Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FOUR SEASONS HEALTH CARE LIMITED,
DELTA I ACQUISITION, INC.
AND
OMEGA WORLDWIDE, INC.
Dated as of August 1, 2002
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TABLE OF CONTENTS
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Page
ARTICLE I DEFINITIONS..............................................2
Section 1.1 Defined Terms.......................................2
Section 1.2 Additional Defined Terms............................5
Section 1.3 Construction........................................7
Section 1.4 Knowledge...........................................8
ARTICLE II THE OFFER................................................8
Section 2.1 The Offer...........................................8
Section 2.2 Company Actions....................................10
Section 2.3 Composition of the Board of Directors..............11
ARTICLE III THE MERGER..............................................13
Section 3.1 The Merger.........................................13
Section 3.2 Conversion of Stock................................13
Section 3.3 Surrender of Certificates..........................13
Section 3.4 Payment............................................14
Section 3.5 No Further Rights of Transfers.....................15
Section 3.6 Stock Option and Other Plans.......................15
Section 3.7 Charter of the Surviving Corporation...............16
Section 3.8 Bylaws of the Surviving Corporation................16
Section 3.9 Directors and Officers of the Surviving
Corporation.......................................16
Section 3.10 Closing............................................17
Section 3.11 Withholding Rights.................................17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........17
Section 4.1 Due Incorporation, Good Standing and Corporate
Power............................................17
Section 4.2 Authorization and Validity of this Agreement.......18
Section 4.3 Capitalization.....................................18
Section 4.4 Consents and Approvals; No Violations..............19
Section 4.5 Company Reports and Financial Statements...........20
Section 4.6 Absence of Certain Changes.........................20
Section 4.7 Title to Properties; Encumbrances..................21
Section 4.8 Compliance with Laws...............................21
Section 4.9 Litigation.........................................22
Section 4.10 Employee Benefit Plans.............................22
Section 4.11 Employment Relations and Agreements................27
Section 4.12 Taxes..............................................28
Section 4.13 Liabilities........................................30
Section 4.14 Intellectual Property..............................30
Section 4.15 Proxy Statement; Offer Documents and
Schedule 14D-9...................................30
(i)
Section 4.16 Broker's or Finder's Fee; Expenses.................31
Section 4.17 Certain Contracts and Arrangements.................31
Section 4.18 Environmental Laws and Regulations.................32
Section 4.19 State Takeover Statutes; Appraisal Rights..........34
Section 4.20 Voting Requirements................................34
Section 4.21 Rights Agreement...................................34
Section 4.22 Opinion of Financial Advisor.......................34
Section 4.23 Insurance..........................................35
Section 4.24 Stock Options......................................35
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........35
Section 5.1 Due Organization, Good Standing and Corporate
Power.............................................35
Section 5.2 Authorization and Validity of Agreement............35
Section 5.3 Consents and Approvals; No Violations..............36
Section 5.4 Offer Documents, Schedule 14D-9 and Proxy
Statement........................................36
Section 5.5 Sub's Operations...................................37
Section 5.6 Funds..............................................37
Section 5.7 PHFL Offer.........................................37
Section 5.8 Brokers............................................37
Section 5.9 Litigation.........................................37
ARTICLE VI TRANSACTIONS PRIOR TO CLOSING DATE......................37
Section 6.1 Access to Information Concerning Properties and
Records...........................................37
Section 6.2 Confidentiality....................................38
Section 6.3 Conduct of the Business of the Company Pending the
Closing Date.....................................38
Section 6.4 Company Stockholders' Meeting; Preparation of
Proxy Statement; Short Form Merger...............42
Section 6.5 Commercially Reasonable Efforts; Parent and Sub
Agreements.......................................43
Section 6.6 No Solicitation of Other Offers....................44
Section 6.7 Notification of Certain Matters....................47
Section 6.8 Antitrust Laws.....................................47
Section 6.9 Directors' and Officers' Insurance.................48
Section 6.10 Rights Agreement...................................49
Section 6.11 Public Announcements...............................49
Section 6.12 Employee Arrangements..............................50
ARTICLE VII CONDITIONS PRECEDENT....................................50
Section 7.1 Conditions Precedent to Each Party's Obligation to
Effect the Merger................................50
ARTICLE VIII TERMINATION AND ABANDONMENT.............................51
Section 8.1 Termination........................................51
Section 8.2 Effect of Termination..............................53
ARTICLE IX MISCELLANEOUS...........................................54
Section 9.1 Fees and Expenses..................................54
(ii)
Section 9.2 Representations and Warranties.....................55
Section 9.3 Extension; Waiver..................................56
Section 9.4 Notices............................................56
Section 9.5 Entire Agreement...................................57
Section 9.6 Binding Effect; Benefit; Assignment................57
Section 9.7 Amendment and Modification.........................57
Section 9.8 Further Actions....................................58
Section 9.9 Headings...........................................58
Section 9.10 Counterparts.......................................58
Section 9.11 APPLICABLE LAW.....................................58
Section 9.12 Severability.......................................58
Section 9.13 Specific Enforcement...............................59
Section 9.14 Waiver of Jury Trial...............................59
Annexes:
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Annex A - Tender Offer Conditions
(iii)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 1, 2002 (this
"Agreement"), by and among FOUR SEASONS HEALTH CARE LIMITED, a private limited
company organized under the laws of England and Wales ("Parent"), DELTA I
ACQUISITION, INC., a corporation organized under the laws of Delaware and a
wholly-owned subsidiary of Parent ("Sub"), and OMEGA WORLDWIDE, INC., a
corporation organized under the laws of Maryland (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent through the
acquisition of all of the issued and outstanding shares of common stock, par
value $0.10 per share (the "Common Stock"), of the Company (including the
associated Preferred Stock Purchase Rights (the "Rights" and, together with
the Common Stock, the "Shares") issued pursuant to the Rights Agreement, dated
as of April 2, 1998, by and between the Company and First Chicago Trust
Company of New York, as amended by the First Amendment to Rights Agreement
dated July 17, 2002, and the Second Amendment to Rights Agreement dated as of
the date hereof, in each case between the Company and Equiserve Trust Company,
N.A., successor to First Chicago Trust Company of New York ("the "Rights
Agreement"));
WHEREAS, in contemplation of the acquisition of the Company by Parent, it
is proposed that Parent shall cause Sub to make a tender offer (as such may be
amended from time to time as permitted by this Agreement, the "Offer") to
purchase, on the terms and subject to the conditions of this Agreement, all of
the Common Stock at a price of U.S. $3.32 per Share net to the seller in cash
(the "Offer Price");
WHEREAS, on the terms and subject to the conditions of this Agreement,
following the acquisition of Shares pursuant to the Offer, Sub shall be merged
(the "Merger") with and into the Company with the Company surviving in
accordance with the Maryland General Corporation Law ("MGCL") and the Delaware
General Corporation Law ("DGCL"), pursuant to which each outstanding Share
shall be converted into the right to receive the Offer Price;
WHEREAS, Parent and Sub are unwilling to enter into this Agreement unless
certain holders of Shares, concurrently with the execution and delivery of
this Agreement, enter into a tender and option agreement and irrevocable proxy
(each, a "Tender and Voting Agreement") by and among Parent, Sub and such
holders of Shares providing for, among other things, the agreement of such
holders of Shares to tender their Shares into the Offer, and to vote all
Shares owned by such holders of Shares in favor of the Merger, subject to the
terms and conditions stated therein;
WHEREAS, Parent and Sub are unwilling to enter into this Agreement unless
the holder of Series C Preferred Shares of the Company (the "Preferred
Shares"), concurrently with the
execution and delivery of this Agreement, enters into a stock purchase
agreement which shall include a voting agreement (the "Preferred Stockholder
Agreement" together with the Tender and Voting Agreements, the "Stockholders
Agreements") by and among Parent, Sub and the holder of Preferred Shares
providing for, among other things, the agreement of such holder of Preferred
Shares to sell its Preferred Shares and, together with the Tender and Voting
Agreement applicable to such holder, to vote all Shares owned by such holder
of Preferred Shares in favor of the Merger;
WHEREAS, the Board of Directors of the Company has appointed from its
members a Special Committee (the "Special Committee") and the Special
Committee has considered the Offer, the Merger and the transactions
contemplated hereby and has unanimously determined that the Offer and the
Merger are fair to and in the best interests of the Company and the holders of
Shares and has determined that the Offer and Merger are advisable, and has
unanimously recommended that the Board of Directors of the Company approve the
Offer, the Merger, this Agreement and the transactions contemplated hereby;
WHEREAS, the Board of Directors of the Company (i) has
unanimously determined that the Offer and the Merger are fair to and in the best
interests of the Company and the holders of Shares, and has declared that the
Offer and the Merger are advisable, (ii) has unanimously approved the Offer, the
Merger, the Stockholders Agreements and this Agreement and (iii) has unanimously
resolved to recommend that the holders of Shares accept the Offer and tender
their Shares pursuant to the Offer and that the stockholders of the Company
approve the Merger, this Agreement and the transactions contemplated hereby;
WHEREAS, the respective Boards of Directors of Parent and Sub
have approved the Merger, this Agreement and the transactions contemplated
thereby;
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Company has entered into a Share Option Agreement (the
"Option Agreement"), dated as of the date hereof, with Parent and Sub; and
WHEREAS, in connection with, and as a condition to, the
acquisition of the Company by Parent, an Affiliate of Parent has agreed to make
an offer (the "PHFL Offer") upon substantially the terms, in all material
respects, set out in the draft offer document dated the date hereof (the "PHFL
Offer Document"), to acquire all of the issued and outstanding shares and
warrants to acquire shares of Principal Healthcare Finance Limited, a company
organized under the laws of Jersey, in the Channel Islands ("PHFL"), other than
those held by the Company.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, representations, warranties and agreements herein contained,
the parties intending to be legally bound, hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms . When used in this Agreement, the following
terms shall have the respective meanings specified therefor below.
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"Affiliate" of any Person shall mean any Person directly or indirectly
controlling, controlled by, or under common control with, such Person, and
shall include, in the case of the Company, PHFT and PHFL and its Subsidiaries;
provided that, for the purposes of this definition, "control" (including with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities or partnership interests, by contract or otherwise;
provided, further, that for purposes of Article VI, the obligation of the
Company, and the obligation of the Company to cause its Affiliates, to take or
refrain from taking any action with respect to PHFT or PHFL shall apply only
to the extent of the Company's control of PHFL as a shareholder or unitholder,
as the case may be, of PHFT or PHFL, pursuant to the Company's participation
in the Board of Directors of PHFT or PHFL (consistent with any such directors'
fiduciary duties), if any, or pursuant to the Company's contractual
arrangements with PHFT or PHFL (it being understood and agreed that
notwithstanding anything herein to the contrary, where there is a conflict
between the obligations of the Company hereunder and the obligations of the
Company or Omega (UK) Limited under the terms of any advisory agreement
between, on the one hand, PHFL or a Subsidiary of PHFL and, on the other hand,
the Company or Omega (UK) Limited, then neither the Company nor Omega (UK)
Limited shall be required to take any action that would give rise to a breach
of such agreement by the Company or Omega (UK) Limited or to omit to take any
action that would give rise to such a breach).
"Antitrust Authorities" shall mean the Federal Trade Commission, the
Antitrust Division of the United States Department of Justice, the attorneys
general of the several states of the United States, the Office of Fair Trading
in the United Kingdom and the Competition Commission, the Australian
Competition and Consumer Commission and any other Governmental Entity having
jurisdiction with respect to the transactions contemplated hereby pursuant to
applicable Antitrust Laws.
"Antitrust Laws" shall mean the Xxxxxxx Act, as amended, the Xxxxxxx Act,
as amended, the HSR Act, the Federal Trade Commission Act, as amended, the
Fair Trading Xxx 0000, as amended, the Competition Xxx 0000, the Australian
Foreign Acquisitions and Takeovers Xxx 0000, the Australian Trade Practices
Act of 1974, the New Zealand Commerce Act of 1986, and all other U.S. and
non-U.S. federal, state, municipal, provincial and other statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines, and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
"Business Day" shall mean any day except a Saturday, a Sunday or any
other day on
which commercial banks are required or authorized to close in Xxx Xxxx, Xxx Xxxx
xxx/xx Xxxxxx, Xxxxxxx.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended, and the regulations promulgated and the rulings issued thereunder.
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Competition Commission" shall mean the U.K. Competition Commission.
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"Completed Commission Filings" shall mean the Commission Filings filed
prior to the date hereof.
"Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"GAAP" shall mean generally accepted accounting principles of the United
States of America consistently applied, as in effect from time to time.
"Governmental Entity" shall mean any instrumentality, subdivision, court,
administrative agency, commission, official or other authority of the United
States or any other country or any state, province, prefect, municipality,
locality or other government or political subdivision thereof, or any
quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" shall mean any of the following (i) U.S. and
non-U.S. patents, and applications for either, (ii) registered and
unregistered trademarks, service marks and other indicia of origin, pending
trademark and service xxxx registration applications, and intent-to-use
registrations or similar reservations of marks, (iii) registered and
unregistered copyrights and mask works, and applications for registration of
either, (iv) internet domain names, applications and reservations therefor,
uniform resource locators and the corresponding Internet sites, (v) trade
secrets and proprietary information not otherwise listed in (i) through (iv)
above, including, without limitation, unpatented inventions, invention
disclosures, moral and economic rights of authors and inventors (however
denominated), confidential information, technical data, customer lists,
corporate and business names, trade names, trade dress, brand names, know-how,
show-how, mask works, formulae, methods (whether or not patentable), designs,
processes, procedures, technology, source codes, object codes, computer
software programs, databases, data collections and other proprietary
information or material of any type, and all derivatives, improvements and
refinements thereof, howsoever recorded, or unrecorded and (vi) any good will
associated with any of the foregoing.
"Material Adverse Effect", with respect to any Person, shall mean any
event, change, occurrence, effect, fact, violation or circumstance having a
material adverse effect on (i) the ability of such Person to perform its
obligations under this Agreement or to consummate the transactions
contemplated hereby or thereby on a timely basis or (ii) the business, assets,
liabilities, results of operations or financial condition of such Person and
its Subsidiaries, taken as a whole; provided, however, that the following
shall be excluded from the definition of "Material Adverse Effect" and from
any determination as to whether a Material Adverse Effect has occurred or may
occur: (a) the effect of changes that are generally applicable to the nursing
home or healthcare industries, (b) any material changes in the financial,
banking, currency or capital markets in general which, in each case, do not
adversely affect the Company more disproportionately than other entities in
the same or similar lines of business or (c) solely for the purpose of clause
(h) of Annex A, such items specifically
4
set forth on the Company Disclosure Letter other than any material change with
respect to such items disclosed thereon as of the date hereof.
"Person" shall mean and include an individual, a partnership, a limited
liability partnership, a joint venture, a corporation, a limited liability
company, a trust, an unincorporated organization, a group and a Governmental
Entity.
"PHFT" shall mean each of Beheer-en-Beleggingsmaats Chappij Dilava B.V.,
Beheer- en-Beleggingsmaats Chappij Rocla B.V., Principal Healthcare Finance
Unit Trust No. 3 and Principal Healthcare Finance Unit Trust No. 4 and each of
their respective subsidiaries, including, without limitation, Principal
Healthcare Finance Trust, Principal Healthcare Finance Unit Trust No. 1,
Principal Healthcare Finance Unit Trust No. 2, Principal Healthcare Finance
Trust No. 2, and Principal Healthcare Finance (NZ) Limited, Principal
Healthcare Finance No.2 Pty Limited, Principal Healthcare Finance Pty Limited,
PHF No.1 Management Pty Limited, PHF No.3 Management Pty Limited, PHF No.2 Pty
Limited, PHF No.1 Pty Limited, Omega (Australia) Pty Limited and Principal
Healthcare Finance No. 3 Pty Limited.
"Securities Act" shall mean the U.S. Securities Act of 1933, as amended.
"Subsidiary", with respect to any Person, shall mean and include (i) any
partnership of which such Person or any of its Subsidiaries is a general
partner, and (ii) any other entity in which such Person or any of its
Subsidiaries owns or has the power to vote fifty percent (50%) or more of the
equity interests in such entity having general voting power to participate in
the election of the governing body of such entity; provided, however, that the
term "Subsidiary," in the case of the Company shall specifically include PHFT
and PHFL and its Subsidiaries; provided, further, that for purposes of Article
VI, the obligation of the Company, and the obligation of the Company to cause
its Subsidiaries, to take or refrain from taking any action with respect to
PHFT or PHFL shall apply only to the extent of the Company's control of PHFT
or PHFL as a shareholder or unitholder, as the case may be, of PHFT and PHFL,
pursuant to the Company's participation in the Board of Directors of PHFL or
PHFT (consistent with any such directors' fiduciary duties), if any, or
pursuant to the Company's contractual arrangements with PHFT or PHFL, as the
case may be (it being understood and agreed that notwithstanding anything
herein to the contrary, where there is a conflict between the obligations of
the Company hereunder and the obligations of the Company or Omega (UK) Limited
under the terms of any advisory agreement between, on the one hand, PHFL or a
subsidiary of PHFL and, on the other hand, the Company or Omega (UK) Limited,
then neither the Company nor Omega (UK) Limited shall be required to take any
action that would give rise to a breach of such agreement by the Company or
Omega (UK) Limited or to omit to take any action that would give rise to such
a breach); and provided, finally, that for purposes of Article IV, the term
"Subsidiary" shall only include PHFL and its Subsidiaries with respect to
Sections 4.3, 4.6, 4.8, 4.9, 4.10(j), 4.13, 4.14(b), 4.17 and 4.18.
Section 1.2 Additional Defined Terms . In addition to the terms defined
in Section 1.1, the following terms shall have the respective meanings
assigned thereto in the section indicated below.
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Defined Term Section Defined Term Section
------------ ------- -------------
Acquisition Proposal 6.6(b) Offer Completion Date 8.1(d)
Agreement Preamble Offer Documents 2.1(b)
Antitrust Condition Annex A Offer Price Second Recital
ANZ Interests 4.10(k) Offer to Purchase 2.1(b)
Articles of Merger 3.1(a) "on a fully diluted basis" Annex A
Bylaws 2.3(c) Options 3.6(a)
Cash Payment 3.6(a) Parent Preamble
Certificate of Merger 3.1(a) Parent Designees 2.3(a)
Certificates 3.3(a) Paying Agent 3.3(a)
Charter 2.2(b) Payment Fund 3.4
Claims 4.18(b) Permits 4.8(b)
Closing 3.10 Permitted Investments 3.4
Closing Date 3.10 PHFL Tenth Recital
Commission Filings 4.5 PHFL Documents 5.7
Common Stock First Recital PHFL Offer Tenth Recital
Company Preamble PHFL Offer Condition Annex A
Company Disclosure Letter 4.1 PHFL Offer Document Seventh
Recital
Company Property 4.18(b) Pre-Closing Period 4.12(b)
Confidentiality Agreement 6.2 Preferred Shares Sixth Recital
Continuing Directors 2.3(c) Preferred Stockholder Sixth Recital
Agreement
Contracts 4.17(a) Proxy Statement 6.4(b)
DGCL Third Recital "Release" or "Released" 4.18(b)
Effective Time 3.1(a) Returns 4.12(a)
Employee Benefit Plans 4.10(a) Rights First Recital
Environmental Claims 4.18(b) Rights Agreement First Recital
Environmental Law 4.18(b) Schedule 14D-9 2.2(c)
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Defined Term Section Defined Term Section
------------ ------- ------------ --------
ERISA 4.10(a) Schedule TO 2.1(b)
Hazardous Materials 4.18(b) Shares First Recital
Heads of Agreement 6.2 Special Committee Sixth Recital
Immigration Laws 4.11 Stock Incentive Plans 3.6(a)
Indemnification Agreements 6.9(b) Stock Plans 3.6(a)
Indemnified Parties 6.9(c) Stockholders Agreement Sixth Recital
Initial Expiration Date 2.1(a) Stockholders' Meeting 6.4(a)
Irrevocable Instruments 5.7 Sub Preamble
Letter of Transmittal 2.1(b) Subsequent Offer Period 2.1(a)
Lien 4.3 Superior Proposal 6.6(b)
Loan Agreement 5.6
Material Contracts 4.17(a) Surviving Corporation 3.1(b)
Merger Third Recital Taxes 4.12(a)
Merger Consideration 3.2(a) Tender Offer Conditions 2.1(a)
MGCL Third Recital Termination Date 8.1(b)
Minimum Condition Annex A UK Companies 4.10(j)
NASDAQ 6.11 UK Employee 4.10(j)
NLRB 4.11 Voting Period 6.5(b)
Offer Second WARN 4.11
Recital
Section 1.3 Construction . In this Agreement, unless the context
otherwise requires:
(a) any reference in this Agreement to "writing" or comparable
expressions includes a reference to facsimile transmission or comparable
means of communication;
(b) words expressed in the singular number shall include the plural
and vice versa, words expressed in the masculine shall include the
feminine and neuter gender and vice versa;
(c) references to Articles, Sections, Exhibits, Schedules and
Recitals are references to articles, sections, exhibits, schedules and
recitals of this Agreement;
(d) reference to "day" or "days" are to calendar days;
(e) the table of contents and headings contained in this Agreement
are for convenience of reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement;
7
(f) this "Agreement" or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may be, such
other agreement or document as the same may have been, or may from time
to time be, amended, varied, novated or supplemented; and
(g) "include," "includes," and "including" are deemed to be followed
by "without limitation" whether or not they are in fact followed by such
words or words of similar import.
