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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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HEALTHDYNE TECHNOLOGIES, INC.
(Name of Subject Company)
HEALTHDYNE TECHNOLOGIES, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
422206102
(CUSIP Number of Class of Securities)
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LESLIE R. JONES, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
HEALTHDYNE TECHNOLOGIES, INC.
1255 KENNESTONE CIRCLE
MARIETTA, GEORGIA 30066
(770) 499-1212
(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person filing statement)
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COPY TO:
BLAINE V. FOGG, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Healthdyne Technologies, Inc., a Georgia
corporation ("Healthdyne"). The address of the principal executive offices of
Healthdyne is 1255 Kennestone Circle, Marietta, Georgia 30066. The title of the
class of equity securities to which this Statement relates is Healthdyne's
common stock, par value $0.01 per share (the "Healthdyne Common Stock").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to a proposed tender offer which I.H.H. Corporation,
a Delaware corporation ("IHH") and a wholly owned subsidiary of Invacare
Corporation, an Ohio corporation ("Invacare"), and Invacare have publicly
disclosed in a Tender Offer Statement on Schedule 14D-1, dated January 27, 1997
(the "Schedule 14D-1"), to purchase shares of Healthdyne Common Stock upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
January 27, 1997 (the "Offer to Purchase") and the Letter of Transmittal (the
"Letter of Transmittal" and together with the Offer to Purchase, the "Invacare
Offer"). Neither Invacare nor any of its affiliates are affiliated with
Healthdyne and the Invacare Offer was not solicited by Healthdyne. The Schedule
14D-1 states that the principal executive offices of Invacare are located at 899
Cleveland Street, Elyria, Ohio 44035.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of Healthdyne, which is the person filing
this Statement, are set forth in Item 1 above.
(b) Each material contract, agreement, arrangement and understanding and
actual or potential conflict of interest between Healthdyne or its affiliates
and (i) its executive officers, directors or affiliates and (ii) Invacare, its
executive officers, directors or affiliates, is set forth below.
Noncompetition Agreements.
Certain Noncompetition Agreements between Healthdyne and Craig B. Reynolds,
President and Chief Executive Officer, Jeffrey A. North, Vice President and
Corporate Controller, and Robert E. Tucker, Senior Vice President -- Operations
provide severance benefits (including severance payments equal to three times
his average annual compensation from Healthdyne for the five years ending prior
to his termination) upon termination of employment following a Change in Control
as defined therein. These agreements are described on pages 10 and 11 of
Healthdyne's Proxy Statement dated April 23, 1996 for the 1996 Annual Meeting of
Shareholders of Healthdyne (the "Proxy Statement"). Pertinent portions of such
pages are filed as Exhibit 1 hereto and are incorporated herein by reference.
Healthdyne has also entered into Noncompetition Agreements with M. Wayne
Boylston, Vice President -- Finance, Chief Financial Officer and Treasurer,
Leslie R. Jones, Vice President, General Counsel and Secretary, and John L.
Miclot, Senior Vice President -- Sales and Marketing (in Mr. Miclot's case, as
amended on January 23, 1997), upon the identical terms and conditions as those
Noncompetition Agreements set forth above.
The foregoing summary is qualified in its entirety by the Noncompetition
Agreements, a copy of the form of which is filed as Exhibit 2 and is
incorporated herein by reference.
Stock Option Plans.
Employee Stock Option Plans. Employees of Healthdyne hold options to
purchase shares of Healthdyne's Common Stock pursuant to the Stock Option Plan
(the "Option Plan"), the 1996 Stock Option Plan (the "1996 Plan") and the Stock
Option Plan II (the "Option Plan II") (collectively the "Plans"). In May 1995
the Stock Option Committee distributed to the holders of outstanding options
granted under the Option Plan a notice of acceleration of the exercise date of
outstanding options conditional upon a "Change of Control Event" defined as (i)
any "person" (as such term is used in Sections 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), becoming a "beneficial
owner" (as defined in
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Rule 13d-3 promulgated pursuant to the Exchange Act), directly or indirectly, of
securities representing 50% or more of the combined voting power of Healthdyne's
then outstanding securities, or (ii) as a result of, or in combination with, any
cash tender offer or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the foregoing
transactions (a "Transaction"), the persons who are directors of Healthdyne
before the Transaction ceasing to constitute a majority of the Board of
Directors of Healthdyne or any successor to Healthdyne. On January 30, 1997, the
Board of Directors of Healthdyne amended the Option Plan to provide that the
Stock Option Committee give at least ten days notice of the potential Change of
Control Event and the Option will become fully vested on the date of such
notice.
The 1996 Plan also provides for the acceleration of the exercise date of
outstanding options granted under the 1996 Plan. In addition to the definition
set forth above, a Change of Control Event is also defined as approval by
Healthdyne's shareholders of the sale, transfer or other disposition of all or
substantially all of the assets of Healthdyne. Additionally, the option
agreement provides that the Stock Option Committee give at least ten days notice
of the potential Change in Control Event and the options will become fully
vested upon the date of such notice. All options granted under the Option Plan
II are fully vested and therefore will not be accelerated upon a Change of
Control Event.
As of January 1, 1997, employees (or former employees), including executive
officers, held options under the Plans to purchase an aggregate of 1,244,282
shares of Healthdyne Common Stock at a weighted average exercise price of
$9.1874 per share (based on exercise prices ranging from $6.0406 to $11.875 per
share). Not included in the foregoing are options granted under the Option Plan
II to purchase 683,263 shares of Healthdyne Common Stock which are held by
officers, directors and employees (or former employees) of Healthdyne's former
parent corporation.
The foregoing summary is qualified in its entirety by the Plans and their
respective forms of agreement, copies of which are filed as Exhibits 3 through 8
and are incorporated herein by reference.
Non-Employee Director Stock Option Plan. The non-employee directors of
Healthdyne hold options to purchase Healthdyne Common Stock pursuant to
Healthdyne's Non-Employee Director Stock Option Plan (the "Director Plan").
Pursuant to the Director Plan, if an optionee's service as a member of the Board
of Directors is terminated or discontinued as a result of any extraordinary
proceeding which results in a change in control of Healthdyne, his option will
become immediately exercisable in full for 30 days prior to such proceeding.
As of January 1, 1997, non-employee directors held options under the
Director Plan to purchase an aggregate of 39,842 shares of Healthdyne Common
Stock at a weighted average exercise price of $8.0509 per share (based on
exercise prices ranging from $7.125 to $11.875 per share).
The foregoing summary is qualified in its entirety by the Director Plan and
form of agreement, copies of which are filed as Exhibits 9 and 10 and are
incorporated herein by reference.
Retirement Benefits.
Healthdyne's executive officers and certain other employees participate in
a Retirement Benefit Award Program. In the event of a "Change in Control" of
Healthdyne, all benefits accrued to date under these Retirement Benefit Awards
immediately vest and each executive officer may require Healthdyne to place in
trust for the executive officer's benefit an amount of money equal to the
present value of the vested benefits under the retirement program.
The foregoing summary is qualified in its entirety by the form of
Retirement Benefit Award Agreement and an amendment thereto, copies of which are
filed as Exhibits 11 and 12 and are incorporated herein by reference.
Split-Dollar Life Insurance.
Healthdyne has entered into Split-Dollar Life Insurance Agreements
("Insurance Agreements") with the executive officers and certain other
employees. If an employee dies prior to termination of employment
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with Healthdyne and prior to his or her Security Release Date (as defined in the
Insurance Agreements), the employee's designated beneficiary will be entitled to
receive as a death benefit an amount equal to two and one-half times the
employee's annual base salary at the time of death. To the extent that the death
benefit under the Policy exceeds such amount, the balance of the death benefit
shall be payable to Healthdyne. Healthdyne retains a security interest in the
Policy until the employee's Security Release Date or until the employee
terminates his or her employment on account of a "Qualifying Termination." A
Qualifying Termination occurs if (i) an employee's employment with the employer
is terminated without cause or (ii) an employee terminates his or her employment
with the employer for "good reason" within one year of a "Change of Control."
After the employee is terminated as a result of a Qualifying Termination,
however, the employee is entitled to exercise all of his or her ownership in the
Policy without any limitation. Pursuant to the Retirement Benefits Awards, as
amended, the value of the Policy is then offset against Healthdyne's obligations
under the Retirement Benefit Award under certain circumstances.
The definition of Change of Control under the Insurance Agreements is
substantially the same as is set forth under Stock Option Plans above except
that Change of Control under the Insurance Agreements also includes changes in
the effective control of Healthdyne which occur on the date that either (i) any
one person, or more than one person acting as a group, acquires ownership of
stock of Healthdyne possessing 20% or more of the total voting power of the
stock of Healthdyne or (ii) a majority of members of Healthdyne's Board of
Directors is replaced during any 12-month period by directors whose appointment
or election is not endorsed by a majority of the members of Healthdyne's Board
of Directors who were directors prior to the date of the appointment or election
of the first of such new directors.
The foregoing summary is qualified in its entirety by the Insurance
Agreements, a copy of the form of which is filed as Exhibit 13 and is
incorporated herein by reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(A) AND (B). AS MORE FULLY DESCRIBED BELOW, THE HEALTHDYNE BOARD OF
DIRECTORS HAS RECOMMENDED THAT HEALTHDYNE SHAREHOLDERS REJECT THE INVACARE OFFER
AND NOT TENDER THEIR SHARES OF HEALTHDYNE COMMON STOCK PURSUANT TO THE INVACARE
OFFER.
Background.
Over the past three years, Invacare has approached Healthdyne on several
occasions to discuss possible business combination transactions, and on each
occasion after due consideration of the Invacare overture, Healthdyne determined
not to pursue a transaction with Invacare.
In February 1996, following receipt by Healthdyne from certain companies,
including Invacare, of indications of interest in pursuing a business
combination, the Board of Directors reviewed with management Healthdyne's
strategic business plan and consulted with legal counsel concerning the Board of
Directors' fiduciary duties. The Board of Directors concluded that it was not in
the best interest of Healthdyne or its shareholders to pursue a sale of
Healthdyne at that time and the Board of Directors did not want to pursue that
option. Management was directed to respond to further exploratory written
requests by communicating that the Board of Directors had concluded that it was
not in Healthdyne's best interest to pursue a sale of Healthdyne at this time
and was instructed to keep the Board of Directors informed of any such requests.
Management was further directed that any specific proposal for the acquisition
of Healthdyne should be brought to the Board of Directors' attention
immediately.
On July 25, 1996, Thomas R. Miklich, Chief Financial Officer and General
Counsel of Invacare, contacted Robert Johnson, as Senior Vice President of
Healthdyne, to express Invacare's interest in acquiring Healthdyne. Mr. Johnson
responded that the Board had determined that it was not in the best interests of
the shareholders to pursue a sale of Healthdyne at this time. Subsequently, A.
Malachi Mixon, III, Chairman and Chief Executive Officer of Invacare, called
Craig B. Reynolds, President and Chief Executive Officer of Healthdyne, to
inquire again about a potential combination. After further consideration among
Healthdyne
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directors and members of management, Parker H. Petit, Chairman of the Board of
Directors of Healthdyne, reiterated to Mr. Mixon that Healthdyne's directors did
not wish to pursue a sale of Healthdyne at that time.
On January 2, 1997, Mr. Mixon sent a letter to Mr. Reynolds, indicating
Invacare's persistent interest in a combination and proposing to acquire
Healthdyne in a negotiated merger transaction in which shareholders of
Healthdyne would receive $12.50 in cash for each share of Healthdyne Common
Stock (the "Invacare Initial Proposal"). The text of the January 2, 1997 letter
is attached to this Schedule 14D-9 as Exhibit 14. Mr. Reynolds sent a copy of
the letter to each member of the Board of Directors and, after consultation with
certain directors, on January 8, 1997, Mr. Reynolds sent a letter to Mr. Mixon
(such letter is attached to this Schedule 14D-9 as Exhibit 15), stating that the
Healthdyne Board of Directors planned to consider the Invacare Initial Proposal
at its next regularly scheduled Board of Directors meeting. Two days later, on
January 10, 1997, Invacare issued a press release disclosing the Invacare
Initial Proposal to acquire all Healthdyne shares. Such press release is
attached to this Schedule 14D-9 as Exhibit 16.
Following Invacare's January 10 press release, Healthdyne issued a press
release on the same day in which it stated that its Board of Directors would
consider Invacare's proposal in due course, adding "[w]e are surprised that
Invacare has now elected to make and publicly announce an offer before our board
has had an opportunity to adequately consider their initial proposal. . ." A
copy of this press release is attached to this Schedule 14D-9 as Exhibit 17.
On January 15, 1997, the Healthdyne Board of Directors met to discuss the
Invacare Initial Proposal and appointed Cowen & Company ("Cowen"), as financial
advisor and Skadden, Arps, Slate, Meagher & Flom LLP as legal advisor to the
Board of Directors. Healthdyne issued a press release on January 16, 1997
announcing these appointments, a copy of which is attached to this Schedule
14D-9 as Exhibit 18.
On January 23, 1997, the Healthdyne Board of Directors met again to review
Healthdyne's financial performance and the Invacare Initial Proposal. The Board
of Directors was advised by management and by Cowen as to Healthdyne's strategic
plans for new products, business expansion and potential earnings growth. Cowen
reviewed the current strategic and financial environment in which Healthdyne
operates and summarized enterprise values and valuation trends related to
comparable companies in the respiratory products industry. Cowen reviewed
analyst estimates regarding Healthdyne's potential earnings per share and future
prospects. Cowen reviewed Healthdyne's financial projections, including
Healthdyne's 1997 and 1998 business plan, as well as the potential financial
impact of management's estimates regarding Healthdyne's market penetration,
product mix and the profitability of its various business lines. Cowen reviewed
the potential valuation implications of various earnings per share projections
relative to a range of industry price/earnings multiples. Cowen also compared
the multiples implied by the Invacare Initial Proposal relative to other
transactions in the respiratory products industry. In addition, Cowen reviewed a
discounted cash flow analysis of Healthdyne based on management's projections of
future financial performance. In summary, Cowen concluded that the Invacare
Initial Proposal was grossly inadequate from a financial point of view. The
Board of Directors was also advised by its legal counsel as to its fiduciary
duties and, among other things, the merits of electing to be governed by
Georgia's Fair Price Statute. Based on this discussion and advice, the Board of
Directors determined that the sale of Healthdyne was not in the best interests
of its shareholders at such time.
Accordingly, on Friday, January 24, 1997, Healthdyne issued a press
release, attached to this Schedule 14D-9 as Exhibit 19, rejecting the Invacare
Initial Proposal. Such press release explained that the Board of Directors 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 strategic
initiatives which Mr. Reynolds stated had not been "fully appreciated by the
investment community." Later that day, Healthdyne filed with the Securities and
Exchange Commission a Current Report on Form 8-K which stated that on January
23, 1997, Healthdyne's Board of Directors had amended its 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.
On the following Monday, January 27, 1997, Invacare and IHH commenced an
unsolicited tender offer, delivered to Healthdyne letters making certain
requests for shareholder information, commenced litigation
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against Healthdyne and certain of its directors (see Item 8) and issued the
press release attached to this Schedule 14D-9 as Exhibit 20. Such press release
stated that Invacare's wholly owned subsidiary IHH had commenced an all-cash
tender offer for all outstanding shares of Healthdyne Common Stock at $13 per
share, to be followed by a second-step merger. Such offer represented an 8.8%
discount from the closing price of the Healthdyne Common Stock on January 30,
1997.
On January 28, 1997, Healthdyne issued a press release, a copy of which is
attached to this Schedule 14D-9 as Exhibit 21, urging its shareholders to
"postpone their decision whether to accept or reject the Invacare Offer until
the Board of Directors has had an opportunity to make a recommendation on the
offer," which recommendation would be made no later than February 10, 1997.
Noting that the Invacare Offer does not expire until February 24, 1997, Mr.
Reynolds stated that "[s]hareholders should have time to receive the Board of
Directors' recommendation and act in an informed manner."
On January 30, 1997, Healthdyne's Board of Directors convened a meeting at
which the Board of Directors, assisted by its financial and legal advisors,
reviewed the Invacare Offer and its terms and conditions. The Board of Directors
reviewed again Healthdyne's business strategy and strategic plan, and considered
the potential for benefits both with and without a merger with Invacare. On
January 30, 1997, Cowen updated its analysis to reflect the Invacare Offer and,
using an analytical framework similar to that presented to the Board of
Directors on January 23, 1997, Cowen reviewed the Invacare Offer. In addition,
Cowen reviewed the reaction of the financial markets to the Invacare Offer and
potential implications for Healthdyne and its shareholders. In summary, Cowen
concluded that the Invacare Offer was grossly inadequate from a financial point
of view. After lengthy discussions and presentations from Healthdyne's legal and
financial advisors, the Board of Directors determined that the best means for
providing value to its shareholders was for Healthdyne to continue to pursue its
strategic plan and not to be put up for sale at this time. The Board of
Directors unanimously concluded that, given projected earnings and the new
products planned for introduction in the near future, the Invacare Offer was
grossly inadequate and not in the best interests of Healthdyne and its
shareholders. In particular, the Board of Directors determined that Healthdyne's
current strategic plan offered the potential for greater benefits for
Healthdyne's shareholders than the Invacare Offer, based on, among other things,
greater opportunities for business expansion, revenue and earnings growth, and
the introduction of new products and product lines into the health care market.
A copy of a letter to shareholders communicating the Board of Director's
recommendation and a form of press release announcing such recommendation are
filed as Exhibits 22 and 23 hereto, respectively, and are incorporated herein by
reference.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
HEALTHDYNE'S SHAREHOLDERS REJECT THE INVACARE OFFER AND NOT TENDER THEIR SHARES
OF HEALTHDYNE COMMON STOCK PURSUANT TO THE INVACARE OFFER.
Factors Considered.
In reaching the conclusions stated above, the Board of Directors took into
account a variety of factors, including but not limited to:
(1) The Board of Directors' familiarity with the financial condition,
business opportunities and current strategies of Healthdyne, the nature of
the markets in which Healthdyne competes and the Board of Directors'
confidence in management and firm belief that the Invacare Offer does not
reflect the fair value of Healthdyne. Specifically, the Board of Directors
determined that the Invacare Offer failed to reflect:
(a) Healthdyne's leading and innovative position in the respiratory
products industry.
(b) The number of significant new products planned for introduction
by Healthdyne into the medical device market.
(c) The expected revenue and earnings growth based on such new
products and Healthdyne's competitive position in such markets.
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(2) Healthdyne's prospects for future growth and expansion, based on
its strategic plans, the strategic alliances and other initiatives which
have recently been implemented and investments that have been made in an
effort to expand Healthdyne's product lines and devices offered to the
market, and the development of new products as well as enhancements to
existing products currently offered by Healthdyne.
(3) The opinion of Cowen to the effect that the price offered pursuant
to the Invacare Offer is grossly inadequate from a financial point of view
to the shareholders of Healthdyne (other than Invacare). A copy of the
written opinion of Cowen which sets forth the assumptions made and matters
considered is attached to this Schedule 14D-9 as Exhibit 24.
(4) The disruptive effect of the Invacare Offer on Healthdyne's
employees, suppliers and customers.
(5) The fact that Healthdyne Common Stock has traded as high as $14.75
per share as recently as June 1996 and closed at $14.25 per share on
January 30, 1997.
(6) The fact that, in the event that Healthdyne decides to pursue a
sale at some future date, the opportunity to enter into a "pooling"
transaction would become available only after May 1997.
(7) The Board of Directors' commitment to protecting the best
interests of the Healthdyne shareholders.
In light of the numerous factors evaluated in connection with its
consideration of the Invacare Offer, the Healthdyne Board of Directors
determined that the Invacare Offer was not in the best interests of its
shareholders.
The foregoing discussion of the information and factors considered by the
Healthdyne Board of Directors is not intended to be exhaustive but includes all
material factors considered by the Healthdyne Board of Directors. In reaching
its determination to recommend rejection of the Invacare Offer, the Healthdyne
Board of Directors did not assign any relative or specific weights to the
foregoing factors, and individual directors may have given differing weights to
different factors. Throughout its deliberations, the Healthdyne Board of
Directors received the advice of legal and financial advisors retained to
provide advice and counsel to the Board of Directors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
On January 15, 1997, Healthdyne retained Cowen as financial advisor, to
assist Healthdyne in its review of the Invacare Offer. As compensation for its
services, Cowen is entitled to compensation as follows: a retainer fee
aggregating $350,000 (payable $50,000 upon the date of Cowen's engagement,
$50,000 on April 1, 1997 and $250,000 on December 31, 1997); and a fee of one
percent of the consideration paid or payable in connection with certain
transactions involving a change in control of Healthdyne. The retainer fee will
be credited against any such transaction fee. Healthdyne has also agreed to
reimburse Cowen, from time to time upon request, for its reasonable
out-of-pocket expenses incurred by Cowen in connection with its activities as
Healthdyne's financial advisor.
In addition, on January 15, 1997, Healthdyne retained D.F. King & Co., Inc.
to act as proxy solicitor in connection with the Invacare Offer for customary
fees.
Except as set forth above, neither Healthdyne nor any person acting on its
behalf has employed, retained or compensated any other person to make any
solicitations or recommendations to shareholders on its behalf concerning the
Invacare Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best knowledge of Healthdyne, no transactions in Healthdyne
Common Stock have been effected during the past 60 days by Healthdyne or any
executive officer, director, affiliate or subsidiary of Healthdyne except as
follows: in December 1996, effective January 1, 1997, the Stock Option Committee
of
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the Board of Directors granted to executive officers and employees of Healthdyne
under the 1996 Stock Option Plan options to purchase 250,250 shares of
Healthdyne Common Stock at an exercise price of $8.9375 per share.
(b) To the best knowledge of Healthdyne, its executive officers, directors,
affiliates and subsidiaries do not presently intend to tender, pursuant to the
Invacare Offer, any shares of Healthdyne Common Stock which are held of record
or are beneficially owned by such persons or to otherwise sell any such shares.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) To the best knowledge of Healthdyne, there are currently no
negotiations being undertaken in response to the Invacare Offer that relate to
or would result in: (1) an extraordinary transaction such as a merger or
reorganization, involving Healthdyne or any subsidiary thereof; (2) a purchase,
sale or transfer of a material amount of assets by Healthdyne or any subsidiary
thereof; (3) a tender offer for or other acquisition of securities by or of
Healthdyne; or (4) any material change in the present capitalization or dividend
policy of Healthdyne.
Although Healthdyne is not currently for sale and is not pursuing
discussions with third parties, in the event that Healthdyne decides to engage
in a sale or other transaction in the future, any disclosure with respect to the
parties to, and the possible terms of, any transaction or proposal might
jeopardize any discussions or negotiations that the Board of Directors might
conduct. Accordingly, the Board of Directors has instructed management not to
disclose the possible terms of any such transactions or proposals, or the
parties thereto, unless and until an agreement in principle relating thereto has
been reached or, upon the advice of counsel, as may otherwise be required by
law.
(b) To the best knowledge of Healthdyne, there are currently no
transactions, board resolutions, agreements in principle or signed contracts in
response to the Invacare Offer, other than as described in Item 3(b) of this
Schedule 14D-9, which relates to or would result in one or more of the matters
referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Certain Litigation.
On January 27, 1997 Invacare and IHH (the "Plaintiffs") filed a complaint
(the "Complaint") in the United States District Court for the Northern District
of Georgia, Atlanta Division. Named as defendants in the Complaint are
Healthdyne and Craig B. Reynolds, J. Terry Dewberry, Alexander H. Lorch, J.
Leland Strange, James J. Wellman and J. Paul Yokubinas, each of whom serves on
the Healthdyne Board of Directors. In the Complaint, Plaintiffs allege that the
Continuing Director Provision (as hereinafter defined) of the Healthdyne
Shareholders Rights Plan violates the Georgia Business Corporation Code (the
"GBCC") and the Supremacy and Commerce Clauses of the United States
Constitution; the Healthdyne Board of Directors breached their fiduciary duties
in refusing to redeem or amend the Healthdyne Shareholders Rights Plan and in
using the Rights Plan, the Georgia Fair Price Statute, and the Georgia Business
Combination Statute to impede the Invacare Offer; the Georgia Fair Price Statute
violates the Supremacy, Due Process and Commerce Clauses of the United States
Constitution and the Due Process Clause of the Georgia Constitution; the
aggregate effect of the Georgia Fair Price Statute, the Georgia Business
Combination Statute and Section 624 of the GBCC ("Section 624") violates the
Supremacy and Commerce Clauses of the United States Constitution; and the
Healthdyne Board of Directors breached its fiduciary duties in attempting to
impede the Invacare Offer.
In the Complaint, Plaintiffs also state that Invacare intends, if
necessary, to nominate a new slate of directors for election at Healthdyne's
next annual meeting. The Complaint seeks (1) a declaration that the Continuing
Director Provision of the Healthdyne Shareholders Rights Plan is either per se
invalid and unenforceable or invalid and unenforceable as applied; (2) an
injunction compelling the Healthdyne Board of Directors to redeem the Rights
associated with the Shareholders Rights Plan; (3) an injunction compelling the
Healthdyne Board of Directors to approve the Invacare Offer and proposed merger
for the purposes of the
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Georgia Fair Price Statute and Georgia Business Combination Statute; (4) a
declaration that the Georgia Fair Price Statute, the Georgia Business
Combination Statute and Section 624 applied together and the Georgia Fair Price
Statute as applied alone are unconstitutional; (5) an injunction against the
Healthdyne Board of Directors taking any steps to impede the Invacare Offer; (6)
a declaration that the Invacare Offer and proposed merger comply with all
applicable laws; and (7) an award of Plaintiffs' costs, disbursements and
attorneys fees.
Georgia Fair Price and Business Combination Statutes.
Under Georgia law, Georgia corporations may adopt a provision in their
bylaws requiring that "Business Combinations" be approved by a special vote of
the board of directors and/or the shareholders unless certain fair pricing
criteria are met. Georgia corporations may also adopt a provision in their
articles of incorporation or bylaws which requires that "Business Combinations"
with "Interested Shareholders" be approved by a super majority vote. These
provisions, both of which have been adopted by Healthdyne, are described below.
The Georgia Fair Price Statute (O.C.G.A. Sections 14-2-1110 through
14-2-1113) authorizes a corporation to adopt a bylaw provision which requires
special approval by the board of directors and/or shareholders for "Business
Combinations" unless certain "fair price" criteria are met. Generally, for
purposes of this statute, "Business Combination" is defined to include mergers,
sales of assets out of the ordinary course of business, liquidations, and
certain issuances of securities involving the corporation and any "Interested
Shareholder." For purposes of this statute, an "Interested Shareholder" is
defined as a person or entity that is the beneficial owner of 10% or more of the
outstanding shares of the corporation's voting stock, or a person or entity that
is an affiliate of the corporation and, at any time within the two-year period
immediately prior to the date in question, was the beneficial owner of 10% or
more of the then outstanding shares of the corporation's voting stock. A
Business Combination with an Interested Shareholder must meet one of three
criteria: (i) the transaction must be unanimously approved by the "Continuing
Directors" (directors who served as directors immediately prior to the date the
Interested Shareholder first became an Interested Shareholder and who are not
affiliates or associates of the Interested Shareholder), provided that the
Continuing Directors constitute at least three members of the board of directors
at the time of such approval: (ii) the transaction must be 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, excluding shares held by
the Interested Shareholder; or (iii) the terms of the transaction must meet fair
pricing criteria and certain other tests intended to assure that all
shareholders receive a fair price and equivalent consideration for their shares
regardless of when they sell to the acquiring party. The Board of Directors of
Healthdyne amended the Bylaws of Healthdyne to elect to be governed by the
Georgia Fair Price Statute on January 23, 1997.
The Georgia Business Combination Statute (O.C.G.A. Sections 14-2-1131
through 14-2-1133) authorizes a corporation to adopt a bylaw provision which
prohibits "Business Combinations" with "Interested Shareholders" occurring
within five years of the date a person first becomes an Interested Shareholder,
unless special approval of the transaction is obtained. For purposes of this
statute, "Business Combination" is defined to include mergers, sales of 10% or
more of the corporation's net assets, and certain issuances of securities
involving the corporation and any "Interested Shareholder." "Interested
Shareholder" has the same definition as under the Georgia Fair Price Statute.
Any Business Combination with an Interested Shareholder within five years of the
date such person first became an Interested Shareholder requires approval in one
of three ways: (i) prior to becoming an Interested Shareholder, the
corporation's board of directors must have approved the Business Combination or
the transaction which resulted in the shareholder becoming an Interested
Shareholder; (ii) the Interested Shareholder acquires at least 90% of the
outstanding voting stock of the corporation (other than shares owned by
officers, directors and their affiliates and associates) in the same transaction
in which such person becomes an Interested Shareholder; or (iii) subsequent to
becoming an Interested Shareholder, such person acquires additional shares
resulting in ownership of at least 90% of the outstanding shares (other than
shares owned by officers, directors and their affiliates and associates), and
obtains the approval of the Business Combination by the holders of a majority of
the remaining shares. The Board of Directors of Healthdyne amended the Bylaws of
Healthdyne to elect to be governed by the Georgia Business Combination Statute
on April 20, 1995, which amendment became effective as of May 22, 1995.
8
<PAGE> 10
Shareholder Rights Plan.
On April 20, 1995, the Board of Directors of Healthdyne declared a dividend
distribution of one Right for each outstanding share of the Healthdyne Common
Stock to shareholders of record at the close of business on May 22, 1995. Each
Right entitles the registered holder to purchase from Healthdyne a unit
consisting of one one-hundredth of a share (a "Unit") of Series B Cumulative
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), at a
purchase price of $50 per Unit, subject to adjustment. The purchase price shall
be paid in cash. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between Healthdyne and SunTrust Bank,
Atlanta, as Rights Agent.
Initially, the Rights attached to all Healthdyne Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates were
distributed. The Rights will separate from the Healthdyne Common Stock and a
"Distribution Date" will occur upon the earlier of (i) 10 days 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 of Healthdyne
Common Stock (the "Stock Acquisition Date"), or (ii) at such time as
Healthdyne's Board of Directors may designate following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 20% or more of such outstanding shares of Healthdyne Common
Stock. Until the Distribution Date, (i) the Rights are evidenced by the
Healthdyne Common Stock certificates and can be transferred with and only with
such Healthdyne Common Stock certificates, (ii) new Healthdyne Common Stock
certificates issued after May 22, 1995 contain a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any
certificates for Healthdyne Common Stock outstanding will also constitute the
transfer of the Rights associated with the Healthdyne Common Stock represented
by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on May 22, 2005, unless earlier redeemed by Healthdyne
as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Healthdyne Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Healthdyne Common Stock issued prior to
the Distribution Date will be issued with Rights.
In the event that, at any time following the Distribution Date, (i)
Healthdyne is the surviving corporation in a merger with an Acquiring Person or
an associate or affiliate of an Acquiring Person and the Healthdyne Common Stock
is not changed or exchanged, or (ii) a person or group of affiliated or
associated persons becomes the beneficial owner of 20% or more of the then
outstanding shares of Healthdyne Common Stock (except pursuant to a tender offer
or exchange offer for all outstanding shares of Healthdyne Common Stock approved
by a majority of the Continuing Directors (as hereinafter defined)), or (iii)
during such time as there is an Acquiring Person, an event occurs which results
in such Acquiring Person's ownership interest being increased by more than 1%
(e.g., a reverse stock split), or (iv) in the event of certain transactions
between an Acquiring Person or an Affiliate of an Acquiring Person and
Healthdyne, each holder of a Right will thereafter have the right to receive,
upon exercise, Healthdyne Common Stock (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 term "Continuing Director" means any member
of Healthdyne's Board of Directors who was a member of the Board of Directors
prior to May 22, 1995, the date of the Rights Agreement, or who has been
subsequently elected to the Board of Directors if such director was recommended
or approved by a majority of the Continuing Directors, but does not include an
Acquiring Person or any representative thereof. Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth in this
paragraph, 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. Moreover, the Rights shall not be exercisable, and shall be null and
void so long as held, by a holder (a "Nonqualified Holder") in any jurisdiction
where the requisite qualification for the issuance to such holder, or the
exercise by such holder, of the Rights in such jurisdiction shall not have been
obtained or be obtainable. However, Rights are not exercisable following the
occurrence of
9
<PAGE> 11
any of the events set forth above until such time as the Rights are no longer
redeemable by Healthdyne as set forth below.
For example, at an exercise price of $50 per Right, each Right not owned by
an Acquiring Person (or by certain related parties) or a Nonqualified Holder
following an event set forth in the preceding paragraph would entitle its holder
to purchase $100 worth of Healthdyne Common Stock (or other consideration, as
noted above) for $50. Assuming that the Healthdyne Common Stock has a per share
value of $14 at such a time, the holder of each valid Right would be entitled to
purchase 7.14 shares of Healthdyne Common Stock for $50. Fractional shares will
not be issued. In lieu of fractional shares of Healthdyne Common Stock,
Healthdyne may pay to the registered holder of Rights Certificates at the time
such Rights are exercised an amount in cash equal to the same fraction of the
current market value of one share of the Healthdyne Common Stock.
In the event that, at any time following the Stock Acquisition Date, (i)
Healthdyne is acquired in a merger or other business combination transaction in
which Healthdyne is not the surviving corporation (other than a merger described
in the second preceding paragraph), (ii) Healthdyne is the surviving corporation
in a merger or consolidation with another person and all or part of the
Healthdyne Common Stock is changed or exchanged, or (iii) 50% or more of
Healthdyne's assets or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided as set forth above) 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 events set forth in this paragraph and in the second preceding
paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number of Units of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible securities at less than
the current market price of the Preferred Stock, or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular semiannual cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exception, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
At any time until ten days following the Stock Acquisition Date (as such
period may be extended by Healthdyne pursuant to the Rights Agreement),
Healthdyne may redeem the Rights in whole, but not in part, at a price of $.01
per Right provided that in certain circumstances such redemption will require
the concurrence of a majority of the Continuing Directors (the "Continuing
Director Provision"). The Continuing Director Provision requires 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 10-day period
following the Stock Acquisition Date has expired, this right of redemption may
be reinstated if an Acquiring Person reduces his beneficial ownership to 10% or
less of the outstanding shares of Healthdyne Common Stock in a transaction or
series of transactions not involving Healthdyne and there are no other Acquiring
Persons. After the above 10-day period expires and prior to 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. Immediately upon the action of the
Board of Directors ordering redemption of the Rights, the Rights will terminate
and the only right of the holders of Rights will be to receive the $.01
redemption price.
10
<PAGE> 12
Until a Right is exercised, the holder thereof, as such, has no rights as a
shareholder of Healthdyne, including, without limitation, the right to vote or
to receive dividends. While the distribution of the Rights is not taxable to
shareholders or to Healthdyne, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Healthdyne Common Stock (or other consideration) or for common
stock of the acquiring company as set forth above.
The Rights Agreement may be amended in certain instances so long as there
are Continuing Directors and a majority of such Continuing Directors votes in
favor of the proposed amendment. Other than those provisions relating to the
principal economic terms of the Rights, any of the provisions of the Rights
Agreement may be amended prior to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may be amended in order to cure any
ambiguity, to correct or supplement any provision contained in the Rights
Agreement which is defective or inconsistent with another provision therein, to
make changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement; provided, however, that no amendment to
adjust the time period governing redemption shall be made at such time as the
Rights are not redeemable and no amendment shall be made to lengthen any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of the common
equity of Healthdyne, including the holders of the Rights. On January 30, 1997,
the Healthdyne Board of Directors amended the Rights Agreement to allow the
Board of Directors, in its discretion, to designate when the Rights will be
evidenced by separate rights certificates after a tender or exchange offer is
first published or sent.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Rights Agent
and a copy of the amendment to the Rights Agreement, dated January 30, 1997, is
attached hereto as Exhibit 25. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
Severance Plans.
