PARENT VOTING AGREEMENT
VOTING AGREEMENT dated as of April 13, 1998 (this "Agreement") by and among
Mariner Health Group, Inc., a Delaware corporation (the "Company"), and Apollo
Management, L.P., Apollo Investment Fund III, L.P., Apollo UK Partners, III,
L.P. and Apollo Overseas Partners III, L.P. (collectively, "Apollo")
WHEREAS, Apollo is the beneficial owner of shares of common stock, par
value $.01 per share (the "Parent Common Stock"), of Paragon Health Network,
Inc., a Delaware corporation ("Parent"), and through a Proxy and Voting
Agreement dated as of November 4, 1997 (the "Proxy and Voting Agreement"),
Apollo has the right to vote additional shares of Parent Common Stock;
WHEREAS, Paragon Acquisition Sub, Inc., a Delaware corporation and wholly
owned subsidiary of the Parent (the "Subsidiary"), Mariner Health Group, Inc.
and Parent have entered into an Agreement and Plan of Merger, dated as of the
date hereof (as the same may be amended or supplemented, the "Merger
Agreement"), with respect to the merger of Subsidiary with and into the Company
(the "Merger") with the Company surviving the Merger; and
WHEREAS, as an inducement to the Company to enter into, execute and deliver
the Merger Agreement, the Company requested that Apollo execute this Agreement
pursuant to which Apollo will agree to vote the shares of Parent Common Stock
which Apollo beneficially owns or has the right to vote as provided herein.
NOW, THEREFORE, in consideration of the execution and delivery by the
Company of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. VOTING AGREEMENTS. Subject to the provisions of Section 6 hereof, in
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connection with the efforts of the Parent to cause the Merger Agreement and the
Merger to receive the required approval of the stockholders of Parent and to be
consummated, Apollo agrees with, and covenants to, the Company as follows:
(a) At any meeting of stockholders of Parent called to vote upon the
Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstance upon which a vote, consent or other approval of
stockholders of Parent is sought with respect to the issuance of shares of
Parent Common Stock in connection with the Merger and pursuant to the
Merger Agreement (the "Issuance"), Apollo shall (i) appear or otherwise
take appropriate action to ensure that the Apollo Shares (as defined below)
are present at such meeting for the purpose of obtaining a quorum and (ii)
vote (or cause to be voted) or execute a written consent with respect to
the Apollo Shares in favor of the Issuance and each of the other
transactions contemplated by or in any way related to the Merger Agreement.
(b) At any meeting of stockholders of Parent or at any adjournment
thereof or in
any other circumstance upon which the vote, consent or other approval of
stockholders of Parent is sought, Apollo shall vote (or cause to be voted)
or execute a written consent in connection with the Apollo Shares against
(i) any merger agreement or merger (other than the Merger Agreement and the
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by Parent or (ii) any action or agreement, including any proposed
amendment of Parent's Certificate of Incorporation or By-laws or other
proposal or transaction involving Parent or any of its subsidiaries which
action, agreement, amendment or other proposal or transaction is intended,
or could reasonably be expected to impede, interfere with, delay, or
attempt to frustrate, prevent or nullify the Merger, the Merger Agreement
or any of the other transactions contemplated thereby (each of the
foregoing in clauses (i) or (ii) above, a "Competing Transaction").
2. REPRESENTATIONS AND WARRANTIES. Apollo represents and warrants to the
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Company as follows:
(a) Through its beneficial ownership and pursuant to the Proxy and
Voting Agreement, Apollo has the right to vote 17,777,778 shares of Parent
Common Stock (the "Apollo Shares"). Except for the Apollo Shares, Apollo
is not the record or beneficial owner of any shares of Parent Common Stock.
(b) This Agreement has been duly executed and delivered by Apollo and
Apollo intends for this to be a valid and binding agreement and will not
take any action to contest the valid and binding nature of this Agreement.
Apollo is a limited partnership duly formed, validly existing and in good
standing under the laws of the state of its formation with full partnership
power and authority necessary to enter into this Agreement and to perform
its obligations hereunder.
(c) Except as described on Schedule 2(c) hereof, neither the execution
and delivery of this Agreement nor the consummation by Apollo of the
transactions contemplated hereby will result in a violation of, or a
default under, or conflict with, any contract, trust, commitment,
agreement, understanding, arrangement or restriction of any kind to which
Apollo is a party or bound or to which the Apollo Shares are subject.
Neither the execution and delivery of this Agreement nor the consummation
by Apollo of the transactions contemplated hereby will violate, or require
any consent, approval or notice under any provision of any judgment, order
or decree applicable to Apollo or the Apollo Shares, except for any
necessary consent, approval or notice under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, or Section 13 of the Securities
Exchange Act of 1934, as amended, and (ii) required by local, state and
federal regulatory agencies, commissions, boards or public authorities with
jurisdiction over health care facilities and providers.
(d) Except as described on Schedule 2(d) hereof, none of which as of
the date hereof impede the ability of Apollo to fulfill its obligations
under this Agreement, the Apollo Shares owned by affiliates of Apollo (the
"Affiliate Shares") and the certificates representing such Shares are now
and at all times during the term hereof will be held by such affiliates, or
by a nominee or custodian for the benefit of such affiliate, free and clear
of all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or
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any other encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder.
(e) Apollo understands and acknowledges that the Company is entering
into the Merger Agreement in reliance upon Apollo's execution and delivery
of this Agreement.
3. COVENANTS. Apollo agrees with, and covenants to, the Company as
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follows:
(a) Apollo shall not (i) transfer (which terms shall include, without
limitation, for the purposes of this Agreement, any sale, gift, pledge,
alienation, assignment or other disposition, directly or indirectly, by
operation of law, in connection with any merger or otherwise (collectively,
a "Transfer")), or consent to any Transfer of, any or all of the Affiliate
Shares or any interest therein, except pursuant to the Merger or as set
forth on Schedule 3(a) hereof, (ii) enter into any contract, option or
other agreement or understanding with respect to any Transfer of any or all
of the Affiliate Shares or any interest therein, (iii) grant any proxy,
power of attorney or other authorization in or with respect to the
Affiliate Shares, except for this Agreement and any proxy granted in
connection with any meeting of stockholders of Parent called to vote upon
the Issuance or at any adjournment thereof which contains voting
instructions consistent with Apollo's obligations under this Agreement, or
(iv) deposit the Affiliate Shares into a voting trust or enter into a
voting agreement or any other arrangement with respect to such Shares;
provided, that Apollo may, subject to the provisions of Section 4 hereof,
transfer any Affiliate Shares to another affiliate of Apollo or other party
to the Proxy and Voting Agreement so long as Apollo continues to be able to
vote such Shares in accordance with the terms of this Agreement.
(b) Subject to the provisions of Section 6 hereof, Apollo shall not,
in its capacity as a stockholder of Parent, and shall instruct any
investment banker, attorney or other adviser or representative of Apollo
not to, directly or indirectly, (i) solicit, initiate, facilitate, or
encourage any Competing Transactions or (ii) participate in any discussions
or negotiations regarding, or furnish to any person any information with
respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to
lead to, a Competing Transaction. Apollo shall immediately cease and cause
to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing.
Without limiting the foregoing, it is understood that solely for purposes
of enabling the Company to avail itself of the remedies available pursuant
to Section 9(h) hereof, any violation of the restrictions set forth in the
preceding sentence by an investment banker, attorney or other adviser or
representative of Apollo, whether or not such person is purporting to act
on behalf of Apollo or otherwise, shall be deemed to be a violation of this
Section 3(b) by Apollo.
4. CERTAIN EVENTS. Apollo agrees that this Agreement and the obligations
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hereunder shall attach to the Apollo Shares and shall be binding upon any person
or entity to which legal or beneficial ownership of the Apollo Shares shall
pass, whether by operation of law or otherwise. In the event of any stock
split, stock dividend, merger, reorganization, recapitalization or other change
in the capital structure of Parent affecting Parent Common Stock, or the
acquisition of additional shares of Parent Common Stock or other voting
securities of Parent by Apollo, the obligations hereunder shall attach to any
additional shares of Parent Common Stock or other voting securities of Parent
issued to or acquired by Apollo.
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5. VOIDABILITY. If prior to the execution hereof, the Board of Directors
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of Parent shall not have duly and validly authorized and approved by all
necessary corporate action the Merger Agreement and the transactions
contemplated thereby, so that by the execution and delivery hereof the Company
would become, or could reasonably be expected to become, an "interested
stockholder" with whom Parent would be prevented for any period pursuant to
Section 203 of the DGCL from engaging in any "business combination" (as such
terms are defined in Section 203 of the DGCL), then this Agreement shall be void
and unenforceable until such time as such authorization and approval shall have
been duly and validly obtained.
6. STOCKHOLDER CAPACITY. Certain persons affiliated with Apollo are
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directors of Parent and Apollo does not make any agreement or understanding
herein with respect to such individuals in their capacity as directors and the
provisions of this Agreement shall not restrict or limit the discharge of their
fiduciary duties as directors of Parent. Apollo signs solely in its capacity as
the beneficial owner or holder of a proxy with respect to the Apollo Shares.
7. REGULATORY APPROVAL. Each of the provisions of this Agreement is
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subject to compliance with applicable regulatory conditions.
8. FURTHER ASSURANCES. Apollo shall, upon request of the Company,
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execute and deliver any additional documents and take such further actions as
may reasonably be deemed by the Company to be necessary or desirable to carry
out the provisions hereof.
9. TERMINATION. It is a condition precedent to the effectiveness of this
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Agreement that the Merger Agreement shall have been executed and delivered and
be in full force and effect. This Agreement shall automatically terminate and
be of no further force and effect upon the first to occur of (i) the Effective
Time of the Merger or (ii) the date upon which the Merger Agreement is
terminated in accordance with its terms. Upon such termination, except for any
rights any party may have in respect of any breach by any other party of its or
his obligations hereunder, none of the parties hereto shall have any further
obligation or liability hereunder
10. MISCELLANEOUS.
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(a) Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to them in the Merger
Agreement.
(b) All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given upon the
same terms as set forth in Section 8.05 of the Merger Agreement, except
that notices to Apollo shall be sent to:
Apollo Advisors, L.P.
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
With a copy to:
Xxxxxx X. Xxxxxx
Sidley & Austin
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000 Xxxx Xxxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
(c) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
(d) This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the
Company and Apollo and delivered to Company, Subsidiary, Parent and Apollo.
(e) This Agreement (including the documents and instruments referred
to herein) constitutes the entire agreement, and supersedes all prior
agreements and undertakings, both written and oral, among the parties with
respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part,
through any merger, by operation of law or otherwise, by any of the parties
without the prior written consent of the other parties, except by laws of
descent or as expressly contemplated by Section 3(a) hereof. Any
assignment in violation of the foregoing shall be void.
(h) Apollo agrees that irreparable damage would occur and that the
Company would not have any adequate remedy at law in the event that any of
the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed
that the Company shall be entitled to an injunction or injunctions to
prevent breaches or threatened breaches by Apollo of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of Delaware or in Delaware
state court, this being in addition to any other remedy to which the
Company may be entitled at law or in equity. In addition, each of the
parties hereto irrevocably and unconditionally (i) consents to be subject
to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated hereby, (ii) agrees
that such party will not attempt to deny or defeat the personal
jurisdiction of such courts by motion or other request for leave from any
such court, (iii) agrees that such party will not bring any action relating
to this Agreement or any of the transactions contemplated hereby in any
court other than a Federal court sitting in the State of Delaware or a
Delaware state court and (iv) that service of process may also be made on
such party by prepaid certified mail with a proof of mailing receipt
validated by the United States Postal Service constituting evidence of,
valid service, and that service made pursuant to this clause (iv) shall
have the same legal force and effect as if served upon such party
personally within the State of Delaware.
(i) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be
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invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions herein and the application thereof to any other
circumstances, shall remain in full force and effect, shall not in any way
be affected, impaired, or invalidated, and shall be enforced to the fullest
extent permitted by law and the provision found to be invalid, void or
unenforceable shall be immediately revised by the parties hereto so as to
be valid, binding and enforceable to the greatest extent then permitted by
applicable law.
(j) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and
signed by such party.
(k) A facsimile of this Agreement containing signatures of all of the
parties hereto shall constitute an original document for all purposes.
[BALANCE OF PAGE INTENTIONALLY OMITTED]
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IN WITNESS WHEREOF, the Company and Apollo have caused this Parent Voting
Agreement to be duly executed and delivered on day and year first above written.
MARINER HEALTH GROUP, INC.
By:
Name:
Title:
APOLLO MANAGEMENT, L.P.
By: AIF III Management, Inc.,
Its General Partner
By:
Name:
Title:
APOLLO INVESTMENT FUND III, L.P.
By: Apollo Advisors II, L.P.,
Its General Partner
By: Apollo Capital Management II, Inc.,
Its General Partner
By:
Name:
Title:
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APOLLO UK PARTNERS III, L.P.
By: Apollo Advisors II, L.P.,
Its General Partner
By: Apollo Capital Management II, Inc.,
Its General Partner
By:
Name:
Title:
APOLLO OVERSEAS PARTNERS, III, L.P.
By: Apollo Advisors II, L.P.,
Its General Partner
By: Apollo Capital Management II, Inc.,
Its General Partner
By:
Name:
Title:
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