Section 1.4 Knowledge . Where any representation or warranty contained in
this Agreement is expressly qualified by reference to the knowledge of the
Company, such knowledge shall mean the actual knowledge, after due and
diligent inquiry as to the matters that are the subject of such representation
and warranty, of the following individuals: Xxxxxx X. Xxxxx, Xxxxxx Xxxxxxx,
Xxxx X. Xxxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxx, Xxxx Xxxxxx and Chee Jap. The
parties understand and agree that for purposes of determining "knowledge"
herein, (a) since July 1, 2001 neither the Company nor the foregoing
individuals have been involved in, or been regularly or consistently informed
of, determinations by, or activities by or on behalf of, the board of
directors of PHFL and "due and diligent inquiry" shall not require inquiries
of such members of the board of directors of PHFL and (b) for purposes of the
representations and warranties set forth in Section 4.18, with respect to each
Company Property of PHFL, Idun Health Care Limited and their respective
Subsidiaries, "due and diligent inquiry" shall not require environmental
surveys of any such Company Property or a review of the files of the Company
pertaining to any such Company Property but shall require disclosure of facts
or circumstances of which the Company otherwise has knowledge.
ARTICLE II
THE OFFER
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Section 2.1 The Offer . (a) Provided that this Agreement shall not have
been terminated in accordance with Article VIII hereof and so long as none of
the events set forth on Annex A hereto (the "Tender Offer Conditions") shall
have occurred and are continuing, as promptly as practicable after the date of
this Agreement, Sub shall and Parent shall cause Sub to, commence (within the
meaning of Rule 14d-2 promulgated under the Exchange Act) the Offer as
promptly as reasonably practicable (but in no event later than five (5)
Business Days after the first public announcement of this Agreement by the
Company). The initial expiration date of the Offer shall be the twentieth
Business Day from and after the date the Offer is commenced (the "Initial
Expiration Date"). The obligation of Sub to accept for payment and to pay for
any Shares tendered shall be subject to the Tender Offer Conditions, any of
which may be waived by Parent or Sub in whole or in part in their sole
discretion; provided, however, that Sub shall not waive the Minimum Condition
without the prior consent of the Company. Parent and Sub expressly reserve the
right to modify the terms of the Offer, including, without limitation, to
extend the Offer beyond any scheduled expiration date; provided, however, that
neither Parent nor Sub shall, without the prior written consent of the
Company, (i) reduce the number of Shares subject to the Offer or waive the
Minimum Condition, (ii) reduce the Offer Price, (iii) impose any additional
conditions to the Offer, (iv) change the form of consideration payable in the
Offer or (v) make any change to the terms of the Offer (including the Tender
Offer Conditions) which is materially adverse in any manner to the
8
holders of the Shares. Subject to the prior satisfaction or waiver of the Tender
Offer Conditions, Sub shall, and Parent shall cause Sub to, accept for payment
and pay for, in accordance with the terms of the Offer, the Shares which have
been validly tendered and not withdrawn at or prior to the expiration of the
Offer promptly after the expiration of the Offer and in any event no later than
three (3) Business Days following the expiration of the Offer. Parent shall
provide or cause to be provided to Sub on a timely basis funds sufficient to
accept for payment and pay for any and all Shares that Sub becomes obligated to
accept for payment and pay for pursuant to the Offer. Parent and Sub shall have
the right, in their sole discretion, to extend the expiration date of the Offer,
from time to time, for successive periods of up to twenty (20) Business Days
each, but in no event, later than the Termination Date, if the Tender Offer
Conditions have not been met. If on any scheduled expiration date of the Offer,
the Offer would have expired without any Shares being purchased because the
Tender Offer Conditions have not been met, Parent and Sub shall, at the request
of the Company (subject always to the terms and conditions of this Agreement),
extend the expiration date of the Offer, from time to time, for successive
periods of up to twenty (20) Business Days each (but in no event later than the
Termination Date) unless such conditions are not capable of being satisfied
prior to the Termination Date. In addition, notwithstanding anything in this
Section 2.1(a) to the contrary, if not already disclosed in the Offer to
Purchase, Parent and Sub may amend the Schedule TO to permit the announcement of
a subsequent offering period (as such term is defined in Rule 14d-1 promulgated
under the Exchange Act (the "Subsequent Offer Period")) to the Offer, and Sub
may include a Subsequent Offer Period to the Offer for up to a maximum of twenty
(20) Business Days.
(b) The Offer shall be made by means of an offer to purchase (the "Offer
to Purchase") subject only to the Tender Offer Conditions. As soon as
reasonably practicable on the date the Offer is commenced, Parent and Sub
shall file with the Commission a Tender Offer Statement on Schedule TO
(together with all amendments and supplements thereto, the "Schedule TO") with
respect to the Offer. The Schedule TO shall contain (included as an exhibit)
or shall incorporate by reference the Offer to Purchase and the related letter
of transmittal (the "Letter of Transmittal") and summary advertisement, as
well as all other information and exhibits required by law (which Schedule TO,
Offer to Purchase, Letter of Transmittal, summary advertisement and such other
information and exhibits, together with any supplements or amendments thereto,
are referred to herein collectively as the "Offer Documents") which shall be
mailed promptly to holders of Shares. The Company and its counsel shall be
given reasonable opportunity to review and comment upon the Offer Documents
prior to their filing with the Commission. The Offer Documents (i) shall
comply in all material respects with the provisions of applicable federal
securities laws and (ii) on the date filed with the Commission and the date
first published, sent or given to the holders of the Shares, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading in light of the circumstances under which they are
made, except that no representation is made by Parent or Sub with respect to
any information supplied by the Company in writing expressly for inclusion in
the Offer Documents. Each of Parent and Sub, on the one hand, and the Company,
on the other hand, agrees promptly to correct any information provided by it
for use in the Offer Documents if and to the extent that the Offer Documents
shall be, or shall have become, false or misleading in any material respect,
and Parent and Sub further agree to take all steps necessary to
9
cause the Schedule TO, as so corrected, to be filed with the Commission and the
other Offer Documents as so corrected to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. Each of Parent and Sub agrees to provide the Company and its
counsel with information with respect to any oral comments and with copies of
any written comments Parent and Sub or their counsel may receive from the
Commission or its staff with respect to the Offer Documents promptly after the
receipt of such comments. Parent and Sub shall use their commercially reasonable
efforts to respond to such comments promptly and shall provide the Company and
its counsel an opportunity to participate in the response of Parent or Sub to
such comments, including the opportunity to participate with Parent and Sub or
their counsel in any discussions with the Commission or its staff.
Section 2.2 Company Actions . The Company hereby consents to the Offer
and the Merger and represents and warrants that:
(a) The Special Committee has considered the Offer, the Merger and
the transactions contemplated hereby and has unanimously determined that
the Offer and the Merger are fair to and in the best interests of the
Company and the holders of Shares and has determined that the Offer and
Merger are advisable, and has unanimously recommended that the Board of
Directors of the Company approve the Offer, the Merger, this Agreement
and the transactions contemplated hereby.
(b) Its Board of Directors (at a meeting duly called and held) by
unanimous vote has (i) determined that each of the Offer and the Merger
is fair to, and in the best interests of, the Company and the holders of
Shares, (ii) declared that the Offer and the Merger are advisable, (iii)
approved the Offer, the Merger, the Stockholders Agreements, the Option
Agreement and this Agreement in accordance with the provisions of the
MGCL, (iv) recommended acceptance of the Offer and approval of the
Merger, this Agreement and the transactions contemplated hereby by the
stockholders of the Company, and (v) taken all other action necessary to
render (and has refrained from taking any action which would not render)
inapplicable to the Offer, the Merger, the Stockholders Agreements and
this Agreement and to the transactions contemplated hereby and thereby,
(x) Subtitles 6 and 7 of Title 3 of the MGCL, (y) Section 6.7 of the
Company's charter (the "Charter") and (z) the Rights Agreement and the
Rights.
(c) The Company shall file with the Commission, as soon as
practicable on the date of the commencement of the Offer, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with
all amendments and supplements thereto, the "Schedule l4D- 9"),
containing the recommendations referred to in clause (a)(iv) of this
Section 2.2, and shall disseminate the Schedule 14D-9 as required by Rule
14d-9 under the Exchange Act. Parent and Sub and their counsel shall be
given reasonable opportunity to review and comment upon the Schedule
l4D-9 prior to its filing with the Commission. The Schedule 14D-9 (i)
shall comply in all material respects with the provisions of applicable
federal securities laws and (ii) on the date filed with the Commission
and on the date first published, sent or given
10
to the holders of Shares shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the state ments therein not
misleading in light of the circumstances under which they are made,
except that no representation is made by the Company with respect to
information supplied by Parent or Sub in writing expressly for inclusion
in the Schedule 14D-9. The Company, on the one hand, and each of Parent
and Sub, on the other hand, agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that
the Schedule 14D-9 shall be, or shall have become, false or misleading in
any material respect and the Company further agrees to take all steps
necessary to cause the Schedule 14D-9, as so corrected, to be filed with
the Commission and to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws. The
Company agrees to provide Parent and its counsel with information with
respect to any oral comments and with copies of any written comments the
Company or its counsel may receive from the Commission or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such
comments. The Company shall use its commercially reasonable efforts to
respond to such comments promptly and shall provide Parent and its
counsel an opportunity to participate in the response of the Company to
such comments, including by participating with the Company and its
counsel in any discussions with the Commission or its staff.
(d) In connection with the Offer, the Company shall promptly furnish
Sub with mailing labels, security position listings and any available
listing or computer list containing, as of the most recent practicable
date, the names and addresses of the record holders of Shares and shall
furnish Sub with such additional information (including, but not limited
to, updated lists of holders of Shares and their addresses, mailing
labels and lists of security positions) and such other assistance as Sub
or its agents may reasonably request for the purpose of communicating the
Offer to the holders of Shares. Subject to the requirements of applicable
law, and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Merger, Sub
and its Affiliates and agents and advisors shall hold in confidence the
information contained in any such labels, listings and files, shall use
such information only in connection with the Offer and the Merger and, if
this Agreement is terminated, shall deliver to the Company all copies of
such information in its possession.
(e) The Company represents and warrants that it has been advised
that each of its directors and executive officers intends to tender
pursuant to the Offer all Shares owned of record and beneficially by him
or her except to the extent such tender would violate applicable
securities laws.
Section 2.3 Composition of the Board of Directors. (a) Promptly following
the Offer Completion Date, Sub shall be entitled to designate up to such
number of directors ("Parent Designees") on the Board of Directors of the
Company, rounded up to the next whole number, as shall give Sub, subject to
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, representation on the Board of Directors of the Company equal
11
to at least that number of directors which equals the product of the total
number of directors on the Board of Directors of the Company (giving effect to
the directors elected pursuant to this sentence) multiplied by a fraction, the
numerator of which shall be the number of Shares beneficially owned by Sub and
Parent and the denominator of which shall be the number of Shares then issued
and outstanding, and the Company and its Board of Directors shall, subject to
applicable duties under Maryland law, at such time, take any and all such action
necessary to cause Parent Designees to be elected to the Board of Directors of
the Company in such class of directors (if any) as shall ensure the longest
possible term for such Parent Designees (including using commercially reasonable
efforts to cause relevant directors to resign and/or increasing the number of
directors on the Board of Directors of the Company (subject to the limitations
set forth in the Company's Charter). The Company shall take all action required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder to effect the election of such Parent Designees, including (i)
mailing to its stockholders the information required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder or (ii) including such
information in the Schedule 14D-9 filed with the Commission and distributed to
the stockholders of the Company, and the Company agrees to make such mailing so
long as Sub shall have provided to the Company, on a timely basis, all
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder with respect to the Parent Designees. Parent and Sub
shall promptly supply the Company and shall be solely responsible for any
information with respect to either of them and their nominees, officers,
directors and Affiliates required by Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. At the Effective Time, the Company, if so
requested, shall use its commercially reasonable efforts to cause Persons
designated by Parent to constitute the same percentage of each committee of its
Board of Directors, each Board of Directors of each Subsidiary (not including
PHFL or PHFT) and each committee of each such Board of Directors (in each case
to the extent of the Company's ability to elect such Persons).
(b) The provisions of Section 2.3(a) are in addition to, and shall not
limit, any rights which Parent, Sub or any of their respective Affiliates may
have as holders or beneficial owners of Shares as a matter of applicable law
with respect to the election of directors or otherwise.
(c) Notwithstanding the provisions of this Section 2.3, the parties
hereto shall use their respective commercially reasonable efforts to ensure
that at least two (2) of the members of the Board of Directors shall, at all
times prior to the Effective Time, be Persons who are directors of the Company
on the date hereof (the "Continuing Directors"), provided that, if there shall
be in office less than two (2) Continuing Directors, the Board of Directors,
subject to their applicable duties under Maryland law may cause the Person
designated by the remaining Continuing Director or Continuing Directors to
fill such vacancy, and such Person shall be deemed to be a Continuing Director
for all purposes of this Agreement, or if no Continuing Directors then remain,
the other directors of the Company then in office, subject to their applicable
duties under Maryland law, shall designate two (2) Persons to fill such
vacancies who will not be officers, employees or Affiliates of the Company or
Parent, and such Persons shall be deemed to be Continuing Directors for all
pur poses of this Agreement. Following the election or appointment of the
Parent Designees pursuant to this Section 2.3 and prior to the Effective Time,
any amendment of this Agreement, the Company's Charter or the Company's
amended and restated bylaws (the "Bylaws"), any termination or amendment of
this Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Parent and Sub or
waiver of any of the Company's rights or remedies hereunder, and any other
consent or action by the Company hereunder, shall require the concurrence of a
majority of the Continuing Directors.
12
ARTICLE III
THE MERGER
---------
Section 3.1 The Merger. (a) Upon the terms and subject to the conditions
of this Agreement, at the Closing, the Company and Sub (i) will execute and
file, as applicable, a certificate of merger (the "Certificate of Merger"), in
such appropriate form as determined by the parties, with the Secretary of
State of the State of Delaware in accordance with the relevant provisions of
the DGCL, (ii) will execute and file, as applicable, the articles of merger,
in such appropriate form as determined by the parties, with the State
Department of Assessments and Taxation of the State of Maryland in accordance
with the relevant provisions of the MGCL (the "Articles of Merger", together
with the Certificate of Merger, the "Certificates of Merger"), (the date and
time of such later filing (or such later time as may be agreed in writing by
the Company and Parent and specified in the Certificates of Merger) being the
"Effective Time") and (iii) shall make all other filings or recordings and
take all such other action required to effect the Merger under the MGCL and
DGCL or otherwise as soon as practicable on or after the Closing Date.
(b) On the terms and subject to the conditions set forth in this
Agreement and in accordance with the applicable provisions of the MGCL and the
DGCL, at the Effective Time, Sub shall be merged with and into the Company,
and the separate corporate existence of Sub shall cease, and the Company shall
continue as the surviving corporation under the laws of the State of Maryland
(the "Surviving Corporation").
(c) From and after the Effective Time, the Merger shall have the effects
set forth in the applicable provisions of the MGCL and the DGCL.
Section 3.2 Conversion of Stock . At the Effective Time:
(a) Each share of Common Stock (and the associated Rights) issued
and outstand ing immediately prior to the Effective Time (other than any
shares of Common Stock (and the associated Rights) which are held by any
wholly-owned Subsidiary of the Company, or which are held, directly or
indirectly, by Parent or any Subsidiary of Parent (including Sub), all of
which shall cease to be outstanding and be canceled and none of which
shall receive any payment with respect thereto) and all rights in respect
thereof shall, by virtue of the Merger and without any action on the part
of Sub, the Company or the holder thereof, forthwith cease to exist and
be converted into and represent the right to receive an amount in cash,
without interest, equal to the Offer Price (the "Merger Consideration");
and
(b) Each share of common stock, par value $0.01 per share, of Sub,
then issued and outstanding, shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into one fully
paid and nonassessable share of Common Stock, par value $0.01 per share,
of the Surviving Corporation.
Section 3.3 Surrender of Certificates . (a) Prior to the Effective Time,
Parent shall designate a bank or trust company located in the United States
which shall be reasonably satisfactory to the Company to act as paying agent
13
(the "Paying Agent") to receive funds in trust in order to make the payments
contemplated by Section 3.2(a). As soon as practicable after the Effective
Time, Parent shall cause the Paying Agent to mail and/or make available to
each holder of a certificate theretofore representing shares of Common Stock
(and the associated Rights) (other than those which are held by any
wholly-owned Subsidiary of the Company, or which are held directly or
indirectly by Parent or any direct or indirect Subsidiary of Parent (including
Sub)) a notice and letter of transmittal advising such holder of the
effectiveness of the Merger and the procedure for surrendering to the Paying
Agent such certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Common Stock (and the
associated Rights) (the "Certificates") in exchange for the Merger
Consideration deliverable in respect thereof pursuant to this Article III.
Upon the surrender for cancellation to the Paying Agent of such Certificates,
together with a letter of transmittal, duly executed and completed in
accordance with the instructions thereon, and any other items reasonably
required by the Paying Agent or Parent and specified by the letter of
transmittal, the Paying Agent shall promptly pay to the Person entitled
thereto the product of the Merger Consideration and the number of shares of
Common Stock (and the associated Rights) represented by such Certificates.
Until so surrendered, each Certificate shall be deemed, for all corporate
purposes, to evidence only the right to receive upon such surrender the Merger
Consideration deliverable in respect thereof to which such Person is entitled
pursuant to this Article III. No interest shall be paid or accrued in respect
of such cash payments.
(b) If the Merger Consideration (or any portion thereof) is to be
delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to
the payment of the Merger Consideration that the Certificates so surrendered
shall be properly endorsed or accompanied by appropriate stock powers and
otherwise in proper form for transfer, and that the Person requesting such
transfer pay to the Paying Agent any transfer or other taxes payable by reason
of the foregoing or establish to the reasonable satisfaction of the Paying
Agent that such taxes have been paid or are not required to be paid.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent shall issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Article III; provided that the Person to whom the Merger Consideration is
paid shall, as a condition precedent to the payment thereof, give the
Surviving Corporation a bond in such reasonable amount as it may direct or
otherwise indemnify the Surviving Corporation in a manner reasonably
satisfactory to it against any claim that may be made against the Surviving
Corporation with respect to the Certificate claimed to have been lost, stolen
or destroyed.
Section 3.4 Payment . Concurrently with or immediately prior to the
Effective Time, Parent shall deposit or cause to be deposited in trust with
the Paying Agent cash in United States dollars in an aggregate amount equal to
the product of (i) the number of shares of Common Stock outstanding
immediately prior to the Effective Time (other than shares of Common Stock
which are held by any wholly-owned Subsidiary of the Company or which are held
directly or indirectly by Parent or any direct or indirect Subsidiary of
Parent (including Sub)) and (ii) the Merger Consideration (such amount being
14
hereinafter referred to as the "Payment Fund"). The Payment Fund shall be
invested by the Paying Agent as directed by Sub (x) in direct obligations of
the United States, obligations for which the full faith and credit of the
United States is pledged to provide for the payment of principal and interest,
commercial paper of an issuer organized under the laws of a state of the
United States rated of the highest quality by Xxxxx'x Investors Service, Inc.,
or Standard & Poor's Ratings Group, or certificates of deposit, bank
repurchase agreements or bankers' acceptances of a United States commercial
bank having at least $1,000,000,000 in assets (collectively, "Permitted
Investments"), or (y) in money market funds which are invested in Permitted
Investments, and any net earnings with respect thereto shall be paid to Sub as
and when requested by Sub. The Paying Agent shall, pursuant to irrevocable
instructions, make the payments referred to in Section 3.2(a) hereof out of
the Payment Fund. The Payment Fund shall not be used for any other purpose.