On January 23, 1997, the Board of Directors of Healthdyne amended its
Corporate Severance Plan and adopted a Special Severance Pay Plan for the sales
organization in order to reassure the employee organization given the concerns
raised by recent hostile takeover activity.
Corporate Severance Plan. Prior to the amendment, plan benefits were
capped at eight years of service. The amendment removes the cap and provides an
additional week of severance per year of service in excess of eight years of
service. The amendment also deletes certain classifications of people eligible
to receive benefits under the plan, namely persons receiving benefits under
Noncompetition Agreements providing for payments following a change in control,
employees receiving benefits under the Special Severance Pay Plan described
below and non-U.S. based employees. The plan was also made non-amendable and
non-terminable by Healthdyne following a Change in Control of Healthdyne.
Special Severance Pay Plan. The Special Severance Pay Plan for the sales
organization provides special severance pay benefits equal to nine months base
salary to persons terminated within 15 months following a Change in Control. In
exchange, sales employees must sign a one-year noncompetition agreement which
would terminate in the event of a Change in Control. If there is no Change in
Control within two years, the Special Severance Pay Plan would terminate;
however, the employees in the sales organization would still be subject to their
noncompetition agreements.
11
<PAGE> 13
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <C> <S>
1 -- Excerpts from Healthdyne's Proxy Statement dated April 23,
1996 for its 1996 Annual Meeting of Shareholders (the "1996
Proxy Statement").
2 -- Form of Noncompetition Agreements.
3 -- Stock Option Plan (filed as Exhibit 10.8 to Healthdyne's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 (the "1995 Form 10-K") and incorporated
herein by reference) and Amendment thereto dated January 30,
1997.
4 -- Form of Stock Option Plan Agreement.
5 -- 1996 Stock Option Plan (filed as Exhibit A to the 1996 Proxy
Statement and incorporated herein by reference).
6 -- Form of 1996 Stock Option Plan Agreement.
7 -- Stock Option Plan II (filed as an Exhibit to Healthdyne's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 and incorporated herein by reference).
8 -- Forms of Stock Option Plan II Agreement.
9 -- Non-Employee Director Stock Option Plan (filed as Exhibit
10.9 to the 1995 Form 10-K and incorporated herein by
reference).
10 -- Form of Non-Employee Director Stock Option Plan Agreement.
11 -- Forms of Retirement Benefit Award Agreements.
12 -- Amendment to the form of Retirement Benefit Award Agreement.
13 -- Form of Split-Dollar Life Insurance Agreement.
14 -- Letter dated January 2, 1997 from A. Malachi Mixon, III,
Chairman and Chief Executive Officer of Invacare, to Craig
B. Reynolds, President and Chief Executive Officer of
Healthdyne.
15 -- Letter dated January 8, 1997 from Mr. Reynolds to Mr. Mixon.
16 -- Press release issued by Invacare on January 10, 1997.
17 -- Press release issued by Healthdyne on January 10, 1997.
18 -- Press release issued by Healthdyne on January 16, 1997.
19 -- Press release issued by Healthdyne on January 24, 1997.
20 -- Press release issued by Invacare on January 27, 1997.
21 -- Press release issued by Healthdyne on January 28, 1997.
*22 -- Letter to Shareholders regarding Board of Directors'
recommendation.
23 -- Press release issued by Healthdyne on January 31, 1997.
*24 -- Opinion dated January 30, 1997 of Cowen & Company.
25 -- Amendment dated January 30, 1997 to the Healthdyne Rights
Agreement dated May 22, 1993 between Healthdyne and SunTrust
Bank, Atlanta (formerly Trust Company Bank) as rights agent.
</TABLE>
- ---------------
* Included in copy mailed to shareholders
12
<PAGE> 14
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
HEALTHDYNE TECHNOLOGIES, INC.
By: /s/ M. WAYNE BOYLSTON
------------------------------------
Name: M. Wayne Boylston
Title: Vice President -- Finance,
Chief Financial Officer and
Treasurer
Dated: January 31, 1997
13
<PAGE> 1
EXHIBIT 1
AGREEMENTS RELATING TO EMPLOYMENT FOR EXECUTIVE MANAGEMENT
The Company has entered into separate Noncompetition Agreements with Messrs.
Reynolds, Tucker and North. The terms and conditions of these Noncompetition
Agreements are identical for each of Messrs. Reynolds, Tucker and North and
provide that in the event the individual's employment is terminated
or the individual terminates employment for good reason (e.g., loss or
reduction of title, responsibility, pay or benefits) within three years
following a change in control as defined in the Noncompetition Agreement, the
individual agrees not to compete for a period of 12 months, as an owner,
employee, consultant or agent of any entity which competes in any material
respect with the Company ("Competitor"). The noncompetition provisions do not
apply in the event (i) less than thirty percent (30%) of the Competitor's
revenue in the last fiscal year was related to Competitor's product lines which
compete with the Company ("Competing Products"), or (ii) the individual
provides services to a Competitor which are unrelated to the Competitor's
Competing Products. Pursuant to the Noncompetition Agreements, Messrs.
Reynolds, Tucker and North will receive certain benefits in the event their
respective employment with the Company is terminated or the individual
terminates his employment for good cause (as defined in the Noncompetition
Agreements) within three years following a change in control of the Company.
In such event, the individual will receive three times his average annual
compensation (as reported on the applicable Forms W-2 from the Company) for the
five years ending prior to termination, a continuation of health, life and
disability benefits for three years, and use of a Company-provided vehicle for
three years (including the cost of repair, maintenance and insurance).
<PAGE> 1
EXHIBIT 2
NON-COMPETITION AGREEMENT
This Non-competition Agreement ("Agreement") dated as of
___________________ between Healthdyne Technologies, Inc., a Georgia corporation
(the "Company"), and _______________________________ (the "Executive").
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to provide security to the Company by preventing competition from
members of the Company's executive management, including the Executive, in the
event of their termination of employment with the Company following a Change in
Control, as defined herein; and
WHEREAS, the Board of Directors has further determined that it is
appropriate to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in potentially disturbing circumstances arising from
the possibility of a Change in Control; and
WHEREAS, the benefits payable by the Company to the Executive as
provided herein are intended to ensure that the Executive receives reasonable
compensation in return for the Executive's agreement not to compete with the
Company in the event of the Executive's termination of employment with the
Company following a Change in Control;
NOW, THEREFORE, this Agreement sets forth the compensation which the
Company agrees it will pay to the Executive and the terms by which the Executive
agrees not to compete with the Company if the Executive's employment with the
Company terminates under one of the circumstances described herein following a
Change in Control.
1. Term. This Agreement shall terminate upon the earliest of (i) three
years from the date hereof if a Change in Control has not occurred within such
three-year period; (ii) the Date of Termination of the Executive based on death,
Disability (as defined in Section 3(b)), Retirement (as defined in Section 3(c))
or Cause (as defined in Section 3(d)) or by the Executive other than for Good
Reason (as defined in Section 3(e)); (iii) three years from the date of a Change
in Control (as defined in Section 2) if the Executive's employment with the
Company has not terminated as of such time; and (iv) the date the Company
satisfies its obligation, if any, to make payments and provide benefits to the
Executive pursuant to Section 4.
2. Change in Control. For purposes of this Agreement, a Change in
Control shall be deemed to have occurred if (a) there shall be consummated (i)
any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or
<PAGE> 2
pursuant to which shares of the Company's common stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of the Company's common stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (ii) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, or (b) the stockholders of the
Company approve any plan or proposal for the liquidation or dissolution of the
Company, or (c) any person (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall
become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act) of 30% of the Company's outstanding Common Stock, or (d) during any period
of two consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors of the Company shall cease for any
reason to constitute a majority thereof unless the election, or the nomination
for election by the Company's stockholders, of each new director was approved by
a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period; provided, however, that, in the
absence of a majority vote of the directors specified in subsection (d) of this
Section 2 to the contrary, the sale, lease, exchange or other disposition (in
one transaction or a series of related transactions) of less than 70% of the
total fair market value of all of the assets of the Company immediately prior to
such transaction or transactions shall not be deemed to be a Change in Control
and provided further that the transaction or transactions which involve the
sale, lease, exchange or other disposition of 70% or more of the total fair
market value of all of the assets of the Company immediately prior to such
transaction or transactions shall be deemed to be a Change in Control even if
approved by the Board of Directors of the Company.
3. Termination Following Change in Control.
(a) If a Change in Control shall have occurred while the Executive is
still an employee of the Company, the Executive shall be entitled to the
compensation and benefits provided in Section 4 upon the subsequent termination
of the Executive's employment with the Company by the Executive or by the
Company during the term of this Agreement, unless such termination is as a
result of (i) the Executive's death; (ii) the Executive's Disability; (iii) the
Executive's Retirement; (iv) the Executive's termination by the Company for
Cause; or (v) the Executive's decision to terminate employment other than for
Good Reason.
(b) Disability. The term "Disability" as used in this Agreement shall
mean termination of the Executive's employment by the Company as a result of the
Executive's incapacity due to physical or mental illness, provided that the
Executive shall have been absent from his duties with the Company on a full-time
basis for six consecutive months and such absence shall have continued unabated
for 30 days after Notice of Termination as described in Section 3(f) is
thereafter given to the Executive by the Company.
-2-
<PAGE> 3
(c) Retirement. The term "Retirement" as used in this Agreement shall
mean termination of the Executive's employment by the Company based on the
Executive's having attained age 65 or such other retirement age as shall have
been established pursuant to a written agreement between the Company and the
Executive.
(d) Cause. The term "Cause" for purposes of this Agreement shall mean
the Company's termination of the Executive's employment on the basis of criminal
or civil fraud on the part of the Executive involving a material amount of funds
of the Company. Notwithstanding the foregoing, the Executive shall not be deemed
to have been terminated for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of the
Company's Board of Directors at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the Board)
finding that in the good faith opinion of the Board the Executive was guilty of
conduct set forth in the first sentence of this Section 3(d) and specifying the
particulars thereof in detail. For purposes of this Agreement only, the
preparation and filing of fictitious, false or misleading documents in
connection with any federal, state or other healthcare program, or any other
violation of any rule or regulation in respect of any federal, state or other
regulatory program by the Company or any subsidiary of the Company shall not be
deemed to constitute "criminal fraud" or "civil fraud".
(e) Good Reason. For purposes of this Agreement, "Good Reason" shall
mean any of the following actions taken by the Company without the Executive's
express written consent:
(i) The assignment to the Executive by the Company of duties
inconsistent with, or the reduction of the powers and functions associated with,
the Executive's position, duties, responsibilities and status with the Company
immediately prior to a Change in Control, or an adverse change in the
Executive's titles or offices as in effect immediately prior to a Change in
Control, or any removal of the Executive from or any failure to re-elect the
Executive to any of such positions, except in connection with the termination of
his employment for Disability, Retirement or Cause or as a result of the
Executive's death or by the Executive other than for Good Reason;
(ii) A reduction by the Company in the Executive's
base salary as in effect on the date hereof or as the same may be increased from
time to time during the term of this Agreement or the Company's failure to
increase (within 12 months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control in an amount
-3-
<PAGE> 4
which at least equals, on a percentage basis, the average annual percentage
increase in base salary for all officers of the Company effected in the
preceding 36 months;
(iii) Any failure by the Company to continue in effect any
benefit plan, program or arrangement (including, without limitation, any profit
sharing plan, group annuity contract, group life insurance supplement, or
medical, dental, accident and disability plans) in which the Executive is
participating at the time of a Change in Control (or any other plans providing
the Executive with substantially similar benefits) (hereinafter referred to as
"Benefit Plans"), or the taking of any action by the Company which would
adversely affect the Executive's participation in or materially reduce the
Executive's benefits under any such Benefit Plan or deprive the Executive of any
fringe benefit enjoyed by the Executive at the time of a Change in Control;
(iv) Any failure by the Company to continue in effect any
incentive plan or arrangement (including, without limitations, any bonus or
contingent bonus arrangements and credits and the right to receive performance
awards and similar incentive compensation benefits) in which the Executive is
participating at the time of a Change in Control (or any other plans or
arrangements providing him with substantially similar benefits) (hereinafter
referred to as "Incentive Plans") or the taking of any action by the Company
which would adversely affect the Executive's participation in any such Incentive
Plan or reduce the Executive's benefits under any such Incentive Plan, expressed
as a percentage of his base salary, by more than five percentage points in any
fiscal year as compared to the immediately preceding fiscal year, or any action
to reduce Executive's bonuses under any Incentive Plan by more than 20% the
average annual bonus previously paid to Executive over the preceding three
fiscal years;
(v) Any failure by the Company to continue in effect any plan
or arrangement to receive securities of the Company (including, without
limitation, the Company's Stock Option Plan, Stock Option Plan II and any other
plan or arrangement to receive and exercise stock options, stock appreciation
rights, restricted stock or grants thereof) in which the Executive is
participating or has the right to participate in at the time of a Change in
Control (or plans or arrangements providing him with substantially similar
benefits) (hereinafter referred to as "Securities Plans") or the taking of any
action by the Company which would adversely affect the Executive's participation
in or materially reduce the Executive's benefits under any such Securities Plan;
(vi) A relocation of the Company's principal executive offices
to a location outside of Marietta, Georgia, or the Executive's relocation to any
place other than the location at which the Executive performed the Executive's
duties prior to a Change in Control, except for required travel by the Executive
on the Company's business to an extent
-4-
<PAGE> 5
substantially consistent with the Executive's business travel obligations at the
time of a Change in Control;
(vii) Any failure by the Company to provide the Executive with
the number of paid vacation days (or compensation therefor at termination of
employment) accrued to the Executive through the date of a Change in Control,
together with any earned but unused vacation days for the vacation year in
question;
(viii) Any material breach by the Company of any provision of
this Agreement;
(ix) Any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company effected in accordance
with the provisions of Section 6(a) hereof;
(x) Any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f), and for purposes of this Agreement, no such
purported termination shall be effective; or
(xi) Any attempt by the Company to require that the Executive
enter into a non-competition agreement with the Company where the terms of such
agreement as to its scope or duration are greater than the terms set forth in
Section 5 hereof.
(f) Notice of Termination. Any termination of the Executive's
employment by the Company for a reason specified in Section 3(b), 3(c) or 3(d)
shall be communicated to the Executive by a Notice of Termination prior to the
effective date of the termination. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate whether such
termination is for the reason set forth in Section 3(b), 3(c) or 3(d) and which
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. For purposes of this Agreement, no termination of the Executive's
employment by the Company shall constitute a termination for Disability,
Retirement or Cause unless such termination is preceded by a Notice of
Termination.
(g) Date of Termination. "Date of Termination" shall mean (a) if the
Executive's employment is terminated by the Company for Disability, 30 days
after a Notice of Termination is given to the Executive (provided that the
Executive shall not have returned to the performance of the Executive's duties
on a full-time basis during such 30-day period) or (b) if the Executive's
employment is terminated by the Company or the Executive for any other reason,
the date on which the Executive's termination is effective; provided that, if
within 30 days after any Notice of Termination is given to the Executive by the
Company the
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<PAGE> 6
Executive notifies the Company that a dispute exists concerning the termination,
the Date of Termination shall be the date the dispute is finally determined
whether by mutual agreement by the parties or upon final judgment, order or
decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected).
4. Compensation and Benefits upon Termination of Employment.
(a) If the Company shall terminate the Executive's employment after a
Change in Control other than pursuant to Section 3(b), 3(c) or 3(d) and Section
3(f), or if the Executive shall terminate his employment for Good Reason, then
the Company shall pay to the Executive, in consideration of the Executive's
adherence to the terms of Section 5 hereof, the following:
(1) On the fifth day following the Date of Termination, the
Company shall pay the Executive in cash an amount three times the Executive's
average annual compensation from the Company and Healthdyne, Inc. (as reported
on Form W-2 pursuant to applicable provisions of the Internal Revenue Code of
1986, as amended (the "Code")) for the five years ending prior to the Date of
Termination, less $1.00.
(2) For a period of three years following the Date of
Termination, the Executive and anyone entitled to claim under or through the
Executive shall be entitled to all benefits under the group hospitalization
plan, health care plan, dental care plan, life or other insurance or death
benefit plan, or other present or future similar group employee benefit plan or
program of the Company for which key executives are eligible at the date of a
Change in Control, to the same extent as if the Executive had continued to be an
employee of the Company during such period and such benefits shall, to the
extent not fully paid under any such plan or program, be paid by the Company.
(3) For a period of three years after the Date of Termination,
the Company shall allow the Executive to utilize for his business and personal
use any company-leased automobile previously furnished to him or an equivalent
type and style of automobile and shall reimburse the Executive for the
maintenance and repair costs of such automobile and extend full insurance
coverage relating to such automobile in favor of the Executive, as additional
named insured, during such three year period. In addition, the Executive shall
be entitled, at the Executive's sole discretion, to exercise any option to
acquire such automobile pursuant to the terms which may be provided in the lease
agreement for the automobile in question.
(b) The parties hereto agree that the payments provided in Section 4(a)
hereof are reasonable compensation in consideration of the Executive's adherence
to the terms of Section 5 hereof. Neither party shall contest the payment of
such benefits as constituting
-6-
<PAGE> 7
an "excess parachute payment" within the meaning of Section 280G(b)(1) of the
Code. In the event that the Executive becomes entitled to the compensation and
benefits described in Section 4(a) hereof (the "Compensation Payments") and the
Executive becomes subject to the tax imposed by Section 4999 of the Code (the
"Excise Tax") as a result of such Compensation Payments and any other benefits
or payments required to be taken into account under Code Section 280G(b)(2)
("Parachute Payments"), the Company shall pay to the Executive at the time
specified in Section 4(a) above an additional amount (the "Gross-Up Payment")
such that the net amount retained by the Executive, after deduction of any
Excise Tax on the Parachute Payments and any Federal, state and local income tax
and Excise Tax upon the payment provided for by this paragraph, shall be equal
to the Parachute Payments determined prior to the application of this paragraph.
For purposes of determining the amount of the Parachute Payments, no payments or
benefits shall be included if, in the opinion of tax counsel selected by the
Company's independent auditors and acceptable to the Executive, such payments or
benefits (in whole or in part) do not constitute Parachute Payments, or such
payments (in whole or in part) represent reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the Code. The
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors. For purposes of determining
the amount of the Gross-Up Payment, the Executive shall be deemed to pay Federal
income taxes at the highest marginal rate of Federal income taxation in the
calendar year in which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rates of taxation in the state and locality
of the Executive's residence on the Date of Termination, net of the maximum
reduction in Federal income taxes which could be obtained from deduction of such
state and local taxes. In the event that the Excise Tax payable by the Executive
is subsequently determined to be less than the amount taken into account
hereunder at the time of termination of the Executive's employment, the
Executive shall repay to the Company at the time that the amount of such
reduction in Excise Tax is finally determined the portion of the Gross-Up
Payment attributable to such reduction plus interest on the amount of such
repayment at the rate provided for in Section 1274(b)(2)(B) of the Code
("Repayment Amount"). In the event that the Excise Tax payable by the Executive
is determined to exceed the amount taken into account hereunder at the time of
the termination of the Executive's employment (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest payable with respect to such excess)
at the time that the amount of such excess is finally determined ("Additional
Gross-up"). The obligation to pay any Repayment Amount or Additional Gross-up
shall remain in effect under this Agreement for the entire period during which
the Executive remains liable for the Excise Tax, including the period during
which any applicable statute of limitation remains open.
-7-
<PAGE> 8
5. Agreement Not to Compete.
(a) In return for the Compensation Payments provided under Section 4(a)
hereof, the Executive agrees that, for a period of twelve (12) months following
the Executive's Termination Date that gives rise to such Compensation Payments,
he or she, as the case may be, will not, directly or indirectly, alone or in
conjunction with any one or more parties, within a fifty (50) mile radius of the
intersection of Georgia State Road 400 and Interstate 285 in Atlanta
(i) manufacture and distribute any one or more of the
following medical devices for use in the home:
diagnostic and therapeutic devices for the evaluation
and treatment of sleep disorders, oxygen
concentrators and medical nebulizers for the
treatment of respiratory disorders, monitors for
infants at risk for sudden infant death syndrome and
uterine contraction monitoring devices for pregnant
women at risk for preterm labor (collectively, the
"Competing Products"), or
(ii) affiliate with or have any interest in (as a
shareholder, owner (excluding ownership of less than
two percent of the stock of a corporation, the shares
of which are publicly traded), employee, officer,
director, independent contractor, agent or
consultant) any business, firm, person, partnership,
corporation or other entity that, during its then
most recently concluded fiscal year, derived more
than 30% of its gross revenues from the manufacture
and distribution of any one or more of the Competing
Products for use in the home (a "Competing Company");
provided that the applicability restriction in this
subsection (ii) shall not apply if the Executive does
not provide services directly or indirectly to the
Competing Company relating to the Competing Products.
(b) The Executive and the Company acknowledge and agree that the
covenants of the Executive in subsection (a) above (the "Protective Covenants")
are reasonable as to time, scope and territory given (i) that the Executive has
worked for the Company throughout and even beyond the territory covered by the
covenant, (ii) that the Company needs to protect the Company's substantial
investment in its client relationships, particularly given the complexity and
competitive nature of the business in which the Company is engaged, and (iii)
that the Executive has sufficient skills to find alternative, commensurate
employment or consulting work in the Executive's field of expertise that would
not entail a violation of the covenants.
(c) In the event of a breach by the Executive of a Protective Covenant,
the Company shall have the right to set-off against any sums the Company owes
the Executive
-8-
<PAGE> 9
the amount of any damages incurred or suffered by the Company as a result of the
breach. Any such set-off of any such sums against the damages incurred by the
Company as a result of any such breach by the Executive shall not be presumed to
be in full satisfaction of or as liquidated damages for or as a release of any
claim for damages against the Executive that may accrue to the Company as a
result of the breach. The parties further agree that any breach or threatened
breach of a Protective Covenant by the Executive would result in irreparable
injury to the Company, and therefore, in addition to all of the remedies
provided at law or in equity, the Executive agrees and consents that the Company
shall be entitled to seek a temporary restraining order and a permanent
injunction to prevent a breach or contemplated breach of the Protective
Covenant.
6. No Obligation to Mitigate Damages; No Effect on Other Contractual
Rights.
(a) All compensation and benefits provided to the Executive under this
Agreement are in consideration of the Executive's adhering to the terms set
forth in Section 5(a) hereof and the Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by the
Executive as the result of employment by another employer after the Date of
Termination, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreement or other contract, plan or arrangement.
7. Successor to the Company.
(a) The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor or assign to its business and/or assets as aforesaid. If at any time
during the term of this Agreement the Executive is employed by any corporation a
majority of the voting securities of which is then owned by
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<PAGE> 10
the Company, "Company" as used in Sections 3, 4, 12 and 13 hereof shall in
addition include such employer. In such event, the Company agrees that it shall
pay or shall cause such employer to pay any amounts owed to the Executive
pursuant to Section 4 hereof.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to him or her hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or the designee or,
if there be no such designee, to the Executive's estate.
8. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt required, postage prepaid, as follows:
If to Company:
Healthdyne Technologies, Inc.
1255 Kennestone Circle
Marietta, Georgia 30066
If to Executive:
-------------------------------------
-------------------------------------
-------------------------------------
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
9. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia.
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<PAGE> 11
10. Validity. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
12. Legal Fees and Expenses. The Company shall pay all legal fees,
expenses and damages which the Executive may incur as a result of the
Executive's instituting legal action to enforce his rights hereunder, or in the
event the Company contests the validity, enforceability or the Executive's
interpretation of, or determinations under, this Agreement. If the Executive is
the prevailing party or recovers any damages in such legal action, the Executive
shall be entitled to receive in addition thereto pre-judgment and post-judgment
interest on the amount of such damages.
13. Severability, Modification. All provisions of this Agreement are
severable from one another, and the unenforceability or invalidity of any
provision of this Agreement shall not affect the validity or enforceability of
the remaining provisions of this Agreement, but such remaining provisions shall
be interpreted and construed in such a manner as to carry out fully the
intention of the parties. Should any judicial body interpreting this Agreement
deem any provision of this Agreement to be unreasonably broad in time,
territory, scope or otherwise, it is the intent and desire of the parties that
such judicial body, to the greatest extent possible, reduce the breadth of such
provision to the maximum legally allowable parameters rather than deeming such
provision totally unenforceable or invalid.
14. Confidentiality. The Executive acknowledges that he or she has
previously entered into, and continues to be bound by the terms of, a
Confidentiality Agreement with the Company.
15. Agreement Not an Employment Contract. This Agreement shall not be
deemed to constitute an employment contract between the Company and the
Executive, and nothing herein shall be deemed to give the Executive the right to
continue in the employ of the Company or to eliminate the right of the Company
to discharge the Executive at any time.
- 11 -
<PAGE> 12
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HEALTHDYNE TECHNOLOGIES, INC.
By_________________________________
Craig B. Reynolds, President
and Chief Executive Officer
-----------------------------------
Executive
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<PAGE> 1
EXHIBIT 3
RESOLUTION
AMENDMENT TO HEALTHDYNE TECHNOLOGIES, INC.
STOCK OPTION PLAN ("PLAN")
WHEREAS, in 1993 the Corporation adopted the Healthdyne Technologies,
Inc. Stock Option Plan ("Plan") and subsequently amended such Plan in 1995 to
increase the shares of the Corporation's stock available thereunder; and
WHEREAS, the Corporation desires to amend the Plan to require the
Committee to give an optionee under the Plan 10 days notice of a change of
control event to the extent the exercise date of such individual's option is
accelerated upon a change of control event and to further provide that the
option shall become immediately exercisable upon the date of such notice;
NOW, THEREFORE, BE IT RESOLVED, that the Corporation hereby approves
the amendment to the Plan and the form of such amendment attached hereto as
Exhibit "A"; and
RESOLVED FURTHER, that the officers of the Corporation and the members
of the Committee be authorized and directed to take any and all actions
necessary to achieve the purpose of the foregoing resolutions; and
RESOLVED FURTHER, that any and all actions heretofore taken by the
officers of the Corporation and members of the Committee, or any of them,
consistent with the foregoing resolutions are hereby approved, authorized,
ratified and confirmed in all respects.
<PAGE> 2
HEALTHDYNE TECHNOLOGIES, INC.
AMENDMENT NO. 2
HEALTHDYNE TECHNOLOGIES, INC. STOCK OPTION PLAN
This Amendment No. 2 to the Healthdyne Technologies, Inc. Stock Option
Plan ("Plan") amends the terms and provisions of the Plan as follows:
I.
Amend Section 6.3 by adding at the end thereof the following language:
In the event the Committee determines to accelerate the
exercise date of an Option upon a change of control event (as defined by the
Committee) pursuant to this Section 6.3 or such accelerated vesting is required
by the terms of an Option agreement, the Committee shall provide the Optionee
at least 10 days notice prior to the change of control event and the Option
shall become immediately exercisable on the date of such notice.
II.
This Amendment No. 2 shall be effective on the date of its adoption by
the Board of Directors of Healthdyne Technologies, Inc.
<PAGE> 1
EXHIBIT 4
HEALTHDYNE TECHNOLOGIES, INC.
STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
OPTION FOR THE PURCHASE OF SHARES ( SHARES) SHARES OF COMMON
STOCK
EXERCISE PRICE PER SHARE: PRICE
This Agreement made and entered into as of this 30th day of June, 1995,
by and between HEALTHDYNE TECHNOLOGIES, Inc., a Georgia corporation,
hereinafter referred to as the "Company" and NAME, hereinafter referred to
as the "Participant".
W I T N E S S E T H :
WHEREAS, the HEALTHDYNE TECHNOLOGIES, Inc. Stock Option Plan,
hereinafter referred to as the "Plan", has been adopted by the Company; and
WHEREAS, Section 6.1 of the Plan authorizes the Stock Option Committee
of the Board of Directors of the Company, hereinafter referred to as the
"Committee", to cause the Company to enter into a written agreement with the
Participant setting forth the form and the amount of any award and any
conditions and restrictions on the award imposed by the Plan and the Committee;
and
WHEREAS, the Committee desires to make an award to the Participant
consisting of a Nonqualified Stock Option;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the Company and the Participant hereby agree as follows:
1. The Company hereby grants to the Participant a Nonqualified Stock
Option pursuant to the Plan to purchase the number of shares of Common Stock of
the Company, par value $.01 per share, set forth above (hereinafter referred to
as "Common Stock"), at the price per share set forth above, subject to the
terms and conditions of this Agreement. The Nonqualified Stock Option is
referred to herein as the "Option".
2. The Participant agrees that he must remain continuously employed
by the Company or any subsidiary hereof or engaged to provide services thereto
for one year from the date of this Agreement in order for the exercise of any
part of the Option to accrue. Subject to the preceding sentence and until
terminated as provided in Paragraph 4, the Option shall become exercisable on
the first anniversary date of this Agreement to the extent of 33-1/3% of the
shares of Common Stock subject to the Option. The Option shall become
exercisable on each of the next two (2) anniversary dates of this Agreement to
the extent of an additional 33-1/3% of the shares of Common Stock subject to
the Option; provided the Participant shall have been in the continuous employ
of the Company or any subsidiary thereof or engaged to provide services thereto
since the date of this Agreement. Although the Option may remain exercisable
after a termination of
<PAGE> 2
employment under the limited circumstances specifically set forth in Paragraph
4 hereof, vesting of the Option shall cease as of the applicable date of
termination or disability referred to in Paragraph 4 and the Option shall be
exercisable during such extended periods of time only to the extent that it was
exercisable on such date of termination or disability.
3. The Participant may exercise the Nonqualified Stock Option by
delivering written notice to the Committee on a form set forth in Exhibit A
hereto or as otherwise provided by the Committee indicating the number of
shares to be purchased. The Company agrees to cause certificates for any
shares of Common Stock purchased hereunder to be delivered to the Participant
upon payment in full of the Option price in cash, unrestricted shares of Common
Stock, or a combination of such Common Stock and cash. Any shares of Common
Stock applied toward the Option price shall be valued at their Fair Market
Value on the date of exercise of the Option, and shall be delivered along with
any portion of the Option price to be paid in cash within five (5) days after
the date of exercise. If the Participant fails to pay the Option price within
five (5) days, the Committee shall have the right in its sole discretion to
void the exercise of the Option.
4. The Option shall terminate on the earliest to occur of the
following dates:
(a) The date upon which the Participant is dismissed from his or her
employment or consulting engagement for good cause (as defined by the
Participant's employment agreement or applicable personnel policy, as the case
may be) or other serious misconduct (as defined in the Plan);
(b) Sixty (60) days after the date on which the Participant
terminates his employment or consulting engagement with the Company or any
subsidiary of the Company for reasons other than retirement, permanent total
disability (as determined by the Social Security Administration), or death;
(c) Twelve (12) months after the Participant's termination of
employment or consulting engagement due to his retirement from the Company or
any subsidiary thereof;
(d) Twelve (12) months after the Participant's date of death;
(e) Twelve (12) months from the date of the disabling event which
shall render the Participant totally and permanently disabled, as determined by
the Social Security Administration; and
(f) Ten (10) years from the date the Option is granted.
For purposes of this Paragraph 4, the date of termination of employment or
consulting shall mean the last date upon which such employment or consulting
services are regularly provided by the Participant, without extension for any
severance period or other compensation payable in connection with such
termination but with extension for any periods of time related to mandated
notices of termination to the extent required to be given to the Participant by
the Company or any subsidiary under any applicable employment agreement or
personnel policy.
5. In the event the Participant shall die prior to the exercise of
the Option granted pursuant to this Agreement, the administrator of the
deceased Participant's estate, the executor under his will, or the person or
persons to whom the Option shall have been validly transferred by such executor
or administrator pursuant to the will or laws of intestate succession, shall
have the
2
<PAGE> 3
right to exercise the Option to the extent exercisable on the date of the
Participant's death, subject to the terms of this Agreement.
6. Except as provided in Paragraph 5, no benefit under the Plan or
this Agreement shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, or charge, excluding the use
of Options under the Plan as collateral in exercising the Option, and any
attempt to do so shall be null and void. No such benefits shall be in any
manner liable for or subject to the debts, contracts, liabilities, engagements,
or torts of the Participant prior to the receipt thereof by the Participant.
7. No election as to benefits or the exercise of the Option may be
made during the Participant's lifetime by anyone other than the Participant, or
his legal representative in the event of the Participant's disability.
8. The Options shall not be exercisable if such exercise would
involve a violation of any applicable federal or state securities law, and the
Company hereby agrees to make reasonable efforts to comply with such securities
laws.
9. The Committee shall make such adjustments to the Option price and
in the number or kind of shares of Common Stock covered by the Option
consistent with the terms of the Plan as the Committee in its sole discretion
may determine is equitably required to prevent dilution or enlargement of the
rights of the Participant that otherwise would result from (a) any stock
dividend, stock split, combination of shares, recapitalization, or other change
in the capital structure of the Company, or (b) any merger, consolidation,
separation, reorganization, or partial or complete liquidation, or (c) any
other corporate transaction or event having an effect similar to any of the
foregoing.
10. The continuous employ or engagement of the Participant with the
Company or any of its subsidiaries shall not be deemed to have ceased by reason
of the transfer of the Participant among the Company or any of its subsidiaries
or to any entity controlled by or in common control with the Company.
11. The Company's obligation hereunder shall be subject to the
satisfaction by the Participant in a manner acceptable to the Company of all
applicable withholding taxes and other withholding obligations.
12. The grant of the Options pursuant to this Agreement shall not be
construed as conferring upon the Participant any right to continued employment,
and the employment of any Participant may be terminated without regard to the
effect which such action may have upon him as a Participant under the Plan.
13. The Board of Directors of the Company may at any time terminate,
amend or modify the Plan or alter the terms of this Option in accordance with
the specific terms and conditions set forth in the Plan.
14. The terms and provisions of the Plan are specifically
incorporated herein by reference and made a part hereof.
15. To the extent that federal law shall not be held to preempt local
law, this Agreement shall be governed by the laws of the State of Georgia. If
any provision of the Agreement shall be held invalid or unenforceable the
remaining provisions hereof shall continue in full force and effect.
3
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officers as of the date first set forth above.
Attest: HEALTHDYNE TECHNOLOGIES, INC.
By: By:
------------------------------------ -------------------------------
Secretary or Asst. Secretary Authorized Officer
PARTICIPANT:
------------------------------------
4
<PAGE> 5
EXHIBIT A
OPTION EXERCISE FORM
(To be executed by the Employee to
exercise the rights to purchase Common Stock
evidenced by the foregoing Option)
TO: HEALTHDYNE TECHNOLOGIES, INC.
The undersigned hereby exercises the right to purchase ___________
shares of Common Stock covered by the attached Option in accordance with the
terms and conditions thereof, and herewith makes payment of the Option Price of
such shares in full.
-------------------------------------
Signature
-------------------------------------
-------------------------------------
Address
-------------------------------------
Social Security Number
Date: , 19
-------------------- ----
<PAGE> 1
EXHIBIT 6
HEALTHDYNE TECHNOLOGIES, INC.
NONQUALIFIED STOCK OPTION
COMMON STOCK
($.01 PAR VALUE)
STOCK OPTION PLAN: HEALTHDYNE TECHNOLOGIES, INC.
1996 STOCK OPTION PLAN
OPTION FOR THE PURCHASE OF: SHARES
----------
EXERCISE PRICE PER SHARE: EIGHT DOLLARS AND 9375/100 DOLLARS ($8.9375)
---------------------------------------------------
HEALTHDYNE DATE OF GRANT: JANUARY 1, 1997
---------------------------------------------------
THIS OPTION AGREEMENT, made and entered into this 1st day of January,
1997, by and between HEALTHDYNE TECHNOLOGIES, INC., a Georgia corporation (the
"Company"), and (the "Participant");
W I T N E S S E T H:
WHEREAS, the HEALTHDYNE TECHNOLOGIES, INC. 1996 Stock Option Plan (the
"Plan") has been adopted by the Company; and
WHEREAS, the Plan authorizes the stock option Committee of the Board of
Directors of the Company, to cause the Company to enter into a written
agreement with the Participant setting forth the form and the amount of any
award and any conditions and restrictions of the award imposed by the Plan and
the Committee; and
WHEREAS, the Committee desires to make an award to the Participant
consisting of a Nonqualified Stock Option;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Participant hereby agree as follows:
1. General Definitions. Any capitalized terms herein shall have the meaning
set forth in the Plan, and, in addition, for purposes of this Option
Agreement, each of the following terms, when used herein, shall have the
meaning set forth below:
(a) The "Common Stock" shall mean the common stock of the Company, par
value $.01 per share.
(b) The "Company" shall mean Healthdyne Technologies, Inc.
<PAGE> 2
(c) The "Exercise Date" shall mean the first anniversary of the Date of
Grant. At any time during the period of this Option commencing with the first
anniversary of the Date of Grant, the Participant may purchase up to 33-1/3% of
the shares covered by this Option and may purchase an additional 33-1/3% on the
second and third anniversary from the Date of Grant so that this Option will be
fully vested on the third anniversary of the Date of Grant.
(d) The "Expiration Date" shall mean the date on which this Option expires
pursuant to the provisions of paragraph 4 hereof.
(e) "Fair Market Value" shall be the mean between the highest and lowest
quoted selling prices at which the Common Stock is sold in the regular way on
the Nasdaq National Market (NASDAQ) or on any similar securities exchange on
the Date of Grant of this Option or, in the absence of any reported sales on
such day, the first preceding day on which there were such sales. If the
Common Stock is not listed on NASDAQ or any similar exchange for the public
trading of securities, fair market value shall be determined by the Committee
in whatever way it considers appropriate under the circumstances taking into
account the financial condition of the Company as reflected in its financial
statements and available independent third party (such as analysts) estimates
of fair market value.
(f) This "Option" shall mean the option evidenced by this Option
Agreement.
(g) The "Option Price" shall mean the purchase price of each share of
Common Stock that may be purchased by the Participant upon the exercise of this
Option, in whole or in part. The Option Price is set forth under "Exercise
Price Per Share" on page 1 of this Option Agreement as adjusted from time to
time in accordance with the provisions hereof.
(h) "Serious Misconduct" shall be determined by the Committee and shall
include, but not be limited to, embezzlement or misappropriation of corporate
funds, other acts of dishonesty, significant activities harmful to the
reputation of the Company or any of its Subsidiaries, a significant violation
of Company or Subsidiary policy, willful refusal to perform or substantial
disregard of the duties properly assigned to the Participant, or a significant
violation of any contractual, statutory or common law duly of loyalty to the
Company or the Subsidiaries.
2. Grant of Option. Upon the terms and subject to the conditions and
limitations hereinafter set forth, the Participant shall have the right, at any
time after the Exercise Date and on or before the Expiration Date, to purchase
the number of shares of Common Stock set forth on page 1 of this Option
Agreement and vested under Paragraphs 1(c) or 7, such number of shares and the
Option Price being subject to adjustment in accordance with the terms of the
Plan notwithstanding anything to the contrary herein.
3. Manner of Exercise. Subject to the terms, conditions, and limitations set
forth herein, this Option may be exercised in whole or in part at any time or
from time to time after the Exercise Date and on or before the Expiration Date
as to any part of the number of whole shares of Common Stock then vested under
Paragraph 1(c) or 7 and available under this Option. Such exercise shall be
effective only if the Participant duly executes and delivers to the Company, at
the principal executive office of the Company or at such other address as the
Company may designate by notice in writing to the Participant, an option
exercise form substantially the same as that attached hereto as Exhibit A,
indicating the
2
<PAGE> 3
number of shares of Common stock to be purchased and accompanied by the Option
Price and any withholding amounts described below. Payment of the Option Price
and any such withholding amounts may be made in one or a combination of the
following forms: (i) in cash, (ii) with shares of Common Stock (not subject to
limitations on transfer), provided that nay shares of Common Stock rendered
for payment shall have been owned for a period of six (6) months or such other
period as in the opinion of the Committee shall be sufficient for such shares
to be considered "mature" shares for purposes of accounting for the
transaction: or (iii) by delivery on a form prescribed by the Committee of an
irrevocable direction to a securities broker approved by the Committee to sell
shares of Common Stock and deliver all or a portion of the proceeds to the
Company in payment for the Common Stock. Any share of Common Stock used to
exercise this Option shall be valued at its Fair Market Value on the trading
day immediately preceding the date of the exercise of this Option.
Upon any effective exercise of this Option, the Company shall become
obligated to issue a certificate or certificates to the Participant
representing the number of shares of common Stock so purchased.
Notwithstanding the foregoing, no shares of common Stock shall be issued prior
to the obtaining of any approval or clearance from any federal or state
governmental agency, which the committee in its sole discretion deems necessary
or advisable, or the lapse of such reasonable period of time following the
exercise of this Option as the Committee may establish for administrative
reasons. In addition, no shares of Common Stock will be issued unless the
Participant (or his representative as the case may be) shall pay to the company
or a Subsidiary, as applicable, such amount as the company or a Subsidiary may
advise it is required under applicable federal, state or local law to withhold
and pay over to governmental taxing authorities by reason of the purchase of
such shares of common Stock pursuant to this Option. No fractional shares will
be issued.
4. Expiration of Option. This Option shall expire, shall become null and void,
and shall be of no further force and effect upon the earlier to occur of the
following events:
(a) The date as of which the Participant's employment or engagement by the
company or any Subsidiaries is terminated for any reason, or by the act of the
Participant, if such termination occurs prior to thirty (30) days from the Date
of Grant;
(b) Except as provided in (a) above, ninety (90) days after the date of
the Participant's resignation or the termination of his or her employment or
engagement with the Company or any of its Subsidiaries for any reason (other
than by reason of his or her Serious Misconduct, death, retirement or
"disability" within the meaning of Section 22(e)(3) of the Code), but during
such ninety-day period the Option shall be exercisable only to the extent that
it was exercisable as of the date of resignation or termination;
(c) The dismissal of the Participant from his or her employment with the
Company or any Affiliate for Serious Misconduct at any time;
(d) The first anniversary of the Participant's death, if the Participant
dies at any time after the Date of Grant and while in the employ or engagement
of the Company or its Subsidiaries or within 60 days after termination of such
employment or engagement, but, during such one-year period, the Option shall be
exercisable only to the extent that it was exercisable at the date of
termination of employment by death or otherwise.
3
<PAGE> 4
(e) One year after the date on which the Participant's employment or
engagement with the Company or any Subsidiary is terminated by reason of the
Participant's retirement or "disability" within the meaning of Section 22(e)(3)
of the Code, but during such one-year period the Option shall be exercisable
only to the extent that it was exercisable as of the date of retirement or
disability.
(f) The date as of which the Committee terminates this Option pursuant to
Section 6.3 of the Plan prior to a Change in Control Event, provided that this
Option shall be fully vested and exercisable from the date notice of such
termination is received to the date of termination specified in such notice; or
(g) The tenth anniversary of the Date of Grant.
5. Holder's Exercise Subject to Compliance with Securities Laws.
Notwithstanding the exercise of this Option, in whole or in part, in accordance
with all other provisions of this Option, the Company shall have no obligation
to honor such exercise and to issue Common Stock pursuant thereto unless and
until the shares of Common Stock to be purchased pursuant to such exercise
shall have been registered under the Securities Act of 1933, as amended (the
"1933 Act"), and under all applicable state securities laws, or unless the
Company shall have received an opinion of counsel satisfactory to the Company
to the effect that such resignation is not required. If the foregoing
conditions shall not have been met within 60 days after exercise, the Company
may elect to treat any such exercise as null and void, the Company shall return
any cash and certificate(s) for shares of Common Stock (duly endorsed in blank
or accompanied by duly executed stock power(s)) delivered in payment for shares
of Common Stock upon such exercise. No such voided exercise shall prejudice
the Participant's right to exercise this Option, in whole or in part, at any
other time.
6. Adjustment of Option Price and Number of Shares That May be Purchased
Hereunder. The Option Price and the number of shares of Common Stock that may
be purchased hereunder shall be subject to adjustment from time to time by the
Committee in accordance with the terms of the Plan in the event of certain
changes in the Common Stock or certain corporate transactions affecting the
number or value of the shares of Common Stock.
7. Change in Control Events. In the event of a Change in Control Event, as
defined in the Plan, this Option shall become immediately exercisable without
regard to Paragraph 1(c) hereof. Whenever possible, the Committee shall notify
the Participant at least 10 days prior to the Change in Control Event and the
Option shall become immediately exercisable on the date of such notice. In
addition, in the event of a Change in Control Event, this Option shall be
exercisable on the date of such notice. In addition, in the event of a Change
in Control Event, this Option shall be exercisable for the remainder of its
term without regard to Paragraphs 4(a)-(f) hereof.
8. Notice of Adjustments. Upon occurrence of any adjustment of the Option
Price, or any increase or decrease in the number of shares of Common Stock that
may be purchased upon the exercise of this Option, then, and in each such case,
the Company, within 30 days thereafter, shall give written notice thereof to
the Participant at the address of the Participant as shown on the books of the
Company, which notice shall the Option Price as adjusted and the increased or
decreased number of shares that may be purchased upon the exercise of this
Option, setting forth in reasonable detail the method of calculation of each.
4
<PAGE> 5
9. Charges, Taxes and Expenses. The issuance of certificates for shares of
Common Stock upon any exercise of this Option shall be made without charge to
the Participant for any transfer tax or other such expense imposed or incurred
with respect to the issuance of such certificates, all of which taxes and
expenses shall be paid by the Company.
10. Certain Obligations of the Company. The Company shall not, by amendment of
its Articles of Incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets or by any other voluntary act or deed avoid or
seek to avoid the performance or observance of any of the covenants,
stipulations or conditions contained herein to be performed or observed by the
Company, but will at all times in good faith assist, insofar as it is able, in
the carrying out of all provisions of this Option and in the taking of all
other actions that may be necessary to protect the rights of the Participant
against dilution. Without limiting the generality of the foregoing, the
Company agrees that it will not establish or increase the par value of the
shares of any Common Stock that are at the time issuable upon exercise of this
Option above the then prevailing Option Price hereunder and that before taking
any action that would cause an adjustment reducing the Option Price hereunder
below the then par value, if any, of the shares of any Common Stock that may be
purchased upon the exercise of this Option, the Company will take any corporate
action that, in the opinion of its counsel, may be necessary so that the
Company may validly and legally issue fully-paid and nonassessable shares of
such Common Stock at the Option Price as so adjusted.
11. Assignment. This Option may not be transferred or assigned by the
Participant otherwise than by will or by the laws of descent and distribution
and, during the lifetime of the Participant, may be exercised, in whole or in
part, only by the Participant; provided, however, subject to the terms and
conditions of the plan and Paragraphs 4(d) and (e) hereof, in the event of the
Participant's death or disability, this Option may be exercised by his or her
personal representative, heirs or legatees.
12. No Right to Continued Employment. This Option does not confer upon the
Participant the right to continued employment with the Company or any
Subsidiary, nor shall it interfere with the right of the Company or a
Subsidiary to terminate his or her employment at any time.
13. Miscellaneous.
(a) The Company covenants that it will at all times reserve and keep
available, solely for the purpose of issue upon the exercise of this Option, a
sufficient number of shares of Common Stock to permit the exercise of this
Option in full.
(b) The terms of this Option shall be binding upon and shall inure to the
benefit of any successors or assigns of the Company and of the Participant.
(c) The Participant shall not be entitled to vote, but shall be entitled
to receive dividends or distributions, with respect to Common Stock that may
be, but has not been, purchased under this Option. Except as provided herein,
the Participant shall not be deemed to be a share holder of the Company with
respect to any such common Stock for any purpose.
(d) This Option has been issued pursuant to the Plan and shall be subject
to, and governed by, the terms and
5
<PAGE> 6
provisions thereof. The Participant hereby agrees to be bound by all the terms
and provisions of the Plan. In the event of any conflict between the terms of
the Plan and this Option Agreement, the provisions of the Plan shall govern.
(e) This Option Agreement shall be governed by the laws of the State of
Georgia.
IN WITNESS WHEREOF, the Company and the Participant have executed this
Option Agreement as of the day and year first above written.
HEALTHDYNE TECHNOLOGIES, INC.
(CORPORATE SEAL) By:
-------------------------------
President & CEO
ATTEST:
- ------------------------------
Secretary
PARTICIPANT:
----------------------------------
6
<PAGE> 7
EXHIBIT A
OPTION EXERCISE FORM
(To be executed by the Employee to
exercise the rights to purchase Common Stock
evidenced by the foregoing Option)
TO: HEALTHDYNE TECHNOLOGIES, INC.
The undersigned hereby exercises the right to purchase ___________ shares
of Common Stock covered by the attached Option in accordance with the terms and
conditions thereof, and herewith makes payment of the Option Price of such
shares in full.
---------------------------------------
Signature
---------------------------------------
---------------------------------------
Address
---------------------------------------
Social Security Number
Date: , 19
------------------ --
<PAGE> 1
EXHIBIT 8
[DIRECTOR]
HEALTHDYNE TECHNOLOGIES, INC.
NONQUALIFIED STOCK OPTION
COMMON STOCK
($.01 PAR VALUE)
<TABLE>
<S> <C>
STOCK OPTION PLAN: HEALTHDYNE TECHNOLOGIES, INC.
STOCK OPTION PLAN II
OPTION FOR THE PURCHASE OF: ________. (____________________
______) SHARES
EXERCISE PRICE PER SHARE: ________. DOLLARS
(_____)
HEALTHDYNE DATE OF GRANT: ________.
</TABLE>
THIS OPTION AGREEMENT, made and entered into as of the 7th day of May,
1995, by and between HEALTHDYNE TECHNOLOGIES, INC., a Georgia corporation (the
"Company"), and __________________________________________________________(the
"Participant");
W I T N E S S E T H:
WHEREAS, the HEALTHDYNE TECHNOLOGIES, INC. Stock Option Plan II (the
"Plan") has been adopted by the Company; and
WHEREAS, Section 6.1 of the Plan authorizes the Stock Option Committee of
the Board of Directors of the Company, hereinafter referred to as the
"Committee," to cause the Company to enter into a written agreement with the
Participant setting forth the form and the amount of any award and any
conditions and restrictions of the award imposed by the Plan and the Committee;
and
WHEREAS, the Committee desires to make an award to the Participant
consisting of a Nonqualified Stock Option;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Participant hereby agree as follows:
1. General Definitions. For purposes of this Option Agreement, each of
the following terms, when used herein, shall have the meaning hereinafter
provided:
(a) The "Code" shall mean the Internal Revenue Code of 1986, as amended.
<PAGE> 2
(b) The "Common Stock" shall mean the common stock of the Company, par
value $.01 per share.
(c) The "Company" shall mean Healthdyne Technologies, Inc.
(d) The "Exercise Date" shall mean the date which is the earlier of (i)
the date on which (a) any "person" (as such term is used in Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the "Act")), becomes
the "beneficial owner" (as defined in Rule 13d-3 promulgated pursuant to the
Act), directly or indirectly, of securities representing 50% or more of the
combined voting power of the Company's or Healthdyne's then outstanding
securities or (b) as a result of, or in combination with, any cash tender offer
or exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who are directors of the Company or Healthdyne
before the Transaction cease to constitute a majority of the Board of Directors
of the Company or Healthdyne or any successor to the Company or Healthdyne; or
(ii) the fourth anniversary of the Healthdyne Date of Grant, provided that this
Option shall be exercisable prior thereto as to the percentage of the shares of
Common Stock then subject to this Option indicated by the table below, based
upon the number of years from the Healthdyne Date of Grant:
<TABLE>
<CAPTION>
NUMBER OF YEARS FROM PERCENTAGE OF SHARES
"HEALTHDYNE DATE OF GRANT" --------------------
--------------------------
<S> <C>
Less than 1 25%
A least 1 but 50%
less than 2
At least 2 but 75%
less than 3
</TABLE>
Notwithstanding the foregoing, "Exercise Date" shall not include any day
during the period beginning on the date of grant of this Option and ending on
the trading day after the date on which the Option Price has been determined by
the Committee.
(e) The "Expiration Date" shall mean the date on which this Option expires
pursuant to the provisions of paragraph 4 hereof.
(f) "Fair Market Value" shall be the closing selling price at which the
Common Stock is sold in the regular way on the National Association of
Securities Dealers Automated Quotation System (NASDAQ) or on any similar
securities exchange on the relevant measurement date or, in the absence of any
reported sales on such day, the first preceding day on which there were such
sales.
(g) "Good Cause," with respect to any dismissal of Participant from his or
her employment with Healthdyne, shall mean the dismissal of the Participant
from such employment by Healthdyne by reason of (i) the Participant's being
convicted of, or pleading guilty or confessing to, any felony or any act of
fraud, misappropriation or embezzlement, (ii) the Participant's improperly
releasing or misappropriating trade secrets or other tangible or intangible
property of Healthdyne or engaging in a dishonest act to the damage or
prejudice of Healthdyne or in willful or grossly negligent conduct or
activities materially damaging to the property,
2
<PAGE> 3
business or reputation of Healthdyne, or (iii) the Participant's failing,
without reasonable cause, to devote his or her full business time and efforts
to Healthdyne.
(h) "Healthdyne" shall mean Healthdyne, Inc. except that as used in
paragraph 1(g) hereof, "Healthdyne" shall mean Healthdyne, Inc. and each of its
Subsidiaries.
(i) "Healthdyne Date of Grant" shall mean the date of grant (indicated on
page 1) of the option granted under the Healthdyne Inc. 1981, 1983, 1985, 1991,
or 1993 Stock Option Plan or Non-Employee Director Stock Option Plan that
corresponds to the Option granted in this Agreement.
(j) This "Option" shall mean the option evidenced by this Option
Agreement.
(k) The "Option Price" shall mean the purchase price of each share of
Common Stock that may be purchased by Participant upon the exercise of this
Option, in whole or in part, as adjusted from time to time in accordance with
the provisions hereof.
(l) "Subsidiary" or "Subsidiaries" shall mean the Company, Healthdyne
Information Enterprises, Inc, and any corporations now or hereafter existing
which are "subsidiary corporations" of Healthdyne within the meaning of Section
424(f) of the Code.
2. Grant of Option. Upon the terms and subject to the conditions and
limitations hereinafter set forth, the Participant shall have the right, at any
time after the Exercise Date and on or before the Expiration Date, to purchase
the number of shares of Common Stock set forth on page 1 of this Option
Agreement, such number of shares being subject to adjustment in accordance with
the provisions set forth below. The purchase price of the shares of Common
Stock that may be purchased upon the exercise of this Option in whole or in
part shall be the price per share set forth under "Exercise Price Per Share" on
page 1 of this Option Agreement, subject, however, to adjustment in accordance
with the provisions set forth below. In addition, the Exercise Price and
number of shares subject to this Option may be adjusted from time to time in
accordance with the terms of the Plan notwithstanding anything to the contrary
herein.
3. Manner of Exercise. Subject to the terms, conditions, and limitations
set forth herein, this Option may be exercised in whole or in part at any time
or from time to time after the Exercise Date and on or before the Expiration
Date as to any part of the number of whole shares of Common Stock then subject
to this Option. Such exercise shall be effective only if the Participant duly
executes and delivers to the Company, at the principal executive office of the
Company or at such other address as the Company may designate by notice in
writing to the Participant, an option exercise form substantially the same as
that attached hereto as Exhibit A, indicating the number of shares of Common
stock to be purchased and accompanied by either (a) cash in an amount equal to
the purchase price of such shares, (b) a certificate or certificates, duly
endorsed in blank or accompanied by duly executed stock power(s), for that
number of "mature" shares (as defined by generally accepted accounting
principles) of Common Stock having a value equal to the purchase price of the
shares of Common Stock as to which this Option is being exercised, with the
value of a share of Common Stock so exchanged being its Fair Market Value on
the trading day immediately preceding the date of purchase, or (c) a
combination of cash and certificates in the form provided by (b) above with an
aggregate value equal to the purchase price of such shares. Upon any effective
exercise of this Option, the Company shall become obligated to issue a
certificate or certificates to the Participant representing the number of
shares of Common Stock so purchased. No fractional shares will be issued.
3
<PAGE> 4
4. Expiration of Option. This Option shall expire, shall become null and
void, and shall be of no further force and effect upon the earlier to occur of
the following events:
(a) Three months after the date of the Participant's resignation or other
voluntary termination of his or her employment or, if a participant in the
Non-Employee Director Stock Option Plan of Healthdyne, his or her position as a
member of the Board of Directors with Healthdyne or any Subsidiary (other than
by reason of his or her death or "disability" within the meaning of Section
72(m)(7) of the Code), but during such three month period the Option shall be
exercisable only to the extent that it was exercisable as of the date of
resignation or termination;
(b) Healthdyne's or any Subsidiary's dismissal of the Participant from his
or her employment or, if a participant in the Non-Employee Director Stock
Option Plan of Healthdyne, his or her position as a member of the Board of
Directors with Healthdyne for Good Cause at any time;
(c) Three months after the date on which Healthdyne or any Subsidiary
terminates Participant's employment or, if a participant in the Non-Employee
Director Stock Option Plan of Healthdyne, his or her position as a member of
the Board of Directors for any reason other than Good Cause, but during such
three month period the Option shall be exercisable only to the extent that it
was exercisable as of the date of termination;
(d) One year after the date on which Participant's employment or, if a
participant in the Non-Employee Director Stock Option Plan of Healthdyne, his
or her position as a member of the Board of Directors with Healthdyne or any
Subsidiary is terminated by reason of the Participant's death or "disability"
within the meaning of Section 72(m)(7) of the Code, but during such one year
period the Option shall be exercisable only to the extent that it was
exercisable as of the date of death or disability; or
(e) The fifth anniversary of the Healthdyne Date of Grant.
Notwithstanding any of the foregoing, the termination of a Participant's
employment or position as a member of the Board of Directors with one or more
but not all of the Company, Healthdyne or any Subsidiary shall not cause this
Option to expire under Subsections (a), (b), (c) or (d) of this Section 4 as
long as the Participant retains a position of employment or as a member of the
Board of Directors of at least one of such entities.
5. Holder's Exercise Subject to Compliance with Securities Laws.
Notwithstanding the exercise of this Option, in whole or in part, in accordance
with all other provisions of this Option, the Company shall have no obligation
to honor such exercise and to issue Common Stock pursuant thereto unless and
until the shares of Common Stock to be purchased pursuant to such exercise
shall have been registered under the Securities Act of 1933, as amended (the
"1933 Act"), and under all applicable state securities laws, or unless the
Company shall have received an opinion of counsel satisfactory to the Company
to the effect that such resignation is not required. If the foregoing
conditions shall not have been met within 60 days after exercise, the Company
may elect to treat any such exercise as null and void, the Company shall return
any cash and certificate(s) for shares of Common Stock (duly endorsed in blank
or accompanied by duly executed stock power(s)) delivered in payment for shares
of Common Stock upon such exercise. No such voided exercise shall prejudice
the Participant's right to exercise this Option, in whole or in part, at any
other time.
4
<PAGE> 5
6. Adjustment of Option Price and Number of Shares That May be Purchased
Hereunder. The Option Price and the number of shares of Common Stock that may
be purchased hereunder shall be subject to adjustment from time to time in
accordance with the terms of the Plan and the following provisions:
(a) In the event of the issuance of additional shares of Common Stock as a
dividend, from and after the record date for the determination of shareholders
entitled to such dividend the Participant (until another such adjustment, if
any) shall be entitled to purchase under this Option the number of shares of
Common Stock, calculated to the nearest full share, obtained by multiplying the
number of shares of Common Stock subject to this Option immediately prior to
said record date by the percentage that the number of additional shares
constituting any such dividend is of the total number of shares of Common Stock
outstanding immediately prior to said record date and adding the result so
obtained to the number of shares of Common Stock subject to this Option
immediately prior to said record date.
Upon each adjustment made pursuant to this subparagraph (a) to the number
of shares of Common Stock that the Participant may purchase under this Option,
the Option Price in effect immediately prior to such adjustment shall be
reduced to an amount determined by dividing (i) the product obtained by
multiplying such Option Price by the number of shares of Common Stock subject
to this Option immediately prior to such adjustment by (ii) the number of
shares of Common Stock subject to this Option immediately following such
adjustment.
(b) If the Company should at any time subdivide the outstanding shares of
its Common Stock, the Option Price in effect immediately prior to such
subdivision shall be proportionately decreased, and if the Company should at
any time combine the outstanding shares of its Common Stock, the Option Price
in effect immediately prior to such combination shall be proportionately
increased, effective from and after the record date of such subdivision or
combination, as the case may be. Upon each adjustment of the Option Price made
pursuant to this subparagraph (b), the Participant (until another such
adjustment, if any) shall be entitled to purchase, at the adjusted Option
Price, the number of shares of Common Stock, calculated to the nearest full
share, obtained by dividing (i) the product obtained by multiplying the number
of shares of Common Stock subject to this Option immediately prior to such
adjustment by the Option Price in effect prior to such adjustment by (ii) the
adjusted Option Price.
7. Reorganization, Reclassification, Consolidation or Merger. If at any
time while this Option is outstanding there should be any reorganization or
reclassification of the Common Stock of the Company (other than a subdivision
or combination of shares provided for in paragraph 6 above), or any
consolidation or merger of the Company with another corporation, then the
number of shares of Common Stock or other securities or property of the Company
of the successor corporation resulting from such consolidation or merger, as
the case may be, to which a holder of the number of shares of Common Stock that
may then be purchased upon the exercise of this Option would have been entitled
upon such reorganization, reclassification, consolidation or merger, may
thereafter be purchased hereunder in lieu of the shares of Common Stock
theretofore subject to this Option; and in any such case, appropriate
adjustment (as determined by agreement of this Participant and the Company)
shall be made in the application of the provisions herein set forth with
respect to the rights and interest thereafter of the Participant to the end
that the provisions set forth herein (including the adjustment of the Option
Price and the number of shares issuable upon the exercise of this Option) shall
thereafter be applicable, as nearly as reasonably may be, in relating to any
shares or other property that may thereafter be purchased thereunder.
8. Notice of Adjustments. Upon occurrence of any adjustment of the Option
Price, any increase or decrease in the number of shares of Common Stock that
may be purchased upon
5
<PAGE> 6
the exercise of this Option, or any reorganization, reclassification,
consolidation, merger or other transaction to which paragraph 7 hereof shall
apply, then, and in each such case, the Company, within 30 days thereafter,
shall give written notice thereof to the Participant at the address of the
Participant as shown on the books of the Company, which notice shall the Option
Price as adjusted and the increased or decreased number of shares that may be
purchased upon the exercise of this Option, setting forth in reasonable detail
the method of calculation of each.
9. Charges, Taxes and Expenses. The issuance of certificates for shares
of Common Stock upon any exercise of this Option shall be made without charge
to the Participant for any transfer tax or other such expense imposed or
incurred with respect to the issuance of such certificates, all of which taxes
and expenses shall be paid by the Company.
10. Certain Obligations of the Company. The Company shall not, by
amendment of its Articles of Incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets or by any other voluntary
act or deed avoid or seek to avoid the performance or observance of any of the
covenants, stipulations or conditions contained herein to be performed or
observed by the Company, but will at all times in good faith assist, insofar as
it is able, in the carrying out of all provisions of this Option and in the
taking of all other actions that may be necessary to protect the rights of the
Participant against dilution. Without limiting the generality of the
foregoing, the Company agrees that it will not establish or increase the par
value of the shares of any Common Stock that are at the time issuable upon
exercise of this Option above the then prevailing Option Price hereunder and
that before taking any action that would cause an adjustment reducing the
Option Price hereunder below the then par value, if any, of the shares of any
Common Stock that may be purchased upon the exercise of this Option, the
Company will take any corporate action that, in the opinion of its counsel, may
be necessary so that the Company may validly and legally issue fully-paid and
nonassessable shares of such Common Stock at the Option Price as so adjusted.
11. Assignment. This Option may not be transferred or assigned by the
Participant otherwise than by will or by the laws of descent and distribution
and, during the lifetime of the Participant, may be exercised, in whole or in
part, only by the Participant. Subject to paragraph 4(d) hereof, in the event
of the Participant's death, this Option may be exercised by his or her personal
representative, heirs or legatees.
12. Miscellaneous.
(a) The Company covenants that it will at all times reserve and keep
available, solely for the purpose of issue upon the exercise of this Option, a
sufficient number of shares of Common Stock to permit the exercise of this
Option in full.
(b) The terms of this Option shall be binding upon and shall inure to the
benefit of any successors or assigns of the Company and of the Participant.
(c) The Participant shall not be entitled to vote or to receive dividends
with respect to any Common Stock that may be, but has not been, purchased under
this Option and shall not be deemed to be a shareholder of the Company with
respect to any such Common Stock for any purpose.
(d) This Option has been issued pursuant to the Plan and shall be subject
to, and governed by, the terms and provisions thereof.
6
<PAGE> 7
IN WITNESS WHEREOF, the Company and the Participant have executed this
Option Agreement as of the day and year first above written.
HEALTHDYNE TECHNOLOGIES, INC.
(CORPORATE SEAL) By:
----------------------------
Authorized Signature
ATTEST:
- ----------------------------
Secretary
PARTICIPANT:
---------------------------------
7
<PAGE> 8
EXHIBIT A
OPTION EXERCISE FORM
(To be executed by the Employee to
exercise the rights to purchase Common Stock
evidenced by the foregoing Option)
TO: HEALTHDYNE TECHNOLOGIES, INC.
The undersigned hereby exercises the right to purchase ___________ shares
of Common Stock covered by the attached Option in accordance with the terms and
conditions thereof, and herewith makes payment of the Option Price of such
shares in full.
------------------------------------
Signature
------------------------------------
------------------------------------
------------------------------------
Address
------------------------------------
Social Security Number
Date: ____________________, 19____
<PAGE> 9
HEALTHDYNE TECHNOLOGIES, INC.
INCENTIVE STOCK OPTION
COMMON STOCK
($.01 PAR VALUE)
STOCK OPTION PLAN: HEALTHDYNE TECHNOLOGIES, INC.
STOCK OPTION PLAN II
OPTION FOR THE PURCHASE OF: _____ (_____) SHARES
EXERCISE PRICE PER SHARE: SEVEN DOLLARS AND 0829/100 DOLLARS
($7.0829)
HEALTHDYNE DATE OF GRANT: OCTOBER 27, 1993
THIS OPTION AGREEMENT, made and entered into as of the 7th day of May,
1995, by and between HEALTHDYNE TECHNOLOGIES, INC., a Georgia corporation (the
"Company"), and (the "Participant");
W I T N E S S E T H:
WHEREAS, the HEALTHDYNE TECHNOLOGIES, INC. Stock Option Plan II (the
"Plan") has been adopted by the Company; and
WHEREAS, Section 6.1 of the Plan authorizes the Stock Option Committee of
the Board of Directors of the Company, hereinafter referred to as the
"Committee," to cause the Company to enter into a written agreement with the
Participant setting forth the form and the amount of any award and any
conditions and restrictions of the award imposed by the Plan and the Committee;
and
WHEREAS, the Committee desires to make an award to the Participant
consisting of an Incentive Stock Option;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Participant hereby agree as follows:
1. General Definitions. For purposes of this Option Agreement, each of
the following terms, when used herein, shall have the meaning hereinafter
provided:
(a) The "Code" shall mean the Internal Revenue Code of 1986, as amended.
(b) The "Common Stock" shall mean the common stock of the Company, par
value $.01 per share.
<PAGE> 10
(c) The "Company" shall mean Healthdyne Technologies, Inc.
(d) The "Exercise Date" shall mean the date which is the earlier of (i)
the date on which (a) any "person" (as such term is used in Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the "Act")), becomes
the "beneficial owner" (as defined in Rule 13d-3 promulgated pursuant to the
Act), directly or indirectly, of securities representing 50% or more of the
combined voting power of the Company's or Healthdyne's then outstanding
securities or (b) as a result of, or in combination with, any cash tender offer
or exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who are directors of the Company or Healthdyne
before the Transaction cease to constitute a majority of the Board of Directors
of the Company or Healthdyne or any successor to the Company or Healthdyne; or
(ii) the fourth anniversary of the Healthdyne Date of Grant, provided that this
Option shall be exercisable prior thereto as to the percentage of the shares of
Common Stock then subject to this Option indicated by the table below, based
upon the number of years from the Healthdyne Date of Grant:
<TABLE>
<CAPTION>
NUMBER OF YEARS FROM PERCENTAGE OF SHARES
"HEALTHDYNE DATE OF GRANT"
------------------------------------------------
<S> <C>
Less than 1 0%
A least 1 but 33-1/3%
less than 2
At least 2 but 66-2/3%
less than 3
</TABLE>
Notwithstanding the foregoing, "Exercise Date" shall not include any day
during the period beginning on the date of grant of this Option and ending on
the trading day after the date on which the Option Price has been determined by
the Committee.
(e) The "Expiration Date" shall mean the date on which this Option expires
pursuant to the provisions of paragraph 4 hereof.
(f) "Fair Market Value" shall be the closing selling price at which the
Common Stock is sold in the regular way on the National Association of
Securities Dealers Automated Quotation System (NASDAQ) or on any similar
securities exchange on the relevant measurement date or, in the absence of any
reported sales on such day, the first preceding day on which there were such
sales.
(g) "Good Cause," with respect to any dismissal of Participant from his or
her employment with Healthdyne, shall mean the dismissal of the Participant
from such employment by Healthdyne by reason of (i) the Participant's being
convicted of, or pleading guilty or confessing to, any felony or any act of
fraud, misappropriation or embezzlement, (ii) the Participant's improperly
releasing or misappropriating trade secrets or other tangible or intangible
property of Healthdyne or engaging in a dishonest act to the damage or
prejudice of Healthdyne or in willful or grossly negligent conduct or
activities materially damaging to the property, business or reputation of
Healthdyne, or (iii) the Participant's failing, without reasonable cause, to
devote his or her full business time and efforts to Healthdyne.
2
<PAGE> 11
(h) "Healthdyne" shall mean Healthdyne, Inc. except that as used in
paragraph 1(g) hereof, "Healthdyne" shall mean Healthdyne, Inc. and each of its
Subsidiaries.
(i) "Healthdyne Date of Grant" shall mean the date of grant (indicated on
page 1) of the option granted under the Healthdyne Inc. 1981, 1983, 1985, 1991,
or 1993 Stock Option Plan or Non-Employee Director Stock Option Plan that
corresponds to the Option granted in this Agreement.
(j) This "Option" shall mean the option evidenced by this Option
Agreement.
(k) The "Option Price" shall mean the purchase price of each share of
Common Stock that may be purchased by Participant upon the exercise of this
Option, in whole or in part, as adjusted from time to time in accordance with
the provisions hereof.
(l) "Subsidiary" or "Subsidiaries" shall mean the Company, Healthdyne
Information Enterprises, Inc, and any corporations now or hereafter existing
which are "subsidiary corporations" of Healthdyne within the meaning of Section
424(f) of the Code.
2. Grant of Option. Upon the terms and subject to the conditions and
limitations hereinafter set forth, the Participant shall have the right, at any
time after the Exercise Date and on or before the Expiration Date, to purchase
the number of shares of Common Stock set forth on page 1 of this Option
Agreement, such number of shares being subject to adjustment in accordance with
the provisions set forth below. The purchase price of the shares of Common
Stock that may be purchased upon the exercise of this Option in whole or in
part shall be the price per share set forth under "Exercise Price Per Share" on
page 1 of this Option Agreement, subject, however, to adjustment in accordance
with the provisions set forth below. In addition, the Exercise Price and
number of shares subject to this Option may be adjusted from time to time in
accordance with the terms of the Plan notwithstanding anything to the contrary
herein.
3. Manner of Exercise. Subject to the terms, conditions, and limitations
set forth herein, this Option may be exercised in whole or in part at any time
or from time to time after the Exercise Date and on or before the Expiration
Date as to any part of the number of whole shares of Common Stock then subject
to this Option. Such exercise shall be effective only if the Participant duly
executes and delivers to the Company, at the principal executive office of the
Company or at such other address as the Company may designate by notice in
writing to the Participant, an option exercise form substantially the same as
that attached hereto as Exhibit A, indicating the number of shares of Common
stock to be purchased and accompanied by either (a) cash in an amount equal to
the purchase price of such shares, (b) a certificate or certificates, duly
endorsed in blank or accompanied by duly executed stock power(s), for that
number of "mature" shares (as defined by generally accepted accounting
principles) of Common Stock having a value equal to the purchase price of the
shares of Common Stock as to which this Option is being exercised, with the
value of a share of Common stock so exchanged being its Fair Market Value on
the trading day immediately preceding the date of purchase, or (c) a
combination of cash and certificates in the form provided by (b) above with an
aggregate value equal to the purchase price of such shares. Upon any effective
exercise of this Option, the Company shall become obligated to issue a
certificate or certificates to the Participant representing the number of
shares of Common Stock so purchased. No fractional shares will be issued.
4. Expiration of Option. This Option shall expire, shall become null and
void, and shall be of no further force and effect upon the earlier to occur of
the following events:
3
<PAGE> 12
(a) Three months after the date of the Participant's resignation or other
voluntary termination of his or her employment or, if a participant in the
Non-Employee Director Stock Option Plan of Healthdyne, his or her position as a
member of the Board of Directors with Healthdyne or any Subsidiary (other than
by reason of his or her death or "disability" within the meaning of Section
72(m)(7) of the Code), but during such three month period the Option shall be
exercisable only to the extent that it was exercisable as of the date of
resignation or termination;
(b) Healthdyne's or any Subsidiary's dismissal of the Participant from his
or her employment or, if a participant in the Non-Employee Director Stock
Option Plan of Healthdyne, his or her position as a member of the Board of
Directors with Healthdyne for Good Cause at any time;
(c) Three months after the date on which Healthdyne or any Subsidiary
terminates Participant's employment or, if a participant in the Non-Employee
Director Stock Option Plan of Healthdyne, his or her position as a member of
the Board of Directors for any reason other than Good Cause, but during such
three month period the Option shall be exercisable only to the extent that it
was exercisable as of the date of termination;
(d) One year after the date on which Participant's employment or, if a
participant in the Non-Employee Director Stock Option Plan of Healthdyne, his
or her position as a member of the Board of Directors with Healthdyne or any
Subsidiary is terminated by reason of the Participant's death or "disability"
within the meaning of Section 72(m)(7) of the Code, but during such one year
period the Option shall be exercisable only to the extent that it was
exercisable as of the date of death or disability; or
(e) The fifth anniversary of the Healthdyne Date of Grant.
Notwithstanding any of the foregoing, the termination of a Participant's
employment or position as a member of the Board of Directors with one or more
but not all of the Company, Healthdyne or any Subsidiary shall not cause this
Option to expire under Subsections (a), (b), (c) or (d) of this Section 4 as
long as the Participant retains a position of employment or as a member of the
Board of Directors of at least one of such entities.
5. Holder's Exercise Subject to Compliance with Securities Laws.
Notwithstanding the exercise of this Option, in whole or in part, in accordance
with all other provisions of this Option, the Company shall have no obligation
to honor such exercise and to issue Common Stock pursuant thereto unless and
until the shares of Common Stock to be purchased pursuant to such exercise
shall have been registered under the Securities Act of 1933, as amended (the
"1933 Act"), and under all applicable state securities laws, or unless the
Company shall have received an opinion of counsel satisfactory to the Company
to the effect that such resignation is not required. If the foregoing
conditions shall not have been met within 60 days after exercise, the Company
may elect to treat any such exercise as null and void, the Company shall return
any cash and certificate(s) for shares of Common Stock (duly endorsed in blank
or accompanied by duly executed stock power(s)) delivered in payment for shares
of Common Stock upon such exercise. No such voided exercise shall prejudice
the Participant's right to exercise this Option, in whole or in part, at any
other time.
6. Adjustment of Option Price and Number of Shares That May be Purchased
Hereunder. The Option Price and the number of shares of Common Stock that may
be purchased hereunder shall be subject to adjustment from time to time in
accordance with t he terms of the Plan and the following provisions:
4
<PAGE> 13
(a) In the event of the issuance of additional shares of Common Stock as a
dividend, from and after the record date for the determination of shareholders
entitled to such dividend the Participant (until another such adjustment, if
any) shall be entitled to purchase under this Option the number of shares of
Common Stock, calculated to the nearest full share, obtained by multiplying the
number of shares of Common Stock subject to this Option immediately prior to
said record date by the percentage that the number of additional shares
constituting any such dividend is of the total number of shares of Common Stock
outstanding immediately prior to said record date and adding the result so
obtained to the number of shares of Common Stock subject to this Option
immediately prior to said record date.
Upon each adjustment made pursuant to this subparagraph (a) to the number
of shares of Common Stock that the Participant may purchase under this Option,
the Option Price in effect immediately prior to such adjustment shall be
reduced to an amount determined by dividing (i) the product obtained by
multiplying such Option Price by the number of shares of Common Stock subject
to this Option immediately prior to such adjustment by (ii) the number of
shares of Common Stock subject to this Option immediately following such
adjustment.
(b) If the Company should at any time subdivide the outstanding shares of
its Common Stock, the Option Price in effect immediately prior to such
subdivision shall be proportionately decreased, and if the Company should at
any time combine the outstanding shares of its Common Stock, the Option Price
in effect immediately prior to such combination shall be proportionately
increased, effective from and after the record date of such subdivision or
combination, as the case may be. Upon each adjustment of the Option Price made
pursuant to this subparagraph (b), the Participant (until another such
adjustment, if any) shall be entitled to purchase, at the adjusted Option
Price, the number of shares of Common Stock, calculated to the nearest full
share, obtained by dividing (i) the product obtained by multiplying the number
of shares of Common Stock subject to this Option immediately prior to such
adjustment by the Option Price in effect prior to such adjustment by (ii) the
adjusted Option Price.
7. Reorganization, Reclassification, Consolidation or Merger. If at any
time while this Option is outstanding there should be any reorganization or
reclassification of the Common Stock of the Company (other than a subdivision
or combination of shares provided for in paragraph 6 above), or any
consolidation or merger of the Company with another corporation, then the
number of shares of Common Stock or other securities or property of the Company
of the successor corporation resulting from such consolidation or merger, as
the case may be, to which a holder of the number of shares of Common Stock that
may then be purchased upon the exercise of this Option would have been entitled
upon such reorganization, reclassification, consolidation or merger, may
thereafter be purchased hereunder in lieu of the shares of Common Stock
theretofore subject to this Option; and in any such case, appropriate
adjustment (as determined by agreement of this Participant and the Company)
shall be made in the application of the provisions herein set forth with
respect to the rights and interest thereafter of the Participant to the end
that the provisions set forth herein (including the adjustment of the Option
Price and the number of shares issuable upon the exercise of this Option) shall
thereafter be applicable, as nearly as reasonably may be, in relating to any
shares or other property that may thereafter be purchased thereunder.
8. Notice of Adjustments. Upon occurrence of any adjustment of the Option
Price, any increase or decrease in the number of shares of Common Stock that
may be purchased upon the exercise of this Option, or any reorganization,
reclassification, consolidation, merger or other transaction to which paragraph
7 hereof shall apply, then, and in each such case, the Company, within 30 days
thereafter, shall give written notice thereof to the Participant at the address
of the Participant as shown on the books of the Company, which notice shall the
Option Price as
5
<PAGE> 14
adjusted and the increased or decreased number of shares that may be
purchased upon the exercise of this Option, setting forth in reasonable detail
the method of calculation of each.
9. Charges, Taxes and Expenses. The issuance of certificates for shares
of Common Stock upon any exercise of this Option shall be made without charge
to the Participant for any transfer tax or other such expense imposed or
incurred with respect to the issuance of such certificates, all of which taxes
and expenses shall be paid by the Company.
10. Certain Obligations of the Company. The Company shall not, by
amendment of its Articles of Incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets or by any other voluntary
act or deed avoid or seek to avoid the performance or observance of any of the
covenants, stipulations or conditions contained herein to be performed or
observed by the Company, but will at all times in good faith assist, insofar as
it is able, in the carrying out of all provisions of this Option and in the
taking of all other actions that may be necessary to protect the rights of the
Participant against dilution. Without limiting the generality of the
foregoing, the Company agrees that it will not establish or increase the par
value of the shares of any Common Stock that are at the time issuable upon
exercise of this Option above the then prevailing Option Price hereunder and
that before taking any action that would cause an adjustment reducing the
Option Price hereunder below the then par value, if any, of the shares of any
Common Stock that may be purchased upon the exercise of this Option, the
Company will take any corporate action that, in the opinion of its counsel, may
be necessary so that the Company may validly and legally issue fully-paid and
nonassessable shares of such Common Stock at the Option Price as so adjusted.
11. Assignment. This Option may not be transferred or assigned by the
Participant otherwise than by will or by the laws of descent and distribution
and, during the lifetime of the Participant, may be exercised, in whole or in
part, only by the Participant. Subject to paragraph 4(d) hereof, in the event
of the Participant's death, this Option may be exercised by his or her personal
representative, heirs or legatees.
12. Miscellaneous.
(a) The Company covenants that it will at all times reserve and keep
available, solely for the purpose of issue upon the exercise of this Option, a
sufficient number of shares of Common Stock to permit the exercise of this
Option in full.
(b) The terms of this Option shall be binding upon and shall inure to the
benefit of any successors or assigns of the Company and of the Participant.
(c) The Participant shall not be entitled to vote or to receive dividends
with respect to any Common Stock that may be, but has not been, purchased under
this Option and shall not be deemed to be a shareholder of the Company with
respect to any such Common Stock for any purpose.
(d) This Option has been issued pursuant to the Plan and shall be subject
to, and governed by, the terms and provisions thereof.
6
<PAGE> 15
IN WITNESS WHEREOF, the Company and the Participant have executed this
Option Agreement as of the day and year first above written.
HEALTHDYNE TECHNOLOGIES, INC.
(CORPORATE SEAL) By:
------------------------------
Authorized Signature
ATTEST:
- --------------------------
Secretary
PARTICIPANT:
----------------------------------
7
<PAGE> 16
EXHIBIT A
OPTION EXERCISE FORM
(To be executed by the Employee to
exercise the rights to purchase Common Stock
evidenced by the foregoing Option)
TO: HEALTHDYNE TECHNOLOGIES, INC.
The undersigned hereby exercises the right to purchase ___________ shares
of Common Stock covered by the attached Option in accordance with the terms and
conditions thereof, and herewith makes payment of the Option Price of such
shares in full.
---------------------------------
Signature
---------------------------------
---------------------------------
Address
---------------------------------
Social Security Number
Date: ____________________, 19____
<PAGE> 17
HEALTHDYNE TECHNOLOGIES, INC.
NONQUALIFIED STOCK OPTION
COMMON STOCK
($.01 Par Value)
STOCK OPTION PLAN: HEALTHDYNE TECHNOLOGIES, INC.
STOCK OPTION PLAN II
OPTION FOR THE PURCHASE OF: SHARES
EXERCISE PRICE PER SHARE: SEVEN DOLLARS AND 9277/100 DOLLARS
($7.9277)
HEALTHDYNE DATE OF GRANT: JANUARY 22, 1993
THIS OPTION AGREEMENT, made and entered into as of the 7th day of May,
1995, by and between HEALTHDYNE TECHNOLOGIES, INC., a Georgia corporation (the
"Company"), and (the "Participant");
W I T N E S S E T H:
WHEREAS, the HEALTHDYNE TECHNOLOGIES, INC. Stock Option Plan II (the
"Plan") has been adopted by the Company; and
WHEREAS, Section 6.1 of the Plan authorizes the Stock Option Committee
of the Board of Directors of the Company, hereinafter referred to as the
"Committee," to cause the Company to enter into a written agreement with the
Participant setting forth the form and the amount of any award and any
conditions and restrictions of the award imposed by the Plan and the Committee;
and
WHEREAS, the Committee desires to make an award to the Participant
consisting of a Nonqualified Stock Option;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the Company and the Participant hereby agree as follows:
1. General Definitions. For purposes of this Option Agreement,
each of the following terms, when used herein, shall have the meaning
hereinafter provided:
(a) The "Code" shall mean the Internal Revenue Code of
1986, as amended.
(b) The "Common Stock" shall mean the common stock of the
Company, par value $.01 per share.
<PAGE> 18
(c) The "Company" shall mean Healthdyne Technologies, Inc.
(d) The "Exercise Date" shall mean the date which is the
earlier of (i) the date on which (a) any "person" (as such term is used in
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the
"Act")), becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated
pursuant to the Act), directly or indirectly, of securities representing 50% or
more of the combined voting power of the Company's or Healthdyne's then
outstanding securities or (b) as a result of, or in combination with, any cash
tender offer or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing transactions
(a "Transaction"), the persons who are directors of the Company or Healthdyne
before the Transaction cease to constitute a majority of the Board of Directors
of the Company or Healthdyne or any successor to the Company or Healthdyne; or
(ii) the fourth anniversary of the Healthdyne Date of Grant, provided that this
Option shall be exercisable prior thereto as to the percentage of the shares of
Common Stock then subject to this Option indicated by the table below, based
upon the number of years from the Healthdyne Date of Grant:
<TABLE>
<CAPTION>
NUMBER OF YEARS FROM PERCENTAGE OF SHARES
"HEALTHDYNE DATE OF GRANT"
- -------------------------------------------------------------------------------
<S> <C>
Less than 1 0%
A least 1 but 33-1/3%
less than 2
At least 2 but 66-2/3%
less than 3
</TABLE>
Notwithstanding the foregoing, "Exercise Date" shall not
include any day during the period beginning on the date of grant of this Option
and ending on the trading day after the date on which the Option Price has been
determined by the Committee.
(e) The "Expiration Date" shall mean the date on which
this Option expires pursuant to the provisions of paragraph 4 hereof.
(f) "Fair Market Value" shall be the closing selling
price at which the Common Stock is sold in the regular way on the National
Association of Securities Dealers Automated Quotation System (NASDAQ) or on any
similar securities exchange on the relevant measurement date or, in the absence
of any reported sales on such day, the first preceding day on which there were
such sales.
(g) "Good Cause," with respect to any dismissal of
Participant from his or her employment with Healthdyne, shall mean the
dismissal of the Participant from such employment by Healthdyne by reason of
(i) the Participant's being convicted of, or pleading guilty or confessing to,
any felony or any act of fraud, misappropriation or embezzlement, (ii) the
Participant's improperly releasing or misappropriating trade secrets or other
tangible or intangible property of Healthdyne or engaging in a dishonest act to
the damage or prejudice of Healthdyne or in willful or grossly negligent
conduct or activities materially damaging to the property, business or
reputation of Healthdyne, or (iii) the Participant's failing, without
reasonable cause, to devote his or her full business time and efforts to
Healthdyne.
2
<PAGE> 19
(h) "Healthdyne" shall mean Healthdyne, Inc. except that
as used in paragraph 1(g) hereof, "Healthdyne" shall mean Healthdyne, Inc. and
each of its Subsidiaries.
(i) "Healthdyne Date of Grant" shall mean the date of
grant (indicated on page 1) of the option granted under the Healthdyne Inc.
1981, 1983, 1985, 1991, or 1993 Stock Option Plan or Non-Employee Director
Stock Option Plan that corresponds to the Option granted in this Agreement.
(j) This "Option" shall mean the option evidenced by this
Option Agreement.
(k) The "Option Price" shall mean the purchase price of
each share of Common Stock that may be purchased by Participant upon the
exercise of this Option, in whole or in part, as adjusted from time to time in
accordance with the provisions hereof.
(l) "Subsidiary" or "Subsidiaries" shall mean the
Company, Healthdyne Information Enterprises, Inc, and any corporations now or
hereafter existing which are "subsidiary corporations" of Healthdyne within the
meaning of Section 424(f) of the Code.
2. Grant of Option. Upon the terms and subject to the conditions
and limitations hereinafter set forth, the Participant shall have the right, at
any time after the Exercise Date and on or before the Expiration Date, to
purchase the number of shares of Common Stock set forth on page 1 of this
Option Agreement, such number of shares being subject to adjustment in
accordance with the provisions set forth below. The purchase price of the
shares of Common Stock that may be purchased upon the exercise of this Option
in whole or in part shall be the price per share set forth under "Exercise
Price Per Share" on page 1 of this Option Agreement, subject, however, to
adjustment in accordance with the provisions set forth below. In addition, the
Exercise Price and number of shares subject to this Option may be adjusted from
time to time in accordance with the terms of the Plan notwithstanding anything
to the contrary herein.
3. Manner of Exercise. Subject to the terms, conditions, and
limitations set forth herein, this Option may be exercised in whole or in part
at any time or from time to time after the Exercise Date and on or before the
Expiration Date as to any part of the number of whole shares of Common Stock
then subject to this Option. Such exercise shall be effective only if the
Participant duly executes and delivers to the Company, at the principal
executive office of the Company or at such other address as the Company may
designate by notice in writing to the Participant, an option exercise form
substantially the same as that attached hereto as Exhibit A, indicating the
number of shares of Common stock to be purchased and accompanied by either (a)
cash in an amount equal to the purchase price of such shares, (b) a certificate
or certificates, duly endorsed in blank or accompanied by duly executed stock
power(s), for that number of "mature" shares (as defined by generally accepted
accounting principles) of Common Stock having a value equal to the purchase
price of the shares of Common Stock as to which this Option is being exercised,
with the value of a share of Common stock so exchanged being its Fair Market
Value on the trading day immediately preceding the date of purchase, or (c) a
combination of cash and certificates in the form provided by (b) above with an
aggregate value equal to the purchase price of such shares. Upon any effective
exercise of this Option, the Company shall become obligated to issue a
certificate or certificates to the Participant representing the number of
shares of Common Stock so purchased. No fractional shares will be issued.
4. Expiration of Option. This Option shall expire, shall become
null and void, and shall be of no further force and effect upon the earlier to
occur of the following events:
3
<PAGE> 20
(a) Three months after the date of the Participant's
resignation or other voluntary termination of his or her employment or, if a
participant in the Non-Employee Director Stock Option Plan of Healthdyne, his
or her position as a member of the Board of Directors with Healthdyne or any
Subsidiary (other than by reason of his or her death or "disability" within the
meaning of Section 72(m)(7) of the Code), but during such three month period
the Option shall be exercisable only to the extent that it was exercisable as
of the date of resignation or termination;
(b) Healthdyne's or any Subsidiary's dismissal of the
Participant from his or her employment or, if a participant in the Non-Employee
Director Stock Option Plan of Healthdyne, his or her position as a member of
the Board of Directors with Healthdyne for Good Cause at any time;
(c) Three months after the date on which Healthdyne or
any Subsidiary terminates Participant's employment or, if a participant in the
Non-Employee Director Stock Option Plan of Healthdyne, his or her position as a
member of the Board of Directors for any reason other than Good Cause, but
during such three month period the Option shall be exercisable only to the
extent that it was exercisable as of the date of termination;
(d) One year after the date on which Participant's
employment or, if a participant in the Non-Employee Director Stock Option Plan
of Healthdyne, his or her position as a member of the Board of Directors with
Healthdyne or any Subsidiary is terminated by reason of the Participant's death
or "disability" within the meaning of Section 72(m)(7) of the Code, but during
such one year period the Option shall be exercisable only to the extent that it
was exercisable as of the date of death or disability; or
(e) The fifth anniversary of the Healthdyne Date of Grant.
Notwithstanding any of the foregoing, the termination of a
Participant's employment or position as a member of the Board of Directors with
one or more but not all of the Company, Healthdyne or any Subsidiary shall not
cause this Option to expire under Subsections (a), (b), (c) or (d) of this
Section 4 as long as the Participant retains a position of employment or as a
member of the Board of Directors of at least one of such entities.
5. Holder's Exercise Subject to Compliance with Securities Laws.
Notwithstanding the exercise of this Option, in whole or in part, in accordance
with all other provisions of this Option, the Company shall have no obligation
to honor such exercise and to issue Common Stock pursuant thereto unless and
until the shares of Common Stock to be purchased pursuant to such exercise
shall have been registered under the Securities Act of 1933, as amended (the
"1933 Act"), and under all applicable state securities laws, or unless the
Company shall have received an opinion of counsel satisfactory to the Company
to the effect that such resignation is not required. If the foregoing
conditions shall not have been met within 60 days after exercise, the Company
may elect to treat any such exercise as null and void, the Company shall return
any cash and certificate(s) for shares of Common Stock (duly endorsed in blank
or accompanied by duly executed stock power(s)) delivered in payment for shares
of Common Stock upon such exercise. No such voided exercise shall prejudice
the Participant's right to exercise this Option, in whole or in part, at any
other time.
6. Adjustment of Option Price and Number of Shares That May be
Purchased Hereunder. The Option Price and the number of shares of Common Stock
that may be purchased hereunder shall be subject to adjustment from time to
time in accordance with the terms of the Plan and the following provisions:
4
<PAGE> 21
(a) In the event of the issuance of additional shares of
Common Stock as a dividend, from and after the record date for the determination
of shareholders entitled to such dividend the Participant (until another such
adjustment, if any) shall be entitled to purchase under this Option the number
of shares of Common Stock, calculated to the nearest full share, obtained by
multiplying the number of shares of Common Stock subject to this Option
immediately prior to said record date by the percentage that the number of
additional shares constituting any such dividend is of the total number of
shares of Common Stock outstanding immediately prior to said record date and
adding the result so obtained to the number of shares of Common Stock subject to
this Option immediately prior to said record date.
Upon each adjustment made pursuant to this subparagraph (a) to
the number of shares of Common Stock that the Participant may purchase under
this Option, the Option Price in effect immediately prior to such adjustment
shall be reduced to an amount determined by dividing (i) the product obtained
by multiplying such Option Price by the number of shares of Common Stock
subject to this Option immediately prior to such adjustment by (ii) the number
of shares of Common Stock subject to this Option immediately following such
adjustment.
(b) If the Company should at any time subdivide the
outstanding shares of its Common Stock, the Option Price in effect immediately
prior to such subdivision shall be proportionately decreased, and if the
Company should at any time combine the outstanding shares of its Common Stock,
the Option Price in effect immediately prior to such combination shall be
proportionately increased, effective from and after the record date of such
subdivision or combination, as the case may be. Upon each adjustment of the
Option Price made pursuant to this subparagraph (b), the Participant (until
another such adjustment, if any) shall be entitled to purchase, at the adjusted
Option Price, the number of shares of Common Stock, calculated to the nearest
full share, obtained by dividing (i) the product obtained by multiplying the
number of shares of Common Stock subject to this Option immediately prior to
such adjustment by the Option Price in effect prior to such adjustment by (ii)
the adjusted Option Price.
7. Reorganization, Reclassification, Consolidation or Merger. If
at any time while this Option is outstanding there should be any reorganization
or reclassification of the Common Stock of the Company (other than a subdivision
or combination of shares provided for in paragraph 6 above), or any
consolidation or merger of the Company with another corporation, then the number
of shares of Common Stock or other securities or property of the Company of the
successor corporation resulting from such consolidation or merger, as the case
may be, to which a holder of the number of shares of Common Stock that may then
be purchased upon the exercise of this Option would have been entitled upon such
reorganization, reclassification, consolidation or merger, may thereafter be
purchased hereunder in lieu of the shares of Common Stock theretofore subject to
this Option; and in any such case, appropriate adjustment (as determined by
agreement of this Participant and the Company) shall be made in the application
of the provisions herein set forth with respect to the rights and interest
thereafter of the Participant to the end that the provisions set forth herein
(including the adjustment of the Option Price and the number of shares issuable
upon the exercise of this Option) shall thereafter be applicable, as nearly as
reasonably may be, in relating to any shares or other property that may
thereafter be purchased thereunder.
8. Notice of Adjustments. Upon occurrence of any adjustment of
the Option Price, any increase or decrease in the number of shares of Common
Stock that may be purchased upon the exercise of this Option, or any
reorganization, reclassification, consolidation, merger or other transaction to
which paragraph 7 hereof shall apply, then, and in each such case, the Company,
within 30 days thereafter, shall give written notice thereof to the Participant
at the address of the Participant as shown on the books of the Company, which
notice shall the Option Price as
5
<PAGE> 22
adjusted and the increased or decreased number of shares that may be purchased
upon the exercise of this Option, setting forth in reasonable detail the method
of calculation of each.
9. Charges, Taxes and Expenses. The issuance of certificates for
shares of Common Stock upon any exercise of this Option shall be made without
charge to the Participant for any transfer tax or other such expense imposed or
incurred with respect to the issuance of such certificates, all of which taxes
and expenses shall be paid by the Company.
10. Certain Obligations of the Company. The Company shall not, by
amendment of its Articles of Incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets or by any other voluntary
act or deed avoid or seek to avoid the performance or observance of any of the
covenants, stipulations or conditions contained herein to be performed or
observed by the Company, but will at all times in good faith assist, insofar as
it is able, in the carrying out of all provisions of this Option and in the
taking of all other actions that may be necessary to protect the rights of the
Participant against dilution. Without limiting the generality of the
foregoing, the Company agrees that it will not establish or increase the par
value of the shares of any Common Stock that are at the time issuable upon
exercise of this Option above the then prevailing Option Price hereunder and
that before taking any action that would cause an adjustment reducing the
Option Price hereunder below the then par value, if any, of the shares of any
Common Stock that may be purchased upon the exercise of this Option, the
Company will take any corporate action that, in the opinion of its counsel, may
be necessary so that the Company may validly and legally issue fully-paid and
nonassessable shares of such Common Stock at the Option Price as so adjusted.
11. Assignment. This Option may not be transferred or assigned by
the Participant otherwise than by will or by the laws of descent and
distribution and, during the lifetime of the Participant, may be exercised, in
whole or in part, only by the Participant. Subject to paragraph 4(d) hereof, in
the event of the Participant's death, this Option may be exercised by his or
her personal representative, heirs or legatees.
12. Miscellaneous.
(a) The Company covenants that it will at all times
reserve and keep available, solely for the purpose of issue upon the exercise
of this Option, a sufficient number of shares of Common Stock to permit the
exercise of this Option in full.
(b) The terms of this Option shall be binding upon and
shall inure to the benefit of any successors or assigns of the Company and of
the Participant.
(c) The Participant shall not be entitled to vote or to
receive dividends with respect to any Common Stock that may be, but has not
been, purchased under this Option and shall not be deemed to be a shareholder
of the Company with respect to any such Common Stock for any purpose.
(d) This Option has been issued pursuant to the Plan and
shall be subject to, and governed by, the terms and provisions thereof.
6
<PAGE> 23
IN WITNESS WHEREOF, the Company and the Participant have executed this
Option Agreement as of the day and year first above written.
HEALTHDYNE TECHNOLOGIES, INC.
(CORPORATE SEAL) By:
---------------------------------
Authorized Signature
ATTEST:
- ----------------------------------
Secretary
PARTICIPANT:
-------------------------------------
7
<PAGE> 24
EXHIBIT A
OPTION EXERCISE FORM
(To be executed by the Employee to
exercise the rights to purchase Common Stock
evidenced by the foregoing Option)
TO: HEALTHDYNE TECHNOLOGIES, INC.
The undersigned hereby exercises the right to purchase ___________
shares of Common Stock covered by the attached Option in accordance with the
terms and conditions thereof, and herewith makes payment of the Option Price of
such shares in full.
------------------------------------
Signature
------------------------------------
------------------------------------
Address
------------------------------------
Social Security Number
Date: ____________________, 19____
<PAGE> 25
[FULL VESTING FORM]
HEALTHDYNE TECHNOLOGIES, INC.
NONQUALIFIED STOCK OPTION
COMMON STOCK
($.01 PAR VALUE)
STOCK OPTION PLAN: HEALTHDYNE TECHNOLOGIES, INC.
STOCK OPTION PLAN II
OPTION FOR THE PURCHASE OF:
SHARES
-------------------------
EXERCISE PRICE PER SHARE: DOLLARS
-------------------------
HEALTHDYNE DATE OF GRANT:
-------------------------
THIS OPTION AGREEMENT, made and entered into as of the 7th day of May,
1995, by and between HEALTHDYNE TECHNOLOGIES, INC., a Georgia corporation (the
"Company"), and (the "Participant");
W I T N E S S E T H:
WHEREAS, the HEALTHDYNE TECHNOLOGIES, INC. Stock Option Plan II (the
"Plan") has been adopted by the Company; and
WHEREAS, Section 6.1 of the Plan authorizes the Stock Option Committee of
the Board of Directors of the Company, hereinafter referred to as the
"Committee," to cause the Company to enter into a written agreement with the
Participant setting forth the form and the amount of any award and any
conditions and restrictions of the award imposed by the Plan and the Committee;
and
WHEREAS, the Committee desires to make an award to the Participant
consisting of a Nonqualified Stock Option;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Participant hereby agree as follows:
1. General Definitions. For purposes of this Option Agreement, each of
the following terms, when used herein, shall have the meaning hereinafter
provided:
(a) The "Code" shall mean the Internal Revenue Code of 1986, as amended.
<PAGE> 26
(b) The "Common Stock" shall mean the common stock of the Company, par
value $.01 per share.
(c) The "Company" shall mean Healthdyne Technologies, Inc.
(d) The "Exercise Date" shall mean the date immediately following the
period beginning on the date of grant of this Option and ending on the trading
day after the date on which the Option Price has been determined by the
Committee.
(e) The "Expiration Date" shall mean the date on which this Option expires
pursuant to the provisions of paragraph 4 hereof.
(f) "Fair Market Value" shall be the closing selling price at which the
Common Stock is sold in the regular way on the National Association of
Securities Dealers Automated Quotation System (NASDAQ) or on any similar
securities exchange on the relevant measurement date or, in the absence of any
reported sales on such day, the first preceding day on which there were such
sales.
(g) "Good Cause," with respect to any dismissal of Participant from his or
her employment with Healthdyne, shall mean the dismissal of the Participant
from such employment by Healthdyne by reason of (i) the Participant's being
convicted of, or pleading guilty or confessing to, any felony or any act of
fraud, misappropriation or embezzlement, (ii) the Participant's improperly
releasing or misappropriating trade secrets or other tangible or intangible
property of Healthdyne or engaging in a dishonest act to the damage or
prejudice of Healthdyne or in willful or grossly negligent conduct or
activities materially damaging to the property, business or reputation of
Healthdyne, or (iii) the Participant's failing, without reasonable cause, to
devote his or her full business time and efforts to Healthdyne.
(h) "Healthdyne" shall mean Healthdyne, Inc. except that as used in
paragraph 1(g) hereof, "Healthdyne" shall mean Healthdyne, Inc. and each of its
Subsidiaries.
(i) "Healthdyne Date of Grant" shall mean the date of grant (indicated on
page 1) of the option granted under the Healthdyne Inc. 1981, 1983, 1985, 1991,
or 1993 Stock Option Plan or Non-Employee Director Stock Option Plan that
corresponds to the Option granted in this Agreement.
(j) This "Option" shall mean the option evidenced by this Option
Agreement.
(k) The "Option Price" shall mean the purchase price of each share of
Common Stock that may be purchased by Participant upon the exercise of this
Option, in whole or in part, as adjusted from time to time in accordance with
the provisions hereof.
(l) "Subsidiary" or "Subsidiaries" shall mean the Company, Healthdyne
Information Enterprises, Inc, and any corporations now or hereafter existing
which are "subsidiary corporations" of Healthdyne within the meaning of Section
424(f) of the Code.
2. Grant of Option. Upon the terms and subject to the conditions and
limitations hereinafter set forth, the Participant shall have the right, at any
time after the Exercise Date and on or before the Expiration Date, to purchase
the number of shares of Common Stock set forth on page 1 of this Option
Agreement, such number of shares being subject to adjustment in accordance with
the provisions set forth below. The purchase price of the shares of Common
Stock that may be purchased upon the exercise of this Option in whole or in
part shall be the price
2
<PAGE> 27
per share set forth under "Exercise Price Per Share" on page 1 of this Option
Agreement, subject, however, to adjustment in accordance with the provisions
set forth below. In addition, the Exercise Price and number of shares subject
to this Option may be adjusted from time to time in accordance with the terms
of the Plan notwithstanding anything to the contrary herein.
3. Manner of Exercise. Subject to the terms, conditions, and limitations
set forth herein, this Option may be exercised in whole or in part at any time
or from time to time after the Exercise Date and on or before the Expiration
Date as to any part of the number of whole shares of Common Stock then subject
to this Option. Such exercise shall be effective only if the Participant duly
executes and delivers to the Company, at the principal executive office of the
Company or at such other address as the Company may designate by notice in
writing to the Participant, an option exercise form substantially the same as
that attached hereto as Exhibit A, indicating the number of shares of Common
stock to be purchased and accompanied by either (a) cash in an amount equal to
the purchase price of such shares, (b) a certificate or certificates, duly
endorsed in blank or accompanied by duly executed stock power(s), for that
number of "mature" shares (as defined by generally accepted accounting
principles) of Common Stock having a value equal to the purchase price of the
shares of Common Stock as to which this Option is being exercised, with the
value of a share of Common Stock so exchanged being its Fair Market Value on
the trading day immediately preceding the date of purchase, or (c) a
combination of cash and certificates in the form provided by (b) above with an
aggregate value equal to the purchase price of such shares. Upon any effective
exercise of this Option, the Company shall become obligated to issue a
certificate or certificates to the Participant representing the number of
shares of Common Stock so purchased. No fractional shares will be issued.
4. Expiration of Option. This Option shall expire, shall become null and
void, and shall be of no further force and effect upon the earlier to occur of
the following events:
(a) Three months after the date of the Participant's resignation or
other voluntary termination of his or her employment with Healthdyne or any
Subsidiary or, if a participant in the Non-Employee Director Stock Option Plan
of Healthdyne, his or her position as a member of the Board of Directors (in
each case other than by reason of his or her death or "disability" within the
meaning of Section 72(m)(7) of the Code);
(b) Healthdyne's or any Subsidiary's dismissal of the Participant from
his or her employment with Healthdyne or such Subsidiary or, if a participant in
the Non-Employee Director Stock Option Plan of Healthdyne, his or her position
as a member of the Board of Directors for Good Cause at any time;
(c) Three months after the date on which Healthdyne or any Subsidiary
terminates Participant's employment or, if a participant in the Non-Employee
Director Stock Option Plan of Healthdyne, his or her position as a member of
the Board of Directors, in either such case for any reason other than Good
Cause;
(d) One year after the date on which Participant's employment with
Healthdyne or any Subsidiary or, if a participant in the Non-Employee Director
Stock Option Plan of Healthdyne, his or her position as a member of the Board
of Directors is terminated by reason of the Participant's death or "disability"
within the meaning of Section 72(m)(7) of the Code; or
(e) The fifth anniversary of the Healthdyne Date of Grant.
Notwithstanding any of the foregoing, the termination of a Participant's
employment or position as a member of the Board of Directors with one or more
but not all of the
3
<PAGE> 28
Company, Healthdyne or any Subsidiary shall not cause this Option to expire
under Subsections (a), (b), (c) or (d) of this Section 4 as long as the
Participant retains a position of employment or as a member of the Board of
Directors of at least one of such entities.
5. Holder's Exercise Subject to Compliance with Securities Laws.
Notwithstanding the exercise of this Option, in whole or in part, in accordance
with all other provisions of this Option, the Company shall have no obligation
to honor such exercise and to issue Common Stock pursuant thereto unless and
until the shares of Common Stock to be purchased pursuant to such exercise
shall have been registered under the Securities Act of 1933, as amended (the
"1933 Act"), and under all applicable state securities laws, or unless the
Company shall have received an opinion of counsel satisfactory to the Company
to the effect that such resignation is not required. If the foregoing
conditions shall not have been met within 60 days after exercise, the Company
may elect to treat any such exercise as null and void, the Company shall return
any cash and certificate(s) for shares of Common Stock (duly endorsed in blank
or accompanied by duly executed stock power(s)) delivered in payment for shares
of Common Stock upon such exercise. No such voided exercise shall prejudice
the Participant's right to exercise this Option, in whole or in part, at any
other time.
6. Adjustment of Option Price and Number of Shares That May be Purchased
Hereunder. The Option Price and the number of shares of Common Stock that may
be purchased hereunder shall be subject to adjustment from time to time in
accordance with the terms of the Plan and the following provisions:
(a) In the event of the issuance of additional shares of Common Stock as a
dividend, from and after the record date for the determination of shareholders
entitled to such dividend the Participant (until another such adjustment, if
any) shall be entitled to purchase under this Option the number of shares of
Common Stock, calculated to the nearest full share, obtained by multiplying the
number of shares of Common Stock subject to this Option immediately prior to
said record date by the percentage that the number of additional shares
constituting any such dividend is of the total number of shares of Common Stock
outstanding immediately prior to said record date and adding the result so
obtained to the number of shares of Common Stock subject to this Option
immediately prior to said record date.
Upon each adjustment made pursuant to this subparagraph (a) to the number
of shares of Common Stock that the Participant may purchase under this Option,
the Option Price in effect immediately prior to such adjustment shall be
reduced to an amount determined by dividing (i) the product obtained by
multiplying such Option Price by the number of shares of Common Stock subject
to this Option immediately prior to such adjustment by (ii) the number of
shares of Common Stock subject to this Option immediately following such
adjustment.
(b) If the Company should at any time subdivide the outstanding shares of
its Common Stock, the Option Price in effect immediately prior to such
subdivision shall be proportionately decreased, and if the Company should at
any time combine the outstanding shares of its Common Stock, the Option Price
in effect immediately prior to such combination shall be proportionately
increased, effective from and after the record date of such subdivision or
combination, as the case may be. Upon each adjustment of the Option Price made
pursuant to this subparagraph (b), the Participant (until another such
adjustment, if any) shall be entitled to purchase, at the adjusted Option
Price, the number of shares of Common Stock, calculated to the nearest full
share, obtained by dividing (i) the product obtained by multiplying the number
of shares of Common Stock subject to this Option immediately prior to such
adjustment by the Option Price in effect prior to such adjustment by (ii) the
adjusted Option Price.
4
<PAGE> 29
7. Reorganization, Reclassification, Consolidation or Merger. If at any
time while this Option is outstanding there should be any reorganization or
reclassification of the Common Stock of the Company (other than a subdivision
or combination of shares provided for in paragraph 6 above), or any
consolidation or merger of the Company with another corporation, then the
number of shares of Common Stock or other securities or property of the Company
of the successor corporation resulting from such consolidation or merger, as
the case may be, to which a holder of the number of shares of Common Stock that
may then be purchased upon the exercise of this Option would have been entitled
upon such reorganization, reclassification, consolidation or merger, may
thereafter be purchased hereunder in lieu of the shares of Common Stock
theretofore subject to this Option; and in any such case, appropriate
adjustment (as determined by agreement of this Participant and the Company)
shall be made in the application of the provisions herein set forth with
respect to the rights and interest thereafter of the Participant to the end
that the provisions set forth herein (including the adjustment of the Option
Price and the number of shares issuable upon the exercise of this Option) shall
thereafter be applicable, as nearly as reasonably may be, in relating to any
shares or other property that may thereafter be purchased thereunder.
8. Notice of Adjustments. Upon occurrence of any adjustment of the Option
Price, any increase or decrease in the number of shares of Common Stock that
may be purchased upon the exercise of this Option, or any reorganization,
reclassification, consolidation, merger or other transaction to which paragraph
7 hereof shall apply, then, and in each such case, the Company, within 30 days
thereafter, shall give written notice thereof to the Participant at the address
of the Participant as shown on the books of the Company, which notice shall the
Option Price as adjusted and the increased or decreased number of shares that
may be purchased upon the exercise of this Option, setting forth in reasonable
detail the method of calculation of each.
9. Charges, Taxes and Expenses. The issuance of certificates for shares
of Common Stock upon any exercise of this Option shall be made without charge
to the Participant for any transfer tax or other such expense imposed or
incurred with respect to the issuance of such certificates, all of which taxes
and expenses shall be paid by the Company.
10. Certain Obligations of the Company. The Company shall not, by
amendment of its Articles of Incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets or by any other voluntary
act or deed avoid or seek to avoid the performance or observance of any of the
covenants, stipulations or conditions contained herein to be performed or
observed by the Company, but will at all times in good faith assist, insofar as
it is able, in the carrying out of all provisions of this Option and in the
taking of all other actions that may be necessary to protect the rights of the
Participant against dilution. Without limiting the generality of the
foregoing, the Company agrees that it will not establish or increase the par
value of the shares of any Common Stock that are at the time issuable upon
exercise of this Option above the then prevailing Option Price hereunder and
that before taking any action that would cause an adjustment reducing the
Option Price hereunder below the then par value, if any, of the shares of any
Common Stock that may be purchased upon the exercise of this Option, the
Company will take any corporate action that, in the opinion of its counsel, may
be necessary so that the Company may validly and legally issue fully-paid and
nonassessable shares of such Common Stock at the Option Price as so adjusted.
11. Assignment. This Option may not be transferred or assigned by the
Participant otherwise than by will or by the laws of descent and distribution
and, during the lifetime of the Participant, may be exercised, in whole or in
part, only by the Participant. Subject to paragraph 4(d) hereof, in the event
of the Participant's death, this Option may be exercised by his or her personal
representative, heirs or legatees.
5
<PAGE> 30
12. Miscellaneous.
(a) The Company covenants that it will at all times reserve and keep
available, solely for the purpose of issue upon the exercise of this Option, a
sufficient number of shares of Common Stock to permit the exercise of this
Option in full.
(b) The terms of this Option shall be binding upon and shall inure to
the benefit of any successors or assigns of the Company and of the Participant.
(c) The Participant shall not be entitled to vote or to receive
dividends with respect to any Common Stock that may be, but has not been,
purchased under this Option and shall not be deemed to be a shareholder of the
Company with respect to any such Common Stock for any purpose.
(d) This Option has been issued pursuant to the Plan and shall be
subject to, and governed by, the terms and provisions thereof.
IN WITNESS WHEREOF, the Company and the Participant have executed this
Option Agreement as of the day and year first above written.
HEALTHDYNE TECHNOLOGIES, INC.
(CORPORATE SEAL) By:
-----------------------------------
Authorized Signature
ATTEST:
- -------------------------
Secretary
PARTICIPANT:
--------------------------------------
6
<PAGE> 31
EXHIBIT A
OPTION EXERCISE FORM
(To be executed by the Employee to
exercise the rights to purchase Common Stock
evidenced by the foregoing Option)
TO: HEALTHDYNE TECHNOLOGIES, INC.
The undersigned hereby exercises the right to purchase ___________ shares
of Common Stock covered by the attached Option in accordance with the terms and
conditions thereof, and herewith makes payment of the Option Price of such
shares in full.
---------------------------------
Signature
---------------------------------
---------------------------------
Address
---------------------------------
Social Security Number
Date: , 19
------------------- ---
<PAGE> 1
EXHIBIT 10
HEALTHDYNE TECHNOLOGIES,INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
COMMON STOCK
(Without Par Value)
OPTION FOR THE PURCHASE OF SHARES
THIS OPTION AGREEMENT, made and entered into as of the 20th day of April,
1995, (the "Effective Date"), by and between HEALTHDYNE TECHNOLOGIES, INC., A
Georgia corporation (the "Company"), and (the "Optionee");
W I T N E S S E T H :
WHEREAS, the Optionee is a member of the Company's Board of Directors, and
the Company has determined that the Optionee is not an employee of the Company;
and
WHEREAS, the Company has determined that it is desirable to grant to the
Optionee an option to purchase a limited number of shares of its common stock
upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the Optionee's services to the Company
and in consideration of the mutual covenants contained herein, the parties
hereto do agree as follows:
1. General Definitions. For purposes of this Option Agreement, each of
the following terms, when used herein, shall have the meaning hereinafter
provided:
(a) The "Code" shall mean the Internal Revenue Code of 1986, as amended.
(b) "Common Stock" shall mean the common stock of the Company, par value
$.01 per share.
(c) The "Company" shall mean Healthdyne Technologies, Inc.
(d) The "Exercise Date" shall mean the third anniversary from the
Effective Date provided that this option shall be exercisable prior thereto as
to the percentage of the shares of Common Stock then subject to this Option
indicated by the table below based upon the number of years from the Effective
Date:
<TABLE>
<CAPTION>
Number of Years Percentage of Shares
--------------- --------------------
<S> <C>
At least 1 but
less than 2 33-1/3%
At least 2 but
less than 3 66-2/3%
At least 3 100%
</TABLE>
<PAGE> 2
(e) The "Expiration Date" shall mean the date on which this Option expires
pursuant to the provisions of paragraph 4 hereof.
(f) This "Option" shall mean the option evidenced by this Option
Agreement.
(g) The "Option Price" shall mean the purchase price of each share of
Common Stock that may be purchased by the Optionee upon the exercise of this
Option, in whole or in part, as adjusted from time to time in accordance with
the provisions hereof.
(h) The "Stock Option Plan" shall mean the Non-employee Director Stock
Option Plan.
(i) The "Subsidiaries" shall mean any corporations now or hereafter
existing which are "subsidiary corporations" of the Company within the meaning
of Section 425(f) of the Code.
2. Grant of Option. Upon the terms and subject to the conditions and
limitations hereinafter set forth, the Optionee shall have the right, at any
time after the Exercise Date and on or before the Expiration Date, to purchase
6,667 shares of Common Stock, such number of shares being subject to adjustment
in accordance with the provisions set forth below. The purchase price of the
shares of Common Stock that may be purchased upon the exercise of this Option
in whole or in part shall be Eleven and 875/100 Dollars ($11.875) per share,
subject, however, to adjustment in accordance with the provisions set forth
below.
3. Manner of Exercise. Subject to the terms, conditions and limitations
set forth herein, this Option may be exercised in whole or in part at any time
or from time to time after the Exercise Date and on or before the Expiration
Date as to any part of the number of whole shares of Common Stock then subject
to this Option. Such exercise shall be effective only if the Optionee duly
executes and delivers to the Company, at the principal executive office of the
Company or at such other address as the Company may designate by notice in
writing to the Optionee, an option exercise form substantially the same as that
attached hereto as Exhibit A, indicating the number of shares of Common Stock
to be purchased and accompanied by cash in an amount equal to the purchase
price of such shares. Upon any effective exercise of this Option, the Company
shall become obligated to issue a certificate or certificates to the Optionee
representing the number of shares of Common Stock so purchased. No fractional
shares will be issued.
4. Expiration of Option. This Option shall expire, shall become null and
void, and shall be of no further force and effect upon the earlier to occur of
the following events:
(a) The tenth anniversary of the Effective Date; or
(b) Thirty (30) days after termination of the Optionee's service on the
Board of Directors of the Company; provided, however, that in the event of the
death of the Optionee while serving as a member of the Board of Directors, the
Option shall terminate six (6) months following the date of death; or
(c) Thirty (30) days after the Optionee becomes an employee of the
Company or its subsidiaries.
5. Holder's Exercise Subject to Compliance with Securities Laws.
Notwithstanding the exercise of this Option, in whole or in part, in accordance
with all other provisions of this Option, the Company shall have no obligation
to honor such exercise and to issue Common Stock pursuant thereto unless and
until the shares of Common Stock to be purchased pursuant to such exercise
shall have been registered under the Securities Act of 1933, as amended (the
"1933 Act"), and under all applicable state securities laws, or unless the
Company shall have received an opinion of counsel satisfactory to the Company
to the effect that such registration is not required. If the foregoing
conditions shall not have been met within 60 Option Price and the number of
shares issuable upon the exercise of this Option) shall thereafter be
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<PAGE> 3
days after exercise, the Company may elect to treat such exercise as null and
void. Upon the Company's election to treat any such exercise as null and void,
the Company shall return any cash delivered in payment for shares of Common
Stock upon such exercise. No such voided exercise shall prejudice the
Optionee's right to exercise this Option, in whole or in part, at any other
time.
6. Adjustment of Option Price and Number of Shares That May Be Purchased
Hereunder. The Option Price and the number of shares of Common Stock that may
be purchased hereunder shall be subject to adjustment from time to time in
accordance with the following provisions:
(a) In the event of the issuance of additional shares of Common Stock as
a dividend, from and after the record date for the determination of
shareholders entitled to such dividend the Optionee (until another such
adjustment, if any) shall be entitled to purchase under this Option the number
of shares of Common Stock, calculated to the nearest full share, obtained by
multiplying the number of shares of Common Stock subject to this Option
immediately prior to said record date by the percentage that the number of
additional shares constituting any such dividend is of the total number of
shares of Common Stock outstanding immediately prior to said record date and
adding the result so obtained to the number of shares of Common Stock subject
to this Option immediately prior to said record date.
Upon each adjustment made pursuant to this subparagraph (a) to the number
of shares of Common Stock that the Optionee may purchase under this option
pursuant to this subparagraph (a), the Option Price in effect immediately prior
to such adjustment shall be reduced to an amount determined by dividing (i) the
product obtained by multiplying such Option Price by the number of shares of
Common Stock subject to this Option immediately prior to such adjustment by
(ii) the number of shares of Common Stock subject to this Option immediately
following such adjustment.
(b) If the Company should at any time subdivide the outstanding shares of
its Common Stock, the Option Price in effect immediately prior to such
subdivision shall be proportionately decreased, and if the Company should at
any time combine the outstanding shares of its Common Stock, the Option Price
in effect immediately prior to such combination shall be proportionately
increased, effective from and after the record date of such subdivision or
combination, as the case may be.
Upon each adjustment of the Option Price made pursuant to this
subparagraph (b), the Optionee (until another such adjustment, if any) shall be
entitled to purchase, at the adjusted Option Price, the number of shares of
Common Stock, calculated to the nearest full share, obtained by dividing (i)
the product obtained by multiplying the number of shares of Common Stock
subject to this Option immediately prior to such adjustment by the Option Price
in effect prior to such adjustment by (ii) the adjusted Option Price.
7. Reorganization, Reclassification, Consolidation or Merger. If at any
time while this Option is outstanding there should be any reorganization or
reclassification of the Common Stock of the Company (other than a subdivision
or combination of shares provided for in paragraph 6 above), or any
consolidation or merger of the Company with another corporation, then the
number of shares of Common Stock or other securities or property of the Company
or of the successor corporation resulting from such consolidation or merger, as
the case may be, to which a holder of the number of shares of Common Stock that
may then be purchased upon the exercise of this Option would have been entitled
upon such reorganization, reclassification, consolidation or merger if this
Option had been exercised in full immediately prior to such reorganization,
reclassification, consolidation or merger, may thereafter be purchased
hereunder in lieu of the shares of Common Stock theretofore subject to this
Option; and in any such case, appropriate adjustment (as determined by
agreement of the Optionee and the Company) shall be made in the application of
the provisions herein set forth with respect to the rights and interest
thereafter of the Optionee to the end that the provisions set forth herein
(including the adjustment of the Option Price and the number of shares issuable
upon the exercise of this Option) shall thereafter be
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<PAGE> 4
applicable, as nearly as reasonably may be, in relation to any shares or other
property that may thereafter be purchased hereunder.
8. Notice of Adjustment. Upon the occurrence of any adjustment of the
Option Price, any increase or decrease in the number of shares of Common Stock
that may be purchased upon the exercise of this Option, or any reorganization,
reclassification, consolidation, merger or other transaction to which paragraph
7 hereof shall apply, then, and in each such case, the Company, within 30 days
thereafter, shall give written notice thereof to the Optionee at the address of
the Optionee shown on the books of the Company, which notice shall state the
Option Price as adjusted and the increased or decreased number of shares that
may be purchased upon the exercise of this Option, setting forth in reasonable
detail the method of calculation of each.
9. Charges, Taxes and Expenses. The issuance of certificates for shares
of Common Stock upon any exercise of this Option shall be made without charge
to the Optionee for any transfer tax or other such expense imposed or incurred
with respect to the issuance of such certificates, all of which transfer taxes
and expenses shall be paid by the Company.
10. Certain Obligations of the Company. The Company shall not, by
amendment of its Restated and Amended Articles of Incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act or deed, avoid or seek to avoid the performance or
observance of any of the covenants, stipulations or conditions contained herein
to be performed or observed by the Company, but will at all times in good faith
assist, insofar as it is able, in the carrying out of all provisions of this
Option and in the taking of all other action that may be necessary to protect
the rights of the Optionee against dilution. Without limiting the generality
of the foregoing, the Company agrees that it will not establish or increase the
par value of the shares of any Common Stock that are at the time issuable upon
exercise of this Option above the then prevailing Option Price hereunder and
that before taking any action that would cause an adjustment reducing the
Option Price hereunder below the then par value, if any, of the shares of any
Common Stock that may be purchased upon the exercise of this Option, the
Company will take any corporate action that, in the opinion of its counsel, may
be necessary so that the Company may validly and legally issue fully-paid and
nonassessable shares of such Common Stock at the Option Price as so adjusted.
11. Assignment. This Option may not be transferred or assigned by the
Optionee otherwise than by will or by the laws of descent and distribution and,
during the lifetime of the Optionee, may be exercised, in whole or in part,
only by the Optionee.
12. Miscellaneous.
(a) The Company covenants that it will at all times reserve and keep
available, solely for the purpose of the issue upon the exercise of this
Option, a sufficient number of shares of Common Stock to permit the exercise of
this Option in full.
(b) The terms of this Option shall be binding upon and shall inure to the
benefit of any successors or assigns of the Company and of the Optionee.
(c) The Optionee shall not be entitled to vote or to receive dividends
with respect to any Common Stock that may be, but has not been, purchased under
this Option and shall not be deemed to be a shareholder of the Company with
respect to any such Common Stock for any purpose.
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IN WITNESS WHEREOF, the Company and the Optionee have excuted this option
Agreement as of the day and year first above written.
ATTEST: HEALTHDYNE TECHNOLOGIES, INC.
By: By:
------------------------------ -------------------------------------
Secretary or Assistant Secretary President and Chief Executive Officer
OPTIONEE
----------------------------------------
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EXHIBIT A
OPTION EXERCISE FORM
(To be executed by the Participant to
exercise the rights to purchase Common Stock
evidenced by the foregoing Option)
TO: HEALTHDYNE TECHNOLOGIES, INC.
The undersigned hereby exercises the right to purchase _______________
shares of Common Stock covered by the foregoing Option in accordance with the
terms and conditions thereof, and herewith makes payment of the Option Price of
such shares in full.
------------------------------
Optionee
------------------------------
------------------------------
(Address)
------------------------------
(Social Security Number)
Dated: , 19
-------------------- ----
<PAGE> 1
EXHIBIT 11
HEALTHDYNE TECHNOLOGIES, INC.
RETIREMENT BENEFIT AWARD FOR _________________
Section 1.
PURPOSE
The purpose of this Agreement is to recognize the valuable services of
("Executive") to Healthdyne Technologies, Inc., a Georgia corporation (the
"Company"), and to its predecessor, Healthdyne, Inc., a Georgia Corporation
("Healthdyne"), and to provide a targeted level of monthly retirement income to
Executive.
Section 2.
BENEFITS
2.1 Timing and Amount.
a. General. If Executive has completed 10 Years of Service when Executive's
employment with the Company (and any related entity described in Section
2.1(d)(8)) terminates, Executive will be entitled to receive a monthly
Retirement Benefit beginning when he reaches age 65 or terminates employment,
whichever occurs later. This Retirement Benefit for any month will equal the
amount which when added to Executive's Social Security Benefit, Other
Retirement Benefit, and Disability Benefit for such month will equal
Executive's Target Retirement Income for such month.
Thus, for any month, Executive's
Retirement Benefit + SSB + ORB + DB = TRI.
The amount of the Retirement Benefit may vary from month to month depending on
the amount of Executive's Social Security Benefit, Other Retirement Benefit and
Disability Benefit for such month.
b. Early Retirement. If Executive has completed 10 Years of Service when
Executive's employment with the Company (and any related entity described in ss.
2.1(d)(8)) terminates and such termination occurs before Executive reaches age
65, he can elect to receive an Early Retirement Benefit at anytime after the
later of his fifty-fifth birthday or termination of employment with the Company.
Election for Early Retirement must be made in writing at least 60 days prior to
the commencement of benefits. If Executive elects Early Retirement, the amount
of his benefit will be reduced (relative to the benefit which would have been
payable at age 65) to reflect its early commencement. His Early Retirement
Benefit for any month will equal the amount which when added to Executive's
Social Security Benefit, Other Retirement Benefit and Disability Benefit for
such month equals his Target Retirement Income for such month multiplied by the
applicable Early Retirement Factor ("ERF") in Section 2.2.
<PAGE> 2
Thus, for any month, Executive's
Early Retirement Benefit + SSB + ORB + DB = TRI x ERF.
The amount of this Early Retirement Benefit may vary from month to month
depending on the amount of Executive's SSB, ORB and DB for such month.
c. Payment Form. If Executive does not have a Spouse on the date his Retirement
Benefit or Early Retirement Benefit commences, his monthly benefit will be paid
to him for his life only based on a TRI determined under Section 2.1(d)(7) or,
in the case of an Early Retirement Benefit, a reduced TRI. Except as described
below, if Executive has a Spouse on the date his Retirement Benefit or Early
Retirement Benefit commences, he will receive a reduced monthly benefit for his
life and, after his death, a monthly benefit will be paid to his surviving
Spouse for her life in an amount equal to 50% of the monthly benefit which
would have been payable to Executive if he had survived. The reduced monthly
benefit and surviving Spouse benefit will be determined by an actuary chosen by
the Company, and the resulting benefit will be equivalent in value to the
monthly benefit otherwise due to the Executive using the actuarial assumptions
listed in Section 4. However, the Executive will be treated as if he has no
Spouse on the date benefits commence if the Spouse dies prior to the payment of
the first monthly payment to Executive. An Executive who has a Spouse on the
date his Retirement Benefit or Early Retirement Benefit commences can elect to
have his benefit paid to him for his life only based on a TRI determined under
Section 2.1(d)(7) or, in the case of an Early Retirement Benefit, a reduced
TRI. Any such election must be made in writing within the 90-day period
immediately preceding the commencement of benefits in accordance with such
administrative procedures as the Company establishes for this purpose. Any such
election shall become irrevocable at the time so made.
d. Definitions. The following definitions apply for purposes of
determining Executive's benefit under this Section 2:
(1) Accrual Fraction - means a fraction, the numerator of which is the
lesser of 20 or Executive's actual Years of Service and the denominator
of which is the lesser of 20 or the number of Years of Service
Executive would complete if Executive continued employment with Company
until Executive reached age 65. The Accrual Fraction cannot exceed one.
(2) Average Compensation - means the arithmetic average of Executive's
annual base salary from the Company or Healthdyne for the three
calendar years for which Executive's base salary is the highest,
including (if applicable) the calendar year in which Executive
terminates employment.
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<PAGE> 3
(3) Disability Benefit ("DB") - means for any month the monthly
disability benefit, if any, actually paid to Executive under any
long-term disability plan maintained by the Company.
(4) Other Retirement Benefit ("ORB") - means for any month an amount
determined by the Company which is attributable to the benefit, if any,
provided to Executive under any defined benefit pension plan maintained
by the Company or any related entity for the benefit of Executive with
respect to employment services prior to the termination of employment
with the Company.
(5) Social Security Benefit ("SSB") - means zero for any month
beginning before Executive's Social Security retirement age, and
thereafter means the maximum monthly Social Security benefit that
Executive would be (or, in the event of Executive's death, is deemed by
the Company to have been) eligible to receive at such age determined
without regard to whether Executive commenced receiving Social Security
benefits earlier.
(6) Spouse - means the spouse to whom Executive has been legally
married in a civil or religious ceremony throughout the one year period
ending on the earlier of the date Executive's Retirement Benefit
commences or his date of death.
(7) Target Retirement Income ("TRI") - means for any Retirement Benefit
payable for Executive's life only, the monthly benefit beginning when
Executive reaches age 65 or terminates employment, whichever occurs
last, determined in accordance with the following formula based on
Executive's Average Compensation and Years of Service as of the date
Executive's employment with the Company terminates:
(60% x Average Compensation x Accrual Fraction) x 1/12.
(8) Year of Service - means each calendar year in which Executive
completes at least 1000 hours of employment with the Company
(plus, in the event that Executive is entitled to compensation under
the Non-competition Agreement dated ___________________, as amended or
extended or any successor or replacement agreement or arrangements
with respect to such matters, three(3) years.) Employment with
Healthdyne or with any direct or indirect corporation or entity in
which Company owns in excess of 50% of the outstanding voting stock
shall for all purposes under this Agreement be deemed to constitute
employment with the Company.
With respect to calendar years which predate the date of this
Agreement, the parties agree that Executive completed 1,000 hours of
employment with respect to all calendar years set forth on Exhibit A
hereto.
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<PAGE> 4
2.2 Early Retirement Factor. The early retirement factors set forth below are
applied to determine the Early Retirement Benefit under Section 2.1(b) and any
survivor benefit which commences early under Section 2.3 based on Executive's
age when he begins receiving his Early Retirement Benefit (or, if payments
begin after Executive's death, the age Executive would have been when
Executive's Spouse begins receiving the survivor benefit):
.50 at age 55 .67 at age 60
.53 at age 56 .73 at age 61
.57 at age 57 .80 at age 62
.60 at age 58 .87 at age 63
.63 at age 59 .93 at age 64
2.3 Survivor Benefit. If benefits under this Agreement are payable in a joint
and survivor form and Executive dies while receiving benefits under this
Agreement, payments will begin to his surviving Spouse following Executive's
death in an amount each month equal to 50% of the monthly benefit which would
have been payable to Executive if he had survived. If Executive dies after
completing 10 Years of Service but before receiving any benefits under this
Agreement, his Spouse shall be entitled to receive the monthly survivor benefit
which would have been payable to her if Executive had terminated his employment
with Company on the earlier of (a) his date of death, or (b) the date his
employment terminated, survived to age 65 and died after beginning to receive
benefits in the joint and survivor form. Payment of this monthly survivor
benefit will begin when Executive would have reached age 65 or his date of
death, whichever occurs later, unless his surviving Spouse elects to begin
receiving the survivor benefit when Executive would have reached age 55 or
Executive's date of death, whichever occurs later. An election for early
commencement must be made in writing within the 6-month period beginning on
Executive's date of death in accordance with such administrative procedures as
Company establishes for this purpose. Company will reduce the amount of the
survivor benefit to reflect its early commencement using the Early Retirement
Factors in Section 2.2.
2.4 Less Than 10 Years of Service. No benefit shall be paid to Executive or on
his behalf if Executive's employment with the Company and any related entity
described in Section 2.1(d)(8) terminates before Executive has completed 10
Years of Service.
Section 3.
The Company in its discretion exercised in good faith may forfeit the
Executive's benefit entirely if (a) Executive breaches any material term of any
applicable invention, confidentiality or noncompetition agreement in a manner
which directly results in an economic loss to the Company in an amount that is
material to its financial condition, (b) Executive intentionally and in bad
faith fails to provide information regarding Other Retirement Benefits or (c)
Executive institutes any legal action against the Company or any related
corporation or entity for which Years of Service are included under this
Agreement other than (i) an action by or on behalf of Executive to enforce the
terms and conditions of this Agreement, (ii) an action for recovery or
protection under the corporate
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<PAGE> 5
indemnification provided to Executive in the course of performing his duties on
behalf of Company or any related corporation or entity, including, without
limitation, an action under any applicable director and officer liability
insurance available, or (iii) as a counterclaim or defense to any claim asserted
by Company or any related corporation or entity against Executive.
Section 4.
SOURCE OF BENEFIT PAYMENTS
Unless there is a Change in Control of the Company, this benefit shall be paid
by the Company from its general assets or by a trust established for the
specific purpose of paying such benefit. No person shall have any right,
interest or claim whatsoever to the payment of this benefit from any person
whomsoever other than Company or such trust established for such purpose, and no
person shall have any right, interest or claim whatsoever to the payment of this
benefit which is superior in any manner to the right, interest, or claim of any
other general and unsecured creditor of the Company.
If a "Change of Control" does occur, all benefits accrued to date become
immediately vested and Executive in his discretion exercised at any time
thereafter may require the Company on behalf of Executive to place in a grantor
trust, of the type and with the terms and conditions of the Trust attached as
Exhibit B hereto, an amount of money which is equal to the present value of
Executive's benefits accrued to date and, on an annual basis thereafter, shall
make additional contributions for any additional benefit accruals of Executive.
The value is to be determined by an actuary (qualified to function as an actuary
under the Employee Retirement Income Security Act (ERISA)) using the following
assumptions:
Interest Discount 7%
Mortality 1983 GAM
Cost of Living Increase for Social
Security Benefits 3%
A delay by Executive in the making of a request for a trust shall in no way
compromise or invalidate Executive's rights with respect thereto, and Company
shall promptly honor such request once made.
Any assets transferred to a trust pursuant to a Change of Control will be
irrevocably committed to paying benefits under this Agreement and, in no event,
can any assets of such trust revert to the Company. The Executive can request
immediate payment from the trustee of any amounts necessary to cover the payment
of taxes which are due from the Executive as a result of the transfer of assets
to the trust or as a result of investment income earned by such trust.
For purposes of this Agreement, "Change in Control" shall mean changes in the
ownership of a corporation, changes in the effective control of a corporation
and changes in ownership of a substantial portion of a corporation's assets all
as defined, discussed and illustrated in Section 280G of the Internal Revenue
Code and the duly promulgated Treasury Regulations thereunder, and the
disposition of a
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<PAGE> 6
substantial portion of the corporation's assets as defined in (D) below. Without
limiting the foregoing and by way of example:
(A) A change in the ownership of a corporation occurs on the date that
any one person, or more than one person acting as a group, acquires ownership of
stock of that corporation that, together with stock held by such person or
group, possess more than fifty percent (50%) of the total fair market value or
total voting power of the stock of such corporation. An increase in the
percentage of stock owned by any one person, or persons acting as a group, as a
result of a transaction in which the corporation acquires its stock in exchange
for property will be treated as an acquisition of stock.
(B) A change in the effective control of a corporation occurs on the
date that either: any one person, or more than one person acting as a group,
acquires (or has acquired during the twelve (12) month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of
the corporation possessing twenty percent (20%) or more of the total voting
power of the stock of such corporation; or a majority of members of the
corporation's board of directors is replaced during any twelve (12) month period
by directors whose appointment or election is not endorsed by a majority of the
members of the corporation's Board of Directors who where directors prior to the
date of the appointment or election of the first of such new directors.
(C) A change in the ownership of a substantial portion of the
corporation's assets occurs on the date that any one person, or more than one
person acting as a group, acquires (or has acquired during the twelve (12) month
period ending on the date of the most recent acquisition by such person or
persons) assets from the corporation that have a total fair market value equal
to or more than one-third of the total fair market value of all of the assets of
the corporation immediately prior to such acquisition or acquisitions. The
transfer of assets by a corporation is not treated as a change in the ownership
of such assets if the assets are transferred: to a shareholder of the
corporation (immediately before the asset transfer) in exchange for such
shareholder's capital stock of the corporation having a fair market value
approximately equal to the fair market value of such assets; or to an entity,
fifty percent (50%) or more of the total value or voting power of which is
owned, directly or indirectly, by the corporation.
(D) A disposition of a substantial portion of a corporation's assets
occurs on the date that the corporation transfers assets by sale, distribution
to shareholders, assignment to creditors, foreclosure or otherwise, in a
transaction or transactions not in the ordinary course of the corporation's
business (or has made such transfers during the twelve (12) month period ending
on the date of the most recent such transfer of assets) that have a total fair
market value equal to or more than one-third of the total fair market value of
all of the assets of the corporation as of the date immediately prior to the
first such transfer or transfers. The transfer of assets by a corporation is not
treated as a disposition of a substantial portion of the corporation's assets if
the assets are transferred to an entity, fifty percent (50%) or more of the
total value or voting power of which is owned, directly or indirectly, by the
Company.
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<PAGE> 7
For purposes of the provisions of this Agreement defining "Change in Control,"
(i) references to the Company in this Agreement include the Georgia corporation
known as Healthdyne Technologies, Inc. as of the date of execution of this
Agreement, and any corporation which is the legal successor to such corporation
by virtue of merger or share exchange; and (ii) the terms "person," "acting as a
group" and "ownership" shall have the meanings prescribed in Sections 3(a)(9)
and 13(d)(3) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3
promulgated thereunder provided; however, that in any merger, consolidation or
share exchange in which less than fifty percent (50%) of the outstanding voting
securities of the Company or its successor corporation are held by the former
shareholders of the Company, the shareholders of the corporation or corporations
who acquired ownership of fifty percent (50%) or more of the surviving
corporations shall be deemed to have acted as a group, resulting in a change in
ownership under (A) above.
Section 5.
NOT A CONTRACT OF EMPLOYMENT
This benefit does not grant Executive the right to remain an employee of Company
for any specific term of employment or in any specific capacity or at any
specific rate of compensation.
Section 6.
NO ALIENATION OR ASSIGNMENT
Neither Executive nor his Spouse shall have any right or power whatsoever to
alienate, commute, anticipate or otherwise assign at law or equity all or any
portion of this benefit, and Company shall have the right, in the event of any
such action, to suspend temporarily or terminate permanently the payment of this
benefit to, or on behalf of, Executive or his Spouse if Executive or his Spouse
attempt to do so.
Section 7.
ERISA
The Company intends that this Agreement come within the various exceptions and
exemptions to ERISA for a plan maintained for a "select group of management or
highly compensated employees" as described in ERISA Sections 201(2), 301(a)(3),
and 401(a)(1), and any ambiguities in this document shall be construed to effect
that intent.
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<PAGE> 8
Section 8.
ADMINISTRATION, AMENDMENT AND TERMINATION
The Board of Directors of the Company shall have all powers necessary to
interpret and administer this award, to amend this award (and any related
exhibits) in writing from time to time in any respect whatsoever and to
terminate this award in writing at any time; provided, however, that any such
amendment or termination shall not be applied retroactively to deprive
Executive of all or any part of the benefits which have accrued to the date of
such amendment or termination. The Board of Directors also shall have the power
to delegate the exercise of all or any part of its powers to such other person
or persons as the Board deems appropriate under the circumstances. If a claim
for benefits under this Agreement is denied, the Board of Directors of the
Company shall provide written notice to Executive or his Spouse setting forth
the specific reasons for such denial and shall afford Executive or his Spouse a
reasonable opportunity for a full and fair review of the decision denying
benefits under this Agreement as required by ERISA Section 503. Reference to
the Company herein shall include any successor in interest to the Company or of
all or a substantial part of its business or assets (whether by merger, sale of
stock, sale of assets or otherwise) and this document shall be binding upon any
such successor and of any successor thereto.
Section 9.
CONSTRUCTION
The headings and subheadings set forth in this document are intended for
convenience only and have no substantive meaning whatsoever. In the construction
of this document, the masculine shall include the feminine and the singular
shall include the plural. This document will be construed in accordance with the
laws of the State of Georgia to the extent not preempted by ERISA.
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<PAGE> 9
Section 10.
EFFECTIVE DATE
This Agreement shall supersede the Retirement Benefit Award for the Executive
dated _________________, and shall become effective on the last to occur of (i)
the acceptance of this Agreement by Executive, or (ii) _________________.
HEALTHDYNE TECHNOLOGIES, INC.
By:
Title:
Date:
Accepted this _____ day of
_____________________199___
___________________________
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<PAGE> 10
HEALTHDYNE TECHNOLOGIES, INC.
RETIREMENT BENEFIT AWARD FOR_______
Section 1.
PURPOSE
The purpose of this Agreement is to recognize the valuable services of
______________________("Executive") to Healthdyne Technologies, Inc., a Georgia
corporation (the "Company"), and to its predecessor, Healthdyne, Inc., a Georgia
Corporation ("Healthdyne"), and to provide a targeted level of monthly
retirement income to Executive.
Section 2.
BENEFITS
2.1 Timing and Amount.
a. General. If Executive has completed 10 Years of Service when Executive's
employment with the Company (and any related entity described in Section
2.1(d)(8)) terminates, Executive will be entitled to receive a monthly
Retirement Benefit beginning when he reaches age 65 or terminates employment,
whichever occurs later. This Retirement Benefit for any month will equal the
amount which when added to Executive's Social Security Benefit, Other
Retirement Benefit, and Disability Benefit for such month will equal
Executive's Target Retirement Income for such month.
Thus, for any month, Executive's
Retirement Benefit + SSB + ORB + DB = TRI.
The amount of the Retirement Benefit may vary from month to month depending on
the amount of Executive's Social Security Benefit, Other Retirement Benefit and
Disability Benefit for such month.
b. Early Retirement. If Executive has completed 10 Years of Service when
Executive's employment with the Company (and any related entity described in
Section 2.1(d)(8)) terminates and such termination occurs before Executive
reaches age 65, he can elect to receive an Early Retirement Benefit at anytime
after the later of his fifty-fifth birthday or termination of employment with
the Company. Election for Early Retirement must be made in writing at least 60
days prior to the commencement of benefits. If Executive elects Early
Retirement, the amount of his benefit will be reduced (relative to the benefit
which would have been payable at age 65) to reflect its early commencement. His
Early Retirement Benefit for any month will equal the amount which when added
to Executive's Social Security Benefit, Other Retirement Benefit and Disability
Benefit for such month equals his Target Retirement Income for such month
multiplied by the applicable Early Retirement Factor ("ERF") in Section 2.2.
<PAGE> 11
Thus, for any month, Executive's
Early Retirement Benefit + SSB + ORB + DB = TRI x ERF.
The amount of this Early Retirement Benefit may vary from month to month
depending on the amount of Executive's SSB, ORB and DB for such month.
c. Payment Form. If Executive does not have a Spouse on the date his Retirement
Benefit or Early Retirement Benefit commences, his monthly benefit will be paid
to him for his life only based on a TRI determined under Section 2.1(d)(7) or,
in the case of an Early Retirement Benefit, a reduced TRI. Except as described
below, if Executive has a Spouse on the date his Retirement Benefit or Early
Retirement Benefit commences, he will receive a reduced monthly benefit for his
life and, after his death, a monthly benefit will be paid to his surviving
Spouse for her life in an amount equal to 50% of the monthly benefit which
would have been payable to Executive if he had survived. The reduced monthly
benefit and surviving Spouse benefit will be determined by an actuary chosen by
the Company, and the resulting benefit will be equivalent in value to the
monthly benefit otherwise due to the Executive using the actuarial assumptions
listed in Section 4. However, the Executive will be treated as if he has no
Spouse on the date benefits commence if the Spouse dies prior to the payment of
the first monthly payment to Executive. An Executive who has a Spouse on the
date his Retirement Benefit or Early Retirement Benefit commences can elect to
have his benefit paid to him for his life only based on a TRI determined under
Section 2.1(d)(7) or, in the case of an Early Retirement Benefit, a reduced
TRI. Any such election must be made in writing within the 90-day period
immediately preceding the commencement of benefits in accordance with such
administrative procedures as the Company establishes for this purpose. Any such
election shall become irrevocable at the time so made.
d. Definitions. The following definitions apply for purposes of
determining Executive's benefit under this Section 2:
(1) Accrual Fraction - means a fraction, the numerator of which is the
lesser of 20 or Executive's actual Years of Service and the denominator
of which is the lesser of 20 or the number of Years of Service
Executive would complete if Executive continued employment with Company
until Executive reached age 65. The Accrual Fraction cannot exceed one.
(2) Average Compensation - means the arithmetic average of Executive's
annual base salary from the Company or Healthdyne for the three
calendar years for which Executive's base salary is the highest,
including (if applicable) the calendar year in which Executive
terminates employment.
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<PAGE> 12
(3) Disability Benefit ("DB") - means for any month the monthly
disability benefit, if any, actually paid to Executive under any
long-term disability plan maintained by the Company.
(4) Other Retirement Benefit ("ORB") - means for any month an amount
determined by the Company which is attributable to the benefit, if any,
provided to Executive under any defined benefit pension plan maintained
by the Company or any related entity for the benefit of Executive with
respect to employment services prior to the termination of employment
with the Company.
(5) Social Security Benefit ("SSB") - means zero for any month
beginning before Executive's Social Security retirement age, and
thereafter means the maximum monthly Social Security benefit that
Executive would be (or, in the event of Executive's death, is deemed by
the Company to have been) eligible to receive at such age determined
without regard to whether Executive commenced receiving Social Security
benefits earlier.
(6) Spouse - means the spouse to whom Executive has been legally
married in a civil or religious ceremony throughout the one year period
ending on the earlier of the date Executive's Retirement Benefit
commences or his date of death.
(7) Target Retirement Income ("TRI") - means for any Retirement Benefit
payable for Executive's life only, the monthly benefit beginning when
Executive reaches age 65 or terminates employment, whichever occurs
last, determined in accordance with the following formula based on
Executive's Average Compensation and Years of Service as of the date
Executive's employment with the Company terminates:
(60% x Average Compensation x Accrual Fraction) x 1/12.
(8) Year of Service - means each calendar year in which Executive
completes at least 1000 hours of employment with the Company.
Employment with Healthdyne or with any direct or indirect corporation
or entity in which Company owns in excess of 50% of the outstanding
voting stock shall for all purposes under this Agreement be deemed to
constitute employment with the Company.
With respect to calendar years which predate the date of this
Agreement, the parties agree that Executive completed 1,000 hours of
employment with respect to all calendar years set forth on Exhibit A
hereto.
2.2 Early Retirement Factor. The early retirement factors set forth below are
applied to determine the Early Retirement Benefit under Section 2.1(b) and any
survivor benefit which commences early under Section 2.3 based on Executive's
age when he begins receiving his Early Retirement Benefit (or, if payments
3
<PAGE> 13
begin after Executive's death, the age Executive would have been when
Executive's Spouse begins receiving the survivor benefit):
.50 at age 55 .67 at age 60
.53 at age 56 .73 at age 61
.57 at age 57 .80 at age 62
.60 at age 58 .87 at age 63
.63 at age 59 .93 at age 64
2.3 Survivor Benefit. If benefits under this Agreement are payable in a joint
and survivor form and Executive dies while receiving benefits under this
Agreement, payments will begin to his surviving Spouse following Executive's
death in an amount each month equal to 50% of the monthly benefit which would
have been payable to Executive if he had survived. If Executive dies after
completing 10 Years of Service but before receiving any benefits under this
Agreement, his Spouse shall be entitled to receive the monthly survivor benefit
which would have been payable to her if Executive had terminated his employment
with Company on the earlier of (a) his date of death, or (b) the date his
employment terminated, survived to age 65 and died after beginning to receive
benefits in the joint and survivor form. Payment of this monthly survivor
benefit will begin when Executive would have reached age 65 or his date of
death, whichever occurs later, unless his surviving Spouse elects to begin
receiving the survivor benefit when Executive would have reached age 55 or
Executive's date of death, whichever occurs later. An election for early
commencement must be made in writing within the 6-month period beginning on
Executive's date of death in accordance with such administrative procedures as
Company establishes for this purpose. Company will reduce the amount of the
survivor benefit to reflect its early commencement using the Early Retirement
Factors in Section 2.2.
2.4 Less Than 10 Years of Service. No benefit shall be paid to Executive or on
his behalf if Executive's employment with the Company and any related entity
described in Section 2.1(d)(8) terminates before Executive has completed 10
Years of Service.
Section 3.
The Company in its discretion exercised in good faith may forfeit the
Executive's benefit entirely if (a) Executive breaches any material term of any
applicable invention, confidentiality or noncompetition agreement in a manner
which directly results in an economic loss to the Company in an amount that is
material to its financial condition, (b) Executive intentionally and in bad
faith fails to provide information regarding Other Retirement Benefits or (c)
Executive institutes any legal action against the Company or any related
corporation or entity for which Years of Service are included under this
Agreement other than (i) an action by or on behalf of Executive to enforce the
terms and conditions of this Agreement, or of any other Non-competition
Agreement or arrangement with the Company or any related corporation or entity,
(ii) an action for recovery or protection under the corporate indemnification
provided to Executive in the course of performing his duties on behalf of
Company or any related corporation or entity, including, without limitation, an
action under any applicable director and officer liability insurance available,
or (iii) as a counterclaim or defense to any claim asserted by Company or any
related corporation or entity against Executive.
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<PAGE> 14
Section 4.
SOURCE OF BENEFIT PAYMENTS
Unless there is a Change in Control of the Company, this benefit shall be paid
by the Company from its general assets or by a trust established for the
specific purpose of paying such benefit. No person shall have any right,
interest or claim whatsoever to the payment of this benefit from any person
whomsoever other than Company or such trust established for such purpose, and no
person shall have any right, interest or claim whatsoever to the payment of this
benefit which is superior in any manner to the right, interest, or claim of any
other general and unsecured creditor of the Company.
If a "Change of Control" does occur, all benefits accrued to date become
immediately vested and Executive in his discretion exercised at any time
thereafter may require the Company on behalf of Executive to place in a grantor
trust, of the type and with the terms and conditions of the Trust attached as
Exhibit B hereto, an amount of money which is equal to the present value of
Executive's benefits accrued to date and, on an annual basis thereafter, shall
make additional contributions for any additional benefit accruals of Executive.
The value is to be determined by an actuary (qualified to function as an actuary
under the Employee Retirement Income Security Act (ERISA)) using the following
assumptions:
Interest Discount 7%
Mortality 1983 GAM
Cost of Living Increase for Social
Security Benefits 3%
A delay by Executive in the making of a request for a trust shall in no way
compromise or invalidate Executive's rights with respect thereto, and Company
shall promptly honor such request once made.
Any assets transferred to a trust pursuant to a Change of Control will be
irrevocably committed to paying benefits under this Agreement and, in no event,
can any assets of such trust revert to the Company. The Executive can request
immediate payment from the trustee of any amounts necessary to cover the payment
of taxes which are due from the Executive as a result of the transfer of assets
to the trust or as a result of investment income earned by such trust.
For purposes of this Agreement, "Change in Control" shall mean changes in the
ownership of a corporation, changes in the effective control of a corporation
and changes in ownership of a substantial portion of a corporation's assets all
as defined, discussed and illustrated in Section 280G of the Internal Revenue
Code and the duly promulgated Treasury Regulations thereunder, and the
disposition of a substantial portion of the corporation's assets as defined in
(D) below. Without limiting the foregoing and by way of example:
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<PAGE> 15
(A) A change in the ownership of a corporation occurs on the date that
any one person, or more than one person acting as a group, acquires ownership of
stock of that corporation that, together with stock held by such person or
group, possess more than fifty percent (50%) of the total fair market value or
total voting power of the stock of such corporation. An increase in the
percentage of stock owned by any one person, or persons acting as a group, as a
result of a transaction in which the corporation acquires its stock in exchange
for property will be treated as an acquisition of stock.
(B) A change in the effective control of a corporation occurs on the
date that either: any one person, or more than one person acting as a group,
acquires (or has acquired during the twelve (12) month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of
the corporation possessing twenty percent (20%) or more of the total voting
power of the stock of such corporation; or a majority of members of the
corporation's board of directors is replaced during any twelve (12) month period
by directors whose appointment or election is not endorsed by a majority of the
members of the corporation's Board of Directors who where directors prior to the
date of the appointment or election of the first of such new directors.
(C) A change in the ownership of a substantial portion of the
corporation's assets occurs on the date that any one person, or more than one
person acting as a group, acquires (or has acquired during the twelve (12) month
period ending on the date of the most recent acquisition by such person or
persons) assets from the corporation that have a total fair market value equal
to or more than one-third of the total fair market value of all of the assets of
the corporation immediately prior to such acquisition or acquisitions. The
transfer of assets by a corporation is not treated as a change in the ownership
of such assets if the assets are transferred: to a shareholder of the
corporation (immediately before the asset transfer) in exchange for such
shareholder's capital stock of the corporation having a fair market value
approximately equal to the fair market value of such assets; or to an entity,
fifty percent (50%) or more of the total value or voting power of which is
owned, directly or indirectly, by the corporation.
(D) A disposition of a substantial portion of a corporation's assets
occurs on the date that the corporation transfers assets by sale, distribution
to shareholders, assignment to creditors, foreclosure or otherwise, in a
transaction or transactions not in the ordinary course of the corporation's
business (or has made such transfers during the twelve (12) month period ending
on the date of the most recent such transfer of assets) that have a total fair
market value equal to or more than one-third of the total fair market value of
all of the assets of the corporation as of the date immediately prior to the
first such transfer or transfers. The transfer of assets by a corporation is not
treated as a disposition of a substantial portion of the corporation's assets if
the assets are transferred to an entity, fifty percent (50%) or more of the
total value or voting power of which is owned, directly or indirectly, by the
Company.
For purposes of the provisions of this Agreement defining "Change in Control,"
(i) references to the Company in this Agreement include the Georgia corporation
known as Healthdyne Technologies, Inc. as of the date of execution of this
Agreement, and any corporation which is the legal successor to such corporation
by virtue of merger or share exchange; and (ii) the terms "person," "acting as a
group" and
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<PAGE> 16
"ownership" shall have the meanings prescribed in Sections 3(a)(9) and 13(d)(3)
of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 promulgated
thereunder provided; however, that in any merger, consolidation or share
exchange in which less than fifty percent (50%) of the outstanding voting
securities of the Company or its successor corporation are held by the former
shareholders of the Company, the shareholders of the corporation or corporations
who acquired ownership of fifty percent (50%) or more of the surviving
corporations shall be deemed to have acted as a group, resulting in a change in
ownership under (A) above.
Section 5.
NOT A CONTRACT OF EMPLOYMENT
This benefit does not grant Executive the right to remain an employee of Company
for any specific term of employment or in any specific capacity or at any
specific rate of compensation.
Section 6.
NO ALIENATION OR ASSIGNMENT
Neither Executive nor his Spouse shall have any right or power whatsoever to
alienate, commute, anticipate or otherwise assign at law or equity all or any
portion of this benefit, and Company shall have the right, in the event of any
such action, to suspend temporarily or terminate permanently the payment of this
benefit to, or on behalf of, Executive or his Spouse if Executive or his Spouse
attempt to do so.
Section 7.
ERISA
The Company intends that this Agreement come within the various exceptions and
exemptions to ERISA for a plan maintained for a "select group of management or
highly compensated employees" as described in ERISA Sections 201(2), 301(a)(3),
and 401(a)(1), and any ambiguities in this document shall be construed to effect
that intent.
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<PAGE> 17
Section 8.
ADMINISTRATION, AMENDMENT AND TERMINATION
The Board of Directors of the Company shall have all powers necessary to
interpret and administer this award, to amend this award (and any related
exhibits) in writing from time to time in any respect whatsoever and to
terminate this award in writing at any time; provided, however, that any such
amendment or termination shall not be applied retroactively to deprive Executive
of all or any part of the benefits which have accrued to the date of such
amendment or termination. The Board of Directors also shall have the power to
delegate the exercise of all or any part of its powers to such other person or
persons as the Board deems appropriate under the circumstances. If a claim for
benefits under this Agreement is denied, the Board of Directors of the Company
shall provide written notice to Executive or his Spouse setting forth the
specific reasons for such denial and shall afford Executive or his Spouse a
reasonable opportunity for a full and fair review of the decision denying
benefits under this Agreement as required by ERISA Section 503. Reference to
the Company herein shall include any successor in interest to the Company or of
all or a substantial part of its business or assets (whether by merger, sale of
stock, sale of assets or otherwise) and this document shall be binding upon any
such successor and of any successor thereto.
Section 9.
CONSTRUCTION
The headings and subheadings set forth in this document are intended for
convenience only and have no substantive meaning whatsoever. In the construction
of this document, the masculine shall include the feminine and the singular
shall include the plural. This document will be construed in accordance with the
laws of the State of Georgia to the extent not preempted by ERISA.
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<PAGE> 18
Section 10.
EFFECTIVE DATE
This Agreement shall supersede the Retirement Benefit Award for the Executive
dated _________________, and shall become effective on the last to occur of (i)
the acceptance of this Agreement by Executive, or (ii) ____________________.
HEALTHDYNE TECHNOLOGIES, INC.
By: ---------------------------------
Title: ---------------------------------
Date: ---------------------------------
Accepted this ______ day of
______________________, 199__
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<PAGE> 19
<PAGE> 20
EXHIBIT A
YEARS OF SERVICE OF EACH EMPLOYEE
<PAGE> 21
EXHIBIT B
TRUST UNDER HEALTHDYNE, INC. NONQUALIFIED RETIREMENT PLANS
This Agreement made this ____ day of _____________, 19__ by and between
Healthdyne, Inc. (Company) and ____________________, a commercial bank or trust
company acceptable to a majority of all participants and beneficiaries entitled
to benefit payments under the Plan(s), (Trustee);
WHEREAS, Company has adopted the nonqualified deferred compensation
Plan(s) as listed in Appendix A.
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Plan(s) with respect to the individuals participating in such
Plan(s);
WHEREAS, Company wishes to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan(s);
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Plan(s) as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
WHEREAS, it is the intention of Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Plan(s);
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
SECTION I. ESTABLISHMENT OF TRUST
(a) Company hereby deposits with Trustee in trust _________ [insert
amount deposited], which shall become the principal of the Trust to be held,
administered and disposed of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
<PAGE> 22
(c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of Plan participants and general creditors as herein set
forth. Plan participants and their beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any assets of the Trust. Any rights
created under the Plan(s) and this Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their beneficiaries against Company.
Any assets held by the Trust will be subject to the claims of Company's general
creditors under federal and state law in the event of Insolvency, as defined in
Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in trust with Trustee
to augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional deposits.
(f) Company shall, as soon as possible, but in no event longer than 90
days following the establishment of this Trust, make an irrevocable contribution
to the Trust in an amount that is sufficient to pay each Plan participant or
beneficiary the benefits to which Plan participants or their beneficiaries would
be entitled pursuant to the terms of the Plan(s) as of the date on which this
Trust is established.
(g) Within 90 days following the end of each Plan year(s) after the
Trust is established, Company shall be required to irrevocably deposit
additional cash or other property to the Trust in an amount sufficient to pay
each Plan participant or beneficiary the benefits payable pursuant to the terms
of the Plan(s) as of the close of the Plan year(s).
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<PAGE> 23
SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
(a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid (as provided for or available under the
Plan(s), and the time of commencement for payment of such amounts. Except as
otherwise provided herein or in the Plan(s), Trustee shall make payments to the
Plan participants and their beneficiaries in accordance with such Payment
Schedule. The Trustee shall make provision for the reporting and withholding of
any federal, state or local taxes that may be required to be withheld with
respect to the payment of benefits pursuant to the terms of the Plan(s) and
shall pay amounts withheld to the appropriate taxing authorities or determine
that such amounts have been reported, withheld and paid by Company.
(b) The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plan(s) shall be determined in good faith by Company or
such party as it shall designate under the Plan(s), and any claim for such
benefits shall be considered and reviewed under the procedures set out in the
Plan(s).
(c) Company may make payment of benefits directly to Plan participants
or their beneficiaries as they become due under the terms of the Plan(s).
Company shall notify Trustee of its decision to make payment of benefits
directly prior to the time amounts are payable to participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with the
terms of the Plan(s), Company shall make the balance of each such payment as it
falls due. Trustee shall notify Company where principal and earnings are not
sufficient.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN
COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Plan participants and their
beneficiaries if the Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to
pay its debts as they become due, or (ii) Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
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<PAGE> 24
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Company under federal and state law as set forth
below.
(1) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in
writing to Trustee that Company has become Insolvent, Trustee shall
determine whether Company is Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to Plan participants or
their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming to
be a creditor alleging that Company is Insolvent, Trustee shall have no
duty to inquire whether Company is Insolvent. Trustee may in all events
rely on such evidence concerning Company's solvency as may be furnished
to Trustee and that provides Trustee with a reasonable basis for making
a determination concerning Company's solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Plan participants or
their beneficiaries and shall hold the assets of the Trust for the
benefit of Company's general creditors. Nothing in this Trust Agreement
shall in any way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of Company
with respect to benefits due under the Plan(s) or otherwise.
(4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of
this Trust Agreement only after Trustee has determined that Company is
not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan(s) for the
period of such discontinuance, less the aggregate amount of any payments made to
Plan participants or their beneficiaries by Company in lieu of the payments
provided for hereunder during any such period of
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<PAGE> 25
discontinuance.
SECTION 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, Company shall have no right or
power to direct Trustee to return to Company or to divert to others any of the
Trust assets before all payment of benefits have been made to Plan participants
and their beneficiaries pursuant to the terms of the Plan(s).
SECTION 5. INVESTMENT AUTHORITY.
(a) In no event may Trustee invest in securities (including stock or
rights to acquire stock) or obligations issued by Company, other than a de
minimis amount held in common investment vehicles in which Trustee invests. All
rights associated with assets of the Trust shall be exercised by Trustee or the
person designated by Trustee, and shall in no event be exercisable by or rest
with Plan participants.
[(B) THE TRUSTEE AND COMPANY SHALL AGREE TO SUCH OTHER INVESTMENT
POWERS OF THE TRUSTEE AS ARE NECESSARY FOR THE ESTABLISHMENT AND PROPER
ADMINISTRATION OF THE TRUST; PROVIDED, HOWEVER, THAT SUCH INVESTMENT POWERS ARE
STANDARD AMONG THE INDUSTRY AND DO NOT CONFLICT WITH THE TERMS OF THE TRUST AS
SET FORTH HEREIN.]
SECTION 6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
SECTION 7. ACCOUNTING BY TRUSTEE.
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee. Within 120 days following the close of each calendar year
and within 30 days after the removal or resignation of Trustee, Trustee shall
deliver to Company a written account of its administration of the Trust during
such year or during the period from the close of the last
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<PAGE> 26
preceding year to the date of such removal or resignation, setting forth all
investments, receipts, disbursements and other transactions effected by it,
including a description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued interest paid
or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be.
SECTION 8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of the Plan(s) or this Trust and is given in
writing by Company. In the event of a dispute between Company and a party,
Trustee may apply to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Company does not pay such costs, expenses and liabilities in a
reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for
Company generally) with respect to any of its duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the
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<PAGE> 27
policy (as distinct from conversion of the policy to a different form) other
than to a successor Trustee, or to loan to any person the proceeds of any
borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue code.
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
Company shall pay all administrative and Trustee's fees and expenses.
If not so paid, the fees and expenses shall be paid from the Trust.
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Company, which
shall be effective 45 days after receipt of such notice unless Company and
Trustee agree otherwise.
(b) Trustee may be removed by Company on 45 days notice or upon
shorter notice accepted by Trustee.
(c) If Trustee resigns or is removed within 5 years after this Trust is
established, Company shall apply to a court of competent jurisdiction for the
appointment of a successor Trustee or for instructions.
(d) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within 45 days after receipt of notice
of resignation, removal or transfer, unless Company extends the time limit.
(e) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraphs (a) or (b) of this section. If no such appointment has
been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
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<PAGE> 28
SECTION 11. APPOINTMENT OF SUCCESSOR.
If Trustee resigns or is removed in accordance with Section 10(a) or
(b) hereof, Company may appoint any unaffiliated third party, such as a bank
trust department or other party that may be granted corporate trustee powers
under state law, as a successor to replace Trustee upon resignation or removal.
The Company must obtain the prior written approval of a majority of the
participants and beneficiaries entitled to benefit payments under the Plan(s)
for the appointment of the successor Trustee, unless such appointment has been
made by a court of competent jurisdiction. The appointment shall be effective
when accepted in writing by the new Trustee, who shall have all of the rights
and powers of the former Trustee, (including ownership rights in the Trust
assets. The former Trustee shall execute any instrument necessary or reasonably
requested by Company or the successor Trustee to evidence the transfer.
SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company with the prior written approval of all
participants and beneficiaries entitled to benefit payments pursuant to the
terms of the Plan(s). Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Plan(s), shall infringe on the benefits intended
to be provided under the Plan(s), reduce or restrict the assets which are the
subject of the Trust other than as required by Section 3, or shall make the
Trust revocable.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan(s). Upon termination of the Trust any assets remaining
in the Trust shall be returned to Company.
(c) Upon prior written approval of all participants or beneficiaries
entitled to payment of benefits pursuant to the terms of the Plan(s), Company
may terminate this Trust prior to the time all benefit payments under the
Plan(s) have been made. All assets in the Trust at termination shall be returned
to Company.
-8-
<PAGE> 29
SECTION 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the state of _______________ [TO BE DETERMINED BY
THE TRUSTEE].
SECTION 14. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be _______________,
19__.
-9-
<PAGE> 1
Exhibit 12
AMENDMENT NUMBER 1
TO THE
HEALTHDYNE TECHNOLOGIES, INC.
RETIREMENT BENEFIT AWARD AGREEMENTS
WHEREAS, the Healthdyne Technologies, Inc. (the "Company") has entered
into Retirement Benefit Award Agreements (the "Agreements") with certain
Executives;
WHEREAS, the terms of the Agreements grant to the Board of Directors of
the Company the power to amend the Agreements in writing from time to time; and
WHEREAS, it is desirable to amend each of the Agreements to provide an
offset to benefits payable to an Executive or an Executive's beneficiary under
the Agreement for any benefits provided under any split-dollar life insurance
agreement between such Executive and the Company.
NOW, THEREFORE, effective ________________, 19___, each Agreement is
amended as follows:
Section 2
BENEFITS
1. Section 2.1(c) is amended by changing the phrase "using the actuarial
assumptions listed in ss. 4" at the end of the third sentence thereof to the
phrase "using the actuarial assumptions set forth in the definition of
Actuarial Equivalent."
2. Section 2.1(d) is amended by adding a new paragraph (2) thereto to
read as follows and by renumbering the former paragraphs (2) through (8)
as paragraphs (3) through (9), respectively:
"(2) Actuarial Equivalent - means a benefit in the form of a lump
sum payment which has an equivalent value computed by an enrolled
actuary (as defined in Department of Labor Regulation Section
901.1(8)) using the following assumptions:
Interest Rate: 7%
Mortality Table: 1983 GAM
Cost of Living Increases for
Social Security Benefits: 3%
1
<PAGE> 2
3. A new Section 2.5 is added to read as follows:
"2.5. Offset for Certain Benefits Payable Under Split-Dollar Life
Insurance Agreements.
a. Offset Value. Executive may own a life insurance policy (the
"Policy") purchased on his or her behalf by the Company. The exercise of
ownership rights under this Policy by Executive is, however, subject to
certain conditions (set forth in a 'Split-Dollar Life Insurance Agreement'
between Executive and the Company, pursuant to which the Company holds a
security interest on the Policy) and, if Executive fails to meet the
conditions set forth in the Split-Dollar Life Insurance Agreement, the
Company may exercise its security interest in the Policy and cause
Executive to lose certain benefits under the Policy. In the event that
Executive satisfies the condition specified in Section 4 or 5 of the
Split-Dollar Life Insurance Agreement, so that Executive or his or her
beneficiary becomes entitled to exercise rights free from the Company's
security interest under one of those sections, or the Company's security
interest is otherwise released, the value of those benefits shall
constitute an offset to Executive's benefits otherwise payable under this
Agreement. As the case may be, this offset (the 'Offset Value') shall be
equal to the cash surrender value of the Policy at the time Executive
becomes entitled to exercise rights free from the Company's security
interest, or in the case of Executive's death, the death benefits payable
to the beneficiary under the Policy. The Actuarial Equivalent of the
Offset Value shall be compared to the Actuarial Equivalent of the benefits
payable under this Agreement (the 'Plan Value'), and the Plan Value shall
be reduced by the Actuarial Equivalent of the Offset Value at the time and
in the manner described in Section 2.5(b) or Section 2.5(c).
b. Manner and Calculation of Payment. If, at the time Executive
terminates employment, the Plan Value exceeds the Actuarial Equivalent of
the Offset Value, the excess of the Plan Value over the Actuarial
Equivalent of the Offset Value shall be paid to Executive or Spouse at the
time and in the manner provided under the general provisions of Section 2;
provided, however, that if such excess is less than $10,000, such excess
shall be paid immediately to Executive or Spouse in a cash lump sum. For
this purpose, the Plan Value shall be calculated by assuming that
Executive or Spouse commences receiving benefits under this Agreement, as
well as any Other Retirement Benefits, any Disability Benefits and Social
Security Benefits, immediately upon Executive's termination of employment
with the Company (or any related entity described in Section 2.1(d)(8));
provided, however, that if Executive terminates employment when Executive
or Spouse is not eligible to commence the receipt of any of such benefits,
the calculation of the Plan Value shall be determined assuming that any
such benefits commence on the earliest date on which such benefits become
payable.
c. Payment of Certain Benefits. If the policy described in
Section 2.5(a) insures the life of an individual other than Executive (the
"Insured Party"), and if such Insured Party dies prior to Executive's
becoming eligible for benefits under this Agreement, and if Executive or
Spouse subsequently becomes eligible for benefits
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<PAGE> 3
hereunder, the Plan Value (as defined in Section 2.5 (a) and
Section 2.5(b)) shall then be offset by the Actuarial Equivalent of the
amount equal to the death benefit previously paid to Executive or
Executive's beneficiary pursuant to the Split-Dollar Life Insurance
Agreement divided by the Tax Adjustment Factor (as defined below). Any
remaining Plan Value shall thereupon be paid to the Executive or Spouse at
the time and in the manner provided under the general provisions of
Section 2; provided, however, that if such remaining Plan Value is less
than $10,000, such remaining Plan Value shall be paid immediately to the
Executive or Spouse in a cash lump sum.
d. Tax Adjustment Factor. For purposes of this Section 2.5, Tax
Adjustment Factor shall mean a number, determined by the Company, which is
equal to one minus the sum of (a) the highest marginal federal personal
income tax rate then in effect and (b) the effective highest marginal
state income tax rate in the state in which Executive resides, net after
the effect of the deduction for such state income tax for federal income
tax purposes."
Section 4
SOURCE OF BENEFIT PAYMENTS
4. Section 4 is amended by deleting the clause "Unless there is a Change
in Control of the Company," at the beginning of the first paragraph thereof and
by capitalizing the first letter of the word "this" which appears after such
clause.
5. Section 4 is further amended by deleting the next three paragraphs
thereof (which begin with the phrases "If a 'Change in Control does occur," "A
delay by the Executive in the making" and "Any assets transferred to a trust")
and by inserting the following provisions in place of those deleted paragraphs:
"If a Change of Control (as defined below) occurs, all benefits accrued to
date by Executive shall cease to be forfeitable under Section 3 of this
Agreement, and Executive in his discretion exercised at any time thereafter may
require the Company on behalf of Executive to place in an individual grantor
trust established by the Company for the benefit of Executive (and Spouse, if
any), of the type and with the terms and conditions of the sample trust document
attached hereto as Exhibit B, an amount of money which is the lump sum
Actuarial Equivalent of Executive's benefits accrued to date. The Company shall
establish such trust and transfer such amount of money to the trust as soon as
practicable but in no event later than 30 days after written request from
Executive is received by the Company. Within 30 days after the end of each
calendar year thereafter, the Company shall make additional contributions to
the trust in amounts which, when added to the funds held by the trust, are
equal to the lump sum Actuarial Equivalent of the benefits accrued by Executive
as of the end of such calendar year. A delay by Executive in the making of a
request for the establishment of such a trust shall in no way compromise or
invalidate Executive's rights with respect thereto. For purposes of determining
the amounts to be transferred to a trust following a Change in Control,
'benefits accrued' and 'benefit accruals' shall be determined (1) without
regard to the possibility of any offset under Section 2.5 or whether Executive
has completed
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<PAGE> 4
10 Years of Service, (2) assuming that Executive retires and commences
receiving benefits under this Agreement at the earliest date that benefits
become payable under the Agreement, and (3) assuming that any Other Retirement
Benefits and Social Security Benefits commence at the earliest date on which
such benefits become payable.
Except as provided herein, any assets transferred to a trust following a
Change in Control in accordance with the terms of the preceding paragraph shall
be irrevocably committed to paying benefits under this Agreement. No assets of
such trust shall revert to the Company prior to the payment of all benefits
payable to Executive under this Agreement (determined after any offset is made
pursuant to Section 2.5 of this Plan). In the event that Executive terminates
employment prior to completing 10 Years of Service, no benefits shall be
payable to Executive under this Agreement, and all assets held under such a
trust shall immediately revert to the Company. Notwithstanding anything
contained herein to the contrary, in the event that the value of the trust fund
ever exceeds 150% of the lump sum Actuarial Equivalent of Executive's accrued
but unpaid benefits (determined without regard to any offset pursuant to
Section 2.5 until such offset, if any, has actually occurred), that portion of
the trust fund in excess of 150% of such lump sum Actuarial Equivalent may, in
the Company's discretion, revert to the Company. In addition, Executive shall be
entitled to request immediate distribution from the trust of all or a portion
of the amount of taxes for which Executive has become liable as a result of the
transfer of assets to the trust or as a result of investment income earned by
such trust."
4
<PAGE> 5
EXHIBIT B
6. Exhibit B is amended by changing the title thereof to "Healthdyne
Technologies, Inc. Grantor Trust for Retirement Benefits for ____________" and
by changing the first paragraph thereof to read as follows:
"This Agreement made this ___ day of ___________,19__ by and
between Healthdyne Technologies, Inc. ('Company') and
___________________, a commercial bank or trust company acceptable to
a majority of Company's executives and former executives who have
entered into retirement benefit award agreements with the Company and
are or may become eligible to receive retirement benefits pursuant to
such agreements ('Trustee')."
7. Exhibit B is further amended by restating the "Whereas" clauses to
read as follows:
WHEREAS, Company has entered into a Retirement Benefit Award
Agreement ('Agreement') with _________________ [insert name of
executive] ('Executive');
WHEREAS, Company has incurred or expects to incur liability
under the terms of such Agreement with respect to Executive;
WHEREAS, Company wishes to establish a trust ('Trust') and to
contribute to the Trust assets that shall be held therein, subject to
the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Executive and/or
Executive's surviving Spouse in such manner and at such time as
provided in the Agreement;
WHEREAS, it is the intention of the parties that this Trust
shall constitute an unfunded arrangement and shall not affect the
status of the Agreement as a part of an unfunded plan maintained for
the purpose of providing deferred compensation for a select group of
management or highly compensated employees for purposes of Title I of
the Employee Retirement Income Security Act of 1974;
WHEREAS, it is the intention of Company to make contributions to
the Trust to provide itself with a source of funds to assist it in
the meeting of its liabilities under the Agreement;".
8. Exhibit B is further amended by deleting subsections (d) through (g)
of Section 1 and inserting the following new subsections (d) through (i) in
place thereof:
"(d) The principal of the Trust, and any earnings thereon, shall
be held separate and apart from other funds of Company and shall be
used exclusively for the uses and purposes of Executive and general
creditors as set
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<PAGE> 6
forth herein. Executive and/or Executive's surviving Spouse (as
defined in the Agreement) shall have no preferred claim on, or any
beneficial ownership interest in, any assets of the Trust. Any rights
created under the Agreement and this Trust Agreement shall be mere
unsecured contractual rights of Executive and/or Executive's
surviving Spouse against Company. Any assets held by the Trust will
be subject to the claims of Company's general creditors under federal
and state law in the event of Insolvency, as defined in Section 3(a)
herein.
(e) Company shall, as soon as possible but in no event later
than the date specified in the Agreement, make an irrevocable
contribution to the Trust in an amount that is the lump sum Actuarial
Equivalent (as defined in the Agreement) of Executive's accrued
benefits (as defined in the second paragraph of Section 4 of the
Agreement) as of the date on which this Trust is established.
(f) Within 30 days following the end of each calendar year after
the Trust is established, Company shall be required to irrevocably
deposit additional cash or other property to the Trust in an amount
which, when combined with the other trust assets, is equal to the
lump sum Actuarial Equivalent of the Executive's accrued benefits
under the terms of the Agreement as of the close of the calendar
year.
(g) Company, in its sole discretion, may at any time, or from
time to time, make additional deposits of cash or other property in
trust with Trustee to augment the principal to be held, administered
and disposed of by Trustee as provided in this Trust Agreement.
Neither Trustee nor Executive (nor Executive's Spouse) shall any
right to compel such additional deposits.
(i) Notwithstanding anything to contrary contained herein, in
the event that the value of the Trust funds ever exceeds 150% of the
lump sum Actuarial Equivalent of the accrued benefits of Executive
(determined without regard to any offset pursuant to Section 2.5 of
the Agreement unless such offset, if any, has actually occurred),
that portion of Trust Fund in excess of 150% of such lump sum
Actuarial Equivalent may, in the Company's discretion, revert to
Company."
9. Exhibit B is further amended (a) by replacing the phrases "each Plan
participant (and his or her beneficiary)" and "Plan participants and their
beneficiaries" with the phrase "Executive and/or Executive's surviving Spouse",
(b) by replacing the phrases "Plan participant or his or her beneficiaries" and
"Plan participants or their beneficiaries" with the phrase "Executive or
Executive's surviving Spouse", and (c) by replacing the term "Plan(s)" with the
term "Agreement" throughout Sections 2 through 13.
10. Sections 11 and 12 of Exhibit B are amended by replacing the three
phrases "a majority of the participants and beneficiaries entitled to benefit
payments", "all participants and beneficiaries entitled to benefit payments"
and "all participants and beneficiaries entitled
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<PAGE> 7
to payment of benefits" with the phrase "Executive or, if Executive is no
longer living, Executive's surviving Spouse."
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officers this ____ day of ________________, 1996.
HEALTHDYNE TECHNOLOGIES, INC.
By___________________________
By:__________________________
7
<PAGE> 1
Exhibit 13
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
This Agreement is entered into as of ___________, ____ by and between
Technologies, Inc., a Georgia corporation, (the "Company") and ("Employee") in
reference to the following facts:
1. Employee is a valued employee of the Company.
2. The Company has simultaneously with the execution of
this Agreement caused _____________________________________ (the "Insurance
Company") to issue and deliver to Employee policy number __________ (the
"Policy") on the life of Employee. The first annual premium has been paid by
the Company as of the date of this Agreement.
3. For purposes of this Agreement, the Company and any
subsidiary of the Company shall constitute the "Employer." For this purpose, a
subsidiary is a corporation which is a member of a controlled group of
corporations (within the meaning of Section 414(b) of the Internal Revenue Code
of 1986, as amended (the "Code")) of which the Company is a member. If Employee
is employed by a corporation which, as a result of a sale or other corporate
reorganization, ceases to be a member of such controlled group, such sale or
other corporate reorganization shall be treated as a termination of Employee by
Employer without Cause (as defined in Section 8) unless immediately following
the event and without any break in employment the Employee remains employed by
the Company or another corporation which is a member of the controlled group of
corporations.
NOW THEREFORE, in consideration of the facts set forth above and the
various promises and covenants set forth below, the parties to this Agreement
agree as follows:
1. Ownership of Policy.
The Company acknowledges that Employee is the owner of the Policy and
that Employee is entitled to exercise all of his or her ownership rights
granted by the terms of the Policy, except to the extent that the power of the
Employee to exercise those rights is specifically limited by this Agreement.
Except as so limited, it is the expressed intention of the parties to reserve
to Employee all rights in and to the Policy granted to its owner by the terms
thereof, including, but not limited to, the right to change the beneficiary of
that portion of the proceeds to which Employee is entitled under Section 4 of
this Agreement and the right to exercise settlement options.
2. The Company's Security Interest.
The Company's security interest in the Policy is conditioned upon its
satisfactorily performing all of the covenants under this Agreement. Each
period covered by any individual premium payment described in Section 3 shall
be considered a discrete extension
<PAGE> 2
of the Company's security interest in the Policy. The Company shall not have
nor exercise any right in and to the Policy which could, in any way, endanger,
defeat, or impair any of the rights of Employee in the Policy, including by way
of illustration any right to collect the proceeds of the Policy in excess of
the amount due the Company as provided in this Agreement and in the Policy. The
only rights in and to the Policy granted to the Company in this Agreement shall
be limited to the Company's security interest in and to the cash value of the
Policy, as defined herein, and a portion of the death benefit of the Policy as
hereinafter provided (the "Security Interest"). The Company shall not assign
any of its Security Interest in the Policy to anyone other than Employee.
3. Premium payments.
Until (a) Employee files a notice with the Company pursuant to Section
10 electing a Security Release Date (as defined in Section 10 below), (b)
Employee otherwise attains his or her Security Release Date, or (c) Employee's
employment with the Company is terminated for any reason, whichever occurs
earliest, the Company agrees to pay premiums under the Policy in amounts such
that premiums (not including the initial premium) received by each anniversary
date are at least equal to the "cumulative cost of term insurance" (as defined
in the Policy) from the first anniversary date through the period ending twelve
months after the anniversary date in question. The premium payment shall be
transmitted directly by the Company to the Insurance Company. Consistent with
the preceding sentences, prior to the release of the Company's Security
Interest in the Policy, Employee and the Company agree that the Company shall
from time to time designate one or more individuals (the "Designee"), who may
be officers of the Company, who shall be entitled to adjust the death benefit
under the Policy; provided, however, that the Designee may only increase, but
not-decrease, the death benefit in effect on the date that the Policy is
issued. During the period of time that this Agreement is in effect, Employee
irrevocably agrees that all dividends paid on the Policy shall be applied to
purchase from the Insurance Company additional paid-up life insurance on the
life of Employee.
4. Death of Employee while employed by Employer.
(a) If Employee dies prior to termination of employment with
Employer and prior to his or her Security Release Date (as defined in Section
10 below), Employee's designated beneficiary shall be entitled to receive as a
death benefit an amount equal to two and one-half (2-1/2) times Employee's
annual base salary at the time of death. The amount described in the preceding
sentence shall be paid from the proceeds of the Policy. To the extent that the
death benefit under the Policy exceeds such amount, the balance of the death
benefit shall be payable to the Company. The designation of the beneficiaries
under the Policy shall be in accordance with this Section.
(b) Employee agrees that, during the period of this Agreement,
Employee will obtain and provide to the Company and/or the Insurance Company
the written consent of the spouse of the Employee, in the form attached hereto
as Exhibit B, to any designation
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<PAGE> 3
by Employee of anyone other than the Employee's spouse as the beneficiary to
receive the benefits under this Section 4.
5. Employee's attaining his or her Security Release Date or termination
of Employee's employment on account of a Qualifying Termination.
(a) By making timely payment of the premiums described in Section
3, the Company may renew its Security Interest in the Policy for the period
commencing with the due date of such payment until the later of (1) the due
date of the next payment described in Section 3, or (2) the date that Employee
attains his or her Security Release Date or terminates employment with the
Employer on account of a Qualifying Termination (either of which events
described in this clause 2 is referred to herein as a "Qualifying Event"). The
Company may not extend its Security Interest in the Policy under the Collateral
Security Assignment Agreement attached as Exhibit A after the occurrence of a
Qualifying Event. After such Qualifying Event, Employee shall be entitled to
exercise all of his or her ownership rights in the Policy without any
limitation, and this Agreement and its accompanying Collateral Security
Assignment Agreement shall no longer constitute a restriction on Employee's
rights.
(b) Notwithstanding paragraph (a), the Company shall continue to
have its Security Interest in the Policy to the extent required to satisfy its
withholding obligations as described in Section 12.
6. Termination of an Employee for a reason other than a Qualifying
Termination.
If the employment of Employee with Employer is terminated prior to his
or her Security Release Date for a reason other than a Qualifying Termination
(as described below), Employee shall cause, either by withdrawing from or
borrowing against the Policy, on a nonrecourse basis, to be transferred to the
Company an amount equal to the maximum amount that may then be obtained under
the Policy. In the event that the amount that can be withdrawn from or borrowed
against the Policy is less than the cash surrender value of the Policy, the
Company shall withhold from other compensation payable to Employee the amount
of such difference unless Employee has previously transferred to the Company an
amount equal to such difference. In no event shall Employee's voluntary
resignation prior to attaining his or her Security Release Date (as such
concept is further defined below) ever constitute a Qualifying Termination,
except in certain situations following a Change in Control (see Section 9).
7. Definition of a Qualifying Termination.
A Qualifying Termination is either of the following events: the
termination of Employee by Employer for any reason other than "Cause," as
described in Section 8; or the termination of Employee after a Change in
Control under the circumstances described in Section 9(a). Both of these
concepts are further defined below.
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<PAGE> 4
8. Qualifying Termination because Employee is terminated for a reason
other than "Cause".
For purposes of this Section, "Cause" shall mean (a) Employee's
failure to render services to the Employer where such failure amounts to
misconduct or gross neglect of Employee's responsibilities and duties; (b)
Employee's commission of an act of fraud or dishonesty against the Employer; or
(c) Employee's conviction of a felony or other crime involving moral turpitude.
9. Qualifying Termination on account of termination after a Change in
Control.
(a) A Qualifying Termination shall be treated as occurring after a
"Change in Control" of the Company (as defined below) if there is first a
"Change in Control" and then, within one year following such Change in Control,
either (1) Employee's employment with the Employer is terminated without
"Cause" (as defined in Section 8) or (2) Employee terminates his or her
employment with the Employer for "Good Reason" (as defined in subsection (c)
below).
(b) For purposes of this Section, "Change in Control" of the
Company shall mean changes in the ownership of the Company, changes in the
effective control of the Company and changes in ownership of a substantial
portion of the Company's assets all as defined, discussed and illustrated in
Section 280G of the Internal Revenue Code and the duly promulgated Treasury
Regulations thereunder, and the disposition of a substantial portion of the
Company's assets as defined in subparagraph (4) below. Without limiting the
foregoing and by way of example:
(1) A change in the ownership of the Company occurs on
the date that any one person, or more than one person acting as a
group, acquires ownership of stock of the Company that, together with
stock held by such person or group, possess more than fifty percent
(50%) of the total fair market value or total voting power of the
stock of the Company. An increase in the percentage of stock owned by
any one person, or persons acting as a group, as a result of a
transaction in which the Company acquires its stock in exchange for
property will be treated as an acquisition of stock.
(2) A change in the effective control of the Company
occurs on the date that either: any one person, or more than one
person acting as a group, acquires (or has acquired during the twelve
(12) month period ending on the date of the most recent acquisition by
such person or persons) ownership of stock of the Company possessing
twenty percent (20%) or more of the total voting power of the stock of
the Company; or a majority of members of the Company's Board of
Directors is replaced during any twelve (12) month period by directors
whose appointment or election is not endorsed by a majority of the
members of the Company's Board of Directors who were directors prior
to the date of the appointment or election of the first of such new
directors.
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<PAGE> 5
(3) A change in the ownership of a substantial portion of
the Company's assets occurs on the date that any one person, or more
than one person acting as a group, acquires (or has acquired during
the twelve (12) month period ending on the date of the most recent
acquisition by such person or persons) assets from the Company that
have a total fair market value equal to or more than one-third of the
total fair market value of all of the assets of the Company
immediately prior to such acquisition or acquisitions. The transfer of
assets by the Company is not treated as a change in the ownership of
such assets if the assets are transferred (A) to a shareholder of the
Company (immediately before the asset transfer) in exchange for such
shareholder's capital stock of the Company having a fair market value
approximately equal to the fair market value of such assets or (B) to
an entity, fifty percent (50%) or more of the total value or voting
power of which is owned, directly or indirectly, by the Company.
(4) A disposition of substantial portion of the Company's
assets occurs on the date that the Company transfers assets by sale,
distribution to shareholders, assignment to creditors, foreclosure or
otherwise, in a transaction or transactions not in the ordinary course
of the Company's business (or has made such transfers during the
twelve (12) month period ending on the date of the most recent such
transfer of assets) that have a total fair market value equal to or
more than - one-third of the total fair market value of all of the
assets of the Company as of the date immediately prior to the first
such transfer or transfers. The transfer of assets by the Company is
not treated as a disposition of a substantial portion of the Company's
assets if the assets are transferred to an entity, fifty percent (50%)
or more of the total value or voting power of which is owned, directly
or indirectly, by the Company.
For purposes of the provisions of this Agreement defining "Change in Control,"
(A) references to the Company in this Agreement include the Georgia corporation
known as Healthdyne Technologies, Inc. as of the date of execution of this
Agreement, and any corporation which is the legal successor to such corporation
by virtue of merger or share exchange; and (B) the terms "person," "acting as a
group" and "ownership" shall have the meanings prescribed in Sections 3(a)(9)
and 1 3(d)(3) of the Securities Exchange Act of 1934, as amended, and Rule
13d-3 promulgated thereunder; provided, however, that in any merger,
consolidation or share exchange in which less than fifty percent (50%) of the
outstanding voting securities of the Company or its successor corporation are
held by the former shareholders of the Company, the shareholders of the
corporation or corporations who acquired ownership of fifty percent (50%) or
more of the surviving corporations shall be deemed to have acted as a group,
resulting in a change in ownership under subparagraph (1) above.
(c) For purposes of this Section, "Good Reason" shall mean the
occurrence of one of the following events:
(1) the assignment to the Employee of any duties
inconsistent with, or the reduction of powers or
functions associated with, his or her positions,
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duties, responsibilities and status with the Employer
immediately prior to a Change in Control, or any
removal of the Employee from, or any failure to
reelect the Employee to, any positions or offices the
Employee held immediately prior to a Change in
Control, except in connection with the termination of
the Employee's employment by the Employer for "Cause"
(as defined in Section 8);
(2) a reduction by the Employer of the Employee's base
salary as in effect immediately prior to a Change in
Control, except in connection with the termination of
the Employee's employment by the Employer for "Cause"
(as defined in Section 8);
(3) a change in the Employee's principal work location to
a location more than forty (40) miles from Marietta,
Georgia, except for required travel on the Employer's
business to an extent substantially consistent with
the Employee's business travel obligations
immediately prior to a Change in Control;
(4) (A) the failure by the Employer to continue in
effect any employee benefit plan, program or
arrangement (including, without limitation, "employee
benefit plans" within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974)
in which the Employee was participating immediately
prior to a Change in Control (or substitute plans,
programs or arrangements providing the Employee with
substantially similar benefits), (B) the taking of
any action, or the failure to take any action, by the
Employer which could (i) adversely affect the
Employee's participation in, or materially reduce the
Employee's benefits under, any of such plans,
programs or arrangements, (ii) materially adversely
affect the basis for computing benefits under any of
such plans, programs or arrangements or (iii) deprive
the Employee of any material fringe benefit enjoyed
by the Employee immediately prior to a Change in
Control or (C) the failure by the Employer to provide
the Employee with the number of paid vacation days to
which the Employee was entitled immediately prior to
a Change in Control in accordance with the Employer's
vacation policy applicable to the Employee then in
effect, except in connection with the termination of
the Employee's employment by the Company for "Cause"
(as defined in Section 8);
(5) the failure by the Employer to pay the Employee any
portion of the Employee's current compensation, or
any portion of the Employee's compensation deferred
under any plan, agreement or arrangement of or with
the Employer within seven (7) days of the date such
compensation is due;
6
<PAGE> 7
(6) the failure by the Company to obtain an assumption of
the obligations of the Company under this Agreement
by any successor to the Company.
(d) A termination of employment by Employee within the 12-month
period following a Change in Control shall be for Good Reason if one of the
occurrences specified in paragraph (c) shall have occurred, notwithstanding
that Employee may have other reasons for terminating employment, including
employment by another employer which Employee desires to accept.
10. Employee's attaining his or her Security Release Date.
(a) Employee's "Security Release Date" shall mean the date which
is at least two years following the date on which the Company receives from
Employee a completed notice in the form attached hereto as Exhibit C, provided
that Employee continues to be employed by Employer until such date. Employee's
election of a Security Release Date shall be irrevocable.
(b) Employee shall attain his or her Security Release Date upon
becoming disabled while employed by the Employer. Employee shall be considered
"disabled" at the time that the Administrator (as defined in Section 13(a)
below) determines, based upon competent medical advice, that an Employee is
incapable of rendering substantial services to the Employer by reason of mental
or physical disability.
(c) The Company's Security Interest in the Policy is contingent
upon the timely payment of the premiums required under Section 3 of this
Agreement. Each period covered by any individual premium payment shall be
considered an independent extension of the Company's Security Interest in the
Policy. In the event that the Company waives its rights by reason of failure to
make payments under Section 3 of this Agreement, Employee shall immediately
attain his or her Security Release Date (provided, however, that the cessation
of the Company's obligations to pay premiums upon Employee's filing of an
election of a Security Release Date shall not result in Employee immediately
attaining his or her Security Release Date.) The Company's failure to extend
its rights in no way affects the Company's duties and obligations under this
Agreement.
11. Limitation on Employee's rights prior to a Qualifying Event.
In order to protect the Company's Security Interest and
notwithstanding any other provisions in this Agreement, prior to a Qualifying
Event, Employee agrees that he or she will not modify the death benefit under
the Policy, direct the investment of the cash surrender value of the Policy,
borrow against the Policy, assign the Policy, or obtain any portion of the cash
value of the Policy. Notwithstanding the preceding sentence, if Section 6
applies to a termination, Employee may borrow or withdraw from the Policy, so
long as the borrowing or withdrawal request is submitted to the Insurance
Company along with a directive that the borrowed or withdrawn amount be
transferred directly to the Company.
7
<PAGE> 8
Prior to the release of the Company's Security Interest in the Policy, Employee
and the Company agree that the Company shall from time to time appoint one or
more individuals (the "Designee"), who may be officers of the Company, who
shall be entitled to direct the investments under the Policy; provided,
however, that, the Designee may only direct the investments under the Policy in
funds offered by the Insurance Company under the Policy.
12. Tax Withholding.
It is recognized by the parties that the rights of Employee in the
Policy (as modified by the Agreement) may cause Employee to be treated under
certain circumstances as in receipt of gross income. These circumstances may
also impose upon the Company an obligation to deduct and withhold federal,
state or local taxes. Unless Employee otherwise provides the Company the
amounts it is required to withhold, Employee shall cause, either by withdrawing
from or borrowing on a nonrecourse basis against the Policy, to be transferred
to the Company that portion of the cash value of the Policy which is equal to
the amount of any federal, state or local taxes required to be withheld.
13. Disputes.
(a) A committee, the members of which shall be the Chief Executive
Officer, Chief Financial Officer and General Counsel of Company, (the
"Administrator") shall administer this Agreement. The Administrator (either
directly or through its designees) will have power and authority to interpret,
construe, and administer this Agreement (for the purpose of this section, the
Agreement shall include the Collateral Security Assignment Agreement); provided
that, the Administrator's authority to interpret this Agreement shall not cause
the Administrator's decisions in this regard to be entitled to a deferential
standard of review in the event that Employee or his or her beneficiary seeks
review of the Administrator's decision as described below.
(b) Neither the Administrator, its designee nor its advisors,
shall be liable to any person for any action taken or omitted in connection
with the interpretation and administration of this Agreement.
(c) Because it is agreed that time will be of the essence in
determining whether any payments are due to Employee or his or her beneficiary
under this Agreement, Employee or his or her beneficiary may, if he or she
desires, submit any claim for payment under this Agreement or dispute regarding
the interpretation of this Agreement to arbitration. This right to select
arbitration shall be solely that of Employee or his or her beneficiary and
Employee or his or her beneficiary may decide whether or not to arbitrate in
his or her discretion. The "right to select arbitration" is not mandatory on
Employee or his or her beneficiary and Employee or his or her beneficiary may
choose in lieu thereof to bring an action in an appropriate civil court. Once
an arbitration is commenced, however, it may not be discontinued without the
mutual consent of both parties to the arbitration. During the lifetime of the
Employee only he or she can use the arbitration procedure set forth in this
section.
8
<PAGE> 9
(d) Any claim for arbitration may be submitted as follows: if
Employee or his or her beneficiary disagrees with the Administrator regarding
the interpretation of this Agreement and the claim is finally denied by the
Administrator in whole or in part, such claim may be filed in writing with an
arbitrator of Employee's or beneficiary's choice who is selected by the method
described in the next four sentences. The first step of the selection shall
consist of Employee or his or her beneficiary submitting a list of five
potential arbitrators to the Administrator. Each of the five arbitrators must
be either (1) a member of the National Academy of Arbitrators located in the
State of Georgia or (2) a retired Georgia Superior Court, Court of Appeals or
Supreme Court judge. Within one week after receipt of the list, the
Administrator shall select one of the five arbitrators as the arbitrator for
the dispute in question. If the Administrator fails to select an arbitrator in
a timely manner, Employee or his or her beneficiary shall then designate one of
the five arbitrators as the arbitrator for the dispute in question.
(e) The arbitration hearing shall be held within seven days (or as
soon thereafter as possible) after the picking of the arbitrator. No
continuance of said hearing shall be allowed without the mutual consent of
Employee or his or her beneficiary and the Administrator. Absence from or
nonparticipation at the hearing by either party shall not prevent the issuance
of an award. Hearing procedures which will expedite the hearing may be ordered
at the arbitrator's discretion, and the arbitrator may close the hearing in his
or her sole discretion when he or she decides he or she has heard sufficient
evidence to satisfy issuance of an award.
(f) The arbitrator's award shall be rendered as expeditiously as
possible and in no event later than one week after the close of the hearing. In
the event the arbitrator finds that the Company has breached this Agreement, he
or she shall order the Company to immediately take the necessary steps to
remedy the breach. The award of the arbitrator shall be final and binding upon
the parties. The award may be enforced in any appropriate court as soon as
possible after its rendition. If an action is brought to confirm the award,
both the Company and Employee agree that no appeal shall be taken by either
party from any decision rendered in such action.
(g) Solely for purposes of determining the allocation of the costs
described in this subsection, the Administrator will be considered the
prevailing party in a dispute if the arbitrator determines (1) that the Company
has not breached this Agreement and (2) the claim by Employee or his or her
beneficiary was not made in good faith. Otherwise, Employee or his or her
beneficiary will be considered the prevailing party. In the event that the
Company is the prevailing party, the fee of the arbitrator and all necessary
expenses of the hearing (excluding any attorneys' fees incurred by the Company)
including stenographic reporter, if employed, shall be paid by the other party.
In the event that Employee or his or her beneficiary is the prevailing party,
the fee of the arbitrator and all necessary expenses of the hearing (including
all attorneys' fees incurred by Employee or his or her beneficiary in pursuing
his or her claim), including the fees of a stenographic reporter if employed,
shall be paid by the Company.
9
<PAGE> 10
14. Collateral Security Assignment of Policy to the Company.
In consideration of the promises contained herein, the Employee has
contemporaneously herewith granted the Security Interest in the Policy to the
Company as collateral. under the form of Collateral Security Assignment
attached hereto as Exhibit A, which Collateral Security Assignment gives the
Company the limited power to enforce its rights to recover the cash value of
the Policy, or a portion of the death benefit thereof, under the circumstances
defined herein. The Company's Security Interest in the Policy shall be
specifically limited to the rights set forth above in this Agreement,
notwithstanding the provisions of any other documents including the Policy.
Employee agrees to execute any notice prepared by the Company requesting a
withdrawal or non-recourse loan in an amount equal to the amount to which the
Company is entitled under Sections 5, 6 or 12 of this Agreement.
15. Employee's beneficiary rights and security interest.
(a) The Company and Employee intend that in no event shall the
Company have any power or interest related to the Policy or its proceeds,
except as provided herein and in the Collateral Security Assignment. In the
event that the Company ever receives or may be deemed to have received any
right or interest in the Policy or its proceeds beyond the limited rights
described herein and in the Collateral Security Assignment, such right or
interest shall be held in trust for the benefit of Employee and be held
separate from the property of the Company. The Company hereby agrees to act as
trustee for the benefit of Employee concerning any right to the Policy or its
proceeds, except to the extent expressly provided otherwise in this Agreement.
(b) In order to further protect the rights of the Employee, the
Company agrees that its rights to the Policy and proceeds thereof shall serve
as security for the Company's obligations as provided in this Agreement to
Employee. The Company grants to Employee a security interest in and
collaterally assigns to Employee any and all rights the Company has in the
Policy, and products and proceeds thereof whether now existing or hereafter
arising pursuant to the provisions of the Policy, this Agreement, the
Collateral Security Assignment or otherwise, to secure any and all obligations
owed by the Company to Employee under this Agreement. In no event shall this
provision be interpreted to reduce Employee's rights to the Policy or expand in
any way the rights or benefits of the Company under this Agreement, the Policy
or the Collateral Security Assignment. This security interest granted to
Employee from the Company shall automatically expire and be deemed waived if
Employee terminates employment with Employer prior to a Qualifying Event.
Nothing in this provision shall prevent the Company from receiving its share of
the death benefits under the Policy as provided in Section 4 of this Agreement.
16. Amendment of Agreement.
Except as provided in a written instrument signed by the Company and
Employee, this Agreement may not be cancelled, amended, altered, or modified.
10
<PAGE> 11
17. Notice under Agreement.
Any notice. consent, or demand required or permitted to be given under
the provisions of this Agreement by one party to another shall be in writing,
signed by the party giving or making it, and may be given either by delivering
it to such other party personally or by mailing it, by United States Certified
mail, postage prepaid, to such party, addressed to its last known address as
shown on the records of the Company. The date of such mailing shall be deemed
the date of such mailed notice, consent, or demand.
18. Binding Agreement.
This Agreement shall bind the parties hereto and their respective
successors, heirs, executor, administrators, and transferees, and any Policy
beneficiary.
19. Controlling law and characterization of Agreement.
(a) To the extent not governed by federal law, this Agreement and
the right to the parties hereunder shall be controlled by the laws of the State
of Georgia.
(b) If this Agreement is considered a "plan" under the Employee
Retirement Income Security Act of 1974 (ERISA), both the Company and Employee
acknowledge and agree that for all purposes the Agreement shall be treated as a
"welfare plan" within the meaning of Section 3(1) of ERISA, so that only those
provisions of ERISA applicable to welfare plans shall apply to the Agreement,
and that any rights that might arise under ERISA if this Agreement were treated
as a "pension plan" within the meaning of Section 3(2) of ERISA are hereby
expressly waived. Consistent with the preceding sentence, Employee further
acknowledges that his or her rights to the Policy and the release of the
Company's Security Interest are strictly limited to those rights set forth in
this Agreement. In furtherance of this acknowledgment and in consideration of
the Company's payment of the initial premiums for this Policy, Employee
voluntarily and irrevocably relinquishes and waives any additional rights in
the Policy or any different restrictions on the release of the Company's
Security Interest that he or she might otherwise argue to exist under either
state, federal, or other law. Employee further agrees that he or she will not
argue that any such additional rights or different restrictions exist in any
judicial or arbitration proceeding. Similarly, the Company acknowledges that
its Security Interest is strictly limited as set forth in this Agreement and
voluntarily and irrevocably relinquishes and waives any additional interests or
different interests or advantages that the Company would have or enjoy if the
Agreement were not treated as a "welfare plan" within the meaning of section
3(1) of ERISA.
11
<PAGE> 12
20. Execution of Documents.
The Company and Employee agree to execute any and all documents
necessary to effectuate the terms of this Agreement.
HEALTHDYNE TECHNOLOGIES, INC.
By:_________________________
Its:________________________
EMPLOYEE
____________________________
12
<PAGE> 13
EXHIBIT A
COLLATERAL SECURITY ASSIGNMENT AGREEMENT
This Collateral Security Assignment is made and entered into effective
as of ____________ ____ by the undersigned as the owner (the "Owner") of Life
Insurance Policy Number __________ (the "Policy") issued by
______________________________________ (the "Insurer") upon the life of Owner
and by Healthdyne Technologies, Inc., a Georgia corporation (the "Assignee").
WHEREAS, the Owner is a valued employee of Assignee or a subsidiary of
Assignee, and the Assignee wishes to retain him or her in its or its
subsidiary's employ; and
WHEREAS, as an inducement to the Owner's continued employment, the
Assignee wishes to pay premiums on the Policy, as more specifically provided
for in that certain Split-Dollar Life Insurance Agreement dated as of
___________, ____, and entered into between the Owner and the Assignee as such
agreement may be hereafter amended or modified (the "Agreement") (unless
otherwise indicated the terms herein shall have the definitions ascribed
thereto in the Agreement);
WHEREAS, in consideration of the Assignee agreeing to make the premium
payments, the Owner agrees to grant the Assignee a security interest in the
Policy as collateral security; and
WHEREAS, the Owner and Assignee intend that the Assignee have no
greater interest in the Policy than that prescribed herein and in the Agreement
and that if the Assignee ever obtains any right or interest in the Policy or
the proceeds thereof, except as provided herein and in the Agreement, such
right or interest shall be held in trust for the Owner to satisfy the
obligations of Assignee to Owner under the Agreement and the Assignee
additionally agrees that its rights to the Policy shall serve as security for
its obligations to the Owner under the Agreement;
NOW, THEREFORE, the Owner hereby assigns, transfers and sets over to
the Assignee for security the following specific rights in the Policy, subject
to the following terms, agreements and conditions:
1. This Collateral Security Assignment is made, and the Policy is
to be held, as collateral security for all liabilities of the Owner to the
Assignee pursuant to the terms of the Agreement, whether now existing or
hereafter arising (the "Secured Obligations"). The Secured Obligations include:
(i) the obligation of the Owner to transfer an amount equal to the entire cash
value in the event that the Owner terminates employment with Employer for a
reason other than a Qualifying Termination and before attaining his or her
Security Release Date; (ii) the obligation of the Owner to pay an amount of
cash to the Assignee or transfer to the Assignee that portion of the cash value
which is equal to any federal, state
A-1
<PAGE> 14
or local taxes that Assignee may be required to withhold and collect (as set
forth in Section 12 of the Agreement); and (iii) the obligation of the Owner to
name the Assignee as beneficiary for a portion of the death benefit under the
Policy in the event of the death of Owner prior to Owner's termination of
employment with Employer in accordance with Section 4 of the Agreement.
2. The Owner hereby grants to Assignee a security interest in and
collaterally assigns to Assignee the Policy and the cash value to secure the
Secured Obligations. However, the Assignee's interest in the Policy shall be
strictly limited to:
(a) The right to be paid the Assignee's portion of the death
benefit in the event of the death of Owner prior to Owner's termination of
employment with Employer in accordance with Section 4 of the Agreement;
(b) The right to receive an amount equal to the entire cash value
of the Policy (which right may be realized by Assignee's receiving a portion of
the death benefit under the Policy or by Owner's causing such amount to be
transferred to Assignee (through withdrawing from or borrowing against the
Policy) in accordance with the terms of the Agreement) if the Owner terminates
employment with Employer for a reason other than a Qualifying Termination
(unless he or she has previously attained his or her Security Release Date);
and
(c) The right to receive an amount equal to any federal, state or
local taxes that Assignee may be required to withhold and collect (as set forth
in Section 12 of the Agreement).
3.(a) Owner shall retain all incidents of ownership in the
Policy, and may exercise such incidents of ownership except as otherwise
limited by the Agreement and hereunder. The Insurer is only authorized to
recognize (and is fully protected in recognizing) the exercise of any ownership
rights by Owner if the Insurer determines that the Assignee has been given
notice of Owner's purported exercise of ownership rights in compliance with the
provisions of Section 3(b) hereof and as of the date thirty days after such
notice is given, the Insurer has not received written notification from the
Assignee of Assignee's objection to such exercise; provided that, the
designation of the beneficiary to receive the death benefits not otherwise
payable to Assignee pursuant to Section 4 of the Agreement may be changed by
the Owner without prior notification of Assignee. The Insurer shall not be
responsible to ensure that the actions of the Owner conform to the Agreement.
(b) Assignee hereby acknowledges that for purposes of this
Collateral Security Assignment, Assignee shall be conclusively deemed to have
been properly notified of Owner's purported exercise of his or her ownership
rights as of the third business day following either of the following events:
(1) Owner mails written notice of such exercise to Assignee by United States
certified mail, postage paid, at the address below and provides the Insurer
with a copy of such notice and a copy of the certified mail receipt or (2) the
A-2
<PAGE> 15
Insurer mails written notice of such exercise to Assignee by regular United
States mail, postage paid, at the address set forth below:
Healthdyne Technologies, Inc.
1255 Kennestone Circle
Marietta, Georgia 30066
ATTN: General Counsel
The foregoing address shall be the appropriate address for such notices to be
sent unless and until the receipt by both Owner and the Insurer of a written
notice from Assignee of a change in such address.
(c) Notwithstanding the foregoing, Owner and Assignee hereby agree
that, until Assignee's security interest in the Policy is released, Assignee
shall from time to time designate one or more individuals (the "Designee"), who
may be officers of Assignee, who shall be entitled to adjust the death benefit
under the Policy and to direct the investments under the Policy; provided,
however, that the Designee may only increase, but not decrease, the death
benefit in effect on the date that the Policy is issued; provided, further,
that the Designee may only direct the investments under the Policy in funds
offered by the Insurer under the Policy. Assignee shall notify the Insurer in
writing of the identity of the Designee and any changes in the identity of the
Designee. Until Assignee's security interest in the Policy is released, no
other party may adjust the death benefit or direct the investments under the
Policy without the consent of the Assignee and Owner.
4. If the Policy is in the possession of the Assignee, the
Assignee shall, upon request, forward the Policy to the Insurer without
unreasonable delay for endorsement of any designation or change of beneficiary
or the exercise of any other right reserved by the Owner.
5. (a) Assignee shall be entitled to exercise its rights under
the Agreement by delivering a written notice to Insurer, executed by the
Assignee and the Owner or the Owner's beneficiary, requesting either (1) a
withdrawal or nonrecourse policy loan equal to the amount to which Assignee is
entitled under Sections 5, 6 or 12 of the Agreement and transfer of such
withdrawn or borrowed amount to Assignee or (2) the payment to the Assignee of
that portion of the death benefit under the Policy to which the Assignee is
entitled under Section 4 of the Agreement. So long as the notice is also signed
by Owner or his or her beneficiary, Insurer shall pay or loan the-specified
amounts to Assignee without the need for any additional documentation.
(b) Upon receipt of a properly executed notice complying with the
requirements of subsection (a) above, the Insurer is hereby authorized to
recognize the Assignee's claims to rights hereunder without the need for any
additional documentation and without investigating (1) the reason for such
action taken by the Assignee; (2) the validity or the amount of any of the
liabilities of the Owner to the Assignee under the Agreement; (3) the
A-3
<PAGE> 16
existence of any default therein, (4) the giving of any notice required herein,
or (5) the application to be made by the Assignee of any amounts to be paid to
the Assignee. The receipt of the Assignee for any sums received by it shall be
a full discharge and release therefor to the Insurer.
6. Upon the full payment of the liabilities of the Owner to the
Assignee pursuant to the Agreement. the Assignee shall execute an appropriate
release of this Collateral Security Assignment.
7. The Assignee shall have the right to request of the Insurer
and/or the Owner notice of any action taken with respect to the Policy by the
Owner.
8.(a) The Assignee and the Owner intend that in no event shall
the Assignee have any power or interest related to the Policy or its proceeds,
except as provided herein and in the Agreement, notwithstanding the provisions
of any other documents including the Policy. In the event that the Assignee
ever receives or may be deemed to have received any right or interest beyond
the limited rights described herein and in the Agreement, such right or
interest shall be held in trust for the benefit of the Owner and be held
separate from the property of the Assignee. The Assignee hereby agrees to act
as trustee for the benefit of the Owner concerning any right to the Policy or
its proceeds, except to the extent expressly provided otherwise in the
Agreement and this Collateral Security Assignment Agreement.
(b) In order to further protect the rights of the Owner, the
Assignee agrees that its rights to the Policy and proceeds thereof shall serve
as security for the Assignee's obligations to the Owner as provided in the
Agreement. Assignee hereby grants to Owner a security interest in and
collaterally assigns to Owner any and all rights it has in the Policy, and
products and proceeds thereof, whether now existing or hereafter arising
pursuant to the provisions of the Policy, the Agreement, this Collateral
Security Assignment or otherwise, to secure Assignee's obligations ("Assignee
Obligations") to Owner under the Agreement, whether now existing or hereafter
arising. The Assignee Obligations include all obligations owed by the Assignee
to Owner under the Agreement, including without limitation: (i) the obligation
to transfer ownership of the Policy to Owner and to make the premium payments
required under Section 3 of the Agreement and (ii) the obligation to do nothing
which may, in any way, endanger, defeat or impair any of the rights of Owner in
the Policy as provided in the Agreement. In no event shall this provision be
interpreted to reduce Owner's rights in the Policy or expand in any way the
rights or benefits of the Assignee under the Agreement. In the event that Owner
terminates employment with Employer for any reason prior to a Qualifying Event,
this security interest and collateral assignment granted by Assignee to Owner
shall automatically expire and be deemed waived. Nothing in this provision
shall prevent the Assignee from receiving its share of the death benefits under
the Policy as provided in Section 4 of the Agreement.
9. Assignee and Owner agree to execute any documents necessary to
effectuate this Collateral Security Assignment pursuant to the provisions of
the Agreement. All
A-4
<PAGE> 17
disputes shall be settled as provided in Section 13 of the Agreement. The
rights under this Collateral Security Assignment may be enforced pursuant to
the terms of the Agreement.
IN WITNESS WHEREOF, the Owner and Assignee have executed this
Collateral Security Assignment effective the day and year first above written.
_________________________________
_____________________, Owner
Healthdyne Technologies, Inc.
By:______________________________
Title:___________________________
A-5
<PAGE> 18
EXHIBIT B
SPOUSAL CONSENT TO DESIGNATION OF NONSPOUSAL BENEFICIARY
My spouse is _________________________. I hereby consent to the
designation made by my spouse of _________________ as the beneficiary (subject
to any rights collaterally assigned to Healthdyne Technologies, Inc.) under
Life Insurance Policy No. __________ which Healthdyne Technologies, Inc. has
purchased from______________________________ and transferred to him/her. I
understand that this consent is valid only with respect to the naming of the
beneficiary indicated above and that the designation of any other beneficiary
will not be valid unless I consent in writing to such designation.
This consent is being voluntarily given, and no undue influence or
coercion has been exercised in connection with my consent to the designation
made by my spouse of the beneficiary named above rather than myself as the
beneficiary under the Split-Dollar Life Insurance Policy.
______________________________
Spouse's Signature
______________________________
Print Spouse's Name
______________________________
Date
<PAGE> 19
EXHIBIT C
SPLIT-DOLLAR LIFE INSURANCE
TWO YEAR SECURITY RELEASE NOTICE
Pursuant to the Split-Dollar Life Insurance Agreement entered into
between Healthdyne Technologies, Inc. (the "Company") and me dated as of
___________, _____ (the "Agreement"), I hereby notify the Company that I
request to be released on _______ _______ ("Security Release Date") from the
Company's collateral security in Policy Number _________ issued by
__________________________________. I understand that my Security Release Date
must be at least two years from the date on which the Company receives this
Notice. I further understand that in order for the Company's collateral
security interest to be released on my Security Release Date, I must continue
to be employed by the Company or one of its subsidiaries (as defined in the
Agreement) until such date.
________________________________
Name of Employee
________________________________
Date
Received by Healthdyne Technologies, Inc.
on _________________________________
By _________________________________
<PAGE> 1
EXHIBIT 14
INVACARE
By Telecopier and UPS Next Day Air
January 2, 1997
STRICTLY CONFIDENTIAL
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.
<PAGE> 2
Mr. Craig B. Reynolds
January 2, 1997
Page Two
[INVACARE LOGO]
Of course, our proposal contemplates, among other things, the
negotiation and execution of mutually acceptable definitive merger and other
agreements containing provisions customary for transactions of this type, the
receipt of any required regulatory approvals and third-party consents, the
operation of Healthdyne in the ordinary course, and the taking of all necessary
actions to eliminate the applicability of, or to satisfy, any anti-takeover or
other defensive provisions contained in the applicable corporate statutes or
Healthdyne's charter and by-laws (including Healthdyne's poison pill). We do
not expect anti-trust concerns to provide a significant hurdle to the closing
of the transaction.
We hope that you and your Board of Directors will view this proposal
as we do -- an excellent opportunity for the stockholders of Healthdyne to
realize full value for their shares to an extent not likely to be available to
them in the marketplace. In the context of a negotiated, friendly transaction,
we are prepared to discuss all aspects of our proposal fully with you,
including structure, economics and your views as to the proper roles for
our respective managers and employees in the combined company. We wish, and
are prepared, to enter into immediate discussions with you and your directors,
management and advisors to answer any questions about our proposal and to
proceed with negotiations leading to the execution of a definitive merger
agreement.
We hope that you will agree that the best way to proceed at this point
would be to begin confidential, non-public discussions to see if we can
negotiate a transaction that can be presented to your stockholders as the joint
effort of Invacare's and Healthdyne's Board of Directors and management. At
this point, therefore, we hope this letter and its contents will remain private
between us.
We would appreciate it if you and your Board of Directors will give
this proposal prompt and serious consideration. We would request a response as
soon as possible, and preferably no later than January 10, 1997.
We are enclosing copies of this letter, as well as information on
Invacare, for distribution to Mr. Petit and the other members of the Board of
Directors so they can familiarize themselves with our proposal and our company.
I hope you and yours had a happy and healthy holiday season and wish
you all the best for the New Year.
Sincerely,
/s/ A. Malachai Mixon, III
--------------------------
A. Malachai Mixon, III
Chairman and CEO
AMM:bjh
Enclosures
CC: Board of Directors of Healthdyne Technologies, Inc.
<PAGE> 1
EXHIBIT 15
[HEALTHDYNE TECHNOLOGIES LETTERHEAD]
January 8, 1997
A. Malachi Mixon, III
Chairman and 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,
/s/ Craig B. Reynolds
Craig B. Reynolds
President and Chief Executive Officer
CBR:LRJ
<PAGE> 1
Exhibit 16
January 10, 1997
DISTRIBUTION: Business Editors, Health & Medical Writers
LENGTH: 1208 words
HEADLINE: Invacare Corporation offers to acquire Healthdyne Technologies, Inc.
for $ 12.50 per share
DATELINE: ELYRIA, Ohio
BODY:
Jan. 10, 1997--Invacare Corporation (NASDAQ/NMS:IVCR) announced today
that it has offered to acquire Healthdyne Technologies, Inc. (NASDAQ/NMS:HDTC)
in a negotiated merger transaction for $ 12.50 per share in cash. The offer
was originally made in a private letter to Healthdyne delivered on January 2,
1997. After Healthdyne responded in writing that its Board of Directors would
not consider the offer until its February Board meeting, Invacare determined to
publicly confirm its offer in a letter to Healthdyne dated January 10, 1997.
The offered price represents more than a 40% premium over Healthdyne's closing
stock price on December 31, 1996, the last trading day prior to the date the
original proposal was made. Based on the prospects and synergies that can be
identified from publicly available information, Invacare believes that the
acquisition will be accretive to its earnings per share within 12 to 18 months.
The full text of Invacare's January 10, 1997 letter to Mr. Craig B.
Reynolds, President and CEO of Healthdyne Technologies, Inc., is as follows:
Thank you for your letter of January 8, 1997 noting that your Board of
Directors will consider our January 2, 1997 acquisition proposal to acquire
Healthdyne Technologies, Inc. at $ 12.50 per share in cash at its next
regularly scheduled Board 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
<PAGE> 2
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
<PAGE> 3
participant in the medical device market with annual sales in excess of
$ 600 million. We have, as you do, an enviable reputation for the quality
of our products and services. We are extremely impressed with the
businesses you and your management team have developed and the manner in
which they complement our businesses. We believe the complementary aspects
of our two companies' products, customers and distribution capabilities
would enable the combined entity to be an even more effective competitor.
Of course, this offer is subject to, among other things, the
negotiation and execution of mutually acceptable definitive merger and
other agreements containing provisions customary for transactions of this
type, the receipt of any required regulatory approvals and third-party
consents, the operation of Healthdyne in the ordinary course, the taking of
all necessary actions to eliminate the applicability of, or to satisfy, any
anti-takeover or other defensive provisions contained in the applicable
corporate statutes or Healthdyne's charter and by-laws (including
Healthdyne's poison pill) and the absence of any actions by Healthdyne's
Board which would seek to frustrate our offer. We do not expect anti-trust
concerns to provide a significant hurdle to the closing of the transaction.
We note from your public filings that Healthdyne has in place a number of
provisions that may be fairly characterized as defensive in nature. We
would request that you satisfy or eliminate their applicability to our
offer and that you not implement or take any action to trigger any
additional defensive measures that could adversely 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
<PAGE> 4
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.
Invacare is the world's leading manufacturer and distributor of home
health care and respiratory products and mobility products for people with
disabilities. The company's headquarters are located in Elyria, Ohio, with
manufacturing facilities in the United States, Australia, Canada, Germany,
France, Mexico, New Zealand, Portugal, Switzerland and the United Kingdom.
Products are distributed worldwide through a network of more than 10,000
provider locations.
<PAGE> 1
EXHIBIT 17
HEALTHDYNE TECHNOLOGIES
RESPONDS TO INVACARE OFFER
Marietta, Georgia, January 10, 1997 -- Healthdyne Technologies, Inc.
(Nasdaq:HDTC), in response to the Invacare (NASDAQ: IVCR) offer announced today,
confirmed that its Board of Directors would consider the Invacare proposal in
due course.
Craig B. Reynolds, President and Chief Executive Officer of Healthdyne
Technologies, stated that, "when we received Invacare's unsolicited invitation
to negotiate last week, we responded that we would implement our standard
procedures for responding to such proposals, which we are continuing to pursue.
We are surprised that Invacare has now elected to make and publicly announce an
offer before our Board has had an opportunity to adequately consider their
initial proposal, especially after Invacare requested that we maintain the
confidentiality of its proposal to negotiate.
"Invacare's offer has been referred to our Board of Directors for
consideration, although we note that the offer represents an approximately 20%
discount from the price achieved by the Company's stock in mid-1996. Previously,
the Board of Directors has determined that a sale of the Company was not in the
best interests of the Company or its shareholders. However, our Board will
certainly thoughtfully consider and respond to the Invacare proposal in due
course."
-more
<PAGE> 2
Page 2
Healthdyne Technologies designs, manufactures and markets
technologically advanced medical devices for use in the home, as well as other
specialized clinical settings. The Company's products include diagnostic and
therapeutic devices for the evaluation and treatment of sleep disorders,
non-invasive ventilators, oxygen concentrators and medication nebulizers for the
treatment of respiratory disorders, monitors for infants at risk for SIDS, and
products for asthma management.
<PAGE> 1
EXHIBIT 18
HEALTHDYNE TECHNOLOGIES M. Wayne Boylston
ANNOUNCES ENGAGEMENT OF January 16, 1997
FINANCIAL AND LEGAL ADVISORS (770) 499-1212
FOR IMMEDIATE RELEASE
Marietta, Georgia, January 16, 1997 -- Healthdyne Technologies
(Nasdaq:HDTC) announced today that it has engaged Cowen & Company to act as its
financial advisor and Skadden, Arps, Slate, Meagher & Flom, LLP to act as its
legal advisor in response to the offer made by Invacare Corporation on January
10, 1997 to acquire Healthdyne Technologies.
Craig B. Reynolds, President and Chief Executive Officer, said, "We will
respond to the Invacare offer after our advisors have had an opportunity to
provide to the Board of Directors their advice. We remain confident in our
strategic plan and growth potential, and we look forward to achieving that
potential for the benefit of our shareholders."
Healthdyne Technologies designs, manufactures and markets technologically
advanced medical devices for use in the home, as well as other specialized
clinical settings. The Company's products include diagnostic and therapeutic
devices for the evaluation and treatment of sleep disorders, non-invasive
ventilators, oxygen concentrators and medication nebulizers for the treatment of
respiratory disorders, monitors for infants at risk for SIDS, and products for
asthma management.
# # #
<PAGE> 1
EXHIBIT 19
HEALTHDYNE TECHNOLOGIES, INC.
REJECTS OFFER; SAYS COMPANY
NOT FOR SALE
FOR IMMEDIATE RELEASE
Marietta, Georgia, January 24, 1997 -- Healthdyne Technologies, Inc.
(Nasdaq:HDTC) announced today that its Board of Directors has unanimously
rejected the unsolicited offer by Invacare Corporation to purchase Healthdyne
Technologies. "The Board has not been and is not seeking to sell the Company"
said Craig B. Reynolds, Healthdyne Technologies' President and Chief Executive
Officer. In rejecting the offer, Healthdyne Technologies' Board considered a
variety of factors, including the opinion of Cowen & Company that the $12.50 per
share price offered by Invacare is grossly inadequate.
"Healthdyne Technologies is poised to introduce many new products in
several markets during 1997 and in early 1998. These introductions will
accelerate the shift toward more innovative, cost-effective and higher margin
products. Due to competitive concerns, the release of detailed information on
these products has been limited and therefore their importance to the Company
has not been fully appreciated by the investment community. We plan to release
additional information concerning these initiatives in early February when we
expect to release our year-end results."
Mr. Reynolds further commented, "the markets currently served by the
Company and those the Company plans to enter are expected to grow from
approximately $575 million in 1996 to approximately $1.2 billion in 1998. We
have a history of successful
<PAGE> 2
product introductions, as most recently shown by the launch of Quatum(R), our
non-invasive ventilator, which is expected to generate $12 million of revenue in
its first full year in the market. Additionally, Healthdyne Technologies has
entered into several strategic sales and distribution agreements which will
significantly enhance the Company's ability to penetrate these rapidly growing
markets."
Healthdyne Technologies designs, manufactures and markets
technologically advanced medical devices for use in the home, as well as other
specialized clinical settings. The Company's products include diagnostic and
therapeutic devices for the evaluation and treatment of sleep disorders,
non-invasive ventilators, oxygen concentrators and medication nebulizers for the
treatment of respiratory disorders, monitors for infants at risk for SIDS, and
products for asthma management.
This press release contains forward-looking statements that involve
risks and uncertainties, including developments in the healthcare
industry, development and introduction of new products on a timely
basis, third party reimbursement policies and practices and regulatory
requirements affecting the approval and sale of medical devices, as
well as other risks detailed from time to time in the Company's reports
filed with the Securities and Exchange Commission, including its
Reports on Form 10-Q for the quarters ended March 31, 1996, June 30,
1996 and September 30, 1996.
<PAGE> 1
EXHIBIT 20
Page 1 of 2
MONDAY JANUARY 27 9:49 AM EDT
INVACARE LAUNCHES TENDER OFFER FOR HEALTHDYNE
TECHNOLOGIES INC. AT INCREASED PRICE OF $13 PER SHARE AND
COMMENCES LITIGATION
ELYRIA, Ohio--(BUSINESS WIRE)--Jan. 27, 1997--Invacare Corp 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 Dec. 31, 1996, the trading day prior to Invacare's
making its original acquisition proposal to Healthdyne on Jan. 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
<PAGE> 2
Page 2 of 2
excellent opportunity for the stockholders of Healthdyne to realize full value
for their shares to an extent not otherwise likely to be available to them. We
continue to be interested in meeting with Healthdyne to discuss our offer in
the hopes of promptly negotiating a mutually agreeable transaction. In the
context of a negotiated transaction, we would consider discussing our offer
price if Healthdyne's management is able to substantiate significant additional
values to Invacare's satisfaction, and are prepared to discuss all other
aspects of our offer fully with Healthdyne, including structure, form of
consideration and the proper roles for our respective managers and employees in
the combined company."
Invacare also announced that it was commencing litigation against Healthdyne
and certain of its directors to declare various defensive mechanisms,
including Healthdyne's "poison pill" rights plan, illegal and to require
Healthdyne and its Board of Directors to take certain actions to permit its
stockholders to effectively consider the Invacare offer. Thomas R. Miklich,
Chief Financial Officer and General Counsel of Invacare, said: "We regret the
necessity of commencing litigation. However, among other defensive tactics,
Healthdyne has a "poison pill" containing certain unusual and draconian
director-entrenching provisions, commonly referred to as "dead-hand pill"
restrictions, which purport, under certain circumstances, to prevent future
directors from redeeming or otherwise nullifying the pill in connection with a
proposed transaction which the future Board determines to be in the best
interests of the Company and its stockholders. We believe that such
restrictions are illegal and that Healthdyne has a duty to take actions to
permit its stockholders to effectively consider our offer free of these and
Healthdyne's other defensive provisions."
Invacare's tender offer is conditioned on, among other things, the acquisition
of at least 51% of Healthdyne's shares on a fully diluted basis, the redemption
or inapplicability of Healthdyne's "poison pill" rights plan and the
inapplicability, invalidation or satisfaction of the Georgia anti-takeover
statues (parts of which Healthdyne's Board of Directors has only recently opted
into by adopting a by-law amendment immediately prior to the public
announcement of its rejection of Invacare's offer). The offer is not
contingent on the receipt of financing. The full terms and conditions of the
offer will be set forth in tender offer materials being filed today with the
SEC which will be mailed promptly to Healthdyne stockholders. The offer and
withdrawal rights with respect thereto will expire at 12:00 midnight, New York
City time, on Monday, Feb. 24, 1997, unless the offer is extended. Invacare
currently holds (including through I.H.H. Corp.) 600,000 shares of Healthdyne
common stock, representing approximately 4.8% of Healthdyne's outstanding
shares based on publicly available information.
Salomon Brothers Inc. is acting as Dealer Manager for the offer, and MacKenzie
Partners Inc. is acting as Information Agent.
Invacare is the world's leading manufacturer and distributor of home health
care products and mobility products for people with disabilities. The
company's headquarters are located in Elyria, Ohio, with manufacturing
facilities in the United States, Australia, Canada, France, Germany, Mexico,
New Zealand, Portugal, Switzerland and the United Kingdom. Products are
distributed worldwide through a network of more than 10,000 provider locations.
CONTACT: MacKenzie Partners Inc.
Daniel Burch
Mark Harnett
212/929-5500
<PAGE> 1
EXHIBIT 21
HEALTHDYNE TECHNOLOGIES URGES
SHAREHOLDERS TO WAIT FOR BOARD'S
RECOMMENDATION ON INVACARE'S TENDER.
FOR IMMEDIATE RELEASE
Marietta, Georgia, January 28, 1997 -- Healthdyne Technologies, Inc.
(Nasdaq:HDTC) today stated that it will carefully study, with the assistance of
its financial advisor, Cowen & Company, and its legal advisors, the unsolicited
tender offer made by Invacare Corporation for all of the common shares of
Healthdyne Technologies at $13 per share.
Healthdyne Technologies urged shareholders to postpone their decision
whether to accept or reject the Invacare offer until the Board of Directors of
Healthdyne Technologies has an opportunity to make a recommendation on the
offer. The Company indicated that it will send its recommendation to
shareholders no later than February 10, 1997.
Noting that the Invacare offer does not expire until February 24, 1997,
Craig B. Reynolds, President and Chief Executive Officer of the Company, stated,
"Shareholders should have time to receive the Board's recommendation and act in
an informed manner. The Board will act with the utmost consideration for the
interests of our shareholders."
<PAGE> 2
Page 2
Healthdyne Technologies designs, manufactures and markets
technologically advanced medical devices for use in the home, as well as other
specialized clinical settings. The Company's products include diagnostic and
therapeutic devices for the evaluation and treatment of sleep disorders,
non-invasive ventilators, oxygen concentrators and medication nebulizers for the
treatment of respiratory disorders, monitors for infants at risk for SIDS, and
products for asthma management.
This press release contains forward-looking statements that involve
risks and uncertainties, including developments in the healthcare
industry, development and introduction of new products on a timely
basis, third party reimbursement policies and practices and regulatory
requirements affecting the approval and sale of medical devices, as
well as other risks detailed from time to time in the Company's reports
filed with the Securities and Exchange Commission, including its
Reports on Form 10-Q for the quarters ended March 31, 1996, June 30,
1996 and September 30, 1996.
# # #
<PAGE> 1
EXHIBIT 22
LOGO
January 31, 1997
Dear Healthdyne Technologies, Inc. Shareholder:
On January 27, 1997, Invacare Corporation announced that its wholly owned
subsidiary I.H.H. Corp. had commenced an unsolicited tender offer for all
outstanding shares of common stock of Healthdyne Technologies, Inc. at $13 per
share. This announcement followed the Healthdyne Board of Directors' rejection
of Invacare's earlier unsolicited proposal to acquire Healthdyne for $12.50 per
share.
Your Board of Directors believes that a merger with Invacare is not in the
best interests of Healthdyne and its shareholders. ACCORDINGLY, THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU REJECT INVACARE'S OFFER AND NOT TENDER ANY OF YOUR
HEALTHDYNE SHARES TO INVACARE.
Your Board of Directors' consideration of Invacare's revised proposal
follows an extensive process of evaluating Healthdyne's strategic alternatives
for enhancing shareholder value. Healthdyne's Board of Directors, assisted by
its financial and legal advisors, has reviewed at length Invacare's offer and
its terms and conditions. The Board of Directors reviewed Healthdyne's business
strategy and strategic plan, and considered the potential for benefits both with
and without a merger with Invacare. After extensive discussions and
presentations from Healthdyne's legal and financial advisors, the Board of
Directors determined that the best means for providing value to its shareholders
was for Healthdyne to continue to pursue its strategic plan and not to be put up
for sale at this time. The Board of Directors unanimously concluded that, given
projected earnings and the new products planned for introduction in the near
future, Invacare's offer was grossly inadequate and not in the best interests of
Healthdyne and its shareholders.
In reaching the conclusions stated above, the Board of Directors took into
account a variety of factors, including:
- The nature of the markets in which Healthdyne competes and the Board of
Directors' firm belief that Invacare's offer does not reflect the actual
value of Healthdyne.
- Healthdyne's prospects for future growth and expansion, investments that
have been made in an effort to expand Healthdyne's product lines and the
development of innovative new products as well as enhancements to existing
products currently offered by Healthdyne.
- The recommendation by Cowen & Company, Healthdyne's financial advisor, to
the effect that the price offered pursuant to Invacare's offer is grossly
inadequate from a financial point of view to the shareholders of
Healthdyne (other than Invacare).
- The Board of Directors' familiarity with the financial condition,
business opportunities and current strategies of Healthdyne.
LOGO
<PAGE> 2
- The disruptive effect of Invacare's offer on Healthdyne's employees,
suppliers and customers.
- The fact that Healthdyne's stock has traded as high as $14.75 per share
as recently as June 1996 and closed at $14.25 per share on January 30,
1997.
- The Board of Directors' commitment to protecting the best interests of
the Healthdyne shareholders.
A more detailed description of the factors considered by your Board of
Directors is contained in the enclosed Schedule 14D-9. We urge you to read it
carefully and in its entirety so that you will be fully informed as to the Board
of Directors' recommendation.
Your Board of Directors and management are convinced that remaining
independent at this time is the best way to maximize shareholder value for all
of the Healthdyne shareholders, and your Board of Directors will continue to
actively pursue our current strategic goals and product introduction, in an
effort to best serve our shareholders.
<TABLE>
<S> <C>
On behalf of the Board of Directors,
/s/ CRAIG B. REYNOLDS /s/ PARKER H. PETIT
--------------------------------------------------- -----------------------------------------------------
Craig B. Reynolds Parker H. Petit
President and Chief Executive Officer Chairman of the Board of Directors
Healthdyne Technologies, Inc. Healthdyne Technologies, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 23
M. Wayne Boylston
January 31, 1997
(770) 499-1212
Marietta, Georgia, January 31, 1997 -- Healthdyne Technologies, Inc.
(Nasdaq:HDTC) announced today that its Board of Directors voted unanimously to
recommend that shareholders reject the unsolicited tender offer by Invacare
Corporation and not tender any of their shares pursuant to the offer. Craig B.
Reynolds, President and Chief Executive Officer of the Company, stated that
"This is the second time in eight days that our Board has met to consider an
Invacare offer to acquire the Company. The Board reiterated that the Company is
not for sale." In recommending that shareholders reject the offer, Healthdyne
Technologies' Board considered a variety of factors, including the opinion of
Cowen & Company that the $13.00 per share price offered by Invacare is grossly
inadequate, the nature of the markets in which the Company competes, the
Company's future business and financial prospects, and the Board's familiarity
with the financial condition, business opportunities, and current strategies of
the Company.
Mr. Reynolds stated that "Healthdyne Technologies' Board is dedicated to
serving its shareholders' interests. Healthdyne Technologies is early in the
process of implementing a carefully conceived long-term business plan. The Board
believes the benefits of Healthdyne Technologies' existing initiatives have not
been fully reflected in the market and that they certainly are not reflected in
Invacare's offer. In making its offer at this time, Invacare is trying to
acquire Healthdyne Technologies at a price that does not reflect Healthdyne
Technologies' intrinsic value. Invacare's persistence in attempting to acquire
Healthdyne Technologies is testimony to the innovative products, advanced
technology and unique strategic position of the Company in the market today."
Parker H. Petit, Chairman of the Board and founder, commented, "Invacare
has traditionally paid bargain prices for their acquisitions. There is no reason
for an industry leader in high technology homecare products, like Healthdyne
Technologies, to be sold at a bargain price. Healthdyne Technologies has made
enhancements in its strategic plans over the last two years with major
investments in new product development and the acquisition of new technologies
and product lines. These investments position the Company to take advantage of
the changes that are taking place in the healthcare industry. As Healthdyne
Technologies' largest non-institutional shareholder, I witnessed a period of
many consecutive years of growth in Company profits. I believe that our
carefully planned investments and acquisitions should have a significant
positive effect on our growth and profitability during 1997 and beyond. To me,
it is obvious that Invacare needs proprietary high technology, but that should
not come at the expense of Healthdyne shareholders."
The Company indicated it planned to release additional information
concerning the Company's strategic initiatives in conjunction with reporting its
year-end results, which are expected next week.
Healthdyne Technologies designs, manufactures and markets technologically
advanced medical devices for use in the home, as well as other specialized
clinical settings. The Company's products include diagnostic and therapeutic
devices for the evaluation and treatment of sleep disorders, non-invasive
ventilators, oxygen concentrators and medication nebulizers for the treatment of
respiratory disorders, monitors for infants at risk for SIDS, and products for
asthma management.
This press release contains forward-looking statements that
involve risks and uncertainties, including developments in the
healthcare industry, development and introduction of new
products on a timely basis, favorable resolution of intellectual
property matters, third-party reimbursement policies and
practices and regulatory requirements affecting the approval and
sale of medical devices, as well as other risks detailed from
time to time in the Company's reports filed with the Securities
and Exchange Commission, including its Reports on Form 10-Q for
the quarters ended March 31, 1996, June 30, 1996 and September
30, 1996.
<PAGE> 1
Exhibit 24
[COWEN LETTERHEAD]
January 30, 1997
Board of Directors
Healthdyne Technologies, Inc.
1255 Kennestone Circle
Marietta, GA 30066
Ladies and Gentlemen:
You have requested our opinion as investment bankers as to the adequacy, from a
financial point of view, to the holders of the outstanding shares of Common
Stock, par value $0.01 per share of Healthdyne Technologies, Inc. (the
"Company") other than Invacare Corporation, of the terms of the Offer to
Purchase (as hereinafter defined). For purposes of this opinion, the "Offer to
Purchase" means the offer described below pursuant to that certain Offer to
Purchase included in the Schedule 14D-1 filed with the Securities and Exchange
Commission on January 27, 1997 by I.H.H. Corp. (the "Bidder"), a wholly-owned
subsidiary of Invacare Corporation (the "Schedule 14D-1").
As more specifically set forth in the Schedule 14D-1, the Bidder has offered,
subject to certain conditions set forth in the Offer to Purchase, to purchase
all of the outstanding shares of Common Stock of the Company, and the
associated Preferred Stock Purchase Rights issued pursuant to the Rights
Agreement, dated as of May 22, 1995 between the Company and Trust Company Bank,
as Rights Agent (the "Rights Agreement"), at a purchase price of $13 per share
(and associated Right) net to the seller in cash.
In the ordinary course of its services, Cowen & Company ("Cowen") is regularly
engaged in the valuation and pricing of businesses and their securities and in
advising corporate securities issuers on related matters.
In arriving at our opinion, Cowen has, among other things:
(1) reviewed the Company's financial statements for the fiscal years ended
December 31, 1994, 1995 and 1996, certain publicly available
filings with the Securities and Exchange Commission and certain other
relevant financial and operating data of the Company;
(2) reviewed the Schedule 14D-1;
(3) held meetings and discussions with management and senior personnel of
the Company to discuss the business, operations, historical
financial results and future prospects of the Company;
(4) reviewed financial projections furnished to us by management of the
Company relating to, among other things, the capital structure,
sales, net income, cash flow, capital requirements and other data of
the Company we deemed relevant;
<PAGE> 2
Healthdyne Technologies, Inc.
January 30, 1997
Page 2
(5) reviewed the valuation of the Company in comparison to other
similar publicly traded companies;
(6) reviewed the historical prices and trading activity of the Common Stock
of the Company from January 26, 1996 through January 28, 1997 and
compared those trading histories with those of other companies which we
deemed relevant;
(7) compared the transaction contemplated by the Offer to Purchase with
other similar transactions, including the acquisition of control; and
(8) compared the discount rate implied by the Offer to Purchase as applied
to the cash flows assumed by projections of the Company's management,
to the weighted average cost of capital of other similar publicly
traded companies; and
(9) conducted such other studies, analysis, inquiries and investigations as
we deemed appropriate.
Cowen was not requested to, and did not, solicit third party indications of
interest in acquiring the Company.
On January 28, 1997, the closing price of the Common Stock of the Company in
the last transaction reported by NASDAQ National Market was $14 1/4 per share.
In rendering this opinion, we relied upon the Company's management with respect
to the accuracy and completeness of the financial and other information
furnished to us as described above. We have not assumed any responsibility for
independent verification of such information, including financial information,
nor have we made an independent evaluation or appraisal of any of the
properties or assets of the Company.
We have acted as financial advisor to the Board of Directors of the Company in
connection with the Offer to Purchase and will receive a fee for our services.
We will also receive a fee for rendering this opinion. In the past, Cowen and
its affiliates have provided financial advisory and financing services for the
Company and have received fees for the rendering of these services. Cowen
served as the lead manager in the Company's June 1993 initial public offering,
advised the Company in its May 1995 spin-off from Healthdyne, Inc. and advised
the Company with respect to the May 1995 implementation of the Rights
Agreement. In addition, in the ordinary course of its business, Cowen trades
the equity securities of the Company for its own account and for the accounts
of its customers, and, accordingly, it may at any time hold a long or short
position in such securities. Moreover, Cowen and its affiliates own 547,000
shares of Common Stock of the Company.
On the basis of our review and analysis, as described above, it is our opinion
as investment bankers that, as of the date hereof, the financial terms of the
Offer to Purchase are grossly inadequate, from a financial point of view, to the
stockholders of the Company other than Invacare Corporation.
Very truly yours,
Cowen & Company
<PAGE> 1
EXHIBIT 25
HEALTHDYNE TECHNOLOGIES, INC.
AMENDMENT NO. 1
HEALTHDYNE TECHNOLOGIES, INC. RIGHTS AGREEMENT
This Amendment No. 1 to the Healthdyne Technologies, Inc. Rights
Agreement dated as of May 22, 1995 ("Rights Agreement") between Healthdyne
Technologies, Inc. (the "Company") and SunTrust Bank, Atlanta (formerly Trust
Company Bank), Rights Agent, amends the terms and provisions of the Rights
Agreement as follows:
I.
Amend the first sentence of Section 3(a) by deleting such sentence in
its entirety and substituting in lieu thereof the following language:
(a) Until the earlier of (i) the close of business on the tenth day
after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the close of business on the
Record Date) or (ii) at such time, as the Company's Board of Directors may
designate, after the date that a tender or exchange offer by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan) is first published or sent or given within the meaning of
Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if
upon consummation thereof, such Person would be the Beneficial Owner of 20% or
more of the shares of Common Stock then outstanding (the earlier of (i) and
(ii), as either of such periods may be extended pursuant to the provisions of
Section 26 hereof, being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for the Common Stock registered in the
names of the holders of the Common Stock (which certificates for Common Stock
shall be deemed also to be certificates for Rights) and not by separate
certificates, and (y) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer to
the Company).
<PAGE> 2
II.
This Amendment No. 1 shall be effective as of the date of its
adoption by the Board of Directors of the Company and shall be executed by the
Rights Agent upon delivery of a certificate signed by a Continuing Director (as
defined in the Plan) which states that the amendment is in compliance with the
terms of Section 26 of the Rights Agreement.
IN WITNESS WHEREOF, the Company and the Rights Agent have caused this
amendment to the Rights Agreement to be duly executed this _____ day of
January, 1997.
Attest: HEALTHDYNE TECHNOLOGIES, INC.
_______________________________ By: ____________________________
Name: Name:
Title: Title:
Attest: SUNTRUST BANK, ATLANTA
_______________________________ By: ____________________________
Name: Name:
Title: Title:
