION
The undersigned shareholder of Healthdyne Technologies, Inc. hereby
appoints Gerald B. Blouch, Thomas R. Miklich and Joseph B. Richey, II and each
of them with full power of substitution, for and in the name of the undersigned,
to represent and to vote, as designated below, all shares of Common Stock, par
value $0.01 per share, of Healthdyne Technologies, Inc. that the undersigned is
entitled to vote if personally present at the 1997 Annual Meeting of
Shareholders of Healthdyne Technologies, Inc., to be held at [ ], at [
a.m.] [ ] time, on 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 RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, 4 AND 5.
(Please mark each proposal with an "X" in the appropriate box)
1. ELECTION OF DIRECTORS:
Election of Nicholas J. DiCicco, Jr., Donald F. Hastings, Jack Kahl, Jr.,
Ernest Peter Mansour, Jon H. Outcalt, James Allen Rutherford and Bill R.
Sanford as Directors whose terms expire in 1998.
/ / FOR ALL NOMINEES EXCEPT AS MARKED / / WITHHOLD AUTHORITY FOR
BELOW 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
3. AMEND HEALTHDYNE TECHNOLOGIES, INC.'S BY-LAWS TO PROVIDE THAT 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
5. AMEND HEALTHDYNE TECHNOLOGIES, INC.'S BY-LAWS TO GIVE THE HOLDERS OF 10% OF
THE OUTSTANDING SHARES OF HEALTHDYNE TECHNOLOGIES, INC.'S COMMON STOCK THE
RIGHT TO DEMAND A SPECIAL MEETING AND TO PROVIDE CERTAIN PROCEDURAL
REQUIREMENTS FOR SPECIAL MEETINGS:
/ / FOR / / AGAINST / / ABSTAIN
2
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<PAGE>
(CONTINUED FROM OTHER SIDE)
6. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS, IF ANY, AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF, IF SUCH OTHER BUSINESS ADVERSELY AFFECTS INVACARE
CORPORATION.
This Proxy, when properly executed, will be voted in the manner marked
herein by the undersigned shareholder. IF NO MARKING IS MADE, THIS PROXY WILL
BE DEEMED TO BE A DIRECTION TO VOTE FOR PROPOSALS 1, 2, 3, 4 AND 5.
Please date and sign this
proxy exactly as your
name appears hereon.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Signature)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Signature, if held jointly)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Title)
Dated:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
TO VOTE IN ACCORDANCE WITH INVACARE CORPORATION'S RECOMMENDATION, JUST SIGN AND
DATE THIS PROXY; NO BOXES NEED TO BE CHECKED. 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.
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IMPORTANT: PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE OR FAX BOTH SIDES OF THIS PROXY TO
MACKENZIE PARTNERS, INC. AT (212) 929-0308
IF YOU NEED ASSISTANCE WITH THIS PROXY CARD, PLEASE CALL
MACKENZIE PARTNERS, INC. TOLL-FREE (800)322-2885 - (212)929-5500 (CALL COLLECT)
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