Promptly following the date which is one hundred and eighty (180) days after
the Effective Time, the Paying Agent shall return to the Surviving Corporation
all cash, certificates and other instruments in its possession that constitute
any portion of the Payment Fund, and the Paying Agent's duties shall
terminate. Thereafter, each holder of a Certificate may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefor the Merger
Consideration, without interest, but shall have no greater rights against the
Surviving Corporation than may be accorded to general creditors of the
Surviving Corporation under applicable law. Notwithstanding the foregoing,
neither the Paying Agent nor any party hereto shall be liable to a holder of
shares of Common Stock for any Merger Consideration delivered to a public
official pursuant to applicable abandoned property, escheat and similar laws.
Section 3.5 No Further Rights of Transfers . At and after the Effective
Time, each holder of Common Stock (and the associated Rights) shall cease to
have any rights as a stockholder of the Company, except as otherwise required
by applicable law and except for, in the case of a holder of a Certificate
(other than shares of Common Stock (and the associated Rights) to be canceled
pursuant to Section 3.2(a) hereof), the right to surrender his or her
Certificate in exchange for payment of the Merger Consideration, and no
transfer of shares of Common Stock (and the associated Rights) shall be made
on the stock transfer books of the Surviving Corporation. Certificates
presented to the Surviving Corporation after the Effective Time shall be
canceled and exchanged for cash as provided in this Article III. At the close
of business on the day of the Effective Time the stock ledger of the Company
with respect to Common Stock (and the associated Rights) shall be closed.
Section 3.6 Stock Option and Other Plans.
(a) Prior to the date which is two Business Days prior to the Initial
Expiration Date, the Board of Directors of the Company (or, if appropriate,
any committee thereof) shall obtain all necessary consents and releases from
all of the holders of all the outstanding stock options and other rights to
purchase or acquire Common Stock (the "Options") heretofore granted under any
stock option plan of the Company or otherwise (the "Stock Plans"), to (i)
provide for the cancellation, effective at the Effective Time, subject to the
payment provided for in the next sentence being made, of all Options (ii)
terminate, as of the Effective Time, the Stock Plans and any other plan,
15
program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any Affiliate
thereof (collectively with the Stock Plans, referred to as the "Stock
Incentive Plans") and (iii) amend, as of the Effective Time, the provisions of
any other Employee Benefit Plan providing for the issuance, transfer or grant
of any capital stock of the Company or any such Affiliate, or any interest in
respect of any capital stock of the Company or any such Affiliate, to provide
no continuing rights to acquire, hold, transfer or grant any capital stock of
the Company or any such Affiliate or any interest in the capital stock of the
Company or any such Affiliate. Immediately prior to the Effective Time, each
Option, whether or not then vested or exercisable, shall no longer be
exercisable for the purchase of shares of Common Stock, but shall entitle each
holder thereof, in cancellation and settlement therefor, to payments by the
Company in cash (the "Cash Payment"), at the Effective Time, equal to the
product of (x) the total number of shares of Common Stock subject to such
Option, whether or not then vested or exercisable, and (y) the amount, if any,
by which the Merger Consideration exceeds the exercise price per share of
Common Stock subject to such Option, each such Cash Payment to be paid to each
holder of an outstanding Option. Upon receipt of the Cash Payment therefor,
all of the holder's Options shall be deemed cancelled. The surrender of the
Options to the Company in exchange for the Cash Payment shall be deemed a
release of any and all rights the holder had or may have had in respect of all
of the holder's Options.
(b) Prior to the Effective Time, the Board of Directors of the Company
(or, if appropriate, any committee thereof) shall take all actions, such that
each restricted stock award granted under the Stock Incentive Plans (the
"Awards") shall become fully and immediately vested and transferable and the
restrictions thereon shall lapse.
(c) Except as otherwise contemplated in this Section 3.6, any then
outstanding stock appreciation rights or limited stock appreciation rights,
and any other rights or interest in respect of the capital stock of the
Company or any Affiliate issued by the Company or any Affiliate of the Company
shall be canceled immediately prior to the Effective Time without any payment
therefor. The Company shall take all steps to ensure that neither it nor any
of its Affiliates is or shall be bound by any Options, other options,
warrants, rights or agreements which would entitle any Person, other than
Parent or its Affiliates, to own any capital stock of the Company or any of
its Subsidiaries or to receive any payment in respect thereof. Notwithstanding
any other provision of this Section 3.6 to the contrary, payment of the Cash
Payment may be withheld with respect to any Option until necessary consents
and releases are obtained.
Section 3.7 Charter of the Surviving Corporation . The Charter of the
Company, as in effect immediately prior to the Effective Time, shall be the
charter of the Surviving Corporation until thereafter changed or amended as
provided therein and in accordance with applicable law.
Section 3.8 Bylaws of the Surviving Corporation . The Bylaws of the
Company, as in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation until thereafter changed or amended as
provided therein and in accordance with applicable law.
Section 3.9 Directors and Officers of the Surviving Corporation . At the
Effective Time, the directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, each of such directors to
hold office, subject to the applicable provisions of the Charter and Bylaws of
16
the Surviving Corporation, until their respective successors shall be duly
elected or appointed and qualify. At the Effective Time, the officers of the
Company immediately prior to the Effective Time shall, subject to the
applicable provisions of the Charter and Bylaws of the Surviving Corporation,
be the officers of the Surviving Corporation until their respective successors
shall be duly elected or appointed and qualify.
Section 3.10 Closing . Unless this Agreement shall have been terminated
and the transactions contemplated hereby shall have been abandoned pursuant to
Article VIII, and subject to the satisfaction or waiver of all of the
conditions set forth in Article VII, the closing of the Merger (the "Closing")
shall take place at 10:00 A.M. at the offices of White & Case LLP, 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as soon as practicable, but in any
event within three (3) Business Days after the last of the conditions set
forth in Article VII hereof is satisfied or waived, other than those
conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions, or at such other
date, time or place as the parties hereto shall agree in writing. Such date is
herein referred to as the "Closing Date".
Section 3.11 Withholding Rights . Parent shall be entitled to deduct and
withhold, or cause to be deducted or withheld, from (i) the consideration
otherwise payable pursuant to this Agreement to any holder of Common Stock
(and, where applicable, any associated Rights) or (ii) any payment made
pursuant to Section 3.6, such amounts as are required to be deducted and
withheld with respect to the making of such payment under the Code, or any
provision of applicable state, local or foreign Tax law. To the extent that
amounts are so deducted and withheld, such deducted and withheld amounts shall
be (i) paid over to the applicable Governmental Entity in accordance with
applicable law and (ii) treated for all purposes of this Agreement as having
been paid to such holders in respect of which such deduction and withholding
was made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
Section 4. The Company hereby represents and warrants to Parent and Sub
as follows; provided, however, that in the case of any representation and
warranty with respect to PHFL, such representation and warranty is made only
to the extent of the knowledge of the Company:
Section 4.1 Due Incorporation, Good Standing and Corporate Power . Each
of the Company and its Subsidiaries is a corporation duly incorporated (or, if
not a corporation, duly organized), validly existing and in good standing
under the laws of the jurisdiction of its incorporation (or, if not a
corporation, organization) and each such Person has all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business as now being conducted. The Company and each of its Subsidiaries
is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it, or the
nature of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be so qualified or licensed
17
and in good standing has not had, does not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company. The Company has, prior to the date of this Agreement, made
available to Parent complete and correct copies of the Company's Charter and
the Company's Bylaws and the comparable governing documents of each of its
Subsidiaries, in each case as amended and in full force and effect as of the
date of this Agreement. Other than as set forth in Schedule 4.1 of the
disclosure letter delivered by the Company to Parent and Sub upon or prior to
entering into this Agreement (the "Company Disclosure Letter"), the respective
Certificates of Incorporation and By-laws or other organizational documents of
the Subsidiaries of the Company do not contain any provision limiting or
otherwise restricting the ability of the Company to control its Subsidiaries.
Section 4.2 Authorization and Validity of this Agreement . The Company
has the requisite corporate power to execute and deliver this Agreement, to
perform its obligations hereunder and (subject to the approval of the Merger
by the stockholders of the Company if required by the DGCL or the MGCL) to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by the Company, and the consummation by it of
the transactions contemplated hereby, have been duly authorized and approved
by its Board of Directors, and no other corporate action on the part of the
Company is necessary to authorize the execution, delivery and performance of
this Agreement by the Company and the consummation of the trans actions
contemplated hereby (other than, if required by the DGCL or the MGCL, the
approval of the Merger by the stockholders of the Company and the filing of
appropriate merger documents as required by the MGCL and the DGCL). This
Agreement has been duly executed and delivered by the Company and, assuming
that this Agreement constitutes a valid and binding obligation of Parent and
Sub, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except to the extent that
its enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
Section 4.3 Capitalization. The authorized capital stock of the Company
consists of (x) Fifty Million (50,000,000) shares of Common Stock and (y) Ten
Million (10,000,000) shares of preferred stock, par value $1.00 per share, of
which 300,000 shares are designated Series A junior participating preferred
stock, 5,000,000 are designated Series B Preferred Stock and 260,000 shares are
designated Series C Preferred Stock. At the close of business on the date
hereof, (i) 12,354,553 shares of Common Stock were issued and outstanding, (ii)
no shares of Series A junior participating preferred stock were issued and
outstanding, (iii) 300,000 shares of Series A junior participating preferred
stock were reserved for issuance pursuant to the Rights Agreement, (iv) no
shares of Common Stock were held by the Company in its treasury, (v) no shares
of Series B Preferred Stock were issued and outstanding, (vi) 260,000 shares of
Series C Preferred Stock were issued and outstanding, (vii) 260,000 shares of
Common Stock were reserved for issuance upon conversion of the Series C
Preferred Stock, (viii) 340,999 shares of Common Stock were subject to issuance
upon exercise of outstanding options, and (ix) not more than 2,530 shares were
shares of restricted stock all of which were awarded under the Stock Plan.
Schedule 4.3(a) of the Company Disclosure Letter sets forth (x) to the knowledge
of the Company, the owners of more than 5% of the issued and outstanding shares
of each class of capital stock of the Company and (y) the capital stock
ownership of each of the directors and executive officers of the Company. All
issued and out standing shares of capital stock of the Company and each of its
Subsidiaries have been duly authorized and validly issued and are fully paid and
nonassessable, and are not subject to, nor were issued in violation of, any
preemptive rights. Except as set forth on Schedule 4.3(b) of the Company
Disclosure Letter, there are no outstanding or authorized options, warrants,
rights, subscriptions, agreements, proxies, obligations, convertible or
exchangeable securities, or other commitments or claims of any character,
contingent or otherwise, relating to shares of capital stock of the Company or
18
any of its Subsidiaries or pursuant to which the Company or any of its
Subsidiaries is or may become obligated to issue shares of its capital stock or
any securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of the capital stock of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries has authorized or
outstanding bonds, debentures, notes or other indebtedness which entitle the
holders to vote (or convertible or exercisable for or exchangeable into
securities which entitle the holders to vote) with the stockholders of the
Company or any Subsidiary on any matter. Except as set forth on Schedule 4.3(c)
of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries owns, directly or indirectly, any capital stock or other equity,
ownership or proprietary interest in any Person (other than any Subsidiary of
the Company). Except as set forth on Schedule 4.3(d) of the Company Disclosure
Letter, all of the outstanding shares of capital stock of each of the
Subsidiaries of the Company are owned, of record and beneficially, by the
Company or one or more of its Subsidiaries free and clear of any liens, security
interest, charge or encumbrance of any kind or nature (each, a "Lien"). Except
as set forth on Schedule 4.3(e) of the Company Disclosure Letter, there are no
restrictions of any kind which prevent or restrict the payment of dividends by
the Company or any of its Subsidiaries. Set forth on Schedule 4.3(f) of the
Company Disclosure Letter is the aggregate amount of accrued and unpaid
dividends due on the Series C Preferred Stock as of the date of this Agreement.
Section 4.4 Consents and Approvals; No Violations . Assuming (i) the
filings required under the Antitrust Laws are made and the applicable waiting
periods thereunder have been terminated or have expired with respect to the
transactions contemplated hereby as set forth on Schedule 4.4 of the Company
Disclosure Letter, (ii) the requirements of the Exchange Act relating to the
Proxy Statement, if any, and the Offer are met, (iii) the filing of the
Certificates of Merger and other appropriate merger documents, if any, as
required by the MGCL and the DGCL are made and (iv) approval of the Merger and
this Agreement by the stockholders of the Company, if required by the DGCL and
the MGCL, is received, the execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby shall not (w) violate or conflict with any provision of the
Company's Charter or the Company's Bylaws or the comparable governing
documents of any of its Subsidiaries, (x) violate or conflict with any
statute, ordinance, rule, regulation, order or decree of any court or of any
Governmental Entity applicable to the Company or any of its Subsidiaries or by
which any of their respective properties or assets may be bound, (y) except as
set forth on Schedule 4.4 of the Company Disclosure Letter, require any filing
with, or Permit, consent or approval of, or the giving of any notice to, any
Governmental Entity or (z) except as set forth on Schedule 4.4 of the Company
Disclosure Letter, result in a violation or breach of, conflict with,
constitute (with or without due notice or lapse of time or both) a default
under (or give rise to any right of termination, cancellation, payment or
acceleration or any right which becomes effective upon the occurrence of a
merger, consolidation, or change of control under), result in the creation of
any Lien upon any of the properties or assets of the Company or any of its
Subsidiaries under, or give rise to any obligation, right of termination,
cancellation, acceleration or increase of any obligation or a loss of a
material benefit or any right which becomes effective upon the occurrence of a
merger, consolidation or change of control under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, franchise,
19
Permit, agreement, contract, arrangement, lease, franchise agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party, or by which any such Person or any of its properties or assets are
bound, other than in the case of clauses (y) and (z), any such violation,
breach, conflict, default, right of termination, cancellation, payment,
acceleration, other right or failure to make any filing or obtaining any
Permit, consent or approval of, or give notice to, any Governmental Entity
that has not had, does not have and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Section 4.5 Company Reports and Financial Statements . Since September
30, 1999, the Company (including any predecessor entity) and its Subsidiaries
have filed all forms, reports, schedules, statements, registration statements
and other documents with the Commission relating to periods commencing on or
after such date required to be filed by it pursuant to the federal securities
laws and the Commission rules and regulations thereunder (such forms, reports,
schedules, statements, registration statements and other documents being
hereinafter referred to as the "Commission Filings"), and, as of their
respective dates, the Commission Filings complied, and will comply, in all
material respects with all applicable requirements of the federal securities
laws and the Commission rules and regulations promulgated thereunder. The
Company has, prior to the date of this Agreement, made available to Parent
true and complete copies of all portions of any Commission Filings not
publicly available. As of their respective dates, the Commission Filings did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were made,
not misleading, except to the extent such statements have been modified or
superseded by later Completed Commission Filings. Each of the consolidated
financial statements of the Company and its consolidated Subsidiaries
contained in the Commission Filings have been prepared in accordance with GAAP
(except (i) as may be indicated therein or in the notes or schedules thereto
and (ii) in the case of unaudited quarterly financial statements, as permitted
by Form 10-Q of the Commission) applied on a consistent basis during the
periods involved and present fairly, in all material respects, the
consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and changes in cash flows for the periods then ended (subject, in
the case of unaudited quarterly statements, to normal year end audit
adjustment). The Company has heretofore provided Parent with true and correct
copies of any amendments and/or modifications to any Commission Filings which
have not yet been filed with the Commission but that are required to be filed
with the Commission in accordance with applicable federal securities laws and
the Commission rules and regulations promulgated thereunder.
Section 4.6 Absence of Certain Changes . Except as set forth in the
Completed Commission Filings or otherwise set forth in Schedule 4.6 of the
Company Disclosure Letter, since March 31, 2002, (i) there has been no
Material Adverse Effect on the Company or, to the knowledge of the Company,
any event, change, occurrence, effect, fact, violation or circumstance that
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company, (ii) the businesses of the Company and
each of its Subsidiaries have been conducted only in the ordinary course
consistent with past practice, (iii) neither the Company nor any of its
Subsidiaries has incurred any material liabilities (direct, contingent or
otherwise) or engaged in any material transaction or entered into any material
20
agreement outside the ordinary course of business consistent with past
practice, (iv) neither the Company nor any of its Subsidiaries have increased
the compensation of any officer or granted any general salary or benefits
increase to their respective employees, other than in the ordinary course of
business consistent with past practice, (v) neither the Company nor any of its
Subsidiaries has taken any action referred to in Section 6.3 hereof except as
permitted thereby, (vi) there has been no declaration, setting aside or
payment of any dividend or other distribution with respect to any class of
stock or any repurchase, redemption or other acquisition by the Company of any
of its Subsidiaries of any stock or other securities of the Company or any of
its Subsidiaries and (vii) there has been no change by the Company in
accounting principles, practices, policies, procedures or methods (except
insofar as may have been required by applicable law, GAAP or the Commission).
Section 4.7 Title to Properties; Encumbrances . Except as set forth in
Schedule 4.7 of the Company Disclosure Letter, the Company and each of its
Subsidiaries has good, valid and marketable title to, or, in the case of
leased properties and assets, valid leasehold interests in, (i) all of its
material tangible properties and assets (real and personal), including,
without limitation, all the properties and assets reflected in the
consolidated balance sheet as of September 30, 2001, contained in the
Commission Filings, except as indicated in the notes thereto and except for
properties and assets reflected in the consolidated balance sheet as of
September 30, 2001, contained in the Commission Filings, which have been sold
or otherwise disposed of in the ordinary course of business after such date,
and except where the failure to have such good, valid and marketable title or
valid leasehold interest has not had, does not have, and would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company, and (ii) all the tangible properties and assets
purchased by the Company and any of its Subsidiaries since September 30, 2001,
except for such properties and assets which have been sold or otherwise
disposed of in the ordinary course of business and except where the failure to
have such good, valid and marketable title or valid leasehold interest has not
had, does not have, and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company, in each case
subject to no Liens, except for (x) Liens reflected or reserved against in the
Completed Commission Filings and (y) such Liens which have not had, do not
have, and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
Section 4.8 Compliance with Laws . (a) Except as set forth on Schedule
4.8 of the Company Disclosure Letter and except where the failure to so comply
has not had, does not have, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company,
the Company and its Subsidiaries have complied and are in compliance with all
applicable federal, state, local and foreign statutes, laws, regulations,
orders, judgments and decrees and have not received notification of any
asserted present or past failure to so comply. No investigation or review by
any Governmental Entity with respect to the Company or any of its Subsidiaries
is pending or, to the knowledge of the Company, threatened, nor, to the
knowledge of the Company, has any Governmental Entity indicated an intention
to conduct the same, other than, in each case, those which have not had, do
not have, or would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
21
(b) The Company and its Subsidiaries hold all federal, state, local and
foreign permits, approvals, licenses, authorizations, certificates, rights,
exemptions and orders from Governmental Entities (the "Permits") that are
necessary for the operation of the business of the Company and/or its
Subsidiaries as now conducted, and there has not occurred any default under
any such Permit, except to the extent that any such failure to hold Permits
and any such default has not had, does not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company.
Section 4.9 Litigation . Except as set forth in Schedule 4.9 of the
Company Disclosure Letter and in the Completed Commission Filings, there is no
action, suit, investigation, proceeding at law or in equity, or any
arbitration or any administrative or other proceeding by or before (or to the
knowledge of the Company any investigation by) any Governmental Entity,
pending (in which service of process has been received by an officer or
employee of the Company or one of its Subsidiaries), or, to the knowledge of
the Company, threatened, against or affecting the Company or any of its
Subsidiaries, or any of their respective properties or rights (a) which has
had, has, or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company or (b) seeking to prevent
or challenging the transactions contemplated by this Agreement. Neither the
Company nor any of its Subsidiaries is subject to any judgment, order or
decree entered in any lawsuit or proceeding which has had, has, or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
Section 4.10 Employee Benefit Plans . (a) List of Plans. Set forth in
Schedule 4.10(a) of the Company Disclosure Letter is an accurate and complete
list of all (i) "employee benefit plans," within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations thereunder ("ERISA"); (ii) bonus, stock option, stock
purchase, restricted stock, incentive, fringe benefit, "voluntary employees'
beneficiary associations" under Section 501(c)(9) of the Code, profit-sharing,
pension, or retirement, deferred compensation, medical, life insurance,
disability, accident, salary continuation, severance, accrued leave, vacation,
sick pay, sick leave, supplemental retirement and unemployment benefit plans,
programs, arrangements, commitments and/or practices (whether or not insured);
and (iii) employment, consulting, termination, and severance contracts or
agreements; for active, retired or former employees or directors, whether or
not any such plans, programs, arrangements, commitments, contracts, agreements
and/or practices (referred to in (i), (ii) or (iii) above) are in writing or
are otherwise exempt from the provisions of ERISA; that have been established,
maintained or contributed to (or with respect to which an obligation to
contribute has been undertaken) or with respect to which any potential
liability is borne by the Company or any of its Subsidiaries (including, for
this purpose and for the purpose of all of the representations in this Section
4.10, any predecessors to the Company or to any of its Subsidiaries and all
employers (whether or not incorporated) that would be treated together with
the Company and/or any of its Subsidiaries as a single employer within the
meaning of Section 414 of the Code, since January 1, 1996 but excluding any
such Subsidiaries and predecessors of Subsidiaries that are organized under
the laws of the United Kingdom or Australia, which are addressed in Section
4.10(j) and 4.10(k), respectively ("Employee Benefit Plans").
