-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NCpcPZphYJTAF0gAouYOHyFPv5NeoN95aFXvmA5LOO/TjIt+dNMQEBCYSRgIzGUf pjvRDvK2SWC/PuLAqQRFPA== 0000912057-97-001720.txt : 19970128 0000912057-97-001720.hdr.sgml : 19970128 ACCESSION NUMBER: 0000912057-97-001720 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19970127 SROS: NASD GROUP MEMBERS: I.H.H. CORP. GROUP MEMBERS: INVACARE CORP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HEALTHDYNE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000900307 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 521756497 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-44621 FILM NUMBER: 97510864 BUSINESS ADDRESS: STREET 1: 1255 KENNESTONE CIRCLE CITY: MARIETTA STATE: GA ZIP: 30066 BUSINESS PHONE: 4044234500 MAIL ADDRESS: STREET 1: 1255 KENNESTONE CIRCLE CITY: MARIETTA STATE: GA ZIP: 30066 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: INVACARE CORP CENTRAL INDEX KEY: 0000742112 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 952680965 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 899 CLEVELAND ST STREET 2: P O BOX 4028 CITY: ELYRIA STATE: OH ZIP: 44036 BUSINESS PHONE: 2163296000 SC 14D1 1 SCH 14D-1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-1 TENDER OFFER STATEMENT (PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934) HEALTHDYNE TECHNOLOGIES, INC. (Name of Subject Company) I.H.H. CORP. INVACARE CORPORATION (Bidders) ------------------------ COMMON STOCK, PAR VALUE $0.01 PER SHARE (Title of Class of Securities) 18139610 (CUSIP Number of Class of Securities) ------------------------ THOMAS R. MIKLICH, ESQ. CHIEF FINANCIAL OFFICER, GENERAL COUNSEL, TREASURER AND CORPORATE SECRETARY INVACARE CORPORATION 899 CLEVELAND STREET ELYRIA, OHIO 44035 TELEPHONE: (216) 329-6000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidders) ------------------------ COPY TO: ROBERT E. SPATT, ESQ. SIMPSON THACHER & BARTLETT 425 LEXINGTON AVENUE NEW YORK, NEW YORK 10017-3954 TELEPHONE: (212) 455-2000 ------------------------ CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE** $180,687,507 $36,138
* Based on the offer to purchase all of the outstanding shares of Common Stock of the Subject Company and the associated Preferred Stock Purchase Rights at $13.00 cash per share, the number of shares outstanding as reported as of November 1, 1996 in the Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 of the Subject Company and the number of options outstanding as of December 31, 1995 as reported in the Annual Report on Form 10-K for the fiscal year ended December 31, 1995 of the Subject Company, less the number of shares owned by the Parent and the Purchaser. ** 1/50 of 1% of Transaction Valuation. / / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. AMOUNT PREVIOUSLY PAID: FILING PARTY: FORM OR REGISTRATION NO.: DATE FILED:
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This Tender Offer Statement on Schedule 14D-1 relates to the offer by I.H.H. Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Invacare Corporation, an Ohio corporation (the "Parent"), to purchase all of the outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Healthdyne Technologies, Inc., a Georgia corporation (the "Company"), and (unless and until the Purchaser declares that the Rights Condition as defined in the Offer to Purchase referred to below is satisfied) the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of May 22, 1995, between the Company and Trust Company Bank, as Rights Agent, at a purchase price of $13 per Share (and associated Right), net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated January 27, 1997 (the "Offer to Purchase"), a copy of which is attached hereto as Exhibit (a)(1), and in the related Letter of Transmittal, a copy of which is attached hereto as Exhibit (a)(2) (which, together with any amendments or supplements thereto, constitute the "Offer"). ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Healthdyne Technologies, Inc. The information set forth in Section 7 ("Certain Information Concerning the Company") of the Offer to Purchase is incorporated herein by reference. (b) The exact title of the class of equity securities being sought in the Offer is Common Stock, par value $0.01 per share, including the associated Preferred Stock Purchase Rights, of the Company. The information set forth in the Introduction (the "Introduction") of the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d); (g) This Statement is filed by the Purchaser and the Parent. The information set forth in the Introduction and Section 8 ("Certain Information Concerning the Purchaser and the Parent") of the Offer to Purchase and Schedule I thereto is incorporated herein by reference. (e)-(f) During the last five years, neither the Purchaser, the Parent nor any persons controlling the Purchaser, nor, to the best knowledge of the Purchaser or the Parent, any of the persons listed in Schedule I to the Offer to Purchase, (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of which any such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a)-(b) The information set forth in the Introduction, Section 8 ("Certain Information Concerning the Purchaser and the Parent") and Section 10 ("Background of the Offer; Contacts with the Company") of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(b) The information set forth in Section 9 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. 2 ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(g) The information set forth in the Introduction, Section 10 ("Background of the Offer; Contacts with the Company"), Section 11 ("Purpose of the Offer; the Merger, Plans for the Company"), Section 12 ("Dividends and Distributions") and Section 13 ("Effect of the Offer on the Market for the Shares, Stock Exchange Listing and Exchange Act Registration") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a)-(b) The information set forth in the Introduction and in Section 8 ("Certain Information Concerning the Purchaser and the Parent") of the Offer to Purchase and Schedules I and II thereto is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Introduction, Section 8 ("Certain Information Concerning the Purchaser and the Parent"), Section 10 ("Background of the Offer; Contacts with the Company"), Section 11 ("Purpose of the Offer, the Merger; Plans for the Company") and Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the Introduction and Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 8 ("Certain Information Concerning the Purchaser and the Parent") of the Offer to Purchase is incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION. (a) None. (b)-(c) The information set forth in the Introduction, Section 11 ("Purpose of the Offer; the Merger; Plans for the Company") and Section 15 ("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 15 ("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (e) The information set forth in the Introduction, Section 10 ("Background of the Offer; Contacts with the Company"), Section 11 ("Purpose of the Offer; the Merger; Plans for the Company") and Section 15 ("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase dated January 27, 1997. (a)(2) Letter of Transmittal. 3 (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Summary Advertisement dated January 27, 1997. (a)(8) Text of Press Release issued by the Parent on January 27, 1997. (b)(1) Commitment Letter dated December 30, 1996 to the Parent from NBD Bank and First Chicago Capital Markets, Inc. (c) Not applicable. (d) Not applicable. (e) Not applicable. (f) Not applicable. (g)(1) Complaint in INVACARE CORPORATION AND I.H.H. CORP. V. HEALTHDYNE TECHNOLOGIES, INC., ET AL., U.S. District Court for the Northern District of Georgia. 4 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. INVACARE CORPORATION By: /s/ THOMAS R. MIKLICH ----------------------------------------- Name: Thomas R. Miklich Title: Chief Financial Officer I.H.H. CORP. By: /s/ THOMAS R. MIKLICH ----------------------------------------- Name: Thomas R. Miklich Title: President Date: January 27, 1997 EXHIBIT INDEX
EXHIBIT PAGE NO. DESCRIPTION NO. - --------- ------------------------------------------------------------------------------------------------ --------- 11(a)(1) Offer to Purchase dated January 27, 1997........................................................ 11(a)(2) Letter of Transmittal........................................................................... 11(a)(3) Notice of Guaranteed Delivery................................................................... 11(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees........................................................................................ 11(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees... 11(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9............................................................................. 11(a)(7) Summary Advertisement dated January 27, 1997.................................................... 11(a)(8) Text of Press Release issued by the Parent on January 27, 1997.................................. 11(b)(1) Commitment Letter dated December 30, 1996 to the Parent from NBD Bank and First Chicago Capital Markets, Inc.................................................................................... 11(g)(1) Complaint in INVACARE CORPORATION AND I.H.H. CORP V. HEALTHDYNE TECHNOLOGIES, INC., ET AL., U.S. District Court for the Northern District of Georgia.............................................
EX-11.(A)1 2 OFFER TO PURCHASE COVER OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF HEALTHDYNE TECHNOLOGIES, INC. AT $13 NET PER SHARE BY I.H.H. CORP. A WHOLLY OWNED SUBSIDIARY OF INVACARE CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, FEBRUARY 24, 1997, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (1) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THERE HAVE BEEN VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY WHICH, WHEN ADDED TO THE 600,000 SHARES BENEFICIALLY OWNED BY THE PURCHASER AND ITS AFFILIATES, WOULD CONSTITUTE AT LEAST 51% OF THE VOTING POWER (DETERMINED ON A FULLY DILUTED BASIS) ON THE DATE OF PURCHASE OF ALL SECURITIES OF THE COMPANY ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS AND IN A MERGER; (2) THE COMPANY'S PREFERRED STOCK PURCHASE RIGHTS HAVING BEEN REDEEMED BY THE COMPANY'S BOARD OF DIRECTORS OR THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT SUCH PREFERRED STOCK PURCHASE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO, OR THAT THE DILUTIVE PROVISIONS THEREOF WOULD NOT BE TRIGGERED BY, THE OFFER OR THE PROPOSED MERGER DESCRIBED HEREIN; (3) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RESTRICTIONS ON BUSINESS COMBINATIONS CONTAINED IN SECTIONS 14-2-1131 THROUGH 14-2-1133 OF THE GEORGIA BUSINESS CORPORATION CODE (THE "GBCC") WOULD NOT APPLY TO THE PURCHASER OR THE PARENT IN CONNECTION WITH THE OFFER OR THE PROPOSED MERGER (AS A RESULT OF ACTION BY THE COMPANY'S BOARD OF DIRECTORS, THE OWNERSHIP BY THE PURCHASER AND ITS AFFILIATES UPON CONSUMMATION OF THE OFFER OF AT LEAST 90% OF THE OUTSTANDING VOTING STOCK OF THE COMPANY (OTHER THAN SHARES HELD BY DIRECTORS, OFFICERS AND CERTAIN EMPLOYEE STOCK PLANS OF THE COMPANY) OR OTHERWISE); AND (4) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RESTRICTIONS ON BUSINESS COMBINATIONS CONTAINED IN SECTIONS 14-2-1110 THROUGH 14-2-1113 OF THE GBCC WOULD NOT APPLY TO THE PURCHASER OR THE PARENT IN CONNECTION WITH THE OFFER OR THE PROPOSED MERGER OR ARE INVALID (IN EITHER CASE, AS A RESULT OF ACTION BY THE COMPANY'S BOARD OF DIRECTORS, JUDICIAL ACTION OR OTHERWISE) OR THAT THE PROPOSED MERGER MAY BE CONSUMMATED WITHOUT ANY APPROVAL REQUIRED UNDER SUCH SECTIONS OF THE GBCC AT A PRICE PER SHARE NOT IN EXCESS OF THE PRICE PER SHARE TO BE PAID IN THE OFFER. THE OFFER IS NOT CONDITIONED ON THE RECEIPT OF FINANCING. -------------------------- THE DEALER MANAGER FOR THE OFFER IS: SALOMON BROTHERS INC --------------- January 27, 1997 (CONTINUED ON NEXT PAGE) (CONTINUED FROM PREVIOUS PAGE) IMPORTANT Any shareholder desiring to tender all or any portion of such shareholder's shares of Common Stock, par value $0.01 per share (the "Shares"), and the associated Preferred Stock Purchase Rights (the "Rights"), of the Company should either (1) complete and sign the Letter of Transmittal (or a facsimile thereof) in accordance with the instructions in the Letter of Transmittal, mail or deliver the Letter of Transmittal (or such facsimile) and any other required documents to the Depositary (as defined herein), and either deliver the certificates representing the tendered Shares and, if separate, the certificates representing the associated Rights and any other required documents to the Depositary or tender such Shares (and Rights, if applicable) pursuant to the procedure for book-entry transfer set forth in Section 3 or (2) request such shareholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such shareholder. Shareholders having Shares (and Rights, if applicable) registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if they desire to tender Shares (and Rights, if applicable) so registered. Unless and until the Purchaser declares that the Rights Condition (as defined herein) is satisfied, holders of Shares will be required to tender one Right for each Share tendered in order to effect a valid tender of such Share. A shareholder who desires to tender Shares and Rights and whose certificates representing such Shares (and Rights, if applicable) are not immediately available, or who cannot comply with the procedure for book-entry transfer on a timely basis, must tender such Shares (and Rights, if applicable) by following the procedures for guaranteed delivery set forth in Section 3. Questions and requests for assistance may be directed to Salomon Brothers Inc, the Dealer Manager, and MacKenzie Partners, Inc., the Information Agent, at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent or from brokers, dealers, commercial banks and trust companies. TABLE OF CONTENTS
PAGE ----- INTRODUCTION............................................................................................... 1 THE TENDER OFFER........................................................................................... 10 1. Term of the Offer; Expiration Date................................................................. 10 2. Acceptance for Payment and Payment for Shares...................................................... 11 3. Procedure for Tendering Shares and Rights.......................................................... 13 4. Withdrawal Rights.................................................................................. 16 5. Certain Federal Income Tax Consequences............................................................ 17 6. Price Range of Shares; Dividends................................................................... 18 7. Certain Information Concerning the Company......................................................... 18 8. Certain Information Concerning the Purchaser and the Parent........................................ 20 9. Source and Amount of Funds......................................................................... 22 10. Background of the Offer; Contacts with the Company................................................. 23 11. Purpose of the Offer; the Merger; Plans for the Company............................................ 29 12. Dividends and Distributions........................................................................ 40 13. Effect of the Offer on the Market for the Shares, Nasdaq Listing and Exchange Act Registration..... 40 14. Certain Conditions of the Offer.................................................................... 41 15. Certain Legal Matters and Regulatory Approvals..................................................... 46 16. Fees and Expenses.................................................................................. 48 17. Miscellaneous...................................................................................... 49
Schedule I Directors and Executive Officers of the Purchaser and the Parent Schedule II Parent Purchases of Shares i To: The Shareholders of HEALTHDYNE TECHNOLOGIES, INC. INTRODUCTION I.H.H. Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Invacare Corporation, an Ohio corporation (the "Parent"), hereby offers to purchase all of the outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Healthdyne Technologies, Inc., a Georgia corporation (the "Company"), and (unless and until the Purchaser declares that the Rights Condition (as defined below) is satisfied) the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of May 22, 1995 (the "Rights Agreement"), between the Company and Trust Company Bank, as Rights Agent (the "Rights Agent"), at a purchase price of $13 per Share (and associated Right), net to the seller in cash without interest thereon, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). Unless the context requires otherwise, all references in this Offer to Purchase to Shares shall be deemed to refer also to the associated Rights, and all references to Rights shall be deemed to include all benefits that may inure to the shareholders of the Company or to holders of the Rights pursuant to the Rights Agreement. Based on publicly available information, the Purchaser believes that one Right is currently associated with each Share. Tendering shareholders will not be obligated to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of Transmittal, stock transfer taxes on the transfer and sale of Shares and Rights pursuant to the Offer. The Purchaser will pay all fees and expenses of Salomon Brothers Inc, which is acting as Dealer Manager for the Offer (in such capacity, the "Dealer Manager"), IBJ Schroder Bank & Trust Company (the "Depositary") and MacKenzie Partners, Inc. (the "Information Agent") incurred in connection with the Offer. See Section 16. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. The Purchaser intends to propose, and to seek to have the Company consummate as soon as practicable after consummation of the Offer, a merger or similar business combination (the "Merger") with the Purchaser or another direct or indirect subsidiary of the Parent, pursuant to which each then outstanding Share (other than Shares held by the Parent, the Purchaser or any other wholly owned subsidiary of the Parent, Shares held in the treasury of the Company and Shares held by shareholders who properly exercise appraisal rights under Georgia law) would be converted into the right to receive in cash the price per Share paid by the Purchaser pursuant to the Offer. The Purchaser will seek to have the Company consummate the Merger as soon as practicable after consummation of the Offer. However, if the Board of Directors of the Company opposes the Offer and the Merger, certain terms of the Rights and certain provisions of the Georgia Business Corporation Code (the "GBCC") and the Company's by-laws (the "By-Laws"; discussions in this Offer to Purchase of provisions of the By-Laws are based upon the By-Laws as most recently publicly disclosed by the Company) may affect the ability of the Purchaser to obtain control of the Company and to effect the Merger. Accordingly, the timing and details of the Merger will depend on a variety of factors and legal requirements, the actions of the Board of Directors of the Company, the number of Shares acquired by the Purchaser pursuant to the Offer, and whether the Minimum Condition, the Rights Condition, the Georgia Business Combination Statute Condition and the Georgia Fair Price Statute Condition (each as defined below) are satisfied. If the current Board of Directors of the Company opposes the Offer and the Merger, the Parent intends, if necessary to facilitate the Offer and the Merger, (i) to nominate individuals for election as directors of the Company who, if elected, would be committed to an acquisition of the Company in accordance with the terms of the Offer and the Merger (subject to any fiduciary duties such nominees would have as directors) and (ii) to consider making other proposals at the Company's upcoming annual 1 meeting of shareholders, and to solicit proxies from shareholders for the purpose of electing such director candidates and approving any such other proposals. Under the By-Laws, shareholder nominations and proposals to be brought before the annual meeting are required to be submitted to the Company at any time between February 22, 1997 and March 24, 1997, assuming that the annual meeting is held on approximately the same date as the Company's 1996 annual meeting (May 23), and the Parent would make any such nominations and proposals within such period. If elected, any director candidates nominated by the Parent would be committed to taking all such actions necessary or appropriate (subject to such directors' fiduciary duties) to approve and effectuate the consummation of the Offer and the Merger, including taking action to execute an agreement and plan of merger and to satisfy the Rights Condition, the Georgia Business Combination Statute Condition and the Georgia Fair Price Statute Condition. As described under "Rights Condition" below, the Parent and the Purchaser are commencing litigation seeking, among other things, to declare illegal certain provisions of the Rights Agreement which would purport to limit the ability of the Parent's nominees, if elected, to satisfy the Rights Condition under certain circumstances. If the Parent does not nominate director candidates for election at the annual meeting, or if such candidates are not elected, and the conditions to the Offer are not otherwise satisfied, the Parent will explore the other options available to it, including taking action to call a special meeting of the Company's shareholders or utilizing any other available methods for the purpose of removing members of the current Board of Directors of the Company and electing director candidates nominated by the Parent or taking other actions to facilitate the consummation of the Offer and the Merger. Under the By-Laws, the Company is required to call a special meeting of the shareholders upon the demand of the holders of sixty percent (60%) of the outstanding Shares. THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY, CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY SPECIAL MEETING OF THE COMPANY'S SHAREHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY SUCH SOLICITATION WHICH THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). Upon consummation of the Offer, assuming the Minimum Condition, the Rights Condition, the Georgia Business Combination Statute Condition, the Georgia Fair Price Statute Condition and the other conditions to the Offer set forth in Section 14 are satisfied, the Purchaser will own sufficient Shares, subject to the procedures described in Section 11, ultimately to remove and/or replace the Company's Board of Directors and to approve the Merger without the vote of any other shareholder. For a discussion of certain appraisal rights available to shareholders upon consummation of the Merger, see Section 11. THE OFFER IS CONDITIONED, AMONG OTHER THINGS, UPON SATISFACTION OF THE FOLLOWING CONDITIONS: (1) THE MINIMUM CONDITION, (2) THE RIGHTS CONDITION, (3) THE GEORGIA BUSINESS COMBINATION STATUTE CONDITION AND (4) THE GEORGIA FAIR PRICE STATUTE CONDITION, EACH OF WHICH IS DESCRIBED BELOW. CERTAIN OTHER CONDITIONS TO THE OFFER ARE DESCRIBED IN SECTION 14. THE OFFER IS NOT CONDITIONED ON THE RECEIPT OF FINANCING. THE MINIMUM CONDITION. The Offer is subject to the condition (the "Minimum Condition") that the Purchaser shall be satisfied, in its sole discretion, that there shall have been validly tendered and not properly withdrawn on or prior to the Expiration Date (as defined below) a number of Shares which, when added to the Shares beneficially owned by the Purchaser and its affiliates (including the Parent), constitute at least 51% of the voting power (determined on a fully diluted basis) on the date of purchase of all securities of the Company entitled to vote generally in the election of directors and in a merger. According to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 (the "September 10-Q"), 12,625,039 Shares were outstanding at November 1, 1996. According to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the "1995 2 10-K"), options covering a total of approximately 1,874,000 Shares were outstanding under the Company's various stock option plans at December 31, 1995. The Parent currently beneficially owns an aggregate of 600,000 Shares (including 100 Shares owned by the Purchaser), representing approximately 4.8% of the Shares outstanding based on the number of Shares reported by the Company as outstanding at November 1, 1996. See Section 8. Based on this information, the Purchaser believes that the Minimum Condition will be satisfied if approximately 6,794,510 Shares are validly tendered pursuant to the Offer and not properly withdrawn. However, the Minimum Condition will depend on the facts as they exist on the date on which Shares are purchased pursuant to the Offer. If, upon consummation of the Offer, the Purchaser and the Parent together own at least 51% of the outstanding Shares (determined on a fully diluted basis), then the Purchaser and the Parent will own sufficient Shares to enable them to effect shareholder approval of the Merger (assuming that the Georgia Business Combination Statute Condition and the Georgia Fair Price Statute Condition are satisfied). THE RIGHTS CONDITION. The Offer is subject to the condition (the "Rights Condition") that the Purchaser shall be satisfied, in its sole discretion, that the Rights shall have been redeemed by the Company's Board of Directors or that such Rights have been invalidated or are otherwise inapplicable to, or the dilutive provisions thereof will not be triggered by, the Offer or the Merger. The Rights are described in the Company's Form 8-A dated May 19, 1995 (the "May 19 Form 8-A"). The following discussion, including the summary of certain aspects of the Rights, is based in part on information contained in the May 19 Form 8-A and is qualified by reference to such information. Although the Purchaser and the Parent do not have any knowledge that would indicate that any statements contained herein based upon such document are untrue, neither the Purchaser nor the Parent assumes any responsibility for the accuracy or completeness of the information contained in such document, or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but which are unknown to the Purchaser and the Parent. A more detailed description of the Rights is contained in Section 11. FLIP-IN AND FLIP-OVER. If at any time following the Distribution Date (as defined in Section 11), (i) a person or group of affiliated or associated persons becomes the beneficial owner of 20% or more of the then outstanding Shares (except pursuant to a tender offer or exchange offer for all outstanding Shares determined by a majority of the Continuing Directors (as defined below) to be fair to shareholders and otherwise in the best interests of the Company and its shareholders) or (ii) certain other transactions take place involving an Acquiring Person (as defined in Section 11) or between an Acquiring Person or an affiliate of an Acquiring Person and the Company, each holder of a Right will thereafter have the right to receive, upon exercise, Shares (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the exercise price of the Right (the "Flip-In"). However, Rights are not exercisable following the occurrence of any of the events set forth above until such time as the Rights are no longer redeemable by the Company as set forth below. If at any time following the Stock Acquisition Date (as defined in Section 11), (i) the Company is acquired in a merger or other business combination transaction in which the Company is not the surviving corporation or in which all or part of its Shares are changed or exchanged (unless such transaction follows a tender offer or exchange offer approved by the Continuing Directors as set forth above) or (ii) 50% or more of the Company's assets or earning power is sold or transferred, each holder of a Right shall thereafter have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the exercise price of the Right (the "Flip-Over"). The events described in the Flip-In and the Flip-Over are referred to as the "Triggering Events." The term "Continuing Director" means any member of the Company's Board of Directors who was a member of the Board prior to May 22, 1995, the date of the Rights Agreement, or has been subsequently elected to the Board if such person was recommended or approved by a majority of the Continuing Directors, but does not include an Acquiring Person or any representative thereof. Notwithstanding any of the foregoing, following the occurrence of any of the Triggering 3 Events, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person will be null and void. The Purchaser believes that, unless the Rights are redeemed or amended, or a majority of the current Board of Directors approves the Offer for the purposes of the determination described above, the consummation of the Offer likely would cause the Purchaser to become an Acquiring Person and trigger the Flip-In and, as a result, could permit significant dilution to the Purchaser's and the Parent's interest in the Company, rendering the Offer and the Merger economically unattractive for the Purchaser and the Parent. REDEMPTION AND AMENDMENT; DEAD-HAND PILL RESTRICTIONS. Except as set forth in the next sentence, the Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right at any time until the tenth day following the Stock Acquisition Date (as such period may be extended by the Company). However, the Rights Agreement contains unusual provisions, commonly referred to as "dead-hand pill" restrictions, which, under certain circumstances, purport to prevent a newly elected Board of Directors from redeeming or amending the Rights without the consent of the old directors. Among other things, the "dead-hand pill" restrictions purport to require the concurrence of a majority of the Continuing Directors to redeem the Rights on or after the time a person becomes an Acquiring Person or on or after a change (resulting from a proxy or consent solicitation) in a majority of the Company's directors if any person who participates in such solicitation states or a majority of the Board of Directors of the Company determines in good faith that such person (or any of its affiliates or associates) intends to take, or may consider taking, any action which would result in such person becoming an Acquiring Person or which would cause the occurrence of a Triggering Event. After the initial redemption period, the right of redemption may be reinstated if an Acquiring Person reduces his beneficial ownership to 10% or less of the outstanding Shares in a transaction or series of transactions not involving the Company and there are no other Acquiring Persons. In addition, from the end of the initial redemption period until the occurrence of a Triggering Event, the Company may redeem the Rights provided that such redemption is incidental to a merger, consolidation or other business combination involving the Company or a reorganization or restructuring of the Company which is approved by a majority of the Continuing Directors. The "dead-hand pill" restrictions further purport to require the concurrence of a majority of the Continuing Directors for any supplement or amendment to the Rights Agreement. RIGHTS CERTIFICATES. Until the Distribution Date, the Rights will be transferred with and only with the Shares. Until the Distribution Date, the surrender for transfer of any of the certificates representing Shares (the "Share Certificates") will also constitute the surrender for transfer of the Rights associated with the Shares represented by such Share Certificates. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Rights Certificates") will be mailed to holders of record of Shares as of the close of business on the Distribution Date. After the Distribution Date, the Rights will be evidenced solely by such Rights Certificates. Unless and until the Purchaser declares that the Rights Condition is satisfied, holders of Shares will also be required to tender one Right for each Share tendered in order to effect a valid tender of such Share. If separate certificates for the Rights are not issued, a tender of Shares will also constitute a tender of associated Rights. The Purchaser believes that currently the Rights are not exercisable, Rights Certificates have not been issued and the Rights are evidenced by the Share Certificates. The Purchaser believes that under the Rights Agreement, as a result of the commencement of the Offer, the Distribution Date will be as early as February 10, 1997, unless prior to that date the Company's Board of Directors redeems the Rights or takes action to delay the Distribution Date. The Purchaser is hereby requesting that the Company's Board of Directors redeem the Rights or take other action to invalidate the Rights or otherwise render the Rights inapplicable to, or prevent the 4 dilutive provisions thereof from being triggered by, the Offer or the Merger, in each case in order to permit the Offer and the Merger to be consummated, including by making the determination that the Offer is fair to the shareholders and in the best interests of the Company and its shareholders. The Purchaser believes that under the circumstances of the Offer and under applicable law, the Board of Directors of the Company is obligated by its fiduciary responsibilities to redeem the Rights or take such other action described above. However, there can be no assurance that the Board of Directors will take any such action. If the current Board of Directors does not so redeem the Rights or take such other action, any action by the Parent to change the composition of the Board of Directors would be intended, among other things, to result in the reconstituted Board taking action to effect such redemption or take such other actions. However, such a reconstituted Board of Directors may, under the purported terms of the "dead-hand pill" restrictions described above, be powerless to effect such redemption or take such other actions, notwithstanding the mandate the Company's shareholders will have given to the Parent's nominees to the Board of Directors in such election, unless one or more Continuing Directors remain on the Board of Directors and a majority of them approve the redemption or such other actions. The Parent and the Purchaser believe that the "dead-hand pill" restrictions, which were adopted by the current Board of Directors of the Company without shareholder approval, are a collection of draconian and extreme director-entrenching provisions which, in purporting to limit the ability of future Boards of Directors of the Company (including any nominated by the Parent or the Purchaser) from acting in the best interests of the Company and its shareholders by redeeming or otherwise nullifying the Rights in connection with a proposed transaction, denies the shareholders and future Boards of Directors meaningful access to and control over the assets of the Company and hinders and prevents the exercise of fundamental shareholder rights under Georgia law. The Parent and the Purchaser believe that such provisions violate Georgia and federal law and are commencing litigation against the Company and certain of its directors in the United States District Court for the Northern District of Georgia (the "Defensive Tactics Litigation") seeking, among other things, (i) an order declaring the "dead-hand pill" restrictions of the Rights Agreement illegal and unenforceable and compelling the Company's Board of Directors to amend the Rights Agreement to remove such restrictions and (ii) an order compelling the Company's Board of Directors to fulfill their fiduciary duties by redeeming the Rights or amending the Rights Agreement to make the Rights inapplicable to the Offer and the Merger. A more detailed description of the Defensive Tactics Litigation is contained in Section 15. THE GEORGIA BUSINESS COMBINATION STATUTE CONDITION. The Offer is subject to the condition (the "Georgia Business Combination Statute Condition") that the Purchaser shall be satisfied, in its sole discretion, that the restrictions on business combinations contained in Sections 14-2-1131 through 14-2-1133 of the GBCC (collectively, the "Georgia Business Combination Statute") would not apply to the Purchaser or the Parent in connection with the Offer or the Merger (as a result of action by the Company's Board of Directors, the ownership by the Purchaser upon consummation of the Offer of at least 90% of the outstanding voting stock of the Company (other than Shares held by directors, officers and certain employee stock plans of the Company) or otherwise). In general, the Georgia Business Combination Statute prohibits any person who is defined to be an "Interested Shareholder", including a beneficial owner of 10% or more of the voting power of the outstanding voting shares of a corporation, from engaging in certain business combinations (including business combinations such as the Merger) with such corporation for a period of five years following the date on which such person became an Interested Shareholder, unless (i) either the transaction by which such person became an Interested Shareholder or the business combination is approved by the board of directors of the corporation prior to the date on which such person became an Interested Shareholder, (ii) upon consummation of the transaction which resulted in such person becoming an Interested Shareholder, such person owned at least 90% of the voting stock outstanding at the time the transaction commenced, excluding shares owned by (a) persons who are officers or directors of the corporation and 5 their affiliates or associates, (b) subsidiaries of the corporation and (c) any employee stock plan under which employee participants do not have the right to determine confidentially the extent to which shares held subject to the plan will be tendered in a tender or exchange offer (all such non-excluded voting stock, "Eligible Voting Stock"), or (iii) subsequent to the date on which such person became an Interested Shareholder, the Interested Shareholder becomes the owner of 90% of the outstanding voting stock of the corporation and the business combination is approved by the board of directors of the corporation and authorized by the affirmative vote, at an annual meeting or a special meeting of the shareholders, of at least a majority of the outstanding voting stock not beneficially owned by the Interested Shareholder or any of its affiliates or associates or by persons who are directors or officers of the Interested Shareholder. The requirements of the Georgia Business Combination Statute do not apply unless the corporation adopts a by-law expressly electing to be governed thereby. According to publicly available information, the Company's By-Laws have included such a provision at least since December 31, 1995. Accordingly, the requirements of the Georgia Business Combination Statute apply to the Company. Consequently, under the Georgia Business Combination Statute, unless the Board of Directors of the Company approves the Offer and the Merger in advance of the consummation of the Offer or the Purchaser and the Parent own 90% of the Eligible Voting Stock upon consummation of the Offer, the Merger could not occur for five years following the consummation of the Offer unless the Parent and its affiliates acquire 90% of the outstanding Shares and the Merger is approved by the Board of Directors of the Company and by a majority of the outstanding Shares not owned by the Parent or its affiliates. According to the September 10-Q, 12,625,039 Shares were outstanding at November 1, 1996 and, according to the Company's 1996 Proxy Statement, at March 15, 1996, directors and officers of the Company beneficially owned an aggregate of approximately 1,878,262 Shares (which number includes options to acquire an unspecified number of Shares exercisable at that time or within 60 days thereof, and which thus is not directly comparable to the aggregate number of Shares reported by the Company to be outstanding at November 1, 1996). In addition, according to publicly available Statements of Beneficial Ownership on Form 4 filed prior to the date hereof, the Purchaser believes that Parker H. Petit, Chairman of the Board of Directors of the Company, has disposed of 349,860, or 37%, of the 955,411 Shares reported to have been beneficially owned by him at March 15, 1996 (excluding options), including the sale in May 1996 of an aggregate of 159,926 Shares at prices ranging from $13.00 to $14.25 per Share, the exchange in June 1996 of 185,000 Shares for interests in a limited partnership "exchange" fund sponsored by a third-party investment bank and the distribution from trust of 4,934 Shares to persons not affiliated with the Company. No information contained in the Company's public filings to date indicates that the Company has any employee stock plans which would hold non-Eligible Voting Stock. Because of the differences in times and methods of reporting the aggregate number of outstanding Shares and the aggregate number of Shares beneficially owned by directors and officers of the Company, the Purchaser is unable to calculate with precision the current aggregate amount of the outstanding Shares, on either a primary or a fully-diluted basis, constituted by Eligible Voting Stock. Accordingly, the Purchaser is unable to calculate with precision at this time the number of Shares needed to be tendered in the Offer in order for the Georgia Business Combination Statute Condition to be satisfied as a result of the Purchaser and the Parent owning 90% of the Eligible Voting Stock upon consummation of the Offer. The Purchaser is hereby requesting that the Board of Directors approve the Offer and the Merger for purposes of the Georgia Business Combination Statute. Under the circumstances of the Offer and under applicable law, the Purchaser believes that the Board of Directors of the Company is obligated by its fiduciary responsibilities to approve, pursuant to the Georgia Business Combination Statute, the acquisition of Shares pursuant to the Offer and the Merger. However, there can be no assurance that the Board of Directors will do so. The Parent and the Purchaser are seeking an order in the Defensive Tactics Litigation to compel the Company's Board of Directors to approve the Offer and the Merger for purposes of the Georgia Business Combination Statute. If the Board does not so approve the Offer and the Merger but upon consummation of the Offer the Purchaser and the Parent together own at least 90% of the 6 Eligible Voting Stock of the Company, then the restrictions on business combinations contained in the Georgia Business Combination Statute would not be applicable. As indicated above, any action by the Purchaser and the Parent to change the composition of the Board of Directors would be intended, among other things, to result in the reconstituted Board taking action to approve the Offer and the Merger in order to satisfy the Georgia Business Combination Statute Condition. THE GEORGIA FAIR PRICE STATUTE CONDITION. The Offer is subject to the condition (the "Georgia Fair Price Statute Condition") that the Purchaser shall be satisfied, in its sole discretion, that the restrictions on business combinations contained in Sections 14-2-1110 through 14-2-1113 of the GBCC (collectively, the "Georgia Fair Price Statute") would not apply to the Purchaser or the Parent in connection with the Offer or the Merger or are invalid (in either case, as a result of action by the Company's Board of Directors, judicial action or otherwise) or that the Merger may be consummated without any approval required under the Georgia Fair Price Statute at a price per Share not in excess of the price per Share to be paid in the Offer. The requirements of the Georgia Fair Price Statute do not apply unless the corporation adopts a by-law expressly electing to be governed thereby. According to publicly available information, the Company's By-Laws did not include such a provision until January 23, 1997, when the Company's Board of Directors, after the Parent had made public its interest in an acquisition of the Company, amended the By-Laws to include such a provision. Accordingly, the requirements of the Georgia Fair Price Statute now purport to apply to the Company. In general, except as provided below, the Georgia Fair Price Statute requires that certain business combinations (including business combinations such as the Merger) between a Georgia corporation and an Interested Shareholder, including a beneficial owner of 10% or more of the voting power of the outstanding voting shares of the corporation, be either (i) unanimously approved by the continuing directors, provided that the continuing directors constitute at least three members of the board of directors at the time of such approval, or (ii) recommended by at least two-thirds of the continuing directors and approved by a majority of the votes entitled to be cast by holders of voting shares, other than voting shares beneficially owned by the Interested Shareholder. As used with respect to the Georgia Fair Price Statute, a "continuing director" means any member of the corporation's board of directors who is not an affiliate or associate of the Interested Shareholder or any of its affiliates (other than the corporation or any of its subsidiaries) and who was a director of the corporation prior to the date on which the Interested Shareholder first became such, and any successor to such continuing director who is not an affiliate or an associate of the Interested Shareholder or any of its affiliates (other than the corporation or its subsidiaries) and is recommended or elected by a majority of all the continuing directors. However, the board and shareholder approval requirements of the Georgia Fair Price Statute do not apply to a business combination in which the only outstanding securities of the corporation are common shares of the same class for which cash consideration only will be paid if each of the following conditions (as described more fully in Section 11, the "Merger Price Provisions") is met: (i) the aggregate amount of cash to be received per share by shareholders is at least equal to the highest of: (a) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Shareholder for any common shares acquired by it (1) within the two-year period immediately prior to the first general public announcement of the proposal of the business combination (the "Announcement Date"), or (2) in the transaction in which it became an Interested Shareholder, whichever is higher, or 7 (b) the "fair market value" (defined as the highest closing sale price during the 30-day period including and immediately preceding the date in question) per share as determined (x) on the Announcement Date or (y) the date on which an Interested Shareholder first became such, whichever fair market value is higher; (ii) after the Interested Shareholder has become such and prior to the consummation of such business combination, unless approved by a majority of the continuing directors, (x) there has been no effective change in the dividend policy of the corporation which adversely affects the shareholders and (y) there has been no increase in the Interested Shareholder's percentage ownership of common shares by more than 1% in any twelve-month period; and (iii) after the Interested Shareholder has become such, the Interested Shareholder has not received any direct or indirect benefit from the corporation not received by all other shareholders proportionately. A more detailed description of the Georgia Fair Price Statute is contained in Section 11. The price per Share to be paid in the Offer (the "Offer Price") is higher than both (i) the highest per share price paid by the Parent and the Purchaser for any Shares acquired by them within the two-year period immediately prior to the relevant Announcement Date, January 10, 1997, the date on which the Parent first publicly announced its proposal of an acquisition of the Company in a merger transaction, and (ii) the fair market value of the Shares as of such Announcement Date. The Georgia Fair Price Statute is designed to protect shareholders against the inequities of certain takeover tactics, such as so-called "two-tiered" transactions in which lesser consideration is paid in the second-step merger than in the first-step tender offer, which result in minority shareholders who do not participate in the initial tender offer receiving a lower price or less desirable form of consideration than the tendering shareholders. Because holders of Shares are to receive the same cash consideration per Share in the Merger as that paid by the Purchaser pursuant to the Offer, the Parent and the Purchaser believe that the Offer and the Merger are in accord with the purpose and intent of the Georgia Fair Price Statute. Moreover, if the highest closing stock price for the Shares during the 30-day period including and immediately preceding the date of consummation of the Offer is not in excess of the Offer Price and the other procedural requirements of the Merger Price Provisions are met, the terms of the Merger Price Provisions would not require a higher price to be paid in the Merger than in the Offer, and the Georgia Fair Price Statute Condition would be satisfied, without the need for any action or approval of the Board of the Directors or the shareholders of the Company. However, the Parent and the Purchaser are unable to predict whether the closing stock price for the Shares on any day in the 30-day period including and immediately preceding the date on which the Offer is consummated will be in excess of the Offer Price, whether as a result of anomalous or manipulative trading activity or otherwise. If the Merger Price Provisions are not met, the terms of the Georgia Fair Price Statute would purport to prohibit the Merger from occuring after consummation of the Offer unless the Merger is either (i) unanimously approved by the continuing directors, and such continuing directors constitute at least three members of the Company's Board of Directors at the time of such approval, or (ii) recommended by at least two-thirds of the continuing directors and approved by holders of a majority of Shares other than voting shares beneficially owned by the Purchaser or its affiliates. The Purchaser is hereby requesting that the Board of Directors unanimously approve the Offer and the Merger for purposes of the Georgia Fair Price Statute. Under the circumstances of the Offer and under applicable law, the Purchaser believes that the Board of Directors of the Company is obligated by its fiduciary responsibilities to unanimously approve, pursuant to the Georgia Fair Price Statute, the acquisition of Shares pursuant to the Offer and the Merger. However, there can be no assurance that the Board of Directors will do so. If the current Board of Directors does not so approve the Offer and the Merger, any action by the Parent to change the composition of the Board of Directors would be intended, among other things, to 8 result in the reconstituted Board taking unanimous action to approve the Offer and the Merger in order to satisfy the Georgia Fair Price Statute Condition. To the extent that the Georgia Fair Price Statute purports to require approval of continuing directors or minority shareholders in order for an all-cash, non-coercive tender offer and merger, such as the Offer and the Merger, to be effected at the same price, the Parent and the Purchaser believe that the Georgia Fair Price Statute is invalid and violates the Georgia and United States Constitutions. The Defensive Tactics Litigation seeks, among other things, (i) an order declaring the Georgia Fair Price Statute illegal and unenforceable to such extent and (ii) an order compelling the Company's Board of Directors to approve the Offer and the Merger for purposes of the Georgia Fair Price Statute. * * * The Purchaser expressly reserves the right to waive any one or more of the conditions to the Offer. See Sections 11, 14 and 15. As indicated in the Parent's press release announcing the commencement of the Offer (set forth in full in Section 10), in the context of a negotiated transaction the Parent would consider discussing the Offer Price if the Company's management is able to substantiate significant additional values to the Parent's satisfaction, and is prepared to discuss all other aspects of the Offer fully with the Company, including the structure of the transaction and the form of consideration. If the Company and the Parent should enter into discussions and negotiations resulting in a definitive merger or other agreement between the Company and the Parent, certain material terms of the Offer and/or the Merger, such as the amount or form of purchase price consideration, may change. Alternatively, such negotiations could result in, among other things, termination of the Offer and submission of a different acquisition proposal to the Company's shareholders for their approval. If prior to the Expiration Date the Purchaser increases the consideration offered to shareholders pursuant to the Offer, such increased consideration will be paid to all shareholders whose Shares are purchased pursuant to the Offer, whether or not such Shares were tendered prior to such increase in consideration. In the event the Offer is not consummated, the Purchaser intends to explore all options which may be available to it at such time, which may include, without limitation, the acquisition of Shares through open-market purchases, privately negotiated transactions, another tender offer or exchange offer or otherwise, upon such terms and at such prices as it shall determine, which may be more or less than the price to be paid pursuant to the Offer. The Purchaser also reserves the right to sell or otherwise dispose of Shares. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 9 THE TENDER OFFER 1. TERM OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the Purchaser will accept for payment, and pay for, all Shares validly tendered prior to the Expiration Date and not properly withdrawn in accordance with Section 4. The term "Expiration Date" means 12:00 midnight, New York City time, on Monday, February 24, 1997, unless and until the Purchaser, in its sole discretion, shall have extended the period during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. THE OFFER IS CONDITIONED UPON THE SATISFACTION OF THE MINIMUM CONDITION, THE RIGHTS CONDITION, THE GEORGIA BUSINESS COMBINATION STATUTE CONDITION, THE GEORGIA FAIR PRICE STATUTE CONDITION, THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED BY THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR ACT") AND THE SATISFACTION OF THE OTHER CONDITIONS SET FORTH IN SECTION 14. THE OFFER IS NOT CONDITIONED ON THE RECEIPT OF FINANCING. If by the Expiration Date any or all of such conditions have not been satisfied or waived, the Purchaser reserves the right (but shall not be obligated), subject to the applicable rules and regulations of the Securities and Exchange Commission (the "Commission"), (i) to decline to purchase any of the Shares tendered and terminate the Offer, (ii) to waive all of the unsatisfied conditions and purchase all Shares validly tendered, (iii) to extend the Offer and, subject to the right of tendering shareholders to withdraw Shares until the Expiration Date, retain the Shares which have been tendered during the period or periods for which the Offer is extended or (iv) to amend the Offer. Subject to the applicable rules and regulations of the Commission, the Purchaser reserves the right, in its sole discretion, at any time and from time to time, regardless of whether the conditions specified in Section 14 shall have been satisfied or any of the events or facts set forth in Section 14 shall have occurred, (i) to extend the period during which the Offer is open and thereby delay acceptance for payment of and payment for any tendered Shares or (ii) to waive any condition or otherwise amend the Offer in any respect, in each case by giving oral or written notice of such extension, waiver or amendment to the Depositary. During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the rights of a tendering shareholder to withdraw such shareholder's Shares. See Section 4. UNDER NO CIRCUMSTANCE WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING PAYMENT FOR TENDERED SHARES. The Purchaser acknowledges (i) that Rule 14e-1(c) under the Exchange Act requires the Purchaser to pay the consideration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer and (ii) that the Purchaser may not (except in order to comply with applicable law) delay acceptance for payment of, or payment for, any Shares upon the occurrence of any of the events or facts specified in Section 14 without extending the period of time during which the Offer is open. There can be no assurance that the Purchaser will exercise its right to extend the Offer. Any extension, delay, termination, waiver or amendment will be followed as promptly as practicable by a public announcement thereof, which announcement in the case of an extension will be made no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which the Purchaser may choose to make any public announcement, except as provided by applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that material changes be promptly disseminated to holders of Shares), the Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service. For purposes of the Offer, a "business 10 day" means any day other than a Saturday, Sunday or a federal holiday and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York City time. If the Purchaser makes a material change in the terms of the Offer or if it waives a material condition of the Offer, the Purchaser will disseminate additional tender offer materials and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which the Offer must remain open following material changes in the terms of the Offer, other than a change in price or a change in the percentage of securities sought, will depend upon the facts and circumstances then existing, including the relative materiality of the changed terms or information. With respect to a change in price or, subject to certain limitations, a change in the percentage of securities sought, a minimum period of ten business days from the day of such change is generally required to allow for adequate dissemination to shareholders. Requests are being made to the Company pursuant to Rule 14d-5 of the Exchange Act and Sections 14-2-1602 and 14-2-1603 of the GBCC for the use of the Company's shareholder lists and security position listings for the purpose of disseminating the Offer to holders of Shares and, in the case of the request under the GBCC, to otherwise communicate with the other shareholders regarding, among other things, the annual meeting and any special meeting. This Offer to Purchase, the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares, and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder lists, or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares, by the Purchaser following receipt of such lists or listings from the Company, or by the Company if it so elects under Rule 14d-5. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and will pay for all Shares validly tendered and not properly withdrawn on or prior to the Expiration Date as soon as practicable after the later to occur of (i) the Expiration Date and (ii) the satisfaction or waiver of the conditions of the Offer set forth in Section 14, including without limitation the expiration or termination of the waiting period applicable to the acquisition of Shares pursuant to the Offer under the HSR Act. In addition, subject to applicable rules of the Commission, the Purchaser expressly reserves the right to delay acceptance for payment of or payment for Shares pending receipt of any other regulatory approvals specified in Section 15. Any such delays will be effected in compliance with Rule 14e-1(c) under the Exchange Act. The Parent intends to file as soon as practicable after the date hereof with the Federal Trade Commission (the "FTC") and the Antitrust Division of the Department of Justice (the "Antitrust Division") a Premerger Notification and Report Form under the HSR Act with respect to the Offer. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer may not be consummated until the expiration of a 15-calendar day waiting period following the filing by the Parent, unless prior to the expiration or termination of the waiting period the FTC or the Antitrust Division extends the waiting period by requesting additional information from the Parent. If such a request is made, the waiting period applicable to the Offer will expire on the tenth calendar day after the date of substantial compliance by the Parent with such request. Thereafter, the waiting period may only be extended by court order. The waiting period under the HSR Act may be terminated by the FTC and the Antitrust Division prior to its expiration. For information with respect to approvals required to be obtained prior to the consummation of the Offer, including under the HSR Act, see Section 15. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) Share Certificates for such Shares and, if applicable, Rights Certificates, or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares and, if applicable, Rights into the Depositary's account at The Depository Trust 11 Company or the Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in Section 3, (ii) a Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined below) in connection with a book-entry transfer, and (iii) any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message transmitted by a Book-Entry Transfer Facility to and received by the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares and, if applicable, Rights which are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against such participant. Unless and until the Purchaser declares that the Rights Condition is satisfied, if Rights Certificates have been distributed to holders of Shares, such holders are required to tender, or make book-entry transfer of, Rights Certificates representing a number of Rights equal to the number of Shares being tendered in order to effect a valid tender of such Shares. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payments from the Purchaser and transmitting such payments to shareholders whose Shares have been accepted for payment. UNDER NO CIRCUMSTANCE WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. If, for any reason whatsoever, acceptance for payment of or payment for any Shares tendered pursuant to the Offer is delayed or the Purchaser is unable to accept for payment or pay for Shares tendered pursuant to the Offer, then without prejudice to the Purchaser's rights set forth herein, the Depositary may nevertheless, on behalf of the Purchaser and subject to Rule 14e-1(c) under the Exchange Act, retain tendered Shares and such Shares may not be withdrawn except to the extent that the tendering shareholder is entitled to and duly exercises withdrawal rights as described in Section 4. If any tendered Shares are not accepted for payment for any reason or if Share Certificates are submitted for more Shares than are tendered, Share Certificates evidencing unpurchased or untendered Shares will be returned without expense to the tendering shareholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility pursuant to the procedures set forth in Section 3, such Shares will be credited to an account maintained at such Book-Entry Transfer Facility), in each case with the related Rights Certificates, if any, as promptly as practicable following the expiration, termination or withdrawal of the Offer. IF PRIOR TO THE EXPIRATION DATE THE PURCHASER INCREASES THE CONSIDERATION OFFERED TO SHAREHOLDERS PURSUANT TO THE OFFER, SUCH INCREASED CONSIDERATION WILL BE PAID TO ALL SHAREHOLDERS WHOSE SHARES ARE PURCHASED PURSUANT TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED OR ACCEPTED FOR PAYMENT PRIOR TO SUCH INCREASE IN CONSIDERATION. The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates the right to purchase all or any portion of the Shares and Rights tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering shareholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 12 3. PROCEDURE FOR TENDERING SHARES AND RIGHTS. VALID TENDER. Except as set forth below, in order for Shares and, prior to the Distribution Date, Rights to be validly tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares and Rights, and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date and either (i) Share Certificates and Rights Certificates, if applicable, evidencing tendered Shares and Rights must be received by the Depositary at such address or such Shares and Rights must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary, in each case on or prior to the Expiration Date, or (ii) the guaranteed delivery procedures described below must be complied with. If the Purchaser declares that the Rights Condition is satisfied, the Purchaser will not require delivery of Rights Certificates. Unless and until the Purchaser declares that the Rights Condition is satisfied, holders of Shares will be required to tender one Right for each Share tendered in order to effect a valid tender of such Share. ACCORDINGLY, SHAREHOLDERS WHO SELL THEIR RIGHTS SEPARATELY FROM THEIR SHARES AND DO NOT OTHERWISE ACQUIRE RIGHTS MAY NOT BE ABLE TO SATISFY THE REQUIREMENTS OF THE OFFER FOR A VALID TENDER OF SHARES. RIGHTS CERTIFICATES. If separate Rights Certificates are not issued, a tender of Shares will also constitute a tender of associated Rights. If the Distribution Date has occurred and Rights Certificates have been distributed to holders prior to the date of tender pursuant to the Offer, Rights Certificates representing a number of Rights equal to the number of Shares being tendered must be delivered to the Depositary or, if available, a Book-Entry Confirmation must be received by the Depositary with respect thereto in order for such Shares to be validly tendered. If the Distribution Date has occurred and Rights Certificates have not been distributed prior to the time Shares are tendered pursuant to the Offer, Rights may be tendered prior to a shareholder receiving Rights Certificates by use of the guaranteed delivery procedures described below. A tender of Shares without Rights Certificates constitutes an agreement by the tendering shareholder to deliver Rights Certificates representing a number of Rights equal to the number of Shares tendered pursuant to the Offer to the Depositary within three business days after the date such Rights Certificates are distributed. If the Rights Condition is not satisfied and the Distribution Date occurs prior to the Expiration Date, the Purchaser reserves the right to require that the Depositary receive such Rights Certificates or a Book-Entry Confirmation with respect to such Rights prior to accepting Shares for payment. In that event, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of, or Book-Entry Confirmation with respect to, among other things, Rights Certificates, if Rights Certificates have been distributed to holders of Shares. See Section 1. THE METHOD OF DELIVERY OF SHARE CERTIFICATES OR RIGHTS CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. BOOK-ENTRY TRANSFER. The Depositary will establish accounts with respect to the Shares at the Book-Entry Transfer Facilities for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of any Book-Entry Transfer Facility may make book-entry delivery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at such Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer at a Book-Entry Transfer Facility, the Letter of Transmittal (or a 13 facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other documents required by the Letter of Transmittal, must in any case be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date, or the guaranteed delivery procedures described below must be complied with. If the Distribution Date occurs, to the extent that the Rights become eligible for book-entry transfer under procedures established by a particular Book-Entry Transfer Facility, the Depositary will make a request to establish an account with respect to the Rights at such Book-Entry Transfer Facility as soon as practicable. If book-entry delivery of Rights is available, the foregoing book-entry transfer procedure will also apply to Rights. However, no assurance can be given that book-entry delivery of Rights will be available. If book-entry delivery is not available and if separate Rights Certificates have been issued, a tendering shareholder is not relieved of delivery requirements hereunder and thus will be required to tender Rights by means of actual physical delivery of Rights Certificates to the Depositary or pursuant to the guaranteed delivery procedures set forth below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. SIGNATURE GUARANTEES. Signatures on Letters of Transmittal must be guaranteed by a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each of the foregoing being referred to as an "Eligible Institution"), except in cases where Shares or Rights are tendered (i) by a registered holder of Shares and Rights who has not completed either the box labeled "Special Payment Instructions" or the box labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If the Share Certificates or Rights Certificates are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made, or Share Certificates or Rights Certificates not accepted for payment or not tendered are to be returned, to a person other than the registered holder, the Share Certificates or Rights Certificates, as the case may be, must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name of the registered holder appears on such certificates, with the signatures on such certificates or stock powers guaranteed as aforesaid. See Instructions 1 and 5 of the Letter of Transmittal. If Share Certificates and Rights Certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) must accompany each such delivery. GUARANTEED DELIVERY. If a shareholder desires to tender Shares and Rights pursuant to the Offer and such shareholder's Share Certificates or Rights Certificates are not immediately available (including because Rights Certificates have not yet been distributed by the Company), or such shareholder cannot deliver the Share Certificates or Rights Certificates and all other required documents to reach the Depositary on or prior to the Expiration Date, or such shareholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares and Rights may nevertheless be tendered, provided that all of the following conditions are satisfied: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form made available by the Purchaser is received by the Depositary as provided below on or prior to the Expiration Date; and 14 (iii) the Share Certificates or Rights Certificates, as the case may be (or a Book-Entry Confirmation), representing all tendered Shares or Rights, in proper form for transfer, in each case together with the Letter of Transmittal (or a facsimile thereof) properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by the Letter of Transmittal are received by the Depositary within (x) in the case of Shares, three trading days after the date of execution of such Notice of Guaranteed Delivery or (y) in the case of Rights, a period ending on the later of (1) three trading days after the date of execution of such Notice of Guaranteed Delivery and (2) three business days after the date the Rights Certificates are distributed to shareholders of the Company. A "trading day" is any day on which the Nasdaq National Market operated by the National Association of Securities Dealers, Inc. (the "NASD") is open for business. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, telex, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution and a representation that the shareholder owns the Shares and, if applicable, Rights tendered within the meaning of, and that the tender of the Shares and, if applicable, Rights effected thereby complies with, Rule 14e-4 under the Exchange Act, each in the form set forth in such Notice of Guaranteed Delivery. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of Share Certificates for, or of Book-Entry Confirmation with respect to, such Shares, and if the Distribution Date has occurred, Rights Certificates for, or a Book-Entry Confirmation if available with respect to, the associated Rights (unless the Purchaser elects, in its sole discretion, to make payment for such Shares pending receipt of the Rights Certificates for, or a Book-Entry Confirmation with respect to, such Rights), a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by the Letter of Transmittal. Accordingly, payment might not be made to all tendering shareholders at the same time and will depend upon when Share Certificates (or Rights Certificates) or Book-Entry Confirmations of such Shares (or Rights, if available) are received into the Depositary's account at a Book-Entry Transfer Facility. UNDER NO CIRCUMSTANCE WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID. If the Rights Condition is satisfied, the guaranteed delivery procedure with respect to Rights Certificates and the requirement for the tender of Rights will no longer apply. APPOINTMENT AS PROXY. By executing the Letter of Transmittal, a tendering shareholder irrevocably appoints designees of the Purchaser and each of them as such shareholder's attorneys-in-fact and proxies, with full power of substitution, in the manner set forth in the Letter of Transmittal, to the full extent of such shareholder's rights with respect to the Shares and Rights tendered by such shareholder and accepted for payment by the Purchaser (and with respect to any and all other Shares or Rights or other securities issued or issuable in respect of such Shares or Rights on or after the date hereof). All such powers of attorney and proxies shall be considered irrevocable and coupled with an interest in the tendered Shares and Rights. Such appointment will be effective when, and only to the extent that, the Purchaser accepts such Shares and Rights for payment as provided herein. Upon such acceptance for payment, all prior powers of attorney and proxies given by such shareholder with respect to such Shares and Rights (and such other shares and securities) will be revoked without further action, and no subsequent powers of attorney and proxies may be given nor any subsequent written consents executed (and, if given or executed, will not be deemed effective). The designees of the Purchaser will, with respect to the Shares and Rights (and such other shares and securities) for which such appointment is effective, be empowered to exercise all voting and other rights of such shareholder as they in their sole discretion may deem proper at any annual or special meeting of the Company's shareholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Shares and Rights to be deemed validly 15 tendered, immediately upon the Purchaser's payment for such Shares and Rights the Purchaser must be able to exercise full voting rights with respect to such Shares, Rights and other securities, including voting at any meeting of shareholders. DETERMINATION OF VALIDITY. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares and Rights will be determined by the Purchaser in its sole discretion, which determination shall be final and binding on all parties. The Purchaser reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of which may, in the opinion of its counsel, be unlawful. The Purchaser also reserves the absolute right to waive any of the conditions of the Offer or any defect or irregularity in any tender of Shares and Rights of any particular shareholder, whether or not similar defects or irregularities are waived in the case of other shareholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of the Purchaser, the Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9. UNDER THE "BACKUP WITHHOLDING" PROVISIONS OF FEDERAL INCOME TAX LAW, THE DEPOSITARY MAY BE REQUIRED TO WITHHOLD 31% OF THE AMOUNT OF ANY PAYMENTS OF CASH PURSUANT TO THE OFFER. IN ORDER TO AVOID BACKUP WITHHOLDING, EACH SHAREHOLDER SURRENDERING SHARES IN THE OFFER MUST, UNLESS AN EXEMPTION APPLIES, PROVIDE THE PAYOR OF SUCH CASH WITH SUCH SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER ("TIN") ON A SUBSTITUTE FORM W-9 AND CERTIFY, UNDER PENALTIES OF PERJURY, THAT SUCH TIN IS CORRECT AND THAT SUCH SHAREHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING. IF A SHAREHOLDER DOES NOT PROVIDE ITS CORRECT TIN OR FAILS TO PROVIDE THE CERTIFICATIONS DESCRIBED ABOVE, THE INTERNAL REVENUE SERVICE ("IRS") MAY IMPOSE A PENALTY ON SUCH SHAREHOLDER AND PAYMENT OF CASH TO SUCH SHAREHOLDER PURSUANT TO THE OFFER MAY BE SUBJECT TO BACKUP WITHHOLDING OF 31%. ALL SHAREHOLDERS SURRENDERING SHARES PURSUANT TO THE OFFER SHOULD COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL TO PROVIDE THE INFORMATION AND CERTIFICATION NECESSARY TO AVOID BACKUP WITHHOLDING (UNLESS AN APPLICABLE EXEMPTION EXISTS AND IS PROVED IN A MANNER SATISFACTORY TO THE DEPOSITARY). CERTAIN SHAREHOLDERS (INCLUDING AMONG OTHERS ALL CORPORATIONS AND CERTAIN FOREIGN INDIVIDUALS AND ENTITIES) ARE NOT SUBJECT TO BACKUP WITHHOLDING. NONCORPORATE FOREIGN SHAREHOLDERS SHOULD COMPLETE AND SIGN A FORM W-8, CERTIFICATE OF FOREIGN STATUS, A COPY OF WHICH MAY BE OBTAINED FROM THE DEPOSITARY, IN ORDER TO AVOID BACKUP WITHHOLDING. SEE INSTRUCTION 11 OF THE LETTER OF TRANSMITTAL. Backup withholding is not an additional tax. Rather, the amount of the backup withholding can be credited against the Federal income tax liability of the person subject to the backup withholding, provided that the required information is given to the IRS. If backup withholding results in an overpayment of tax, a refund can be obtained by the shareholder upon filing a Federal income tax return. OTHER REQUIREMENTS. The Purchaser's acceptance for payment of Shares and, if applicable, Rights tendered pursuant to any of the procedures described above will constitute a binding agreement between the tendering shareholder and the Purchaser upon the terms and subject to the conditions of the Offer, including the tendering shareholder's representation and warranty that the shareholder is the holder of the Shares within the meaning of, and that the tender of the Shares and Rights complies with, Rule 14e-4 under the Exchange Act. 4. WITHDRAWAL RIGHTS. Tenders of Shares and Rights made pursuant to the Offer are irrevocable, except that Shares and Rights tendered pursuant to the Offer may be withdrawn at any time on or prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after March 28, 1997 (or such later date as may apply in case the Offer is extended). If the Purchaser extends the Offer, is delayed in its acceptance for payment of Shares and 16 Rights or is unable to purchase Shares and Rights validly tendered pursuant to the Offer for any reason, then without prejudice to the Purchaser's rights under the Offer, the Depositary may nevertheless, on behalf of the Purchaser, retain tendered Shares and Rights and such Shares and Rights may not be withdrawn except to the extent that tendering shareholders are entitled to withdrawal rights as described in this Section 4. Any such delay will be accompanied by an extension of the Offer to the extent required by law. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any notice of withdrawal must specify the name of the person who tendered the Shares or Rights to be withdrawn, the number of Shares or Rights to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares or Rights. If Share Certificates or Rights Certificates to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates the serial numbers shown on such certificates must be submitted to the Depositary and the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares or Rights have been tendered for the account of any Eligible Institution. If Shares or Rights have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares or Rights, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the first sentence of this paragraph. A withdrawal of Shares or Rights shall also constitute a withdrawal of the associated Rights or Shares, as applicable. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. None of the Purchaser, the Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Withdrawals of Shares and Rights may not be rescinded. Any Shares or Rights properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares or Rights may be re-tendered at any time prior to the Expiration Date by again following one of the procedures described in Section 3. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The summary of tax consequences set forth below is for general information only and is based on the law as currently in effect. The tax treatment of each shareholder will depend in part upon such shareholder's particular situation. Special tax consequences not described herein may be applicable to particular classes of taxpayers, such as financial institutions, broker-dealers, persons who are not citizens or residents of the United States, shareholders who acquired their Shares through the exercise of an employee stock option or otherwise as compensation, and persons who received payments in respect of options to acquire Shares. ALL SHAREHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS. The receipt of cash pursuant to the Offer or the Merger will be a taxable transaction for Federal income tax purposes under the Internal Revenue Code of 1986, as amended, and may also be a taxable transaction under applicable state, local, foreign income or other tax laws. Generally, for Federal income tax purposes, a tendering shareholder will recognize gain or loss in an amount equal to the difference between the cash received by the shareholder pursuant to the Offer or the Merger and the shareholder's adjusted tax basis in the Shares (and the associated Rights) tendered by the shareholder and purchased pursuant to the Offer or converted in the Merger, as the case may be. Gain or loss will be calculated 17 separately for each block of Shares tendered and purchased pursuant to the Offer or converted in the Merger, as the case may be. If Shares are held by a shareholder as capital assets, gain or loss recognized by the shareholder will be capital gain or loss, which will be long-term capital gain or loss if the shareholder's holding period for the Shares exceeds one year. There are limitations on the deductibility of capital losses. See Section 3 ("Procedure for Tendering Shares and Rights--Backup Federal Income Tax Withholding and Substitute Form W-9"). 6. PRICE RANGE OF SHARES; DIVIDENDS. According to the 1995 10-K, the Shares are traded in the over-the-counter market and are quoted principally on the Nasdaq National Market. The following table sets forth, for the quarters indicated, the high and low sales prices per Share on the Nasdaq National Market as reported in the 1995 10-K with respect to periods occurring in 1995 and as reported by the Dow Jones News Service thereafter. According to the 1995 10-K and publicly available sources, the Company did not pay any cash dividends during such periods.
