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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 26
TO
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 the 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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This Amendment No. 26 amends and supplements the Schedule 14D-9 filed with
the Securities and Exchange Commission on January 31, 1997 (as amended, the
"Schedule 14D-9") by Healthdyne Technologies, Inc., a Georgia corporation
("Healthdyne"), relating to the proposed tender offer by I.H.H. Corporation, a
Delaware corporation ("IHH") and a wholly owned subsidiary of Invacare
Corporation, an Ohio corporation ("Invacare"), to purchase for cash all
outstanding shares of Common Stock, par value $.01 per share, of Healthdyne.
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ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 of the Schedule 14D-9 is hereby amended and supplemented by
adding the following information:
On July 29, 1997, Healthdyne entered into an Escrow Agreement (the
"Escrow Agreement") with First Union National Bank, as escrow agent, and
pursuant thereto funded a $1.0 million escrow fund for indemnification and
payment of certain expenses of Healthdyne's Continuing Directors (as defined in
the Rights Agreement). The Escrow Agreement was entered into in lieu of a
Trust Agreement, a form of which was filed as Exhibit 73 to this Schedule
14D-9. The substantive terms of the Escrow Agreement are substantially the
same as the terms of the form of Trust Agreement previously filed. A copy of
the Escrow Agreement is attached hereto as Exhibit 78.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
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EXHIBIT 78 -- Escrow Agreement by and between Healthdyne Technologies,
Inc. and First Union National Bank for Indemnification
and Payment of Certain Expenses of Healthdyne Technologies,
Inc. Continuing Directors, dated as of July 24, 1997.
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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/ Leslie R. Jones
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Name: Leslie R. Jones
Title: Vice President, General
Counsel and Secretary
Dated: July 30, 1997
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EXHIBIT 78
ESCROW AGREEMENT
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by and between
Healthdyne Technologies, Inc.
and
First Union National Bank
for
Indemnification and Payment of Certain Expenses
of Healthdyne Technologies, Inc.
Continuing Directors
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Made And Entered Into As Of July 24, 1997
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ESCROW AGREEMENT FOR INDEMNIFICATION
AND PAYMENT OF CERTAIN EXPENSES OF
HEALTHDYNE TECHNOLOGIES, INC. CONTINUING DIRECTORS
This ESCROW AGREEMENT ("Escrow Agreement") has been made as of July 24,
1997, among HEALTHDYNE TECHNOLOGIES, INC., a corporation organized and existing
under the laws of the State of Georgia with its executive offices at 1255
Kennestone Circle, Marietta, Georgia 30066 ("HDTC"), and FIRST UNION NATIONAL
BANK, a national banking association with a principal place of business at 999
Peachtree Street, N.E., Suite 1100, Atlanta, Georgia 30309 (the "Escrow Agent").
WITNESSETH:
WHEREAS, Invacare Corporation ("Invacare") has commenced an unsolicited
tender offer (the "Offer") to acquire all of the outstanding shares of Common
Stock, par value $.01 per share (the "Common Stock"), of HDTC at a price of
$15.00 per share and the Board of Directors of HDTC, based on, among other
things, the advice of HDTC's financial advisor, has determined that the Offer is
grossly inadequate and has recommended that stockholders of HDTC reject the
Offer;
WHEREAS, in connection with the Offer, Invacare is proposing to elect,
and is soliciting proxies in favor of, a slate of four nominees (the "Invacare
Nominees") to HDTC's seven member Board;
WHEREAS, on April 20, 1995, HDTC declared a dividend distribution of
one preferred stock purchase right (the "Rights") for each outstanding share of
Common Stock to stockholders of record at the close of business on May 22, 1995;
WHEREAS, the Rights were issued pursuant to a Rights Agreement, dated
as of May 22, 1995, between HDTC and Trust Company Bank (the "Rights
Agreement");
WHEREAS, if Invacare's nominees are elected to the Board of Directors,
under the Rights Agreement, the concurrence of the continuing directors as
defined in the
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Rights Agreement who are re-elected to HDTC's Board of Directors at the 1997
Annual Meeting of HDTC's shareholders (the "Continuing Directors") will be
required to amend or redeem the Rights;
WHEREAS, if Invacare's nominees are elected to, and acquire control of,
the Board of Directors of HDTC, HDTC may not make adequate resources available
to the Continuing Directors in order to enable them to carry out their
prescribed functions under the Rights Agreement and to fulfill their fiduciary
obligations to stockholders of HDTC;
WHEREAS, the Continuing Directors, or some of them, are, or may be,
defendants or parties in various civil actions which are currently pending
(including, without limitation, the actions captioned Invacare Corporation and
I.H.H. Corp. v. Healthdyne Technologies, Inc., et al., (Civil Action No.
1:97-cv-0205-CC) in the United States District Court for the Northern District
of Georgia, Atlanta Division and the appeal of such action to the United States
Court of Appeals for the Eleventh Circuit and In re Healthdyne Technologies,
Inc. Shareholder Litigation (Civil Action No. 1-97-CV-0349-CC) in the United
States District Court for the Northern District of Georgia, Atlanta Division) or
various civil or criminal actions which may in the future arise, in connection
with or relating to (1) their service as directors and officers of HDTC and/or
its subsidiaries, (2) the efforts of Invacare to acquire control of HDTC, (3)
actions taken by HDTC or any of the Continuing Directors in anticipation of, or
in response to, Invacare's efforts to acquire control of HDTC, and in seeking
alternative transactions to Invacare's offer, (4) actions taken by HDTC or any
of the Continuing Directors in entering into employment agreements, employee
retention agreements, employee benefit plans and programs and indemnification
agreements, (5) actions taken by any Continuing Director who is, as of the date
of this Escrow Agreement, a director of HDTC and who retains such position
following a Change of Control (as defined in section 9.1 hereof), and (6) the
entering into this Escrow Agreement, all of which is referred to as the
"Litigation";
WHEREAS, the Continuing Directors may incur costs and expenses, other
than Litigation Expenses (as
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defined in section 6.1 hereof), including, without limitation, legal, financial
advisory or other expenses, in connection with (1) the commencement of any
action or litigation against Invacare or its affiliates or representatives or
its nominees who have been elected to HDTC's Board of Directors, (2) the
exercise of their fiduciary duties to stockholders of HDTC, including, without
limitation, carrying out their prescribed functions as Continuing Directors
under the Rights Agreement, (3) the evaluation or consideration of any bids,
offers or proposals from Invacare or any other party to acquire or merge with
HDTC or to acquire control over or acquire the assets of HDTC, or any processes
or procedures instituted by the Board of Directors of HDTC to seek, evaluate and
make decisions concerning any such bids, offers or proposals or (4) opposing any
actions by Invacare or the Invacare Nominees which the Continuing Directors
believe not to be in the best interests of stockholders (collectively, the
"Continuing Director Expenses");
WHEREAS, section 14-2-853 of the Georgia Business Corporation Code (the
"GBCC") permits, and Article VI of HDTC's By-Laws requires, that the reasonable
expenses incurred by a director of HDTC, who is a party to a proceeding because
he is a director, be paid by HDTC in advance of the final disposition of such
action upon receipt of (1) a written affirmation of the director's good faith
belief that he has met the relevant standard of conduct or that the proceeding
involves conduct for which liability has been eliminated (an "Affirmation"), and
(2) an undertaking to repay any funds advanced if it is ultimately determined
that the director is not entitled to indemnification (an "Undertaking");
WHEREAS, section 14-2-857 of the GBCC permits, and Article VI of HDTC's
By-Laws requires, that the expenses incurred by an officer of HDTC, who is a
party to a proceeding because he is an officer, be paid by HDTC to the same
extent as a director;
WHEREAS, each of the Continuing Directors who as of the date hereof is
a party to any Litigation has provided, or will as required provide, an executed
Affirmation and an executed Undertaking to HDTC;
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WHEREAS, the Continuing Directors have also entered into
indemnification agreements with HDTC (the "Indemnification Agreements")
providing for the indemnification of, and advancement of expenses to, the
Continuing Directors and for the continued coverage of the Continuing Directors
under HDTC's directors' and officers' liability insurance policies issued by the
American International Group, Inc. (the "D&O Coverage");
WHEREAS, for the purposes of (A) providing indemnification and
advancement of expenses to any Continuing Director incurring a Litigation
Expense (as defined in section 6.1 hereof) and assuring such indemnification
after a Change of Control pursuant to the provisions of the GBCC and the
Indemnification Agreements and (B) providing a fund for any Continuing Director
who incurs any Continuing Director Expense and assuring the availability of
funds to pay such Continuing Director Expenses following a Change of Control,
HDTC desires to establish and continue an escrow fund of one million dollars
($1,000,000) with such amount (together with the net earnings thereon) to be
available for the purposes described herein subject only to the claims of HDTC's
general creditors as provided herein; and
WHEREAS, the Escrow Agent has agreed and does agree to the terms and
conditions of this Escrow Agreement;
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, intending to be legally bound hereby, it is agreed by
and between HDTC and the Escrow Agent for the benefit of the Continuing
Directors as follows:
ARTICLE I
Escrow Fund and Definitions
1.1 Escrow Fund. HDTC hereby establishes with the Escrow Agent an
escrow fund for (A) the indemnification and advancement of expenses of any
Continuing Director who prior to the date hereof has incurred, or hereafter
incurs, any Litigation Expense and (B) the payment to (or at the direction of)
any Continuing Director who incurs a Continuing Director
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Expense, with such fund to consist of (i) one million dollars ($1,000,000) which
shall be deposited with the Escrow Agent by HDTC and (ii) any other property
which the Escrow Agent may hereinafter at any time hold or acquire, including,
without limitation, income on such (collectively, the "Escrow Fund"). The Escrow
Agent shall hold the Escrow Fund separate and apart from any other funds of
HDTC, shall use all of the funds held hereunder exclusively for the purposes
herein set forth, shall hold and administer the Escrow Fund as a single fund,
shall invest and reinvest the same without distinction between principal and
income, and shall pay over and distribute the same in accordance with the
provisions of this Escrow Agreement.
1.2 Effective Date. The effective date of this Escrow Agreement is July
24, 1997.
ARTICLE II
Payments to the Escrow Fund
Receipt of Payments. The Escrow Agent shall accept deposits in cash or
other property that are made by or on behalf of HDTC and its subsidiaries from
time to time in accordance with such funding method and policy as will permit
the Escrow Agent to make payments pursuant to any Advancement Request (as
defined in section 6.1 hereof).
ARTICLE III
Powers and Duties of the Escrow Agent
3.1 In General. The Escrow Agent shall hold the Escrow Fund subject to
the terms and purposes of this Escrow Agreement.
3.2 Disbursement Into Court. If, at any time, there shall exist any
dispute between HDTC and the Continuing Directors, or any of them, with respect
to the holding or disposition of any portion of the Escrow Fund or any other
obligations of the Escrow Agent hereunder, or if at any time the Escrow Agent is
unable to determine, to the Escrow Agent's sole satisfaction, the
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proper disposition of any portion of the Escrow Fund or the Escrow Agent's
proper actions with respect to its obligations hereunder, or if the Continuing
Directors have not within 30 days of the furnishing by the Escrow Agent of a
notice of resignation pursuant to section 3.5 hereof, appointed a successor
Escrow Agent to act hereunder, then the Escrow Agent may petition (by means of
an interpleader action or any other appropriate method) any court of competent
jurisdiction in Atlanta, Georgia, for instructions with respect to such dispute
or uncertainty, and pay into such court all funds held by it in the Escrow Fund
for holding and disposition in accordance with the instructions of such court.
The Escrow Agent shall have no liability to HDTC, its shareholders or any
Continuing Director or any other person or entity with respect to any such
disbursement into court, specifically including any liability or claimed
liability that may arise, or be alleged to have arisen, out of or as a result of
any delay in the disbursement of funds held in the Escrow Fund or any delay in
or with respect to any other action required or requested of the Escrow Agent.
3.3 Liability and Indemnification.
(a) The Escrow Agent shall have no liability or obligation with respect
to the Escrow Fund except for the Escrow Agent's willful misconduct or gross
negligence. The Escrow Agent's sole responsibility shall be for the safekeeping,
investment, and disbursement of the Escrow Fund in accordance with the terms of
this Escrow Agreement. The Escrow Agent shall have no implied duties or
obligations and shall not be charged with knowledge or notice of any fact or
circumstance not specifically set forth herein. The Escrow Agent may rely upon
any instrument, not only as to its due execution, validity and effectiveness,
but also as to the truth and accuracy of any information contained therein,
which the Escrow Agent shall in good faith believe to be genuine, to have been
signed or presented by the person or parties purporting to sign the same and to
conform to the provisions of this Escrow Agreement. In no event shall the Escrow
Agent be liable for incidental, indirect, special, consequential or punitive
damages. The Escrow Agent shall not be obligated to take any legal action or
commence any proceeding in connection with the Escrow Fund, any account in which
the Escrow Funds are
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deposited, or this Escrow Agreement, or to appear in, prosecute or defend any
such legal action or proceeding. The Escrow Agent may consult legal counsel
selected by it in the event of any dispute or question as to the construction of
any of the provisions hereof or of any other Escrow Agreement or of its duties
hereunder, and shall incur no liability and shall be fully indemnified from any
liability whatsoever in acting in accordance with the opinion or instruction of
such counsel. The reasonable fees and expenses of any such counsel shall be paid
out of the Escrow Fund.
(b) The Escrow Agent is authorized, in its sole discretion, to comply
with orders issued or process entered by any court with respect to the Escrow
Fund, without determination by the Escrow Agent of such court's jurisdiction in
the matter. If any portion of the Escrow Fund is at any time attached, garnished
or levied upon under any court order, or in case the payment, assignment,
transfer, conveyance or delivery of any such property shall be stayed or
enjoined by any court order, or in case any order, judgment or decree shall be
made or entered by any court affecting such property or any part thereof, then
and in any such event, the Escrow Agent is authorized, in its sole discretion,
to rely upon and comply with any such order, writ, judgment or decree which it
is advised by legal counsel selected by it is binding upon it without the need
for appeal or other action; and if the Escrow Agent complies with any such
order, writ, judgment or decree, it shall not be liable to any of the parties
hereto or to any other person or entity by reason of such compliance even though
such order, writ, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.
(c) From and at all times after the date of this Escrow Agreement, HDTC
shall, to the fullest extent permitted by law and to the extent provided herein,
indemnify and hold harmless the Escrow Agent and each director, officer,
employee, attorney, agent and affiliate of the Escrow Agent (collectively, the
"Indemnified Parties") against any and all actions, claims (whether or not
valid), losses, damages, liabilities, costs and expenses of any kind or nature
whatsoever (including without limitation reasonable attorneys' fees, costs and
expenses) incurred by or asserted against any of the Indemnified Parties from
and
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after the date hereof, whether direct, indirect or consequential, as a result of
or arising from or in any way relating to any claim, demand, suit, action or
proceeding (including any inquiry or investigation) by any person, including
without limitation HDTC or any Continuing Director, whether threatened or
initiated, asserting a claim for any legal or equitable remedy against any
person under any statute or regulation, including, but not limited to, any
federal or state securities laws, or under any common law or equitable cause or
otherwise, arising from or in connection with the negotiation, preparation,
execution, performance or failure of performance of this Escrow Agreement or any
transactions contemplated herein, whether or not any such Indemnified Party is a
party to any such action, proceeding, or suit or the target of any such inquiry
or investigation; provided, however, that no Indemnified Party shall have the
right to be indemnified hereunder for any liability finally determined by a
court of competent jurisdiction, subject to no further appeal, to have resulted
solely from the gross negligence or willful misconduct of such Indemnified
Party. If any such action or claim shall be brought or asserted against any
Indemnified Party, such Indemnified Party shall promptly notify HDTC in writing,
and HDTC shall assume the defense thereof, including the employment of counsel
and the payment of all expenses. Such Indemnified Party shall, in its sole
discretion, have the right to employ separate counsel (who may be selected by
such Indemnified Party in its sole discretion) in any such action and to
participate in the defense thereof, and the fees and expenses of such counsel
shall be paid by such Indemnified Party, except that HDTC shall be required to
pay such fees and expenses if (a) HDTC agrees to pay such fees and expenses, or
(b) HDTC shall fail to assume the defense of such action or proceeding or shall
fail, in the reasonable discretion of such Indemnified Party, to employ counsel
satisfactory to the Indemnified Party in any such action or proceeding, or (c)
HDTC is the plaintiff in any such action or proceeding or (d) the named parties
to any such action or proceeding (including any impleaded parties) include both
Indemnified Party and HDTC and one or more of the Continuing Directors, and
Indemnified Party shall have been advised by counsel that there may be one or
more legal defenses available to it which are different from or additional to
those available to HDTC and such Continuing Director. All such fees and
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expenses payable by HDTC pursuant to the foregoing sentence shall be paid from
time to time as incurred, both in advance of and after the final disposition of
such action or claim. All of the foregoing losses, damages, costs and expenses
of the Indemnified Parties shall be payable by HDTC, upon demand by such
Indemnified Party. The obligations of HDTC under this section 3.3(c) shall
survive any termination of this Escrow Agreement and the resignation or removal
of the Escrow Agent.
3.4 Fees and Expenses of Escrow Agent. HDTC shall compensate the Escrow
Agent for its services hereunder in accordance with Schedule A attached hereto
and, in addition, shall reimburse the Escrow Agent for all of its reasonable
out-of-pocket expenses, including attorneys' fees, travel expenses, telephone
and facsimile transmission costs, postage (including express mail and overnight
delivery charges), copying charges and the like. All of the compensation and
reimbursement obligations set forth in this section 3.4 shall be payable by HDTC
upon demand by the Escrow Agent. The obligations of HDTC under this section 3.4
shall survive any termination of this Escrow Agreement and the resignation or
removal of the Escrow Agent.
The Escrow Agent is authorized to, and may, disburse to itself from the
Escrow Fund, from time to time, the amount of any compensation and reimbursement
of out-of-pocket expenses due and payable hereunder (including any amount to
which the Escrow Agent or any Indemnified Party is entitled to seek
indemnification pursuant to section 3.3(c) hereof). The Escrow Agent shall
notify HDTC and the Continuing Directors of any disbursement from the Escrow
Fund to itself or any Indemnified Party in respect of any compensation or
reimbursement hereunder and shall furnish to HDTC and the Continuing Directors
copies of all related invoices and other statements. HDTC and the Continuing
Directors hereby grant to the Escrow Agent and the Indemnified Parties a
security interest in and lien upon the Escrow Fund and all funds therein to
secure all obligations hereunder to the Escrow Agent and the Indemnified
Parties, and the Escrow Agent and Indemnified Parties shall have the right to
offset the amount of any compensation or reimbursement due any of them hereunder
(including any claim for indemnification pursuant to section 3.3(c) hereof)
against the Escrow Fund. If for
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any reason funds in the Escrow Fund are insufficient to cover such compensation
and reimbursement, HDTC shall promptly pay such amounts to the Escrow Agent or
any Indemnified Party upon receipt of an itemized invoice.
3.5 Tenure in Office. The Escrow Agent may resign from the performance
of its duties hereunder at any time by giving thirty (30) days' prior written
notice to HDTC and the Continuing Directors. The Escrow Agent may be removed by
HDTC prior to a Change of Control for any reason upon thirty (30) days' prior
written notice to the Escrow Agent. Subsequent to a Change of Control, the
Escrow Agent may only be removed upon the written request of all the Continuing
Directors. Such resignation or removal shall take effect upon the appointment of
a successor Escrow Agent as provided hereinbelow.
3.6 Successor Escrow Agent. HDTC shall have the power to appoint a
successor Escrow Agent prior to a Change of Control. Subsequent to a Change of
Control, a successor Escrow Agent may only be appointed by the mutual agreement
of all the Continuing Directors. Any successor Escrow Agent appointed pursuant
to the provisions of this section 3.6 shall be a bank or corporate Escrow Agent
with a minimum primary capital, as defined under applicable bank regulatory
requirements ("Primary Capital"), of at least one hundred million dollars
($100,000,000). The appointment of a successor Escrow Agent shall become
effective upon acceptance in writing of such appointment by the successor Escrow
Agent. The successor Escrow Agent shall have no liability for events occurring
prior to the time such successor Escrow Agent assumed its Escrow Agent duties
hereunder. Every successor Escrow Agent appointed to and accepting a Escrow
Agentship hereunder shall have all the rights, title, powers, duties, exemptions
and limitations of the original Escrow Agent, and the retiring Escrow Agent
shall be discharged from its duties and obligations under this Escrow Agreement,
but shall not be discharged from any liability for actions taken as the Escrow
Agent hereunder prior to such succession. After any retiring Escrow Agent's
resignation or removal, the provisions of this Escrow Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
the Escrow Agent under this Escrow Agreement.
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ARTICLE IV
Investment Powers
The Escrow Agent shall invest and reinvest the Escrow Fund as
directed by HDTC (subject to applicable minimum investment requirements) by the
furnishing of a written direction executed by HDTC; provided, however, that no
investment or reinvestment may be made except in the following (collectively
referred to herein as "Permitted Investments"):
(a) direct obligations of the United States of America or
obligations the principal of and the interest on which are
unconditionally guaranteed by the United States of America;
(b) certificates of deposit issued by any bank, bank and trust
company, or national banking association, having a minimum Primary
Capital of $100,000,000 (a "Qualified Bank") (including the Escrow
Agent and its affiliates), which certificates of deposit are insured by
the Federal Deposit Insurance Corporation or a similar governmental
agency;
(c) repurchase agreements with any Qualified Bank (including
the Escrow Agent and its affiliates); or
(d) any money market fund substantially all of which is
invested in the foregoing investment categories, including any money
market fund managed by the Escrow Agent and any of its affiliates.
If the Escrow Agent has not received a written direction from
HDTC at any time that an investment decision must be made, the Escrow Agent
shall invest the Escrow Fund, or such portion thereof as to which no such
written direction has been received, in investments described in clause (b)
above. Each of the foregoing investments shall be made in the name of the Escrow
Agent. No investment shall be made in any instrument or security that has a
maturity of greater than six (6) months. Notwithstanding anything to the
contrary contained herein, the Escrow Agent may, without notice to HDTC or the
Continuing Directors, sell or liquidate any
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of the foregoing investments at any time if the proceeds thereof are required
for any release of funds permitted or required hereunder, and the Escrow Agent
shall not be liable or responsible for any loss, cost or penalty resulting from
any such sale or liquidation, nor shall the Escrow Agent be liable for any other
loss on any other Permitted Investment. With respect to any funds received by
the Escrow Agent for deposit into the Escrow Fund or any written direction from
HDTC received by the Escrow Agent with respect to investment of any funds in the
Escrow Fund after ten o'clock, a.m., Atlanta, Georgia, time, the Escrow Agent
shall not be required to invest such funds or to effect such investment
instruction until the next day upon which banks in Atlanta, Georgia are open for
business.
ARTICLE V
Accounts and Records
5.1 Records. The Escrow Agent shall keep accurate and detailed records
of all investments, receipts, disbursements and all other transactions required
with regard to the Escrow Fund, as well as such specified records as shall be
agreed upon in writing between HDTC and the Escrow Agent. All such accounts,
books and records shall be open to inspection and audit at all reasonable times
by HDTC and by the Continuing Directors or their authorized agents.
5.2 Reports.
(a) Within sixty (60) days after the end of each calendar year and
within sixty (60) days after the removal or resignation of the Escrow Agent or
the termination of the Escrow Fund, the Escrow Agent shall render a written
report to the Board of Directors of HDTC (the "Board") (and, following a Change
of Control, to each Continuing Director) containing a complete accounting
showing the total assets in the Escrow Fund as of the latest Valuation Date (as
defined in section 5.3 hereof) and the fair market value placed on each asset as
of that date, as well as a statement of purchases, sales and any investment
changes and all income, expenses, and disbursements since the last such report.
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(b) The approval of, or the lack of written objection by, the Board or,
after a Change of Control, the approval of, or the lack of written objection by,
all the Continuing Directors within ninety (90) days after submission of any
report or accounting by the Escrow Agent shall be a complete release and
discharge of the Escrow Agent as to the information contained therein, unless
the Escrow Agent has engaged in willful misconduct or gross negligence in the
preparation of such report or accounting.
5.3 Valuation. The Escrow Agent shall value all assets of the Escrow
Fund at fair market value at least annually on the last day of the calendar
year, or on such other day as is mutually agreed to by HDTC and the Escrow Agent
(the "Valuation Date").
ARTICLE VI
Payments From the Escrow Fund
6.1 Payments Generally. Prior to a Change of Control, the Escrow Agent
shall make payments out of the Escrow Fund in such manner and in such amounts as
the Board of Directors of HDTC may direct. On and after a Change of Control, the
Board of Directors of HDTC shall have no authority to direct that payments be
made out of the Escrow Fund and the Escrow Agent shall have an unconditional
obligation, subject only to the provisions of section 6.2 hereof, to promptly
make payments out of the Escrow Fund to (or at the direction of) the
Representative (as defined below) of the Continuing Directors upon receipt from
such Representative of a written request (an "Advancement Request") specifying
in reasonable detail (A) any expense actually incurred by a Continuing Director
(including, without limitation, the fees, charges and disbursements of legal
counsel) in connection with the defense or prosecution of any Litigation,
including the prosecution of any appeal relating to the Litigation (a
"Litigation Expense") or (B) any Continuing Director Expense actually incurred
by a Continuing Director. The Escrow Agent shall also notify HDTC of any
Advancement Request and the amount advanced to a Continuing Director in
connection therewith.
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6.2 Requirement of Undertaking. No Continuing Director shall be
entitled to receive any payment from the Escrow Agent for purposes of a
Litigation Expense pursuant to the terms of this Escrow Agreement unless, at or
prior to the time of such payment, such Continuing Director delivers or has
delivered an Affirmation and an Undertaking to HDTC, a copy of which shall be
furnished to the Escrow Agent, substantially in the forms attached hereto as
Exhibits A and B, respectively.