(b) Status of Plans. Each Employee Benefit Plan (including any related
trust) complies in form in all material respects with the requirements of all
22
applicable laws, including, without limitation, ERISA, the Code, and foreign
tax, labor, securities, data privacy, currency exchange control and other
laws, and has at all times been maintained and operated in substantial
compliance with its terms and the requirements of all applicable laws,
including, without limitation, ERISA and the Code. Neither the Company nor any
of its Subsidiaries has any commitment, intention or understanding to create,
modify or terminate any Employee Benefit Plan. No condition or circumstance
exists that would prevent the amendment or termination of any Employee Benefit
Plan. To the knowledge of the Company, no event has occurred and no condition
or circumstance has existed that could result in a material increase in the
benefits under or the expense of maintaining any Employee Benefit Plan from
the level of benefits or expense incurred for the most recent fiscal year
ended thereof.
(c) No Pension Plans. No Employee Benefit Plan is an "employee pension
benefit plan" (within the meaning of Section 3(2) of ERISA), other than a
"simple retirement account" (within the meaning of Section 408(p) of the
Code).
(d) Liabilities. Except as set forth in Schedule 4.10(d) of the Company
Disclosure Letter:
(i) Neither the Company nor any of its Subsidiaries maintains any
Employee Benefit Plan which is a "group health plan" (as such term is
defined in Section 607(1) of ERISA or Section 5000(b)(1) of the Code)
that has not been administered and operated in all respects in compliance
with the applicable requirements of Part 6 of Subtitle B of Title I of
ERISA and Section 4980B of the Code and neither the Company nor any of
its Subsidiaries is subject to any material liability, including, without
limitation, additional contributions, fines, taxes, penalties or loss of
tax deduction as a result of such administration and operation. No
Employee Benefit Plan which is such a group health plan is a "multiple
employer welfare arrangement," within the meaning of Section 3(40) of
ERISA. Each Employee Benefit Plan that is intended to meet the
requirements of Section 125 of the Code meets such requirements, and each
program of benefits for which employee contributions are provided
pursuant to elections under any Employee Benefit Plan meets the
requirements of the Code applicable thereto. Neither the Company nor any
of its Subsidiaries maintains any Employee Benefit Plan which is an
"employee welfare benefit plan" (as such term is defined in Section 3(1)
of ERISA) that has provided any "disqualified benefit" (as such term is
defined in Section 4976(b) of the Code) with respect to which an excise
tax could be imposed.
(ii) Neither the Company nor any of its Subsidiaries maintains any
Employee Benefit Plan providing for post-employment or retiree health,
life insurance and/or other welfare benefits and having unfunded
liabilities, and neither the Company nor any of its Subsidiaries have any
obligation to provide any such benefits to any retired or former
employees or active employees following such employees' retirement or
termination of service. Neither the Company nor any of its Subsidiaries
has any unfunded liabilities pursuant to any Employee Benefit Plan. No
Employee Benefit Plan holds as an asset any interest in any annuity
contract, guaranteed investment contract or any other investment or
insurance contract, policy or instrument issued by an insurance company
that, to the knowledge of the Company, is or may be the subject of
bankruptcy, conservatorship, insolvency, liquidation, rehabilitation or
similar proceedings.
23
(iii) Neither the Company nor any of its Subsidiaries has incurred
any liability for any tax or excise tax arising under Chapter 43 of the
Code, and no event has occurred and to the knowledge of the Company no
condition or circumstance has existed that could give rise to any such
liability.
(iv) There are no actions, suits, claims or disputes pending, or, to
the best knowledge and belief of the Company, threatened, anticipated or
expected to be asserted against or with respect to any Employee Benefit
Plan or the assets of any such plan (other than routine claims for
benefits and appeals of denied routine claims). No civil or criminal
action brought pursuant to the provisions of Title I, Subtitle B, Part 5
of ERISA is pending, threatened, anticipated, or expected to be asserted
against the Company or any of its Subsidiaries or any fiduciary of any
Employee Benefit Plan, in any case with respect to any Employee Benefit
Plan. No Employee Benefit Plan or any fiduciary thereof has been the
direct or indirect subject of an audit, investigation or examination by
any governmental or quasi-governmental agency.
(e) Contributions. Full payment has been timely made of all amounts which
the Company or any of its Subsidiaries is required, under applicable law or
under any Employee Benefit Plan or any agreement relating to any Employee
Benefit Plan to which the Company or any of its Subsidiaries is a party, to
have paid as contributions or premiums thereto as of the last day of the most
recent fiscal year of such Employee Benefit Plan ended prior to the date
hereof. All such contributions and/or premiums have been fully deducted for
income tax purposes and no such deduction has been challenged or disallowed by
any governmental entity, and to the best knowledge and belief of the Company
and its Subsidiaries no event has occurred and no condition or circumstance
has existed that could give rise to any such challenge or disallowance. The
Company has made adequate provision for reserves to meet contributions and
premiums and any other liabilities that have not been paid or satisfied
because they are not yet due under the terms of any Employee Benefit Plan,
applicable law or related agreements. Benefits under all Employee Benefit
Plans are as represented and have not been increased subsequent to the date as
of which documents have been provided.
(f) Transactions. Neither the Company nor any of its Subsidiaries nor any
of their respective directors, officers, employees or, to the best knowledge
and belief of the Company, other persons who participate in the operation of
any Employee Benefit Plan or related trust or funding vehicle, has engaged in
any transaction with respect to any Employee Benefit Plan or breached any
applicable fiduciary responsibilities or obligations under Title I of ERISA
that would subject any of them to a tax, penalty or liability for prohibited
transactions or breach of any obligations under ERISA or the Code or would
result in any claim being made under, by or on behalf of any such Employee
Benefit Plan by any party with standing to make such claim.
(g) Triggering Events. Set forth in Schedule 4.10(g) attached hereto is
an accurate and complete list of any payment, acceleration, vesting or
increase in benefits to any employee, former employee, consultant, officer or
director of the Company or any of its Subsidiaries (but not including any such
payment, acceleration, vesting or increase in benefits attributable solely to
any such individual's status as a security holder of the Company or PHFL) as a
24
result of the execution of this Agreement and the consummation of the
transactions contemplated hereby.
(h) Classification. The Company and its Subsidiaries have classified all
individuals who perform services for them correctly under each Employee
Benefit Plan, ERISA, the Code and other applicable law as common law
employees, independent contractors or leased employees.
(i) Documents. The Company has delivered or caused to be delivered to the
Parent and its counsel true and complete copies of all material documents in
connection with each Employee Benefit Plan, including, without limitation
(where applicable): (i) all Employee Benefit Plans as in effect on the date
hereof, together with all amendments thereto, including, in the case of any
Employee Benefit Plan not set forth in writing, a written description thereof;
(ii) all current summary plan descriptions, summaries of material
modifications, and material communications; (iii) all current trust
agreements, declarations of trust and other documents establishing other
funding arrangements (and all amendments thereto and the latest financial
statements thereof); (iv) the annual report on Internal Revenue Service Form
5500-series for each of the last three years for each Employee Benefit Plan
required to file such form; (v) the most recently prepared financial
statements for each Employee Benefit Plan for which such statements are
required; and (vi) all contracts and agreements relating to each Employee
Benefit Plan, including, without limitation, service provider agreements,
insurance contracts, annuity contracts, investment management agreements,
subscription agreements, participation agreements, and recordkeeping
agreements and collective bargaining agreements.
(j) U.K. Plans. Subsections 4.10(a) through 4.10(i), Subsection 4.10(k)
and Section 4.11 shall not apply to any continuing employees or former
employees of Omega (UK) Limited, PHFL or Idun Health Care Limited or any of
their Subsidiaries (the "UK Companies"). The provisions of this subsection
4.10(j) shall apply instead to (aa) continuing employees and former employees
directly employed by Omega (UK) Limited, PHFL and Idun Health Care Limited
(and, in relation to (iv) below, any employee of any UK Company) and (bb)
employees of any UK Company of "regional manager" level or above (together the
"UK Employees"). In relation to each such UK Employee, Schedule 4.10(j) of the
Company Disclosure Letter sets forth an accurate and complete listing of the
following:
(i) any written service or employment agreement or (as appropriate)
any standard form of particulars of employment applicable and issued to
employees;
(ii) his name and date of commencement of employment (including any
employment with a previous employer which counts as continuous employment
for the purposes of any relevant UK employment legislation);
(iii) his rate of remuneration, bonus and commission, any other
benefit of any kind to which he is entitled which is provided or made
available to him, his period of notice, entitlement to holidays and
holiday bonuses;
25
(iv) particulars of any collective agreement or policy affecting his
terms of employment, including disciplinary or grievance procedures and
any procedures to be followed in the case of redundancy or dismissal; and
(v) any written agreement or arrangement with any consultant of any
UK Company.
In addition to those UK Employees referred to above there are no
additional employees of any UK Company in receipt of salary, fees or other
benefits in excess of (pound)45,000 or whose employment or appointment cannot
be terminated without giving more than three months' notice. In relation to
any such employee the Disclosure Letter sets out those particulars required by
Clauses (i) to (v) above.
Except as set forth in Schedule 4.10(j) of the Company Disclosure Letter
or in the Completed Commission filings, the UK Companies are in substantial
compliance with their legal obligations under English law in relation to each
of the UK Employees. There is not at present any industrial action being taken
by any UK Employees nor, to the knowledge of the Company, is any such
industrial action threatened against any UK Company. There are no recognized
trade unions covering any UK Employees. So far as the Company is aware, no UK
Company is currently being investigated by the Equal Opportunities Commission,
Commission for Racial Equality or Disability Research Commission in relation
to any UK Employees. Except as set forth in Schedule 4.10(j) of the Company
Disclosure Letter, there are no outstanding or, to the knowledge of the
Company, threatened claims (including occupational health and safety claims)
against any UK Company by any UK Employees. Except as set forth in Schedule
4.10(j) of the Company Disclosure Letter, there exists no employment,
consulting, severance, indemnification arrangements or deferred compensation
agreements between either UK Company and any UK Employee or any consultant,
nor any agreement that would give any UK Employee or consultant the right to
receive any payment from any UK Company as a result of the Offer or the Merger
(but not including any such payment solely attributable to any such
individual's status as a security holder of the Company or PHFL).
Set forth in Schedule 4.10(j) attached hereto is an accurate and complete
list of any payment, acceleration, vesting or increase in benefits to any UK
Employee owing solely as a result of the execution of this Agreement and the
consummation of the transactions contemplated hereby.
(k) Australia Plans. Subsections 4.10(a) through 4.10(j) and Section 4.11
shall not apply to any continuing employees or former employees of PHFT or its
Subsidiaries. The provisions of this subsection 4.10(k) shall apply instead to
continuing employees and former employees directly employed by PHFT or
Principal Healthcare Finance NZ Limited (together with PHFT, the "ANZ
Interests") only. The information contained in Schedule 4.10(k) is accurate
and not misleading. Except as set forth on Schedule 4.10(k): Since June 20,
1998, none of the ANZ Interests (x) has or has had any employees or
consultants in Australia or New Zealand or (y) have made any contract,
arrangement, understanding or representation pursuant to which one or more
employees, consultants or agents will or may be entitled to any benefit (but
26
not including any such benefit solely attributable to any such individual's
status as a security holder of the Company or PHFL) if ownership (direct or
indirect) of the Company changes; no claim has been made, nor has any ANZ
Interest received notice of any potential Claim, by or on behalf of any past
or present employee or consultant; there is no issue which may lead to
industrial action by employees or any industrial organization of employees
which may disrupt the business of the ANZ Interests; the ANZ Interests have
complied with and continue to comply with all obligations arising under law,
equity, statute (including occupational health and safety, annual leave, long
service leave, equal opportunity, anti-discrimination, taxation,
superannuation, workers compensation and industrial laws) or any award,
enterprise agreement or other instrument made or approved under any law with
respect to their past and present employees and consultants; there are no
awards, enterprise agreements or other instruments made or approved under law
which apply to employees of the ANZ Interests; there are no contracts,
arrangements or understandings with consultants of any of the ANZ Interests;
none of the ANZ Interests operate a bonus, profit share or employee incentive
plan or scheme for its employees or officers.
Section 4.11 Employment Relations and Agreements . Except as set forth on
Schedule 4.11(a) of the Company Disclosure Letter or in the Completed
Commission Filings (i) each of the Company and its Subsidiaries is in
substantial compliance with all federal, foreign, state or other applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours applicable to such Person, as the case may be,
and has not and is not engaged in any unfair labor practice as determined by
the National Labor Relations Board ("NLRB"), (ii) no material unfair labor
practice charge or complaint against the Company or any of its Subsidiaries is
pending before the NLRB or an equivalent tribunal under applicable foreign
law, (iii) there is no labor strike, slowdown, stoppage or material dispute
pending or, to the knowledge of the Company, threatened against or involving
the Company or any of its Subsidiaries, (iv) no representation question exists
respecting the employees of the Company or any of its Subsidiaries, (v) no
collective bargaining agreement is currently being negotiated by the Company
or any of its Subsidiaries and neither the Company nor any of its Subsidiaries
is or has been a party to a collective bargaining agreement, (vi) neither the
Company nor any of its Subsidiaries is experiencing or has experienced any
material labor difficulty during the last three years, (vii) no grievance or
arbitration proceeding arising out of or under a collective bargaining
agreement is pending and no claim thereunder exists or, to the knowledge of
the Company, is threatened with respect to the Company's or its Subsidiaries'
operations, (viii) neither the Company nor any of its Subsidiaries has any
Equal Employment Opportunity Commission charges or other claims of employment
discrimination pending or, to the Company's best knowledge, currently
threatened against the Company or any such Subsidiary, (ix) no wage and hour
department investigation has been made of the Company or any of its
Subsidiaries, (x) neither the Company nor any of its Subsidiaries had any
occupational health and safety claims against the Company or any such
Subsidiary, (xi) the Company and each of its Subsidiaries is in compliance in
all material respects with the terms and provisions of the Immigration Reform
and Control Act of 1986, as amended, and all related regulations promulgated
thereunder (the "Immigration Laws") and (xii) there has been no "mass layoff"
or "plant closing" by the Company as defined in the Federal Workers Adjustment
Retraining and Notification Act ("WARN") or state law equivalent, or any other
mass layoff or plant closing that would trigger notice pursuant to WARN or
state law equivalent, within ninety (90) days prior to the Closing Date. The
Company and its Subsidiaries are not and have never been, to the knowledge of
the Company, the subject of any inspection or investigation relating to its
compliance with or violation of the Immigration Laws, nor have they been, to
27
the knowledge of the Company, warned, fined or otherwise penalized by reason
of any such failure to comply with the Immigration Laws, nor is any such
proceeding pending or, to the Company's knowledge, threatened.
Section 4.12 Taxes . Except as set forth on Schedule 4.12 of the Company
Disclosure Letter and, with respect to Idun Health Care Limited and its
Subsidiaries, from after October 29, 1999 only:
(a) Tax Returns. The Company and each of its Subsidiaries has timely
filed or caused to be timely filed or shall timely file or cause to be timely
filed with the appropriate taxing authorities all returns, statements, forms
and reports for Taxes (as hereinafter defined) (the "Returns") that are
required to be filed by, or with respect to, the Company and its Subsidiaries
on or prior to the Offer Completion Date. The Returns reflect accurately and
shall reflect accurately all liability for Taxes of the Company and each of
its Subsidiaries for the periods covered thereby and all other information
presented on such Returns is true, correct and complete in all material
respects. "Taxes" shall mean all taxes, assessments, charges, duties, fees,
levies or other governmen tal charges including, without limitation, all
United States federal, state, local, non-foreign and other income, franchise,
profits, capital gains, capital stock, transfer, sales, use, occupation,
property, excise, severance, windfall profits, stamp, license, payroll,
withholding and other taxes, assessments, charges, duties, fees, levies or
other governmental charges of any kind whatsoever (whether payable directly or
by withholding and whether or not requiring the filing of a Return), all
estimated taxes, deficiency assessments, additions to tax, penalties and
interest, and shall include any liability for such amounts which may be
incurred as a result either of being a member of a combined, consolidated,
unitary or affiliated group, or of a contractual obligation to indemnify any
Person or other entity.
(b) Payment of Taxes . All Taxes and Tax liabilities due by or with
respect to the income, assets or operations of the Company and its
Subsidiaries for all taxable years or periods that end on or prior to the
Offer Completion Date and, with respect to any taxable year or period
beginning on or prior to and ending after the Offer Completion Date, the
portion of such taxable year or period ending on and including the Offer
Completion Date ("Pre-Closing Period"), have been timely paid or shall be
timely paid in full on or prior to the Offer Completion Date or accrued and
adequately disclosed and fully provided for on the financial statements of the
Company and its Subsidiaries in accordance with GAAP.
(c) Other Tax Matters . (i) Neither the Company nor any of its
Subsidiaries has been the subject of any audit or other examination of Taxes
by the tax authorities of any nation, state or locality since 1998 and, to the
knowledge of the Company and no such audit or other examination is
contemplated or pending, nor has the Company or any of its Subsidiaries
received any written notices from any taxing authority relating to any issue
which could affect the Tax liability of the Company or any of its
Subsidiaries.
(ii) Neither the Company nor any of its Subsidiaries, as of the
Closing Date, (w) has entered into an agreement or waiver or been
requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of Taxes of the Company
or any of its Subsidiaries, (x) is presently contesting the Tax liability
28
of the Company or any of its Subsidiaries before any Governmental Entity,
(y) has granted any power-of-attorney related to Tax matters to any
Person, or (z) has applied for and/or received a ruling or determination
from a taxing authority regarding a past or prospective transaction of
the Company or any of its Subsidiaries.
(iii) No written claim has ever been made by any taxing authority in
a jurisdiction where the Company or any of its Subsidiaries does not file
Returns that the Company or any of its Subsidiaries is, or may be,
subject to taxation by that jurisdiction.
(iv) All Taxes which the Company or any of its Subsidiaries is (or
was) required by law to withhold or collect in connection with amounts
paid or owing to any employee, independent contractor, creditor,
shareholder, or other third party have been duly withheld or collected,
and have been timely paid over to the proper authorities to the extent
due and payable.
(v) There are no tax sharing, allocation, indemnification or similar
agreements or arrangements in effect as between the Company, any
Subsidiary, or any predecessor or Affiliate of any of them and any other
party under which Parent, Sub, the Company or any of its Subsidiaries
could be liable for any Taxes or other claims of any party.
(vi) No indebtedness of the Company or any of its Subsidiaries
consists of "corporate acquisition indebtedness" within the meaning of
Section 279 of the Code or bears interest that is otherwise nondeductible
pursuant to Section 163 of the Code.
(vii) Neither the Company nor any of its Subsidiaries has applied
for, been granted, or agreed to any accounting method change for which it
shall be required to take into account any adjustment pursuant to Section
481 of the Code or any similar provision of the Code or the corresponding
tax laws of any nation, state or locality.
(viii) Neither the Company nor any of its Subsidiaries has been a
"United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code at any time during the five year period
ending on the date hereof.
(ix) Except as provided in Schedule 4.12(c)(ix) of the Company
Disclosure Letter, there is no individual who is providing services to
the Company or any of its Subsidiaries to which both clause (A) and
clause (B) apply: (A) as of the date hereof, the individual is entitled
to compensation under one or more arrangements for which the Company or
any Subsidiary would be entitled to an income tax deduction for all or a
portion of the compensation paid to or for the benefit of such individual
under U.S. Federal income tax in the absence of Code section 280G or Code
section 162(m); and (B) the income tax deduction for payments described
in clause (A) may be disallowed by reason of Code section 280G or Code
section 162(m). Schedule 4.12(c)(ix) sets forth next to the name of each
such individual, the amount (or a good faith estimate of such amount) of
payment to each such individual that may be disallowed as an income tax
deduction by reason of Code Section 280G or Code Section 162(m). Neither
the Company nor any Subsidiary is subject to an obligation to provide a
tax gross up payment to any individual by reason of the individual
incurring excise tax liability under Code section 4999.
29
(x) Neither the Company nor any of its Subsidiaries has been
included in any "consolidated," "unitary" or "combined" Return (other
than Returns which include only the Company and any Subsidiaries of the
Company) provided for under the laws of any jurisdiction or any state or
locality with respect to Taxes, for any taxable period for which the
statute of limitations has not expired.
Section 4.13 Liabilities . Neither the Company nor any of its
Subsidiaries has outstanding any claims, liabilities or indebtedness,
contingent or otherwise, of any kind whatsoever (whether accrued, absolute,
contingent or otherwise), except (i) as set forth in Section 4.13 of the
Company Disclosure Letter, (ii) as set forth in the Completed Commission
Filings, (iii) for liabilities incurred since the date of the most recent
financial statements included in the Completed Commission Filings in the
ordinary course of business consistent with past practice which would not be
required to be reflected in or reserved against in financial statements
prepared in accordance with GAAP, (iv) such other claims, liabilities or
indebtedness which have not had, do not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company or (v) such inter-company claims, liabilities or indebtedness
existing among the Company, PHFT (but, with respect to PHFT, not excluding any
such claims, liabilities or indebtedness between any Australian entity (as
minority interest only) and the rest of the group), PHFL and their respective
Subsidiaries.
Section 4.14 Intellectual Property . (a) Except as disclosed in Schedule
4.14(a) of the Company Disclosure Letter and except where the failure to so
own or have such right to use has not had, does not have, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company, the Company or its Subsidiaries owns or has a
valid and enforceable right to use, free and clear of all Liens, all
Intellectual Property necessary or material to conduct the business of the
Company and its Subsidiaries as presently conducted.
(b) Except as disclosed in Schedule 4.14(b) of the Company Disclosure
Letter and except for such infringement, violation, misappropriation or misuse
that has not had, does not have, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company,
the conduct of the Company's and its Subsidiaries' businesses or the use of
the Intellectual Property does not infringe, violate, misappropriate or misuse
any Intellectual Property rights or any other proprietary right of any Person
or give rise to any obligations to any Person as a result of co-authorship.
Section 4.15 Proxy Statement; Offer Documents and Schedule 14D-9 .
Neither the Schedule 14D-9 nor any of the information supplied or to be
supplied by the Company in writing for inclusion in the Offer Documents will,
at the times the Schedule 14D-9, the Offer Documents or any amendments or
supplements thereto are filed with the Commission or are first published, sent
or given to stockholders of the Company, as the case may be, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. In
the event a Stockholders' Meeting is held, the Proxy Statement to be sent to
the stockholders of the Company in connection with such Stockholders' Meeting
30
will not, on the date the Proxy Statement (or any amendment or supplement
thereto) is first mailed to stockholders of the Company or at the time of the
Stockholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied or to be
supplied by Parent, Sub or any of their respective representatives in writing
for inclusion in the foregoing documents. The Schedule 14D-9 and the Proxy
Statement, if applicable, will comply in all material respects with the
requirements of the Exchange Act.
Section 4.16 Broker's or Finder's Fee; Expenses . Other than UBS Warburg
LLC, the fees and expenses of which shall not exceed the amount set forth on
Schedule 4.16 of the Company Disclosure Letter, no agent, broker, Person or
firm acting on behalf of the Company or any Subsidiary is, or shall be,
entitled to any broker's, finder's or similar fee or commission or broker's or
finder's fees in connection with this Agreement or any of the transactions
contemplated hereby from any of the parties hereto or from any Affiliate of
any of the parties hereto. Notwithstanding the foregoing, the total amount of
out of pocket costs, fees and expenses payable by the Company and its
Subsidiaries in connection with this Agreement and the transactions
contemplated hereby (including fees and expenses payable to its accountants,
legal, financial and other advisors and their respective representatives,
including the fees and expenses of UBS Warburg) shall not exceed the amount
set forth on Schedule 4.16 of the Company Disclosure Letter.
Section 4.17 Certain Contracts and Arrangements . (a) As of the date
hereof, except as set forth on Schedule 4.17(a) of the Company Disclosure
Letter and except for inter-company contracts, agreements, instruments or
understandings existing among the Company, PHFT (but, with respect to PHFT,
not excluding any such contracts, agreements, instruments or understandings
between any Australian entity (as minority interest only) and the rest of the
group), PHFL (but, with respect to each of PHFT and PHFL, not excluding any
such contracts, agreements, instruments or understandings between a
securitised entity, on the one hand, and a non-securitised entity on the
other) and their respective Subsidiaries, neither the Company nor any of its
Subsidiaries is a party to or bound by any contracts, agreements, instruments
or understandings which have not expired or been terminated ("Contracts") of
the following nature (collectively, the "Material Contracts"):
(i) Contracts (other than those filed as exhibits to the Completed
Commission Filings) with any current or former employee, director or
officer of the Company or any of its Subsidiaries;
(ii) Contracts other than contracts entered into in the ordinary
course of business consistent with past practice (x) for the sale of any
material amount of the assets of the Company or any of its Subsidiaries,
or (y) for the grant to any Person of any preferential rights to purchase
any material amount of its assets;
(iii) Contracts which restrict the Company or any of its Affiliates
from competing in any line of business or with any Person in any
geographical area in any material matter, or which restrict any other
Person from competing with the Company or any of its Affiliates in any
line of business or in any geographical area in any material matter;
31
(iv) Contracts which are material to the Company and which
restrict the Company or any of its Subsidiaries from disclosing any
information concerning or obtained from any other Person (other than
contracts entered into in the ordinary course of business consistent
with past practice);
(v) Contracts entered into since March 31, 2002 and involving
(i) the acquisition, merger or purchase of all or substantially all
of the assets or business of a third party, involving aggregate
consideration of $250,000 or more, or (ii) the purchase or sale of
assets, or a series of related purchases or sales of assets,
involving aggregate consideration of $250,000 or more;
(vi) Contracts with any Affiliate that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities Act;
(vii) Contracts which are material to the Company and contain a
"change in control" or similar provision;
(viii) Contracts, including mortgages or other grants of
security interests, guarantees and notes, relating to the borrowing
of money in an aggregate amount in excess of $250,000; provided that
those Contracts reflected in the consolidated financial statements
of the Company and its Subsidiaries included in the Completed
Commission Filings need not be disclosed on Schedule 4.17(a) of the
Company Disclosure Letter;
(ix) Contracts constituting any material joint venture,
partnership, strategic alliance or similar arrangement;
(x) Contracts existing on the date hereof involving revenues or
payments in excess of $250,000 per year, other than contracts
entered into in the ordinary course of business consistent with past
practice; and
(xi) Contracts of the type described under Item 601(b)(10) of
Regulation S-K under the Securities Act.
(b) Each Material Contract is in full force and effect and is a valid and
binding obligation of the Company or the Subsidiary party thereto or bound
thereby and, to the knowledge of the Company, each other party thereto. Except
as set forth on Schedule 4.17(b) of the Company Disclosure Letter and except
as has not had, does not have, and would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on the
Company, neither the Company nor any of its Subsidiaries is in breach or
default under any Material Contract nor, to the knowledge of the Company, is
any other party to any Material Contract in breach or default thereunder.
Section 4.18 Environmental Laws and Regulations . (a) Except as set forth
on Schedule 4.18 of the Company Disclosure Letter and as except as have not
had, do not have, and would not be reasonably expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company, (i) Hazardous
Materials have not at any time during the Company's direct or indirect
ownership (by fee or leasehold interest) or operation of the Company Property,
and to the knowledge of the Company, at any other time, been generated, used,
32
treated or stored, transported to or from, or Released or disposed of, on any
Company Property except in compliance with applicable Environmental Laws, (ii)
the Company and each of its Subsidiaries are in compliance with all
Environmental Laws and the requirements of any permits issued under such
Environmental Laws with respect to any Company Property, (iii) there are no
pending or, to the knowledge of the Company, any threatened Environmental
Claims against the Company or any of its Subsidiaries or any Company Property,
(iv) to the knowledge of the Company, there are no facts or circumstances,
conditions or occurrences regarding any Company Property that would reasonably
be anticipated (x) to form the basis of an Environmental Claim against the
Company or any of its Subsidiaries or any Company Property for which the
Company or any of its Subsidiaries could reasonably be expected to be liable,
or (y) to cause such Company Property to be subject to any restrictions on its
ownership, occupancy, use or transferability under any Environmental Law and
(v) to the knowledge of the Company, there are no underground storage tanks
located on any Company Property.
(b) For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Company Property" means any real property and
improvements at any time owned, leased or operated by the Company or any of
its Subsidiaries, (ii) "Hazardous Materials" means (x) any petroleum or
petroleum products, radioactive materials, asbestos in any form that has
become friable, urea formaldehyde foam insulation, dielectric fluid containing
levels of polychlorinated biphenyls, and radon gas, (y) any chemicals,
materials or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "extremely hazardous substances," "restricted hazardous wastes,"
"toxic sub stances," "toxic pollutants," or words of similar import, under any
applicable Environmental Law, and (z) any other chemical, material or
substance, exposure to which is prohibited, limited or regu lated by any
Governmental Entity, (iii) "Environmental Law" means any federal, state,
foreign or local statute, law, rule, regulation, ordinance, guideline, policy,
code or rule of common law in effect and in each case, as amended, as of the
date hereof and Closing Date, and any judicial interpretation thereof or order
applicable to the Company or its operations or property as of the date hereof
and Closing Date, including any judicial or administrative order, consent
decree or judgment, relating to the indoor or outdoor environment, health,
safety or Hazardous Materials, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended,
42 X.X.X.xx. 9601 et seq.; the Resource Conservation and Recovery Act, as
amended, 42 X.X.X.xx. 6901 et seq.; the Federal Water Pollution Control Act,
as amended, 33 X.X.X.xx. 1251 et seq.; the Toxic Substances Control Act, 15
X.X.X.xx. 2601 et seq.; the Clean Air Act, 42 U.S.C. ss.7401 et seq.;
Occupational Safety and Health Act, 29 U.S.C. 651 et seq.; Oil Pollution Act
of 1990, 33 U.S.C.ss.2701 et seq.; and the Safe Drinking Water Act, 42
X.X.X.xx. 300f et seq., and their state and local counterparts and
equivalents, (iv) "Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non compliance or violation, investigations or proceedings under
any Environmental Law or any permit issued under any such Environmental Law
(for purposes of this subclause (iv), "Claims"), including, without
limitation, (x) any and all Claims by governmental or regulatory authorities
for enforcement, cleanup, removal, response, remedial or other actions or
damages pursuant to any applicable Environmental Law, and (y) any and all
Claims by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury or threat of injury to health, safety or the
indoor or outdoor environment and (v) "Release" or "Released" means disposing,
33
discharging, injecting, spilling, leaking, leaching, dumping, emitting,
escaping, emptying or seeping into or upon any land or water or air, or
otherwise entering into the indoor or outdoor environment.
Section 4.19 State Takeover Statutes; Appraisal Rights . (a) The Board of
Directors of the Company has approved the Offer, the Merger, the Stockholders
Agreements and this Agreement, and such approval is sufficient to render the
restrictions contained in Section 3-603 of the MGCL and Section 6.7 of the
Company's Articles of Amendment and Restatement inapplicable to the Offer, the
Merger, the Stockholders Agreements, this Agreement and the other transactions
contemplated therein and herein. Except for Section 3-603 of the MGCL and
Section 6.7 of the Company's Articles of Amendment and Restatement (which have
been rendered inapplicable), no other takeover statute or similar statute or
regulation of any state is applicable to the Offer, the Merger, the
Stockholders Agreements or this Agreement (including all of the transac tions
contemplated thereby and hereby).
(b) The stockholders of the Company are not and shall not be entitled to
dissenter, appraisal or similar rights pursuant to Section 3-202 of the MGCL
or otherwise, with respect to the Merger or the other transactions
contemplated thereby (other than if Parent or Sub shall have taken or failed
to take any action which would entitle the stockholders of the Company to such
rights).
Section 4.20 Voting Requirements . In the event that Section 253 of the
DGCL or Section 3-106 of the MGCL is unavailable to effectuate the Merger, the
affirmative vote of the holders of at least a majority of the outstanding
shares of Common Stock (with each share of Common Stock having one (1) vote),
entitled to be cast in approving the Merger, is the only vote of the holders
of any class or series of the Company's capital stock necessary to adopt this
Agreement and approve the transactions contemplated by this Agreement.
Section 4.21 Rights Agreement . The Company and the Board of Directors of
the Company have taken all necessary action to amend the Rights Agreement
(without redeeming the Rights), and shall maintain in effect all necessary
action (i) to render the Rights Agreement inapplicable with respect to the
Offer, the Merger, the Stockholders Agreements, this Agreement and the other
transactions contemplated thereby and hereby and (ii) to ensure that (x)
neither Parent nor Sub nor any of their "Affiliates" (as such term is defined
in the Rights Agreement) or "Associates" (as such term is defined in the
Rights Agreement) is considered to be an "Acquiring Person" (as such term is
defined in the Rights Agreement) and (y) the provisions of the Rights
Agreement, including the occurrence of a "Distribution Date" (as such term is
defined in the Rights Agreement), are not and shall not be triggered by reason
of the announcement or consummation of the Offer, the Merger, the Stockholders
Agreements, this Agreement or the consummation of any of the other
transactions contemplated thereby or hereby. The Company has delivered to
Parent a complete and correct copy of the Rights Agreement, as amended, and
the Rights Agreement has not been further modified or amended.
Section 4.22 Opinion of Financial Advisor . The Special Committee and the
Board of Directors of the Company have received the opinion of UBS Warburg
LLC, a complete and correct signed copy of which has been, or promptly upon
receipt thereof shall be, delivered to Parent solely for informational
34
purposes, to the effect that, as of the date of this Agreement, the cash
consideration to be received in the Offer and the Merger by the holders of
Common Stock, other than Parent, Sub and their respective affiliates, is fair
from a financial point of view to such holders, subject to the qualifications
and assumptions contained therein.
Section 4.23 Insurance . The Company has delivered to Parent and Sub,
prior to the date of this Agreement, copies of all insurance policies which
are owned by the Company or its Subsidiaries or which name the Company or any
of its Subsidiaries as an insured, additional insured, or loss payee,
including, without limitation, those which pertain to the Company's or any of
its Subsidiaries' assets, employees or operations. All such insurance policies
are in full force and effect, are valid and enforceable, and all premiums due
thereunder have been paid. Neither the Company nor any of its Subsidiaries has
received any notice of cancellation or modification in coverage amounts of any
such insurance policies.
Section 4.24 Stock Options. The Board of Directors of the Company (or, if
appropriate, any committee thereof) has obtained all necessary consents and
releases from all of the holders of Options heretofore granted under any Stock
Plans not entitled to payment pursuant to Section 3.6 hereof to provide for
the cancellation of all Options held by such holders, effective at the
Effective Time.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
------------------------------------------------
Section 5. Each of Parent and Sub hereby represents and warrants to the
Company as follows:
Section 5.1 Due Organization, Good Standing and Corporate Power . Parent
is a private limited company duly organized and validly existing under the
laws of England and Wales. Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Parent
has made available to the Company complete and correct copies of the
organizational documents of Sub, which are in full force and effect as of the
date hereof.
Section 5.2 Authorization and Validity of Agreement . Each of Parent and
Sub has the requisite corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Sub and the consummation by each of them of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of each of Parent and Sub. No other corporate action on the part of
either of Parent or Sub is necessary to authorize the execution, delivery and
performance of this Agreement by each of Parent and Sub and the consummation
of the transactions contemplated hereby (other than the filing of the
appropriate merger documents as required by the DGCL). This Agreement has been
duly executed and delivered by each of Parent and Sub and, assuming that this
Agreement constitutes a valid and binding obligation of the Company,
constitutes a valid and binding obligation of each of Parent and Sub,
enforceable against each of Parent and Sub in accordance with its terms,
except that such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, and general equitable principles.
35
Section 5.3 Consents and Approvals; No Violations . Assuming (i) the
filings required under the Antitrust Laws as set forth on Schedule 4.4 of the
Company Disclosure Letter are made and the applicable waiting periods
thereunder have been terminated or have expired, (ii) the requirements of the
Exchange Act relating to the Proxy Statement, if any, and the Offer are met,
(iii) the filing of the Certificates of Merger and other appropriate merger
documents, if any, as required by the MGCL or the DGCL, are made, and (iv)
approval of the Merger and this Agreement by the stockholders of the Company,
if required by the MGCL or the DGCL, is received, the execution and delivery
of this Agreement by Parent and Sub and the consummation by Parent and Sub of
the transactions contemplated hereby and thereby shall not (w) violate or
conflict with any provision of the Articles of Association of Parent or the
Certificate of Incorporation or By-Laws of Sub, (x) violate or conflict with
any statute, ordinance, rule, regulation, order or decree of any Governmental
Entity applicable to Parent or Sub or by which either of their respective
properties or assets may be bound, (y) require any filing with, consent or
approval of, Permit from, or the giving of any notice to, any Governmental
Entity or (z) result in a violation or breach of, conflict with, constitute
(with or without due notice or lapse of time or both) a default under (or give
rise to any right of termination, cancellation or acceleration or any right
which becomes effective upon the occurrence of a merger, consolidation or
change of control under), result in the creation of any Lien upon any of the
properties or assets of the Parent or Sub under, or give rise to any
obligation, right of termination, cancellation, acceleration or increase of
any obligation or a loss of a material benefit or any right which becomes
effective upon the occurrence of a merger, consolidation or change of control
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, franchise, Permit, agreement, contract, arrangement, lease
or other instrument or obligation to which Parent or Sub or any of their
Subsidiaries is a party, or by which any such Person or any of its properties
or assets may be bound, other than in the case of clauses (y) and (z), any
such violation, breach, conflict, default, right of termination, cancellation,
payment, acceleration, other right or failure to make any filing or obtaining
any Permit, consent or approval of, or give notice to, any Governmental Entity
that has not had, does not have and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent or Sub.
Section 5.4 Offer Documents, Schedule 14D-9 and Proxy Statement . The
Offer Documents will not, at the time the Offer Documents are filed with the
Commission or are first published, sent or given to stockholders of the
Company, as the case may be, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements made therein, in the light of the circum
stances under which they were made, not misleading. None of the information
supplied or to be supplied by Parent and Sub in writing for inclusion in the
Proxy Statement (if any) and the Schedule 14D-9 (or any amendment or
supplement thereto) will, on the date mailed to stockholders of the Company or
at the time of the Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, Parent and Sub make no representation or warranty with respect to
any information supplied or to be supplied by the Company in writing for
inclusion in any of the foregoing documents or the Offer Documents. The Offer
Documents will comply in all material respects with the requirements of the
Exchange Act.
36
Section 5.5 Sub's Operations . Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement and has not
engaged in any business activities or conducted any operations other than in
connection with such transactions.
Section 5.6 Funds . Parent has entered into a Senior Credit Agreement
dated August 1, 2002 between Parent and Four Seasons Healthcare Holdings PLC,
as original borrowers, the initial Guarantors as defined therein, Barclays
Bank PLC as mandated lead arranger, facility agent and security agent, and the
Lenders (as defined therein) (the "Loan Agreement"), a true and complete copy
of which has been delivered to the Company, providing for, subject to certain
conditions set forth therein, all funds necessary to consummate the
transactions contemplated by this Agreement. As of the date of this Agreement,
the Loan Agreement provided to Company is in full force and effect and has not
been amended in any material respect.
Section 5.7 PHFL Offer . Parent has delivered to the Company draft copies
of the PHFL Offer Document, as well as such documents, undertakings and
contracts as may be necessary to reflect the terms and conditions of the PHFL
Offer and the PHFL Offer Condition (collectively, the "PHFL Documents"). Upon
commencement of the PHFL Offer, the PHFL Documents provided to the Company
shall be in full force and effect and shall not have been amended in any
material respect. As of the date hereof, Parent has received executed
instruments irrevocably tendering, subject to the terms and conditions set
forth therein, shares and warrants of PHFL pursuant to the PHFL Offer (the
"Irrevocable Instruments") from shareholders representing 90% or more of the
outstanding ordinary shares of PHFL (other than the ordinary shares of PHFL
owned by the Company), on a diluted basis.
Section 5.8 Brokers . No broker, investment banker or other person is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent and Sub, for which fee or
commission the Company or any Subsidiary of the Company may be liable.
Section 5.9 Litigation . There is no litigation, arbitration, claim,
investigation, suit, action or proceeding pending or, to the knowledge of
Parent, threatened against or affecting Parent and Sub, nor is there any order
outstanding against Parent or Sub which would reasonably be expected to,
individually or in the aggregate, (A) cause any of the transactions
contemplated by this Agreement to be rescinded following their consummation,
including the Offer or the Merger, or (B) materially impair or delay the
ability of Parent or Sub to perform its obligations hereunder or prevent the
consummation by them of any of the transactions contemplated thereby.
ARTICLE VI
TRANSACTIONS PRIOR TO CLOSING DATE
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Section 6.1 Access to Information Concerning Properties and Records .
During the period commencing on the date hereof and ending on the earlier of
(i) the Closing Date and (ii) the date on which this Agreement is terminated
pursuant to Section 8.1 hereof, the Company shall and shall cause each of its
Subsidiaries to, upon reasonable notice, afford Parent and Sub and their
37
respective employees, counsel, accountants, consultants and other authorized
representatives, access during normal business hours to the officers,
directors, employees, accountants, properties (but not for the purpose of any
physical testing), books and records in the possession or control of the
Company and its Subsidiaries in order that they may have the opportunity to
make such investigations as they shall desire of the affairs of the Company
and its Subsidiaries; provided, however, that such investigation shall not
affect the representations and warranties made by the Company in this
Agreement. The Company shall furnish promptly to Parent and Sub (x) a copy of
each form, report, schedule, statement, registration statement and other
document filed by it or its Subsidiaries during such period pursuant to the
requirements of United States federal or state securities laws and (y) all
other information concerning its or its Subsidiaries' business, properties and
personnel as Parent and Sub may request. The Company agrees to cause its
officers and employees to furnish such additional financial and operating data
and other informa tion and respond to such inquiries as Parent and Sub shall
from time to time reasonably request.
Section 6.2 Confidentiality . Except as contemplated by this Agreement,
information obtained by Parent, Sub and their respective counsel, accountants,
consultants and other authorized representatives pursuant to Section 6.1 shall
be subject to the Heads of Agreement between Parent and PHFL dated April 8,
2002 (the "Heads of Agreement") and to the provisions of the Confidentiality
Agreement between the Company and Parent dated January 7, 2002 (the
"Confidentiality Agreement", together with the Heads of Agreement, the
"Confidentiality Agreements").
Section 6.3 Conduct of the Business of the Company Pending the Closing
Date . The Company agrees that, except as expressly permitted or required by
this Agreement or otherwise consented to in writing by Parent, during the
period commencing on the date hereof and ending at the earlier of (x) such
time as nominees of Parent shall comprise a majority of the members of the
Board of Directors of the Company and (y) termination of this Agreement
pursuant to Section 8.1:
(a) The Company shall, and shall cause each of its Subsidiaries to
conduct their respective operations only according to their ordinary and
usual course of business consistent with past practice and shall use
their commercially reasonable efforts to preserve intact their respective
business organization, keep available the services of their officers and
employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients, customers and others having significant
business relationships with them;
(b) The Company shall not, and shall cause each of its Subsidiaries
not to, consent to any action by the Company or any of its Subsidiaries
with respect to any of the following, except as set forth in Schedule 6.3
of the Company Disclosure Letter:
(i) make any change in or amendment to its Charter or its
Bylaws (or comparable governing documents);
(ii) issue or sell, or authorize to issue or sell, any shares
of its capital stock or any other securities, or issue or sell, or
authorize to issue or sell, any securities convertible into or
38
exchangeable for, or options, warrants or rights to purchase or
subscribe for, or enter into any arrangement or contract with
respect to the issuance or sale of, any shares of its capital stock
or any other securities, or make any other changes in its capital
structure, except for the possible issuance by the Company of shares
of Common Stock pursuant to the terms of any vested Options or
pursuant to the terms of the Company's Series C Preferred Stock;
(iii) sell, pledge or dispose of or agree to sell, pledge or
dispose of any stock or other equity interest owned by it in any
other Person;
(iv) declare, pay or set aside any dividend or other
distribution or payment with respect to, or split, combine, redeem
or reclassify, or purchase or otherwise acquire, any shares of its
capital stock or its other securities (it being acknowledged that
dividends may continue to accrue under the current terms of the
Company's Series C Preferred Stock);
(v) enter into any contract or commitment with respect to
capital expenditures with a value in excess of, or requiring
expenditures by the Company and its Subsidiaries in excess of,
$250,000, individually, or enter into contracts or commitments with
respect to capital expenditures with a value in excess of, or
requiring expenditures by the Company and its Subsidiaries in excess
of, $250,000, in the aggregate;
(vi) acquire, by merging or consolidating with, by purchasing
an equity interest in or a portion of the assets of, or by any other
manner, any business or any Person, or otherwise acquire any assets
of any Person (other than the purchase of assets in the ordinary
course of business and consistent with past practice);
(vii) except to the extent required under existing employee and
director benefit plans, agreements or arrangements in effect on the
date of this Agreement, increase the compensation or fringe benefits
of any of its directors, officers or employees, or grant any
severance or termination pay not currently required to be paid under
existing severance plans, or enter into any employment, consulting
or severance agreement or arrangement with any present or former
director, officer or other employee of the Company or any of its
Subsidiaries, or establish, adopt, enter into or amend or terminate
any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit
of any directors, officers or employees;
(viii) transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of, subject to any Lien or otherwise encumber any
material assets, or incur or modify any indebtedness or other
material liability, other than in the ordinary course of business
consistent with past practice, or issue any debt securities or
assume, guarantee or endorse or otherwise as an accommodation become
responsible for the obligations of any Person or make any loan or
other extension of credit (other than to a wholly-owned Subsidiary);
39
(ix) agree to the settlement of or waive any material claim or
litigation;
(x) make or rescind any material tax election;
(xi) except to the extent permitted by Section 6.11 or required
by law or by any listing agreement with a national securities
exchange or automated quotation system to which the Company is a
party, issue any press release or otherwise make any public
announcements without prior consultation and review by, and consent
(which consent shall not be unreasonably withheld) of, Parent;
(xii) except as required by applicable law or GAAP, make any
material change in its method of accounting;
(xiii) adopt or enter into a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger) or any agreement relating
to an Acquisition Proposal, except as expressly permitted in Section
6.6;
(xiv) (I) incur, assume or prepay any indebtedness for borrowed
money or guarantee any such indebtedness of another Person, other
than indebtedness owing to or guarantees of indebtedness owing to
the Company or any direct or indirect wholly-owned Subsidiary of the
Company, or (II) make any loans, extensions of credit or advances to
any other Person, other than to the Company, or to any direct or
indirect wholly-owned Subsidiary of the Company, except, in the case
of clause (I), for borrowings under existing credit facilities
described in the Completed Commission Filings in the ordinary course
of business consistent with past practice for working capital
purposes and in the case of clause (II) for loans, extensions of
credit or advances constituting trade payables in the ordinary
course of business;
(xv) accelerate the payment, right to payment or vesting of any
bonus, severance, profit sharing, retirement, deferred compensation,
stock option, insurance or other compensation or benefits;
(xvi) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge or satisfaction (I)
of any such claims, liabilities or obligations in the ordinary
course of business and consistent with past practice or (II) of
claims, liabilities or obligations reflected or reserved against in
the most recent consolidated financial statements (or the notes
thereto) contained in the Completed Commission Filings;
(xvii) enter into any Material Contract;
(xviii) other than as disclosed in the Completed Commission
Filings, plan, announce, implement or effect any reduction in force,
lay-off, early retirement program, severance program or other
40
program or effort concerning the termination of employment of
employees of the Company or its Subsidiaries, provided, however,
that routine employee terminations for cause shall not be considered
subject to this clause (xviii);
(xix) (I) take any action, engage in any transaction or enter
into any agreement which would be reasonably likely to cause (A) any
of the representations or warranties set forth in Article IV that
are subject to, or qualified by, a "Material Adverse Effect" or
other materiality qualification to be untrue as of the Effective
Time, or any such representations and warranties that are not so
qualified to be untrue in any manner which has, or would reasonably
be expected to have, a Material Adverse Effect on the Company, or
(B) any of the Tender Offer Conditions not being satisfied; or (II)
purchase or acquire, or offer to purchase or acquire, any shares of
Common Stock of the Company;
(xx) take any action, including, without limitation, the
adoption of any shareholder-rights plan or amendments to the Company
Charter or the Company Bylaws (or comparable governing documents),
which would, directly or indirectly, restrict or impair the ability
of Parent to vote or otherwise to exercise the rights and receive
the benefits of a stockholder with respect to securities of the
Company that may be acquired or controlled by Parent or Sub, or
which would permit any stockholder to acquire securities of the
Company on a basis not available to Parent or Sub in the event that
Parent or Sub were to acquire any shares of Common Stock;
(xxi) materially modify, amend or terminate any Material
Contract or waive any of its material rights or claims except in the
ordinary course of business consistent with past practice;
(xxii) (I) prepare any Return in a manner which is materially
inconsistent with the past practices of the Company or a Subsidiary,
as the case may be, with respect to the treatment of items on such
Returns; (II) incur any material liability for Taxes other than in
the ordinary course of business; (III) enter into any settlement or
closing agreement with a taxing authority that materially affects or
may materially affect the Tax liability of the Company or a
Subsidiary, as the case may be, for any period ending after the
Closing Date;
(xxiii) fail to use its commercially reasonable efforts to
maintain with financially responsible insurance companies insurance
on its tangible assets and its businesses in such amounts and
against such risks and losses as are consistent with past practice;
(xxiv) breach any provision of the Standstill Agreement dated
the date hereof between the Company, Principal Healthcare
Investments (Guernsey) Limited and Barclays Bank PLC as Facility
Agent;
(xxv) exercise the warrants with respect to PHFL held by the
Company or its Subsidiaries; or
41
(xxvi) agree, in writing or otherwise, to take any of the
foregoing actions.
The Company agrees to promptly provide notice to Parent and Sub in the
event that it becomes aware that either PHFL or PHFT has undertaken any
activity that would violate this Section 6.3(b) as if the provisions of this
Section were applicable to them.
(c) The Company shall, at any time on or following the Offer Completion
Date and upon the request of Parent and Sub, assume the obligations of Parent
set forth in the Preferred Stockholder Agreement and purchase the Preferred
Shares pursuant to the Preferred Stockholder Agreement.
Section 6.4 Company Stockholders' Meeting; Preparation of Proxy
Statement; Short Form Merger . (a) Promptly following the purchase of Shares
pursuant to the Offer and, if applicable, the Subsequent Offer Period, if
required by law in order to consummate the Merger, the Company, acting through
its Board of Directors, shall, in accordance with the Company Charter and the
Company Bylaws and applicable law, duly call, convene and hold a meeting of
the stockholders of the Company (the "Stockholders' Meeting") for the purpose
of voting upon the Merger, this Agreement and the transactions contemplated
hereby, and the Company agrees that the Merger, pursuant to this Agreement and
the transactions contemplated hereby shall be submitted at such meeting. The
Company shall take all commercially reasonable action necessary to solicit
from its stockholders proxies, and shall use commercially reasonable efforts
to take all other action necessary and advisable to secure the vote of
stockholders required by applicable law and by the Company Charter or the
Company Bylaws to obtain their approval of the Merger, this Agreement and the
transactions contemplated hereby. Subject to the terms of this Agreement, the
Board of Directors of the Company shall recommend that the holders of Common
Stock vote in favor of the approval of this Agreement, the Merger, and the
transactions contemplated hereby at the Stockholders' Meeting, and the Company
agrees that it shall include in the Proxy Statement such recommendation of its
Board of Directors that the stockholders of the Company approve this
Agreement. For purposes of Articles VIII and IX of this Agreement, failure by
one or more of the Parent Designees to vote in favor of or otherwise effect
the covenants set forth in this Section 6.4 shall not constitute a breach of
any such covenant by the Company and shall constitute a breach of this
Agreement by Parent. Parent shall cause all shares of Common Stock of the
Company owned by Parent and its direct and indirect Subsidiaries (including
Sub) to be voted in favor of the Merger, this Agreement and the transactions
contemplated hereby.
(b) If stockholder approval of the Merger is required by law, as promptly
as practicable following Parent's request, the Company shall promptly prepare
and file with the Commission a preliminary proxy statement or information
statement (together with any amendment or supplement thereto, the "Proxy
Statement") and shall promptly use its commercially reasonable efforts to
respond to the comments of the Commission, if any, in connection therewith and
to furnish all information regarding the Company that is required in the
definitive Proxy Statement (including, without limitation, financial
statements and supporting schedules and certificates and reports of
independent public accountants). Parent, Sub and the Company shall cooperate
with each other in the preparation of the Proxy Statement. Without limiting
the generality of the foregoing, each of Parent and Sub shall furnish to the
Company for inclusion in the Proxy Statement the information relating to it
required by the Exchange Act to be set forth in the Proxy Statement. Promptly
after the expiration or termination of the Offer, if required by the MGCL or
the DGCL in order to consummate the Merger, the Company shall cause the
definitive Proxy Statement to be mailed to the stockholders of the Company
42
and, if necessary, after the definitive Proxy Statement shall have been so
mailed, promptly circulate amended, supplemental or supplemented proxy
material and, if required in connection therewith, resolicit proxies. The
Company shall not use any proxy material in connection with the meeting of its
stockholders without Parent's prior approval which approval shall not be
unreasonably withheld.
(c) Notwithstanding the foregoing clauses (a) and (b), in the event that
Parent or any other subsidiary of Parent shall own at least 90% of the
outstanding shares of Common Stock pursuant to the Offer or otherwise, the
parties hereto agree to take all necessary and appropriate action to cause the
Merger to become effective, as soon as practicable after the expiration of the
Offer, without a meeting of stockholders of the Company, in accordance with
Section 3-106 of the MGCL and Section 253 of the DGCL, including providing
notice, as promptly as practicable, of the Merger to each stockholder of
record of the Company.
Section 6.5 Commercially Reasonable Efforts; Parent and Sub Agreements .
(a) Subject to the terms and conditions provided herein, each of the Company,
Parent and Sub shall, and the Company shall cause each of its Subsidiaries to,
cooperate and use their commercially reasonable efforts to take, or cause to
be taken, all appropriate action, and do, or cause to be done, and assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, (i) the Offer, (ii) the Merger and the other transactions
contemplated hereby (including the satisfaction of the PHFL Offer Condition),
including the satisfaction of the respective conditions set forth in Article
VII, (iii) the sale of all or substantially all of the assets or equity
interests in both (x) Principal Healthcare Finance Unit Trust No.1 and
Principal Healthcare Finance Unit Trust No.2 and (y) Omega (Australia) Pty
Limited directly or indirectly owned by the Company on terms reasonably
satisfactory to Parent and with net proceeds of such sale of not less than the
amount set forth in Section 6.5 of the Company Disclosure Letter (it being
understood by the parties that the consummation of any such sale is not a
condition to the consummation of the Offer and that "net proceeds" shall mean
proceeds net of all costs, fees and Taxes associated with such sale, including
without limitation, all costs, fees and Taxes associated with the distribution
of the proceeds of such sale to the Company), and (iv) to make, or cause to be
made, all filings necessary, proper or advisable under applicable laws, other
than Antitrust Laws (other than required by Section 6.8), and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including their commercially reasonable efforts to obtain, prior to the
Closing Date, all licenses, Permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities and parties to contracts
with the Company and its Subsidiaries as are necessary for consummation of the
transactions contemplated by this Agreement and to fulfill the conditions to
the Offer and the Merger; provided, however, that no loan agreement or
contract for borrowed money shall be repaid, in whole or in part, except as
currently required by its terms, and no contract shall be amended to increase
the amount payable thereunder or otherwise to be more burdensome to the
Company or any of its Subsidiaries in order to obtain any such consent,
approval or authorization without first obtaining the written approval of
Parent and Sub.
43
(b) Without limiting the scope of paragraph (a) above, the Company, in
its capacity as a stockholder, hereby agrees that during the period commencing
on the date hereof and continuing until the earlier to occur of (i) the
Closing or (ii) the termination of this Agreement pursuant to Section 8.1
hereof (the "Voting Period"), the Company shall use its commercially
reasonable efforts to cause its Subsidiaries to take or cause to be taken, all
appropriate action, and do, or cause to be done, and assist and cooperate with
Parent, Sub and the Company in doing all things necessary, proper or advisable
to consummate and make effective in the most expeditious manner practicable,
the Offer and the Merger and the other transactions contemplated (including
the satisfaction of the PHFL Offer Condition). Without limiting the scope of
the preceding sentence, during the Voting Period, at any meeting (or any
adjournment or postponement thereof) of the holders of any class or classes of
the capital stock of PHFL, however called, or in connection with any written
consent of the holders of any class or classes of the capital stock of PHFL,
the Company shall vote (or cause to be voted) the shares of PHFL owned by the
Company (x) in favor of the PHFL Offer and the approval of the terms of the
PHFL Offer and each of the other transactions contemplated by the PHFL Offer
and any actions required in furtherance thereof, (y) against any action,
transaction or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
PHFL, or any of its Subsidiaries under the PHFL Offer and (z) except as
otherwise agreed to in writing in advance by Parent, against any action
involving PHFL or any of its Subsidiaries that is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or
adversely affect the PHFL Offer and the transactions contemplated by the PHFL
Offer. The Company hereby agrees that it shall not, and shall cause its
Affiliates not to, enter into any agreement, letter of intent, agreement in
principle or understanding with any Person that violates or conflicts with, or
could reasonably be expected to violate or conflict with, the provisions and
agreements contained in the PHFL Offer.
(c) Parent and Sub hereby covenant and agree that, without the prior
written consent of the Company, neither Parent nor Sub shall (i) amend or
alter, or consent to any amendment or alteration of, the Loan Agreement or the
PHFL Documents in any manner that materially delays or impacts the ability of
Parent or Sub to consummate the Offer, the PHFL Offer, the Merger and the
other transactions contemplated by this Agreement or (ii) provide or consent
to any amendment, waiver or release of any Irrevocable Instruments.
Section 6.6 No Solicitation of Other Offers . (a) The Company shall, and
shall take all actions reasonably necessary to cause its Affiliates and each
of its and their respective officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants and other agents
immediately to, cease any discussions or negotiations with any other Person or
Persons that may be ongoing with respect to any Acquisition Proposal. The
Company shall not take, and shall not authorize or permit its Affiliates and
its and their respective officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants or other agents, to
take, any action (i) to encourage, solicit, initiate or facilitate, directly
or indirectly, the making or submission of any Acquisition Proposal
(including, without limitation, by taking any action that would make the
Rights Agreement inapplicable to an Acquisition Proposal), (ii) to enter into
any agreement, arrangement or understanding with respect to any Acquisition
44
Proposal, or to agree to approve or endorse any Acquisition Proposal or enter
into any agreement, arrangement or understanding that would require the
Company to abandon, terminate or fail to consummate the
Merger or any other transaction contemplated by this Agreement, (iii) to
initiate or participate in any way in any discussions or negotiations with, or
furnish or disclose any information to, any Person (other than Parent or Sub) in
connection with any Acquisition Proposal, (iv) to facilitate or further in any
other manner any inquiries or the making or submission of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal,
or (v) to grant any waiver or release under any standstill, confidentiality or
similar agreement entered into by the Company or any of its Affiliates or
representatives regarding or in connection with an Acquisition Proposal;
provided, however, that the Company, in response to an unsolicited Acquisition
Proposal that did not result from a breach of this Section 6.6(a) and otherwise
in compliance with its obligations under Section 6.6(c) hereof, may (x) request
clarifications from, or furnish information to (but not enter into substantive
discussions with), any Person (other than Parent or Sub) which makes such
unsolicited Acquisition Proposal if (A) such action is taken subject to a
confidentiality agreement with terms that are customary and are not more
favorable to such Person than the terms of the Confidentiality Agreement (as in
effect on the date hereof), (B) such action is taken solely for the purpose of
obtaining information necessary to ascertain whether such Acquisition Proposal
is a Superior Proposal, and (C) the Board of Directors of the Company determines
in good faith, after consultation with outside nationally recognized legal
counsel to the Company, that it is necessary to take such actions in order to
comply with the duties of the Board of Directors of the Company under applicable
law or (y) participate in substantive discussions with, request clarifications
from, or furnish information to, any Person (other than Parent or Sub) which
makes such unsolicited Acquisition Proposal if (A) such action is taken subject
to a confidentiality agreement with terms that are customary and are not more
favorable to such third party than the terms of the Confidentiality Agreement
(as in effect on the date hereof), (B) the Board of Directors of the Company
determines in good faith, after consultation with the Company's financial
advisor, that such Acquisition Proposal is a Superior Proposal and (C) the Board
of Directors of the Company determines in good faith, after consultation with
outside nationally recognized legal counsel to the Company, that it is necessary
to take such actions in order to comply with the duties of the Board of
Directors under applicable law. Without limiting the foregoing, Parent, Sub and
the Company agree that any violation of the restrictions set forth in this
Section 6.6(a) by any Affiliate, officer, director, employee, representative,
consultant, investment banker, attorney, accountant or other agent, which Person
has been informed by the Company, or otherwise made aware or had knowledge, of
its obligations hereunder, of the Company or any of its Affiliates, whether or
not such Person is purporting to act on behalf of the Company or any of its
Affiliates, shall constitute a breach by the Company of this Section 6.6(a);
provided, however that if the Company is aware that any other agent is in
violation of the restrictions contained in this Section 6.6(a), the Company
shall be in breach of this Section 6.6(a) if such agent does not refrain from
such action. The Company shall enforce, to the fullest extent permitted under
applicable law, the provisions of any standstill, confidentiality or similar
agreement entered into by the Company or any of its Affiliates or
representatives including, but not limited to, where necessary obtaining
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court having jurisdiction.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw, modify or amend, or propose to withdraw, modify or
amend, in a manner adverse to Parent or Sub, the approval, adoption or, as the
case may be, recommendation of the Offer, the Merger, this Agreement or the
Stockholders Agreements, (ii) approve or recommend, or propose to approve or
45
recommend, any Acquisition Proposal, (iii) cause the Company to accept any
Acquisition Proposal and/or enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each an
"Acquisition Agreement") related to any Acquisition Proposal or (iv) resolve
to do any of the foregoing; provided that the Board of Directors of the
Company may recommend to its stockholders an Acquisition Proposal and, in
connection therewith, withdraw or modify its approval or recommendation of the
Offer or the Merger if (w) the Company has complied with its obligations under
Section 6.6(a) and 6.6(c), (x) the Board of Directors of the Company
determines in good faith that the Acquisition Proposal is a Superior Proposal,
(y) the Board of Directors of the Company determines in good faith, after
consultation with outside nationally recognized legal counsel to the Company
that it is necessary to take such actions in order to comply with the duties
of the Board of Directors under applicable law and all the conditions to the
Company's right to terminate this Agreement in accordance with Section
8.1(c)(i) have been satisfied (including the expiration of the three (3)
Business Day period described therein and the payment of all amounts required
pursuant to Section 9.1) and (z) simultaneously with such withdrawal,
modification or recommendation, this Agreement is terminated in accordance
with Section 8.1(c)(i). Nothing in this Section 6.6 shall prohibit the Company
or its Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to an Acquisition Proposal by a third
party to the extent required under Rule 14e-2 of the Exchange Act.
"Acquisition Proposal" shall mean (i) any inquiry, proposal or offer
(including, without limitation, any proposal to stockholders of the Company)
from any Person or group relating to any direct or indirect acquisition or
purchase of ten percent (10%) or more of the consolidated assets of the
Company and its Subsidiaries or ten percent (10%) or more of the Common Stock
of the Company or any class of equity securities of the Company's
Subsidiaries, (ii) any tender offer or exchange offer that, if consummated,
would result in any Person beneficially owning ten percent (10%) or more of
the Common Stock of the Company or any class of equity securities of the
Company's Subsidiaries, (iii) any transaction with an unaffiliated third party
involving the transaction specified in clauses (i) or (ii) pursuant to a
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Subsidiaries or (iv) any other transaction the consummation of which could
reasonably be expected to impede, interfere with, prevent or materially delay
the Offer or the Merger or which could reasonably be expected to dilute
materially the benefits to Parent of the transactions contemplated hereby;
provided, however, that "Acquisition Proposal" shall specifically exclude any
inquiry, proposal or offer from any Person or group relating to any direct or
indirect acquisition or purchase of the equity interests of PHFT owned by the
Company; and provided, further, that any transaction permitted to be, or not
otherwise prohibited from being, undertaken by the Company or its Subsidiaries
pursuant to the provisions of Section 6.3 of this Agreement shall not be an
Acquisition Proposal.
"Superior Proposal" shall mean a bona fide binding written offer not
solicited by or on behalf of the Company made by a third party to acquire all
of the Common Stock, other than those shares beneficially held by such third
party, pursuant to a tender offer or a merger or to acquire all or
substantially all of the assets of the Company (i) on terms which the Board of
Directors of the Company determines in good faith, after consultation with an
independent nationally recognized investment bank, to have a higher value than
the consideration to be received by the stockholders of the Company (in their
capacity as such) than the transactions contemplated hereby (to the extent the
transactions contemplated hereby are proposed to be modified by Parent in
46
accordance with Sec tion 8.1(c)(i)), (ii) which is not conditioned on any
financing and (iii) which is reasonably capable of being consummated (taking
into account, among other things, all legal, financial, regulatory and other
aspects of such proposal and the identity of the Person making such proposal).
(c) In addition to the obligations of the Company set forth in Section
6.6(a), as promptly as possible (but in any event not later than twenty-four
(24) hours) after the receipt or occurrence thereof, the Company shall advise
Parent of any request for information with respect to any Acquisition Proposal
or of any Acquisition Proposal, or any inquiry, proposal, discussions or
negotiation with respect to any Acquisition Proposal, the terms and conditions
of such request, Acquisition Proposal, inquiry, proposal, discussion or
negotiation and the Company shall, within one (1) day of the receipt thereof,
promptly provide to Parent copies of any written materials received by the
Company in connection with any of the foregoing, and the identity of the
Person making any such Acquisition Proposal or such request, inquiry or
proposal or with whom any discussions or negotiations are taking place. The
Company shall keep Parent fully informed of the status and material details
(including amendments or proposed amendments) of any such request or
Acquisition Proposal and keep Parent fully informed as to the material details
of any information requested of or provided by the Company and as to the
details of all discussions or negotiations with respect to any such request,
Acquisition Proposal, inquiry or proposal, and shall provide to Parent within
one (1) day of receipt thereof all written materials received by the Company
with respect thereto. The Company shall promptly provide to Parent any
non-public information concerning the Company provided to any other Person in
connection with any Acquisition Proposal which was not previously provided to
Parent.
(d) The Company shall immediately request each Person which has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company or any portion thereof to return all
confidential information heretofore furnished to such Person by or on behalf
of the Company, and the Company shall use its commercially reasonable efforts
to have such information returned.
Section 6.7 Notification of Certain Matters . Parent and the Company
shall promptly notify each other of the occurrence or non-occurrence of any
fact or event which has caused or could reasonably be expected to cause (i)
any representation or warranty made by it (including, in the case of Parent,
Sub) in this Agreement to be untrue or inaccurate in any material respect at
any time from the date hereof to the Effective Time or (ii) any covenant,
condition or agreement under this Agreement not to be complied with or
satisfied by it (including, in the case of Parent, Sub) in any material
respect; provided, however, that no such notification shall modify the
representations or warranties of any party or the conditions to the
obligations of any party hereunder. Each of the Company, Parent and Sub shall
give prompt notice to the other parties hereof of any notice or other
communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated
by this Agreement.
Section 6.8 Antitrust Laws . (a) Each party hereto shall (i) take
promptly all actions necessary to make the filings required of it or any of
its Affiliates under any applicable Antitrust Laws in connection with this
Agreement and the transactions contemplated hereby, (ii) comply at the
47
earliest practicable date with any formal or informal request for additional
information or documentary material received by it or any of its Affiliates
from any Antitrust Authority and (iii) cooperate with one another in
connection with any filing under applicable Antitrust Laws and in connection
with resolving any investigation or other inquiry concerning the transactions
contemplated by this Agreement initiated by any Antitrust Authority.
(b) Each party hereto shall use its commercially reasonable efforts to
resolve such objections, if any, as may be asserted with respect to the
transactions contemplated by this Agreement under any Antitrust Law. Without
limiting the generality of the foregoing, "commercially reasonable efforts"
shall include:
(i) in the case of each of Parent and the Company:
(A) if applicable, filing with the appropriate Antitrust
Authorities in the United States no later than the fifth (5th) day
following the date hereof a Notification and Report Form pursuant to
the HSR Act with respect to the transactions contemplated by this
Agreement; and
(B) if Parent or the Company receives a formal request for
additional information or documentary material from an Antitrust
Authority, substantially complying with such formal request within
sixty (60) days following the date of its receipt thereof or such;
and
(ii) in the case of the Company only, subject to Parent's compliance
with clause (i) above, not frustrating or impeding Parent's strategy or
negotiating positions with any Antitrust Authority.
(c) Each party hereto shall promptly inform the other parties of any
material communication made to, or received by such party from, any Antitrust
Authority or any other Governmental Entity regarding any of the transactions
contemplated hereby.
Section 6.9 Directors' and Officers' Insurance . (a) The Charter and the
Bylaws of the Surviving Corporation shall contain the provisions with respect
to indemnification and exculpation from liability set forth in the Company's
Charter and Bylaws as in effect on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period
of six years from the Effective Time in any manner that would adversely affect
the rights thereunder of individuals who on or prior to the Effective Time
were directors or officers of the Company, unless such modification is
required by law.
(b) Parent and Sub agree that all rights to indemnification existing in
favor of, and all exculpations and limitations of the personal liability of,
the directors and officers of the Company and its Subsidiaries provided for in
the Company's Charter or the Company's Bylaws, as well as indemnification
agreements set forth in Schedule 6.9(b) of the Company Disclosure Letter (the
"Indemnification Agreements"), as in effect as of the date hereof with respect
to matters occurring at or prior to the Effective Time, including the Merger,
shall continue in full force and effect in accordance with their terms until
the earlier of (i) the termination of the rights to indemnification under the
Indemnification Agreements or (ii) six (6) years from the Effective Time.
48
(c) For a period of six (6) years from the Effective Time, the Surviving
Corporation shall either (i) maintain in effect the Company's current
directors' and officers' liability insurance (on its current terms) covering
those Persons who are currently covered on the date of this Agreement by the
Company's directors' and officers' liability insurance policy (a copy of which
has been heretofore delivered to Parent)(the "Indemnified Parties"); provided,
however, that in no event shall Parent be required to expend in any one year
an amount in excess of one hundred and twenty percent (120%) of the annual
premiums currently paid by the Company for such insurance which the Company
represents to be $383,049 for the twelve month period ending on July 5, 2003;
provided, further, that if the annual premiums of such insurance coverage
exceed such amount, the Surviving Corporation shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount; and provided, further, that the Surviving Corporation may substitute
for such Company policies other policies with at least the same coverage
containing terms and conditions which are no less advantageous, and provided
that said substitution does not result in any gaps or lapses in coverage with
respect to matters occurring prior to the Effective Time or (ii) cause the
Parent's, directors' and officers' liability insurance then in effect to cover
the Indemnified Parties with respect to those matters covered by the Company's
directors' and officers' liability insurance policy so long as the terms
thereof are not materially less advantageous to the intended beneficiaries
thereof than the Company's current directors' and officers' liability
insurance covering the Indemnified Parties.
(d) This Section 6.9 is intended for the irrevocable benefit of, and to
grant third party rights to, the Indemnified Parties and shall be binding on
all successors and assigns of Parent, the Company and the Surviving
Corporation. Each of the Indemnified Parties shall be entitled to enforce the
covenants contained in this Section 6.9.
(e) To the maximum extent permitted by law, all rights of indemnification
for the benefit of any Indemnified Party set forth in the Company's Bylaws and
the Indemnification Agreements shall be mandatory rather than permissive.
Section 6.10 Rights Agreement . Other than in connection with the
transactions contemplated hereby or concurrently with the termination of this
Agreement, the Company shall not (i) redeem the Rights, (ii) amend (other than
to delay the "Distribution Date" (as such term is defined in the Rights
Agreement) or to render the Rights inapplicable to the Offer and the Merger)
or terminate the Rights Agreement prior to the Effective Time, unless required
to do so by a court of competent jurisdiction or (iii) take any action which
would allow any "Person" (as such term is defined in the Rights Agreement)
other than Parent or Sub to be the "Beneficial Owner" (as such term is defined
in the Rights Agreement) of 10% or more of the Common Stock without causing a
"Distribution Date" (as such term is defined in the Rights Agreement) or a
"Stock Acquisition Date" (as such term is defined in the Rights Agreement) to
occur.
Section 6.11 Public Announcements . Parent and the Company shall consult
with each other before issuing any press release or otherwise making any
public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation and review by the other party of such
release or statement, or without the prior consent of the other party, which
shall not be unreasonably withheld; provided, however, that a party may,
49
without the prior consent of the other party, issue such press release or make
such public statement as may be required by law or by any listing agreement
with a national securities exchange or automated quotation system to which
Parent or any Affiliate of Parent or, as the case may be, the Company is a
party, if it has used all commercially reasonable efforts to consult with the
other party and to obtain such party's consent, but has been unable to do so
in a timely manner. In this regard, the parties shall make a joint public
announcement of the transactions contemplated by this Agreement no later than
(i) the close of business in the United States, Eastern time, on the day this
Agreement is signed, if such signing occurs any time the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") is open for
trading or (ii) prior to the next opening of trading on NASDAQ following the
date on which this Agreement is signed, if such signing does not occur during
a Business Day.
Section 6.12 Employee Arrangements. (a) At the Offer Completion Date, and
provided that Parent has received on or before the Offer Completion Date
resignation letters in the agreed form obligating the senior executive
officers signatory thereto whose names are set forth in Schedule 6.12(a) of
the Company Disclosure Letter (other than Xxxxxx Xxxxx) to resign from the
Company effective two months following the Offer Completion Date, Company
shall pay or cause to be paid (and Parent shall cause the Company to pay or
cause to be paid), to the Company's and its Subsidiaries' senior executive
officers, such change of control payment and bonus as are due under the
respective senior officer's change of control agreement or employment
contract, which amounts due are set forth opposite such senior officer's name
in Schedule 6.12(a) of the Company Disclosure Letter.
(b) Company shall pay or cause to be paid (and Parent shall cause the
Company to pay or cause to be paid), if and when due, to the Company's
employees whose names are set forth in Schedule 6.12(b) of the Company
Disclosure Letter, such change of control payments as are contractually due
under the respective employee's change of control agreement or employment
contract, in each case which amounts due are set forth opposite such
employee's name in Schedule 6.12(b) of the Company Disclosure Letter.
ARTICLE VII
CONDITIONS PRECEDENT
--------------------
Section 7.1 Conditions Precedent to Each Party's Obligation to Effect the
Merger . The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver (subject to applicable law), at or prior
to the Effective Time, of each of the following conditions:
(a) Approval of Company's Stockholders. To the extent required by
applicable law, the Merger, this Agreement and the transaction
contemplated hereby shall have been approved by holders of a majority of
the shares of Common Stock entitled to vote thereon (voting as one class,
with each share of Common Stock having one (1) vote) in accordance with
applicable law, the Company's Charter and the Company's Bylaws;
(b) Injunction. No temporary restraining order, preliminary or
permanent injunc tion or other order shall have been issued by any
50
federal, state or foreign court or by any federal, state or foreign
Governmental Entity, and no other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect;
(c) Statutes. No federal, state or non-United States statute, rule,
regulation, executive order, decree or order of any kind shall have been
enacted, entered, promulgated or enforced by any court or Governmental
Entity which prohibits, restrains, restricts or enjoins the consummation
of the Merger or has the effect of making the Merger illegal;
(d) Antitrust Laws. The waiting periods (and any extensions thereof)
applicable to the consummation of the Merger under the HSR Act or any
other Antitrust Laws, if any, shall have expired or been terminated, and
all required permits or approvals under Applicable Antitrust Laws shall
have been obtained; and
(e) Consummation of the Offer (f) . Sub shall have accepted for
payment and paid for all Shares validly tendered (and not withdrawn) in
the Offer or the Subsequent Offer Period.
ARTICLE VIII
TERMINATION AND ABANDONMENT
---------------------------
Section 8.1 Termination . This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after approval of the Merger by the
Company's stockholders:
(a) by mutual consent of the Company, on the one hand, and of Parent
and Sub, on the other hand;
(b) by either Parent, on the one hand, or the Company, on the other
hand, if:
(i) any court of competent jurisdiction or any Governmental
Entity shall have issued an order, decree or ruling or taken any
other action permanently restricting, enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for,
Shares pursuant to the Offer or shares of Common Stock (including
the associated Rights) pursuant to the Merger, and such order,
decree or ruling or other action shall have become final and
nonappealable; (provided that the right to terminate this Agreement
under this Section 8.1(b)(i) shall not be available to any party
whose material failure to fulfill any obligation under this
Agreement has been the principal cause of or resulted in such order,
decree ruling or action); or
(ii) the purchase of Shares pursuant to the Offer shall not
have occurred within seventy-five (75) days after commencement of
the Offer (the "Termination Date"), unless the purchase of Shares
pursuant to the Offer shall not have occurred because of a material
breach of any representation, warranty, obligation, covenant,
agreement or condition set forth in this Agreement on the part of
the party seeking to terminate this Agreement;
51
(c) by the Company at any time prior to the purchase of Shares
pursuant to the Offer, if:
(i) a Superior Proposal is received and the Board of Directors
of the Company determines in good faith, after consultation with
outside nationally recognized legal counsel to the Company, that it
is necessary to terminate this Agreement and enter into an agreement
to effect the Superior Proposal in order to comply with the duties
of the Board of Directors under applicable law; provided, however,
that the Company may not terminate this Agreement pursuant to this
Section 8.1(c)(i) unless the Company has complied with its
obligations under Section 6.6 and until (x) three (3) Business Days
have elapsed following delivery to Parent of a written notice of
such determination by the Board of Directors and during such three
(3) Business Day period the Company has fully cooperated with Parent
including, without limitation, informing Parent of the terms and
conditions of such Superior Proposal and the identity of the Person
making such Superior Proposal, with the intent of enabling both
parties to agree to a modification of the terms and conditions of
this Agreement so that the transactions contemplated hereby may be
effected, (y) at the end of such three (3) Business Day period the
Acquisition Proposal continues to constitute a Superior Proposal,
and the Board of Directors of the Company, after consultation with
outside nationally recognized legal counsel to the Company,
continues to believe in good faith that it is necessary to terminate
this Agreement and enter into an agreement to effect the Superior
Proposal in order to comply with the duties of the Board of
Directors under applicable law and (z) (A) prior to or
simultaneously with such termination, Parent has received all fees
and expense reimbursements set forth in Section 9.1 hereof by wire
transfer in same day funds and (B) simultaneously or substantially
simultaneously with such termination the Company enters into a
definitive acquisition, merger or similar agreement to effect the
Superior Proposal;
(ii) (x) there shall be a breach of any representation or
warranty of Parent or Sub in this Agreement, other than any such
breach which, individually and in the aggregate, have not had, do
not have, and would not reasonably be expected to have, a Material
Adverse Effect on Parent, or (y) there shall be a material breach by
Parent or Sub of any of their respective covenants or agreements
contained in this Agreement, which breach, in the case of any of
clauses (x) or (y), either is not reasonably capable of being cured,
or if it is reasonably capable of being cured, has not been cured by
the earlier of (A) ten (10) days after the giving of notice to
Parent of such breach and (B) one (1) Business Day prior to the
expiration of the Offer, provided that the Company may not terminate
this Agreement pursuant to this Section 8.1(c)(ii) if the Company is
in material breach of this Agreement; or
(iii) (x) Parent or Sub shall have failed to commence the Offer
in accordance with the first sentence of Section 2.1(a) or (y) the
Offer has expired without Sub purchasing any Shares pursuant
thereto, unless such failure or expiration shall have been caused by
the failure of the conditions set forth in clauses (e), (f), (g) or
(h) of Annex A to be satisfied; or
52
(d) by Parent at any time prior to the initial purchase of Shares
pursuant to the Offer (the "Offer Completion Date"), if:
(i) the Offer is terminated or expires in accordance with its
terms without Sub having purchased any Shares thereunder due to a
failure to satisfy any one or more of the conditions set forth on
Annex A hereto, unless any such failure shall have been caused by or
resulted from the failure of Parent or Sub to perform in any
material respect any covenant or agreement of either of them
contained in this Agreement or from the material breach by Parent or
Sub of any representation or warranty of either of them contained in
this Agreement;
(ii) (x) there shall be a breach of any representation or
warranty of the Company in this Agreement that is qualified as to
Material Adverse Effect, (y) there shall be a breach of any
representation or warranty of the Company in this Agreement that is
not so qualified, other than any such breach which, individually and
in the aggregate, have not had, do not have, and would not
reasonably be expected to have, a Material Adverse Effect on the
Company or (z) there shall be a material breach by the Company of
any of its covenants or agreements contained in this Agreement,
which breach, in the case of any of clauses (x), (y) or (z), either
is not reasonably capable of being cured or, if it is reasonably
capable of being cured, has not been cured by the earlier of (A) ten
(10) days after giving written notice to the Company of such breach
and (B) one (1) business day prior to the expiration of the Offer,
provided that Parent may not terminate this Agreement pursuant to
this Section 8.1(d)(ii) if Parent or Sub is in material breach of
this Agreement; or
(iii) (x) the Company shall have (A) withdrawn, modified or
amended, or proposed to withdraw, modify or amend, in a manner
adverse to Parent or Sub, the approval, adoption or recommendation,
as the case may be, of the Offer, the Merger, this Agreement or the
Stockholders Agreements, (B) approved or recommended, or proposed to
approve or recommend, any Acquisition Proposal or (C) announced a
neutral position with respect to any Acquisition Proposal, and not
rejected such Acquisition Proposal within seven (7) Business Days of
the announcement of such neutral position or (y) the Company's Board
of Directors or any committee thereof shall have resolved to take
any of the actions set forth in the foregoing.
Section 8.2 Effect of Termination . (a) In the event of the termination
of this Agreement pursuant to Section 8.1 by Parent or Sub, on the one hand,
or the Company, on the other hand, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement shall become void and
have no effect, and there shall be no liability hereunder on the part of
Parent, Sub or the Company, except that Sections 6.2 and Article IX and this
Section 8.2 shall survive any termination of this Agreement. Nothing in this
Section 8.2 shall relieve any party to this Agreement of liability for breach
of this Agreement.
53
(b) Notwithstanding anything to the contrary in this Agreement, Parent
and Sub expressly acknowledge and agree that, with respect to any termination
of this Agreement pursuant to Section 8.1, other than an intentional breach of
this Agreement by the Company, pursuant to which Parent and Sub elect to
terminate this Agreement in accordance with Section 8.1(d)(ii), in
circumstances where amounts are payable in accordance with Section 9.1, the
payment of such amounts shall constitute liquidated damages with respect to
any claim for damages or any other claim which Parent and Sub would otherwise
be entitled to assert against the Company or any of its assets, or against any
of its directors, officers, employees or stockholders, with respect to this
Agreement and the transactions contemplated hereby and shall constitute the
sole and exclusive remedy available to Parent and Sub; provided that, in the
event of an unintentional breach of the representations and warranties made by
the Company in this Agreement pursuant to which Parent and Sub elect to
terminate this Agreement in accordance with Section 8.1(d)(ii), the Company
shall not be required to pay any amounts pursuant to Section 9.1 of the
Agreement in excess of two million five hundred thousand dollars
($2,500,000.00). The parties hereto expressly acknowledge and agree that, in
light of the difficulty of accurately determining actual damages with respect
to the foregoing, upon any termination of this Agreement pursuant to Section
8.1, other than an intentional breach pursuant to which Parent and Sub elect
to terminate this Agreement in accordance with
Section 8.1(d)(ii), in circumstances where the amounts are payable in
accordance with Section 9.1(b) or (c), the right to payment under any of such
subsections of Section 8.1 (i) constitutes a reasonable estimate of the
damages that will be suffered by reason of any such proposed or actual
termination of this Agreement pursuant to said section; and (ii) shall be in
full and complete satisfaction of any and all damages arising as a result of
the foregoing.
ARTICLE IX
MISCELLANEOUS
-------------
Section 9.1 Fees and Expenses . (a) Except as provided in paragraph (b)
below, all costs and expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.
(b) If this Agreement is terminated:
(i) at a time when Parent is entitled to terminate this Agreement in
accordance with (x) Section 8.1(d)(i), solely due to any of (A) the
Minimum Condition and/or (B) the condition set forth in clause (h) of
Annex A, not having been met at the time of such termination or (y)
Section 8.1(d)(ii)(z) or Section 8.1(d)(iii) and both (I) an Acquisition
Proposal is announced after the date hereof and prior to or on the date
of such termination and (II), in each case, within twelve (12) months of
such termination, the Company enters into an Acquisition Agreement with
respect to any Acquisition Proposal which had been made prior to the date
of such termination or any Acquisition Proposal is consummated within
twelve (12) months of such termination; or
(ii) by the Company in accordance with Section 8.1(c)(i); or
(iii) [Intentionally Omitted]
54
(iv) at a time when Parent is entitled to terminate this Agreement
in accordance with Section 8.1(b)(ii), or by the Company in accordance
with Section 8.1(c)(iii)(y), unless such termination shall have been
caused by the failure of the Antitrust Condition, the PHFL Offer
Condition or the conditions set forth in clauses (a), (b), (c), (d) or
(i) of Annex A to be satisfied, and both (I) an Acquisition Proposal is
announced after the date hereof and prior to or on the date of such
termination and (II) within twelve (12) months of such termination, the
Company enters into an Acquisition Agreement with respect to any
Acquisition Proposal which had been made prior to the date of such
termination or any Acquisition Proposal is consummated within twelve (12)
months of such termination;
then the Company shall pay to Parent in immediately available funds an amount
equal to two million five hundred thousand dollars ($2,500,000.00).
(c) If this Agreement is terminated by Parent pursuant to Section
8.1(d)(ii), then the Company shall reimburse Parent, or such party or parties
as directed by Parent, in immediately available funds, for the out-of-pocket
expenses of Parent and Sub (including, without limitation, printing fees,
filing fees and fees and expenses of its legal and financial advisors and all
fees and expenses payable to any financing sources) related to the Offer, this
Agreement, the Stockholders Agreements, the transactions contemplated hereby
and thereby and any related financing.
(d) The payments required to be made in the preceding paragraphs shall be
paid as follows: (A) in the case of clauses (b)(ii) or (c), simultaneously
with such termination; (B) in the case of clauses (b)(i) and clause (b)(iv),
on the day the Company enters into the Acquisition Agreement or consummates
the Acquisition Proposal.
(e) For purposes of this Section 9.1, an "Acquisition Proposal" with
respect to any Acquisition Proposal made after the termination of this
Agreement, shall have the meaning assigned to such term in Section 6.6, except
that the reference to "10 percent" in clause (i) of such definition shall be
deemed to be a reference to "30 percent" and the reference to "Subsidiaries"
shall be deemed to be a reference to PHFL only.
(f) In the event this Agreement is terminated under circumstances in
which (i) a fee is not payable (and may not become payable) by the Company to
Parent pursuant to Section 9.1(b) hereof or (ii) out-of-pocket expenses of
Parent and Sub are not payable by the Company pursuant to Section 9.1(c)
hereof, Parent shall reimburse the Company for its expenses, upon such
termination, in an amount equal to two hundred and fifty thousand dollars
($250,000).
Section 9.2 Representations and Warranties . The respective
representations and warranties of the Company, on the one hand, and each of
Parent and Sub, on the other hand, con tained herein or in any certificates or
other documents delivered prior to or at the Closing shall not be deemed
waived or otherwise affected by any investigation made by any party. Each and
every such representation and warranty shall expire with, and be terminated
and extinguished by, (i) in the case of representations and warranties made by
the Company, the acceptance for payment of any Shares pursuant to the Offer or
(ii) in the case of representations and warranties made by Parent and Sub, the
Closing, and thereafter none of the Company, Parent or Sub shall be under any
55
liability whatsoever with respect to any such representation or warranty. This
Section 9.2 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the Effective Time.
Section 9.3 Extension; Waiver . Subject to Section 2.3, at any time prior
to the Effective Time, the parties hereto, by action taken by or on behalf of
the Boards of Directors of the Company, Parent or Sub, may (i) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein by any other applicable party or in any document,
certificate or writ ing delivered pursuant hereto by any other applicable
party or (iii) subject to Section 9.7, waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
Section 9.4 Notices . All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person,
sent by overnight courier (providing proof of delivery) or mailed, certified
or registered mail with postage prepaid, or sent by facsimile (upon
confirmation of receipt), at the following addresses or facsimile numbers (or
at such other address or facsimile number for a party as shall be specified by
like notice):
(a) if to the Company, to it at:
Omega Worldwide, Inc.
0000 Xxxxxxx Xxxx.
Xxxxx 0
Xxx Xxxxx, Xxxxxxxx 00000
Attn: President
with a copy (which shall not constitute notice) to:
Mayer, Brown, Xxxx & Maw
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
and
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000-0000
Fax: 000-000-0000
Attention: Xxxxx X. Xxxxx, Xx., Esq.
(b) if to either Parent or Sub, to it at:
56
Four Seasons Health Care Limited
Xxxxxxx Xxxxx, Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx XX0 0XX
Fax: 000-00-0000-000000
Attention: Xxxxxx Xxxxxx
with a copy (which shall not constitute notice) to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third (3rd) Business Day after
the mailing thereof, except for a notice of a change of address, which shall be
effective only upon receipt thereof.
Section 9.5 Entire Agreement . This Agreement, the Stockholders
Agreements and the Option Agreement contain the entire understanding of the
parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings, oral and written, with
respect thereto, other than the Confidentiality Agreement.
Section 9.6 Binding Effect; Benefit; Assignment . This Agreement shall
inure to the benefit of and be binding upon the parties hereto and, with
respect to the provisions of Section 6.9 and 6.12, shall inure to the benefit
of the Persons or entities benefiting from the provisions thereof who are
intended to be third-party beneficiaries thereof. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto without the prior written consent of each of the other
parties, except that Sub may assign and transfer its right and obligations
hereunder (i) to any of its Affiliates or (ii) for the purpose of securing any
financing of the transactions contemplated hereby; provided, each of Parent
and Sub continues to be liable for the performance of all of their respective
obligations and payments to be made by Parent and Sub and such assignees
hereunder to the extent that such assignees do not timely perform such
obligations in all respects. Except as provided in the first sentence of this
Section 9.6, nothing in this Agreement, expressed or implied, is intended to
confer on any Person (including, without limitation, any current or former
employees of the Company), other than the parties hereto, any rights or
remedies.
Section 9.7 Amendment and Modification . Subject to applicable law, this
Agreement may be amended, modified and supplemented in writing by the parties
hereto in any and all respects before the Effective Time (notwithstanding any
stockholder approval), by action author ized by the respective Boards of
Directors of Parent, Sub and the Company or, in the case of Parent or Sub, by
the respective officers authorized by their respective Board of Directors,
provided, however, that after any such stockholder approval, no such
amendment, modification or supplement shall be made which (i) would alter the
amount or change the form of the Merger Consideration to be delivered to the
57
Company's stockholders or alter or change any of the terms or conditions of
this Agreement if such alteration or change would adversely affect the
Company's stockholders or (ii) by law requires further approval by such
stockholders without such further approval.
Section 9.8 Further Actions . Each of the parties hereto agrees that,
subject to its legal obligations, it shall use its commercially reasonable
efforts to fulfill all conditions precedent specified herein, to the extent
that such conditions are within its control, and to do all things reasonably
necessary to consummate the transactions contemplated hereby.
Section 9.9 Headings . The descriptive headings of the several Articles
and Sections of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 9.10 Counterparts . This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
Section 9.11 APPLICABLE LAW . THIS AGREEMENT AND THE LEGAL RELATIONS
BETWEEN THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAWS
RULES THEREOF, EXCEPT THAT THE MGCL SHALL APPLY TO THE EXTENT REQUIRED IN
CONNECTION WITH THE STOCK HOLDERS' MEETING, IF ANY, AND THE MERGER. THE STATE
OR FEDERAL COURTS LOCATED WITHIN THE STATE OF DELAWARE SHALL HAVE JURISDICTION
OVER ANY AND ALL DISPUTES BETWEEN THE PARTIES HERETO, WHETHER IN LAW OR
EQUITY, ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE AGREEMENTS,
INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY AND THE PARTIES CONSENT TO AND
AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS. EACH OF THE PARTIES HEREBY
WAIVES AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (I) SUCH PARTY IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF SUCH COURTS, (II) SUCH PARTY AND SUCH PARTY'S
PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR (III) ANY
LITIGATION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN AN
INCONVENIENT FORUM. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER
PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED
IN SECTION 9.4, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE
VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO
SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.
Section 9.12 Severability . If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or against
its regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and this Agreement
58
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable term, provision, covenant or restriction or
any portion thereof had never been contained herein.
Section 9.13 Specific Enforcement . The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any
other remedy to which they are entitled at law or in equity.
Section 9.14 Waiver of Jury Trial . Each of the parties to this Agreement
hereby irrevocably waives all right to a trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement or the
transactions contemplated hereby.
* * * * *
59
IN WITNESS WHEREOF, each of Parent, Sub and the Company have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, all as of the date first above written.
OMEGA WORLDWIDE, INC.
By /s/ Xxxx Xxxxxx
------------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President and Secretary
DELTA I ACQUISITION, INC.
By /s/ Xxxx Xxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxx
Title: Director
FOUR SEASONS HEALTH CARE LIMITED
By /s/ Xxxxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Director
ANNEX A
-------
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex A is
annexed and "Purchaser" shall be deemed to refer to Sub.
Notwithstanding any other provision of the Offer or the Merger Agreement,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or
return tendered shares promptly after termination or withdrawal of the Offer),
to pay for any Shares tendered pursuant to the Offer and may postpone the
acceptance for payment of, or, subject to the restrictions referred to above,
the payment for, any tendered Shares, if (i) there shall not have been validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of Shares which, when added to the Shares, if any, previously acquired
by Purchaser, repre sents at least a majority of all issued and outstanding
Shares, on a fully diluted basis ("on a fully- diluted basis" meaning, at any
time, the number of Shares outstanding, together with the Shares which the
Company may be required to issue pursuant to warrants or options or other
obligations outstanding at such time under employee stock or similar benefit
plans or otherwise, whether or not vested or then exercisable, but excluding
the effect of the Rights), on the date of purchase (the "Minimum Condition"),
(ii) required permits, approvals or waiting periods under applicable Antitrust
Laws shall not have expired or been obtained or waived (the "Antitrust
Condition"), (iii) the PHFL Offer shall not have become or been declared
unconditional in all respects (the "PHFL Offer Condition"), provided that the
PHFL Offer Condition shall be deemed satisfied in the event all the conditions
necessary for the consummation of the PHFL Offer have been met, other than the
occurrence of the Offer Completion Date or Purchaser becoming obligated to
accept for payment shares tendered pursuant to the Offer. In addition to and
not limiting the foregoing, notwithstanding any other provision of the Offer
or the Merger Agreement, Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act, to pay for any Shares tendered
pursuant to the Offer and may elect not to commence the Offer, may terminate,
subject to the terms of this Agreement, or amend the Offer and may postpone
the acceptance for payment of or, subject to the restrictions referred to
above, the payment for, any tendered Shares if, at any time on or after the
date of the Merger Agreement and at or before the time of payment for any such
Shares (whether or not any Shares have theretofore been accepted for payment,
or paid for, pursuant to the Offer), any of the following shall exist:
(a) there shall have been any temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other Governmental Entity which (i) prohibits,
restrains, limits or makes illegal the acceptance for payment, payment
for or purchase of Common Stock or the consummation of the Offer, the
Merger or the other material transactions contemplated by this Agreement
or the Offer Documents; (ii) renders Sub unable to accept for payment,
pay for or purchase some or all of the Common Stock tendered and not
withdrawn pursuant to the Offer, or (iii) imposes material limitations on
the ability of Sub to effectively exercise full rights of ownership of
the Common Stock to be acquired in the Offer, including the right to vote
such Common Page Stock, or the assets or business of the Company and its
Subsidiaries;
Annex A
Page 2
(b) there shall have been threatened in writing, instituted or
pending any action or proceeding by any Governmental Entity, domestic or
foreign, before any court of competent jurisdiction or Governmental
Entity, (i) challenging or seeking to, or which could reasonably be
expected to make, illegal, impede, delay or otherwise directly or
indirectly restrain, prohibit or make materially more costly the Offer or
the Merger or seeking to obtain material damages, (ii) seeking to
prohibit or materially limit the ownership or operation by Parent or
Purchaser of all or any material portion of the business or assets of the
Company and its Subsidiaries taken as a whole or to compel Parent or
Purchaser to dispose of or hold separately all or any material portion of
the business or assets of Parent and its Subsidiaries taken as a whole or
the Company and its Subsidiaries taken as a whole, or seeking to impose
any limitation on the ability of Parent or Purchaser to conduct its
business or own such assets, (iii) seeking to impose limitations on the
ability of Parent or Purchaser effectively to exercise full rights of
ownership of the shares of Common Stock, including, without limitation,
the right to vote any shares of Common Stock acquired or owned by
Purchaser or Parent on all matters properly presented to the Company's
stockholders, (iv) seeking to require divestiture by Parent or Purchaser
of any shares of Common Stock, (v) seeking any material diminution in the
benefits expected to be derived by Parent or Purchaser as a result of the
transactions contemplated by the Offer or the Merger or (vi) otherwise
directly or indirectly relating to the Offer or the Merger and which
could reasonably be expected to have a Material Adverse Effect on the
Company or on Parent;
(c) there shall be any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
proposed, enacted, enforced, promulgated, amended or issued and
applicable to or deemed applicable to (i) Parent, Purchaser, the Company
or any Subsidiary of the Company or (ii) the Offer or the Merger, by any
Governmental Entity other than the routine application of the waiting
period provisions of the HSR Act and any other Antitrust Law to the Offer
or to the Merger, that could reasonably be expected to result directly or
indirectly in any of the consequences referred to in paragraph (a) above;
(d) there shall have occurred (i) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States, Australia or the United Kingdom, (ii) any material
limitation (whether or not mandatory) by any United States Federal or
United States state or a United Kingdom or Australian Governmental Entity
on the extension of credit by banks or other lending institutions, or
(iii) in the case of any of the foregoing existing at the time of the
commencement of the Offer, an acceleration or worsening thereof;
(e) (i) any representation or warranty of the Company contained in
the Agreement that is qualified as to Material Adverse Effect shall not
be true and correct as of the date of consummation of the Offer as though
made on or as of such date (other than representations and warranties
which, by their terms, address matters only as of another specified date,
which shall be true and correct only as of such other specified date) and
(ii) any representation or warranty of the Company contained in the
Agreement that is not qualified as to Material Adverse Effect shall not
be true and correct (except where the failure of any such representations
or warranties referred to in this clause
Annex A
Page 3
(ii) to be so true and correct individually and in the aggregate has not
had, does not have, and would not reasonably be expected to have, a
Material Adverse Effect on the Company) as of the date of consummation of
the Offer as though made on or as of such date (other than
representations and warranties which, by their terms, address matters
only as of another specified date, which shall be true and correct only
as of such other specified date);
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by the Company
under the Merger Agreement;
(g) the Board of Directors of the Company or any committee thereof
shall (i) have withdrawn, modified or amended, or proposed to withdraw,
modify or amend, in a manner adverse to Parent or Purchaser, the
approval, adoption or recommendation, as the case may be, of the Offer,
the Merger, the Merger Agreement or the Stockholders Agreements, (ii)
shall have approved or recommended, or proposed to approve or recom mend,
any Acquisition Proposal, (iii) shall have announced a neutral position
with respect to any Acquisition Proposal and not rejected such
Acquisition Proposal within three (3) Business Days of the announcement
of such neutral position or (iv) shall have resolved to do any of the
foregoing;
(h) there shall have occurred any event, change, occurrence, effect,
fact, violation or circumstance that has had or would reasonably be
expected to have a Material Adverse Effect on the Company;
(i) any representation or warranty by the holder of the Preferred
Shares contained in the Preferred Stockholder Agreement shall not be true
and correct in any material respect as of the date of consummation of the
Offer as though made on or as of such date (other than representations
and warranties which, by their terms, address matters only as of another
specified date, which shall be true and correct only as of such other
specified date) or the holder of Preferred Shares shall have failed to
perform in any material respect any obligation or to comply in any
material respect with any agreement or covenant of the holder of
Preferred Shares to be performed or complied with by such stockholder
under the Preferred Stockholder Agreement; or
(j) the Merger Agreement shall have been terminated in accordance
with its terms.
which, in the sole judgment of Purchaser, in any such case and regardless of
the circumstances (including any action or inaction by Parent or Purchaser)
giving rise to any such condition, makes it inadvisable to proceed with the
Offer and/or with such acceptance for payment of, or payment for, Shares.
Annet A
Page 4
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent or Purchaser, or may be waived by Parent or
Purchaser, in whole or in part at any time and from time to time in their
respective sole discretion; provided that all conditions to the Offer must
have been satisfied or waived prior to the expiration date of the Offer, other
than any conditions dependent upon receipt of required governmental approvals
which have not yet been obtained, in which case the Purchaser may postpone the
obligation to pay for the Shares purchased in the Offer until receipt of the
required governmental regulatory approvals. The failure by Parent or 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.