HIGH LOW --------- --------- Year Ended December 31, 1995: First Quarter.............................................................................. $ 12.63 $ 8.63 Second Quarter............................................................................. 12.13 9.88 Third Quarter.............................................................................. 15.88 10.25 Fourth Quarter............................................................................. 13.75 9.63 Year Ended December 31, 1996: First Quarter.............................................................................. 13.50 8.50 Second Quarter............................................................................. 14.88 9.88 Third Quarter.............................................................................. 13.25 8.13 Fourth Quarter............................................................................. 10.00 7.63 Year Ended December 31, 1997: First Quarter (through January 24, 1997)................................................... 14.00 9.06
The Offer represents more than a 45% premium over the $8.88 closing sale price per Share reported on the Nasdaq National Market on December 31, 1996, the last full trading day before the Parent delivered its January 2, 1997 letter to the Company proposing to acquire the Company at a price of $12.50 per Share in cash. On January 9, 1997, the day prior to the Parent's issuance of the press release announcing the transmission of the Parent's January 10, 1997 public letter offering to acquire the Company in a transaction in which shareholders would receive $12.50 per Share in cash, the closing sale price per Share reported on the Nasdaq National Market was $9.25. On January 24, 1997, the last full trading day prior to announcement of the Offer and the day on which the Company announced rejection of the Parent's prior offer, the closing sale price per Share reported on the Nasdaq National Market was $14.00. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. The Rights are currently attached to the outstanding Shares and may not be traded separately. As a result of the commencement of the Offer, the Distribution Date may be as early as February 10, 1997, after which the Rights could begin trading separately from the Shares. See Section 11. IN SUCH EVENT, SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION, IF ANY, FOR THE RIGHTS. Unless and until the Purchaser declares that the Rights Condition is satisfied, holders of Shares will be required to tender one Right for each Share tendered in order to effect a valid tender of such Share. Accordingly, shareholders who sell their Rights separately from their Shares and do not otherwise acquire Rights may not be able to satisfy the requirements of the Offer for a valid tender of Shares. 7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning the Company contained in this Offer to Purchase, including financial information, has been taken from or based upon 18 publicly available documents and records on file with the Commission and other public sources. The summary information concerning the Company in this Section 7 and elsewhere in this Offer to Purchase is derived from the 1995 10-K, the September 10-Q and other publicly available information. The summary information set forth below is qualified in its entirety by reference to such reports (which may be obtained and inspected as described below) and should be considered in conjunction with the more comprehensive financial and other information in such reports and other publicly available reports and documents filed by the Company with the Commission and other publicly available information. Although the Purchaser and the Parent do not have any knowledge that would indicate that any statements contained herein based upon such reports are untrue, neither the Purchaser nor the Parent assumes any responsibility for the accuracy or completeness of the information contained therein, or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but which are unknown to the Purchaser and the Parent. GENERAL. The Company is a Georgia corporation with its principal executive offices located at 1255 Kennestone Circle, Marietta, Georgia 30066. The telephone number of the Company at such offices is (770) 499-1212. The Company designs, manufactures, and markets technologically advanced medical devices for use in the home and in specialized clinical settings, such as subacute facilities, sleep laboratories, clinics and physician offices. The Company's principal products include diagnostic and therapeutic devices for evaluation and treatment of sleep disorders, such as obstructive sleep apnea; peak flow meters and drug delivery devices for the treatment of asthma; oxygen concentrators, medication nebulizers, and pressure support non-invasive ventilators for the treatment of respiratory disorders; and monitors for infants at risk for Sudden Infant Death Syndrome. FINANCIAL INFORMATION. Set forth below are certain selected consolidated financial data for the Company's three fiscal years ending December 31, 1995 which were derived from the 1995 10-K, and for the nine-month periods ending September 30, 1996 and 1995, which were derived from the Company's Quarterly Reports on Form 10-Q for the quarters ended September 30, 1996 and September 30, 1995. More comprehensive financial information is included in such documents (including management's discussion and analysis of financial condition and results of operations) and other documents filed by the Company with the Commission, and the following financial data is qualified in its entirety by reference to such other documents including the financial information and related notes contained therein. Such other documents may be examined and copies thereof may be obtained from the offices of the Commission and the Nasdaq Stock Market in the manner set forth below. 19 HEALTHDYNE TECHNOLOGIES, INC. SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS ENDED FOR THE YEAR ENDED SEPTEMBER 30, DECEMBER 31, -------------------- --------------------------------- 1996 1995 1995 1994 1993 --------- --------- ----------- --------- --------- INCOME STATEMENT DATA Revenues..................................................... $ 85,266 $ 81,529 $ 110,494 $ 89,012 $ 68,598 Operating Earnings........................................... 8,831 8,721 12,209 8,712 9,202 Earnings before Income Taxes................................. 7,252 7,450 10,389 8,488 8,577 Income Tax Expense........................................... (2,894) (2,943) (4,102) (3,383) (3,362) --------- --------- ----------- --------- --------- Net Earnings................................................. $ 4,358 $ 4,507 $ 6,287 $ 5,105 $ 5,215 --------- --------- ----------- --------- --------- --------- --------- ----------- --------- --------- Net Earnings per Common Share................................ $ 0.34 $ 0.36 $ 0.50 $ 0.41 $ 0.47 Weighted Average Number of Common Shares Outstanding for EPS Calculation................................................ 12,963 12,633 12,694 12,401 11,184 AT SEPTEMBER 30, AT DECEMBER 31, -------------------- --------------------------------- 1996 1995 1995 1994 1993 --------- --------- ----------- --------- --------- BALANCE SHEET DATA Total Assets................................................. $ 91,552 $ 78,773 $ 82,876 $ 69,412 $ 44,629 Total Liabilities............................................ 48,988 44,350 45,975 36,377 14,642 Total Shareholders' Equity................................... 42,564 34,423 36,901 29,535 24,487
The Shares are registered under the Exchange Act. Accordingly, the Company is subject to the informational filing requirements of the Exchange Act and in accordance therewith is obligated to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information as of particular dates concerning the Company's directors and officers, their remuneration, options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is required to be disclosed in such proxy statements and distributed to the Company's shareholders and filed with the Commission. Such reports, proxy statements and other information should be available for inspection at the public reference facilities of the Commission located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available for inspection and copying at prescribed rates at the regional offices of the Commission located at 1401 Brickell Avenue, Suite 200, Miami, Florida 33131, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New York 10048. Such reports, proxy statements and other information may also be obtained at the Web site that the Commission maintains at http://www.sec.gov. Copies of this material should be obtainable, by mail, upon payment of the Commission's customary fees, from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, such material should also be available for inspection at the library of the Nasdaq Stock Market, 1735 K Street, NW, Washington, D.C. 20006. Except as otherwise noted in this Offer to Purchase, all of the information with respect to the Company set forth in this Offer to Purchase has been derived from publicly available information. 8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT. The Purchaser, a Delaware corporation and a wholly owned subsidiary of the Parent, was organized in connection with the proposed acquisition of the Company and has not carried on any unrelated activities to date other than those incident to its formation. The Parent is the leading home medical equipment manufacturer in the world based upon its distribution channels, the breadth of its product line and sales. The Parent designs, manufactures and 20 distributes an extensive line of medical equipment for the home health care and extended care markets. The Parent continuously revises and expands its product lines to meet changing market demands. Its products are sold principally to over 10,000 home health care and medical equipment provider locations throughout the world. Products are sold through its world-wide distribution network by its sales force, telemarketing employees and various organizations of independent manufacturer's representatives. The Parent also uses its extensive dealer network to distribute medical equipment and related supplies manufactured by others. The name, citizenship, business address, principal occupation or employment, and five- year employment history of each of the directors and executive officers of the Purchaser and the Parent and certain other information are set forth in Schedule I hereto. Set forth below are certain selected consolidated financial data relating to the Parent and its subsidiaries for the Parent's three fiscal years ending December 31, 1995 which were derived from the Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 1995, and for the nine-month periods ending September 30, 1996 and 1995, which were derived from the Parent's Quarterly Reports on Form 10-Q for the quarters ended September 30, 1996 and September 30, 1995. More comprehensive financial information is included in such documents (including management's discussion and analysis of financial condition and results of operations) and other documents filed by the Parent with the Commission, and the following financial data is qualified in its entirety by reference to such other documents including the financial information and related notes contained therein. Such other documents may be examined and copies thereof may be obtained from the offices of the Commission and the Nasdaq Stock Market in the same manner as set forth with respect to information about the Company in Section 7. INVACARE CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS ENDED FOR THE YEAR ENDED SEPTEMBER 30, DECEMBER 31, ------------------------ ------------------------------------- 1996 1995 1995 1994 1993 ----------- ----------- ----------- ----------- ----------- INCOME STATEMENT DATA Net Sales............................................... $ 451,776 $ 360,577 $ 504,032 $ 411,123 $ 365,457 Income from Operations.................................. 44,943 36,875 54,144 43,736 36,870 Earnings Before Income Taxes............................ 43,281 34,787 51,845 41,877 33,510 Income Taxes............................................ (16,875) (13,210) (19,680) (15,500) (11,400) ----------- ----------- ----------- ----------- ----------- Net Earnings............................................ $ 26,406 $ 21,577 $ 32,165 $ 26,377 $ 22,110 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net Earnings per Share.................................. $ 0.87 $ 0.72 $ 1.07 $ 0.89 $ 0.75 Weighted Average Number of Shares Outstanding for EPS Calculation........................................... 30,387 30,012 30,077 29,696 29,475 AT SEPTEMBER 30, AT DECEMBER 31, ------------------------ ------------------------------------- 1996 1995 1995 1994 1993 ----------- ----------- ----------- ----------- ----------- BALANCE SHEET DATA Working Capital......................................... $ 155,806 $ 112,690 $ 119,749 $ 112,768 $ 95,278 Total Assets............................................ 488,082 376,764 408,750 338,109 286,367 Total Liabilities....................................... 260,681 188,210 207,431 174,102 151,405 Total Shareowners' Equity............................... 227,401 188,554 201,319 164,007 134,962
21 The Parent currently beneficially owns an aggregate of 600,000 Shares (including 100 Shares owned by the Purchaser), representing approximately 4.8% of the 12,625,039 Shares reported by the Company as outstanding at November 1, 1996, 83,000 of which Shares were acquired by the Parent during the past 60 days in the transactions described in Schedule II. Except as described in this Offer to Purchase and in Schedules I and II, none of the Purchaser, the Parent nor, to the best knowledge of the Purchaser and the Parent, any of the persons listed on Schedule I hereto or any associate or majority-owned subsidiary of the Purchaser, the Parent or any of the persons so listed, beneficially owns or has a right to acquire directly or indirectly any Shares, and none of the Purchaser, the Parent nor, to the best knowledge of the Purchaser and the Parent, any of the persons or entities referred to above, or any of the respective executive officers, directors or subsidiaries of any of the foregoing, has effected any transactions in the Shares during the past 60 days. Except as set forth in this Offer to Purchase, neither the Purchaser nor the Parent or, to the best knowledge of the Purchaser and the Parent, any of the persons listed on Schedule I hereto, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including but not limited to contracts, arrangements, understandings or relationships concerning the transfer or voting of such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, neither the Purchaser nor the Parent or, to the best knowledge of the Purchaser and the Parent, any of the persons listed on Schedule I hereto, has had since January 1, 1994 any business relationships or transactions with the Company or any of its executive officers, directors or affiliates that are required to be reported under the rules and regulations of the Commission applicable to the Offer. Except as set forth in this Offer to Purchase, since January 1, 1994 there have been no contacts, negotiations or transactions between any of the Parent, the Purchaser or, to the best knowledge of the Purchaser and the Parent, any of the persons listed in Schedule I hereto, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors, or a sale or other transfer of a material amount of assets. 9. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the Purchaser to purchase all of the outstanding Shares (on a fully-diluted basis) and pay related fees and expenses is expected to be approximately $187 million. The Purchaser will obtain such funds through capital contributions by the Parent and/or various wholly-owned direct or indirect subsidiaries of the Parent. The Parent has in place committed bank facilities sufficient to provide such funds. However, the Offer is not conditioned on the receipt of financing. The Parent has accepted a commitment letter (the "Commitment Letter") from NBD Bank ("NBD"), as agent, and its affiliate First Chicago Capital Markets, Inc. ("First Chicago"), as arranger, which provides that NBD will provide to the Parent, on specified terms and subject to specified conditions, up to $200 million, a portion of which may be provided by a syndicate of lenders selected by First Chicago in consultation with the Parent, and will act as administrative agent for the Facility (as defined below). The Commitment Letter contemplates a two-year revolving credit facility in the amount of $200 million (the "Facility"). The proceeds of the Facility may be used by the Parent or a wholly owned subsidiary of the Parent to finance the acquisition of the Company, provided that a certain amount of proceeds acceptable to NBD may be used for other acquisitions and working capital purposes. The Facility will be guaranteed by the Parent's significant subsidiaries including, after the Merger, the Company. Loans under the Facility ("Loans") will bear interest, at the Parent's option, at NBD's Prime Rate, at specified spreads above LIBOR (adjusted for reserves) or at negotiated fixed rates to the extent available and mutually agreed. Loans bearing interest at LIBOR will be for interest periods of 1, 2, 3 and 6 month 22 periods. All interest will be paid at the end of the applicable interest period or quarterly, whichever is earlier. NBD's commitment to provide the Facility is subject to customary conditions, including (i) the preparation, execution and delivery of mutually acceptable definitive loan documentation, (ii) consummation of the Offer upon terms and conditions reasonably satisfactory to NBD, (iii) NBD and First Chicago being satisfied with the structure of the acquisition of the Company and the legal and tax aspects thereof and (iv) the amendment of the Parent's other credit facilities with NBD to conform generally to the terms of the Facility. The commitment may be terminated in the event of certain customary events, including: (i) if information provided to NBD or First Chicago by or on behalf of the Parent proves to be inaccurate or incomplete in any respect material to the Parent or the Company or (ii) if NBD or First Chicago reasonably determines that there has been any material adverse change in (a) the business, condition (financial or otherwise), operations, performance, properties or prospects of the Parent or the Company since December 31, 1995 or (b) primary or secondary loan syndication markets or capital markets generally. The definitive documentation relating to the Facility also will contain representations, warranties, covenants and events of default and conditions customary for transactions of this type. In addition, the Facility will contain financial covenants with respect to an interest coverage ratio, a debt-to-capitalization ratio and net worth, in each case of the Parent on a consolidated basis. The Parent will also agree to cause the Merger to be consummated as soon as reasonably possible following the consummation of the Offer. The Parent has agreed to pay specified fees to NBD, First Chicago and the lenders in connection with the Facility. The Parent also has agreed to pay certain expenses of, and provide customary indemnities to, NBD, First Chicago and (under certain circumstances) the other lenders under the Facility. The foregoing summary of the source and amount of funds is qualified in its entirety by reference to the text of the Commitment Letter, a copy of which is filed as an exhibit to the Tender Offer Statement on Schedule 14D-1 of the Purchaser and the Parent filed with the Commission in connection with the Offer (the "Schedule 14D-1") and is incorporated herein by reference and may be inspected in the same manner as set forth in Section 7. When definitive agreements relating to the Facility are executed, copies will be filed as exhibits to amendments to the Schedule 14D-1. The Parent intends to repay any loans under the Facility with internally generated funds, including those of the Company if the Merger is consummated, and from the proceeds of future borrowings or other debt or equity financings. At this time, no specific plans or arrangements have been made for any such future borrowings or other financings. Such plans or arrangements, if any, when made will be based on the Parent's review from time to time of the advisability of particular actions, as well as on prevailing interest rates and financial and other economic conditions. However, after consummation of the Merger, the Parent intends to explore various possible plans for long-term debt financing that might be considered to refinance all or part of the Facility. 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. In the late summer of 1996, Thomas R. Miklich, Chief Financial Officer and General Counsel of the Parent, contacted Robert Johnson, a Senior Vice President of the Company, and indicated that the Parent would be interested in discussing a potential combination of the two entities. Mr. Johnson responded shortly thereafter that the Board of Directors of the Company had determined that the Company was not for sale. A brief time later, A. Malachi Mixon, III, Chairman and Chief Executive Officer of the Parent, called Craig B. Reynolds, President and Chief Executive Officer of the Company, with the intent of inquiring again about a potential combination. His call was not returned by Mr. Reynolds. Mr. Mixon then suggested to an acquaintance who had a business relationship with the former parent of the 23 Company that a combination of the Parent and the Company would be beneficial to the shareholders of both, and requested that the acquaintance let Parker H. Petit, Chairman of the Board of Directors of the Company, know of the Parent's interest. Within a few days, Mr. Mixon received a terse voice mail message from Mr. Petit in which Mr. Petit stated, and then repeated, that the Company was not for sale. Less than a week after receiving Mr. Petit's voice mail message, Mr. Mixon encountered Mr. Reynolds at a trade show and suggested that the Parent and the Company meet to discuss the potential for a transaction as he felt it would be beneficial for shareholders of both companies. Mr. Reynolds responded that he was not in a position to schedule such a meeting because the Board of Directors of the Company had previously decided that the Company was not for sale. On January 2, 1997, Mr. Mixon called Mr. Reynolds and was told that he was in a meeting and was unable to take Mr. Mixon's call. Mr. Mixon then indicated that he was faxing a confidential letter and requested that Mr. Reynolds' secretary hand the letter directly to Mr. Reynolds. He then asked that Mr. Reynolds call him once he had the opportunity to review the letter. Mr. Reynolds did not and has not to date called Mr. Mixon. The text of the January 2, 1997 letter is as follows: January 2, 1997 Mr. Craig B. Reynolds President & CEO Healthdyne Technologies, Inc. 1255 Kennestone Circle Marietta, GA 30066 Dear Craig: I am writing this letter to follow up on our communication several weeks ago, which I am disappointed did not result in more specific discussions at that time. We believe that there are clear and compelling advantages to both Invacare Corporation and Healthdyne Technologies from the combination of our two companies and that such a transaction would create great value for each of our companies and our respective stockholders. We therefore propose that Invacare Corporation acquire Healthdyne Technologies through a negotiated merger transaction in which Healthdyne stockholders would receive $12.50 in cash for each share of outstanding common stock. This price would represent a premium of more than 40% over your closing stock price on December 31, 1996. As I am sure you are aware, Invacare is an important participant in the medical device market, with annual sales in excess of $600 million. We have, as you do, an enviable reputation for the quality of our products and service. We are extremely impressed with the businesses you and your management team have developed and the manner in which they complement our businesses. We believe the complementary aspects of our two companies' products, customers and distribution capabilities would enable the combined entity to be an even more effective competitor. We are prepared to meet with you or your representatives at your earliest convenience to discuss our proposal and begin negotiations of definitive documentation, which we are confident could be quickly and successfully concluded. We have committed bank facilities in place sufficient to fund the proposed transaction. Of course, our proposal contemplates, among other things, the negotiation and execution of mutually acceptable definitive merger and other agreements containing provisions customary for transactions of this type, the receipt of any required regulatory approvals and third-party consents, the operation of Healthdyne in the ordinary course, and the taking of all necessary actions to eliminate the applicability of, or to satisfy, any anti-takeover or other defensive 24 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 best way to proceed at this point would be to begin confidential, non-public discussions to see if we can negotiate a transaction that can be presented to your stockholders as the joint effort of Invacare's and Healthdyne's Board of Directors and management. At this point, therefore, we hope this letter and its contents will remain private between us. We would appreciate it if you and your Board of Directors will give this proposal prompt and serious consideration. We would request a response as soon as possible, and preferably no later than January 10, 1997. We are enclosing copies of this letter, as well as information on Invacare, for distribution to Mr. Petit and the other members of the Board of Directors so they can familiarize themselves with our proposal and our company. I hope you and yours had a happy and healthy holiday season and wish you all the best for the New Year. Sincerely, A. Malachi Mixon, III Chairman and CEO On January 8, 1997, Mr. Reynolds sent the following letter to Mr. Mixon: January 8, 1997 A. Malachi Mixon, III Chairman & CEO Invacare Corporation 899 Cleveland Street P.O. Box 4028 Elyria, OH 44036-2125 Dear Mr. Mixon: Thank you for your letter dated January 2, 1997. I am forwarding your letter together with enclosures to our Board of Directors for review. The Board of Directors 25 some time ago established procedures for reviewing inquiries of this sort. The Board will review your letter at its next regularly-scheduled Board Meeting in February, and you can expect the Company's response thereafter. Thank you for the kind statements in your letter concerning the Company's reputation for the quality of our products and service. Sincerely, Craig B. Reynolds President and Chief Executive Officer On January 10, 1997, the Parent issued the following press release and sent the letter reprinted therein to the Company: Elyria, Ohio--(January 10, 1997)--Invacare Corporation announced today that it has offered to acquire Healthdyne Technologies, Inc. in a negotiated merger transaction for $12.50 per share in cash. The offer was originally made in a private letter to Healthdyne delivered on January 2, 1997. After Healthdyne responded in writing that its Board of Directors would not consider the offer until its February Board meeting, Invacare determined to publicly confirm its offer in a letter to Healthdyne dated January 10, 1997. The offered price represents more than a 40% premium over Healthdyne's closing stock price on December 31, 1996, the last trading day prior to the date the original proposal was made. Based on the prospects and synergies that can be identified from publicly available information, Invacare believes that the acquisition will be accretive to its earnings per share within 12 to 18 months. The full text of Invacare's January 10, 1997 letter to Mr. Craig B. Reynolds, President and CEO of Healthdyne Technologies, Inc., is as follows: Thank you for your letter of January 8, 1997 noting that your Board of Directors will consider our January 2, 1997 acquisition proposal to acquire Healthdyne Technologies, Inc. at $12.50 per share in cash at its next regularly scheduled meeting in February. We are pleased that Healthdyne's Board of Directors plans to consider our proposal, but we are disappointed that Healthdyne has chosen to defer its consideration for such a long time without seeking any discussions with us. We had expected that an acquisition proposal offering a 40% premium over your year-end stock price would have encouraged a prompt and constructive dialogue. We continue to believe that there are clear and compelling advantages to both Invacare Corporation and Healthdyne from the combination of our two companies and that such a transaction would create great value for each of our companies and our respective stockholders. As a result, we feel obligated and are fully committed to pursue this matter more expeditiously. We hereby reiterate our offer to acquire Healthdyne Technologies, Inc. through a negotiated merger transaction in which Healthdyne stockholders would receive $12.50 in cash for each share of outstanding common stock. Because of the critical importance of our offer to the stockholders of both Healthdyne and Invacare, and because of the length of time until your Board of Directors may consider our offer, particularly in light of the recent unusual trading volumes in Healthdyne's stock, we feel compelled to release this letter publicly. We believe that the stockholders of Healthdyne will enthusiastically support our offer, and that your Board of Directors should have the benefit of the reaction of Healthdyne's stockholders in evaluating our offer. We continue to be interested in meeting with you to give you the opportunity to discuss our offer and to begin negotiations of definitive documentation, which we are confident could be quickly and successfully concluded. 26 We have committed bank facilities in place sufficient to fund the proposed transaction. We are the owners of approximately 4.9% of Healthdyne's outstanding common stock. As we have said before, Invacare is an important participant in the medical device market with annual sales in excess of $600 million. We have, as you do, an enviable reputation for the quality of our products and services. We are extremely impressed with the businesses you and your management team have developed and the manner in which they complement our businesses. We believe the complementary aspects of our two companies' products, customers and distribution capabilities would enable the combined entity to be an even more effective competitor. Of course, this offer is subject to, among other things, the negotiation and execution of mutually acceptable definitive merger and other agreements containing provisions customary for transactions of this type, the receipt of any required regulatory approvals and third-party consents, the operation of Healthdyne in the ordinary course, the taking of all necessary actions to eliminate the applicability of, or to satisfy, any anti-takeover or other defensive provisions contained in the applicable corporate statutes or Healthdyne's charter and by-laws (including Healthdyne's poison pill) and the absence of any actions by Healthdyne's Board which would seek to frustrate our offer. We do not expect anti-trust concerns to provide a significant hurdle to the closing of the transaction. We note from your public filings that Healthdyne has in place a number of provisions that may be fairly characterized as defensive in nature. We would request that you satisfy or eliminate their applicability to our offer and that you not implement or take any action to trigger any additional defensive measures that could adversely affect the ability of your stockholders to ultimately express their views on, or receive the benefits of, our offer, or enter into any significant transactions or take any other actions that could impede or necessitate an adjustment to the terms of our offer. We believe that you and your Board of Directors should carefully and promptly consider this offer and view it as we do -- an excellent opportunity for the stockholders of Healthdyne to realize full value for their shares to an extent not likely to be available to them in the marketplace absent our offer. We are certain that, upon reflection, you and your fellow members of the Board of Directors will recognize the extraordinary opportunity that our offer presents Healthdyne and its stockholders. In the context of a negotiated, friendly transaction, we would be prepared to discuss all aspects of our offer fully with you. We hope that you and your Board of Directors will give our offer prompt and serious consideration so that we may move forward, in our preferred course, to a negotiated transaction which can be presented to your stockholders as the joint effort of Invacare's and Healthdyne's Board of Directors and management. We would request that you accelerate your Board of Directors' review of our offer and confirm to us as soon as possible that your Board of Directors will consider our offer shortly. Following the Parent's January 10 press release, the Company issued a press release on January 10, 1997 in which it stated that its Board of Directors would consider the Parent's proposal in due course. On Friday, January 24, 1997, the Company issued a press release stating that its Board of Directors had "unanimously rejected" the Parent's January 10 offer, adding that "[t]he Board has not been and is not seeking to sell the Company." The Company also stated that it had received the opinion of its investment bankers that the $12.50 per Share offer was "grossly inadequate", and indicated that the Company planned to release in early February information concerning various developments and potential developments which Mr. Reynolds asserted had not been "fully appreciated by the investment 27 community." Later that day, the Company filed with the Commission a Current Report on Form 8-K which disclosed that on January 23, 1997, after the Parent had made public its interest in an acquisition of the Company, the Company's Board of Directors had amended the By-Laws to (i) elect that the Company be governed by the Georgia Fair Price Statute and (ii) remove from the By- Laws a provision requiring the annual meeting of shareholders to be held on the fourth Tuesday in April unless a different date was set by the Board of Directors. Neither action was disclosed in the Company's press release issued earlier that day. On the following Monday, January 27, 1997, the Parent and the Purchaser commenced the Offer, delivered to the Company letters making the requests for shareholder information described in Section 1, commenced the Defensive Tactics Litigation and issued the following press release: INVACARE CORPORATION LAUNCHES TENDER OFFER FOR HEALTHDYNE TECHNOLOGIES, INC. AT INCREASED PRICE OF $13 PER SHARE AND COMMENCES LITIGATION Elyria, Ohio--(January 27, 1997)--Invacare Corporation announced today that its wholly owned subsidiary I.H.H. Corp. has commenced an all-cash tender offer for all outstanding shares of common stock of Healthdyne Technologies, Inc. at $13 per share, to be followed by a second-step merger in which holders of shares not validly tendered would receive the same per share price as in the offer. The tender offer price represents more than a 45% premium over Healthdyne's closing stock price on December 31, 1996, the trading day prior to Invacare's making its original acquisition proposal to Healthdyne on January 2, 1997, and reflects a $.50 per share increase over Invacare's previous offer to Healthdyne. A. Malachi Mixon, III, Chairman and Chief Executive Officer of Invacare, said: "We are surprised and disappointed that Healthdyne's Board of Directors has rejected our offer without even calling us or seeking any discussions with us whatsoever. We have difficulty understanding how our original offer, which represented more than a 40% premium over the prevailing market price, could have been viewed by Healthdyne, its Board of Directors or its financial advisors as 'grossly inadequate', especially since the Company's Chairman sold approximately one-third of his shares at prices ranging from $13.00 to $14.25 as recently as last May and June. While we, like Healthdyne's other stockholders, would certainly be interested in seeing and understanding the detailed information which the Company's management has claimed will improve its prospects and has promised for release in early February, we note that in recent periods the Company has disappointed its stockholders by failing to meet analysts' published expectations. However, because we remain fully committed to this acquisition on terms that bring value to the stockholders of both companies, we are increasing our offer price from $12.50 to $13 in the interests of completing this transaction expeditiously. "Although we would have preferred to have conducted discussions with Healthdyne regarding our offer and continue to look forward to the opportunity to do so, their rejection of our prior offer and continued refusal to have any discussions or contacts with us force us to make our offer directly to the stockholders in a manner which, under the tender offer rules, will require Healthdyne's Board to provide a prompt and more thorough response. "We hope that when Healthdyne's Board considers our increased offer it will view it as we do -- an excellent opportunity for the stockholders of Healthdyne to realize full value for their shares to an extent not otherwise likely to be available to them. We continue to be interested in meeting with Healthdyne to discuss our offer in the hopes of promptly negotiating a mutually agreeable transaction. In the context of a negotiated transaction, we would consider discussing our offer price if Healthdyne's management is able to substantiate significant additional values 28 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 statutes (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, February 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. 11. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. THE MERGER. The Purchaser intends to propose, and to seek to have the Company consummate, the Merger as soon as practicable after consummation of the Offer. However, if the Board of Directors of the Company opposes the Offer and the Merger, certain terms of the Rights and certain provisions of the GBCC and the By-Laws may affect the ability of the Purchaser to obtain control of the Company and to effect the Merger. Accordingly, the timing and details of the Merger will depend on a variety of factors and legal requirements, the actions of the Board of Directors of the Company, the number of Shares acquired by the Purchaser pursuant to the Offer and whether the Minimum Condition, the Rights Condition, the Georgia Business Combination Statute Condition and the Georgia Fair Price Statute Condition are satisfied. BOARD APPROVAL. Except in the case of a short-form merger in accordance with the GBCC described below, the GBCC requires that the Merger be approved by the Company's Board of Directors. As described above, the Parent and the Purchaser have previously requested and continue to request that the Company's Board of Directors approve the Merger and believe that the Company's Board of Directors is obligated by its fiduciary responsibilities to do so. The Parent intends, if necessary to facilitate the Offer and the Merger, (i) to nominate individuals for election as directors of the Company who, if elected, would be committed to an acquisition of the Company in accordance with the terms of 29 the Offer and the Merger (subject to any fiduciary duties such nominees would have as directors) and (ii) to consider making other proposals at the Company's upcoming annual meeting of shareholders, and to solicit proxies from shareholders for the purpose of electing such director candidates and approving any such other proposals. If elected, any director candidates nominated by Parent would be committed to taking all such actions necessary or appropriate (subject to such directors' fiduciary duties) to approve and effectuate the consummation of the Offer and the Merger, including taking action to execute an agreement and plan of merger and to satisfy the Rights Condition, the Georgia Business Combination Statute Condition and the Georgia Fair Price Statute Condition. As described under "The Rights" below, the Parent and the Purchaser are commencing the Defensive Tactics Litigation seeking, among other things, to declare illegal certain provisions of the Rights Agreement which would purport to limit the ability of the Parent's nominees, if elected, to satisfy the Rights Condition under certain circumstances. If the Parent does not nominate director candidates for election at the annual meeting, or if such candidates are not elected, and the conditions to the Offer are not otherwise satisfied, the Parent will explore the other options available to it, including taking action to call a special meeting of the Company's shareholders or utilizing other available methods for the purpose of removing members of the current Board of Directors of the Company and electing director candidates nominated by the Parent or taking other actions to facilitate the consummation of the Offer and the Merger. Under the By-Laws, the Company is required to call a special meeting of the shareholders upon the demand of the holders of sixty percent (60%) of the outstanding Shares. There are currently seven members of the Company's Board of Directors. The directors are all elected for a term of one year at each annual meeting of the shareholders of the Company. The Company does not have a "staggered" board of directors under which only a portion of the Board is elected each year, and under the GBCC the Company cannot implement such a "staggered" board without an amendment to its Amended and Restated Articles of Incorporation, as amended (the "Charter"), or its By-Laws which is approved by the shareholders of the Company. The GBCC and the By-Laws provide that any director, or the entire Board of Directors, may be removed from office at any time by the affirmative majority vote of the outstanding Shares entitled to vote for directors. The By-Laws provide that the vacancy caused by any such removal may be filled by the shareholders, or, if authorized by the shareholders, by the remaining directors. Under the GBCC, amendment of the Charter generally requires a resolution of the Board of Directors and the affirmative vote of a majority of the outstanding Shares entitled to vote. The By-Laws generally may be amended by the shareholders by a majority vote of the outstanding shares or, subject to the GBCC and the Charter, by the Board of Directors. If all the conditions to the Offer are satisfied even though the Company's Board of Directors does not take the actions requested by the Purchaser to approve the Offer and the Merger, and if the Parent does not seek or is unsuccessful in seeking election of a majority of the seven directors at the upcoming annual meeting, then the Parent and the Purchaser intend to take such action as may be necessary and lawful to secure control of the Board of Directors of the Company. Such action may include calling a special meeting of the shareholders of the Company, which under the By-Laws the Parent and the Purchaser will have the power to effect without the action of any other shareholder if the Parent and the Purchaser hold sixty percent (60%) or more of the outstanding Shares following consummation of the Offer. In the event the Parent obtains control of the Company's Board of Directors, the Parent would expect to seek approval of the Merger as soon as practicable thereafter, consistent with the fiduciary obligations of the Board. THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY, CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY SPECIAL MEETING OF THE COMPANY'S SHAREHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY SUCH SOLICITATION WHICH THE PURCHASER MAY MAKE WILL BE MADE ONLY 30 PURSUANT TO SEPARATE PROXY MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT. SHAREHOLDER APPROVAL. The GBCC requires that, unless otherwise provided by the Company's Charter, the Merger be approved by the affirmative vote of the holders of a majority of all votes entitled to be cast. The Minimum Condition requires that the Purchaser be satisfied, in its sole discretion, that there shall have been validly tendered and not properly withdrawn on or prior to the Expiration Date a number of Shares which, when added to the Shares beneficially owned by the Purchaser and its affiliates (including the Parent), constitutes at least 51% of the voting power (determined on a fully diluted basis) on the date of purchase of all securities entitled to vote generally in the election of directors and in a merger. Upon consummation of the Offer and assuming the Minimum Condition is satisfied, the Parent and the Purchaser will own sufficient Shares to enable them to effect shareholder approval of the Merger with the affirmative vote of the Shares owned by them (assuming that the Georgia Business Combination Statute and the Georgia Fair Price Statute are satisfied). THE OFFER IS CONDITIONED UPON THE MINIMUM CONDITION BEING SATISFIED. The foregoing description of the Charter and the By-Laws is based upon and qualified in its entirety by reference to the text of the Charter and By-Laws filed by the Company as exhibits to documents filed with the Commission, which may be obtained in the manner described in Section 7. THE RIGHTS. The following discussion, including the summary of certain aspects of the Rights, is based in part on information contained in the Company's May 19 Form 8-A and is qualified by reference to such information. Although the Purchaser and the Parent do not have any knowledge that would indicate that any statements contained herein based upon such document are untrue, neither the Purchaser nor the Parent assumes any responsibility for the accuracy or completeness of the information contained in such document, or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but which are unknown to the Purchaser and the Parent. On April 20, 1995, the Board of Directors of the Company, declared a dividend distribution of one Right for each outstanding Share to the shareholders of record at the close of business on May 22, 1995 (the "Record Date"). Each Right entitles the registered holder to purchase from the Company 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 (the "Purchase Price"), subject to adjustment. On April 20, 1995, each holder of an outstanding Share received one Right. As long as the Rights are attached to the Shares, the Company will issue one Right for each Share issued between the Record Date and the Distribution Date. Initially, Rights are attached to all Share Certificates outstanding and no separate Right Certificates are distributed. A "Distribution Date" for the Rights will occur upon the earlier of (i) the tenth business day following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding Shares (the "Stock Acquisition Date") or (ii) the tenth business day after the date of the commencement of a tender offer or exchange offer if upon consummation thereof the person or group proposing such offer would be the beneficial owner of 20% or more of the outstanding Shares. Until the Distribution Date, the Rights will be evidenced by Share Certificates and will be transferred with and only with Share Certificates and new Share Certificates issued upon transfer or new issuances of Shares after May 22, 1995 will contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any Share Certificate will also constitute the transfer of the Rights associated with the Shares represented by such Share Certificate. 31 The Rights are not exercisable until the Distribution Date (or the expiration of the Company's redemption rights, as described below) and will expire at the close of business on May 22, 2005, unless earlier redeemed by the Company as described below. As soon as practicable following the Distribution Date, separate Rights Certificates will be mailed to holders of record of the Shares as of the close of business on the Distribution Date. After the Distribution Date, such separate Rights Certificates alone will evidence the Rights. Except as otherwise determined by the Board of Directors of the Company, only Shares issued prior to the Distribution Date will be issued with Rights. In the event that, at any time following the Distribution Date, (i) the Company is the surviving corporation in a merger or other business combination with an Acquiring Person or an associate or affiliate of an Acquiring Person in which the Shares are 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 (except pursuant to a tender offer or exchange offer for all outstanding Shares determined by a majority of the Continuing Directors to be fair to shareholders and otherwise in the best interests of the Company and its shareholders) 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) certain transactions take place between an Acquiring Person or an affiliate of an Acquiring Person and the Company, each holder of a Right will thereafter have the right to receive, upon exercise, Shares (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the exercise price of the Right. 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 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. In any case, Rights are not exercisable following the occurrence of any of the events set forth above until such time as the Rights are no longer redeemable by the Company as set forth below. In the event that, at any time following the Stock Acquisition Date, (i) the Company is acquired in a merger or other business combination transaction in which the Company is not the surviving corporation, (ii) the Company is the surviving corporation in a merger or consolidation with another person and all or part of its Shares are changed or exchanged (unless, in the case of clause (i) or (ii), such merger or other business combination is with a person or subsidiary thereof who consummated a tender offer or exchange offer approved by the Continuing Directors as set forth in the preceding paragraph), or (iii) 50% or more of the Company'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 Purchase Price payable and the number of Units or other securities or property issuable upon exercise of 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 or the Shares, (ii) upon the grant to holders of the Preferred Stock of 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 dividends payable in Preferred Stock) or cash (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above). With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in the Purchase Price. No fractional Units will be issued 32 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 the tenth day following the Stock Acquisition Date (as such period may be extended by the Company), the Company may redeem the Rights in whole, but not in part, at a price (the "Redemption Price") of $.01 per Right, except that under the purported terms of the "dead-hand pill" restrictions such authorization to redeem will require the concurrence of a majority of the Continuing Directors (as defined below) when (i) such authorization occurs on or after the time a person becomes an Acquiring Person, or (ii) such authorization occurs on or after the date of a change (resulting from a proxy or consent solicitation) in a majority of the directors in office at the commencement of such solicitation if any person who is a participant in such solicitation has stated (or, if upon the commencement of such solicitation, a majority of the Board of Directors of the Company has determined 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 this 10-day period 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 in a transaction or series of transactions not involving the Company and there are no other Acquiring Persons. In addition, from the expiration of the above 10-day period until the occurrence of a Triggering Event, the Company may redeem the Rights provided that such redemption is incidental to a merger, consolidation or other business combination involving the Company or a reorganization or restructuring of the Company which is approved by a majority of the Continuing Directors. Immediately upon the action of the Board of Directors of the Company ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. Rights will not be exercisable prior to the expiration of the Company's right of redemption described above. Until a Right is exercised, it will not entitle the holder thereof to any rights as a shareholder of the Company, including without limitation the right to vote or to receive dividends. While the distribution of the Rights will not be taxable to shareholders or to the Company, shareholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Shares (or other consideration) of the Company or for common stock of the acquiring company as set forth above. Under the purported provisions of the "dead-hand pill" restrictions, the Rights Agreement may be amended only 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 the Company, including the holders of the Rights. Under the Rights Agreement, as a result of the commencement of the Offer, the Distribution Date will be as early as February 10, 1997, unless prior to such date the Company's Board of Directors redeems the Rights or takes action to delay the Distribution Date. The Purchaser believes that, unless the Rights are redeemed or amended, or a majority of the current Board of Directors approves the Offer for the purposes of the determination described above, the consummation of the Offer likely would cause the Purchaser to become an Acquiring Person and constitute a Triggering Event and, as a result, could 33 permit significant dilution to the Purchaser's and the Parent's interest in the Company, rendering the Offer and the Merger economically unattractive for the Purchaser and the Parent. The Rights Condition requires that the Purchaser shall be satisfied, in its sole discretion, that the Rights shall have been redeemed by the Company's Board of Directors or that the Rights have been invalidated or are otherwise inapplicable to, or the dilutive provisions thereof will not be triggered by, the Offer or the Merger. The Purchaser believes that under the circumstances of the Offer and under applicable law, the Board of Directors of the Company is obligated by its fiduciary responsibilities to redeem the Rights or take such other action to invalidate the Rights or otherwise render the Rights inapplicable to, or prevent the dilutive provisions thereof from being triggered by, the Offer or the Merger, in each case in order to permit the Offer and the Merger to be consummated, including by making the determination that the Offer is fair to the shareholders and in the best interests of the Company and its shareholders. The Purchaser is hereby requesting that the Company's Board of Directors redeem the Rights or take such other action described above. However, there can be no assurance that the Board of Directors will take any such action. If the current Board of Directors does not so redeem the Rights or take such other action, any action by the Parent to change the composition of the Board of Directors would be intended, among other things, to result in the reconstituted Board taking action to effect such redemption or take such other actions. However, such a reconstituted Board of Directors may, under the purported terms of the "dead-hand pill" restrictions described above, be powerless to effect such redemption or take such other actions, notwithstanding the mandate the Company's shareholders will have expressed in electing the Parent's nominees to the Board of Directors, unless one or more Continuing Directors remain on the Board of Directors and a majority of them approve the redemption or such other actions. The Parent and the Purchaser believe that the "dead-hand pill" restrictions violate Georgia and federal law and are commencing the Defensive Tactics Litigation seeking, among other things, (i) an order declaring the "dead-hand pill" restrictions of the Rights Agreement illegal and unenforceable and compelling the Company's Board of Directors to amend the Rights Agreement to remove such provisions and (ii) an order compelling the Company's Board of Directors to fulfill their fiduciary duties by redeeming the Rights or amending the Rights Agreement to make the Rights inapplicable to the Offer and the Merger. UNLESS THE RIGHTS ARE REDEEMED, HOLDERS OF SHARES WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF SUCH SHARE. IF SEPARATE CERTIFICATES FOR THE RIGHTS ARE NOT ISSUED, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS. THE OFFER IS CONDITIONED UPON THE RIGHTS CONDITION BEING SATISFIED. GEORGIA BUSINESS COMBINATION STATUTE. In general, the Georgia Business Combination Statute prohibits any person who is an Interested Shareholder, including a beneficial owner of 10% or more of the voting power of the outstanding voting shares of a corporation, from engaging in certain business combinations (including the Merger) with such corporation for a period of five years following the date on which such person became an Interested Shareholder, unless (i) either the transaction by which such person became an Interested Shareholder or the business combination is approved by the board of directors of the corporation prior to the date on which such person became an Interested Shareholder, (ii) upon consummation of the transaction which resulted in such person becoming an Interested Shareholder, such person owned at least 90% of the Eligible Voting Stock outstanding at the time the transaction commenced, which excludes shares owned by (a) persons who are officers or directors of the corporation and their affiliates or associates, (b) subsidiaries of the corporation and (c) any employee stock plan under which employee participants do not have the right to determine confidentially the extent to which shares held subject to the plan will be tendered in a tender or exchange offer, or (iii) subsequent to the date on which such person became an Interested Shareholder, the Interested Shareholder becomes the owner of 90% of the outstanding voting stock of the corporation and the business combination is approved by the board of directors of the corporation and authorized by the 34 affirmative vote, at an annual or special meeting of shareholders, of at least a majority of the outstanding voting stock not beneficially owned by the Interested Shareholder or any of its affiliates or associates or by persons who are directors or officers of the Interested Shareholder. The requirements of the Georgia Business Combination Statute do not apply unless the corporation adopts a by-law expressly electing to be governed thereby. According to publicly available information, the Company's By-Laws have included such a provision at least since December 31, 1995. Accordingly, the requirements of the Georgia Business Combination Statute apply to the Company. The Purchaser hereby requests that the Company's Board of Directors approve the Offer and the Merger for all purposes, including the Georgia Business Combination Statute. Under the circumstances of the Offer and under applicable law, the Purchaser believes that the Board of Directors of the Company is obligated by its fiduciary responsibilities to approve, pursuant to the Georgia Business Combination Statute, the acquisition of Shares pursuant to the Offer and the Merger. However, there can be no assurance that the Board of Directors will do so. The Parent and the Purchaser are seeking an order in the Defensive Tactics Litigation to compel the Company's Board of Directors to approve the Offer and the Merger for purposes of the Georgia Business Combination Statute. If the Board does not so approve the Offer and the Merger but upon consummation of the Offer the Purchaser and the Parent together own at least 90% of the Eligible Voting Stock of the Company, then the restrictions on business combinations contained in the Georgia Business Combination Statute would not be applicable. Any action by the Purchaser and the Parent to change the composition of the Board of Directors would be intended, among other things, to result in the reconstituted Board taking action to approve the Offer and the Merger in order to satisfy the Georgia Business Combination Statute Condition. THE OFFER IS CONDITIONED UPON THE GEORGIA BUSINESS COMBINATION STATUTE CONDITION BEING SATISFIED. GEORGIA FAIR PRICE STATUTE. In 1985, the Georgia legislature adopted a series of provisions which were designed to protect shareholders of Georgia corporations against the inequities of certain tactics, such as so-called "two-tiered" transactions in which lesser consideration is paid in the second-step merger than in the first-step tender offer, which result in minority shareholders who do not participate in the initial tender offer receiving a lower price or less desirable form of consideration than tendering shareholders. In general, except as provided below, the Georgia Fair Price Statute requires that, in addition to any vote otherwise required by law or the articles of incorporation of a corporation, certain business combinations (including business combinations such as the Merger) between an Interested Shareholder (as defined below), including a beneficial owner of 10% or more of the voting power of the outstanding voting shares of a corporation, and a Georgia corporation be either (i) unanimously approved by the continuing directors, provided that the continuing directors constitute at least three members of the board of directors at the time of such approval, or (ii) recommended by at least two-thirds of the continuing directors and approved by a majority of the votes entitled to be cast by holders of voting shares, other than voting shares beneficially owned by the Interested Shareholder who is, or whose affiliate is, a party to the business combination. However, the board and shareholder approvals required by the above-described provisions do not apply to a business combination if each of the following conditions is met: (i) the aggregate amount of cash, and the fair market value as of five days before the consummation of the business combination of consideration other than cash, to be received per share by holders of any class of common shares or any class or series of preferred shares in such business combination is at least equal to the highest of the following: (a) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Shareholder for any shares of the same class or series acquired by it (1) within the two-year period immediately prior to the Announcement Date 35 of the proposal of the business combination, or (2) in the transaction in which it became an Interested Shareholder, whichever is higher; (b) the fair market value (defined as the highest closing sale price during the 30-day period including and immediately preceding the date in question) per share of such class or series on the Announcement Date or on the date on which the Interested Shareholder became an Interested Shareholder, whichever fair market value is higher; or (c) in the case of shares other than common shares, the highest preferential amount per share to which the holders of shares of such class or series are entitled in the event of any voluntary liquidation, dissolution, or winding up of the corporation; provided that this clause only applies if the Interested Shareholder has acquired shares of such class or series within the two-year period immediately prior to the Announcement Date; (ii) the consideration to be received by holders of any class or series of outstanding shares shall be in cash or in the same form as the Interested Shareholder has previously paid for shares of the same class or series, and if the Interested Shareholder has paid for shares of any class or series of shares with varying forms of consideration, the form of consideration for such class or series of shares shall be either cash or the form used to acquire the largest number of shares of such class or series previously acquired by it; (iii) after such Interested Shareholder has become an Interested Shareholder and prior to the consummation of such business combination, unless approved by a majority of the continuing directors and with other specified exceptions, there shall have been (a) no failure to declare and pay at the regular rate therefor any full periodic dividends on any outstanding preferred shares; (b) no reduction in the annual rate of dividends paid on common shares, except as necessary to reflect any subdivision of the shares; (c) an increase in such annual rate of dividends as is necessary to reflect any reclassification, recapitalization, reorganization, or any similar transaction which has the effect of reducing the number of outstanding shares; and (d) no increase in the interested shareholder's percentage ownership of any class or series of shares of the corporation by more than 1% in any twelve-month period; and (iv) after such Interested Shareholder has become an Interested Shareholder, such Interested Shareholder shall not have received the benefit, directly or indirectly (except proportionately as a shareholder), of any loans, advances, guarantees, pledges, or other financial assistance or any tax credits or other tax advantages provided by the corporation or any of its subsidiaries, whether in anticipation of or in connection with such business combination or otherwise. In addition, the board and shareholder approval requirements of the Georgia Fair Price Statute would not apply to any business combination with an Interested Shareholder or its affiliates if, during the three-year period immediately preceding the consummation of the business combination, the Interested Shareholder has not, during such period (i) ceased to be an Interested Shareholder or (ii) increased its percentage ownership of any class or series of common or preferred shares by more than 1% in any twelve-month period. The requirements of the Georgia Fair Price Statute do not apply unless the corporation adopts a by-law expressly electing to be governed thereby. According to publicly available information, on January 23, 1997, after the Parent had made public its interest in an acquisition of the Company, the Company's Board of Directors amended the By-Laws to include such a provision. Accordingly, the requirements of the Georgia Fair Price Statute now purport to apply to the Company. The Offer Price is higher than both (i) the highest per share price paid by the Parent and the Purchaser for any Shares acquired by them within the two-year period immediately prior to the relevant Announcement Date, January 10, 1997, the date on which the Parent first publicly announced its 36 proposal of an acquisition of the Company in a merger transaction, and (ii) the fair market value of the Shares as of such Announcement Date. The Georgia Fair Price Statute is designed to protect shareholders against the inequities of so-called "two-tiered" transactions in which lesser consideration is paid in the second-step merger than in the first- step offer. Because holders of Shares are to receive the same cash consideration per Share in the Merger as that paid by the Purchaser pursuant to the Offer, the Parent and the Purchaser believe that the Offer and the Merger are in accord with the purpose and intent of the Georgia Fair Price Statute. Moreover, if the highest closing stock price for the Shares during the 30-day period including and immediately preceding the date of consummation of the Offer is not in excess of the Offer Price and the other procedural requirements of the Merger Price Provisions are met, the terms of the Merger Price Provisions would not require a higher price to be paid in the Merger than in the Offer, and the Georgia Fair Price Statute Condition would be satisfied, without the need for any action or approval of the Board of the Directors or the shareholders of the Company. However, the Parent and the Purchaser are unable to predict whether the closing stock price for the Shares on any day in the 30-day period including and immediately preceding the date on which the Offer is consummated will be in excess of the Offer Price, whether as a result of anomalous or manipulative trading activity or otherwise. If the Merger Price Provisions are not met, the terms of the Georgia Fair Price Statute would purport to prohibit the Merger from occuring after consummation of the Offer unless the Merger is either (i) unanimously approved by the continuing directors, and such continuing directors constitute at least three members of the Company's Board of Directors at the time of such approval, or (ii) recommended by at least two-thirds of the continuing directors and approved by holders of a majority of Shares other than voting shares beneficially owned by the Purchaser or its affiliates. The Purchaser is hereby requesting that the Board of Directors unanimously approve the Offer and the Merger for purposes of the Georgia Fair Price Statute. Under the circumstances of the Offer and under applicable law, the Purchaser believes that the Board of Directors of the Company is obligated by its fiduciary responsibilities to unanimously approve, pursuant to the Georgia Fair Price Statute, the acquisition of Shares pursuant to the Offer and the Merger. However, there can be no assurance that the Board of Directors will do so. If the current Board of Directors does not so approve the Offer and the Merger, any action by the Parent to change the composition of the Board of Directors would be intended, among other things, to result in the reconstituted Board taking unanimous action to approve the Offer and the Merger in order to satisfy the Georgia Fair Price Statute Condition. To the extent that the Georgia Fair Price Statute purports to require approval of continuing directors or minority shareholders in order for an all-cash, non-coercive tender offer and merger, such as the Offer and the Merger, to be effected at the same price, the Parent and the Purchaser believe that the Georgia Fair Price Statute is invalid and violates the Georgia and United States Constitutions. The Defensive Tactics Litigation seeks, among other things, (i) an order declaring the Georgia Fair Price Statute illegal and unenforceable to such extent and (ii) an order compelling the Company's Board of Directors to approve the Offer and the Merger for purposes of the Georgia Fair Price Statute. THE OFFER IS CONDITIONED UPON THE GEORGIA FAIR PRICE STATUTE CONDITION BEING SATISFIED. SHORT-FORM MERGER. Section 14-2-1104 of the GBCC provides that if a corporation owns at least 90% of the outstanding shares of each class of another corporation, the corporation holding such stock may merge such other corporation into itself without any action or vote on the part of the board of directors or the shareholders of such other corporation (a "short-form merger"). If, following consummation of the Offer, the Purchaser owns 90% or more of the outstanding Shares, the Purchaser would have the power to consummate the Merger without the approval of the Board of Directors or the vote of other shareholders of the Company, subject to compliance with the provisions of Section 14-2-1104 of the GBCC. The Parent presently intends to merge the Purchaser into the Company, a transaction which could not be effected through a short-form merger. If, however the Parent determines instead to cause 37 the Company to be merged into the Purchaser and the Purchaser owns 90% or more of the outstanding Shares following consummation of the Offer, a short-form merger could be employed or, if the Purchaser does not own 90% of the outstanding Shares following consummation of the Offer, it may seek to purchase additional shares in the open market or otherwise in order to reach the 90% threshold and employ a short-form merger. The per share consideration paid for any Shares so acquired may be greater or less than that paid in the Offer. APPRAISAL RIGHTS IN CONNECTION WITH THE OFFER. Shareholders do not have appraisal rights as a result of the Offer. However, if the Merger is consummated, shareholders of the Company who did not vote in favor of the Merger have certain rights under Georgia law to dissent and demand payment of the fair value of their Shares. Such rights, if a dissenting shareholder complied with the applicable statutory procedures, could lead to a judicial determination of the fair value required to be paid to such dissenting holder of his Shares. The Purchaser cannot make any representation as to the outcome of the appraisal of fair value as determined by the Georgia courts, and shareholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or equivalent to, the consideration per Share provided in the Offer. In an appraisal proceeding, however, the Purchaser may argue that for purposes of such proceeding the fair value of the Shares is less than the consideration per Share provided in the Offer. Under the GBCC, dissenting shareholders who comply with the applicable statutory procedures will be entitled to fair value for their Shares (i.e., the value of the Shares immediately before the consummation of the Merger, excluding any appreciation or depreciation in anticipation of the Merger) and to receive payment of such fair value in cash. If a shareholder demand to the Company for payment of such fair value remains unsettled, the Company is required within 60 days of receiving the demand to commence a proceeding for judicial determination of the fair value of the Shares and interest accrued since the consummation of the Merger. If the Company does not commence the proceeding within the 60-day period, it shall pay each such dissenting shareholder the amount demanded. In Grace Bros., Ltd. v. Farley Industries, Inc., the Georgia Supreme Court stated that any facts which shed light on the value of dissenting shareholders' interests are to be considered in arriving at "fair value" under the statutory appraisal remedy. Shareholders should recognize that the value so determined could be higher or lower than the price per Share paid pursuant to the Offer or the consideration per Share to be paid in the Merger or other similar business combination. A shareholder entitled to dissent and obtain payment for his Shares under the GBCC may not challenge the Merger except for failure to comply with the procedural requirements of the GBCC or the Charter or By-Laws or in cases of fraud or deception. Pursuant to Section 14-2-1302(b) of the GBCC, statutory appraisal rights are the exclusive remedy for dissenting shareholders. THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING SHAREHOLDERS DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY SHAREHOLDERS DESIRING TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE GBCC. The foregoing description of the GBCC, including the descriptions of the Georgia Business Combination Statute and the Georgia Fair Price Statute, is not necessarily complete and is qualified in its entirety by reference to the GBCC. RULE 13E-3. The Commission has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions and which may under certain circumstances be applicable to the Merger following the purchase of Shares pursuant to the Offer in which the Purchaser seeks to acquire any remaining Shares. Rule 13e-3 should not be applicable to the Merger if the Merger is consummated within one year after the expiration or termination of the Offer and the price paid in the Merger is not less than the per Share price paid pursuant to the Offer. However, in the event that the Purchaser is deemed to have acquired control of the Company pursuant to the Offer and if the Merger is consummated more than one year after completion of the Offer or an alternative acquisition transaction is effected whereby 38 shareholders of the Company receive consideration less than that paid pursuant to the Offer, in either case at a time when the Shares are still registered under the Exchange Act, the Purchaser may be required to comply with Rule 13e-3 under the Exchange Act. If applicable, Rule 13e-3 would require, among other things, that certain financial information concerning the Company and certain information relating to the fairness of the Merger or such alternative transaction and the consideration offered to minority shareholders in the Merger or such alternative transaction, be filed with the Commission and disclosed to shareholders prior to consummation of the Merger or such alternative transaction. The purchase of a substantial number of Shares pursuant to the Offer may result in the Company being able to terminate its Exchange Act registration. See Section 13. If such registration were terminated, Rule 13e-3 would be inapplicable to any such future Merger or such alternative transaction. OTHER. The timing and details of the Merger will depend on a variety of factors and legal requirements, the action of the Company's Board of Directors, the number of Shares acquired by the Purchaser pursuant to the Offer and whether the Minimum Condition, the Rights Condition, the Georgia Business Combination Statute Condition and the Georgia Fair Price Statute Condition are satisfied or waived. Although the Purchaser has proposed the Merger to the Company and seeks to have the Company consummate the Merger as soon as practicable after consummation of the Offer, the Purchaser can give no assurance that the Merger will be consummated or as to the timing of the Merger if it is consummated. Although the Purchaser has proposed the Merger on the terms described above, it is possible that as a result of delays in the Purchaser's ability to effect the Merger, information hereafter obtained by the Purchaser, changes in general economic or market conditions or in the business, operations or financial condition or prospects of the Company, any of the Minimum Condition, the Rights Condition, the Georgia Business Combination Statute Condition and/or the Georgia Fair Price Statute Condition not being satisfied or any other currently unforeseen factors, the Merger may not be so proposed, may be delayed or abandoned or may be proposed on different terms. Although it has no current intention to do so, the Purchaser reserves the right to propose a merger on terms other than those described above and the right to withdraw any merger proposal. The Purchaser reserves the right to purchase, following consummation or termination of the Offer, additional Shares or Rights in the open market, in privately negotiated transactions, in another tender offer or exchange offer or otherwise. In addition, in the event that the Purchaser decides not to propose the Merger, to propose a Merger on terms other than those described above or to withdraw any Merger previously proposed, the Purchaser will evaluate its other alternatives. Such alternatives could include purchasing additional Shares or Rights in the open market, in privately negotiated transactions, in another tender offer or exchange offer or otherwise, or taking no further action to acquire additional Shares or Rights. Any additional purchases of Shares or Rights could be at a price greater or less than the price to be paid for Shares and Rights in the Offer and could be for cash or other consideration. Alternatively, the Purchaser and the Parent may sell or otherwise dispose of any or all Shares or Rights acquired pursuant to the Offer or otherwise. Such transactions may be effected on terms and at prices then determined by the Purchaser and the Parent, which may vary from the price paid for Shares and Rights in the Offer. PLANS FOR THE COMPANY. Based upon publicly available information, the Parent believes that significant operating and sales synergies may be achievable by the combined entity, which could include both increases in sales and margins and reduced expenses. If and to the extent that the Purchaser acquires control of the Company or otherwise obtains access to the books and records of the Company, the Parent and the Purchaser intend to conduct a detailed review of the Company and its assets, corporate structure, dividend policy, capitalization, operations, properties, policies, management and personnel and consider and determine what, if any, changes would be desirable in light of the circumstances which then exist. Such strategies could include, among other things, changes in the Company's business, corporate structure, Charter, By-Laws, capitalization, management or dividend policy. As the Parent has previously stated, in a negotiated transaction the Parent is prepared to discuss the proper roles for the Parent's and the Company's managers and employees in a combined company. 39 Except as described in this Offer to Purchase, none of the Purchaser, the Parent nor, to the best knowledge of the Purchaser and the Parent, any of the persons listed on Schedule I have any present plans or proposals that would relate to or result in an extraordinary corporate transaction such as a merger, reorganization or liquidation involving the Company or any of its subsidiaries or a sale or other transfer of a material amount of assets of the Company or any of its subsidiaries, any material change in the capitalization or dividend policy of the Company or any other material change in the Company's corporate structure or business or the composition of its Board of Directors or management. 12. DIVIDENDS AND DISTRIBUTIONS. If on or after October 1, 1996 (except to the extent publicly disclosed by the Company with specificity in documents filed with the Commission prior to January 2, 1997) and prior to the termination of the Offer, the Company shall have (i) split, combined or otherwise changed the Shares or its capitalization, or disclosed that it has taken any such action, (ii) acquired or otherwise caused a reduction in the number of outstanding Shares or other securities or (iii) issued or sold additional Shares (except for the issuance of up to approximately 1,874,000 Shares assumed to be reserved for issuance on or prior to December 31, 1995 pursuant to the exercise of then outstanding employee stock options, in accordance with their terms as publicly disclosed prior to January 2, 1997), shares of any other class of capital stock, other voting securities or any securities convertible into, or rights, warrants or options, conditional or otherwise, to acquire, any of the foregoing, then, without prejudice to the Purchaser's rights under Section 14, the Purchaser may make such adjustments to the purchase price and other terms of the Offer as it deems appropriate. If on or after October 1, 1996 (except to the extent publicly disclosed by the Company with specificity in documents filed with the Commission prior to January 2, 1997) and prior to the termination of the Offer the Company shall have declared or paid any cash or stock dividend or other distribution on the Shares, or issued with respect to the Shares any additional Shares, shares of any other class of capital stock, other voting securities or any securities convertible into, or rights, warrants or options, conditional or otherwise, to acquire, any of the foregoing, payable or distributable to shareholders of record on a date prior to the transfer to the name of the Purchaser or the nominee or transferee of the Purchaser on the Company's stock transfer records of such Shares that are purchased pursuant to the Offer (except that if the Rights are redeemed by the Board of Directors in accordance with the terms of the Rights Agreement, tendering shareholders who are holders of record as of the applicable record date will be entitled to receive and retain the redemption price of $.01 per Right in accordance with the Rights Agreement), then, without prejudice to the Purchaser's rights under Section 14, (i) the purchase price payable per Share by the Purchaser pursuant to the Offer will be reduced to the extent any such dividend or distribution is payable in cash and (ii) any non-cash dividend, distribution or issuance received and held by a tendering shareholder shall (x) be required to be promptly remitted and transferred by the tendering shareholder to the Depositary for the account of the Purchaser, accompanied by appropriate documentation of transfer, or (y) at the direction of the Purchaser, be exercised for the benefit of the Purchaser, in which case the proceeds of such exercise will promptly be remitted to the Purchaser. Pending such remittance or appropriate assurance thereof, the Purchaser will, subject to applicable law, be entitled to all rights and privileges as owner of any such non-cash dividend, distribution or right and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Purchaser in its sole discretion. 13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NASDAQ LISTING AND EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to the Offer will likely reduce the number of Shares that might otherwise trade publicly and will reduce the number of holders of Shares. This could adversely affect the liquidity and market value of the remaining Shares held by the public. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the requirements of the NASD for continued inclusion in the Nasdaq National Market, which require, among other things, that an issuer have at least 200,000 publicly held shares, held by at least 300 shareholders, with a market value of at least $1 million and have net tangible assets of at least $1 million, $2 million or $4 million, 40 depending on profitability levels during the issuer's four most recent fiscal years. If these and certain other standards are not met, the Shares might nevertheless continue to be included in the NASD's Nasdaq Stock Market (the "Nasdaq Stock Market") with quotations published in the Nasdaq "additional list" or in one of the "local lists", but if the number of holders of the Shares were to fall below 300, or if the number of publicly held Shares were to fall below 200,000 or there were not at least two registered and active market makers for the Shares, the NASD's rules provide that the Shares would no longer be "qualified" for Nasdaq Stock Market reporting and the Nasdaq Stock Market would cease to provide any quotations. Shares held directly or indirectly by directors, officers or beneficial owners of more than 10% of the Shares are not considered as being publicly held for this purpose. According to the 1995 10-K, as of March 15, 1996 there were 2,188 holders of record of Shares. If, as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet the requirements of the NASD for continued inclusion in the Nasdaq National Market or in any other tier of the Nasdaq Stock Market and the Shares are no longer included in the Nasdaq National Market or in any other tier of the Nasdaq Stock Market, as the case may be, the market for Shares could be adversely affected. In the event that the Shares no longer meet the requirements of the NASD for continued inclusion in any tier of the Nasdaq Stock Market, it is possible that the Shares would continue to trade in the over-the-counter market and that price quotations would be reported by other sources. The extent of the public market for the Shares and the availability of such quotations would, however, depend upon the number of holders of Shares remaining, at such time, the interest in maintaining a market in Shares on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act, as described below, and other factors. The Shares are currently "margin securities" under the rules of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such Shares for the purpose of buying, carrying, or trading in securities ("purpose loans"). Depending upon factors similar to those described above with respect to stock exchange listing and market quotations, the Shares might no longer constitute "margin securities" for the purposes of the Federal Reserve Board's margin regulations and therefore could no longer be used as collateral for purpose loans made by brokers. The Shares are currently registered under the Exchange Act. The purchase of Shares pursuant to the Offer may result in the Shares becoming eligible for deregistration under the Exchange Act. Registration of the Shares may be terminated upon application of the Company to the Commission if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders. The termination of the registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to holders of the Shares and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in connection with shareholders' meetings and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Shares. Furthermore, "affiliates" of the Company and persons holding "restricted securities" of the Company may be deprived of the ability to dispose of the securities pursuant to Rule 144 under the Securities Act of 1933. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or eligible for continued inclusion in any tier of the Nasdaq Stock Market. The Purchaser intends to seek to cause the Company to terminate the registration of the Shares as soon after the consummation of the Offer or Merger as the requirements for termination of registration are met. 14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer, the Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations 41 of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for any Shares or Rights tendered pursuant to the Offer, and may postpone the acceptance for payment or, subject to the restriction referred to above, payment for any Shares or Rights tendered pursuant to the Offer, and may amend or terminate the Offer (whether or not any Shares have theretofore been purchased or paid for) if, in the sole judgment of the Purchaser, the Minimum Condition, the Rights Condition, the Georgia Business Combination Statute Condition or the Georgia Fair Price Statute Condition shall not have been satisfied or if, at any time on or after October 1, 1996 and prior to the acceptance for payment of or payment for Shares, any one or more of the events listed below shall have occurred or shall be determined by the Parent or the Purchaser to have occurred (except for any such events occurring between September 30, 1996 and January 2, 1997 which shall have been publicly disclosed prior to January 2, 1997): (a) there shall have been threatened, instituted or pending any action, proceeding, claim or application by or before any federal, state, local, provincial or other government or governmental regulatory or administrative authority or agency or court or tribunal, domestic, foreign or supranational (each, a "Governmental Entity"), that (i) challenges or seeks to make illegal, to delay or otherwise directly or indirectly to restrain or prohibit, or which is likely to impose, in the sole judgment of the Purchaser, voting, procedural, price or other requirements in addition to those required by the provisions of the GBCC described in Section 11 and federal securities law (each as in effect on the date hereof) in connection with the acquisition of Shares by the Purchaser or any of its affiliates, the making of the Offer, the acceptance for payment of or payment for Shares by the Purchaser or any of its affiliates or the consummation of the Merger or any other business combination involving the Company or the performance of any of the contracts or other arrangements entered into by the Purchaser or any of its affiliates in connection with the acquisition of the Company, seeking to obtain any material damages as a result thereof or otherwise directly or indirectly relating to the Offer or the Merger or such other business combination, (ii) seeks to restrain, prohibit or limit the exercise of full rights of ownership or operation by the Purchaser or any of its affiliates of all or any portion of the business or assets of the Company or any of its subsidiaries or the Purchaser or any of its affiliates or to compel the Purchaser or any of its affiliates to dispose of or to hold separately all or any portion of the business or assets of the Company or any of its subsidiaries or the Purchaser or any of its affiliates, or seeks to impose any limitation on the ability of the Purchaser or any of its affiliates to conduct such business or own such assets, (iii) seeks to impose or confirm limitations on the ability of the Purchaser or any of its affiliates effectively to acquire or hold or to exercise full rights of ownership of Shares, including without limitation the right to vote the Shares acquired or owned by the Parent, the Purchaser or any of its affiliates on all matters properly presented to the shareholders of the Company, or the right to vote any shares of capital stock of any subsidiary directly or indirectly owned by the Company, (iv) seeks to require divestiture by the Parent or the Purchaser or any of its affiliates of any Shares, (v) might result, in the sole judgment of the Purchaser, in a diminution of the benefits expected to be derived by the Purchaser or any of its affiliates as a result of the Offer or the Merger or any other business combination involving the Company, or in a diminution of the value of the Shares or the Company or any of its subsidiaries to the Purchaser or any of its affiliates, (vi) otherwise directly or indirectly relating to the Offer or which, in the sole judgment of the Purchaser, might otherwise materially adversely affect the Company or any of its subsidiaries or the value of the Shares, (vii) in the sole judgment of the Purchaser, materially adversely affects the business, properties, assets, liabilities, shareholders' equity, condition (financial or otherwise), capitalization, licenses, franchises, operations, results of operations or prospects of the Company or any of its subsidiaries, or (viii) challenges or adversely affects the financing of the Offer or the Merger or any other business combination involving the Company; or 42 (b) other than the application of the waiting periods under the HSR Act and the necessity for the approvals and other actions by any Governmental Entity described in Section 15, there shall have been proposed, sought, promulgated, enacted, entered, enforced or deemed applicable to the Offer, the Merger or any other business combination involving the Company by any Governmental Entity, any statute, rule, regulation, judgment, decree, decision, order or injunction that, in the sole judgment of the Purchaser, might, directly or indirectly, result in any of the consequences referred to in clauses (i) through (viii) of paragraph (a) above; or (c) any change (or any condition, event or development involving a prospective change) shall have occurred or been threatened in the business, properties, assets, liabilities, shareholders' equity, condition (financial or otherwise), capitalization, licenses, franchises, permits, operations, results of operations or prospects of the Company or any of its subsidiaries or affiliates (or the Purchaser shall have become aware thereof) or in general political, market, economic or financial conditions in the United States or abroad that, in the sole judgment of the Purchaser, is or may be materially adverse to the Company or any of its subsidiaries or affiliates, or the Purchaser shall have become aware of any facts that, in the sole judgment of the Purchaser, have or may have material adverse significance with respect to either the value of the Company or any of its subsidiaries or affiliates or the value of the Shares to the Parent or the Purchaser or any of its affiliates; or (d) there shall have occurred or been threatened (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the United States over-the-counter market, (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any material adverse change (or any existing or threatened condition, event or development involving a prospective material adverse change) in United States or any other currency exchange rates or a suspension of, or a limitation on, the markets therefor, (iv) any extraordinary or material adverse change in the financial markets or major stock exchange indices in the United States or abroad or in the market price of Shares, (v) the commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (vi) any limitation (whether or not mandatory) by any Governmental Entity or any other event that, in the sole judgment of the Purchaser, may have material adverse significance with respect to the extension of credit by banks or other lending institutions or the financing of the Offer or the Merger or any other business combination involving the Company or (vii) in the case of any of the situations described in clauses (i) through (vi) above existing at the time of the commencement of the Offer, a material acceleration or worsening thereof; or (e) a tender or exchange offer for some or all of the Shares shall have been publicly proposed to be made or shall have been made by another person (including the Company or any of its subsidiaries or affiliates), or it shall have been publicly disclosed or the Purchaser shall have otherwise deemed that (i) any person, entity (including the Company or any of its subsidiaries or affiliates) or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall have acquired or proposed to acquire beneficial ownership of more than 5% of any class or series of capital stock of the Company (including the Shares) through the acquisition of stock, the formation of a group or otherwise, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of more than 5% of any class or series of capital stock of the Company (including the Shares) other than acquisitions for bona fide arbitrage purposes only and other than as disclosed in a Schedule 13D or 13G on file with the Commission prior to January 2, 1997, (ii) any such person, entity or group which, prior to such date, had filed such a Schedule with the Commission, shall have acquired or proposed to acquire, through the acquisition of stock, the formation of a group or otherwise, beneficial ownership of additional shares of any class or series of capital stock of the Company (including the Shares) constituting 1% or more of any such class or series, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of shares of any class or series of capital stock of the 43 Company (including the Shares) constituting 1% or more of any such class or series, (iii) any person, entity or group shall have entered into a definitive agreement or an agreement in principle or made a proposal with respect to a tender or exchange offer for some or all the Shares or a merger, consolidation or other business combination with or involving the Company or any of its subsidiaries or affiliates or (iv) any person, entity or group shall have filed a Notification and Report Form under the HSR Act or made a public announcement reflecting an intent to acquire the Company or any of its subsidiaries or any assets or securities of the Company or any of its subsidiaries; or (f) the Company or any of its subsidiaries shall have, directly or indirectly, (i) split, combined or otherwise changed, or authorized or proposed the split, combination or other change of, the Shares or its capitalization, (ii) acquired or otherwise caused a reduction in the number of, or authorized or proposed the acquisition or other reduction in the number of, any outstanding Shares or other securities of the Company or any subsidiary thereof (other than as a redemption of the Rights in accordance with the terms of the Rights Agreement as publicly disclosed to be in effect on May 22, 1995), (iii) issued, distributed or sold, or authorized, proposed or announced the issuance, distribution or sale of, (A) any additional Shares, shares of any other class or series of capital stock, other voting securities, or any securities convertible into or exchangeable or exercisable for any of the foregoing, or options, rights or warrants, conditional or otherwise, to acquire any of the foregoing, except for the issuance of up to approximately 1,874,000 Shares assumed to be reserved for issuance prior to December 31, 1995 pursuant to the exercise of then outstanding employee stock options, in accordance with their terms or (B) any other securities or rights in respect of, in lieu of or in substitution or exchange for any shares of its capital stock, (iv) permitted the issuance or sale of any shares of any class of capital stock or other debt or equity securities of any subsidiary of the Company or any securities convertible into or exchangeable or exercisable for any of the foregoing, (v) declared, paid or proposed to declare or pay any dividend or other distribution, whether payable in cash, securities or other property, on, or in respect of, any Shares (other than a distribution of the Rights Certificates or a redemption of the Rights in accordance with the Rights Agreement as publicly disclosed to be in effect on May 22, 1995), (vi) altered or proposed to alter any material term of any outstanding security of the Company or any of its subsidiaries (including the Rights), (vii) issued, distributed or sold, or authorized or proposed the issuance, distribution or sale of, any debt securities or securities convertible into or exchangeable or exercisable for debt securities or any rights, warrants or options entitling the holder thereof to purchase or otherwise acquire any debt securities, or otherwise incurred, authorized or proposed the incurrence of, any debt other than in the ordinary course of business and consistent with past practice or any debt containing burdensome covenants, (viii) authorized, recommended, proposed, effected or announced its intention to engage in any merger (other than the Merger), consolidation, liquidation, dissolution, business combination, acquisition (including by way of exchange) of assets or securities, disposition (including by way of exchange) of assets or securities, joint venture, release or relinquishment of any material contract or other rights of the Company or any of its affiliates or any comparable event not in the ordinary course of business, (ix) authorized, recommended, proposed or announced its intent to enter into, or entered into, any agreement or arrangement with any person, entity or group that, in the sole judgment of the Purchaser, has or may have material adverse significance with respect to the value of the Company or any of its affiliates, or the value of the Shares to the Purchaser or any of its affiliates, (x) amended or proposed, adopted or authorized any amendment (other than those amendments to the By-Laws described in the Company's Current Report on Form 8-K filed on January 24,1997 with the Commission, any amendment which provides that the Rights are inapplicable to the Offer and the Merger or is otherwise proposed by the Parent or the Purchaser) to the Charter or the By-Laws or similar organizational documents of the Company or any of its subsidiaries or the Rights Agreement or the Purchaser shall have learned that the Company or any of its subsidiaries shall have proposed or adopted any such amendment that was not disclosed in 44 publicly available filings prior to January 2, 1997, (xi) entered into or amended any employment, severance or similar agreement, arrangement or plan with or for the benefit of any employee of the Company or any of its subsidiaries (other than in the ordinary course of business) or so as to provide for increased or accelerated benefits to employees as a result of or in connection with the making of the Offer, the acceptance for payment of or payment for Shares by the Purchaser or the consummation by the Purchaser or any of its affiliates of the Merger or any other business combination involving the Company, (xii) except as may be required by law, taken any action to terminate or amend any employee benefit plan (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended) of the Company or any of its affiliates, or the Purchaser shall have become aware of any such action which shall not have been disclosed in publicly available filings prior to January 2, 1997, (xiii) agreed in writing or otherwise to take any of the foregoing actions, or (xiv) otherwise acted in a manner not in the ordinary course of business consistent with past practice; or (g) the Purchaser shall become aware (i) that any material contractual right of the Company or any of its subsidiaries shall be impaired or otherwise adversely affected or that any material amount of indebtedness of the Company or any of its subsidiaries shall become accelerated or otherwise become due or become subject to acceleration prior to its stated due date, in each case with or without notice or the lapse of time or both, as a result of or in connection with the Offer or the consummation by the Purchaser or any of its affiliates of the Merger or any other business combination involving the Company, (ii) of any covenant, term or condition in any of the instruments or agreements of the Company or any of its subsidiaries that, in the sole judgment of the Purchaser, is or may be (whether considered alone or in the aggregate with other such covenants, terms or conditions) materially adverse to either the value of the Company or any of its subsidiaries (including without limitation any event of default that may occur as a result of or in connection with the Offer, the consummation by the Purchaser or any of its affiliates of the Merger or any other business combination involving the Company) or the value of the Shares to the Purchaser or any of its affiliates or the consummation by the Purchaser or any of its affiliates of the Merger or any other business combination involving the Company, or (iii) that any report, document, instrument, financial statement or schedule of the Company filed with the Commission contained, when filed, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; or (h) any waiting periods under the HSR Act applicable to the purchase of Shares pursuant to the Offer shall not have expired or been terminated, or any approval, permit, authorization or consent of any Governmental Entity (including those described or referred to in Section 15) which is required or believed to be appropriate shall not have been obtained on terms satisfactory to the Parent in its sole discretion; or (i) (i) the Purchaser or any of its affiliates shall have entered into a definitive agreement or announced an agreement in principle with respect to the Merger or any other business combination with the Company or any of its affiliates or the purchase of any material portion of the securities or assets of the Company or any of its subsidiaries, or (ii) the Purchaser or any of its affiliates and the Company shall have agreed that the Purchaser shall amend or terminate the Offer or postpone the payment for the Shares pursuant thereto; which, in the sole judgment of the Purchaser with respect to each and every matter referred to above and regardless of the circumstances (including any action or inaction by the Purchaser or any of its affiliates) giving rise to any such condition, makes it inadvisable to proceed with the Offer or with such acceptance for payment of or payment for Shares. 45 The foregoing conditions are for the sole benefit of the Purchaser and may be waived by the Purchaser in whole or in part at any time and from time to time in its sole discretion. Any determination by the Purchaser concerning the events described above shall be final and binding upon all parties including tendering shareholders. The failure by the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. A public announcement will be made of a material change in, or waiver of, such conditions, to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act, and the Offer will be extended in connection with any such change or waiver to the extent required by such rules. 15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. GENERAL. Except as set forth below, based upon its examination of publicly available filings by the Company with the Commission and other publicly available information concerning the Company, neither the Purchaser nor the Parent is aware of any licenses or other regulatory permits that appear to be material to the business of the Company and its subsidiaries, taken as a whole, that might be adversely affected by the Purchaser's acquisition of Shares (and the indirect acquisition of the stock of the Company's subsidiaries) as contemplated herein, or of any filings, approvals or other actions by or with any Governmental Entity that would be required prior to the acquisition of Shares (or the indirect acquisition of the stock of the Company's subsidiaries) by the Purchaser pursuant to the Offer as contemplated herein. Should any such approval or other action be required, it is the Purchaser's present intention to seek such approval or action. However, the Purchaser does not presently intend to delay the purchase of Shares tendered pursuant to the Offer pending the receipt of any such approval or the taking of any such action (subject to the Purchaser's right to delay or decline to purchase Shares if any of the conditions in Section 14 shall have occurred). There can be no assurance that any such approval or other action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to the business of the Company, the Parent or the Purchaser or that certain parts of the businesses of the Company, the Parent or the Purchaser might not have to be disposed of or held separate or other substantial conditions complied with in order to obtain such approval or other action or in the event that such approval was not obtained or such other action was not taken, any of which could cause the Purchaser to elect to terminate the Offer without the purchase of the Shares thereunder. The Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions, including conditions relating to the legal matters discussed in this Section 15. See Section 14. DEFENSIVE TACTICS LITIGATION. The Parent and the Purchaser are commencing the Defensive Tactics Litigation in the United States District Court for the Northern District of Georgia, which names the Company and certain of its directors as defendants and seeks declaratory and injunctive relief in connection with the Offer and the Merger. The Defensive Tactics Litigation asks the court either to invalidate or cause the Company and its Board of Directors to remove several defensive mechanisms embodied in the GBCC and the By-Laws which, absent the relief sought, could effectively prevent the Purchaser from consummating the Offer and the Merger. In particular, the Defensive Tactics Litigation seeks relief including: (i) invalidating and requiring the removal of the "dead-hand pill" restrictions on the grounds that they violate the director defendants' fiduciary duties and violate Georgia law, or, if not, that the Georgia law violates the United States Constitution; (ii) requiring the director defendants to fulfill their fiduciary duties by redeeming the Rights or amending the Rights Agreement to make them inapplicable to the Offer and Merger; (iii) compelling the director defendants to fulfill their fiduciary duties by approving the Offer and the Merger for the purposes of the Georgia Business Combination Statute and the Georgia Fair Price Statute; (iv) declaring that the application of the Georgia Fair Price Statute to the Offer and the Merger would violate the Georgia and United States Constitutions; (v) declaring that the Georgia laws referred to above, as implemented and applied together to the Offer and the Merger, would violate the United States Constitution; (vi) declaring that the Offer and Merger comply with all applicable laws, obligations and agreements; and (vii) preventing the Company, the director defendants and the 46 Company's other agents from taking any steps to interfere with the Offer and the Merger, including the commencement of judicial proceedings. STATE TAKEOVER LAWS. A number of states have adopted takeover laws and regulations which purport to varying degrees to be applicable to attempts to acquire securities of corporations which are incorporated, or which have substantial business operations in or having substantial economic effects, or which have substantial assets, security holders, principal executive offices or principal places of business, in such states. In 1982, the Supreme Court of the United States, in Edgar V. Mite Corp., invalidated on constitutional grounds the Illinois Business Takeovers Act, which as a matter of state securities law made takeovers of corporations meeting certain requirements more difficult. However, in 1987, in CTS Corp. V. Dynamics Corp. of America, the Supreme Court of the United States held that the State of Indiana could, as a matter of corporate law and in particular those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without the prior approval of the remaining stockholders, provided that such laws were applicable only under certain conditions. Subsequently, a number of Federal courts ruled that various state takeover statutes were unconstitutional insofar as they apply to corporations incorporated outside the state of enactment. The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted takeover laws. Other than the Georgia Business Combination Statute and the Georgia Fair Price Statute, the Purchaser does not know whether any of these laws will, by their terms, apply to the Offer and has not complied with any such laws. Should any person seek to apply any such state takeover law to the Offer, the Purchaser will take such action as then appears desirable, which may include challenging the validity or applicability of any such statute in appropriate court proceedings. In the event it is asserted that one or more such state takeover laws is applicable to the Offer, and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer, the Purchaser might be required to file certain information with, or receive approvals from, the relevant state authorities. In addition, if enjoined, the Purchaser might be unable to accept for payment any Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer. In such case, the Purchaser may not be obligated to accept for payment any Shares tendered. See Section 14. ANTITRUST. Under the HSR Act and the rules that have been promulgated thereunder by the FTC, certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division and the FTC and certain waiting period requirements have been satisfied. The acquisition of Shares pursuant to the Offer is subject to such requirements. See Section 2. The Parent intends to file as soon as practicable after the date hereof with the FTC and the Antitrust Division a Premerger Notification and Report Form in connection with the purchase of Shares pursuant to the Offer. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer may not be consummated until the expiration of a 15-calendar day waiting period following the filing by the Parent, unless such waiting period is extended by a request from the FTC or the Antitrust Division for additional information or documentary material prior to the expiration of the waiting period. If either the FTC or the Antitrust Division were to request additional information or documentary material from the Parent, the waiting period would expire at 11:59 p.m., New York City time, on the tenth calendar day after the date of substantial compliance by the Parent with such request. Thereafter, the waiting period could be extended only by court order. If the acquisition of Shares is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary material pursuant to the HSR Act, the Offer may, but need not, be extended and in any event the purchase of and payment for Shares will be deferred until ten days after the request is substantially complied with, unless the waiting period is sooner terminated by the FTC and the Antitrust Division. See Section 2. Only one extension of such waiting period pursuant to a request for additional information is authorized by the HSR Act and the rules promulgated thereunder, except by court order. Any such extension of the waiting 47 period will not give rise to any withdrawal rights not otherwise provided for by applicable law. See Section 4. Although the Company is required to file certain information and documentary material with the Antitrust Division and the FTC in connection with the Offer, neither the Company's failure to make such filings nor a request from the Antitrust Division or the FTC for additional information or documentary material made to the Company will extend the waiting period. The FTC and the Antitrust Division frequently scrutinize the legality under the antitrust laws of transactions such as the proposed acquisition of Shares by the Purchaser pursuant to the Offer. At any time before or after the purchase by the Purchaser of Shares pursuant to the Offer, either of the FTC and the Antitrust Division could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or seeking the divestiture of Shares purchased by the Purchaser or the divestiture of assets of the Parent, its subsidiaries or the Company. Private parties and state attorneys general may also bring legal action under federal or state antitrust laws under certain circumstances. Based solely upon an examination of publicly available information relating to the businesses in which the Company is engaged, the Parent and the Purchaser believe that the acquisition of Shares by the Purchaser will not violate the antitrust laws. Nevertheless, there can be no assurance that a challenge to the Offer or other acquisition of Shares by the Purchaser on antitrust grounds will not be made or, if such a challenge is made, what the outcome will be. See Section 14 for certain conditions to the Offer, including conditions with respect to litigation and certain government actions. MARGIN CREDIT REGULATIONS. Federal Reserve Board Regulations G, T, U and X (the "Margin Credit Regulations") restrict the extension or maintenance of credit for the purpose of buying or carrying margin stock, including the Shares, if the credit is secured directly or indirectly thereby. Such secured credit may not be extended or maintained in an amount that exceeds the maximum loan value of the margin stock. Under the Margin Credit Regulations, the Shares are presently margin stock and the maximum loan value thereof is generally 50% of their current market value. The definition of "indirectly secured" contained in the Margin Credit Regulations provides that the term does not include an arrangement with a customer if the lender in good faith has not relied upon margin stock as collateral in extending or maintaining the particular credit. 16. FEES AND EXPENSES. Salomon Brothers Inc ("Salomon Brothers") is acting as Dealer Manager in connection with the Offer and serving as financial advisor to the Parent and the Purchaser in connection with the proposed acquisition of the Company. The Parent has paid Salomon Brothers a fee of $100,000 and has agreed to pay an additional fee of $250,000, which became payable upon the public announcement of the offer to acquire the Company. Upon the acquisition by the Parent, the Purchaser or another subsidiary of the Parent of the Company, or all or a significant portion of the assets of the Company or more than 10% of the equity securities of the Company, the Parent has agreed to pay Salomon Brothers an additional fee of $1,650,000. The Parent and the Purchaser will also reimburse Salomon Brothers for reasonable out-of-pocket expenses, including reasonable attorneys' fees and expenses, and have also agreed to indemnify Salomon Brothers against certain liabilities and expenses in connection with the Offer, including certain liabilities under the federal securities laws. The Purchaser has retained MacKenzie Partners, Inc. to act as the Information Agent and IBJ Schroder Bank & Trust Company to act as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telegraph and personal interview and may request brokers, dealers and other nominee shareholders to forward the Offer materials to beneficial owners. The Information Agent and the Depositary will receive reasonable and customary compensation for services relating to the Offer and will be reimbursed for certain out-of-pocket expenses. The Purchaser and the Parent have also agreed to indemnify the Information Agent and the Depositary against certain liabilities and expenses in connection with the Offer, including certain liabilities under the federal securities laws. 48 The Purchaser will not pay any fees or commissions to any broker or dealer or any other person for soliciting tenders of Shares pursuant to the Offer (other than to the Dealer Manager and the Information Agent). Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding offering materials to their customers. 17. MISCELLANEOUS. The Offer is being made solely by this Offer to Purchase and the related Letter of Transmittal and is being made to all holders of all Shares. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction or any administrative or judicial action pursuant thereto. However, the Purchaser may in its discretion take such actions as it may deem necessary to make the Offer in any jurisdiction and extend the Offer to holders of Shares in such jurisdiction. In those jurisdictions where securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by Salomon Brothers Inc, the Dealer Manager, or one more registered brokers or dealers that are licensed under the laws of such jurisdiction. The Purchaser and the Parent have filed with the Commission a Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional information with respect to the Offer. Such statement and any amendments thereto, including exhibits, may be inspected and copies may be obtained from the offices of the Commission (except that they will not be available at the regional offices of the Commission) in the manner set forth in Section 7 of this Offer to Purchase. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF THE PURCHASER OR THE PARENT NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. I.H.H. Corp. January 27, 1997 49 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER AND THE PARENT 1. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The name and position with the Purchaser of each director and executive officer of the Purchaser are set forth below. The other required information with respect to each such person is set forth under "Directors and Executive Officers of the Parent" below. All directors and executive officers listed below are citizens of the United States.
NAME POSITION - ---------------------------------------------- ---------------------------------------------- Thomas R. Miklich............................. Director, President, Treasurer and Assistant Secretary Gerald B. Blouch.............................. Vice President, Secretary and Assistant Treasurer
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARENT. The name, business address, present principal occupation or employment and material occupations, positions, offices or employments during the last five years of each director and executive officer of the Parent and certain other information are set forth below. Unless otherwise indicated, the business address of each such director and executive officer is c/o Invacare Corporation, 899 Cleveland Street, P.O. Box 4028, Elyria, Ohio 44036. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with the Parent. All directors and executive officers listed below are citizens of the United States, except that Benoit Juranville is a citizen of France.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT NAME AND ADDRESS HELD DURING THE LAST FIVE YEARS - ------------------------------------------ --------------------------------------------------------------------- A. Malachi Mixon, III..................... A. Malachi Mixon, III, has been Chief Executive Officer and a Director of the Company since 1979 and Chairman of the Board since 1983. Mr. Mixon also served as President from 1979 until November of 1996. Mr. Mixon also serves as a Director of The Lamson & Sessions Co., Cleveland, Ohio, a New York Stock Exchange listed company and a supplier of engineered thermoplastic products, The Sherwin-Williams Company, Cleveland, Ohio, a New York Stock Exchange listed company and a manufacturer and distributor of coatings and related products, NCS HealthCare, Inc., a NASDAQ listed company and a provider of pharmacy services to long term care institutions and PRIMUS, a Cleveland-based venture capital company. Mr. Mixon also serves as a Trustee of The Cleveland Clinic Foundation, Cleveland, Ohio, one of the world's leading teaching and health care institutions. Frank B. Carr............................. Frank B. Carr has been a Director since 1982. From 1983 to 1996, when he retired, Mr. Carr was a Managing Director of McDonald & Company Securities, Inc., Cleveland, Ohio, an investment banking and brokerage firm, and a partner in its predecessor firm (McDonald & Company) since 1968. Mr. Carr
I-1
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT NAME AND ADDRESS HELD DURING THE LAST FIVE YEARS - ------------------------------------------ --------------------------------------------------------------------- also serves as a Director of Brush Wellman Inc., Cleveland, Ohio, a New York Stock Exchange listed company and a producer of engineered materials containing beryllium, and Preformed Line Products Company, Cleveland, Ohio, a supplier of supports and connectors for electric power and communications lines. Michael F. Delaney........................ Michael F. Delaney has been a Director since 1986. From 1992 to the Paralyzed Veterans of America present, Mr. Delaney has been the Associate Director of Development 801 18th Street, N.W. of the Paralyzed Veterans of America, Washington, D.C. Washington, D.C. 20006 Dr. Bernadine P. Healy.................... Dr. Bernadine P. Healy has been a Director since 1996. From 1995 to College of Medicine the present, Dr. Healy has been the Dean of the College of Medicine The Ohio State University and Professor of Medicine at The Ohio State University, Columbus, Columbus, OH 43210 Ohio. From 1994 to 1995, Dr. Healy served as Senior Policy Advisor of the Page Center for Health and Science Policy Studies at The Cleveland Clinic Foundation, Cleveland, Ohio and from 1991 to 1993 served as Director of the National Institutes of Health in Bethesda, Maryland. From 1985 to 1991, Dr. Healy served as the Chairman of the Research Institute of The Cleveland Clinic Foundation, Cleveland, Ohio. Dr. Healy also serves as Trustee of the Battelle Memorial Institute in Columbus, Ohio. Dr. Healy also serves as a director of Medtronic, Inc. a New York Stock Exchange listed Company and producer of cardiac pacemakers and on the Board of National City Corporation, Cleveland, Ohio, a New York Stock Exchange listed Company and a bank holding company. Francis J. Callahan, Jr................... Francis J. Callahan, Jr., has been a Director since 1980. From 1958 Crawford Fitting Company to the present, Mr. Callahan has been President of Crawford Fitting 29500 Solon Road Company, Cleveland, Ohio, a manufacturer of tube fittings and valves. Solon, OH 44139 Mr. Callahan also serves as a Trustee of The Cleveland Clinic Foundation, Cleveland, Ohio. Whitney Evans............................. Whitney Evans has been a Director since 1980. From 1980 to the Pine Tree Investments, Inc. present, Mr. Evans has been a private investor. From 1980 to the 4480 Grove Street present, Mr. Evans has been Vice President of Pine Tree Investments, Sonoma, CA 95476 Inc., Cleveland, Ohio, a business and a real estate investment firm. From 1987 to 1995, Mr. Evans served as the President of Harmony Group, Sonoma, California, a consultant to non-profit organizations. Dan T. Moore, III......................... Dan T. Moore, III has been a Director since 1980. Since 1993, Mr. Perfect Impression Moore has served as President of Perfect Impression, Cleveland, Ohio, 12801 Coit Road a manufacturer of a polymer footbed that molds to the exact contours Cleveland, OH 44108 of the foot using a brief microwave heating system. Since 1993, Mr. Moore has served as Managing Partner of Whiskey Island Partners, which is developing a marina complex on 35 acres of land on
I-2
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT NAME AND ADDRESS HELD DURING THE LAST FIVE YEARS - ------------------------------------------ --------------------------------------------------------------------- Cleveland's Lakefront. Since March 1993, Mr. Moore has been Chairman and Treasurer of Advanced Ceramics Corporation, a closely-held manufacturer of industrial ceramic products. From 1979 to the present, Mr. Moore has been President of Dan T. Moore Co., Cleveland, Ohio. Since 1988, Mr. Moore has also served as President of Soundwich, Inc., Cleveland, Ohio, a closely-held company that produces polymers for damping sheet metal engine components and since 1985 has served as President of Flow Polymers, Inc., a manufacturer of homogenizing aids for rubber tire compounds. E. P. Nalley.............................. E. P. Nalley has been a Director since 1983. From 1987 to 1991, when he retired, Mr. Nalley was the Company's Senior Vice President--Sales and Assistant to the President. Mr. Nalley is now a private investor. Mr. Nalley also serves as a Director of Royal Appliance Manufacturing Co., Cleveland, Ohio, a New York Stock Exchange listed manufacturer of vacuum cleaners. Joseph B. Richey, II...................... Joseph B. Richey, II has been a Director since 1980. In 1992 he was named President--Invacare Technologies and Senior Vice President--Total Quality Management. From 1989 to 1992, he was Senior Vice President and General Manager--North American Operations and was Senior Vice President and General Manager--Rehabilitation and Respiratory Division from 1984 to 1989. Mr. Richey also serves as a Director of Steris Corporation, Cleveland, Ohio, a NASDAQ listed manufacturer and distributor of medical sterilizing equipment, a Director of Royal Appliance Manufacturing Co., Cleveland, Ohio, a New York Stock Exchange listed manufacturer of vacuum cleaners, and a Director of Unique Mobility Inc., Golden, Colorado, an American Stock Exchange listed engineering concern and manufacturer of high efficiency permanent magnet motors and electronic controls. William M. Weber.......................... William M. Weber has been a Director since 1988. In 1994, Mr. Weber Roundcap L.L.C. became President of Roundcap L.L.C. and a principal of Roundwood 25800 Science Park Drive Capital, a partnership that invests in public and private companies. Beachwood, OH 44122 From 1968 to 1994, Mr. Weber was President of Weber, Wood, Medinger, Inc., Cleveland, Ohio, a commercial real estate brokerage and consulting firm. Gerald B. Blouch.......................... Gerald B. Blouch was named President in November 1996 and has been Chief Operating Officer since December 1994 and Chairman--Invacare International since December 1993. Previously, Mr. Blouch was President--Home Care Division from March 1994 to December 1994 and Senior Vice President--Home Care Division from September 1992 to March 1994. Mr. Blouch served as Chief Financial Officer from May 1990 to May 1993 and Treasurer from March 1991 to May 1993.
I-3
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT NAME AND ADDRESS HELD DURING THE LAST FIVE YEARS - ------------------------------------------ --------------------------------------------------------------------- Thomas R. Miklich......................... Thomas R. Miklich has been Chief Financial Officer, General Counsel and Treasurer since May 1993 and in September 1993 was named Secretary. Previously, Mr. Miklich was Executive Vice President and Chief Financial Officer of Van Dorn Company from 1991 to 1993, and Chief Financial Officer of The Sherwin-Williams Company from 1986 to 1991. Benoit Juranville......................... Benoit Juranville has been President--Invacare Europe since December 1993 and previously was President of Poirier S.A. which was purchased by Invacare in 1992. He was added to the company's Executive Committee in December of 1994. Mr. Juranville has also been Chairman and Chief Executive Officer of Jufine S.A. (France), a management consulting company, since January 1995. From 1983 through 1992, Mr. Juranville was Chairman of the Board and Managing Director of Poirier, S.A. Louis F. J. Slangen....................... Louis F. J. Slangen was named Senior Vice President--Sales & Marketing in December 1994 and from September 1989 to December 1994 was Vice President--Sales and Marketing. Mr. Slangen was previously Vice President and General Manager--Rehab Division from 1992 to 1994. M. Louis Tabickman........................ M. Louis Tabickman was named Group Vice President--Rehab Products in August 1995. Mr. Tabickman has been an officer since July 1985 and was named President--Invacare Canada in March, 1994. Previously, Mr. Tabickman was Vice President & General Manager--Power Business Unit from December 1994 to August 1995, Vice President and General Manager-- Invacare Canada from September 1992 to March 1994 and Vice President and General Manager of Service and Distribution from July 1985 until September 1992. Thomas J. Buckley......................... Thomas J. Buckley was named Group Vice President-- Standard Products in August 1995. Mr. Buckley was previously General Manager of Manual Wheelchairs from December 1994 to August 1995. From November 1993 to December 1994 Mr. Buckley was the Business Unit Leader of the Bed Products and Pressure Relief Business Units. Before this period, Mr. Buckley served as Director of Distribution. Donald P. Andersen........................ Mr. Donald P. Andersen has been Group Vice President-- Respiratory Products since 1996. Prior to that, Mr. Andersen was Senior Director and General Manager of the Cryogenic Division for Puritan-Bennett Corporation from 1993 to 1996 and Eastern Regional Manager for Puritan-Bennett Corporation from 1989 to 1993.
I-4 SCHEDULE II TRANSACTIONS IN SHARES DURING THE PAST 60 DAYS BY THE PARENT (ALL PURCHASES WERE MADE ON THE OPEN MARKET)
NUMBER OF PRICE PER DATE SHARES SHARE - ---------- ----------- ----------- 12/9/96 13,000 8.8750 12/11/96 31,000 9.1450 12/13/96 16,000 9.2500 12/16/96 20,000 9.2500 12/16/96 3,000 9.1250
On January 2, 1997, the Parent contributed 100 Shares to the Purchaser in exchange for 100 shares of common stock, par value $0.01 per share, of the Purchaser. II-1 Facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted. The Letter of Transmittal, certificates for Shares and/or Rights and any other required documents should be sent or delivered by each shareholder of the Company or his broker, dealer, commercial bank, trust company or other nominee to the Depositary as follows: THE DEPOSITARY FOR THE OFFER IS: IBJ SCHRODER BANK & TRUST COMPANY BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT DELIVERY: P.O. Box 84 (212) 858-2611 One State Street Bowling Green Station Attn: Reorganization New York, New York 10004 New York, New York Operations Department Attn: Securities Processing 10274-0084 Window, Subcellar One Attn: Reorganization CONFIRM FACSIMILE BY Operations Department TELEPHONE: (212) 858-2103
Any questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and addresses listed below. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent. You may also contact your broker, dealer, commercial bank or trust company for assistance concerning the Offer. THE INFORMATION AGENT FOR THE OFFER IS: [MACKENZIE PARTNERS, INC. LOGO] 156 Fifth Avenue New York, NY 10010 (212) 929-5500 (call collect) or CALL TOLL-FREE: (800) 322-2885 THE DEALER MANAGER FOR THE OFFER IS: SALOMON BROTHERS INC Seven World Trade Center New York, New York 10048 (212) 783-6592 (Call Collect) EX-11.(A)2 3 LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF HEALTHDYNE TECHNOLOGIES, INC. PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 27, 1997 BY I.H.H. CORP. A WHOLLY OWNED SUBSIDIARY OF INVACARE CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, FEBRUARY 24, 1997, UNLESS THE OFFER IS EXTENDED. THE DEPOSITARY FOR THE OFFER IS: IBJ SCHRODER BANK & TRUST COMPANY BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT DELIVERY: P.O. Box 84 (212) 858-2611 One State Street Bowling Green Station Attn.: Reorganization New York, New York 10004 New York, New York Operations Department Attn.: Securities Processing 10274-0084 Window, Subcellar One Attn.: Reorganization CONFIRM FACSIMILE BY Operations Department TELEPHONE: (212) 858-2103
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by shareholders either if certificates for Shares or Rights (as such terms are defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in Section 2 of the Offer to Purchase (as defined below)) is utilized, if tenders of Shares or Rights are to be made by book-entry transfer into the account of IBJ Schroder Bank & Trust Company, as Depositary (the "Depositary"), at The Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer Facilities") pursuant to the book-entry procedures set forth in Section 3 of the Offer to Purchase (as defined below). Shareholders who tender Shares or Rights by book-entry transfer are referred to herein as "Book-Entry Shareholders". Unless and until I.H.H. Corp., a Delaware corporation (the "Purchaser"), declares that the Rights Condition (as defined in the Offer to Purchase) is satisfied, holders of Shares will be required to tender one Right for each Share tendered in order to effect a valid tender of such Share. If the Distribution Date (as defined in the Offer to Purchase) has not occurred prior to the time Shares are tendered pursuant to the Offer (as defined below), a tender of Shares will also constitute a tender of the associated Rights. See Section 3 of the Offer to Purchase. If the Distribution Date has occurred, and certificates representing Rights (the "Rights Certificates") have been distributed to holders of Shares, such holders will be required to tender Rights Certificates representing a number of Rights equal to the number of Shares being tendered in order to effect a valid tender of such Shares. Holders of Shares and Rights whose certificates for such Shares (the "Share Certificates") and, if applicable, Rights Certificates are not immediately available or who cannot deliver their Share Certificates or, if applicable, Rights Certificates and all other required documents to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or who cannot complete the procedure for book-entry transfer on a timely basis, must tender their Shares and Rights according to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) DESCRIPTION OF SHARES TENDERED
SHARE CERTIFICATE(S) AND SHARE(S) TENDERED (ATTACH ADDITIONAL LIST, IF NECESSARY) SHARES SHARE EVIDENCED BY CERTIFICATE SHARE SHARES NUMBER(S)* CERTIFICATE(S)* TENDERED** TOTAL SHARES...................................................... * NEED NOT BE COMPLETED BY BOOK-ENTRY SHAREHOLDERS. ** UNLESS OTHERWISE INDICATED, ALL SHARE CERTIFICATES DELIVERED TO THE DEPOSITARY WILL BE DEEMED TO HAVE BEEN TENDERED. SEE INSTRUCTION 4.
DESCRIPTION OF RIGHTS TENDERED*
RIGHTS CERTIFICATE(S) AND RIGHT(S) TENDERED (ATTACH ADDITIONAL LIST, IF NECESSARY) RIGHTS RIGHTS EVIDENCED BY CERTIFICATE RIGHTS RIGHTS NUMBER(S)** CERTIFICATE(S)** TENDERED*** TOTAL RIGHTS...................................................... * NEED NOT BE COMPLETED IF THE DISTRIBUTION DATE HAS NOT OCCURRED. ** NEED NOT BE COMPLETED BY BOOK-ENTRY SHAREHOLDERS. *** UNLESS OTHERWISE INDICATED, ALL RIGHTS CERTIFICATES DELIVERED TO THE DEPOSITARY WILL BE DEEMED TO HAVE BEEN TENDERED. SEE INSTRUCTION 4.
/ / CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER RIGHTS BY BOOK-ENTRY TRANSFER): Name of Tendering Institution __________________________________________________ Check box of applicable Book-Entry Transfer Facility: (CHECK ONE) / / DTC / / PDTC Account Number Transaction Code Number - ------------------------ ----------------------- / / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY: Name(s) of Registered Holder(s) ________________________________________________ Window Ticket No. (if any) _____________________________________________________ Date of Execution of Notice of Guaranteed Delivery _____________________________ Name of Institution which Guaranteed Delivery __________________________________ If delivered by Book-Entry Transfer, check box of Book-Entry Transfer Facility (check one): (CHECK ONE) / / DTC / / PDTC Account Number Transaction Code Number - ------------------------ ----------------------- / / CHECK HERE IF RIGHTS ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER RIGHTS BY BOOK-ENTRY TRANSFER): Name of Tendering Institution __________________________________________________ Check box of applicable Book-Entry Transfer Facility: (CHECK ONE) / / DTC / / PDTC Account Number Transaction Code Number - ------------------------ ----------------------- / / CHECK HERE IF RIGHTS ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY: Name(s) of Registered Holder(s) ________________________________________________ Window Ticket No. (if any) _____________________________________________________ Date of Execution of Notice of Guaranteed Delivery _____________________________ Name of Institution which Guaranteed Delivery __________________________________ If delivered by Book-Entry Transfer, check box of Book-Entry Transfer Facility (check one): (CHECK ONE) / / DTC / / PDTC Account Number Transaction Code Number - ------------------------ ----------------------- NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to I.H.H. Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Invacare Corporation, an Ohio corporation (the "Parent"), the above-described shares of Common Stock, par value $0.01 per share (the "Shares"), of Healthdyne Technologies, Inc., a Georgia corporation (the "Company"), and (unless and until the Purchaser declares that the Rights Condition (as defined in the Offer to Purchase described below) is satisfied), the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of May 22, 1995 (the "Rights Agreement"), between the Company and Trust Company Bank, as Rights Agent (the "Rights Agent"), at a purchase price of $13 per Share (and associated Right), net to the seller in cash without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated January 27, 1997 (the "Offer to Purchase") and in this Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). Unless the context requires otherwise, all references to Shares shall be deemed to refer also to the associated Rights, and all references to Rights shall be deemed to include all benefits that may inure to the shareholders of the Company or to holders of the Rights pursuant to the Rights Agreement. The undersigned understands that the Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates, the right to purchase all or any portion of the Shares and Rights tendered pursuant to the Offer, receipt of which is hereby acknowledged. The undersigned understands that if the Distribution Date (as defined in the Offer to Purchase) has occurred and certificates representing Rights (the "Rights Certificates") have been distributed to holders prior to the date of tender of the Shares and Rights tendered herewith pursuant to the Offer, Rights Certificates representing a number of Rights equal to the number of Shares being tendered herewith must be delivered to the Depositary (as defined below) or, if available, a Book-Entry Confirmation (as defined herein) must be received by the Depositary with respect thereto in order for such Shares tendered herewith to be validly tendered. If the Distribution Date has occurred and Rights Certificates have not been distributed prior to the time Shares are tendered herewith pursuant to the Offer, the undersigned agrees to deliver Rights Certificates representing a number of Rights equal to the number of Shares tendered herewith to IBJ Schroder Bank & Trust Company (the "Depositary") within three business days after the date such Rights Certificates are distributed. A tender of Shares without Rights Certificates constitutes an agreement by the tendering shareholder to deliver Rights Certificates representing a number of Rights equal to the number of Shares tendered pursuant to the Offer to the Depositary within three business days after the date such Rights Certificates are distributed. The undersigned understands that if the Rights Condition is not satisfied and the Distribution Date occurs prior to the Expiration Date, the Purchaser reserves the right to require that the Depositary receive such Rights Certificates or a Book-Entry Confirmation with respect to such Rights prior to accepting Shares for payment. In that event, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of, or Book-Entry Confirmation with respect to, among other things, Rights Certificates, if Rights Certificates have been distributed to holders of Shares. Subject to, and effective upon, acceptance for payment of the Shares and Rights tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all of the Shares and Rights that are being tendered hereby and any and all dividends, distributions (including additional Shares) or rights declared, paid or issued with respect to the tendered Shares on or after October 1, 1996 (except to the extent publicly disclosed by the Company with specificity in documents filed with the Commission prior to January 2, 1997) and payable or distributable to the undersigned on a date prior to transfer to the name of the Purchaser or nominee or transferee of the Purchaser on the Company's stock transfer records of the Shares tendered herewith (except that if the Rights are redeemed by the Company's Board of Directors in accordance with the terms of the Rights Agreement, tendering stockholders who are holders of record as of the applicable record date will be entitled to receive and retain the redemption price of $.01 per Right in accordance with the Rights Agreement) (collectively, a "Distribution"), and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and Rights (and any Distribution) with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (i) deliver such Share Certificates (as defined herein) evidencing such shares and Rights Certificates (and any Distribution) or transfer ownership of such Shares and Rights (and any Distribution) on the account books maintained by a Book-Entry Transfer Facility, together, in either case, with appropriate evidences of transfer, to the Depositary for the account of the Purchaser, (ii) present such Shares and Rights (and any Distribution) for transfer on the books of the Company and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and Rights and any Distribution, all in accordance with the terms and subject to the conditions of the Offer. By executing this Letter of Transmittal, the undersigned irrevocably appoints designees of the Purchaser and each of them as such shareholder's attorneys-in-fact and proxies, with full power of substitution, in the manner set forth in this Letter of Transmittal, to the full extent of such shareholder's rights with respect to the Shares and Rights tendered by such shareholder and accepted for payment by the Purchaser (and with respect to any and all other Shares or Rights or other securities issued or issuable in respect of such Shares or Rights on or after the date hereof). All such powers of attorney and proxies shall be considered irrevocable and coupled with an interest in the tendered Shares and Rights. Such appointment will be effective when, and only to the extent that, the Purchaser accepts such Shares and Rights for payment. Upon such acceptance for payment, all prior powers of attorney and proxies given by such shareholder with respect to such Shares and Rights (and such other shares and securities) will be revoked without further action, and no subsequent powers of attorney and proxies may be given nor any subsequent written consents executed (and, if given or executed, will not be deemed effective). The designees of the Purchaser will, with respect to the Shares and Rights (and such other shares and securities) for which such appointment is effective, be empowered to exercise all voting and other rights of such shareholder as they in their sole discretion may deem proper at any annual or special meeting of the Company's shareholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Shares and Rights to be deemed validly tendered, immediately upon the Purchaser's payment of such Shares and Rights, the Purchaser must be able to exercise full voting rights with respect to such Shares and Rights and other securities, including voting at any meeting of shareholders. The undersigned hereby represents and warrants that the (a) undersigned has full power and authority to tender, sell, assign and transfer the Shares and Rights tendered hereby (and any Distribution) and (b) when the Shares and Rights are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title to the Shares and Rights (and any Distribution), free and clear of all liens, restrictions, charges and encumbrances, and the same will not be subject to any adverse claim. The undersigned, upon request, will execute and deliver all additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares and Rights tendered hereby (and any Distribution). In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of the Purchaser any and all Distributions in respect of the Shares and Rights tendered hereby, accompanied by appropriate documentation of transfer; and, pending such remittance and transfer or appropriate assurance thereof, the Purchaser shall be, subject to applicable law, entitled to all rights and privileges as the owner of each such Distribution, and may withhold the entire purchase price of the Shares and or deduct from the purchase price, the amount or value of such Distribution, as determined by the Purchaser in its sole discretion. All authority herein conferred or agreed to be conferred shall not be affected by and shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Tenders of Shares and Rights made pursuant to the Offer are irrevocable, except that Shares and Rights tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date (as defined in the Offer to Purchase) and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after March 28, 1997 (or such later date as may apply in case the Offer is extended). See Section 4 of the Offer to Purchase. The undersigned understands that tenders of Shares and Rights pursuant to any of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions set forth in the Offer, including the undersigned's representation and warranty that the undersigned owns the Shares and Rights being tendered. Unless otherwise indicated herein under "Special Payment Instructions", please issue the check for the purchase price and/or issue or return any certificate(s) for Shares and Rights not tendered or not accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered" and "Description of Rights Tendered", respectively. Similarly, unless otherwise indicated "Special Delivery Instructions", please mail the check for the purchase price and/or any certificate(s) for Shares and Rights not tendered or not accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered" and "Description of Rights Tendered", respectively. In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or any certificate(s) for Shares and Rights not tendered or accepted for payment in the name of, and deliver such check and/or certificates to, the person or persons so indicated. Unless otherwise indicated herein under "Special Payment Instructions", please credit any Shares and Rights tendered herewith by book-entry transfer that are not accepted for payment by crediting the account at the Book-Entry Transfer Facility designated above. The undersigned recognizes that the Purchaser has no obligation, pursuant to the Special Payment Instructions, to transfer any Shares or Rights from the name(s) of the registered holder(s) thereof if the Purchaser does not accept for payment any of the Shares or Rights so tendered. SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificate(s) for To be completed ONLY if certificate(s) for Shares and Rights not tendered or not Shares and Rights not tendered or not accepted for payment and/or the check for accepted for payment and/or the check for the purchase price of Shares and Rights the purchase price of Shares and Rights accepted for payment are to be issued in the accepted for payment are to be sent to name of someone other than the undersigned someone other than the undersigned or to the or if Shares or Rights tendered by undersigned at an address other than that book-entry transfer which are not accepted shown above. for payment are to be returned by credit to an account maintained at a Book-Entry Transfer Facility. Issue: / / check / / certificates to: Mail: / / check / / certificates to: Name........................................ Name........................................ (PLEASE PRINT) (PLEASE PRINT) Address..................................... Address..................................... ............................................ ........................................... (INCLUDE ZIP CODE) (INCLUDE ZIP CODE) ........................................... ........................................... (TAX ID. OR SOCIAL SECURITY NO.) (TAX ID. OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE) (SEE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE) Credit Shares and Rights tendered by book- entry transfer that are not accepted for payment to (Check one): / / The Depository Trust Company / / Philadelphia Depository Trust Company ............................................ (DTC OR PDTC ACCOUNT NO.)
SIGN IMPORTANT SIGN HERE SHAREHOLDERS: SIGN HERE HERE [arrow] AND COMPLETE SUBSTITUTE FORM W-9 [arrow] ................................................................................... ................................................................................... (SIGNATURE(S) OF HOLDER(S)) Dated:...................................................................... , 1997 (Must be signed by the registered holder(s) exactly as name(s) appear(s) on Share Certificate(s) or Rights Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustee, executor, administrator, guardian, attorney-in-fact, officer of corporation or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5.) Name(s)............................................................................ ................................................................................... (PLEASE PRINT) Capacity (Full Title).............................................................. Address............................................................................ ................................................................................... (INCLUDE ZIP CODE) Area Code and Telephone Number..................................................... Tax Identification or Social Security No. ............................................................... GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature............................................................... Name............................................................................... Name of Firm....................................................................... (PLEASE PRINT) Address............................................................................ (INCLUDE ZIP CODE) Area Code and Telephone Number..................................................... Dated:...................................................................... , 1997
INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) of Shares and Rights (which term, for purposes of this document, shall include any participant in a Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares and/or Rights) tendered herewith, unless such holder(s) has completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" above, or (b) if such Shares and/ or Rights are tendered for the account of a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each of the foregoing being referred to as an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5 of this Letter of Transmittal. 2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by shareholders either if certificates are forwarded herewith or, unless an Agent's Message is utilized, if tenders are to be made pursuant to the procedure for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. Share Certificates, or timely confirmation (a "Book-Entry Confirmation") of a book entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a facsimile hereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) and, unless and until the Purchaser declares that the Rights Condition (as defined in the Offer to Purchase) is satisfied, Rights Certificates or timely confirmation of a book-entry transfer of Rights into the Depositary's account at a Book-Entry Transfer Facility, if available (together with, if Rights are forwarded separately from Shares, a properly completed and duly executed Letter of Transmittal (or a facsimile hereof) with any required signature guarantees, or an Agent's Message in the case of a book-entry delivery, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date or, if later, within three business days after the date such Rights Certificates are distributed. Shareholders whose Share Certificates or Rights Certificates are not immediately available (including Rights Certificates that have not yet been distributed by the Company) or who cannot deliver their Share Certificates or Rights Certificates and all other required documents to the Depositary prior to the Expiration Date or who cannot complete the procedure for delivery by book-entry transfer on a timely basis may tender their Shares and Rights by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, must be received by the Depositary prior to the Expiration Date; (iii) the Share Certificates (or a Book-Entry Confirmation) representing all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three Nasdaq National Market trading days after the date of execution of such Notice of Guaranteed Delivery; and (iv) unless and until the Purchaser declares that the Rights Condition is satisfied, the Rights Certificates, if issued, representing the appropriate number of Rights or a Book-Entry Confirmation, if available, in each case together with a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three Nasdaq National Market trading days after the date of execution of such Notice of Guaranteed Delivery, or if later, three business days after Rights Certificates are distributed to shareholders, all as provided in Section 3 of the Offer to Purchase. If Share Certificates and Rights Certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. THE METHOD OF DELIVERY OF SHARE CERTIFICATES OR RIGHTS CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares and Rights will be purchased. All tendering shareholders, by execution of this Letter of Transmittal (or a facsimile hereof), waive any right to receive any notice of the acceptance of their Shares and Rights for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares and Rights and any other required information should be listed on a separate signed schedule attached hereto. 4. PARTIAL TENDERS. (NOT APPLICABLE TO BOOK-ENTRY SHAREHOLDERS) If fewer than all the Shares evidenced by any Share Certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered". If fewer than all the Rights evidenced by any Rights Certificates submitted are to be tendered, fill in the number of Rights which are to be tendered in the box entitled "Number of Rights Tendered". In such cases, new Share Certificates or Rights Certificates, as the case may be, for the Shares or Rights that were evidenced by your old Share Certificates or Rights Certificates, but were not tendered by you, will be sent to you, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by Share Certificates and all Rights represented by Rights Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares and Rights tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares and Rights tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares and Rights are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to the Purchaser of their authority so to act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares and Rights listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment is to be made to or certificates for Shares or Rights not tendered or not purchased are to be issued in the name of a person other than the registered holder(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the certificate(s) listed, the certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the certificate(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. Unless and until the Purchaser declares the Rights Condition to be satisfied, if Rights Certificates have been distributed to holders of Shares, such holders are required to tender Rights Certificate(s) representing a number of Rights equal to the number of Shares tendered in order to effect a valid tender of such Shares. It is necessary that shareholders follow all signature requirements of this Instruction 5 with respect to the Rights in order to tender such Rights. 6. STOCK TRANSFER TAXES. Except as provided in this Instruction 6, the Purchaser will pay any stock transfer taxes with respect to the transfer and sale of Shares and Rights to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if certificate(s) for Shares and Rights not tendered or accepted for payment are to be registered in the name of, any person other than the registered holder(s), or if tendered certificate(s) are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or an exemption therefrom, is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Share Certificates evidencing the Shares tendered hereby. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in the name of, and/or certificates for Shares and Rights not tendered or not accepted for payment are to be issued or returned to, a person other than the signer of this Letter of Transmittal or to an address other than that shown in this Letter of Transmittal, the appropriate boxes on this Letter of Transmittal must be completed. A Book-Entry Shareholder may request that Shares and/or Rights not accepted for payment be credited to such account maintained at a Book-Entry Transfer Facility as such Book-Entry Shareholder may designate under "Special Payment Instructions". If no such instructions are given, such Shares or Rights not accepted for payment will be returned by crediting the account of the Book-Entry Transfer Facility designated above. 8. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the Purchaser in whole or in part at any time and from time to time in its sole discretion. 9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for assistance may be directed to the Dealer Manager or the Information Agent at their respective addresses and telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent or from brokers, dealers, commercial banks or trust companies. 10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing Shares or Rights has been lost, destroyed or stolen, the shareholder should promptly notify the Information Agent. The shareholder will then be instructed as to the steps that must be taken in order to replace the certificate. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. 11. SUBSTITUTE FORM W-9. Each tendering shareholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on the Substitute Form W-9 which is provided below, and to certify, under penalties of perjury, that such number is correct and that such shareholder is not subject to backup withholding of federal income tax. If a tendering shareholder has been notified by the Internal Revenue Service that such shareholder is subject to backup withholding, such shareholder must cross out item (2) of the Certification box of the Substitute Form W-9, unless such shareholder has since been notified by the Internal Revenue Service that such shareholder is no longer subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering shareholder to 31% federal income tax withholding on the payment of the purchase price of all Shares purchased from such shareholder. If the tendering shareholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such shareholder should write "Applied For" in the space provided for the TIN in Part I of the Substitute Form W-9, and sign and date the Substitute Form W-9 and sign the certification provided below. If "Applied For" is written in Part I and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold 31% on all payments of the purchase price to such shareholder until a TIN is provided to the Depositary. See Sections 3 and 5 of the Offer to Purchase. IMPORTANT: THIS LETTER OR TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR THE NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE. ALL TENDERING SHAREHOLDERS MUST COMPLETE THE FOLLOWING: PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY SUBSTITUTE PART I--Taxpayer Identification Number-- FOR ALL ACCOUNTS Enter taxpayer identification number in Social Security Number or FORM W-9 the box at right. (For most individuals, Employer Identification Number this is your social security number. If you do not have a number, see Obtaining a Number in the enclosed Guidelines.) Certify by signing and dating below. Note: If the account is in more than one name, see the chart in the enclosed Guidelines to determine which number to give the payer. DEPARTMENT OF THE PART II--For Payees Exempt From Backup Withholding, see the enclosed Guidelines and TREASURY complete as instructed therein. INTERNAL REVENUE CERTIFICATION--Under penalties of perjury, I certify that: OR (1) The number shown on this form is my correct Taxpayer Identification Number (or I PAYER'S REQUEST am waiting for a number to be issued to me), and FOR TAXPAYER (2) I am not subject to backup withholding either because I have not been notified by IDENTIFICATION the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a NUMBER ("TIN") result of failure to report all interest or dividends, or the IRS has notified me that I am no longer subject to backup withholding. CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.) SIGN HERE SIGNATURE: DATE: , 1997 -->
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN THE SPACE PROVIDED FOR THE TIN IN PART I OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all reportable payments made to me will be withheld. Signature_____________________________ Date____________________________, 1997 THE INFORMATION AGENT FOR THE OFFER IS: [MACKENZIE PARTNERS, INC. LOGO] 156 Fifth Avenue New York, New York 10010 (212) 929-5500 (call collect) or CALL TOLL-FREE (800) 322-2885 THE DEALER MANAGER FOR THE OFFER IS: SALOMON BROTHERS INC Seven World Trade Center New York, New York 10048 (212) 783-6592 (Call Collect) January 27, 1997 EX-11.(A)3 4 NOTICE OF GUARANTEE NOTICE OF GUARANTEED DELIVERY TO TENDER SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF HEALTHDYNE TECHNOLOGIES, INC. TO I.H.H. CORP. A WHOLLY OWNED SUBSIDIARY OF INVACARE CORPORATION As set forth in Section 3 of the Offer to Purchase described below, this instrument or one substantially equivalent hereto must be used to accept the Offer (as defined below) if certificates for Shares (as defined below) or the associated Preferred Stock Purchase Rights (the "Rights") are not immediately available or the certificates for Shares or Rights and all other required documents cannot be delivered to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) or if the procedure for delivery by book-entry transfer cannot be completed on a timely basis. This instrument may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary. THE DEPOSITARY FOR THE OFFER IS: IBJ SCHRODER BANK & TRUST COMPANY
BY HAND OR OVERNIGHT BY MAIL: BY FACSIMILE TRANSMISSION: DELIVERY: P.O. Box 84 (212) 858-2611 One State Street Bowling Green Station Attn: Reorganization New York, New York 10004 New York, New York Operations Department Attn: Securities Processing 10274-0084 Window, Subcellar One Attn: Reorganization CONFIRM FACSIMILE BY Operations Department TELEPHONE: (212) 858-2103
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box in the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tender(s) to I.H.H. Corp., a Delaware corporation and a wholly owned subsidiary of Invacare Corporation, an Ohio corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 27, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"), receipt of which is hereby acknowledged, the number of shares of Common Stock, par value $0.01 per share (the "Shares"), and the number of Rights, indicated below of Healthdyne Technologies, Inc., a Georgia corporation, pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Signature(s).................................................................... Name(s) of Record Holders ............................................................................... PLEASE TYPE OR PRINT Number of Shares and Rights .................................................... Certificate Nos. (If Available) ............................................................................... ............................................................................... Dated ...................................................................., 1997 Address(es)..................................................................... ............................................................................... ZIP CODE Area Code(s) and Tel. No(s) .................................................... Check one box (if Shares and Rights will be tendered by book-entry transfer): / / The Depository Trust Company / / Philadelphia Depository Trust Company Account Number ................................................................. ............................................................................... GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program, hereby (a) represents that the above named person(s) "own(s)" the Shares and/or Rights tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents that such tender of Shares complies with Rule 14e-4, (c) guarantees to deliver to the Depositary either the certificates evidencing all tendered Shares, in proper form for transfer, or to deliver Shares pursuant to the procedure for book-entry transfer into the Depositary's account at the Depository Trust Company or the Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility"), in either case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry delivery, and any other required documents, all within three Nasdaq National Market trading days after the date hereof and (d) guarantees, if applicable, to deliver certificates representing the Rights ("Rights Certificates") in proper form for transfer, or to deliver such Rights pursuant to the procedure for book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility together with, if Rights are forwarded separately, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry delivery, and any other required documents, all within the later of (1) three Nasdaq National Market trading days after the date hereof and (2) three business days after the date the Rights Certificates are distributed to holders of Shares. - -------------------------------------------- -------------------------------------------- NAME OF FIRM AUTHORIZED SIGNATURE Name - --------------------------------------------- ADDRESS PLEASE TYPE OR PRINT Title - --------------------------------------------- ZIP CODE AUTHORIZED SIGNATURE Dated --------------------------------------- , AREA CODE AND TEL NO. 1997
NOTE: DO NOT SEND CERTIFICATES FOR SHARES OR RIGHTS WITH THIS NOTICE. CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-11.(A)4 5 BROKER/DEALER LETTER -------------------- SALOMON BROTHERS -------------------- OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF HEALTHDYNE TECHNOLOGIES, INC. AT $13 NET PER SHARE BY I.H.H. CORP. A WHOLLY OWNED SUBSIDIARY OF INVACARE CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, FEBRUARY 24, 1997, UNLESS THE OFFER IS EXTENDED. January 27, 1997 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by I.H.H. Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Invacare Corporation, an Ohio corporation (the "Parent"), to act as Dealer Manager in connection with the Purchaser's offer to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Healthdyne Technologies, Inc., a Georgia corporation (the "Company"), and (unless and until the Purchaser declares that the Rights Condition (as defined in the Offer to Purchase) is satisfied) the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of May 22, 1995 (the "Rights Agreement"), between the Company and Trust Company Bank, as Rights Agent, at a price of $13 per Share (and associated Right), net to the seller in cash without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 27, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer") enclosed herewith. Unless and until the Purchaser declares that the Rights Condition is satisfied, holders of Shares will be required to tender one Right for each Share tendered in order to effect a valid tender of such Share. If the Distribution Date (as defined in the Offer to Purchase) has not occurred prior to the time Shares are tendered pursuant to the Offer, a tender of Shares will constitute a tender of the associated Rights. If the Distribution Date has occurred and the certificates representing such Rights ("Rights Certificates") have been distributed by the Company to holders of Shares, such holders of Shares shall be required to tender Rights Certificates representing a number of Rights equal to the number of Shares being tendered in order to effect valid tender of such Shares. Holders of Shares and Rights whose certificates for such Shares (the "Share Certificates") and, if applicable, Rights Certificates are not immediately available or who cannot deliver their Share Certificates or, if applicable, their Rights Certificates, and all other required documents to the Depositary (as defined below) prior to the Expiration Date (as defined in the Offer to Purchase), or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Shares and Rights according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Unless the context otherwise requires, all references to Shares shall include the associated Rights, and all references to Rights shall include all benefits that may inure to holders of Rights pursuant to the Rights Agreement. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. The Offer is conditioned upon, among other things: (1) the Purchaser being satisfied, in its sole discretion, that there have been validly tendered and not properly withdrawn prior to the expiration of the Offer that number of Shares which, when added to the 600,000 Shares beneficially owned by the Purchaser and its affiliates, would constitute at least 51% of the voting power (determined on a fully diluted basis) on the date of purchase of all securities of the Company entitled to vote generally in the election of directors and in a merger; (2) the Purchaser being satisfied, in its sole discretion, that the Rights have been redeemed by the Company's Board of Directors or that such Rights have been invalidated or are otherwise inapplicable to, or that the dilutive provisions thereof would not be triggered by, the Offer or the proposed Merger (as defined in the Offer to Purchase); (3) the Purchaser being satisfied, in its sole discretion, that the restrictions on business combinations contained in Sections 14-2-1131 through 14-2-1133 of the Georgia Business Corporation Code (the "GBCC") would not apply to the Purchaser or the Parent in connection with the Offer or the proposed Merger (as a result of action by the Company's Board of Directors, the ownership by the Purchaser and its affiliates upon consummation of the Offer of at least 90% of the outstanding voting stock of the Company (other than shares held by directors, officers and certain employee stock plans of the Company) or otherwise); and (4) the Puchaser being satisfied, in its sole discretion, that the restrictions on business combinations contained in Sections 14-2-1110 through 14-2-1113 of the GBCC would not apply to the Purchaser or the Parent in connection with the Offer or the proposed Merger or are invalid (in either case, as a result of action by the Company's Board of Directors, judicial action or otherwise) or that the proposed Merger may be consummated without any approval required under such Sections of the GBCC at a price per Share not in excess of the price per Share to be paid in the Offer. The Offer is also subject to other terms and conditions. See the Introduction and Sections 1 and 14 of the Offer to Purchase. The Offer is not conditioned on the receipt of financing. Enclosed herewith for your information and forwarding to your clients are copies of the following documents: 1. The Offer to Purchase, dated January 27, 1997. 2. The GREEN Letter of Transmittal to tender Shares for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal may be used to tender Shares. 3. The GOLD Notice of Guaranteed Delivery for Shares and Rights to be used to accept the Offer if Share Certificates or Rights Certificates are not immediately available or if such certificates and all other required documents cannot be delivered to IBJ Schroder Bank & Trust Company (the "Depositary") by the Expiration Date or if the procedure for book-entry transfer cannot be completed by the Expiration Date. 4. A GRAY printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. 5. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. 6. A return envelope addressed to IBJ Schroder Bank & Trust Company, the Depositary. 2 YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, FEBRUARY 24, 1997, UNLESS THE OFFER IS EXTENDED. In order to take advantage of the Offer, (i) a duly executed and properly completed Letter of Transmittal and any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry delivery of Shares or Rights, and any other required documents should be sent to the Depositary, and (ii) either Share Certificates, and if applicable, Rights Certificates, representing the tendered Shares (and, if applicable, tendered Rights) should be delivered to the Depositary, or such Shares (and, if applicable, tendered Rights) should be tendered by book-entry transfer into the Depositary's account maintained at one of the Book-Entry Transfer Facilities (as described in the Offer to Purchase), all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. If holders of Shares wish to tender, but it is impracticable for them to forward their Share Certificates or, if applicable, Rights Certificates, or other required documents on or prior to the Expiration Date or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. The Purchaser will not pay any fees or commissions to any broker, dealer or any other person (other than the Dealer Manager and MacKenzie Partners, Inc. (the "Information Agent") (as described in the Offer to Purchase)) for soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your customers. The Purchaser will pay or cause to be paid any stock transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to Salomon Brothers Inc, the Dealer Manager, or the Information Agent, at their respective addresses and telephone numbers set forth on the back cover page of the Offer to Purchase. Additional copies of the enclosed materials may be obtained from the Information Agent. Very truly yours, SALOMON BROTHERS INC NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE PARENT, THE PURCHASER, THE COMPANY, THE DEPOSITARY, THE INFORMATION AGENT OR THE DEALER MANAGER, OR ANY AFFILIATE OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENTS OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. 3 EX-11.(A)5 6 CLIENT LETTER OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF HEALTHDYNE TECHNOLOGIES, INC. AT $13 NET PER SHARE BY I.H.H. CORP. A WHOLLY OWNED SUBSIDIARY OF INVACARE CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, FEBRUARY 24, 1997, UNLESS THE OFFER IS EXTENDED. January 27, 1997 TO OUR CLIENTS: Enclosed for your consideration is an Offer to Purchase, dated January 27, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal relating to an offer by I.H.H. Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Invacare Corporation, an Ohio corporation (the "Parent"), to purchase all of the outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Healthdyne Technologies, Inc., a Georgia corporation (the "Company"), and (unless and until the Purchaser declares that the Rights Condition (as defined in the Offer to Purchase) is satisfied) the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of May 22, 1995 (the "Rights Agreement"), between the Company and Trust Company Bank, as Rights Agent, at a price of $13 per Share (and associated Right), net to the seller in cash without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). Unless the context requires otherwise, all references to "Shares" shall be deemed to refer also to the associated Rights, and all references to Rights shall be deemed to include all benefits that may inure to the shareholders of the Company or to the holders of the Rights pursuant to the Rights Agreement. We are the holder of record of Shares held by us for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account. Unless and until the Purchaser declares that the Rights Condition is satisfied, holders of Shares will be required to tender a number of Rights equal the number of Shares being tendered in order to effect a valid tender of such Shares. Based on the Company's filings with the Securities and Exchange Commission (the "Commission"), until the Distribution Date (as defined in the Offer to Purchase), the surrender for transfer of any of the certificates representing Shares (the "Share Certificates") will also constitute the surrender for transfer of the Rights associated with the Shares represented by such Share Certificates. Based on the Company's filings with the Commission, as soon as practicable following the Distribution Date, separate certificates representing the Rights ("Rights Certificates") will be mailed to holders of record of Shares as of the close of business on the Distribution Date; after the Distribution Date, such separate Rights Certificates alone will evidence the Rights. See Section 3 of the Offer to Purchase. We request instructions as to whether you wish to have us tender on your behalf any or all of such Shares held by us for your account, pursuant to the terms and subject to the conditions set forth in the Offer to Purchase. Your instructions to tender Shares held by us for your account will also constitute a direction to us to tender a number of Rights held by us for your account equal to the number of Shares tendered. Your attention is invited to the following: 1. The tender price is $13 per share, net to the seller in cash without interest thereon. 2. The Offer is made for all of the outstanding Shares. 3. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Monday, February 24, 1997, unless the Offer is extended. 4. The Offer is conditioned upon, among other things: (1) the Purchaser being satisfied, in its sole discretion, that there have been validly tendered and not properly withdrawn prior to the expiration of the Offer that number of Shares which, when added to the Shares beneficially owned by the Purchaser and its affiliates, would constitute at least 51% of the voting power (determined on a fully diluted basis) on the date of purchase of all securities of the Company entitled to vote generally in the election of directors and in a merger; (2) the Purchaser being satisfied, in its sole discretion, that the Rights have been redeemed by the Company's Board of Directors or that such Rights have been invalidated or are otherwise inapplicable to, or that the dilutive provisions thereof would not be triggered by, the Offer or the proposed Merger (as defined in the Offer to Purchase); (3) the Purchaser being satisfied, in its sole discretion, that the restrictions on business combinations contained in Sections 14-2-1131 through 14-2-1133 of the Georgia Business Corporation Code (the "GBCC") would not apply to the Purchaser or the Parent in connection with the Offer or the proposed Merger (as a result of action by the Company's Board of Directors, the ownership by the Purchaser and its affiliates upon consummation of the Offer of at least 90% of the outstanding voting stock of the Company (other than Shares held by directors, officers and certain employee stock plans of the Company) or otherwise); and (4) the Purchaser being satisfied, in its sole discretion, that the restrictions on business combinations contained in Sections 14-2-1110 through 14-2-1113 of the GBCC would not apply to the Purchaser or the Parent in connection with the Offer or the proposed Merger or are invalid (in either case, as a result of action by the Company's Board of Directors, judicial action or otherwise) or that the proposed Merger may be consummated without any approval required under such Sections of the GBCC at a price per Share not in excess of the price per Share to be paid in the Offer. The Offer is also subject to other terms and conditions. See the Introduction and Sections 1 and 14 of the Offer to Purchase. The Offer is not conditioned on the receipt of financing. 5. Tendering shareholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares pursuant to the Offer. The Offer is being made solely by the Offer to Purchase and the related Letter of Transmittal and is being made to all holders of all Shares. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction or any administrative or judicial action pursuant thereto. However, the Purchaser may in its discretion take such actions as it may deem necessary to make the Offer in any jurisdiction and extend the Offer to holders of Shares in such jurisdiction. In those jurisdictions where securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by Salomon Brothers Inc, the Dealer Manager, or one more registered brokers or dealers that are licensed under the laws of such jurisdiction. If you wish to have us tender any or all of the Shares held by us for your account, please instruct us by completing, executing and returning to us the instruction form contained in this letter. If you authorize a tender of your Shares, all such Shares will be tendered unless otherwise specified in such instruction form. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the expiration of the Offer. 2 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF HEALTHDYNE TECHNOLOGIES, INC. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated January 27, 1997, and the related Letter of Transmittal (the "Offer to Purchase") in connection with the offer by I.H.H. Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Invacare Corporation, an Ohio corporation, to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Healthdyne Technologies, Inc., a Georgia corporation, and (unless and until the Purchaser declares that the Rights Condition (as defined in the Offer to Purchase) is satisfied) the associated Preferred Stock Purchase Rights (the "Rights"). This will instruct you to tender the number of Shares and Rights indicated below (or, if no number is indicated below, all Shares and Rights) held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal furnished to the undersigned. Number of Shares (and Rights) to be SIGN HERE Tendered* .................................................... ................................ Shares (and Rights) .................................................... Dated ........................................, 1997 Signature(s) .................................................... Please print names(s) .................................................... Address .................................................... Area Code and Telephone Number .................................................... Taxpayer Identification or Social Security Number
- ------------------------ * Unless otherwise indicated, it will be assumed that all of your Shares (and Rights) held by us for your account are to be tendered. 3 EX-11.(A)6 7 TAX GUIDELINES GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. -- Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer.
- ----------------------------------------------------- GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - ----------------------------------------------------- 1. An individual's The individual account 2. Two or more The actual owner of individuals (joint the account or, if account) combined funds, any one of the individuals(1) 3. Husband and wife The actual owner of (joint account) the account or, if joint funds, either person(1) 4. Custodian account of The minor(2) a minor (Uniform Gift to Minors Act) 5. Adult and minor The adult or, if the (joint account) minor is the only contributor, the minor(1) 6. Account in the name The ward, minor, or of guardian or incompetent committee for a person(3) designated ward, minor, or incompetent person 7. a. The usual The revocable savings grantor-trustee(1) trust account (grantor is also trustee) b. So-called trust account that is The actual owner(1) not a legal or valid trust under State law 8. Sole proprietorship The owner(4) account - ----------------------------------------------------- GIVE THE EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - ----------------------------------------------------- 9. A valid trust, The legal entity (Do estate, or pension not furnish the trust identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, The organization charitable, or educational organization account 12. Partnership account The partnership held in the name of the business 13. Association, club or The organization other tax-exempt organization 14. A broker or The broker or registered nominee nominee 15. Account with the The public entity Department of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments
- --------------------------------------------- - --------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501(a), or an individual retirement plan. - The United States or any agency or instrumentality thereof. - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - An international organization or any agency or instrumentality thereof. - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - A real estate investment trust. - A common trust fund operated by a bank under section 584(a). - An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). - An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - Payments of patronage dividends where the amount renewed is not paid in money. - Payments made by certain foreign organizations. - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. NOTE: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - Payments described in section 6049(b)(5) to non-resident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045 and 6050A. PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES. (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-- Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-11.(A)7 8 SUMMARY AD Exhibit 11(a)7 This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase dated January 27, 1997 and the related Letter of Transmittal. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction or any administrative or judicial action pursuant thereto. However, the Purchaser may in its discretion take such actions as it may deem necessary to make the Offer in any jurisdiction and extend the Offer to holders of Shares in such jurisdiction. In those jurisdictions where securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by Salomon Brothers Inc (the "Dealer Manager") or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF HEALTHDYNE TECHNOLOGIES, INC. AT $13 NET PER SHARE BY I.H.H. CORP. A WHOLLY OWNED SUBSIDIARY OF INVACARE CORPORATION I.H.H. Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Invacare Corporation, an Ohio corporation (the "Parent"), is offering to purchase all of the outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Healthdyne Technologies, Inc., a Georgia corporation (the "Company"), and (unless and until the Purchaser declares that the Rights Condition (as defined below) is satisfied) the associated Preferred Stock Purchase Rights (the "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, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 27, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together, as amended from time to time, constitute the "Offer"). Unless the context requires otherwise, all references to Shares shall be deemed to refer also to the associated Rights, and all references to Rights shall be deemed to include all benefits that may inure to the shareholders of the Company or to holders of Rights pursuant to the Rights Agreement. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, FEBRUARY 24, 1997, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (1) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THERE HAVE BEEN VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE 600,000 SHARES BENEFICIALLY OWNED BY THE PURCHASER AND ITS AFFILIATES, WOULD CONSTITUTE AT LEAST 51% OF THE VOTING POWER (DETERMINED ON A FULLY DILUTED BASIS) ON THE DATE OF PURCHASE OF ALL SECURITIES OF THE COMPANY ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS AND IN A MERGER; (2) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN REDEEMED BY THE COMPANY'S BOARD OF DIRECTORS OR THAT SUCH RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO, OR THAT THE DILUTIVE PROVISIONS THEREOF WOULD NOT BE TRIGGERED BY, THE OFFER OR THE PROPOSED MERGER DESCRIBED BELOW (THE "RIGHTS CONDITION"); (3) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RESTRICTIONS ON BUSINESS COMBINATIONS CONTAINED IN SECTIONS 14-2-1131 THROUGH 14-2-1133 OF THE GEORGIA BUSINESS CORPORATION CODE (THE "GBCC") WOULD NOT APPLY TO THE PURCHASER OR THE PARENT IN CONNECTION WITH THE OFFER OR THE PROPOSED MERGER (AS A RESULT OF ACTION BY THE COMPANY'S BOARD OF DIRECTORS, THE OWNERSHIP BY THE PURCHASER AND ITS AFFILIATES UPON CONSUMMATION OF THE OFFER OF AT LEAST 90% OF THE OUTSTANDING VOTING STOCK OF THE COMPANY (OTHER THAN SHARES HELD BY DIRECTORS, OFFICERS AND CERTAIN EMPLOYEE STOCK PLANS OF THE COMPANY) OR OTHERWISE); AND (4) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RESTRICTIONS ON BUSINESS COMBINATIONS CONTAINED IN SECTIONS 14-2-1110 THROUGH 14-2-1113 OF THE GBCC WOULD NOT APPLY TO THE PURCHASER OR THE PARENT IN CONNECTION WITH THE OFFER OR THE PROPOSED MERGER OR ARE INVALID (IN EITHER CASE, AS A RESULT OF ACTION BY THE COMPANY'S BOARD OF DIRECTORS, JUDICIAL ACTION OR OTHERWISE) OR THAT THE PROPOSED MERGER MAY BE CONSUMMATED WITHOUT ANY APPROVAL REQUIRED UNDER SUCH SECTIONS OF THE GBCC AT A PRICE PER SHARE NOT IN EXCESS OF THE PRICE PER SHARE TO BE PAID IN THE OFFER. THE OFFER IS NOT CONDITIONED ON THE RECEIPT OF FINANCING. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. The Purchaser intends to propose, and to seek to have the Company consummate as soon as practicable after consummation of the Offer, a merger or similar business combination (the "Merger") with the Purchaser or another direct or indirect subsidiary of the Parent, pursuant to which each then outstanding Share (other than Shares held by the Parent, the Purchaser or any other wholly-owned subsidiary of the Parent, Shares held in the treasury of the Company and Shares held by shareholders who properly exercise appraisal rights under Georgia law) would be converted into the right to receive in cash the price per Share paid by the Purchaser pursuant to the Offer. UNLESS AND UNTIL THE PURCHASER DECLARES THAT THE RIGHTS CONDITION IS SATISFIED, HOLDERS OF SHARES WILL ALSO BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF SUCH SHARE. IF SEPARATE CERTIFICATES FOR THE RIGHTS ("RIGHTS CERTIFICATES") ARE NOT ISSUED, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF ASSOCIATED RIGHTS. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary (as defined in the Offer to Purchase) of the Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payments from the Purchaser and transmitting such payments to shareholders whose Shares have been accepted for payment. UNDER NO CIRCUMSTANCE WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing Shares ("Share Certificates") and, if applicable, Rights Certificates, or timely confirmation of a book-entry transfer of such Shares and, if applicable, Rights into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility"), pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) a Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined in Section 2 of the Offer to Purchase) in connection with a book-entry transfer, and (iii) any other documents required by the Letter of Transmittal. Subject to the applicable rules and regulations of the Securities and Exchange Commission, the Purchaser reserves the right, in its sole discretion, at any time or from time to time, regardless of whether the conditions specified in Section 14 of the Offer to Purchase shall have been satisfied or any of the events or facts set forth in Section 14 of the Offer to Purchase shall have occurred, to extend the period during which the Offer is open by giving oral or written notice of such extension to the Depositary. During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the rights of a tendering shareholder to withdraw such shareholder's Shares. Any such extension will be followed as promptly as practicable by a public announcement thereof, which announcement will be made no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. The term "Expiration Date" means 12:00 midnight, New York City time, on Monday, February 24, 1997, unless and until the Purchaser, in its sole discretion, shall have extended the period during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. Tenders of Shares and Rights made pursuant to the Offer are irrevocable, except that Shares and Rights tendered pursuant to the Offer may be withdrawn at any time on or prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after March 28, 1997 (or such later date as may apply in case the Offer is extended). For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any notice of withdrawal must specify the name of the person who tendered the Shares or Rights to be withdrawn, the number of Shares or Rights to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares or Rights. If Share Certificates or Rights Certificates to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates the serial numbers shown on such certificates must be submitted to the Depositary and the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to Purchase), unless such Shares or Rights have been tendered for the account of any Eligible Institution. If Shares or Rights have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares or Rights, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the second sentence of this paragraph. A withdrawal of Shares or Rights shall also constitute a withdrawal of the associated Rights or Shares, as applicable. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. Requests are being made to the Company for the use of the Company's shareholder list and security position listings for the purpose of disseminating the Offer to holders of Shares and communicating with shareholders in connection with the Offer. The Offer to Purchase and the related Letter of Transmittal and, if required, other relevant materials will be mailed to record holders of Shares whose names appear on the Company's shareholder list and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares by the Purchaser following receipt of such lists or listings from the Company, or by the Company, if it so elects. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance may be directed to the Dealer Manager or the Information Agent at their respective addresses and telephone numbers as set forth below. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager and the Information Agent) for soliciting tenders of Shares and Rights pursuant to the Offer. Additional copies of the Offer to Purchase, the Letter of Transmittal and all other tender offer materials may be obtained from the Information Agent or from brokers, dealers, commercial banks and trust companies, and will be furnished promptly at the Purchaser's expense. The Information Agent for the Offer is: [MACKENZIE PARTNERS, INC. LOGO] 156 Fifth Avenue New York, New York 10010 (212) 929-5500 (call collect) or CALL TOLL-FREE (800) 322-2885 The Dealer Manager for the Offer is: [SALOMON BROTHERS INC LOGO] Seven World Trade Center New York, New York 10048 (212) 783-6592 (CALL COLLECT) January 27, 1997 EX-11.(A)8 9 PRESS RELEASE FOR IMMEDIATE RELEASE CONTACTS: Daniel Burch Mark Harnett MacKenzie Partners, Inc. (212) 929-5500 INVACARE CORPORATION LAUNCHES TENDER OFFER FOR HEALTHDYNE TECHNOLOGIES, INC. AT INCREASED PRICE OF $13 PER SHARE AND COMMENCES LITIGATION Elyria, Ohio - (January 27, 1997) - Invacare Corporation (NASDAQ/NMS:IVCR) 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. (NASDAQ/NMS:HDTC) at $13 per share, to be followed by a second-step merger in which holders of shares not validly tendered would receive the same per share price as in the offer. The tender offer price represents more than a 45% premium over Healthdyne's closing stock price on December 31, 1996, the trading day prior to Invacare's making its original acquisition proposal to Healthdyne on January 2, 1997, and reflects a $.50 per share increase over Invacare's previous offer to Healthdyne. A. Malachi Mixon, III, Chairman and Chief Executive Officer of Invacare, said: "We are surprised and disappointed that Healthdyne's Board of Directors has rejected our offer without even calling us or seeking any discussions with us whatsoever. We have difficulty understanding how our original offer, which represented more than a 40% premium over the prevailing market price, could have been viewed by Healthdyne, its Board of Directors or its financial advisors as 'grossly inadequate', especially since the Company's Chairman sold approximately one-third of his shares at prices ranging from $13.00 to $14.25 as recently as last May and June. While we, like Healthdyne's other stockholders, would certainly be interested in seeing and understanding the detailed information which the Company's management has claimed will improve its prospects and has promised for release in early February, we note that in recent periods the Company has disappointed its stockholders by failing to meet analysts' published expectations. However, because we remain fully committed to this acquisition on terms that bring value to the stockholders of both companies, we are increasing our offer price from $12.50 to $13 in the interests of completing this transaction expeditiously. "Although we would have preferred to have conducted discussions with Healthdyne regarding our offer and continue to look forward to the opportunity to do so, their rejection of our prior offer and continued refusal to have any discussions or contacts with us force us to make our offer directly to the stockholders in a manner which, under the tender offer rules, will require Healthdyne's Board to provide a prompt and more thorough response. -MORE- "We hope that when Healthdyne's Board considers our increased offer it will view it as we do -- an excellent opportunity for the stockholders of Healthdyne to realize full value for their shares to an extent not otherwise likely to be available to them. We continue to be interested in meeting with Healthdyne to discuss our offer in the hopes of promptly negotiating a mutually agreeable transaction. In the context of a negotiated transaction, we would consider discussing our offer price if Healthdyne's management is able to substantiate significant additional values to Invacare's satisfaction, and are prepared to discuss all other aspects of our offer fully with Healthdyne, including structure, form of consideration and the proper roles for our respective managers and employees in the combined company." Invacare also announced that it was commencing litigation against Healthdyne and certain of its directors to declare various defensive mechanisms, including Healthdyne's "poison pill" rights plan, illegal and to require Healthdyne and its Board of Directors to take certain actions to permit its stockholders to effectively consider the Invacare offer. Thomas R. Miklich, Chief Financial Officer and General Counsel of Invacare, said: "We regret the necessity of commencing litigation. However, among other defensive tactics, Healthdyne has a 'poison pill' containing certain unusual and draconian director-entrenching provisions, commonly referred to as 'dead-hand pill' restrictions, which purport, under certain circumstances, to prevent future directors from redeeming or otherwise nullifying the pill in connection with a proposed transaction which the future Board determines to be in the best interests of the Company and its stockholders. We believe that such restrictions are illegal and that Healthdyne has a duty to take actions to permit its stockholders to effectively consider our offer free of these and Healthdyne's other defensive provisions." 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 statutes (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, February 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. -MORE- 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. # # # EX-11.(B)1 10 COMMITMENT LETTER Exhibit 11(b)(1) December 30, 1996 Invacare Corporation 899 Cleveland Street P.O. Box 4028 Elyria, Ohio 44036-2125 Attention: Thomas R. Miklich Ladies and Gentlemen: Invacare Corporation (the "Borrower") has requested senior credit facilities (the "Facilities") to be provided to the Borrower in the aggregate principal amount of $200,000,000 (the "Aggregate Commitment") to finance the acquisition (the "Acquisition") of all of the stock of a public company previously identified by the Borrower to us (the "Seller"). The Acquisition will be accomplished through a cash tender offer (the "Tender Offer") by a wholly owned subsidiary of the Borrower ("AcquisitionCo") for not less than a majority of the shares of the Seller (on a fully diluted basis). The Tender Offer will be in an aggregate amount consistent with the total cost of the Acquisition previously disclosed by the Borrower to us and consistent with the terms previously disclosed to us. The commitment of NBD (the "Agent") hereunder is contingent upon the consummation of the Acquisition and the Tender Offer upon terms and conditions reasonably satisfactory to the Agent, the Agent's satisfactory review of all agreements and documents executed or filed in connection therewith, the Acquisition and the Tender Offer, the structure of the Borrower and AcquisitionCo and its other subsidiaries before and after the Acquisition, and the legal, accounting and tax aspects of the Acquisition and the Tender Offer being satisfactory to Agent and Arranger and its counsel, the total amounts of the Facilities or any other funds of the Borrower which are being used to consummate the Acquisition, directly or indirectly, being consistent with the amounts previously disclosed by the Borrower to the Agent and Arranger, the Borrower amending the covenants, pricing and other appropriate terms in its other credit facilities with the Agent, in a manner satisfactory to the Agent, to those described in the attached Term Sheet (as defined below) and the other terms and conditions set forth in this letter and the attached Term Sheet. The Term Sheet and this Commitment Letter are intended as an outline only and do not purport to summarize all of the terms, conditions, covenants, representations, warranties and other provisions which will be contained in definitive legal documentation for the transaction which is the subject of this Commitment Letter. NBD Bank is pleased to provide you with a financing commitment for, and to agree to act as administrative agent bank (the "Agent") in connection with, the entire amount of the Facilities on the terms and conditions set forth in the term sheet attached hereto ("Term Sheet") and subject to the conditions set forth in this letter. First Chicago Capital Markets, Inc. (the "Arranger"), an affiliate of the Agent, is pleased to provide you with its undertaking to syndicate all or a portion of the Facilities to a syndicate of lenders (collectively, including NBD Bank, the "Lenders"). While the Agent's agreement herein is to provide the entire amount of the Facilities on a fully underwritten basis, the Arranger reserves the right to syndicate all or a portion of the Facilities to additional Lenders with a corresponding reduction in the Agent's commitment. In the event that any information relating to conditions or events not previously disclosed to either Agent or Arranger or relating to new information or additional developments concerning conditions or events previously disclosed which may have a material adverse effect on the condition, assets, properties, business or prospects of the Borrower and its subsidiaries or the Seller, or any conditions set forth in definitive financing documentation are not satisfied, either may, in its sole discretion, suggest alternative financing amounts or structures that ensure Sheet no. 2 adequate protection for the Lenders or decline to participate in the proposed financing. The Agent and the Arranger and officers and employees of each of the Agent and Arranger will have the right to share information received from the Borrower, the Seller and their respective affiliates, agents, officers, and employees. The Borrower agrees to (i) reimburse Agent and Arranger for all out-of- pocket expenses (including the fees of outside counsel and time charges for inside counsel) incurred in connection with this Commitment Letter, the transactions contemplated thereby and Agent's and Arranger's on-going due diligence therewith, including without limitation travel expenses and costs incurred in connection with the preparation, negotiation, execution, administration, syndication, and enforcement of any document relating to this transaction and its role hereunder, (ii) indemnify and hold harmless the Agent, Arranger, Lenders and their respective officers, employees, agents and directors (collectively, the "Indemnified Persons") against any and all losses, claims, damages, or liabilities of every kind whatsoever to which the Indemnified Persons may become subject in connection in any way with the transactions (including without limitation the Acquisition and the providing of the Facilities) which are the subject of this Commitment Letter, including without limitation expenses incurred in connection with investigating or defending against any liability or action whether or not a party thereto, except to the extent any of the foregoing is found in a final judgment by a court of competent jurisdiction to have arisen solely from such Lender's gross negligence or willful misconduct: and (iii) assert no claim against any Indemnified Persons seeking consequential damages on any theory of liability in connection in any way with the transaction which is the subject of this Commitment Letter. The obligations described in this paragraph are independent of all other obligations hereunder and under the Loan Documents, shall survive the expiration, revocation or termination of this Commitment Letter, and shall be payable whether or not the financing transactions contemplated by this Commitment Letter shall close. Agent's and Arranger's respective obligations under this Commitment Letter are enforceable solely by the party signing this Commitment Letter and may not be relied upon by any other person. IF THIS COMMITMENT LETTER, THE TERM SHEET, THE AGENT FEE LETTER, OR ANY ACT, OMISSION OR EVENT DESCRIBED IN THIS PARAGRAPH BECOMES THE SUBJECT OF A DISPUTE, THE PARTIES HERETO EACH HEREBY WAIVE TRIAL BY JURY. This Agent's commitment and the Arranger's undertaking is subject to, among other conditions (i) the preparation, execution, and delivery of a mutually acceptable credit agreement ("Credit Agreement") and other loan documents (collectively, the "Loan Documents") incorporating, without limitation, substantially the terms and the conditions outlined herein and in the Term Sheet; (ii) Agent's and Arranger's respective determination that (a) there is an absence of a material adverse change in the business, condition (financial or otherwise), operations, performance, properties, or prospects of the Borrower, the Seller or any of their material subsidiaries from December 31, 1995 or otherwise from that disclosed in publicly filed financial statements of the Seller; and (b) there is an absence of any material adverse change prior to closing in primary and secondary loan syndication markets or capital markets generally. Arranger will manage all aspects of the syndication, including, without limitation, decisions as to the selection of institutions to be approached and when they will be approached, when their commitments will be accepted, which institutions will participate, the allocations of Sheet no. 3 the commitments among the Lenders and the amount and distribution of the fees discussed herein among the Lenders, all in consultation with the Borrower. Upon Arranger's acceptance of any such commitment from a Lender, Agent shall be relieved of its commitment to fund such amount. To assist Arranger in its syndication efforts, the Borrower shall, and shall cause its subsidiaries to: (a) provide and to cause its advisors to provide Arranger upon request with all information deemed reasonably necessary by it to complete successfully the syndication, including, without limitation, all information and projections prepared by Borrower or on Borrower's behalf relating to the transactions contemplated hereby; (b) cause the management of the Borrower to actively participate in, both the preparation of an information package regarding the operations and prospects of the Borrower and the presentation of the information to prospective Lenders; and (c) not to make any statement publicly about the Commitment or the Facilities which might negatively affect Arranger's ability to syndicate the Facilities. The Agent and the Arranger acknowledge that, as Seller is a public corporation, under certain circumstances the only available information may be public information. Please indicate your acceptance of this commitment by the Agent and undertaking by the Arranger in the space indicated below and return a copy of this letter so executed to the Agent. This commitment and undertaking will expire at 5:00 p.m. (Detroit time) January 2, 1997 unless on or prior to such time the Agent shall have received a copy of this letter executed by the Borrower together with the fee required under paragraph 1(a) of the Agent's Fee Letter of even date herewith (the "Fee Letter"). Notwithstanding timely acceptance of the commitment pursuant to the preceding sentence, the commitment will automatically terminate unless definitive Loan Documents are executed on or before February 28, 1997. By its acceptance hereof, the Borrower agrees to pay the Agent and the Arranger the fees described in the Fee Letter. This commitment replaces and supersedes any previous commitment relating to the transactions described in this letter. By accepting delivery of this Commitment Letter, the Fee Letter and the Term Sheet, the Borrower hereby agrees that, prior to executing this Commitment Letter, the Borrower will not disclose either expressly or impliedly, without the Agent's and the Arranger's prior written consent, to any person any of the terms of this Commitment Letter, the Fee Letter or Term Sheet, or the fact that this Commitment Letter, the Fee Letter or Term Sheet or the financing proposal represented thereby exists except that the Borrower may disclose any of the foregoing to any employee or attorney of the Borrower to whom, in each case, it is necessary to disclose such information so long as any such employee or attorney is directed to observe this confidentiality obligation. Upon the Borrower's execution of this Commitment Letter, the Borrower may make public disclosure of the existence and the amount of the commitment, and the Borrower may file a copy of this Commitment Letter (but not the Fee Letter) or make such other disclosures if such disclosure is required by law, but may not make any other disclosure. If the Borrower does not accept this commitment, the Borrower is to immediately return this Commitment Letter, the Fee Letter and the Term Sheet (and all copies of the foregoing) to the Agent. The Borrower authorizes each of the Agent and the Arranger to answer inquiries from financial media with respect to the Facilities. Sheet no. 4 This Commitment Letter and Term Sheet supersede any and all prior versions thereof. This Commitment Letter shall be governed by the internal laws of the State of Michigan, and may only be amended by a writing signed by all parties hereto. Very truly yours, NBD BANK, individually and as Agent By: /s/ Winifred S. Pinet -------------------------------- Title: First Vice President ----------------------------- FIRST CHICAGO CAPITAL MARKETS, INC., as Arranger By: /s/ Maher Touma -------------------------------- Title: Managing Director ----------------------------- Accepted and agreed: INVACARE CORPORATION By: /s/ Thomas R. Miklich ----------------------- Title: CFO -------------------- Date: 1/2/97 --------------------- CONFIDENTIAL INVACARE CORPORATION - -------------------------------------------------------------------------------- PROPOSED SUMMARY TERM SHEET - -------------------------------------------------------------------------------- BORROWER: Invacare Corporation ("Invacare" or the "Company"), or a wholly owned subsidiary of Invacare reasonably acceptable to the Agent and fully guaranteed by Invacare. AGENT: NBD Bank ("NBD" or the "Agent"). ARRANGER: First Chicago Capital Markets, Inc. ("FCCM" or the "Arranger"). TYPE OF FACILITIES: REVOLVING CREDIT: $200,000,000 Two Year Unsecured Revolving Credit. PARTICIPANTS: NBD Bank ("NBD") and other banks to be selected by FCCM, NBD and the Company. The share of each Participant to be mutually determined by FCCM, NBC and the Company. USE OF PROCEEDS: Finance the acquisition (the "Acquisition") of a public company previously identified to the Agent (the "Seller"). The Acquisition will include a tender offer (the "Tender Offer") by a subsidiary of Invacare for a minimum of 51% of the stock of the Seller (on a fully diluted basis). A certain amount of the proceeds, in an amount acceptable to the Agent, may also be used for other acquisitions and working capital. AVAILABILITY REVOLVING CREDIT: Immediately upon signing of the Credit Agreement and satisfaction of the conditions thereunder. CONFIDENTIAL INVACARE CORPORATION - -------------------------------------------------------------------------------- MATURITIES: REVOLVING CREDIT: Two years from date of first funding, with maturity not later than October 31, 1999. PRICING: At the Borrower's Option: PRIME: The higher of 50 basis points over the Federal Funds Rate or NBD's Prime Rate as it exists from time to time, plus the Applicable Margin. Minimum draws of $500,000. LIBOR: Adjusted(1) LIBOR plus the Applicable Margin (1, 2, 3, and 6 month options). Minimum draws of $1,000,000. FIXED: Negotiated fixed rates as available, and mutually agreed. FOOTNOTES: (1) Adjusted for maximum Federal Reserve Board reserve requirements. APPLICABLE MARGIN: The Applicable Margin is based upon the following matrix: Applicable Margin - -------------------------------------------------------------------------------- Funded Debt All-in to Total Cap Prime LIBOR Facility Fee Drawn - -------------------------------------------------------------------------------- 68-58* 0.00 45 bps 20 bps 65 bps 57-50 0.00 30 bps 15 bps 45 bps 49-40 0.00 25 bps 12.5 bps 37.5 bps Less than 40 0.00 18.5 bps 9 bps 27.5 bps - -------------------------------------------------------------------------------- *INITIAL PRICING LEVEL. PREPAYMENT: Prepayment of LIBOR and fixed rate loans would be subject to appropriate prepayment indemnities. - -------------------------------------------------------------------------------- NBD/FCCM -2- December 30, 1996 CONFIDENTIAL INVACARE CORPORATION - -------------------------------------------------------------------------------- FEES: UNDERWRITING AND AGENT'S FEES: Per fee letter. FACILITY FEE: Per annum fee, payable quarterly in arrears, on the entire facility amount, as described above. LEGAL FEES: All reasonable legal fees of Agent's counsel for the account of the Borrower. CAPITAL ADEQUACY: Language will be incorporated into the Facility Agreement requiring that the Borrower compensate the Participants for any change in capital requirements or laws that would have the effect of reducing the Bank's yields. INTEREST PAYMENTS: At the end of each applicable Interest Period or quarterly, if earlier. INTEREST PERIODS: Interest Periods may be of 1, 2, 3, or 6 months or such other period as may be agreed to by the Banks. DOCUMENTATION: The Facility will be subject to a Credit Agreement, acceptable to all parties and containing terms and conditions customary for such a Facility. These terms and conditions will include without limitation: - representations and warranties. - undertakings including provision of financial information under agreed accounting principles; negative pledge, etc. - provision for increased costs (including capital adequacy) and indemnifications to Participants. - -------------------------------------------------------------------------------- NBD/FCCM -3- December 30, 1996 CONFIDENTIAL INVACARE CORPORATION - -------------------------------------------------------------------------------- - transferability, which will include Banks' right to assign subject to Borrower's (which may not be unreasonably withheld and may not be withheld during a default) and Agent's consent and subparticipate without consent, subject to limitations. FINANCIAL COVENANTS: Customary in credit agreements of this nature, with respect to the Borrower and its Subsidiaries, including but not limited to: INTEREST COVERAGE: The Company will at all times maintain Interest Coverage not less than 3.00 to 1.00 on a four quarter trailing basis; except when Funded Debt to Total Capitalization is between 58% and 68%, at which point Interest Coverage shall not be less than 2.25:1.0. FUNDED DEBT TO The Company will at all times maintain a TOTAL CAPITALIZATION: ratio of Funded Debt to Total Capitalization not to exceed 68%, decreasing to 65% on a date not later than nine months after the initial funding, but not prior to 12/31/97. NET WORTH: The Company will at all times maintain Net Worth at not less than $200,000,000, increasing annually by 50% of Net Income, commencing not later than 9 months from initial funding, but not prior to 12/31/97, and at fiscal year end thereafter. All financial covenants tested on a consolidated basis, effective upon first funding under the Credit Agreement and calculated in accordance with U.S. GAAP unless otherwise noted. NEGATIVE PLEDGE Customary negative covenants for a COVENANTS: senior note senior note financing, including but not limited to: - ------------------------------------------------------------------------------- NBD/FCCM -4- December 30, 1996 CONFIDENTIAL INVACARE CORPORATION - -------------------------------------------------------------------------------- (1) negative pledge and sale of assets and negative negative pledge, subject to appropriate basket and permitted sales and exceptions, if required, for compliance with Regulations U and G; (2) Sale of installment contracts permitted, with limitations; (3) merger and consolidation limitations; (4) other restrictions (subject to exceptions, as appropriate, to be negotiated) on investments, transactions with affiliates, indebtedness and contingent liabilities, changes in line of business, and prepayment or modification of other debt and liabilities. NON-FINANCIAL Customary non-financial covenants for a COVENANTS: senior bank financing. Additionally, (a) as soon as reasonably possible after completion of the Tender Offer the Company will merge (the "Merger") the Seller and the subsidiary it formed to acquire the Seller and (b) guaranties of the Company's present and future significant subsidiaries will be required, provided that the guaranty of the Seller will not be required until after the Merger. REPORTING REQUIREMENTS: Customary in credit agreements of this nature, including but not limited to the following: (1) Annual audited financial statements, 10K, consolidating and annual report within 90 days of each fiscal year end. (2) Quarterly 10Q financial statements within 50 days of each quarter end. (3) Quarterly compliance certificates signed by a corporate officer. - -------------------------------------------------------------------------------- NBD/FCCM -5- December 30, 1996 CONFIDENTIAL INVACARE CORPORATION - -------------------------------------------------------------------------------- GOVERNING LAW: The Credit Agreement will be governed by the laws of the State of Michigan. COUNSEL TO THE AGENT BANK: Dickinson, Wright, Moon, Van Dusen & Freeman. EVENTS OF DEFAULT: Customary in credit agreements of this nature, including but not limited to the following: (1) Failure to pay principal when due; failure to pay interest or fees within five days of the due date. (2) Failure to meet covenants (with grace periods, where appropriate). (3) Representations or warranties false in any material respect when made. (4) Cross default to other debt of the Borrower and its Subsidiaries which is triggered by an event which causes acceleration thereof or permits holders thereof to accelerate their debt. (5) Change of ownership or control. (6) other usual defaults with respect to the Borrower and Subsidiaries, including but not limited to insolvency, bankruptcy, ERISA, and judgment defaults. CONDITIONS PRECEDENT: Customary conditions precedent to each advance, including without limitation the following: (1) Completion of satisfactory loan documentation. - -------------------------------------------------------------------------------- NBD/FCCM -6- December 30, 1996 CONFIDENTIAL INVACARE CORPORATION - -------------------------------------------------------------------------------- (2) No material adverse change prior to closing. (3) Satisfaction of all conditions described in the commitment letter issued in connection with this proposed summary term sheet, compliance with all laws and regulations, satisfactory review of all agreements, documents and transactions executed, filed or delivered in connection with, or otherwise relating to, the Acquisition and the Tender Offer and receipt of all legal opinions requested by the Agent. DEFINITIONS: INTEREST COVERAGE: The ratio of Earnings, subject to appropriate reductions, before Interest and Taxes to Interest Expense. FUNDED DEBT: The sum of all debt and similar liabilities classified as long term, including but not limited to debt for borrowed money, capital leases, letters of credit and guaranties for any of the foregoing. NET WORTH: Shall mean the sum of Stockholder's Common Equity, Preferred Stock and Minority Interest, less Treasury stock. TOTAL CAPITALIZATION: The sum of Net Worth and Funded Debt. All other defined terms are according to GAAP and acceptable to the Agent. December 30, 1996 - -------------------------------------------------------------------------------- NBD/FCCM -7- December 30, 1996 EX-11.(G)1 11 COMPLAINT UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION ____________________________________ ) INVACARE CORPORATION and ) I.H.H. CORP., ) ) Plaintiffs, ) ) v. ) CIVIL ACTION NO: ) HEALTHDYNE TECHNOLOGIES, INC., ) CRAIG B. REYNOLDS, ) J. TERRY DEWBERRY, ) ALEXANDER H. LORCH, ) J. LELAND STRANGE, ) JAMES J. WELLMAN, and ) J. PAUL YOKUBINAS, ) ) Defendants. ) ___________________________________ ) COMPLAINT Invacare Corporation ("Invacare") and I.H.H. Corp. ("I.H.H."), as and for their complaint, allege upon knowledge with respect to themselves and their own acts, and upon information and belief as to all other matters, as follows: NATURE OF THE ACTION 1. On January 27, 1997, I.H.H., a wholly-owned subsidiary of Invacare, commenced an all-cash, all-shares, fully-priced, premium tender offer for the shares of defendant Healthdyne Technologies, Inc. ("Healthdyne") at a price of $13 per share (the "Offer"). The Offer was -1- commenced only AFTER the defendants on Healthdyne's Board of Directors rejected on January 24, 1997 an earlier Invacare offer without even discussing it with Invacare and only after the defendants began taking precipitous and unjustified defensive steps to improperly impede the Offer and entrench the defendant directors, in gross violation of the individual defendants' fiduciary duties. The Offer is conditioned on removal or inapplicability of a number of Healthdyne's anti-takeover devices. Invacare intends, as soon as practicable following consummation of the Offer, to have Healthdyne merge with I.H.H. or another wholly-owned subsidiary of Invacare for the same per share cash consideration as that paid in the Offer (the "Proposed Merger"). The purpose of the Offer and Proposed Merger is to enable Invacare to acquire control of, and the entire equity interest in, Healthdyne. 2. The Offer is fully financed, non-coercive and fair to Healthdyne's shareholders. The Offer represents a premium of more than 45% over the market price for Healthdyne's shares as of December 31, 1996, the trading day prior to Invacare's January 2, 1997 initial proposal for the acquisition of Healthdyne. The Offer and Proposed Merger do not pose any threat to the interests of Healthdyne's shareholders or to Healthdyne's corporate policy. 3. On January 24, 1997, Healthdyne issued a press release rejecting Invacare's earlier offer out of hand -- even though Healthdyne had not negotiated or even discussed with Invacare the merits of Invacare's proposal. Moreover, prior to issuance of the press release, Healthdyne began taking defensive measures designed to improperly impede the Offer and to entrench the incumbent directors. On January 23, 1997, Healthdyne's Board of Directors, at a special meeting, amended Healthdyne's bylaws to (1) delete a provision specifying the date of the annual meeting -2- of shareholders if not otherwise set by the Board of Directors, and (2) opt into the so-called "Fair Price Requirements" of the Georgia Business Corporation Code (the "GBCC"), O.C.G.A. Sections 14-2-1110 through 14-2-1113 (the "Fair Price Statute"), into which Healthdyne could have opted at any time in its corporate history, but chose not to do so until immediately before rejecting Invacare's offer. These actions, taken contemporaneously with rejection of Invacare's offer, when viewed in context, clearly had only one purpose in mind: to impede Healthdyne's shareholders from considering the Offer and to entrench the incumbent directors, in violation of Georgia law and the individual defendants' fiduciary duties. 4. Healthdyne has available various other anti-takeover devices, including a "poison pill" shareholder rights plan and the "Business Combinations With Interested Stockholders" provisions of the GBCC, O.C.G.A. Sections 14-2-1131 through 14-2-1133 (the "Business Combination Statute"), which it may rely on in an attempt to block the Offer. Healthdyne's "poison pill" shareholder rights plan contains a set of draconian and illegal redemption and amendment restrictions which severely limit its shareholders' right to elect new directors not approved by the incumbent management. In light of their refusal even to discuss an acquisition and in light of the defensive measures they have already precipitously taken in response to Invacare's proposals, the defendants may also attempt to adopt other defensive measures designed to impede, delay, or prevent consummation of the Offer and the Proposed Merger and to improperly entrench the incumbent directors. 5. Given the premium price and fair structure of the Offer and Proposed Merger and its substantial value to Healthdyne's shareholders, Healthdyne should not be allowed to deprive its -3- shareholders of the opportunity to decide upon the merits of the Offer and Proposed Merger for themselves. Use of Healthdyne's anti-takeover devices and other defensive measures against the Offer and Proposed Merger -- which Healthdyne has already begun to undertake in response to Invacare's proposals, as evidenced by the eleventh-hour bylaw amendments -- represents an unreasonable response to the Offer and Proposed Merger in violation of the individual defendants' fiduciary duties. 6. Healthdyne's use of anti-takeover devices to obstruct the Offer and Proposed Merger will deprive its shareholders of the opportunity to decide upon their merits for themselves and will cause Invacare irreparable injury as a result of the loss of the unique opportunity to acquire control of Healthdyne. Moreover, the presence of such devices is causing confusion and uncertainty in the market for public securities because investors do not know whether they will be able to avail themselves of an advantageous financial offer. Thus, the defendants' use of these illegal measures must be enjoined. 7. Plaintiffs bring this action for injunctive and/or declaratory relief: (a) to prevent the existing director-entrenching anti-takeover devices and other defensive measures of Healthdyne, including the Dead-Hand Provision (as defined below), from impeding or delaying shareholder consideration of plaintiffs' Offer and Proposed Merger in violation of Georgia law and the individual defendants' fiduciary duties; (b) to prevent the application of certain Georgia statutes -- such as the Fair Price Statute, which Healthdyne recently rushed to opt into, and the Business Combination Statute -- to plaintiffs' Offer and Proposed Merger; and -4- (c) to prevent the defendants from otherwise taking additional actions to impede or delay shareholder consideration of plaintiffs' Offer and Proposed Merger, which Offer and Proposed Merger are being made in compliance with all applicable laws, obligations, and agreements. JURISDICTION AND VENUE 8. This action is brought pursuant to the Supremacy Clause (art. VI, cl. 2) and the Commerce Clause (art. I, Section 8, cl. 3), and the Due Process Clause (amends. V and XIV) of the United States Constitution; O.C.G.A. Sections 14-2-624, 14-2-1110 ET SEQ., and 14-2-1131 ET SEQ.; principles of common law; and the federal Declaratory Judgments Act, 28 U.S.C. Section 2201. Pursuant to Rule 24(c) of the Federal Rules of Civil Procedure, plaintiffs call the attention of the Court to 28 U.S.C. Section 2403, pursuant to which the Court shall notify the state attorney general of any action in which the constitutionality of any statute of a state is drawn into question. 9. The Court has jurisdiction of the subject matter of this action pursuant to 28 U.S.C. Sections 1331, 1332(a), and 1367(a). The plaintiffs and defendants are citizens of different states, and the matter in controversy exceeds the sum of $75,000, exclusive of interest and costs. 10. Venue is proper in this district pursuant to 28 U.S.C. Sections 1391(a)-(c). THE PARTIES 11. Plaintiff Invacare is an Ohio corporation with its principal place of business in Ohio. Invacare designs, manufactures, and distributes an exclusive line of medical equipment for the home health care and extended care markets. Invacare owns common stock of Healthdyne. -5- 12. Plaintiff I.H.H. is a Delaware corporation with its principal place of business in Ohio. It is a wholly-owned subsidiary of Invacare, was organized to acquire control of Healthdyne, and has not conducted any unrelated activities since its organization. I.H.H. owns common stock of Healthdyne. 13. Defendant Healthdyne is a Georgia corporation with its principal place of business in Georgia. It is engaged in the business of designing, manufacturing, and marketing technologically advanced medical devices, primarily for use in the home, as well as in specialized clinical settings. 14. Defendants Craig B. Reynolds, J. Terry Dewberry, Alexander H. Lorch, J. Leland Strange, James J. Wellman, and J. Paul Yokubinas (the "Director Defendants") are directors of Healthdyne and residents of Georgia. The Director Defendants constitute six of the seven members of Healthdyne's Board of Directors. THE OFFER AND PROPOSED MERGER 15. On January 27, 1997, I.H.H. commenced a tender offer for all outstanding shares of Healthdyne common stock (together with the associated preferred stock purchase rights issued pursuant to the Rights Agreement between Healthdyne and Trust Company Bank, dated as of May 22, 1995 (the "Poison Pill")), at the price of $13 per share net to the seller in cash. The Offer is conditioned, INTER ALIA, upon: (a) Invacare and I.H.H. being able to acquire a total of at least 51% of Healthdyne's shares; (b) Healthdyne's Poison Pill being redeemed, invalidated, or otherwise rendered inapplicable; -6- (c) I.H.H. being satisfied that the provisions of the Business Combination Statute, O.C.G.A. Sections 14-2-1131 through 14-2-1133, do not apply to prevent or impede the Offer or the Proposed Merger; and (d) I.H.H. being satisfied that the provisions of the Fair Price Statute, O.C.G.A. Sections 14-2-1100 through 14-2-1113, do not apply to prevent or impede the Offer or the Proposed Merger or are invalid, or that the Proposed Merger may be consummated without any approval required under such sections at a price per share not in excess of the price per share to be paid in the Offer. The Offer is explicitly not subject to plaintiffs' receipt of financing for the Offer or the Proposed Merger. 16. The Offer is being made in conformity with the Williams Act (Sections 14(d)-(e) and 28 of the Securities Exchange Act of 1934), 15 U.S.C. Sections 78n(d)-(e) and 78bb, and the rules and regulations promulgated thereunder by the Securities and Exchange Commission ("SEC"), 17 C.F.R. Section 240.14d-1 ET SEQ. (collectively, the "Williams Act"). The Williams Act is a comprehensive federal statute which regulates all interstate tender offers. 17. As soon as practicable following consummation of the Offer, Invacare will seek to have Healthdyne consummate the Proposed Merger with I.H.H. The purpose of the Proposed Merger is to acquire all shares not tendered and purchased pursuant to the Offer or otherwise. Pursuant to the Proposed Merger, each then outstanding Healthdyne share would be converted into the right to receive an amount in cash equal to the price per share paid pursuant to the Offer. 18. Invacare also intends, if necessary, to nominate a slate of new directors (the "New Directors") for election at Healthdyne's next annual meeting. Healthdyne's bylaws require that, under current circumstances, notice of nominations for directors must be made between February 22, 1997 and March 24, 1997. If elected, the New Directors would be committed, subject to their -7- obligations to Healthdyne's shareholders under Georgia law, to: (a) redeeming or amending the Poison Pill; (b) approving the Offer and the Proposed Merger for purposes of the Fair Price Statute; (c) approving the Offer and the Proposed Merger for purposes of the Business Combination Statute; (d) causing Healthdyne to execute an agreement and plan of merger with respect to the Proposed Merger; (e) approving, submitting, and recommending to the shareholders of Healthdyne approval of the Proposed Merger; and (f) taking such other action as may be required to expedite the prompt consummation of the Offer and the Proposed Merger. 19. The purpose of the Offer and the Proposed Merger is to enable Invacare to acquire control of, and the entire equity interest in, Healthdyne. 20. The Offer and Proposed Merger are clearly in the best interests of Healthdyne's shareholders. The Offer is a fully financed, all-cash offer, available to all Healthdyne shareholders, for all outstanding shares; it is not "front-end loaded" or otherwise coercive in nature. The Proposed Merger would permit shareholders who did not tender their shares in the Offer to receive the same cash consideration per share as shareholders who tendered in the Offer. The Offer and Proposed Merger price represents a full and fair value to Healthdyne's shareholders. 21. The Offer and Proposed Merger provide Healthdyne's shareholders with the opportunity to realize a premium of more than 45% over the market price of their shares as of December 31, 1996, the trading day prior to Invacare's initial January 2, 1997 proposal to acquire Healthdyne. The closing price quotation of Healthdyne shares on December 31, 1996 was $8.88 per share. -8- 22. The Offer and Proposed Merger do not pose any threat to the interests of Healthdyne's shareholders or to Healthdyne's corporate policy and effectiveness. 23. The Offer and Proposed Merger comply with all applicable laws, obligations, and agreements. The Offer documents fairly disclose all information material to the decision of Healthdyne's shareholders whether to accept or reject the Offer, in compliance with plaintiffs' obligations under all applicable securities laws. Plaintiffs are making the filings required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 24. Nevertheless, the Offer and Proposed Merger cannot be completed successfully unless Healthdyne's anti-takeover devices are removed. Given the premium price and fair structure of the Offer and the Proposed Merger, Healthdyne and the Director Defendants should remove these barriers and assist plaintiffs in obtaining any necessary regulatory approvals. In any event, Healthdyne and the Director Defendants should not be permitted to delay consummation of the Offer or Proposed Merger by litigation in other forums, including litigation on the propriety of its anti-takeover devices. HEALTHDYNE'S REFUSAL TO DISCUSS A TRANSACTION WITH INVACARE 25. In late summer of 1996, Thomas R. Miklich, Invacare's Chief Financial Officer and General Counsel, contacted Robert Johnson, a Healthdyne officer, and indicated that Invacare would be interested in discussing a potential combination of the two entities. Mr. Johnson responded shortly thereafter that Healthdyne's Board of Directors had determined that Healthdyne was not for sale. -9- 26. Shortly thereafter, A. Malachi Mixon, III, Invacare's Chairman and Chief Executive Officer, called Craig B. Reynolds, Healthdyne's President and Chief Executive Officer, with the intent of inquiring about a potential combination. This call was never returned. Mr. Mixon then suggested to an acquaintance who had a business relationship with Healthdyne's former parent that a combination of Invacare and Healthdyne would be beneficial to the shareholders of both. He also requested that the acquaintance inform Parker H. Petit, Chairman of Healthdyne's Board of Directors, of Invacare's interest. Within a few days, Mr. Mixon received a terse voice mail message from Mr. Petit in which Mr. Petit stated, and then repeated, that Healthdyne was not for sale. 27. Less than a week after receiving Mr. Petit's voice mail message, Mr. Mixon encountered Mr. Reynolds at a trade show and suggested that Invacare and Healthdyne meet to discuss the potential for a transaction, as he felt it would be beneficial for shareholders of both companies. Mr. Reynolds responded that he was not in a position to schedule such a meeting because Healthdyne's Board had previously decided that Healthdyne was not for sale. 28. On January 2, 1997, Mr. Mixon called Mr. Reynolds and was told that he was in a meeting and unable to take Mr. Mixon's call. Mr. Mixon then indicated that he was faxing a confidential letter (the "January 2 Letter") and requested that Mr. Reynolds' secretary hand the letter directly to Mr. Reynolds. He then asked that Mr. Reynolds call him once he had the opportunity to review the letter. Mr. Reynolds did not and has not to date called Mr. Mixon. 29. In the January 2 Letter to Mr. Reynolds and the members of Healthdyne's Board, Mr. Mixon proposed to acquire Healthdyne through a negotiated merger transaction with -10- Healthdyne in which Healthdyne shareholders would receive $12.50 per share in cash, although Mr. Mixon added that Invacare would be prepared to discuss all aspects of the proposal, including structure and economics. Mr. Mixon also asked for a response by January 10, 1997. 30. On January 8, 1997, Mr. Reynolds responded in a brief letter, indicating that he was forwarding the January 2 Letter to Healthdyne's Board for consideration at its regularly scheduled meeting at some unspecified time in February. He added that Healthdyne's response to the January 2 Letter could be expected thereafter. 31. Because combining Healthdyne and Invacare is an urgent issue of great importance to the shareholders of both companies, Invacare restated its offer to acquire Healthdyne through a negotiated merger at $12.50 per share in a letter to Mr. Reynolds dated January 10, 1997 (the "January 10 Letter"), which was publicly released. In the January 10 Letter, Mr. Mixon informed Healthdyne that Invacare was "disappointed that Healthdyne has chosen to defer its consideration for such a long time without seeking any discussions with [Invacare]." Mr. Mixon pointed out that the offer -- representing "a 40% premium over [Healthdyne's] year-end stock price" -- was "an excellent opportunity for the shareholders of Healthdyne to realize full value for their shares to an extent not likely to be available to them in the marketplace absent [Invacare's] offer." Mr. Mixon concluded the January 10 Letter by offering "to discuss all aspects of" the offer "[i]n the context of a negotiated, friendly transaction." 32. On the same day, January 10, Healthdyne issued a press release in response to the January 10 Letter. The press release stated that Healthdyne's Board of Directors would consider -11- Invacare's proposal "in due course", but failed even to give an indication of when such consideration would take place. 33. On January 24, 1997, Healthdyne issued a press release summarily rejecting Invacare's offer without negotiating or even discussing it with Invacare. On that same day, Healthdyne filed a Form 8-K with the Securities and Exchange Commission indicating that on the previous day, January 23, 1997, Healthdyne's Board of Directors had amended Healthdyne's bylaws to (1) delete a provision specifying the date of the annual meeting of shareholders if not otherwise set by the Board, and (2) opt into the Fair Price Statute, O.C.G.A. Section 14-2-1110 ET SEQ. 34. As indicated by the foregoing, Healthdyne has refused even to meet with Invacare to consider or discuss a combination or merger with Invacare and has in response to Invacare's proposals already begun taking precipitous measures to improperly impede shareholder consideration of the Offer and entrench the current directors. HEALTHDYNE'S POISON PILL, THE POISON PILL'S DEAD-HAND PROVISION, AND OTHER DEFENSIVE MEASURES 35. Healthdyne has at its disposal various anti-takeover devices and other defensive measures -- including the Poison Pill, the Fair Price Statute, and the Business Combination Statute -- which Healthdyne may use illegally to attempt to block the Offer and Proposed Merger and to entrench the Director Defendants. 36. Given the premium price and fair structure of the Offer and the Proposed Merger and their substantial value to Healthdyne's shareholders, use of Healthdyne's Poison Pill or other anti-takeover devices to prevent consummation of the Offer would represent an unreasonable -12- response to the Offer and Proposed Merger, would foreclose effective shareholder action, and would violate the Director Defendants' fiduciary duties. 37. Healthdyne's Poison Pill was adopted WITHOUT a vote of Healthdyne's owners -- the shareholders. The Poison Pill was expressly designed to inflict massive economic penalties on a potential acquiror and to prevent the owners of Healthdyne from accepting an offer to purchase their shares without the prior approval of the incumbent Board. 38. As part of the Poison Pill, Healthdyne authorized and declared a dividend of one capital stock purchase right (a "Right") for each share of common stock of Healthdyne, payable to shareholders of record as of the close of business on May 22, 1995. The Rights will expire on May 22, 2005 (the "Final Expiration Date"), unless the Rights are earlier redeemed or the Final Expiration Date is extended. 39. Each Right initially entitles the holder to purchase one one-hundredth of a share of Healthdyne Series B Cumulative Preferred Stock at a price of $50. 40. The Poison Pill provides that the Rights do not become exercisable until the "Distribution Date". The "Distribution Date" is the earlier of (a) ten business days following a public announcement that an acquiror has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares (the "Stock Acquisition Date"), or (b) ten business days after the commencement of a tender offer or exchange offer that would result in a person or group beneficially owning 20% or more of the outstanding shares. After the Distribution Date, the Rights will trade separately from the shares. -13- 41. Healthdyne's Poison Pill has both a "flip-in" feature and a "flip-over" feature. Each feature operates somewhat differently, but both are designed to inflict massive economic punishment on an acquiror that is not favored by current management. FLIP-IN 42. After the Distribution Date, any of a number of "triggering events", most significantly any person or group of affiliated or associated persons becoming the beneficial owner of 20% or more of the outstanding common stock of Healthdyne, will entitle each holder of a Right (EXCEPT the acquiror and its affiliates and associates) to buy $100 worth of Healthdyne shares for $50 per Right. This "flip-in" feature flagrantly discriminates against an acquiror by diluting its holdings and increasing massively the number of shares the acquiror would have to purchase in order to consummate a merger. FLIP-OVER 43. After the Stock Acquisition Date, similar "triggering events", most significantly a merger in which Healthdyne is not the surviving corporation or its common stock is changed or exchanged, would also entitle each holder of a Right to purchase $100 worth of the acquiring company's shares for $50 per Right. This "flip-over" feature subjects the acquiring company to a massive half-price sale of its own stock, drastically diluting the interest of its other shareholders and thereby impairing its capital structure. 44. The obvious purpose of the flip-in and flip-over features is to render an attempted acquisition of Healthdyne financially impossible without the approval of the incumbent directors. Furthermore, as described below, the purported terms of the Poison Pill provide that, in many -14- instances, its effects can only be avoided by approval of the incumbent directors or their hand-picked successors. Unless the Poison Pill is redeemed or otherwise nullified, Healthdyne's shareholders will be deprived of the opportunity to decide whether they want to accept Invacare's all-cash, all-shares, non-coercive Offer. Recognizing the insurmountable barriers posed by the Poison Pill, Invacare has made its Offer conditional upon the voluntary or court-ordered redemption, amendment, or invalidation of the Rights. DEAD-HAND CONTROL 45. Healthdyne's Poison Pill has an illegal aspect which is not found in most poison pills: it contains a set of redemption and amendment restrictions commonly referred to as a "dead-hand" provision (the "Dead-Hand Provision"). The Dead-Hand Provision serves no purpose other than to discourage acquisition activity by making a proxy contest to replace the present Board futile. The Poison Pill provides methods for removing its punitive provisions through redemption or amendment. However, under the Dead-Hand Provision, once a potential acquiror has amassed 15% of Healthdyne's outstanding shares OR replaced a majority of the directors through a proxy solicitation, the Poison Pill can only be redeemed by Healthdyne's current Board or their hand-picked successors (collectively "Dead-Hand Continuing Directors"). Furthermore, the Dead-Hand Provision provides that the Poison Pill can be amended ONLY by Dead-Hand Continuing Directors. 46. Accordingly, even if Healthdyne's shareholders at the next annual meeting vote to replace all incumbent directors with New Directors who support the Offer and Proposed Merger, the New Directors purportedly could not redeem or amend the Poison Pill to permit the -15- shareholders to get the benefit of the Offer and the Proposed Merger because, presumably not having been approved by the incumbents, they would not be Dead-Hand Continuing Directors. Moreover, after such election, NO ONE would have any power to redeem or amend the Poison Pill, and the shareholders, who by their vote will have expressed their desire to accept plaintiffs' Offer, would be effectively prevented from accepting it until the expiration of the Rights in 2005. ILLEGALITY OF THE DEAD-HAND PROVISION 47. By purporting to remove from all directors other than Dead-Hand Continuing Directors the power to redeem or amend the Poison Pill in many instances, the Dead-Hand Provision severely handicaps future boards to the point of rendering future proxy contests futile and effectively impossible. Under O.C.G.A. Sections 14-2-803 and 14-2-808 and Healthdyne's bylaws, the shareholders of Healthdyne have the right to elect and remove directors. By taking from the shareholders this basic and fundamental right, the director-entrenching Dead-Hand Provision blatantly violates Georgia law. 48. Further, under O.C.G.A. Section 14-2-801, duly elected directors are empowered to exercise all corporate powers and to direct the management of the business and affairs of a corporation, subject only to limitations contained in the corporation's articles of incorporation. Because the Dead-Hand Provision, which is not contained in the articles of incorporation, limits the ability of future directors who are not Dead-Hand Continuing Directors to direct the management of the business and affairs of the corporation by prohibiting them from redeeming or modifying the Poison Pill to permit Healthdyne's shareholders to consider a tender offer or merger proposal such directors support, the Dead-Hand Provision violates Georgia law. -16- 49. Because the Dead-Hand Provision violates O.C.G.A. Sections 14-2-801, 14-2-803, and 14-2-808, it is void and unenforceable under Georgia law. If Georgia law does permit the Dead-Hand Provision, the Georgia law conflicts with the Williams Act in violation of the Supremacy Clause of the United States Constitution and impermissibly burdens interstate commerce in violation of the Commerce Clause of the United States Constitution. ILLEGALITY OF INVOKING THE POISON PILL TO BLOCK THE OFFER AND PROPOSED MERGER 50. There is no reasonable basis for concluding that the Offer and Proposed Merger pose a threat of any kind to the shareholders of Healthdyne. If the shareholders deem the Offer to be inadequate, they, the owners of Healthdyne, can reject Invacare's Offer and Proposed Merger by refusing to tender their shares. 51. Indeed, the only potential harm Healthdyne's shareholders now face is that posed by Healthdyne's refusal to redeem or amend the Poison Pill, which refusal will make it prohibitively expensive for plaintiffs to consummate the Offer even if the shareholders want to accept it. 52. Given the premium price and fair structure of the Offer and the Proposed Merger, Healthdyne and the Director Defendants should redeem the Rights under the provisions of the Poison Pill, or amend the Poison Pill to make the Rights inapplicable to the Offer and Proposed Merger, so as to enable the shareholders to exercise their right as the owners of Healthdyne to decide upon the merits of the Offer and Proposed Merger for themselves. 53. The Director Defendants' failure to redeem the Rights or amend the Poison Pill violates the Director Defendants' fiduciary duties because it will deny the shareholders of -17- Healthdyne, including plaintiffs, meaningful access to or control over the assets of Healthdyne and will hinder or prevent the shareholders of Healthdyne, including plaintiffs, from exercising their fundamental shareholder rights under Georgia law. THE GEORGIA FAIR PRICE STATUTE 54. The Fair Price Statute, O.C.G.A. Sections 14-2-1110 through 14-2-1113, ostensibly intended to assure fair treatment of shareholders of Georgia corporations in corporate takeovers, imposes substantial restrictions on business combinations involving interested shareholders (E.G., beneficial owners of 10% or more of the voting power of the shares of the corporation). The Fair Price Statute was designed to impede coercive two-tier tender offer and merger transactions in which the acquiror first makes a premium tender offer to obtain a major stock interest in the corporation and then attempts to acquire total ownership by effecting a "freezeout merger" in which minority shareholders who do not participate in the initial tender offer may receive substantially less valuable consideration than those who tendered earlier. The Fair Price Statute was thus designed to impede discriminatory two-step transactions, not tender offer and merger transactions such as plaintiffs' fully priced, all-cash, non-coercive Offer and Proposed Merger, under which all shareholders will receive the same consideration in the Offer and the Proposed Merger. 55. The Fair Price Statute prohibits business combinations between a Georgia corporation and an interested shareholder unless: (a) the transaction is unanimously approved by the "continuing directors" of the corporation (I.E., those who were directors prior to the interested shareholder becoming such and are unaffiliated with the interested shareholder); (b) the -18- transaction is approved by two-thirds of the continuing directors and a majority of shares held by shareholders other than the interested shareholder; or (c) the interested shareholder meets certain so-called "fair price" and procedural requirements set out in the statute. 56. Absent continuing director approval, the so-called "fair price" provisions of the statute require that an interested shareholder, in effecting a business combination subsequent to having consummated a tender offer, must pay to all shareholders who did not tender into the initial offer a sum which is at least equal to the HIGHEST of (1) the highest per share price paid by the interested shareholder for any shares of the same class or series within the two-year period prior to the date of the first public announcement of the proposed business combination; (2) the price paid in the transaction in which the interested shareholder first became an interested shareholder (I.E., the tender offer); or (3) the highest closing sale price for the stock on its principal stock exchange during the 30 days including and immediately preceding (a) the date of the first public announcement of the proposed business combination, or (b) the date on which the interested shareholder first became an interested shareholder (I.E., the date on which the tender offer was consummated), whichever is higher. 57. Thus, by a rigid statutory formula, the Fair Price Statute fixes the price at which an interested shareholder may effect a business combination with a Georgia corporation absent unanimous or supermajority approval of the business combination by the incumbent board of directors. 58. Moreover, while the Fair Price Statute purports only to require "fair" and "equal" treatment of all shareholders in a takeover situation, the fixed price which must be paid to non- -19- tendering shareholders may actually have to be GREATER than the price paid to tendering shareholders. Such would be the case, for example, in situations where the closing price for the corporation's stock on any day of the 30 days preceding consummation of the tender offer is inflated above the tender offer price, whether by anomalous or manipulative trading activity or otherwise. In such a situation, the terms of the Fair Price Statute would purport to impose an unfair economic penalty upon the interested shareholder and could mandate an additional premium for non-tendering shareholders beyond the premium already reflected in the tender offer price received by tendering shareholders. In so doing, the Fair Price Statute directly contravenes its ostensible purpose of assuring equal treatment for all shareholders. The statute also discourages premium, non-coercive, two-step tender offer and merger transactions by subjecting potential acquirors committed to paying all shareholders equal consideration to the risk that they would never be able to consummate a tender offer. 59. The Fair Price Statute applies only if the corporation elects in its bylaws to be covered by the statute. Healthdyne could have opted into the Fair Price Statute at any time in its corporate history, but chose not do so until immediately before rejecting Invacare's prior offer. 60. In contrast, Healthdyne's bylaws have contained provisions "opting-in" to the Business Combination Statute since at least December 31, 1995, the year in which a majority of Healthdyne's common stock was distributed to the public. 61. The Offer price is higher than both (i) the highest per share price paid by plaintiffs for any shares acquired by them within the two-year period immediately prior to January 10, 1997, when Invacare first publicly announced its proposal to acquire Healthdyne, and (ii) the -20- highest closing price of Healthdyne shares during the 30-day period including and immediately preceding January 10, 1997. Thus, if the highest closing price of Healthdyne shares during the 30-day period including and immediately preceding the date of consummation of the Offer is in excess of the Offer price and the continuing directors do not approve the Offer and Proposed Merger, the terms of the Fair Price Statute would prevent the Proposed Merger from being consummated at the same per share price as the Offer. 62. Given the premium price and fair structure of the Offer and Proposed Merger, Healthdyne and the Director Defendants should approve the Offer and Proposed Merger for purposes of the Fair Price Statute. The Director Defendants' failure to approve the Offer and Proposed Merger for the purposes of the Fair Price Statute violates the Director Defendants' fiduciary duties because it will deny the shareholders of Healthdyne, including plaintiffs, meaningful access to or control over the assets of Healthdyne and will hinder or prevent the shareholders of Healthdyne, including plaintiffs, from exercising their fundamental shareholder rights under Georgia law. GEORGIA BUSINESS COMBINATION STATUTE 63. The Georgia legislature designed the Business Combination Statute, O.C.G.A. Sections 14-2-1131 through 14-2-1133, to impede coercive and inadequate tender offers, NOT non-coercive, premium tender offers like the Offer. The statute provides that no business combination may be consummated by a resident domestic corporation with an interested shareholder (E.G., a beneficial owner of 10% or more of the voting power of the shares of the corporation) for five years from the date the interested shareholder became an interested shareholder, unless: -21- (a) before the person became an interested shareholder, the Board approved either (i) the person's becoming an interested shareholder or (ii) the business combination; (b) in the transaction in which the person became an interested shareholder, the interested shareholder became the beneficial owner of at least 90 percent of the resident domestic corporation's shares (other than certain defined "Insider Shares"); OR (c) after becoming an interested shareholder, the person (i) acquires additional shares resulting in the interested shareholder owning at least 90 percent of the shares, not including Insider Shares, and (ii) the business combination is approved by a majority of the shares not owned by insiders or the interested shareholder. 64. Given the premium price and fair structure of the Offer and Proposed Merger, the Director Defendants' failure to approve the Offer and the Proposed Merger for the purpose of the Business Combination Statute violates the Director Defendants' fiduciary duties because it will deny the shareholders of Healthdyne, including plaintiffs, meaningful access to or control over the assets of Healthdyne and will hinder or prevent the shareholders of Healthdyne, including plaintiffs, from exercising their fundamental shareholder rights under Georgia law. IRREPARABLE INJURY 65. Healthdyne's and the Director Defendants' reliance upon and refusal to remove or nullify Healthdyne's anti-takeover devices and other defensive measures so as to obstruct the Offer or Proposed Merger will (a) deny plaintiffs meaningful access to or control over the assets of Healthdyne, (b) hinder or prevent plaintiffs from exercising their fundamental shareholder rights under Georgia law and (c) cause plaintiffs irreparable injury as a result of the loss of the unique opportunity to acquire control of Healthdyne. These injuries will be suffered directly by plaintiffs and are separate and distinct from the injuries that such actions will cause Healthdyne's other -22- shareholders, who will be deprived of the fundamental right to decide for themselves whether or not to accept the Offer and sell their shares for a substantial premium. 66. Plaintiffs have no adequate remedy at law. Only through the exercise of the Court's equitable powers will plaintiffs be protected from immediate and irreparable injury. Unless the Court enjoins the application of Healthdyne's anti-takeover devices to the Offer and Proposed Merger and enjoins Healthdyne and the Director Defendants from impeding the Offer or Proposed Merger by any other defensive measures, including litigation in other forums, plaintiffs will be (a) precluded from consummating the Offer, which is conditioned on invalidation or inapplicability of Healthdyne's anti-takeover devices, (b) denied any meaningful access to or control over the assets of Healthdyne, and (c) hindered in or prevented from exercising their fundamental shareholder rights under Georgia law. Should that occur, plaintiffs will have lost the unique opportunity to acquire control of Healthdyne and the shareholders of Healthdyne will have lost their opportunity to tender their shares for a 45% premium over the market price of Healthdyne's shares as of December 31, 1996, the trading day prior to Invacare's initial proposal for the acquisition of Healthdyne. DECLARATORY AND INJUNCTIVE RELIEF 67. The Court may grant the declaratory and injunctive relief sought herein pursuant to 28 U.S.C. Section 2201 and Fed. R. Civ. P. 57 and 65. A substantial controversy exists between the parties, as demonstrated by (a) the defendants' January 24, 1997 rejection of Invacare's January 2, 1997 initial proposal for the acquisition of Healthdyne, (b) defendants' unwillingness even to meet with plaintiffs to consider or discuss a combination or merger despite plaintiffs' premium, all-cash -23- Offer, (c) the defendants' eleventh-hour adoption of bylaw amendments in response to Invacare's proposal, which amendments are designed to entrench the Director Defendants and to impede the Offer and Proposed Merger, (d) the defendants' failure to redeem or amend the Poison Pill, and (e) the defendants' failure and refusal to approve the Offer and Proposed Merger for the purposes of the Fair Price Statute and the Business Combination Statute. The adverse legal interests of the parties are real and immediate. The existence of this controversy is causing confusion and uncertainty in the market for public securities because investors do not know whether they will be able to avail themselves of an advantageous financial offer. The granting of the requested declaratory and injunctive relief will serve the public interest by affording relief from such uncertainty and by avoiding delay. COUNT I INJUNCTIVE AND DECLARATORY RELIEF - DEAD-HAND PROVISION - VIOLATION OF GEORGIA BUSINESS CORPORATION CODE 68. Plaintiffs repeat and reallege each allegation contained in Paragraphs 1 through 67 of this Complaint as if fully set forth herein. 69. Under the GBCC, the shareholders of Healthdyne have the right to elect and remove directors. Subject only to limitations contained in the articles of incorporation, the duly elected directors are empowered to exercise all corporate powers and to direct the management of the business and affairs of the corporation. 70. O.C.G.A. Section 14-2-624 ("Section 624") authorizes the Board of a Georgia corporation to issue certain shareholder rights (such as those commonly found in "poison pill" -24- plans). The comment to Section 624 makes it clear that this authority is limited by the directors' fiduciary obligations to the corporation. Section 624 does not and cannot authorize the Dead-Hand Provision because its amendment and redemption restrictions conflict with other provisions of the GBCC and are in breach of the Director Defendants' fiduciary duties. 71. The Dead-Hand Provision (which is not contained in the articles of incorporation) violates the GBCC and the Director Defendants' fiduciary duties by impinging on Healthdyne's shareholders' rights to elect and remove directors, by rendering any future proxy contest futile, and by preventing future directors from exercising all corporate powers and managing the business and affairs of Healthdyne. 72. Plaintiffs have no adequate remedy at law. COUNT II INJUNCTIVE AND DECLARATORY RELIEF - DEAD-HAND PROVISION - SUPREMACY CLAUSE VIOLATION 73. Plaintiffs repeat and reallege each allegation contained in Paragraphs 1 through 72 of this Complaint as if fully set forth herein. 74. Plaintiffs' Offer is being made in conformity with the Williams Act. The Williams Act establishes a comprehensive, uniform system for regulating interstate tender offers. In enacting the Williams Act, Congress explicitly recognized the economic benefits created by tender offers; these benefits include (a) providing investors an opportunity to sell their shares at advantageous premiums over prevailing market prices, and (b) providing a mechanism for the -25- removal of entrenched management who fail to generate maximum returns on shareholders' equity investments. 75. The Williams Act reflects Congress's judgment and philosophy that shareholders themselves should be able to determine when it is in their best interests to tender their shares to an offeror. Thus, the Williams Act deliberately strikes a neutral balance, favoring neither an offeror nor incumbent management, so that shareholders' interests receive maximum protection. 76. To achieve these ends, the Williams Act requires that shareholders receive specific information deemed by the SEC to be material to an informed decision to tender securities or to decline an offer. Removing all artificial barriers to the exercise of shareholder choice, the Williams Act is specifically designed to enable shareholders to take advantage of tender offers that maximize their economic interests. 77. To the extent Section 624 is adjudged to permit the Dead-Hand Provision, it conflicts with the Williams Act and is thus unconstitutional because it violates the Supremacy Clause of the United States Constitution, which accords supremacy to United States law over conflicting state laws. U.S. Const. art. VI, cl. 2. 78. Plaintiffs have no adequate remedy at law. -26- COUNT III INJUNCTIVE AND DECLARATORY RELIEF - DEAD-HAND PROVISION - COMMERCE CLAUSE VIOLATION 79. Plaintiffs repeat and reallege each allegation contained in Paragraphs 1 through 78 of this Complaint as if fully set forth herein. 80. Healthdyne's shares are widely held outside Georgia. Therefore, the Offer constitutes a substantial securities transaction in interstate commerce, employing interstate instrumentalities and facilities in the communication of the Offer and in transactions for the purchase and sale of Healthdyne's securities occurring across state lines. 81. The Commerce Clause of the United States Constitution provides that: "Congress shall have the power . . . [t]o regulate commerce . . . among the several states." U.S. Const., art. 1, Section 8, cl. 3. 82. To the extent Section 624 as applied to the Offer and Proposed Merger is adjudged to permit the Dead-Hand Provision, it violates the Commerce Clause by imposing a substantial and adverse burden on interstate commerce. Specifically, the Dead-Hand Provision: (a) deters and/or substantially eliminates nationwide tender offers for Georgia corporations with such provisions, except offers that are approved by incumbent management; (b) burdens Invacare and other prospective tender offerors in their efforts to buy securities from willing sellers of Healthdyne stock located throughout the United States; (c) burdens Healthdyne shareholders throughout the United States in their efforts to sell their shares at a premium; -27- (d) substantially interferes with and diminishes access to the national securities market; and (e) impedes the injection into interstate commerce of millions of dollars by means of the Offer and Proposed Merger and interferes with the efficient allocation of economic resources. 83. These burdens imposed on interstate commerce far outweigh any purported local benefits. To the extent that the Dead-Hand Provision reduces or eliminates shareholder autonomy and entrenches existing management, it is detrimental to the interests of shareholders. 84. The undue burden on interstate commerce created by the Dead-Hand Provision has a direct and substantial impact in this case. 85. Plaintiffs have no adequate remedy at law. COUNT IV INJUNCTIVE AND DECLARATORY RELIEF - POISON PILL - BREACH OF FIDUCIARY DUTY 86. Plaintiffs repeat and reallege each allegation contained in Paragraphs 1 through 85 of this Complaint as if fully set forth herein. 87. The Offer and Proposed Merger are fully financed; non-coercive and non-discriminatory; fair to Healthdyne's shareholders; and represent a substantial premium over the market price of Healthdyne shares as of the trading date prior to Invacare's initial January 2, 1997 proposal to acquire Healthdyne. 88. The Offer and Proposed Merger comply with all applicable laws, obligations, and agreements and pose no threat to the interests of Healthdyne's shareholders or to Healthdyne's corporate policy or effectiveness. Defendants' use of or reliance upon the Poison Pill, including -28- its Dead-Hand Provision, to prevent Healthdyne's shareholders from deciding for themselves whether or not to accept the Offer is not proportionate to any threat posed, nor within the range of reasonable responses to the Offer or the Proposed Merger, forecloses effective shareholder action, and is in breach of the Director Defendants' fiduciary duties. Plaintiffs seek declaratory and injunctive relief against such breaches of fiduciary duties. 89. Defendants' refusal to redeem or amend the Poison Pill so as to block the Offer and Proposed Merger also violates the Director Defendants' fiduciary duties because such action will deny plaintiffs meaningful access to or control over the assets of Healthdyne and will hinder or prevent plaintiffs from exercising their fundamental shareholder rights under Georgia law. 90. Plaintiffs have no adequate remedy at law. COUNT V INJUNCTIVE AND DECLARATORY RELIEF - USE OF FAIR PRICE STATUTE - BREACH OF FIDUCIARY DUTY 91. Plaintiffs repeat and reallege each allegation contained in Paragraphs 1 through 90 of this Complaint as if fully set forth herein. 92. The Fair Price Statute is intended to prevent coercive and inadequate two-tier tender offer and merger transactions. 93. However, plaintiffs' all-cash Offer is fully-financed, non-coercive, and non- discriminatory, and non-tendering shareholders are to receive the same per share cash consideration in the Proposed Merger as in the Offer. The Offer and the Proposed Merger are fair and represent a substantial premium over the market price of Healthdyne shares on -29- December 31, 1996, the trading day prior to Invacare's initial January 2, 1997 proposal to acquire Healthdyne. 94. Therefore, application of the Fair Price Statute to impede, delay, or prevent shareholder consideration of the Offer would be improper and in derogation of the Director Defendants' fiduciary duties. 95. Healthdyne and the Director Defendants should be enjoined from using the Fair Price Statute for the improper purpose of impeding shareholder consideration of the Offer. 96. Plaintiffs have no adequate remedy at law. COUNT VI INJUNCTIVE AND DECLARATORY RELIEF - USE OF GEORGIA BUSINESS COMBINATION STATUTE - BREACH OF FIDUCIARY DUTY 97. Plaintiffs repeat and reallege each allegation contained in Paragraphs 1 through 96 of this Complaint as if fully set forth herein. 98. The Business Combination Statute is intended to prevent coercive and inadequate tender offers. 99. However, Invacare's Offer and Proposed Merger are fully financed, non-coercive, and non-discriminatory. The Offer and Proposed Merger are fair and represent a substantial premium over the market price of Healthdyne shares on December 31, 1996, the trading day prior to Invacare's initial January 2, 1997 proposal to acquire Healthdyne. -30- 100. Therefore, application of the Business Combination Statute to impede, delay, or prevent shareholder consideration of the Offer and Proposed Merger would be improper and in derogation of the Director Defendants' fiduciary duties. 101. Healthdyne and the Director Defendants should be enjoined from using the Business Combination Statute for the improper purpose of impeding shareholder consideration of the Offer and Proposed Merger. 102. Plaintiffs have no adequate remedy at law. COUNT VII INJUNCTIVE AND DECLARATORY RELIEF - FAIR PRICE STATUTE - SUPREMACY CLAUSE VIOLATION 103. Plaintiffs repeat and reallege each allegation contained in Paragraphs 1 through 102 of this Complaint as if fully set forth herein. 104. This claim for relief arises under the Supremacy Clause of the United States Constitution. 105. To the extent that the Fair Price Statute (a) purports to fix the price at which shares may be acquired in connection with a business combination according to a rigid statutory formula, and (b) purports to require payment of a price to non-tendering shareholders in the merger that is higher than the price paid to tendering shareholders in the tender offer, it conflicts with the Williams Act and is thus unconstitutional because it violates the Supremacy Clause of the United States Constitution, which accords supremacy to United States law over conflicting state laws. U.S. Const., art. VI, cl. 2. -31- 106. Plaintiffs have no adequate remedy at law. COUNT VIII INJUNCTIVE AND DECLARATORY RELIEF - FAIR PRICE STATUTE - UNITED STATES AND GEORGIA CONSTITUTIONAL VIOLATIONS 107. Plaintiffs repeat and reallege each allegation contained in Paragraphs 1 through 106 of this Complaint as if fully set forth herein. 108. This claim for relief arises under the Due Process and Commerce Clauses of the United States Constitution and the Due Process Clause of the Constitution of the State of Georgia. U.S. Const. amends. V and XIV; Ga. Const. art. I, Section I, par. I. 109. By fixing the price at which shares may be acquired in connection with a business combination according to a rigid statutory formula, the Fair Price Statute deprives interested shareholders of the fundamental freedoms guaranteed by the Due Process Clauses of the United States and Georgia Constitutions and imposes an undue burden on interstate commerce which far outweighs any purported local benefits in violation of the Commerce Clause of the United States Constitution. 110. For example, in requiring that, under certain circumstances, non-tendering shareholders receive a higher price for their shares in the merger than tendering shareholders in the tender offer, the Fair Price Statute fails to employ means related to the effectuation of its purported purpose of equal treatment for all shareholders. 111. Accordingly, to the extent that the Fair Price Statute would require payment of a price to non-tendering shareholders in the Proposed Merger that is higher than the price paid to -32- tendering shareholders in the Offer, it is invalid, unconstitutional, and void as so applied under the Due Process and Commerce Clauses of the United States Constitution and the Due Process Clause of the Georgia Constitution. 112. Plaintiffs have no adequate remedy at law. COUNT IX INJUNCTIVE AND DECLARATORY RELIEF - AGGREGATE EFFECT OF STATE LAWS - SUPREMACY AND COMMERCE CLAUSE VIOLATIONS 113. Plaintiffs repeat and reallege each allegation in Paragraphs 1 through 112 of this Complaint as if fully set forth herein. 114. As implemented and applied together, Section 624, if adjudged to permit the Dead-Hand Provision; the Business Combination Statute, if the Director Defendants fail to approve the Offer and Proposed Merger for the purposes thereof; and the Fair Price Statute, if the Director Defendants fail to approve the Offer and Proposed Merger for the purposes thereof and to the extent that it requires payment of a price to non-tendering shareholders in the Proposed Merger that is higher than the price paid to tendering shareholders in the Offer, would (a) conflict with the Williams Act, and thus violate the Supremacy Clause of the United States Constitution, article VI, clause 2, which accords supremacy to United States law over conflicting state laws; and (b) impose substantial and adverse burdens on interstate commerce which far outweigh any purported local benefits, and thus violate the Commerce Clause of the United States Constitution, article 1, section 8, clause 3. -33- 115. Plaintiffs have no adequate remedy at law. COUNT X INJUNCTIVE AND DECLARATORY RELIEF - OTHER ATTEMPTS TO IMPEDE OFFER AND PROPOSED MERGER - BREACH OF FIDUCIARY DUTY 116. Plaintiffs repeat and reallege each allegation contained in Paragraphs 1 through 115 of this Complaint as if fully set forth herein. 117. The Offer and Proposed Merger are all-cash, fully-financed, non-coercive, and non-discriminatory and comply with all applicable laws, obligations, and agreements. Healthdyne and the Director Defendants should not be permitted to manipulate the existing corporate machinery or to adopt new defensive measures that would have the effect of delaying, impeding, or blocking plaintiffs' Offer, the election of the New Directors, or the Proposed Merger, or that would have the effect of preventing Healthdyne's shareholders from freely considering whether to accept the Offer and approve the Proposed Merger. Nor should Healthdyne and the Director Defendants be permitted to delay, impede, or prevent consummation of the Offer and Proposed Merger by litigation in other forums. This matter is now before this Court, which is fully capable of resolving all issues relating to the Offer and Proposed Merger. Attempts to litigate these matters in other forums would be for the improper purpose of delaying, impeding, or preventing consummation of the Offer and Proposed Merger and therefore would be in derogation of the Director Defendants' fiduciary duties. 118. Thus, Healthdyne and the Director Defendants should be enjoined from using such devices for the improper purpose of impeding shareholder consideration of the Offer. -34- 119. Plaintiffs have no adequate remedy at law. WHEREFORE, plaintiffs respectfully request that this Court enter an order: (a) declaring and adjudging that the Dead-Hand Provision is invalid and unenforceable under Georgia law and is in violation of the Director Defendants' fiduciary duties; compelling the Director Defendants to amend the Poison Pill to delete the Dead-Hand Provision and enjoining Healthdyne, the Director Defendants, and Healthdyne's officers, successors, agents, servants, subsidiaries, employees and attorneys from taking any actions to enforce or apply the Dead-Hand Provision that (i) would interfere with plaintiffs' voting rights, (ii) discriminate in any way against plaintiffs in the exercise of their rights with respect to their Healthdyne stock, (iii) impede or frustrate the ability of Healthdyne's shareholders to consider and make their own determination as to whether to elect New Directors and/or accept the terms of the Offer and/or approve the Proposed Merger, or (iv) otherwise interfere, impede, or delay the commencement, continuation, or consummation of the Offer or Proposed Merger; (b) in the event the Dead-Hand Provision is adjudged permissible under Section 624, declaring that Section 624 is unconstitutional as applied to the Offer and Proposed Merger to the extent that it permits the Dead-Hand Provision because (i) it is in conflict with the Williams Act and thus violates the Supremacy Clause of the United States Constitution, and (ii) it violates the Commerce Clause of the United States Constitution; (c) compelling the Director Defendants to redeem the Rights associated with the Poison Pill or to amend the Poison Pill so as to make the Rights inapplicable to the -35- Offer and Proposed Merger, and enjoining Healthdyne, the Director Defendants, and Healthdyne's officers, successors, agents, servants, subsidiaries, employees and attorneys from taking any action to implement, distribute, or recognize any rights or powers with respect to said Rights (other than to redeem or amend the Rights in accordance with the order), and from taking any actions pursuant to the Poison Pill that would dilute or interfere with plaintiffs' voting rights or in any other way discriminate against plaintiffs in the exercise of their rights with respect to their Healthdyne stock; (d) compelling the Director Defendants to approve the Offer and Proposed Merger pursuant to the Fair Price Statute and enjoining Healthdyne, the Director Defendants, and Healthdyne's officers, successors, agents, servants, subsidiaries, employees and attorneys from taking any actions to enforce or apply the Fair Price Statute that would interfere with the commencement, continuation, or consummation of the Offer or Proposed Merger; (e) compelling the Director Defendants to approve the Offer and Proposed Merger for the purpose of the Business Combination Statute and enjoining Healthdyne, the Director Defendants, and Healthdyne's officers, successors, agents, servants, subsidiaries, employees and attorneys from taking any actions to enforce or apply the Business Combination Statute that would interfere with the commencement, continuation, or consummation of the Offer or Proposed Merger; (f) declaring that the Fair Price Statute is unconstitutional as applied to the Offer and Proposed Merger because (i) it is in conflict with the Williams Act and thus -36- violates the Supremacy Clause of the United States Constitution, and (ii) it violates the Due Process and Commerce Clauses of the United States Constitution and the Due Process Clause of the Georgia Constitution; (g) declaring that Section 624 (to the extent it is adjudged to permit the Dead-Hand Provision), the Business Combination Statute, and the Fair Price Statute are, as implemented and applied together to the Offer and Proposed Merger, unconstitutional because (i) they are in conflict with the Williams Act and thus violate the Supremacy Clause of the United States Constitution, and (ii) they violate the Commerce Clause of the United States Constitution; (h) enjoining Healthdyne, the Director Defendants, and Healthdyne's officers, successors, agents, servants, subsidiaries, employees and attorneys from taking any steps to impede or frustrate the ability of Healthdyne's shareholders to consider and make their own determination as to whether to accept the terms of the Offer or approve the Proposed Merger or taking any other action to thwart or interfere with the Offer or Proposed Merger; (i) declaring and adjudging that the Offer and Proposed Merger comply with all applicable laws, obligations, and agreements; (j) declaring and adjudging that Healthdyne, the Director Defendants, and Healthdyne's officers, successors, agents, servants, subsidiaries, employees and attorneys may not commence, and enjoining them from commencing, in any forum other than this Court, any judicial proceedings that would require litigation, by way of claim, defense, or counterclaim, of any of the claims, defenses, or -37- counterclaims which may be asserted in this lawsuit and that would delay or impede commencement, continuation, or consummation of the Offer or Proposed Merger, including, without limitation, any proceedings challenging the Offer or Proposed Merger or seeking to enforce, apply, or declare the validity of any of Healthdyne's anti-takeover devices or other defensive measures; (k) awarding plaintiffs their costs and disbursements in this action, including reasonable attorneys' fees; and (l) granting such other and further relief as to the Court seems just and proper. -38- Dated: January 27, 1997 KING & SPALDING /s/ M. Robert Thornton ------------------------- M. Robert Thornton Georgia Bar No. 710475 Michael R. Smith Georgia Bar No. 661689 David J. Onorato Georgia Bar No. 553826 191 Peachtree Street, N.E. Attorneys for Plaintiffs Invacare Corporation Atlanta, Georgia 30303 and I.H.H. Corp. Telephone: (404) 572-4600 Facsimile: (404) 572-5100 Of Counsel: SIMPSON THACHER & BARTLETT 425 Lexington Avenue New York, New York 10017 (212) 455-2000 -----END PRIVACY-ENHANCED MESSAGE-----