6.3 Incumbency Certificate and Representative. HDTC has provided to the
Escrow Agent an Incumbency Certificate showing the names, addresses and
signatures of the persons it expects to become the Continuing Directors in the
event of a Change of Control. The Escrow Agent may rely exclusively on such
Incumbency Certificate, or any subsequent Incumbency Certificate signed by the
persons named therein, as to the identity and authentic signatures of the
Continuing Directors. The Continuing Directors shall designate, in a writing
signed by all of them and delivered to the Escrow Agent and to HDTC, one
Continuing Director to act as the Representative of all of the Continuing
Directors hereunder (the "Representative"). The designation of the
Representative may be changed at any time by written notice signed by all of the
Continuing Directors and delivered to the Escrow Agent and to HDTC.
6.4 Payments by HDTC. If the Escrow Fund is not sufficient to make
payments to (or at the direction of) Continuing Directors as provided in this
Escrow Agreement, HDTC shall make the balance of each such payment as it becomes
due.
6.5 Payments Only Pursuant to Advancement Requests. Except as provided
in Article VIII of this Escrow Agreement, HDTC shall have no right or power to
direct the Escrow Agent to return any assets in the Escrow Fund to HDTC or to
divert any assets in the Escrow Fund to any purpose other than for payments to
(or at the direction of) Continuing Directors in connection with any Advancement
Request.
6.6 Exculpation. The Escrow Agent shall have no liability to HDTC, any
Continuing Director, or any other person or entity, with respect to any
disbursement of Escrow Funds made in accordance with an Advancement
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Request accompanied, where required by Section 6.2, with an Affirmation and an
Undertaking.
ARTICLE VII
Escrow Fund Subject to Creditors
7.1 Assets. Subject to the Escrow Agent's lien on the Escrow Fund for
indemnification, fees and expenses, all assets in the Escrow Fund, including any
earnings on such assets, shall be subject to the claims of the general creditors
of HDTC but only under circumstances in which HDTC is Insolvent as provided in
section 7.2.
7.2 Insolvency.
(a) HDTC shall be deemed to have become insolvent ("Insolvent") on the
date on which a decree or order is entered by a court of competent jurisdiction
adjudging HDTC a bankrupt or an insolvent, or approving as properly filed a
petition for reorganization under applicable bankruptcy or debtor protection
laws. HDTC shall give written notice to the Escrow Agent and to each Continuing
Director if it is deemed to have become Insolvent. On and after the date on
which the Escrow Agent receives such notice, the Escrow Agent shall make no
further payments from the Escrow Fund pursuant to section 6.1 and shall make
payments only to such persons, at such times and in such amounts as shall be
approved in writing by a court of competent jurisdiction.
(b) If it is determined that HDTC has ceased to be Insolvent within the
meaning of section 7.2(a), then section 7.2(a) shall cease to apply, and section
6.1 shall again become applicable, on and after the earliest date on which the
Escrow Agent has received written notice from HDTC that it has ceased to be
Insolvent or the Escrow Agent determines that HDTC has ceased to be Insolvent.
(c) If the Escrow Agent receives a written notice from HDTC or the
Representative that an allegation has been made that HDTC is insolvent in any
complaint or petition filed in a judicial proceeding, the Escrow Agent shall
thereafter refrain from making any payments from
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the Escrow Fund to (or at the direction of) Continuing Directors, or
distributing assets from the Escrow Fund. If the Escrow Agent later receives
written notice from HDTC or the Representative that such allegations have been
withdrawn or such proceeding has been dismissed, it shall resume such payment of
benefits in accordance with section 6.1; otherwise it shall discontinue such
payments and hold the assets of the Escrow Fund for the benefit of the creditors
of HDTC. In no event shall the Escrow Agent make payments to (or at the
direction of) Continuing Directors or distribute assets of the Escrow Fund
except as provided in this Article VII if it has actual knowledge of the
insolvency of HDTC.
ARTICLE VIII
Tax Issues, Amendment and Termination
8.1 In General. Except as provided in this Article VIII, following a
Change of Control, the Escrow Agreement shall be irrevocable and subject to no
modification. The parties hereby agree that earnings on any assets held in the
Escrow Fund shall be taxable to and such taxes shall be paid by HDTC.
Notwithstanding the foregoing, the terms of the Escrow Agreement may be
submitted to the Internal Revenue Service (the "IRS") for a private letter
determination regarding the tax consequences thereof, including, but not limited
to, a determination that the establishment and funding of the Escrow and Escrow
Fund, the disbursement of Escrow Funds to third parties, and the recognition of
income by the Escrow Fund will not, for federal income tax purposes, result in
any amounts being includible in the income of the Continuing Directors. The cost
of preparation of such private letter determination shall be paid for out of the
Escrow Fund.
8.2 Amendment. HDTC hereby expressly waives all rights and powers to
amend this Escrow Agreement, except (a) prior to a Change of Control by a
written instrument executed by HDTC and the Escrow Agent and (b) following a
Change of Control by a written instrument executed by the Escrow Agent and HDTC
and consented to in writing by all the Continuing Directors; provided, however,
that following a Change of Control, this Escrow Agreement may be modified by a
written instrument
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executed by the Escrow Agent and consented to in writing by all the Continuing
Directors for the purpose of curing any ambiguity or correcting any provisions
contained herein which may be defective or inconsistent with other provisions
contained herein; and provided, further, however, that prior to a Change of
Control, notwithstanding any other provision of this Escrow Agreement, the terms
of this Escrow Agreement may be modified by HDTC without the consent of the
Escrow Agent and any person who may be affected thereby to conform with the
requirements of the IRS necessary to secure a favorable private letter
determination, as provided in section 8.1.
8.3 Termination.
(a) HDTC may terminate this Escrow Agreement at any time, by
instrument, in writing, executed pursuant to authorization of the Board of
Directors of HDTC; provided, however, that, following a Change of Control, this
Escrow Agreement may be terminated only (i) upon the depletion of all of the
funds or assets which comprise the Escrow Fund or (ii) by the written agreement
of HDTC and all of the Continuing Directors. Notwithstanding anything contained
in this Escrow Agreement to the contrary, unless sooner terminated pursuant to
the terms hereof, this Escrow Agreement shall terminate automatically on July
22, 1999. Any amounts remaining in the Escrow Fund as of the termination of this
Escrow Agreement shall revert to, and be paid by the Escrow Agent to, HDTC.
(b) Any termination, unless automatic, shall become effective upon the
receipt by the Escrow Agent of the instrument of termination and such written
consents as may be required hereunder or as may be reasonably requested
hereunder; thereafter the Escrow Agent, upon the direction of the Board of
Directors of HDTC, shall liquidate the Escrow Fund to the extent required for
distribution and, after the final account of the Escrow Agent has been approved
or settled, shall distribute the balance of the Escrow Fund remaining in its
hands as directed by the Board of Directors of HDTC, or in the absence of such
direction or directions, as may be directed by a judgment or decree of a court
of competent jurisdiction. Following any termination, the powers of
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the Escrow Agent hereunder shall continue as long as any of the Escrow Fund
remains in its hands.
ARTICLE IX
Change of Control Provisions
9.1 Change of Control Defined. (a) For purposes of this
Escrow Agreement, a change of control of HDTC ("Change of Control") shall occur
upon:
(i) the reorganization, merger, consolidation or similar
business combination of HDTC with one or more other entities, other
than a transaction following which at least fifty-one percent (51%) of
the ownership interests of the institution resulting from such
transaction are owned in substantially the same proportion by persons
who, prior to such transaction, owned at least fifty-one percent (51%)
of the outstanding voting shares of HDTC;
(ii) the acquisition of substantially all of the assets of
HDTC or of more than twenty percent (20%) of the voting shares of HDTC
by any person or entity, or by any persons or entities acting in
concert or as a group; or
(iii) the occurrence of any event if, immediately following
such event, 50% or more of the members of the Board of Directors of
HDTC are not Continuing Directors.
(b) (i) HDTC shall give written notice to the Escrow
Agent of the occurrence of any Change of Control as promptly as practicable, but
in no event later than five (5) days after the date on which such Change of
Control occurs; provided that the Escrow Agent shall give effect to such notice
even if it is received after the expiration of such five (5) day period; and
further provided, that the failure of HDTC to give notice of a Change of Control
shall not affect any of the rights or obligations of the parties hereto pursuant
to the terms of this Escrow Agreement or otherwise be construed to create an
implication that no Change of Control has occurred.
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(ii) Any Continuing Director shall have the right to give
written notice to the Escrow Agent of the occurrence of a Change of Control. The
Escrow Agent shall furnish HDTC with a copy of any such notice.
Until Escrow Agent receives written notice of a Change of Control as provided
above, Escrow Agent may assume that no Change of Control has occurred.
9.2 Access to Records and Information. HDTC shall promptly furnish
to the Escrow Agent such records and other information to which it has access as
the Escrow Agent may reasonably request in order to carry out its duties under
this Escrow Agreement.
ARTICLE X
Miscellaneous
10.1 No Assignment. Except to the extent required by applicable
law, or as provided herein, the interest of the Continuing Directors in the
Escrow Fund shall not be subject in any way to alienation, sale, transfer,
assignment, pledge, attachment, garnishment, execution or encumbrance of any
kind, or to garnishment, attachment, levy or execution of any kind for the debts
or defaults of the Escrow Agent or of any person, natural or legal, having an
interest in the Escrow Fund; any attempt to accomplish the same shall be void.
10.2 Governing Law and Severability. The validity and construction
of any provision of this Escrow Agreement shall be governed by the laws of the
State of Georgia, except to the extent preempted by federal law. If any
provision of this Escrow Agreement shall be declared invalid or unenforceable by
a court of competent jurisdiction, the remaining provisions hereof shall remain
valid and shall continue in effect.
10.3 Binding Effect on Successor. This Escrow Agreement shall be
binding upon and inure to the benefit of HDTC and the Escrow Agent, and to their
respective successors and assigns, including any successors to HDTC or the
Escrow Agent or their businesses or assets as the result of any merger,
consolidation, reorganization, transfer of assets or otherwise, and any
subsequent
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successor thereto, without the execution or filing of any instrument or the
performance of any act. This Escrow Agreement shall inure to the benefit of the
heirs, successors, assigns and legal representatives of the Continuing
Directors. In no event shall any such consolidation, reorganization, transfer of
assets or other transaction suspend or delay the payments to (or at the
direction of) the Continuing Directors.
10.4 Continuing Directors' Rights. No Continuing Director shall
have any right, claim, or other cause of action against the Escrow Agent or the
Escrow Fund, except to the extent necessary to enforce the Continuing Directors'
rights under the terms of the Escrow Agreement, and no Continuing Director shall
have any beneficial ownership interest in or preferred claim as to any portion
of the Escrow Fund prior to receiving payments therefrom. All assets held in the
Escrow Fund shall at all times be subject to the terms of this Escrow Agreement,
and distribution of assets shall be made solely pursuant to the terms hereof.
10.5 Reversion to HDTC. No amendment to HDTC's Articles of
Incorporation, By-Laws or the relevant provisions of the GBCC shall cause any of
the assets of the Escrow Fund to revert to HDTC except as provided in Article
VIII hereof.
10.6 General Undertaking. All parties to this Escrow Agreement and
all persons claiming any interest whatsoever agree to perform any and all acts
and execute any and all documents and papers which may be necessary or desirable
for the carrying out of the Escrow Agreement or any of its provisions.
10.7 Masculine, Feminine, Singular and Plural. The masculine shall
be read in the feminine, the singular in the plural, and vice versa, wherever
the context shall so require.
10.8 Notices. Notices, accountings, and reports required to be
given by the Escrow Agent, HDTC or the Continuing Directors may be given by
personal delivery or by certified mail (return receipt requested) addressed to
the party involved at the last address of such party recorded on the general
address files of the Escrow Agent or HDTC. If given by mail, the date of
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mailing shall be deemed to be the date as of which the same was given or
furnished to the addressee. Any notice required under this Escrow Agreement may
be waived in writing by the person entitled to such notice.
10.9 Counterparts. The foregoing instrument may be executed in one
or more counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument.
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IN WITNESS WHEREOF, HDTC and the Escrow Agent have caused this Escrow
Agreement to be executed by their duly authorized officers and their respective
corporate seals to be hereunto affixed as of the day and year first above
written.
HEALTHDYNE TECHNOLOGIES, INC.
By:/s/ M. Wayne Boylston
-------------------------------
Name: M. Wayne Boylston
Title: Vice President-Finance
Attest:
By:./s/ Leslie R. Jones
----------------------------
Name: Leslie R. Jones
Title: Vice President,
General Counsel and Secretary
(Corporate Seal)
FIRST UNION NATIONAL BANK,
as Escrow Agent
/s/ Emily E. Katt
-------------------------------
Name: Emily E. Katt
Title: Vice President
Attest:
By:/s/ R. Douglas Milner
----------------------------
Name: R. Douglas Milner
Title: Vice President
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SCHEDULE A
Fees Payable to Escrow Agent
ACCEPTANCE FEE: $500, PAYABLE ON CLOSING DATE.
ANNUAL FEE: $4,000, PAYABLE ON CLOSING DATE AND ANNUALLY IN ADVANCE ON THE
ANNIVERSARY DATE OF THE CLOSING.
TRUSTEE'S COUNSEL FEES: $750
<PAGE> 29
Exhibit A
AFFIRMATION
This AFFIRMATION is being provided pursuant to that certain Escrow
Agreement dated as of July 24, 1997 by and between Healthdyne Technologies, Inc.
(the "Corporation") and First Union National Bank of Georgia (the "Escrow
Agent") for Indemnification and Payment of Certain Expenses of Healthdyne
Technologies, Inc. Continuing Directors (the "Escrow Agreement"). Capitalized
terms used and not otherwise defined herein have the meanings ascribed thereto
in the Escrow Agreement.
WHEREAS, section 6.2 of the Escrow Agreement provides that no
Continuing Director shall be entitled to receive any payment from the Escrow
Agent for purposes of a Litigation Expense unless, at or prior to the time of
such payment, such Continuing Director delivers or has delivered an Affirmation
to the Corporation;
NOW THEREFORE, the undersigned hereby affirms his or her good faith
belief that either (a) the proceeding giving rise to the expenses for which the
undersigned now requests, or hereafter may request, an advance involves conduct
for which liability has been eliminated pursuant to the Corporation's Articles
of Incorporation, or (b) he or she conducted himself or herself in good faith
and reasonably believed:
(i) In the case of conduct in his or her official capacity, that
such conduct was in the best interest of the Corporation;
(ii) In all other cases, that such conduct was at least not opposed
to the best interests of the Corporation; and
(iii) In the case of any criminal proceeding, that the individual
had no reasonable cause to believe such conduct was unlawful.
Dated the day of , 19 .
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Name of Director:
<PAGE> 30
Exhibit B
UNDERTAKING
This UNDERTAKING is being provided pursuant to that certain Escrow
Agreement dated as of July 24, 1997 by and between Healthdyne Technologies, Inc.
(the "Corporation") and First Union National Bank of Georgia (the "Escrow
Agent") for Indemnification and Payment of Certain Expenses of Healthdyne
Technologies, Inc. Continuing Directors (the "Escrow Agreement"). Capitalized
terms used and not otherwise defined herein have the meanings ascribed thereto
in the Escrow Agreement.
WHEREAS, section 6.2 of the Escrow Agreement provides that no
Continuing Director shall be entitled to receive any payment from the Escrow
Agent for purposes of a Litigation Expense unless, at or prior to the time of
such payment, such Continuing Director delivers or has delivered an Undertaking
to the Corporation;
NOW THEREFORE, the undersigned hereby undertakes to repay to the
Corporation the amount of such Litigation Expenses advanced pursuant to the
Escrow Agreement if it shall ultimately be determined that the undersigned is
not entitled to be indemnified by the Corporation.
The undersigned confirms that this undertaking is an unlimited general
obligation.
Dated the day of , 19 .
--- -------- --
--------------------------------------
Name of Director:
