UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment
No. )
Filed by the Registrant
þ
Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive
Proxy Statement
o
Definitive
Additional Materials
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Soliciting
Material Pursuant to
§ 240.14a-12
ALLIED HEALTHCARE INTERNATIONAL INC.
(Name of Registrant as Specified In
Its Charter)
N/A
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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ALLIED
HEALTHCARE INTERNATIONAL INC.
245
Park Avenue
New York, New York 10167
September 21, 2011
Dear Shareholder:
You are cordially invited to attend a special meeting of the
shareholders of ALLIED HEALTHCARE INTERNATIONAL INC. to be held
at 11:00 a.m., Eastern Time, on October 19, 2011,
at the offices of Edwards Angell Palmer & Dodge LLP,
750 Lexington Avenue, New York, NY 10022.
On July 28, 2011, we entered into an Agreement and Plan of
Merger, which we refer to as the merger agreement, among the
Company, Saga Group Limited, which we refer to as Parent, and
AHL Acquisition Corp., which we refer to as Merger Sub, pursuant
to which Merger Sub will merge with and into the Company, with
the Company continuing as the surviving corporation of the
merger, but as a wholly owned subsidiary of Parent. At the
special meeting, you will be asked to consider and vote upon a
proposal to adopt the merger agreement. The merger agreement is
attached as Annex A to the enclosed proxy statement. You
will also be asked to approve, by a non-binding advisory vote,
compensation arrangements for the Companys named executive
officers in connection with the merger.
If our shareholders adopt the merger agreement and the merger is
subsequently completed, you will be entitled to receive $3.90 in
cash, without interest and less any applicable withholding
taxes, per share of Company common stock you own at the
effective time of the merger. On July 28, 2011, the last
full trading day prior to the public announcement of the merger
agreement, the closing price of our common stock was $2.45 per
share.
Your vote is very important, regardless of the number of
shares you own.
The merger cannot be consummated
unless the merger agreement is adopted by the affirmative vote
of at least two-thirds of all outstanding shares of Company
common stock entitled to vote at the special meeting. If you
fail to vote your shares, it will have the same effect as voting
against adoption of the merger agreement.
After careful consideration, our board of directors has
determined that the merger agreement and the transactions
contemplated by the merger agreement, including the merger, are
advisable, fair to, and in the best interests of, the Company
and its shareholders.
Accordingly, our board of directors
recommends that you vote FOR the adoption of the
merger agreement. Our board of directors also recommends that
you vote FOR the non-binding proposal regarding
merger-related executive compensation arrangements.
Only holders of record of Company common stock at the close of
business on September 15, 2011 will be entitled to vote at
the special meeting. Please complete, sign, date and return your
proxy. Completing a proxy now will not prevent you from being
able to vote at the special meeting by attending in person and
casting a vote. If you hold your shares in street
name, you should instruct your bank, broker or other
nominee how to vote.
The failure to instruct your bank,
broker or other nominee to vote your shares FOR
adoption of the merger agreement will have the same effect as
voting against the proposal to adopt the merger agreement.
The proxy statement attached to this letter provides you with
information about the proposed merger and the special meeting.
We encourage you to read the entire proxy statement carefully.
You may also obtain more information about the Company from the
documents we have filed with the Securities and Exchange
Commission.
Whether or not you plan to attend the meeting, we urge you to
vote as promptly as possible so that your shares will be voted
at the special meeting of shareholders. If you attend the
meeting and vote in person, your vote by ballot will revoke any
proxy previously submitted.
Sincerely,
Jeffrey S. Peris
Chairman of the Board
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER,
PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE PROPOSED
MERGER, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROXY STATEMENT IS DATED SEPTEMBER 21, 2011 AND IS
FIRST BEING MAILED TO SHAREHOLDERS ON OR ABOUT
SEPTEMBER 21, 2011.
ALLIED
HEALTHCARE INTERNATIONAL INC.
245
PARK AVENUE
NEW YORK, NEW YORK 10167
NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS
TO BE HELD OCTOBER 19, 2011
TO OUR SHAREHOLDERS:
A special meeting of shareholders of ALLIED HEALTHCARE
INTERNATIONAL, INC., a New York corporation, will be held at the
offices of Edwards Angell Palmer & Dodge LLP, 750
Lexington Avenue, New York, NY 10022 on October 19, 2011,
at 11:00 a.m., Eastern Time, for the following purposes:
1. To consider and vote on a proposal to adopt the
Agreement and Plan of Merger, dated as of July 28, 2011 (as
it may be amended from time to time), which we refer to as the
merger agreement, among Saga Group Limited, which we refer to as
Parent, AHL Acquisition Corp., which we refer to as Merger Sub,
and Allied Healthcare International, Inc., which we refer to as
the Company, pursuant to which the Company will become a
wholly-owned subsidiary of Parent.
2. To consider and vote upon a proposal to adjourn the
special meeting, if necessary, to allow for the solicitation of
additional proxies in favor of the proposal to adopt the merger
agreement if there are insufficient votes to adopt the merger
agreement.
3. To consider and vote upon an advisory (non-binding)
proposal to approve the compensation arrangements described in
this proxy statement for the Companys named executive
officers in connection with the merger.
Shareholders of record at the close of business on
September 15, 2011, the record date fixed by the board of
directors for the special meeting, are entitled to notice of and
to vote at the special meeting or any adjournment or
postponement thereof.
Your vote is important, regardless of the number of shares
you own.
The merger cannot be completed unless
the merger agreement is adopted by the affirmative vote of the
holders of not less than two-thirds of the outstanding shares of
common stock entitled to vote at the special meeting. Approval
of the proposal to adjourn the special meeting requires the
affirmative vote of a majority of those shares of common stock
present or represented by proxy at the special meeting and
entitled to vote thereon. Whether or not you plan to attend the
meeting, we urge you to sign, date and mail your proxy card or
submit your proxy by telephone or on the Internet prior to the
meeting to ensure that your shares will be represented at the
meeting if you are unable to attend. If you fail to return your
proxy card, your shares of Company common stock will not be
counted for the purposes of determining whether a quorum is
present, and your shares will have the same effect as a vote
against the adoption of the merger agreement. Not returning your
proxy will have no effect on the adjournment proposal or the
non-binding proposal regarding merger-related executive
compensation arrangements. If you hold your shares through a
bank, brokerage firm or other nominee, you should follow the
instructions of your bank, brokerage firm or nominee to
determine whether you will be able to submit your proxy by
telephone or on the Internet. You may revoke or change your
proxy at any time before the final vote at the meeting.
After careful consideration, our board of directors has
determined that the merger agreement and the transactions
contemplated by the merger agreement, including the merger, are
advisable and fair to, and in the best interests of, the Company
and its shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE FOR ADOPTION OF THE MERGER AGREEMENT,
FOR THE PROPOSAL TO ADJOURN THE SPECIAL MEETING
AND FOR THE NON-BINDING PROPOSAL REGARDING
MERGER-RELATED EXECUTIVE COMPENSATION ARRANGEMENTS.
BY ORDER OF THE BOARD OF DIRECTORS
Leslie J. Levinson
Secretary
September 21, 2011
TABLE
OF CONTENTS
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ANNEXES
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A-1
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B-1
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ii
SUMMARY
References to Allied, the Company,
we, our, our company or
us in this proxy statement refer to Allied
Healthcare International Inc.
This summary briefly describes selected information in this
proxy statement and may not contain all of the information that
is important to you. We urge you to carefully read this proxy
statement in its entirety, including the annexes attached
hereto, which are incorporated into this proxy statement by
reference. Each item in this summary includes a page reference
directing you to a more complete description of that topic.
The
Parties to the Merger Agreement (Page 12)
Allied
Healthcare International Inc.
Allied Healthcare International Inc., a New York corporation, is
a leading homecare provider of health and social care (often
referred to as domiciliary care) in the United Kingdom and
Ireland, as measured by revenues, market share and number of
staff. We operate a community-based network of approximately 120
branches with the capacity to provide carers (known as home
health aides in the U.S.), nurses, and specialized medical
personnel to locations covering approximately 90% of the U.K.
population.
For more information about Allied, please visit our website at
www.alliedhealthcare.com. Our website address is provided as an
inactive textual reference only. The information provided on our
website is not part of this proxy statement, and therefore is
not incorporated by reference. See also Where You Can Find
More Information on page 68.
Saga
Group Limited
Saga Group Limited, a corporation organized under the laws of
England and Wales, which we refer to as Parent, is the United
Kingdoms leading provider of products and services
specifically designed for peopled aged fifty and over. With
2.7 million customers, Parent provides insurance, savings,
financial advice, care services, and holiday services, and
publishes Saga Magazine.
AHL
Acquisition Corp.
AHL Acquisition Corp., a New York corporation, which we refer to
as Merger Sub, was formed for the sole purpose of completing the
merger with the Company. Merger Sub has not engaged in any
activities to date except for those incidental to its formation
and as otherwise contemplated by the merger agreement. Merger
Sub is a wholly-owned subsidiary of Parent. Upon consummation of
the proposed merger, Merger Sub will merge with and into the
Company and will cease to exist, with the Company continuing as
the surviving corporation.
The
Special Meeting (Page 13)
Date,
Time and Place
We will hold the special meeting on October 19, 2011, at
11:00 a.m., Eastern Time, at the offices of Edwards
Angell Palmer & Dodge LLP, 750 Lexington Avenue, New
York, NY 10022.
Purpose
The purpose of the special meeting is for our shareholders to
consider and vote upon (i) a proposal to adopt the merger
agreement, a copy of which is attached as Annex A to this
proxy statement, (ii) a proposal to adjourn the special
meeting, if necessary, to allow for the solicitation of
additional proxies in favor of the proposal to adopt the merger
agreement if there are insufficient votes to adopt the merger
agreement, and (iii) to approve the non-binding proposal
regarding the merger-related executive compensation arrangements
described in this proxy statement.
1
Record
Date; Shareholders Entitled to Vote
The record date for the special meeting is September 15,
2011. You are entitled to receive notice of, and to vote at, the
special meeting if you owned shares of common stock at the close
of business on the record date. Shareholders will have one vote
for each matter to be presented for shareholder action at the
meeting for each share of Company common stock they owned at the
close of business on the record date. On the record date, there
were 43,571,251 shares of Company common stock outstanding.
Quorum
The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of our common stock is
necessary to constitute a quorum at the meeting. For purposes of
determining whether a quorum is present, abstentions and broker
non-votes will be included. In the event that a quorum is not
present at the special meeting, it is expected that the meeting
will be adjourned or postponed.
Shareholder
Vote Required to Adopt the Proposals at the Special
Meeting
Adoption of the merger agreement requires the affirmative vote
of the holders of at least two-thirds of our outstanding shares
of common stock. Approval of the adjournment proposal requires
the affirmative vote of the holders of a majority of the shares
of common stock present in person or represented by proxy and
entitled to vote on the matter at the special meeting. Approval
of the non-binding advisory vote regarding the merger-related
executive compensation arrangements described in this proxy
statement requires the affirmative vote of the holders of a
majority of the shares of common stock present in person or
represented by proxy and entitled to vote on the matter at the
special meeting.
Voting
Any shareholder of record entitled to vote at the special
meeting may submit a proxy by telephone, on the Internet, by
returning the enclosed proxy card by mail, or by voting in
person by appearing at the special meeting. If your shares of
Company common stock are held in street name by your
bank, brokerage firm or other nominee, you should instruct your
bank, brokerage firm or nominee on how to vote your shares of
Company common stock by using the instructions provided. If you
do not provide your bank, brokerage firm or nominee with
instructions, your shares of Company common stock will not be
voted and that will have the same effect as a vote
AGAINST
the adoption of the merger agreement
but will have no effect on the approval of the adjournment
proposal or the approval of the non-binding proposal regarding
merger-related executive compensation arrangements.
Revocation
of Proxies
Any shareholder of the Company may revoke or change his or her
proxy at any time before the final vote at the meeting. You may
do so by executing and returning a proxy card dated later than
the previous one, by properly submitting a later proxy by
telephone or on the Internet, by attending the special meeting
and casting your vote by ballot at the special meeting or by
delivering a written revocation dated after the date of the
proxy that is being revoked to Allied Healthcare International
Inc., 245 Park Avenue, New York, New York 10167, Attention:
Secretary, prior to the close of business on the business day
that immediately precedes the special meeting. Attending the
meeting alone will not revoke your proxy unless you specifically
request your proxy to be revoked. The submission of a proxy will
not affect the right of a holder of shares of common stock to
attend, or vote in person at, the meeting. If you hold your
shares through a bank, brokerage firm or other nominee, you
should follow the instructions of your bank, brokerage firm or
nominee regarding revocation of proxies. If your bank, brokerage
firm or nominee allows you to vote by telephone or on the
Internet, you may be able to change your vote by voting again by
telephone or on the Internet.
Solicitation
Costs
Our directors, officers and other employees may solicit proxies
in person, by telephone, electronically, by mail or other means,
but they will not be specifically compensated for these
services. Brokers, banks and other
2
persons will be reimbursed by us for expenses they incur in
forwarding proxy materials to obtain voting instructions from
beneficial shareholders. We have also hired Alliance Advisors,
LLC to assist in the solicitation of proxies. The total cost of
solicitation of proxies will be borne by us. For a description
of the costs and expenses to us of soliciting proxies, see
The Special Meeting Solicitation Costs
on page 15.
Shareholders should not send in their stock certificates with
their proxies.
A transmittal form with instructions for the
surrender of certificates representing shares of Company common
stock will be mailed to shareholders if the merger is completed.
The
Merger and the Merger Agreement (Page 17 and
Page 48)
If the merger agreement is adopted by our shareholders and the
other conditions to the closing of the merger are satisfied or
waived, Merger Sub will merge with and into the Company, with
the Company continuing as the surviving corporation. We
sometimes use the term surviving corporation in this
proxy statement to refer to the Company as the surviving entity
following the merger. As a result of the merger, the Company
will become a wholly-owned subsidiary of Parent and will cease
to be an independent, publicly traded company. Following
consummation of the merger, you will not own any shares of the
capital stock of the surviving corporation of the merger. If the
merger is consummated, each share of Company common stock that
is issued and outstanding immediately prior to the effective
time of the merger (other than shares held by Parent, Merger
Sub, the Company or any of their respective subsidiaries) will
be converted into the right to receive $3.90 in cash, without
interest and less any applicable withholding taxes, which amount
we refer to in this proxy statement as the merger consideration.
Treatment
of Stock Options and SARs (Page 49)
If the merger is consummated, each Company stock option (whether
vested or unvested) that is outstanding immediately prior to the
effective time of the merger and has not otherwise been
forfeited prior thereto will become fully vested and cancelled
as of the effective time of the merger, and will be converted
into the right to receive, for each share previously underlying
such option, a cash payment equal to the excess, if any, of the
merger consideration over the exercise price per share of such
option, without interest, less any applicable withholding taxes.
If the exercise price of any outstanding Company stock options
is equal to or greater than the merger consideration, then such
options will be cancelled as of the effective time of the merger
without any payment and will have no further force or effect.
Each stock appreciation right (SAR) issued by the
Company that is outstanding immediately prior to the effective
time of the merger and that is vested as of immediately prior to
the effective time of the merger will be cancelled and converted
into the right to receive a cash payment equal to the excess, if
any, of the merger consideration over the exercise price per
share of the Company common stock subject to the SAR, multiplied
by the number of shares of Company common stock subject to such
SAR, without interest, less any applicable withholding taxes.
However, no SARs are expected to vest prior to the effective
time of the merger. Only our Chief Executive Officer holds SARs.
See Interests of Company Directors and Executive Officers
in the Merger on page 39 for more information on the
SARs.
There are no outstanding equity-based awards other than Company
stock options and Company SARs.
Recommendation
of the Board of Directors (Page 28)
Our board of directors, at a meeting held on July 28, 2011,
(i) determined that the merger is in the best interests of
the Company and its shareholders, and declared it advisable to
enter into the merger agreement, (ii) approved the
execution, delivery and performance of the merger agreement and
the consummation of the transactions contemplated thereby,
including the merger, (iii) resolved to recommend that the
shareholders approve the adoption of the merger agreement and
directed that the matter be submitted for consideration by the
shareholders of the Company at the special meeting, and
(iv) took all necessary actions so that, to the extent
permitted by law, neither the provisions of Section 912 of
the New York Business Corporation Law, which we refer to as the
NYBCL, and any other similar applicable
anti-takeover law, nor the provisions of our
shareholder rights (or poison pill) plan, would be
applicable to the merger.
Our board of directors
3
recommends that our shareholders vote FOR the
proposal to adopt the merger agreement, FOR the
proposal to adjourn the special meeting and FOR the
non-binding proposal regarding the merger-related executive
compensation arrangements described in this proxy statement.
For a discussion of the material factors considered by our
board of directors in reaching its conclusions, see The
Merger Recommendation of the Board of
Directors on page 28.
Opinion
of Oppenheimer & Co. Inc. (Page 31)
On July 28, 2011, at a meeting of the Companys board
of directors held to evaluate the merger,
Oppenheimer & Co. Inc., which we refer to as
Oppenheimer, rendered its oral opinion to the Companys
board of directors, which was subsequently confirmed in writing,
that, as of the date of such written opinion and based upon and
subject to the assumptions, procedures, factors and limitations
set forth therein, the consideration to be received by the
holders of the Companys common stock in the merger was
fair to the holders of shares of the Companys common stock
from a financial point of view.
The full text of the Oppenheimer opinion is attached as
Annex B to this proxy statement and is incorporated by
reference into this proxy statement. Oppenheimer has consented
to the reference to and reproduction of its opinion in this
proxy statement. You are urged to read Oppenheimers
opinion carefully in its entirety.
Financing
of the Merger (Page 39)
The purchase price will be funded by cash on hand or amounts
drawn under available credit facilities by Parent. There is no
financing condition to the merger.
Interests
of Company Directors and Executive Officers in the Merger
(Page 39)
In considering the recommendation of the board of directors, you
should be aware that our directors and executive officers may
have interests in the merger that are different from, or in
addition to, your interests as a shareholder. The board of
directors was aware of these interests and considered these
interests, among other matters, in reaching its decision to
approve the merger agreement and to recommend that our
shareholders vote in favor of adopting the merger agreement.
These interests include the following:
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accelerated vesting of equity awards held by our employees,
including our executive officers and our directors,
simultaneously with the effective time of the merger, and the
settlement of such awards in exchange for cash; and
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the entitlement of our two executive officers to receive
payments under a retention bonus agreement in connection with
the merger.
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If the proposal to adopt the merger agreement is approved by our
shareholders, the shares of common stock held by our directors
and executive officers will be treated in the same manner as
outstanding shares of common stock held by all other
shareholders of the Company.
Governmental
and Regulatory Matters (Page 43)
General
We believe that the proposed merger is not subject to the
reporting and waiting provisions of the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the HSR
Act). Thus, no filings have been made or are presently
contemplated with the United States Department of Justice (the
DOJ) and the United States Federal Trade Commission
(the FTC). Nevertheless, the DOJ or the FTC as well
as, in some circumstances, foreign governmental entities, state
attorneys general or private persons, could challenge the
transaction at any time before or after its completion. As
described below, Parent and Company have made a filing with the
competition authorities in Ireland and the competition
authorities in Ireland have issued a determination letter
clearing the merger. No other merger-related filings with
competition authorities are anticipated to be required.
4
Irish
Competition Act
Affiliates of Parent and the Company each conduct business in
Ireland. The Irish Competition Act 2002 requires notification to
and prior approval by the Competition Authority of the Republic
of Ireland of mergers or acquisitions involving parties
exceeding specified thresholds, which affiliates of Parent and
the Company exceed. Parent and the Company filed the requisite
merger notification form under the Irish Competition Act 2002
with the Competition Authority of the Republic of Ireland on
August 4, 2011. On August 22, 2011, the Competition
Authority issued a determination letter clearing the merger. On
September 1, 2011, a mandatory additional ten-day waiting
period expired.
Takeover
Statutes (Page 57)
If any fair price, business combination,
control share acquisition or other form of
anti-takeover statute or regulation is or becomes applicable to
the merger agreement or the transactions contemplated by the
merger agreement, we, Parent and Merger Sub have agreed to take
such actions as are necessary so that the transactions
contemplated by the merger agreement may be consummated as
promptly as practicable on the terms and conditions contemplated
by the merger agreement and otherwise act to eliminate or
minimize the effects of such statute or regulation.
Conditions
to the Merger (Page 57)
The respective obligations of the Company, Parent and Merger Sub
to consummate the merger are subject to the satisfaction or
waiver of certain conditions, including, among others,
(i) the adoption of the merger agreement by our
shareholders, (ii) the accuracy of the representations and
warranties of the parties, (iii) the absence of any legal
restrictions on the consummation of the merger,
(iv) material compliance by the parties with their
respective covenants and agreements under the merger agreement,
and (v) to the extent required under the Irish Competition
Act 2002, the approval of the Competition Authority of the
Republic of Ireland.
Termination
of the Merger Agreement and Termination Fees (Pages 59 and
60)
The merger agreement may be terminated by mutual written consent
of the Company and Parent or by either the Company or Parent
under certain specified circumstances as more fully described in
The Merger Agreement Termination on
page 59. Upon termination of the merger agreement under
some circumstances, we may be required to pay to Parent a
termination fee of $5.2 million, as more fully described in
The Merger Agreement Termination Fees and
Expenses on page 60.
Market
Price of Common Stock (Page 64)
The closing sale price of the Company common stock on the NASDAQ
Stock Market on July 28, 2011, the last trading day prior
to the public announcement of the proposed merger, was $2.45 per
share. On September 15, 2011, the most recent practicable
date before this proxy statement was mailed to our shareholders,
the closing price for Company common stock on the NASDAQ Stock
Market was $3.82 per share. You are encouraged to obtain current
market quotations for common stock in connection with voting
your shares of Company common stock.
No
Dissenters Rights (Page 67)
Under the NYBCL, no dissenters rights exist with respect
to the merger.
5
QUESTIONS
AND ANSWERS ABOUT
THE SPECIAL MEETING AND THE MERGER
The following questions and answers, presented for your
convenience only, briefly address some questions that may arise
about the merger, the merger agreement and the special meeting.
These questions and answers may not address all questions that
may be important to you as a shareholder. You should still
carefully read the entire proxy statement, including the
attached hereto, which are incorporated into this proxy
statement by reference.
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Q:
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Why am I receiving these materials?
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A:
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You are receiving this proxy statement and proxy card because
you own shares of common stock of the Company. This proxy
statement describes matters on which we urge you to vote and is
intended to assist you in deciding how to vote your shares of
common stock with respect to such matters.
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Q:
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When and where is the special meeting?
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A:
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We will hold the special meeting on October 19, 2011 at
11:00 a.m., Eastern Time, at the offices of Edwards Angell
Palmer & Dodge LLP, 750 Lexington Avenue, New York, NY
10022.
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Q:
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Who may attend the special meeting?
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A:
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All shareholders of record at the close of business on
September 15, 2011, which we refer to as the record date,
or their duly appointed proxies, and our invited guests may
attend the special meeting. Please be prepared to present valid
photo identification for admission to the special meeting. If
you hold shares of common stock in street name (that
is, in a brokerage account or through a bank or other nominee)
and you would like to attend the special meeting, you will need
to bring a valid photo identification and proof of ownership,
such as a brokerage statement as of a recent date, a copy of
your voting instruction form or a legal proxy from
your broker, bank or other nominee. If you wish to vote in
person at the special meeting, you must obtain a
legal proxy from your broker, bank or other nominee.
Shareholders of record will be verified against an official list
available in the registration area at the special meeting. We
reserve the right to deny admittance to anyone who cannot
adequately show proof of share ownership.
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Q:
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How many votes must be present to hold the special
meeting?
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A:
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A majority of the outstanding shares of common stock entitled to
vote at the special meeting, represented in person or by proxy
at the special meeting, will constitute a quorum. Shares of
common stock represented in person or by proxy, including
abstentions and broker non-votes, if any, will be counted for
purposes of determining whether a quorum is present.
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Q:
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Who may vote?
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A:
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You may vote if you owned common stock as of the close of
business on the record date. Each share of common stock is
entitled to one vote. As of the record date, there were
43,571,251 shares of common stock outstanding and entitled
to vote at the special meeting.
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Q:
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What am I being asked to vote upon?
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A:
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We are asking you to consider and vote upon the following items:
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a proposal to adopt the merger agreement,
pursuant to which Merger Sub, a wholly-owned subsidiary of
Parent, will merge with and into the Company, with the Company
continuing as the surviving corporation and a wholly-owned
subsidiary of Parent;
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a proposal to adjourn the special meeting, if
necessary, to allow for the solicitation of additional proxies
in favor of the proposal to adopt the merger agreement if there
are insufficient votes to adopt the merger agreement; and
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a proposal to approve, by a non-binding
advisory vote, the compensation arrangements for our named
executive officers in connection with the merger that are
described in more detail in this proxy statement.
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Q:
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What vote is required to approve the proposal to adopt the
merger agreement?
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A:
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The adoption of the merger agreement requires the affirmative
vote of the holders of at least two-thirds of the outstanding
shares of common stock entitled to vote at the special meeting.
If you fail to grant a proxy or vote in person at the special
meeting, abstain from voting, or do not provide your bank,
brokerage firm or other nominee with voting instructions, this
will have the same effect as a vote
AGAINST
the proposal to adopt the merger agreement.
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Q:
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What vote is required to approve the proposal to adjourn the
special meeting?
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A:
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The proposal to adjourn the special meeting, if necessary, will
require the affirmative vote of the holders of a majority of our
shares of common stock present or presented by proxy at the
special meeting. Abstaining from voting will have the same
effect as a vote
AGAINST
the proposal to
adjourn the special meeting. If you fail to submit a proxy or
vote in person at the special meeting, the shares of common
stock not voted will not be counted in respect of, and therefore
will not have an effect on, the proposal to adjourn the special
meeting. If your shares of common stock are held through a bank,
broker or other nominee and you do not instruct your bank,
broker or other nominee to vote your shares of common stock,
your shares of common stock will not be voted, but this will not
have an effect on the proposal to adjourn the special meeting.
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Q:
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Why am I being asked to cast an advisory (non-binding) vote
to approve certain merger-related executive compensation payable
to our named executive officers in connection with the
merger?
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A:
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The Securities and Exchange Commission recently adopted rules
that require us to seek an advisory (non-binding) vote with
respect to payments that will or may be made to our named
executive officers in connection with the merger.
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Q:
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What will happen if shareholders do not approve the
merger-related executive compensation at the special meeting?
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A:
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Approval of payments to our named executive officers that will
be payable in connection with the merger is not a condition to
our payment of those amounts or to the completion of the merger.
The vote with respect to the merger-related executive
compensation is merely an advisory vote and will not be binding
on Allied, our board of directors or Parent. Accordingly,
regardless of the outcome of the non-binding advisory vote, if
the merger agreement is adopted by the shareholders and the
merger is completed, our named executive officers will be
eligible to receive the merger-related compensation payments in
accordance with the terms and conditions applicable to those
payments.
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Q:
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What is the recommendation of the Board of Directors?
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A:
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The Board of Directors recommends that you vote:
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FOR
the proposal to adopt
the merger agreement;
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FOR
the adjournment
proposal; and
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FOR
the non-binding
proposal regarding the merger-related executive compensation
arrangements described in this proxy statement.
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Q:
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What will I receive in the merger?
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A:
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If the merger is completed, you will be entitled to receive
$3.90 in cash, without interest and less any applicable
withholding taxes, in exchange for each share of Allied common
stock that you own at the effective time of the merger.
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Q:
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What effects will the proposed merger have on the Company?
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A:
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As a result of the proposed merger, the Company will cease to be
a publicly traded company and will become a wholly-owned
subsidiary of Parent. You will no longer have any interest in
the future earnings or growth of the Company. Following
completion of the merger, our reporting obligations with respect
to our common stock under the Securities Exchange Act of 1934,
as amended, which we refer to as the
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Exchange Act, will be terminated upon application to the
Securities and Exchange Commission, which we refer to as the
SEC. In addition, upon completion of the merger, our common
stock will no longer be listed on any exchange or quotation
system, including the NASDAQ Stock Market, and price quotations
will no longer be available.
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Q:
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What are the tax consequences of the exchange of Company
common stock for cash in the merger?
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A:
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If you are a U.S. holder of our common stock, the
merger will be a taxable transaction to you. Subject to the
discussion in The Merger Certain United States
Federal Income Tax Matters, your receipt of cash in
exchange for your shares of our common stock pursuant to the
merger generally will cause you to recognize gain or loss
measured by the difference, if any, between the cash you receive
pursuant to the merger (determined before the deduction of any
applicable withholding taxes) and your adjusted tax basis in the
common stock surrendered in the merger. If you are a
non-U.S.
holder of our common stock, the merger generally will not
be a taxable transaction to you under U.S. federal income tax
laws unless you have certain connections to the United States.
Tax matters are complicated, and the tax consequences of the
merger to you will depend on the facts of your own situation.
You should read The Merger Certain United
States Federal Income Tax Matters for definitions of
U.S. holder and
non-U.S.
holder, and for a more detailed discussion of the U.S.
federal income tax consequences of the merger. You should also
consult your tax advisor with respect to the specific tax
consequences to you in connection with the merger in light of
your own particular circumstances, including federal estate,
gift and other non-income tax consequences, and tax consequences
under state, local or foreign tax laws.
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Q:
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Do any of the Companys directors or officers have
interests in the merger that may differ from or be in addition
to my interests as a shareholder?
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A:
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Yes. In considering the recommendation of the Board with respect
to the proposal to adopt the merger agreement, you should be
aware that our directors and executive officers may have
interests in the merger that are different from, or in addition
to, the interests of our shareholders generally. The Board was
aware of and considered these interests, among other matters, in
approving the merger agreement and the merger, and in
recommending that the merger agreement be adopted by the
shareholders of the Company. For a description of the interests
of our directors and executive officers in the merger, see
The Merger Interests of Company Directors and
Executive Officers in the Merger.
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Q:
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How do I vote?
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A:
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You may vote by:
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completing, dating, signing and returning the
enclosed proxy card in the accompanying prepaid reply envelope;
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using the telephone number printed on your
proxy card;
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using the Internet voting instructions
printed on your proxy card;
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if you hold your shares in street
name, following the procedures provided by your bank,
brokerage firm or other nominee; or
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attending the special meeting and voting in
person by ballot.
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Even if you plan to attend the special meeting in person, you
are strongly encouraged to vote your shares of common stock by
proxy. If you are a record holder or if you obtain a
legal proxy to vote shares which you beneficially
own, you may still vote your shares of common stock in person at
the special meeting even if you have previously voted by proxy.
If you are present at the special meeting and vote in person,
your previous vote by proxy will not be counted.
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Q:
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May I change my vote after I have mailed my signed proxy
card?
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A:
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Yes. Any shareholder may revoke or change his or her proxy at
any time before the final vote at the meeting. You may do so by
executing and returning a proxy card dated later than the
previous one, by properly
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submitting a later proxy by telephone or on the Internet, by
attending the special meeting and casting your vote by ballot at
the special meeting or by delivering a written revocation dated
after the date of the proxy that is being revoked to Allied
Healthcare International, Inc., 245 Park Avenue, New York, New
York 10167, Attention: Secretary, prior to the closing of the
polls for the vote at the special meeting. Attending the meeting
alone will not revoke your proxy unless you specifically request
your proxy to be revoked. The submission of a proxy will not
affect the right of a holder of shares of common stock to attend
or vote in person at the meeting. If you hold your shares
through a bank, brokerage firm or other nominee, you should
follow the instructions of your bank, brokerage firm or nominee
regarding revocation of proxies. If your bank, brokerage firm or
nominee allows you to vote by telephone or on the Internet, you
may be able to change your vote by voting again by telephone or
on the Internet.
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Q:
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What happens if I sign and return my proxy card without
specifying my vote?
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A:
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If you are the record holder of your shares and you sign and
return your proxy card without specifying your vote, your shares
will be voted
FOR
the adoption of the merger
agreement,
FOR
the adjournment proposal and
FOR
the non-binding proposal regarding
merger-related executive compensation arrangements.
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Q:
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Will my shares of common stock be voted if I do not provide
my proxy?
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A:
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If you are the shareholder of record and you do not vote or
provide a proxy, your shares of common stock will not be voted.
If your shares of common stock are held in street
name, they may not be voted if you do not provide the
bank, brokerage firm or other nominee with voting instructions.
Currently, banks, brokerage firms or other nominees have the
authority to vote shares of common stock for which their
customers do not provide voting instructions on
routine matters. However, banks, brokerage firms or
other nominees are precluded from exercising their voting
discretion with respect to approving non-routine matters, such
as the proposal to adopt the merger agreement, the proposal to
approve the adjournment of the special meeting, and the
non-binding proposal regarding merger-related executive
compensation arrangements. As a result, absent specific
instructions from the beneficial owner of such shares of common
stock, banks, brokerage firms or other nominees are not
empowered to vote those shares of common stock on any of the
proposals to be voted on at the special meeting.
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Q:
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What happens if I sell my shares before the special
meeting?
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A:
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The record date of the special meeting is earlier than the
special meeting and the date that the merger is expected to be
completed. If you transfer your shares of our common stock after
the record date but before the special meeting, you will retain
your right to vote at the special meeting, but will have
transferred the right to receive $3.90 per share in cash to be
received by our shareholders in the merger. In order to receive
the $3.90 per share in cash, you must hold your shares through
completion of the merger.
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Q:
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What does it mean if I receive more than one set of
materials?
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A:
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This means you own shares of Company common stock that are
registered under different names. For example, you may own some
shares directly as a shareholder of record and other shares
through a broker or you may own shares through more than one
broker. In these situations, you will receive multiple sets of
proxy materials. You must complete, sign, date and return all of
the proxy cards or follow the instructions for any alternative
voting procedure on each of the proxy cards that you receive in
order to vote all of the shares you own. Each proxy card you
receive comes with its own prepaid return envelope; if you vote
by mail, make sure you return each proxy card in the return
envelope that accompanies that proxy card.
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Q:
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Do I have any rights to seek payment of the fair value of my
shares?
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A:
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No. Under the NYBCL, no dissenters rights exist with
respect to the merger.
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Q:
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When is the merger expected to be completed?
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A:
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We are working toward completing the merger as quickly as
possible, and we anticipate that it will be completed during the
fourth calendar quarter of 2011. However, the exact timing of
the completion of the
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merger cannot be predicted. In order to complete the merger, we
must obtain shareholder approval and the other closing
conditions under the merger agreement must be satisfied or
waived.
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Q:
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What happens if the merger is not completed?
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A:
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If the merger agreement is not adopted by the shareholders of
the Company or if the merger is not completed for any other
reason, the shareholders of the Company will not receive any
payment for their shares of common stock. Instead, the Company
will remain an independent public company, and the common stock
will continue to be listed and traded on NASDAQ. Under specified
circumstances, the Company may be required to pay Parent a
termination fee upon the termination of the merger agreement, as
described under The Merger Agreement
Termination Fees and Expenses.
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Q:
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Who will count the votes?
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A:
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A representative of Computershare Trust Company, N.A., our
transfer agent, will serve as the independent inspector of
elections and will count the votes.
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Q:
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Should I send in any share certificates now?
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A:
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No. After the merger is completed, you will be sent a
letter of transmittal with detailed written instructions for
exchanging your common share certificates for the merger
consideration. If your shares are held in street
name by your bank, brokerage firm or other nominee, you
will receive instructions from your bank, brokerage firm or
nominee as to how to effect the surrender of your street
name shares in exchange for the merger consideration.
Please do not send in your certificates now.
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Q:
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Who can help answer my questions?
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A:
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If you have any questions, or require assistance in voting your
proxy, please call our proxy solicitor, at
1-877-777-8133.
If your bank, brokerage firm other nominee holds your shares in
street name, you should also call your bank,
brokerage firm or other nominee for additional information.
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10
FORWARD-LOOKING
STATEMENTS
This proxy statement, and the documents to which we refer you in
this proxy statement, contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Exchange Act. Forward-looking
statements include information concerning our possible or
assumed future results of operations, the expected completion
and timing of the merger and other information relating to the
merger. There are forward-looking statements throughout this
proxy statement, including, without limitation, under the
headings Summary, The Merger, The
Merger Agreement and in statements containing the words
believes, plans, expects,
anticipates, intends,
estimates or other similar expressions. You should
be aware that forward-looking statements involve known and
unknown risks and uncertainties. Although we believe that the
expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that the actual results or
developments we anticipate will be realized, or even if
realized, that they will have the expected effects on our
business or operations. These forward-looking statements speak
only as of the date on which the statements were made and we
undertake no obligation to publicly update or revise any
forward-looking statements made in this proxy statement or
elsewhere as a result of new information, future events or
otherwise, except as required by law.
In addition to other factors and matters contained in this
document, we believe the following factors could cause actual
results to differ materially from those discussed in the
forward-looking statements:
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the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement;
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the outcome of any legal proceedings that have been or may be
instituted against us and others relating to the merger
agreement;
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the inability to complete the merger due to the failure to
obtain shareholder approval or the failure to satisfy other
conditions to completion of the merger;
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the failure of the merger to close for any other reason;
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risks that the proposed transaction disrupts current plans and
operations and the potential difficulties in employee retention
as a result of the merger;
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the effect of the announcement of the merger on our employees,
customer relationships, operating results and business generally;
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the amount of the costs, fees, expenses and charges related to
the merger;
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general economic, political and social conditions; and
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other risks detailed in our current filings with the SEC.
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See Where You Can Find More Information on
page 68. Many of the factors that will determine our future
results are beyond our ability to control or predict. In light
of the significant uncertainties inherent in the forward-looking
statements contained herein, readers should not place undue
reliance on forward-looking statements, which reflect
managements views only as of the date hereof. We cannot
guarantee any future results, levels of activity, performance or
achievements. The statements made in this proxy statement
represent our views as of the date of this proxy statement, and
it should not be assumed that the statements made herein remain
accurate as of any future date. Moreover, we assume no
obligation to update forward-looking statements or update the
reasons that actual results could differ materially from those
anticipated in forward-looking statements, except as required by
law.
11
THE
PARTIES TO THE MERGER AGREEMENT
Allied
Healthcare International Inc.
Allied is a leading homecare provider of health and social care
(often referred to as domiciliary care) in the United Kingdom
and Ireland, as measured by revenues, market share and number of
staff. We operate a community-based network of approximately 120
branches with the capacity to provide carers (known as home
health aides in the U.S.), nurses, and specialized medical
personnel to locations covering approximately 90% of the U.K.
population. We provide personal or basic care and nursing
services in the customers own homes, public or private
hospitals and nursing and care homes. Homecare, which accounts
for approximately 90% of our revenues, is provided for
individuals (normally elderly individuals) who require
domiciliary care, individuals with learning disabilities and
individuals of all ages who require health-related services for
complex care needs. The main purchasers of our services for
customers in their own homes are local governmental social
services departments, private individuals, the Health and Social
Care Board and National Health Services (the NHS)
Primary Care Trusts. We also supply nursing staff services to
nursing homes and hospitals that account for our remaining
revenues.
Our principal corporate offices are located at 245 Park Avenue,
New York, New York 10167, and our telephone number at that
location is
(212) 750-0064.
As our principal operations are predominantly in the United
Kingdom, we also maintain an English head office in Stone,
Staffordshire. Our common stock trades on the NASDAQ Global
Select Market under the symbol AHCI.
Saga
Group Limited
Saga is the United Kingdoms leading provider of products
and services specifically designed for peopled aged fifty and
over. With 2.7 million customers, Parent provides
insurance, savings, financial advice, care services, holidays
and publishes Saga Magazine.
AHL
Acquisition Corp.
Merger Sub was formed for the sole purpose of completing the
merger with the Company. Merger Sub has not engaged in any
activities to date except for those incidental to its formation
and as otherwise contemplated by the merger agreement. Merger
Sub is a wholly-owned subsidiary of Parent. Upon consummation of
the proposed merger, Merger Sub will merge with and into the
Company and will cease to exist, with the Company continuing as
the surviving corporation.
12
THE
SPECIAL MEETING
Date,
Time and Place of the Special Meeting
This proxy statement is being furnished to our shareholders as
part of the solicitation of proxies by our board of directors
for use at the special meeting to be held on October 19,
2011 at 11:00 a.m., Eastern Time, at the offices of Edwards
Angell Palmer & Dodge LLP, 750 Lexington Avenue, New
York, NY 10022 or at any postponement or adjournment thereof.
Purpose
of the Special Meeting
The purpose of the special meeting is for our shareholders to
consider and vote upon (i) a proposal to adopt the merger
agreement, a copy of which is attached as Annex A to this
proxy statement, (ii) a proposal to adjourn or postpone the
special meeting, if necessary, if there are insufficient shares
of Company common stock represented (either in person or by
proxy) to constitute a quorum necessary to adopt the merger
agreement at the special meeting, and (iii) to approve the
non-binding proposal regarding the merger-related executive
compensation arrangements described in this proxy statement.
Record
Date; Shareholders Entitled to Vote
The record date for the special meeting is September 15,
2011. You are entitled to receive notice of, and to vote at, the
special meeting if you owned shares of common stock at the close
of business on the record date. Shareholders will have one vote
for each matter to be presented for shareholder action at the
meeting for each share of Company common stock they owned at the
close of business on the record date. On the record date, there
were 43,571,251 shares of Company common stock outstanding.
Quorum
The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of our common stock is
necessary to constitute a quorum at the meeting. For purposes of
determining whether a quorum is present, abstentions and broker
non-votes will be included. In the event that a quorum is not
present at the special meeting, it is expected that the meeting
will be adjourned or postponed.
Attendance
Only shareholders of record or their duly authorized proxies
have the right to attend the special meeting. To gain
admittance, you must present valid photo identification, such as
a drivers license or passport. If your shares of Company
common stock are held through a bank, broker or other nominee,
please bring to the special meeting a copy of your brokerage
statement evidencing your beneficial ownership of the common
stock as of the record date and valid photo identification. If
you are the representative of a corporate or institutional
shareholder, you must present valid photo identification along
with proof that you are the representative of such shareholder.
Shareholder
Vote Required to Adopt the Proposals at the Special
Meeting
Approval of the proposal to adopt the merger agreement requires
the affirmative vote of the holders of at least two-thirds of
the outstanding shares of common stock. For the proposal to
adopt the merger agreement, you may vote
FOR,
AGAINST
or
ABSTAIN.
Abstentions will not be counted as votes cast in favor of
the proposal to adopt the merger agreement but will count for
the purpose of determining whether a quorum is present.
If
you fail to submit a proxy or to vote in person at the special
meeting, or abstain, it will have the same effect as a vote
AGAINST the proposal to adopt the merger agreement.
If you hold your shares in street name, the failure
to instruct your broker, bank or other nominee how to vote your
shares will have the same effect as a vote AGAINST
the proposal to adopt the merger agreement.
Approval of the proposal to adjourn the special meeting, if
necessary or appropriate, to solicit additional proxies requires
the affirmative vote of the holders of a majority of the shares
of common stock present in
13
person or represented by proxy and entitled to vote on the
matter at the special meeting. For the proposal to adjourn the
special meeting, you may vote
FOR,
AGAINST
or
ABSTAIN.
For
purposes of this proposal, if your shares of common stock are
present at the special meeting but are not voted on this
proposal, or if you have given a proxy and abstained on this
proposal, this will have the same effect as if you voted
AGAINST
the proposal. If you fail to submit a
proxy or to vote in person at the special meeting, your shares
of common stock not voted will not be counted in respect of, and
will not have any effect on, the proposal to adjourn the special
meeting.
Approval of the non-binding, advisory vote regarding the
merger-related executive compensation arrangements described in
this proxy statement requires the affirmative vote of the
holders of a majority of the shares of common stock present in
person or represented by proxy and entitled to vote on the
matter at the special meeting. For the non-binding proposal
regarding these merger-related executive compensation
arrangements, you may vote
FOR,
AGAINST
or
ABSTAIN.
For
purposes of this proposal, if your shares of common stock are
present at the special meeting but are not voted on this
proposal, or if you have given a proxy and abstained on this
proposal, this will have the same effect as if you voted
AGAINST
the proposal. If you fail to submit a
proxy or vote in person at the special meeting, your shares of
common stock not voted will not be counted in respect of, and
will not have any effect on, the non-binding proposal regarding
merger-related executive compensation arrangements.
Brokers who hold shares in street name for customers
have the authority to vote on routine proposals when
they have not received instructions from the beneficial owners.
However, brokers may not exercise their voting discretion with
respect to approving non-routine matters such as the adoption of
the merger agreement and the adjournment proposal and, as a
result, absent specific instructions from the beneficial owner
of such shares, brokers are not empowered to vote those shares,
referred to generally as broker non-votes.
Broker
non-votes will not be counted as votes cast or shares voting on
the proposals. These broker non-votes will be counted for
purposes of determining whether a quorum is present, but will
have the same effect as a vote AGAINST the adoption
of the merger agreement. Broker non-votes will have no effect on
the outcome of the adjournment proposal
.
Voting
Shareholders of record who hold shares of Company common stock
can vote shares on matters presented at the special meeting in
four ways:
(a)
By Proxy.
After reading the proxy
materials, you can cause your shares to be voted by signing,
dating and returning the enclosed proxy card. If you do this,
the proxies will vote your shares of Company common stock in the
manner you indicate. All properly executed proxy cards that we
receive prior to the vote at the special meeting, and that are
not revoked, will be voted in accordance with the instructions
indicated on the proxy cards. If you sign, date and return but
do not indicate instructions on the proxy card, your shares of
Company common stock will be voted
FOR
the
adoption of the merger agreement.
(b)
By Telephone.
After reading the proxy
materials and with your proxy and voting instruction form in
front of you, you may call the toll-free number
1-800-652-VOTE
(8683) using a touch-tone telephone. You will be prompted
to enter your control number from your proxy and voting
instruction form. This number will identify you and the Company.
Then you can follow the simple instructions that will be given
to you to record your proxy.
(c)
Over the Internet.
After reading the
proxy materials and with your proxy and voting instruction form
in front of you, you may use your computer to access the Web
site www.investorvote.com/AHCI. You will be prompted to enter
your control number from your proxy and voting instruction form.
This number will identify you and the Company. Then you can
follow the simple instructions that will be given to you to
record your proxy.
(d)
In Person.
You may attend the special
meeting and cast your vote in person.
14
The Internet and telephone voting procedures have been set up
for your convenience and have been designed to authenticate your
identity, allow you to give voting instructions and confirm that
those instructions have been recorded properly.
Brokers, banks or other nominees holding shares of Company
common stock in street name may vote your shares of
Company common stock on the adoption of the merger agreement and
adjournment of the special meeting only if you provide
instructions on how to vote. Brokers, banks and other nominees
will provide you with directions on how to instruct the broker,
bank or other nominee to vote your shares of Company common
stock, and you should carefully follow these instructions.
Revocation
of Proxies
Any shareholder of the Company may revoke or change his or her
proxy at any time before the final vote at the meeting. You may
do so by executing and returning a proxy card dated later than
the previous one, by properly submitting a later proxy by
telephone or on the Internet, by attending the special meeting
and casting your vote by ballot at the special meeting or by
delivering a written revocation dated after the date of the
proxy that is being revoked to Allied Healthcare International
Inc., 245 Park Avenue, New York, New York 10167, Attention:
Secretary, prior to the closing of the polls for the vote at the
special meeting. Attending the meeting alone will not revoke
your proxy unless you specifically request your proxy to be
revoked. The submission of a proxy will not affect the right of
a holder of shares of common stock to attend, or vote in person
at, the meeting. If you hold your shares through a bank,
brokerage firm or other nominee, you should follow the
instructions of your bank, brokerage firm or nominee regarding
revocation of proxies. If your bank, brokerage firm or nominee
allows you to vote by telephone or on the Internet, you may be
able to change your vote by voting again by telephone or the
Internet.
Adjournments
and Postponements
Although it is not currently expected, the special meeting may
be adjourned or postponed for the purpose of soliciting
additional proxies if there are insufficient votes at the time
of the special meeting to approve the proposal to adopt the
merger agreement. The special meeting may also be adjourned if a
quorum is not present. Other than an announcement to be made at
the special meeting of the time, date and place of an adjourned
meeting, any adjournment may be made without notice. We are
required to give notice, however, if a new record date is set
for the adjourned meeting. Any adjournment or postponement of
the special meeting for the purpose of soliciting additional
proxies will allow the Companys shareholders who have
already sent in their proxies to revoke them at any time prior
to their use at the special meeting as adjourned or postponed.
Solicitation
Costs
This proxy solicitation is being made and paid for by the
Company on behalf of its board of directors. The cost of
soliciting proxies will be borne by the Company. In addition to
soliciting proxies by mail, proxies may be solicited by our
directors, officers and other employees by personal interview,
telephone, Internet and other means of communication. Such
persons will receive no additional compensation for such
services. Arrangements will also be made with brokerage houses
and other custodians, nominees and fiduciaries for the
forwarding of proxy solicitation materials to the beneficial
owners of shares of our common stock held of record by such
brokers and other fiduciaries. The Company will reimburse the
brokers and other fiduciaries for their reasonable
out-of-pocket
expenses incurred when the solicitation materials are forwarded.
To assist in the solicitation of proxies, the Company has
engaged Alliance Advisors, LLC, who may be contacted by banks
and brokers at 1-973-873-7700 and by all others toll-free at
1-877-777-8133. The cost to engage Alliance Advisors is
estimated to be $15,000. The Company has also agreed to
reimburse Alliance Advisors for reasonable administrative and
out-of-pocket
expenses incurred in connection with the proxy solicitation and
to indemnify it against certain losses, costs and expenses.
15
Questions
and Additional Information
If you have any questions about the merger or how to vote or
direct a vote in respect of your shares of Company common stock,
or if you need additional copies of this proxy statement or the
enclosed proxy card or voting instructions, you may contact us
by phone at (212) 750-0064 or by submitting a question to
Alliance Advisors, our proxy solicitor at:
Alliance Advisors, LLC
200 Broadacres Drive, 3rd Floor
Bloomfield, NJ 07003
Banks and Brokers Call 1.973.873.7700
All Others Call Toll-Free 1.877.777.8133
16
THE
MERGER (PROPOSAL 1)
The discussion in this proxy statement of the merger and the
principal terms of the merger agreement is subject to, and is
qualified in its entirety by reference to, the merger agreement,
a copy of which is attached to this proxy statement as
Annex A. You should read the entire merger agreement
carefully.
The
Merger
At the effective time of the merger, Merger Sub will merge with
and into the Company, with the Company continuing as the
surviving corporation of the merger, but as a wholly owned
subsidiary of Parent.
If the merger is consummated, the Company will cease to be an
independent, publicly traded company and the Company common
stock will be delisted from the NASDAQ Stock Market and
deregistered under the Exchange Act. As such, we would no longer
file periodic reports with the SEC on account of the Company
common stock. Following consummation of the merger, you will not
own any shares of the capital stock of the surviving corporation
of the merger.
Merger
Consideration
If the merger is consummated, each share of Company common stock
that is issued and outstanding immediately prior to the
effective time of the merger (other than shares held by the
Company as treasury stock, and shares owned by its subsidiaries,
Parent or Merger Sub) will be cancelled and converted into the
right to receive $3.90 in cash, without interest and less any
applicable withholding taxes.
If the merger is consummated, each Company stock option (whether
vested or unvested) that is outstanding immediately prior to the
effective time of the merger and has not otherwise been
forfeited prior to the effective time will be cancelled and
converted into the right to receive, for each share previously
underlying such option, a cash payment equal to the excess, if
any, of the merger consideration over the exercise price per
share of such option, without interest, less any applicable
withholding taxes. If the exercise price of any outstanding
Company stock options is equal to or greater than the merger
consideration, then such options will be cancelled as of the
effective time of the merger without any payment and will have
no further force or effect.
If the merger is consummated, each Company stock appreciation
right (SAR) that is outstanding immediately prior to the
effective time of the merger and that is vested as of
immediately prior to the effective time of the merger (including
any portion of a Company SAR that vests as a result of the
merger) will be cancelled and converted into the right to
receive a cash payment equal to the excess, if any, of the
merger consideration over the exercise price per share of the
Company common stock subject to the SAR, multiplied by the
number of shares of Company common stock subject to such SAR,
without interest, less any applicable withholding taxes.
However, no SARs are expected to vest prior to the effective
time of the merger.
Background
of the Merger
As part of the ongoing oversight and management of our
Companys business, our Board of Directors and senior
management have regularly reviewed and discussed our
Companys performance, risks, long-term goals, prospects
and overall strategic direction. In the course of these
discussions and in light of economic, regulatory, competitive
and other conditions, our Board of Directors and senior
management have evaluated various strategic alternatives to
enhance shareholder value. For a discussion of some of the
strategic initiatives considered and undertaken in recent years,
see The Recommendation of our Board of
Directors and the Reasons for the Merger below. Except as
otherwise indicated, references in this section to contacts with
Saga include contacts with its parent Acromas Holdings Ltd. and
its affiliate Nestor Healthcare.
Following a regular meeting of our Board of Directors at the
Companys offices in Stone, Staffordshire, England in
mid-March, 2010, taking the above into account, our
non-executive directors requested Sophia Corona and Wayne
Palladino, the two independent members of our Strategic
Investment Committee (the Investment Committee), to
contact representatives of Oppenheimer & Co.
(Oppenheimer) who had performed other engagements
for our Company to seek Oppenheimers views about general
market conditions
17
with respect to the possibility of a strategic transaction
involving the Company. Representatives of Oppenheimer met on
March 23, 2010 with Mr. Palladino, Ms. Corona,
our chairman, Dr. Jeffrey Peris, and our outside counsel to
discuss this topic, and the substance of that meeting was
thereafter communicated to our other Board members.
During the period between March 23, 2010 and May 18,
2010, the Investment Committee and the Board continued
discussions with Oppenheimer with respect to investigating a
possible strategic transaction.
These discussions marked the beginning of a process, outlined in
more detail below, in which commencing June 21, 2010
through the time of the signing of the merger agreement,
Oppenheimer contacted over 80 US, UK and other European
counterparties, including over 60 private equity firms (whom we
refer to as financial buyers) and over 20 companies engaged
in or potentially interested in entering the UK home health and
social care industry (whom we refer to as strategic buyers), in
connection with a possible strategic transaction involving the
Company. Except as described below, none of these discussions
resulted in an indication of interest that our Board of
Directors considered adequate.
Between each of the Board meetings and other events described
below, representatives of Oppenheimer, members of the Board, its
Investment Committee, the non-executive directors and outside
counsel engaged regularly in meetings and other communications
to report on the process generally and specific developments. A
number of Board and Investment Committee meetings not described
below were held throughout the process for Board members to keep
updated on the progress of discussions and to give instructions
to Oppenheimer.
On May 18, 2010, during a regular Board meeting,
representatives from Oppenheimer met with our Board of Directors
to brief the Board on their preliminary views about a process
through which Oppenheimer could conduct a confidential
soft review of the market to determine whether
pursuing a strategic transaction would be advisable for the
Company. At this meeting Oppenheimer identified a number of US,
UK and other European based counterparties who might be
interested in a strategic transaction. At this meeting, the
Board also determined to continue to gather information and
explore the possibility of a strategic transaction, but in the
meantime instructed management to continue to operate the
Company in the ordinary course. The Board also directed its
Investment Committee to continue discussions with Oppenheimer
with respect to establishing the terms of a limited engagement
to test the market for US buyers only, which included both
financial and strategic buyers. Potential UK and other European
buyers were excluded from the engagement at this time due to
concerns regarding confidentiality, including the potential for
rumors leaking into the marketplace particularly at a time when
it was not certain that our Board would entertain a strategic
transaction. At the same time, our legal counsel also reviewed
with the directors their fiduciary duties and legal obligations
to the Company and its stockholders in considering a sale of the
Company.
On May 26, 2010 during a special meeting of the Board, the
Board discussed a proposed engagement letter from Oppenheimer
relating to a limited exploratory review of the market for
US-based buyers with respect to a possible strategic
transaction. Following discussion of such letter the Board
authorized the engagement of Oppenheimer for this purpose. In
engaging Oppenheimer, the Board considered the prior work that
Oppenheimer had conducted for the Company, as well as its
substantial experience in transactions of the type being
contemplated by the Company, its experience in both the US and
UK markets and its knowledge of the healthcare industry
generally.
During a regularly scheduled Board meeting on June 8, 2010,
the Investment Committee advised the Board that the limited
engagement letter had been executed with Oppenheimer and that it
was continuing to work with management and Oppenheimer with
respect to developing a report for the Boards
consideration relating to its US-based market review.
On or about June 21, 2010, Oppenheimer began a soft market
check by contacting US-based potential buyers.
On July 15, 2010 during a special meeting of the Board to
discuss various matters related to the Companys business,
the Board also received a presentation from Oppenheimer
summarizing its confidential soft market check of 36 US
counterparties who might potentially be interested in a
strategic transaction. Of that group, 10 US-based financial
buyers submitted to Oppenheimer either an oral or written
non-binding
18
preliminary indication of interest with ranges from $2.87 per
share to $4.05 per share. No US strategic buyers submitted an
indication of interest. During the meeting, Oppenheimer and the
Board discussed whether to continue the strategic process and
the Board agreed to continue with the process due to the
interest expressed up to that point at prices which were
significantly higher than our stock price historically. In
addition to setting up management meetings with the US-based
interested parties, the Board further instructed Oppenheimer to
expand the process to include potential buyers based in the UK
and other European countries, initially through the private
equity community and later, given competitive sensitivities, to
the strategic market.
On or about July 19, 2010 Oppenheimer began to expand its
market check and contacted approximately 20 UK and other
European based financial buyers, of which 8 ultimately submitted
to Oppenheimer either an oral or written non-binding preliminary
indication of interest with ranges from $3.39 per share to $5.10
per share.
During the period from July 28, 2010 through
August 26, 2010, Company management met with 16 interested
financial buyers, with most parties performing certain
high-level due diligence including review of summary financial
projections. During this time, the Investment Committee and the
Board continued to receive updates from Oppenheimer as to the
process, efforts to schedule management meetings, results of
management meetings and non-binding preliminary indications of
interest. During this period representatives of Oppenheimer
continued discussions with potential interested parties and
subsequent to each of the respective management meetings,
requested each interested party to reconfirm or revise its
non-binding indication of interest, including in particular any
upward or downward revisions to their views on price. Among the
parties in discussions were those we refer to as Financial
Bidders A through E.
On August 26, 2010, the Board convened a special meeting to
receive an update on the status of the process. During this
meeting, Oppenheimer reviewed with the Board 14 non-binding
indications of interest from various US and UK-based potential
acquirors contacted by Oppenheimer (with 2 parties dropping out
of the process), with 13 indications ranging from $3.19 per
share to $4.04 per share and one indication at $5.10 per share.
These included indications from Financial Bidders A through E as
follows: Financial Bidder A implied price of
$3.71 per share; Financial Bidder B $5.10 per
share; Financial Bidder C implied price range
of $3.88-$4.04 per share; Financial Bidder D
$4.00 per share; and Financial Bidder E implied
price of $3.88 per share. Oppenheimer noted however, that
Financial Bidder Bs indication of $5.10 was an
outlier and might not solidify into a bona fide indicative offer.
At this meeting it was determined to allow five of the highest
bidders to proceed to the second round of the process, including
Financial Bidders B, C and D. Financial Bidder A backed out
of the process when the Company refused to grant it exclusivity
at a price that was clearly inferior to the other proposals. All
other bidders were informed that they would not be continuing in
the process due to inadequate prices. Also at this meeting, the
Board discussed with Oppenheimer its views as to when it would
be appropriate to approach potential UK and other European
strategic buyers and the Board requested Oppenheimer to develop
a list of potential strategic counterparties for the Board to
consider.
Also at this meeting, Oppenheimer advised the Board that
representatives of Credit Suisse, acting on behalf of
Sagas parent Acromas Holdings Ltd., had contacted them on
August 25, 2010 and indicated Saga would like to engage in
discussions with the Company. Upon learning this information
from Oppenheimer, the Board authorized Oppenheimer to respond to
Credit Suisse that the Board would be interested in holding
preliminary discussions with Acromas and Saga. The Board was
aware that Acromas and Saga had made an unsolicited approach to
a direct competitor of the Company, Nestor Healthcare Group PLC
(which we refer to as Nestor), and was believed to be in active
acquisition discussions with them.
On August 27, 2010, Saga entered into a nondisclosure and
confidentiality agreement with Oppenheimer on behalf of the
Company.
Also on August 27, 2010, Oppenheimer received an
unsolicited call from Financial Bidder F inquiring about
the Company and asking to be included in the process.
Oppenheimer requested that, if interested, Financial
Bidder F should submit a non-binding indication of interest
based on publicly available information. On September 1,
2010, Financial Bidder F submitted a preliminary
non-binding indication of interest that
19
implied a per share price range of $4.69-$4.81. Based on that
indication, Financial Bidder F was allowed to proceed in
the process and executed a non-disclosure and confidentiality
agreement.
During late August and early September 2010, the Board, the
Investment Committee and Oppenheimer coordinated with members of
the Companys management the process of gathering due
diligence information to be made available to potential buyers.
On or about September 7, 2010, an electronic data room was
established and opened to permit approved bidders to conduct due
diligence on the Company.
On September 1, 2010, the Board held a special meeting
during which Oppenheimer reported on several calls with
Sagas investment bankers during the previous few days. The
Board also reviewed and discussed materials prepared by
Oppenheimer related to 11 other potential UK and other European
strategic parties, including the capability of such parties to
complete a transaction and the likely strategic fit. Following
that discussion, the Board instructed Oppenheimer to contact the
other identified potential strategic purchasers and report their
responses to the Board. From September 1, 2010 through
September 22, 2010, Oppenheimer contacted these potential
strategic parties, none of which resulted in an indication of
interest.
On September 10, 2010, representatives of Acromas (Andrew
Goodsell, CEO, and Stuart Howard, CFO) and Saga (Roger Ramsden,
CEO, Mark Jackson, Deputy Chairman of Saga Independent Living,
and Alison Davies, CFO of Saga Services, met with our CEO, Sandy
Young, and our CFO, Paul Weston, at the offices of Acromas
Holdings Ltd. in London to discuss the Company, its operations
and financial performance in order to allow Saga to formulate an
indicative proposal. Representatives of Oppenheimer and Credit
Suisse were also present at this meeting.
During the second round of the strategic process, from
August 26, 2010 through September 22, 2010, the five
previously selected highest financial bidders, Financial
Bidder F and Saga each conducted preliminary due diligence
on the Company, including in some cases having additional
meetings with Company management. In addition, Oppenheimer
continued discussions with three of the financial bidders that
were initially excluded from the second round of the process,
including Financial Bidder E, as these bidders asked to be
let back into the process having indicated that they may be
prepared to revise upwards their indicative price.
On September 20, 2010, Sagas investment bankers
submitted on behalf of Saga a preliminary non-binding proposal
letter to purchase all of the Companys capital stock at an
implied value of $4.60 per share. After receipt of that letter,
Oppenheimer provided feedback to Credit Suisse that the proposed
price level of the transaction was unlikely to be sufficient.
After consultation with their client, on September 22,
2010, Sagas investment bankers submitted on behalf of Saga
a revised preliminary non-binding proposal letter to purchase
all of the Companys capital stock for $5.30 per share in
cash, based on the then current exchange rate of $1.55 per pound
sterling. The proposal stated that it was based on the
Companys then projected financial forecasts and was
subject to completion of satisfactory due diligence. During a
regularly scheduled Board meeting on September 22, 2010,
representatives of Oppenheimer briefed the Board on ongoing
process developments with prospective financial and strategic
buyers. Oppenheimer reported during such meeting that nine
potential financial buyers continued to express interest in a
transaction at implied prices ranging from $4.00 to $5.10 per
share, including Financial Bidder B at a price of $5.10,
Financial Bidder C at an implied price of $4.04, Financial
Bidder D at a price of $4.00, Financial Bidder E at a
price of $4.10 and Financial Bidder F at an implied price
range of $4.69 to $4.81. Oppenheimer also discussed Sagas
revised non-binding proposal at $5.30 per share. Oppenheimer
discussed with the Board that Sagas proposal had not been
preceded by material due diligence and that it was
Oppenheimers understanding that Saga appeared to still be
actively pursuing the Nestor acquisition. At this meeting, the
Board determined to proceed with Financial Bidder B,
Financial Bidder F and Saga.
After the September 22, 2010 Board meeting, Oppenheimer
contacted the remaining interested parties to inform them of
their respective status in the process. Financial Bidder C
increased its indication to an implied price of approximately
$4.50 per share and Financial Bidder D increased its
indication to a price of $4.50 per share. Both bidders were
informed that their respective indications continued to be lower
than other indications.
20
On September 30, 2010, representatives of Financial
Bidder B met with certain members of the Board of the
Company and with representatives of Oppenheimer. At that
meeting, Financial Bidder B expressed concern about
proceeding with the due diligence process without exclusivity
given their uncertainty over the number of bidders involved and
the prospective costs of conducting due diligence. After
consultations with the Board, on or about October 8, 2010
Oppenheimer met again with Financial Bidder B to attempt to
give Financial Bidder B assurances that its bid was
competitive and to seek ways to expedite its diligence review.
At about the same time, representatives of Saga met with our CEO
and CFO, together with representatives of Oppenheimer and Credit
Suisse, to continue discussions about the Company, its
operations and performance as part of Sagas due diligence
review process.
In early October 2010, Oppenheimer and the Board discussed ways
to maintain competitive tension among the potential buyers and
to mitigate the transactional risks of granting exclusivity to
any one party while bids were still forming, and determined that
the Company should engage an accountancy firm with expertise in
UK healthcare matters to conduct and prepare a Vendor Due
Diligence package (VDD Report) that would be
provided to both Financial Bidders B and F. The accounting firm
(the VDD Provider) was subsequently engaged on
October 18, 2010 and from that date through
December 3, 2010, Financial Bidder B and Financial
Bidder F performed limited due diligence while awaiting the
report from the VDD Provider.
On October 19, 2010, Andrew Goodsell, the CEO of Acromas,
and Stuart Howard, the CFO of Acromas, met with Wayne Palladino
and Dr. Jeffrey Peris in New York City to discuss the
merits of a potential transaction, Sagas commitment to a
potential transaction and its ability to execute and finance an
acquisition. Mr. Goodsell indicated that notwithstanding
Sagas ongoing discussions with Nestor, in his view the
transactions were not mutually exclusive and fit within their
strategic objective of becoming a full service provider to the
over-50 population in the UK. Based on this meeting the
Companys attending representatives believed that Saga had
the financial capability to execute both transactions, did not
require financing and appeared to have received preliminary
board approval to move forward with a possible acquisition of
the Company. Our Board held a special meeting on
October 25, 2010 to receive an update and briefing relating
to the meeting with Messrs. Goodsell and Howard.
On October 29, 2010, a draft merger agreement was delivered
by Oppenheimer to Credit Suisse. Oppenheimer also indicated to
Credit Suisse at such time, out of concern for the disclosure of
competitively sensitive information to a company that was
engaged in discussions to buy a direct competitor, that requests
for branch visits and further management meetings or other
financial and operating information would not be forthcoming
until a proposed transaction framework was better understood.
In parallel, during the period between October 25, 2010 and
November 29, 2010, Oppenheimer continued discussions with
Sagas investment bankers about concerns over timing and
the implications of a transaction with Nestor on Sagas
commitment to pursuing a transaction with the Company. On
November 23, 2010, representatives of Saga and members of
the Companys executive team had a further discussion of
operational and financial due diligence matters, with
representatives of Oppenheimer and Credit Suisse also
participating.
During a November 29, 2010 meeting of the non-executive
directors of the Company, the independent directors confirmed
that, in light of potential retention arrangements that may be
offered to him, as well as potential equity roll-over
requirements in the event a private equity firm were to acquire
the Company, Mr. Young would continue not to participate in
any pricing or structural decisions relating to a sale of the
Company, but would remain on the Investment Committee in order
to facilitate management meetings with potential bidders, the
bidders due diligence review and other matters as
appropriate.
Meanwhile, the UK governments announcement on
October 20, 2010 of a comprehensive spending review
(CSR) and other initiatives announced in the months
following (including a potential fundamental change in the
commissioning structure for the provision of healthcare services
by Allieds clients) introduced material uncertainty into
the staffing and home health and social care markets generally.
In addition, local government authorities in the UK began to
react negatively to potential spending reductions announced in
the CSR.
21
During the fourth calendar quarter of 2010, these factors began
to negatively impact operating results and the outlook for UK
home health and social care companies generally and our Company,
like others in the sector, began to feel the effects of those
initiatives over the coming months with reduced contracted hours
and pressure on pricing.
On December 2, 2010, during a regular meeting of the Board,
the status of Sagas proposed transaction with Nestor was
discussed.
On December 3, 2010, the VDD Provider delivered its final
draft of the VDD Report to the Company. The report was
subsequently provided by the VDD Provider directly to Financial
Bidder B and Financial Bidder F as previously agreed
with the Board. A key conclusion of the VDD Report was that in
light of CSR, the proposed healthcare market reforms and the
current operating performance of the Company (e.g., the original
adjusted EBITDA forecast for the year ended September 30,
2010 was not achieved), the financial forecasts prepared by the
Company which had been provided to potential buyers were
unlikely to be achieved. At the request of the Board,
Oppenheimer asked Financial Bidder B and Financial
Bidder F to reconfirm their indications of interest after
receiving the VDD Report.
On December 6, 2010 Saga publicly announced that it had
offered to acquire Nestor.
On or about December 7, 2010 a draft of a merger agreement
was distributed to Financial Bidders B and F.
On December 10, 2010, Financial Bidder B wrote to the
Board indicating its unwillingness to proceed with a transaction
at its indicative price and its lack of desire to engage in any
further dialogue until the operating performance of the Company
and clarity over the UK healthcare market had improved, with a
suggestion of perhaps re-engaging during the second quarter of
2011.
The Investment Committee held a special meeting on
December 13, 2010, during which changes in the UK market
following the change in government and potential budget
constraints were discussed, along with the impact of such events
on the Companys projected financials, the process and the
pricing of a transaction. Representatives of Oppenheimer were
present during the meeting and stated that, notwithstanding
issues in the UK healthcare market, they believed there
continued to be strong interest in this sector and that a
successful transaction could be executed. The Investment
Committee also agreed that while other alternatives were being
explored, including evaluating the impact of acquisitions and a
more rigorous share repurchase program, lines of communication
would continue to remain open with Saga.
On December 16, 2010, the Investment Committee again met
with representatives of Oppenheimer. Oppenheimer expressed the
view that, in the event that Financial Bidder F did not
wish to proceed in the process, given the impending holiday
season, there would be little meaningful reaction from other
potentially interested parties before mid-January. It was also
Oppenheimers view that, given the Companys need to
reassess more fully the impact of the CSR and potential
budgetary constraints and the impact that it would have on the
Companys business, before any parties were re-approached,
the Company should prepare updated financial forecasts along
with supporting memoranda so that in short order each re-engaged
partys interest in pursuing a strategic transaction (and
at what valuation) could be determined. In addition, it was
Oppenheimers recommendation that re-engaging a broader
universe of parties should not occur until Sagas interest
level could be ascertained, as financial bidders were unlikely
to engage fully in any process if a strategic buyer were to also
be bidding contemporaneously with them. It was also noted that
Saga was the highest bidder remaining in the process and that
they were not reliant on bank financing to complete a
transaction. The same day, Sagas investment bankers at
Credit Suisse advised our investment bankers that Saga remained
interested in a transaction with the Company but that their
attention had been focused on completing the Nestor transaction.
Through our investment bankers, we requested Saga to provide a
mark-up
to
the merger agreement prior to additional due diligence steps
being taken.
On or around December 21, 2010 Financial Bidder F
withdrew from discussions citing similar reasons as Financial
Bidder B.
On or about December 21, 2010, Saga indicated that it had
retained US counsel to review the draft merger agreement.
22
On December 21, 2010, the Board convened a special meeting
to discuss various matters including the status of the process.
The Board also discussed with Oppenheimer potential alternative
counterparties. Oppenheimer again recommended approaching a
limited number of potentially interested parties after revised
financial forecasts were prepared by management. During this
meeting the Board also reiterated that the Investment Committee
would continue to interact with Oppenheimer and management on
day-to-day
matters related to the process between meetings of our Board of
Directors, for the purpose of receiving updates on the sale
process, facilitating the due diligence review, and giving
interim guidance to management and Oppenheimer. The Investment
Committee consisted of Wayne Palladino, Sophia Corona and Sandy
Young, with Mr. Young participating in order to facilitate
senior management meetings and coordinate due diligence
responses through Company management. Mr. Young was not
engaged in pricing negotiations. During the process, the
Investment Committee reported to the full Board on its
activities.
From late December 2010 through early February 2011, management
of the Company worked to prepare updated financial forecasts,
which reflected the future prospects of the business taking into
account the CSR, current operating performance and the overall
market outlook, and other supporting memoranda for the purpose
of re-approaching potentially interested parties.
During January 2011 the Board continued to meet on a periodic
basis to monitor the process and completion of the information
items that would be helpful to prospective interested parties.
On January 13, 2011, Oppenheimer received an unsolicited
call from the advisor to a large UK multi-service organization
that expressed interest in a strategic transaction with the
Company (Strategic Bidder A). In February 2011,
an initial meeting was held with management of the Company,
Oppenheimer and Strategic Bidder A. However, following an
internal review by Strategic Bidder A after the initial
meeting, they concluded that they were not interested in
proceeding with discussions.
On January 24, 2011, Oppenheimer received a markup of the
draft merger agreement reflecting Sagas US and UK
counsels consolidated comments. The comments included
proposed changes to the exceptions to the Companys
restrictions on soliciting competing bids following the signing
of the merger agreement and during the pendency of the merger,
as well as the parties remedies in the event of a breach
of the agreement, the materiality standards for the
Companys representations and warranties, and the
conditions for payment of a termination fee. Sagas markup
proposed a termination fee representing 3.8% of the transaction
value.
On January 28, 2011, Oppenheimer spoke with Andrew Goodsell
of Acromas to determine their continued interest in a
transaction with the Company. Mr. Goodsell expressed to
Oppenheimer his continued strong interest in a potential
transaction. After that conversation, Oppenheimer spoke with
Credit Suisse who also confirmed Sagas continuing interest.
On February 1, 2011, Saga announced that it had completed
the acquisition of Nestor.
During a regular Board meeting on February 2, 2011 the
Investment Committee recommended to the Board that it continue
discussions with Saga and furnish Saga with an updated version
of the VDD Report prepared for the Company (redacted for
commercially sensitive points) while continuing steps to
complete the updated information package for other potential
bidders.
On February 3, 2011 Oppenheimer spoke with Credit Suisse to
discuss a possible transaction timeline, including a plan for
delivery of certain information.
On February 14, 2011, a meeting occurred at Credit
Suisses offices in London to present the revised Company
forecasts and to discuss the redacted VDD Report. At this time
access to the electronic data room was also reopened to the Saga
team. Present from Saga were Stuart Howard, John Ivers (CEO of
Sagas healthcare business), Martyn Ellis (CFO of
Sagas healthcare business), as well as Sandy Young, our
CEO, and Paul Weston, our CFO, and representatives of
Oppenheimer and Credit Suisse.
Between February 16, 2011 and March 6, 2011, Saga and
its financial and legal advisors performed due diligence on the
Company, including reviewing the revised forecasts and data room
contents.
23
On February 18, 2011, representatives of Credit Suisse
relayed to Oppenheimer that Saga management expected to make a
presentation to the Acromas board in early March to obtain
approval for an updated indicative offer for the Company which
would then be communicated to the Company. Oppenheimer
communicated such message to our Board and subsequently obtained
its approval to request the VDD Provider to update the VDD
Report for operating performance to the end of January (the
Operating Update).
On February 18, 2011, the Board of Directors convened a
special meeting in order for, among other things, the Investment
Committee to update the Board on the process. Our CEO,
Mr. Young, summarized the February 14 meeting in
London. While Saga appeared interested in continuing the process
and was pleased with the quality of the information provided,
given their need to analyze the information, the Investment
Committee did not realistically believe that a revised bid would
be forthcoming much before early March 2011. During the
February 18th Board meeting, the Board also approved
the execution of a supplemental engagement letter with
Oppenheimer relating to its activities, since its previous
letter had related to a more limited market review.
On February 25, 2011, Oppenheimer confirmed with Credit
Suisse that the Company had provided responses to all
outstanding initial due diligence questions and anticipated
receiving from Saga confirmation of their indicative offer as
approved by Acromas board.
On March 7, 2011, Credit Suisse contacted Oppenheimer and
orally submitted, on behalf of Saga, a revised offer price of
$3.35 per share. Credit Suisse indicated that this price
reflected, in Sagas view, a downturn in the business since
the forecasts of the previous summer, as well as significant
ambiguity in their view around the UK healthcare markets in
light of the UK government proposals and the CSR. Oppenheimer
responded to Credit Suisse, indicating that they believed this
proposal would be unattractive to the Company, did not reflect
the strategic value of the business and gave no value to the
synergies emerging to large branch based businesses. Oppenheimer
agreed however to present this proposal to the Board for their
consideration.
On March 8, 2011, our Board convened a special meeting to
discuss Sagas revised bid. The meeting was attended by
representatives of Oppenheimer. The Board directed Oppenheimer
to advise Saga that their proposed price was unacceptable and to
further advise them that if an agreement on price could not be
reached soon, the Company would proceed to focus on other
opportunities.
On March 9, 2011, Oppenheimer spoke with Credit Suisse to
relay the message that the Board did not believe that
Sagas current proposal at $3.35 a share was attractive and
that Oppenheimer had been instructed to engage with other
parties. It was, however, agreed that Oppenheimer and Credit
Suisse would maintain communication.
Oppenheimer and Credit Suisse again spoke on March 14, 2011
following the Companys announcement of the acquisition of
ScotHomecare, a homecare business with operations in Scotland
and England. Oppenheimer provided a copy of the press release
with respect to such acquisition to Credit Suisse.
On March 15, 2011, Oppenheimer advised the Investment
Committee that there was currently no increase in Sagas
bid and Oppenheimer was subsequently instructed by the
Investment Committee to advise Saga that they would be removed
from the process and their access to the data room terminated if
their offer remained at the same level.
On March 18, 2011, Credit Suisse contacted Oppenheimer to
confirm Sagas desire to stay in the process but reported
that Saga needed additional time.
On March 22, 2011, the Board convened a special meeting. In
light of Sagas most recent indicative offer and the fact
that it had declined to submit an increased bid, the Board
determined that it would be appropriate to invite a second round
of interest from a group of
agreed-upon
private equity firms, consisting of Financial Bidders B, C, D
and E, who were considered the most likely parties of those
already contacted to be able to make, finance and execute a
revised acquisition proposal. Accordingly, the Board instructed
the Investment Committee to work with management and Oppenheimer
to solicit indications of price from at least these bidders
prior to the Easter holiday, if possible.
24
Given that there had been no further contact from Saga with
respect to a revised bid, in accordance with the Boards
instructions, on March 23, 2011, Sagas access to the
electronic data room was suspended.
On March 23, 2011, Oppenheimer, at the Boards
instruction, contacted Financial Bidders B, C, D and E to
ascertain their continued interest in the transaction with the
Company. Each of these firms had prior knowledge of the business
and its management, and were believed to be in a position to
give a clear indication of interest relatively quickly. During
the period from March 23 through April 8, management
meetings were held with these firms, their advisors and their
banks, including the provision of revised financial forecasts
and access to the VDD Report, the Operating Update and the
electronic data room.
On April 8, 2011 Credit Suisse contacted Oppenheimer to
confirm that Saga still intended to re-engage in due course but
needed more time to integrate the recently completed Nestor
acquisition.
On April 14, 2011, Financial Bidder A, which
originally dropped out of the process when the Board did not
grant them exclusivity, approached Oppenheimer with an interest
in an acquisition transaction with the Company. On
April 20, 2011, prior to having full access to the revised
financial forecast or further meetings with Company management,
Financial Bidder A submitted a non-binding indication of
interest at an implied price of approximately $4.00 per share.
After reviewing the revised forecasts, the VDD Report and the
Operating Update and subsequent to meeting with Company
management and representatives of Oppenheimer on April 27,
2011, Financial Bidder A withdrew its indication of
interest, citing concerns over the Companys operating
trends, the competitive environment for its services in the UK
and their ability to arrange bank financing based on the
contents of the VDD Report and Operating Update.
On or about April 15, 2011, an advisor to a potential
strategic buyer (whom we refer to as Strategic
Bidder B) contacted the Company and Oppenheimer spoke
with such advisors on April 19, 2011 regarding their
potential interest in the Company. On or about April 20,
2011, Credit Suisse reiterated to Oppenheimer Sagas
continued intention to re-engage in the process.
On April 28, 2011, during a regularly convened Board
meeting, representatives from Oppenheimer reviewed with the
Board the indications of interest that had been received.
Financial Bidder B had declined to submit a proposal out of
continued concern for industry trends and Company performance.
Financial Bidder C had made a non-binding indication of
interest at $3.75 per share, subject to bank financing, and
indicated it had hired a financial advisor and was prepared to
act quickly if the Company would enter into an exclusivity
period. Financial Bidder D had indicated that it may still
submit a proposal, but that it needed to complete diligence on
the attainability of current fiscal year forecasted EBITDA.
Financial Bidder E had submitted an offer that implied a
price of approximately $3.46 per share, but the offer was
contingent on the Companys financial results for its first
fiscal quarter of 2012 (the fourth calendar quarter of
2011) being completed and meeting Financial
Bidder Es expectations. Financial Bidder E also
included a bank financing condition, but noted in its calls with
Oppenheimer that, given market conditions and the current
operating performance at the Company, bank financing in the near
term would be difficult to obtain. Oppenheimer advised the Board
that these discussions, along with concerns around bank
financing raised by Financial Bidder A, should be taken
into account when considering the financing condition of
Financial Bidder Cs proposal. In addition, on
April 28, 2011, Strategic Bidder B submitted an
indication of interest at an implied price of $3.34 per share.
This was subsequently revised to an implied price of $3.54 per
share after a calculation error by Strategic Bidder B with
respect to the Companys indebtedness was corrected.
Strategic Bidder B had not performed any due diligence to
date nor had it met with management. In addition, it too would
require bank financing.
Oppenheimer provided its view to the Board that the proposal
from Financial Bidder C was the most actionable from all of
those submitted by financial bidders, and recommended that the
Company proceed with Financial Bidder C (notwithstanding
the uncertainty around its proposed financing condition),
potentially within a limited exclusivity period if required by
Financial Bidder C. In addition, in order to help ascertain
the credibility of Strategic Bidder Bs proposal,
Oppenheimer recommended providing Strategic Bidder B with
the VDD Report and Operating Update, which was provided to
Strategic Bidder B following their entering into a
non-disclosure agreement. Finally, Oppenheimer also recommended
approaching Saga one final time to advise them of the
Companys intention to pursue a transaction with another
party if they were not to raise their indicative offer to a more
competitive level.
25
Following discussion of each of the bids and the Companys
situation, the Board concurred with Oppenheimers
recommendation, and determined to proceed towards negotiating a
definitive agreement with Financial Bidder C, unless Saga
increased its offer price or Strategic Bidder B increased
its offer.
On April 29, 2011, Oppenheimer contacted Credit Suisse to
advise them that the Company had alternative proposals at values
above Sagas last indicative offer of $3.35 per share and
that there only remained a short window for Saga in which to
revise its bid before the Company potentially entered into
exclusivity with another party.
On May 3, 2011, Credit Suisse requested Oppenheimer to
provide some additional information around some of the key
assumptions Saga was using in their models. Following receipt of
this information, Credit Suisse indicated to Oppenheimer that
Saga would be prepared to increase its indicative price to $3.85
per share. Oppenheimer advised Credit Suisse that the Company
would be expecting a higher per share offer. Following further
discussion with Saga, Credit Suisse reverted later in the day
with a revised offer at $3.90 per share, which Oppenheimer
indicated it would present to the Board upon its receipt from
Credit Suisse in writing.
On May 4, 2011, Credit Suisse provided to Oppenheimer a
written non-binding offer on behalf of Saga with respect to the
Company at $3.90 per share, which was subject to Saga being
given a period of exclusivity to complete due diligence and
negotiate a definitive agreement, but was not subject to any
financing condition.
On May 5, 2011, the Board convened a meeting at which
representatives of Oppenheimer updated the Board on the status
of the process. Oppenheimer recommended to the Company that it
proceed, on an exclusive basis if necessary, with Saga. In
Oppenheimers view, Sagas bid was the most compelling
given the price, their knowledge of the business, their
opportunities for synergies which other buyers would not have
(thereby limiting a price reduction) and their ability to
finance the transaction without bank debt. Oppenheimer then
reviewed the other details of Sagas proposal, indicating
that they were requiring eight weeks of exclusivity to complete
diligence and finalize transaction documents, and that the bid
represented a premium of 69% to the weighted average price per
share of the Companys common stock during the prior three
months. According to Sagas proposal, the price was based
on certain financial assumptions, which would all be subject to
satisfactory confirmation by Saga in due diligence, and was
generally subject to the conclusion of satisfactory due
diligence, negotiation of formal transaction documentation,
including a merger agreement containing customary
representations and warranties, and other terms and conditions
appropriate to a transaction of this nature. The Board requested
Oppenheimer to briefly leave the meeting so that the Board could
discuss the merits of Sagas proposal. Oppenheimer shortly
thereafter rejoined the meeting and the Board instructed
Oppenheimer to contact Saga and advise them that the Company was
prepared to enter into an exclusivity agreement predicated on a
price of $3.90 per share and incorporating terms that would
provide for termination of the exclusivity if there were any
changes proposed to the indicative price.
On May 6, 2011 Oppenheimer advised Credit Suisse that the
Company was prepared to proceed on an exclusive basis with Saga.
At this time, Oppenheimer also advised Financial Bidder C,
Financial Bidder D and Financial Bidder E that the
Company was about to enter into exclusivity arrangements with
another party. None of these financial bidders contacted
Oppenheimer with a revised higher bid or removed any of the
conditions from their bids.
On May 13, 2011, Saga presented to Oppenheimer a due
diligence request list and draft exclusivity agreement.
On May 19, 2011, the Company and Saga entered into an
agreement providing for an eight week exclusivity period during
which Saga would complete its due diligence and the parties
would negotiate a definitive agreement, subject to our
Boards ability to terminate the exclusivity if necessary
for fiduciary reasons in light of an unsolicited superior bid.
On May 20, 2011, Oppenheimer received a revised non-binding
indicative offer letter from Strategic Bidder B, indicating
that it raised its prior indication of interest from $3.54 per
share to $3.90 per share, pending further due diligence,
including meeting with management (whom it had not yet met) and
its ability to obtain debt financing. Following a preliminary
meeting of the Investment Committee and Oppenheimer, our
26
Board considered this proposal, but determined that it was
unlikely to lead to a superior proposal (as defined in the
exclusivity agreement with Saga), given the uncertainty of the
due diligence process, Strategic Bidder Bs lack of
direct experience in the Companys markets, the uncertainty
of debt financing and likely execution risk, and determined that
the risk to the potential transaction with Saga outweighed any
potential advantage of engaging in further discussions with
Strategic Bidder B.
From May 23, 2011 through July 27, 2011, Saga and its
advisors conducted thorough due diligence, including an
extensive review of the information contained in the data room,
submitting hundreds of questions and requesting additional
information to be supplied to the data room. In addition,
numerous meetings and teleconferences were conducted with the
Company and its advisors and Saga and its advisors.
On May 27, 2011, representatives of Saga management, the
Company, Oppenheimer and Credit Suisse met at Credit
Suisses offices in London to discuss the Companys
financial forecasts and for the Company to provide a business
update.
During the period from June 22 to July 7, 2011, Saga team
members, accompanied by representatives of Oppenheimer, visited
a series of Company branches in the UK and Ireland as part of
their due diligence process.
On June 23, 2011, our counsel, Edwards Angell
Palmer & Dodge LLP (EAPD), distributed a
revised draft of the merger agreement to Sagas counsel.
On June 24, 2011, Messrs. Young and Ivers met in
London to discuss, among other things, transaction progress and
the executive team.
On July 8, 2011, a representative of Paul, Weiss, Rifkind,
Wharton & Garrison LLP Paul Weiss), US
counsel to Saga, met with representatives of EAPD at EAPDs
New York offices to discuss remaining open issues in the merger
agreement. The participants discussed, among other things, the
conditions to closing in the agreement, certain materiality
modifications and material adverse effect conditions, the
termination fee and conditions under which the fee would be
payable, regulatory filings, proposed limitations on the
Companys ability to incur capital expenditures, and
certain employee-related covenants. During such discussion,
Sagas counsel reiterated Sagas position that a 3.8%
termination fee would be appropriate in light of the lengthy
process that had led to the agreement and Sagas assumption
that Oppenheimer had run a thorough process involving all
potential bidders.
On July 11, 2011, EAPD circulated a revised draft of the
proposed merger agreement to Sagas counsel. During the
period from June 23, 2011 through July 28, 2011,
counsel to Saga and counsel to the Company held several
discussions and negotiated the remaining unresolved issues in
the merger agreement and exchanged drafts of the document,
subject to resolution of the termination fee and final pricing
confirmation.
During the period from July 11 to July 14, Saga held a
series of
one-on-one
meetings between John Ivers and the Companys executive
team.
On July 27, 2011, our Board convened a special meeting to
discuss and review Oppenheimers preliminary fairness
opinion analysis and to ask questions relating to the analysis
and its underlying assumptions and conclusions.
On July 28, 2011, after exchanging further proposals on the
amount of the termination fee and after receiving the advice of
Oppenheimer and legal counsel, the Board agreed to a termination
fee of approximately 3.0% of the transaction value and
communicated its agreement to Saga.
On July 28, 2011, our Board of Directors convened a special
meeting to review and consider the final proposal from Saga.
Members of our senior management and representatives of our
counsel EAPD and Oppenheimer also participated. Our legal
counsel led a discussion that again reviewed and summarized the
Boards fiduciary duties in the context of the proposed
transaction. Our Board of Directors was informed that the
remaining issues on the merger agreement had been resolved
satisfactorily in accordance with previous instructions. Our
legal counsel also discussed the final merger agreement and
related documentation in detail with our Board of Directors. Our
Board of Directors then considered the merger from the business,
financial and legal perspective and the current conditions in
the UK healthcare industry and also considered the reasons for
the merger described in The
27
Merger The Recommendation of our Board of Directors
and the Reasons for the Merger. Next, representatives of
Oppenheimer reviewed for our Board of Directors its updated
financial analysis of the $3.90 per share cash offer by Saga.
Following questions and discussion by our Board of Directors and
at the request of our Board, representatives of Oppenheimer
delivered an oral opinion, which was subsequently confirmed in
writing, to the effect that as of July 28, 2011 and based
upon and subject to the factors and assumptions set forth in
Oppenheimers written opinion, the $3.90 per share in cash
to be paid to the holders of Company common stock pursuant to
the merger agreement was fair from a financial point of view to
such holders.
After careful consideration and deliberation, our Board of
Directors unanimously (a) determined that the merger
agreement, the merger and the other transactions contemplated by
the merger agreement were advisable, fair to and in the best
interests of the Company and its stockholders, (b) approved
and authorized execution of the merger agreement and the
consummation of the merger and the other transactions
contemplated by the merger agreement, (c) directed that the
adoption of the merger agreement be submitted to the Company
stockholders for consideration, and (d) resolved to
recommend that the Company stockholders approve the merger and
adopt the merger agreement.
Following this meeting of our Board of Directors, the Company
and Saga executed the merger agreement.
On the morning of July 29, 2011, prior to the opening of
the financial markets in the United States, the Company issued a
press release announcing the merger agreement and the merger.
The
Recommendation of our Board of Directors and the Reasons for the
Merger
Our board of directors, acting with the advice and assistance of
independent legal and financial advisors, evaluated and
negotiated the merger, including the terms and conditions of the
merger agreement, with Parent. Our board of directors
unanimously (i) determined that the merger agreement, the
merger and the other transactions contemplated by the merger
agreement are advisable, fair to and in the best interests of
our company and its shareholders, (ii) approved and
authorized to be taken all corporate action required to
authorize the execution of the merger agreement and the
consummation of the merger and the other transactions
contemplated by the merger agreement and (iii) resolved to
recommend that the shareholders adopt the merger agreement.
In the course of reaching its determination, our board of
directors consulted with management and its financial and legal
advisors and considered a number of factors, including, among
others, the following:
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The current and historical market prices of our common stock and
the fact that the proposed per share merger consideration of
$3.90 represents (1) a premium for our common stock of
59.2% to the closing price of our common stock on July 28,
2011, the last trading day before the public announcement of the
merger agreement, (2) a 57.2% premium to the volume
weighted average price per share of our common stock based on
the closing prices and trading volumes (volume weighted
average price) of our common stock during the three-month
period ending July 28, 2011, (3) a 61.5% premium to
the volume weighted average price of our common stock during the
six-month period ending July 28, 2011, and (4) a 59.0%
premium to the volume weighted average price per share of our
common stock during the
1-year
period ending July 28, 2011.
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The fact that following a competitive process involving both
strategic and financial parties as potential acquirors, the
proposed per share merger consideration of $3.90 equaled or
exceeded the per share price proposed in other indications of
interest.
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The fact that the proposed merger consideration will be paid in
cash, allowing our shareholders to immediately realize a fair
value for their investment, while also providing the
shareholders certainty of value for their shares and avoiding
long-term business risk.
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Our current and historical financial condition and results of
operations and our financial plan and prospects if we were to
remain an independent company, including the following specific
factors:
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our belief that we are unlikely to achieve significant organic
growth in the near term as an independent company by
establishing new locations or materially increasing hours at our
existing locations, particularly in light of UK budgetary
pressures and future ongoing budgetary uncertainties;
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in light of current and anticipated budget pressures on
reimbursements and utilization, the likelihood that our revenue
and profitability could be adversely affected as a result of
numerous recent UK government initiatives that affect the
payment for, and usage of, home health and social care services;
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notwithstanding that we have closed and integrated several
smaller acquisitions under an acquisition program we undertook
following a capital markets review in 2009, and notwithstanding
our active solicitation of other business combinations as a
means of growth, our belief that we have limited opportunities
in the near term to achieve significant growth as an independent
company through major acquisitions or merger transactions in the
home health and social care industry, in part in light of our
inability to date to consummate acquisitions of a larger
magnitude; and
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the belief that the price per share for our common stock was not
expected to significantly appreciate in the foreseeable future
to levels comparable to the price offered by Parent.
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The belief by our board of directors that, in comparison to
possible strategic alternatives to the sale of our company to
Parent that the board has considered from time to time,
including possible repatriation of our companys stock
listing to a UK market, continuing to operate independently
(whether on a stand-alone basis or following one or more
significant acquisitions), growth through acquisitions of or
mergers with other companies in the home health and social care
industries, additional stock repurchases and organic growth, the
merger with Parent maximizes shareholder value and is more
favorable to the shareholders than the other alternatives
reasonably available, taking into account risk of execution of
each alternative as well as business, competitive, industry and
market risk.
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The opinion rendered by Oppenheimer to our board of directors,
to the effect that, as of July 28, 2011, and based upon and
subject to the factors and assumptions set forth in
Oppenheimers written opinion, the $3.90 per share in cash
to be paid to the holders (other than Parent and its affiliates)
of our common stock pursuant to the merger agreement was fair
from a financial point of view to such holders, and the
financial analyses presented by Oppenheimer to our board of
directors in connection with the rendering of its opinion, as
more fully described in the section entitled The
Merger Opinion of Oppenheimer & Co.
Inc.
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The belief by our board of directors that the competitive
process by which the merger was negotiated with Parent led to
more favorable terms, including an increase in the per share
purchase price, as compared to the offer price offered by Parent
on March 7, 2011.
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The belief by our board of directors that based on the
negotiations with Parent, it was unlikely that additional
discussions with Parent would yield a higher price.
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The belief by our board of directors (after consulting with its
outside financial advisor and outside legal counsel) that the
termination fee of $5.2 million in the case of a superior
proposal as defined in The Merger Agreement
Restrictions on Solicitations of Other Offers was
reasonable and proportionate and comparable to similar fees in
transactions of a similar size, and not preclusive of other
offers.
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The business reputation and capabilities of Parent, its
management and its financial resources, and the likelihood that
the merger could be completed relatively quickly and in an
orderly manner.
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The fact that Parent has other operations in the home health and
social care industry, and our board of directors belief
that this gives Parent a strategic rationale for acquiring our
company, and therefore gives Parent additional motivation to
complete the merger.
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The fact that Parents obligation to consummate the merger
is not subject to any financing condition or other financing
contingency in the merger agreement.
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In addition to the items highlighted above, the other terms and
conditions contained in the merger agreement, including, among
others:
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the representations, warranties and covenants of the parties
contained in the merger agreement;
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29
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the limited number and nature of the conditions to Parents
obligations to consummate the merger and the limited risk of
non-satisfaction of such conditions provide reasonable certainty
of completion of the merger;
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the provisions of the merger agreement that permit our board of
directors, under specified circumstances, to withdraw, modify or
change in a manner adverse to Parent, the board of
directors recommendation to our shareholders that they
vote their shares in favor of adoption of the merger agreement
and to terminate the merger agreement if certain conditions are
satisfied, including in response to a superior proposal;
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our ability to specifically enforce the terms and provisions of
the merger agreement or; and
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the fact that the terms and conditions of the merger agreement
were the product of arms-length negotiation between the
parties.
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Our board of directors also considered a variety of risks and
other potentially negative factors concerning the merger
agreement and the merger, including, among others, the following:
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The possibility that the merger may not be consummated and the
potential risks and costs to our company and its shareholders if
the merger is not consummated, including the diversion of
management and employee attention, significant transactions
costs incurred by us, potential employee attrition and the
potential effect on our continuing business and our
relationships with customers, business partners, suppliers and
employees.
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The risk of a material decline in our companys share price
if the merger is not consummated, particularly in light of the
significant increase in our companys share price that
occurred subsequent to the public announcement of the merger.
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The fact that our companys shareholders will not
participate in any future earnings or growth of our company and
will not benefit from any appreciation in value of our company,
including any appreciation in value that could be realized as a
result of improvements to our operations.
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The restrictions on the conduct of our business prior to the
completion of the merger, requiring us to conduct our business
only in the ordinary course, subject to specific limitations,
and to use our commercially reasonable efforts to preserve
intact our business organizations which may delay or prevent us
from undertaking business opportunities that may arise pending
completion of the merger or preclude actions that would be
advisable if we were to remain an independent company.
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The fact that under the terms of the merger agreement, we are
not able to solicit other acquisition proposals during the
pendency of the merger.
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The termination fee payable under specified circumstances to
Parent if the merger agreement is terminated, and the potential
effect that such termination fee may have in deterring other
potential acquirors from making competing proposals that could
be more advantageous to our companys shareholders.
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The fact that, for U.S. federal income tax purposes, the
merger would be taxable to our shareholders that are
U.S. shareholders (as defined in The
Merger Certain United States Federal Income Tax
Matters on page 44).
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The fact that our directors and executive officers may have
interests in the merger that may be different from, or in
addition to, those of our other shareholders. For more
information about these interests, see below under the heading
The Merger Interests of Company Directors and
Executive Officers in the Merger.
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This discussion summarizes the material factors considered by
our board of directors in its consideration of the merger. After
considering these factors, our board of directors concluded that
the positive factors relating to the merger agreement and the
merger significantly outweighed the potential negative factors.
In view of the wide variety of factors considered by our board
of directors, and the complexity of these matters,
30
our board of directors did not find it practicable to quantify
or otherwise assign relative weights to the foregoing factors.
In addition, individual members of our board of directors may
have assigned different weights to various factors. Our board of
directors unanimously approved and recommended the merger
agreement and the merger based upon the totality of the
information presented to and considered by it. Our board of
directors believes that the merger is in the best interests of
our company and its shareholders.
Opinion
of Oppenheimer & Co. Inc.
We have engaged Oppenheimer as our financial advisor in
connection with the merger. In connection with this engagement,
our board of directors requested that Oppenheimer evaluate the
fairness, from a financial point of view, of the $3.90 per share
cash consideration to be received in the merger by holders of
our common stock. On July 28, 2011, at a meeting of our
board of directors held to evaluate the merger, Oppenheimer
rendered to our board of directors an oral opinion, which was
confirmed by delivery of a written opinion dated July 28,
2011, to the effect that, as of that date and based on and
subject to the matters described in its opinion, the
consideration to be received in the merger by holders of our
common stock was fair, from a financial point of view, to such
holders.
The full text of Oppenheimers written opinion, dated
July 28, 2011, which describes the assumptions made,
procedures followed, matters considered and limitations on the
review undertaken, is attached to this proxy statement as
Annex B.
Oppenheimers opinion was provided to our
board of directors in connection with its evaluation of the
merger consideration from a financial point of view and does not
address any other aspect of the merger. Oppenheimer expressed no
view as to, and its opinion does not address, the underlying
business decision of the Company to proceed with or effect the
merger or the relative merits of the merger as compared to any
alternative business strategies that might exist for the Company
or the effect of any other transaction in which the Company
might engage. Oppenheimers opinion does not constitute a
recommendation to a shareholder as to how such shareholder
should vote or act with respect to any matters relating to the
merger.
The summary of Oppenheimers opinion described
below is qualified in its entirety by reference to the full text
of its opinion.
In arriving at its opinion, Oppenheimer:
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reviewed the execution version, dated July 28, 2011, of the
merger agreement;
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reviewed publicly available audited financial statements of the
Company for the fiscal years ended September 30, 2010,
September 30, 2009 and September 30, 2008 and
unaudited financial statements of the Company for the periods
ended March 31, 2011 and December 31, 2010;
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reviewed financial forecasts and estimates relating to the
Company prepared by management of the Company;
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reviewed historical market prices and trading volumes for
Company common stock;
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held discussions with the senior management of the Company with
respect to the business, financial condition, operating results
and future prospects of the Company;
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reviewed and analyzed certain publicly available financial data
for companies that Oppenheimer deemed relevant in evaluating the
Company;
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reviewed and analyzed certain publicly available financial
information for transactions that Oppenheimer deemed relevant in
evaluating the merger;
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analyzed the estimated present value of future cash flows of the
Company based on financial forecasts, budgets and estimates
prepared by the management of the Company;
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reviewed the premiums paid, based on publicly available
information, in merger and acquisition transactions that
Oppenheimer deemed relevant in evaluating the merger;
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reviewed other public information concerning the Company that
Oppenheimer deemed relevant; and
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31
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performed such other analyses, reviewed such other information
and considered such other factors as Oppenheimer deemed
appropriate.
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In rendering its opinion, Oppenheimer relied upon and assumed,
without independent verification or investigation, the accuracy
and completeness of the financial and other information provided
to or discussed with Oppenheimer by the Company and its
management, employees, representatives and affiliates or
otherwise reviewed by Oppenheimer. With respect to the financial
forecasts and estimates relating to the Company utilized in its
analyses, Oppenheimer assumed, at the direction of the our
management and with our consent, without independent
verification or investigation, that such forecasts and estimates
were reasonably prepared on bases reflecting the best available
information, estimates and judgments of our management as to the
future financial condition and operating results of the Company.
Representatives of the Company advised Oppenheimer, and
Oppenheimer therefore assumed, that the final terms of the
merger agreement would not vary materially from those set forth
in the execution form of the merger agreement reviewed by
Oppenheimer. Oppenheimer also assumed, with our consent, that
the merger would be consummated in accordance with its terms
without waiver, modification or amendment of any material term,
condition or agreement and in compliance with all applicable
laws and other requirements and that, in the course of obtaining
the necessary regulatory or third party approvals, consents and
releases with respect to the merger, no delay, limitation,
restriction or condition would be imposed that would have an
adverse effect on the Company or the merger. Oppenheimer neither
made nor obtained any independent evaluations or appraisals of
the assets or liabilities, contingent or otherwise, of the
Company.
Oppenheimer did not express any opinion as to the underlying
valuation, future performance or long-term viability of the
Company or the price at which shares of our common stock would
trade at any time. Oppenheimer also expressed no view as to, and
its opinion did not address, the solvency of the Company under
any state, federal or other laws relating to bankruptcy,
insolvency or similar matters. In addition, Oppenheimer
expressed no view as to, and its opinion did not address, any
terms or other aspects or implications of the merger (other than
the $3.90 per share cash consideration to the extent expressly
specified in its opinion) or any aspect or implication of any
other agreement, arrangement or understanding entered into in
connection with the merger or otherwise, including, without
limitation, the fairness of the amount or nature of, or any
other aspect relating to, the compensation to be received by any
individual officers, directors or employees of any parties to
the merger, or any class of such persons, relative to the merger
consideration. In addition, Oppenheimer expressed no view as to,
and its opinion did not address, the Companys underlying
business decision to proceed with or effect the merger nor did
its opinion address the relative merits of the merger as
compared to any alternative business strategies that might exist
for the Company or the effect of any other transaction in which
the Company might engage. Oppenheimers opinion was
necessarily based on the information available to it and general
economic, financial and stock market conditions and
circumstances as they existed and could be evaluated by
Oppenheimer on the date of its opinion. Although subsequent
developments may affect its opinion, Oppenheimer does not have
any obligation to update, revise or reaffirm its opinion.
This summary is not a complete description of Oppenheimers
opinion or the financial analyses performed and factors
considered by Oppenheimer in connection with its opinion. The
preparation of a financial opinion is a complex analytical
process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances
and, therefore, a financial opinion is not readily susceptible
to summary description. Oppenheimer arrived at its ultimate
opinion based on the results of all analyses undertaken by it
and assessed as a whole, and did not draw, in isolation,
conclusions from or with regard to any one factor or method of
analysis for purposes of its opinion. Accordingly, Oppenheimer
believes that its analyses and this summary must be considered
as a whole and that selecting portions of its analyses and
factors or focusing on information presented in tabular format,
without considering all analyses and factors or the narrative
description of the analyses, could create a misleading or
incomplete view of the processes underlying Oppenheimers
analyses and opinion.
In performing its analyses, Oppenheimer considered industry
performance, general business, economic, market and financial
conditions and other matters existing as of the date of its
opinion, many of which are beyond the Companys control. No
company, business or transaction used in the analyses is
identical to the
32
Company or the merger, and an evaluation of the results of those
analyses is not entirely mathematical. Rather, the analyses
involve complex considerations and judgments concerning
financial and operating characteristics and other factors that
could affect the acquisition, public trading or other values of
the companies, business segments or transactions analyzed.
The assumptions and estimates contained in Oppenheimers
analyses and the ranges of valuations resulting from any
particular analysis are not necessarily indicative of actual
values or future results, which may be significantly more or
less favorable than those suggested by its analyses. In
addition, analyses relating to the value of businesses or
securities do not purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold.
Accordingly, the assumptions and estimates used in, and the
results derived from, Oppenheimers analyses are inherently
subject to substantial uncertainty.
Oppenheimer was not requested to, and it did not, recommend the
specific consideration payable in the merger. The type and
amount of consideration payable in the merger was determined
through negotiation between us and Parent, and the decision to
enter into the transaction was solely that of our board of
directors. Oppenheimers opinion and financial presentation
were only one of many factors considered by our board of
directors in its evaluation of the merger and should not be
viewed as determinative of the views of our board of directors
or management with respect to the merger or the merger
consideration.
The following is a summary of the material financial analyses
reviewed with our board of directors in connection with
Oppenheimers opinion dated July 28, 2011.
The
financial analyses summarized below include information
presented in tabular format. In order to fully understand
Oppenheimers financial analyses, the tables must be read
together with the text of each summary. The tables alone do not
constitute a complete description of the financial analyses.
Considering the data in the tables below without considering the
full narrative description of the financial analyses, including
the methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of Oppenheimers
financial analyses.
Selected
Companies Analysis
Oppenheimer reviewed financial and stock market information of
the Company and the following five public companies with
operations in the home health and social care industry that are
listed in the U.S. Although none of the companies listed
below is directly comparable to the Company, Oppenheimer
selected these companies on the basis that each was a publicly
traded company listed in the U.S. with operations in the
home health and social care industry, which is the industry in
which the Company operates, and because the Company is listed in
the U.S. The companies listed below are referred to as the
U.S. selected companies.
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Gentiva Health Services
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Amedisys Inc.
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LHC Group
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Almost Family Inc.
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Addus HomeCare Corp.
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Oppenheimer also reviewed financial information of the Company
and the following two public companies listed in the U.K. with
operations in the home health and social care industry in the
U.K. Although neither of the companies listed below are directly
comparable to the Company, Oppenheimer selected these companies
on the basis that each was a publicly traded company listed in
the U.K. with operations in the home health and social care
industry in the U.K., which is the industry in which the Company
operates. The companies listed below are referred to as the U.K.
selected companies.
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CareTech Holdings PLC
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Mears Group PLC
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33
Oppenheimer reviewed, among other things, enterprise values of
the U.S. selected companies and U.K. selected companies,
calculated as fully diluted market value based on closing stock
prices on July 27, 2011, plus total debt and less cash and
other adjustments, as multiples of earnings before interest,
taxes, depreciation and amortization, referred to as EBITDA, for
the latest twelve months of publicly available information and
estimated calendar years 2011 and 2012. Oppenheimer then applied
(i) a range of selected multiples of EBITDA for the latest
twelve month period and estimated calendar year 2011 and 2012
EBITDA of 3.9x to 5.2x, 4.5x to 6.1x and 4.0x to 5.4x,
respectively, derived from the U.S. selected companies to
corresponding data of the Company and (ii) a range of
selected multiples of EBITDA for the latest twelve month period
and estimated calendar year 2011 and 2012 EBITDA of 6.9x to
9.3x, 6.2x to 8.3x and 5.8x to 7.8x, respectively, derived from
the U.K. selected companies to corresponding data of the
Company, to determine per share equity reference ranges.
Financial data for the selected companies was based on certain
publicly available research analysts estimates, public
filings and other publicly available information. In each case,
the range of selected multiples of EBITDA represented plus or
minus 15% of the median EBITDA multiple from the relevant
analysis. Financial data for the Company was based on publicly
available information and data provided by our management. This
analysis indicated the following implied per share equity value
reference range which, in each case, was based on the average of
the results of the last twelve month period and estimated
calendar year 2011 and 2012 EBITDA of the selected companies, as
compared to the per share merger consideration:
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Implied per Share Equity Reference Range
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Per Share Merger
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(U.S. Selected Companies)
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Consideration
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$2.55 $3.18
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$
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3.90
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Implied per Share Equity Reference Range
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Per Share Merger
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(U.K. Selected Companies)
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Consideration
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$3.47 $4.41
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$
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3.90
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Selected
Transaction Analysis
Oppenheimer reviewed the enterprise values of the following four
transactions involving U.S. listed companies with
operations in the home health and social care industry. The
transactions listed below are referred to as the
U.S. selected transactions.
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Announcement
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Date
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Target
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Acquiror
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8/16/2010
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Rescare
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Onex Corp.
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5/24/2010
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Odyssey Healthcare
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Gentiva Health Services
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6/19/2008
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Patient Care
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Almost Family
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2/19/2008
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TLC Health Care Services
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Amedisys
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Oppenheimer also reviewed the transaction values of the
following five transactions involving U.K. listed companies with
operations in the home health and social care industry. The
transactions listed below are referred to as the U.K. selected
transactions.
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Announcement
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Date
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Target
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Acquiror
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12/6/10
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Nestor Healthcare Group
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Acromas Holdings
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3/1/2010
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Care UK
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Bridgepoint Capital
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12/18/2009
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Supporta
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Mears Group
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8/7/2009
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Claimar
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Housing21
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9/15/2008
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Carewatch
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Lyceum Capital
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Oppenheimer reviewed, among other things, enterprise values for
the U.S. selected transactions and U.K. selected
transactions, calculated as the purchase price paid for the
target companies in the selected transactions, plus debt, less
cash and other adjustments, as a multiple of such target
companies latest 12 months EBITDA publicly available
at the time of the announcement of the relevant transaction.
34
Oppenheimer then applied (i) a range of selected multiples
of EBITDA for the latest twelve month period of 6.2x to 8.3x
derived from the U.S. selected transactions to
corresponding data of the Company and (ii) a range of
selected multiples of EBITDA for the latest twelve month period
of 6.8x to 9.2x derived from the U.K. selected transactions to
corresponding data of the Company, to determine per share equity
reference ranges. In each case, the range of selected multiples
of EBITDA represented plus or minus 15% of the median EBITDA
multiple from the relevant analysis. Financial data for the
selected transactions were based on publicly available
information at the time of the announcement of the relevant
transaction. Financial data for the Company was based on
publicly available information and data provided by our
management. This analysis indicated the following implied per
share equity value reference range for the Company as compared
to the per share merger consideration:
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Implied per Share Equity Reference Range
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Per Share Merger
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(U.S. Selected Transactions)
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Consideration
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$3.25 $4.12
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$
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3.90
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Implied per Share Equity Reference Range
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Per Share Merger
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(U.K. Selected Transactions)
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Consideration
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$3.51 $4.47
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$
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3.90
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Discounted
Cash Flow Analysis
Oppenheimer performed a discounted cash flow analysis on the
Company calculating the estimated present value of the
unlevered, after-tax free cash flow that the Company was
forecasted to generate during the fourth quarter of 2011 and
during fiscal year 2012 through fiscal year 2015 based on
internal estimates of our management, excluding hypothetical
bolt-on acquisitions. Oppenheimer calculated terminal values for
the Company by applying a range of terminal value EBITDA
multiples of 6.0x to 8.0x to the Companys fiscal year 2015
estimated EBITDA. The range of terminal value EBITDA multiples
represented the overall median EBITDA multiple of the
U.S. selected companies and U.K. selected companies on the
low end and the overall median multiple of the selected
transactions on the high end. The present values of the cash
flows and terminal values were then calculated using discount
rates ranging from 11.6% to 13.6%, reflecting estimates of the
Companys weighted average cost of capital using the
capital asset pricing model and assuming that the selected
companies average capital structure represents the optimal
capital structure. This analysis indicated the following implied
per share equity reference ranges for the Company, as compared
to the implied merger consideration:
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Per Share Merger
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Implied per Share Equity Reference Range
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Consideration
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$3.26 $4.06
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$
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3.90
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Other
Factors
Oppenheimer also reviewed, for informational purposes, certain
other factors, including:
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the premiums paid in certain all-cash transactions in the United
States with total equity values between $50 million and
$300 million announced between January 1, 2005 and
July 27, 2011 and applied to the closing prices of our
common stock one day, one week and one month prior to
July 27, 2011 (a selected range of premiums derived from
corresponding pre-announcement periods for such transactions),
which indicated an implied per share equity value reference
range for the Company of approximately $2.91 to $3.77 per
share; and
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historical trading prices of our common stock from July 27,
2010 through July 27, 2011.
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Miscellaneous
We agreed to pay Oppenheimer for its financial advisory services
in connection with the merger an aggregate fee currently
estimated to be approximately $2.8 million, a portion of
which was payable upon Oppenheimers initial retention, a
portion of which was payable upon delivery of Oppenheimers
opinion and a
35
significant portion of which is contingent upon consummation of
the merger. We also have agreed to reimburse Oppenheimer for its
reasonable expenses, including reasonable fees and expenses of
its legal counsel, and to indemnify Oppenheimer and related
parties against liabilities relating to, or arising out of, its
engagement. In the ordinary course of business, Oppenheimer and
its affiliates may actively trade the securities of the Company
and its and Parents respective affiliates for
Oppenheimers and its affiliates own accounts and for
the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities.
We selected Oppenheimer to act as our financial advisor in
connection with the merger based on Oppenheimers
reputation and experience and its familiarity with us and our
business. Oppenheimer is an internationally recognized
investment banking firm and, as part of its investment banking
business, is regularly engaged in valuations of businesses and
securities in connection with acquisitions and mergers,
underwritings, secondary distributions of securities, private
placements and valuations for other purposes. The issuance of
Oppenheimers opinion was approved by an authorized
committee of Oppenheimer.
Certain
Financial Information
The Company does not, as a matter of course, publicly disclose
forecasts as to future financial performance, earnings or other
results and is especially cautious of making forecasts for
extended periods due to the unpredictability of the underlying
assumptions and estimates. However, in connection with the
evaluation of a possible transaction involving the Company, the
Company provided Oppenheimer certain non-public forecasts that
were prepared by management of the Company and not for public
disclosure. In addition, in connection with its due diligence
review of the Company, the Company provided Parent and other
interested bidders certain non-public forecasts that were
prepared by management of the Company and not for public
disclosure.
A summary of these forecasts is not being included in this
document to influence your decision whether to vote for or
against the proposal to adopt the merger agreement, but because
these forecasts were made available to Oppenheimer for use in
connection with its financial analysis summarized above under
Opinion of Oppenheimer & Co.,
or were made available to Parent as part of its due diligence
review. The inclusion of this information should not be regarded
as an indication that the Board, the Company, Oppenheimer,
Parent or any other person considered, or now considers, such
forecasts to be a reliable prediction of actual future results.
The forecasts are subjective in many respects. There can be no
assurance that these forecasts will be realized or that actual
results will not be significantly higher or lower than
forecasted. The forecasts cover multiple years and such
information by its nature becomes subject to greater uncertainty
with each successive year. As a result, the inclusion of the
forecasts in this proxy statement should not be relied on as
necessarily predictive of actual future events.
In addition, the forecasts were not prepared with a view toward
public disclosure or toward complying with generally accepted
accounting principles, which we refer to as GAAP, the published
guidelines of the SEC regarding projections and the use of
non-GAAP measures or the guidelines established by the American
Institute of Certified Public Accountants for preparation and
presentation of prospective financial information. The forecasts
included below were prepared by, and are the responsibility of,
our management. Neither our independent registered public
accounting firm, nor any other independent accountants, have
compiled, examined or performed any procedures with respect to
the forecasts contained herein, nor have they expressed any
opinion or any other form of assurance on such information or
its achievability.
In compiling these forecasts, the Companys management took
into account historical performance, combined with estimates
regarding revenues, gross profit, capital spending, overhead and
stock-based compensation, among other things. Although the
forecasts were presented with numerical specificity, they
reflect numerous assumptions as to future events made by our
management that our management believed were reasonable at the
time the forecasts were prepared. However, this information is
not fact and should not be relied upon as being necessarily
indicative of actual future results. The forecasts were based on
numerous variables and assumptions that are inherently
uncertain, and many of the forecasts are partially or wholly
beyond the control of the Company. Important factors that may
affect actual results and cause these forecasts not to be
achieved include, but are not limited to, risks and
uncertainties relating to the Companys business
36
(including its ability to achieve strategic goals, objectives
and targets over the applicable periods), industry performance,
the regulatory environment (including U.K. government policy
relating to health and social care), general business and
economic conditions and other factors described under
Forward-Looking Statements on page 11. In
addition, the forecasts do not reflect revised prospects for the
Companys business, changes in general business or economic
conditions, or any other transaction or event that has occurred
or that may occur and that was not anticipated at the time the
financial forecasts were prepared. There can be no assurance
that these forecasts will be realized or that the Companys
future results will not materially vary from these financial
forecasts.
No one has made or makes any representation to any stockholder
or anyone else regarding the information included in the
forecasts set forth below. Readers of this proxy statement are
cautioned not to rely on the forecasted information. We have not
updated and do not intend to update, or otherwise revise, the
forecasts to reflect circumstances existing after the date when
made or to reflect the occurrence of subsequent events, even in
the event that any or all of the assumptions are shown to be in
error.
The forecasts below are forward-looking statements. For
information on factors that may cause the Companys future
results to materially vary, see Forward-Looking
Statements on page 11.
Forecasts
Provided to Oppenheimer
The following is a summary of the forecasts prepared by
management of the Company and considered by Oppenheimer for
purposes of evaluating the merger:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected(1) for Year Ending September 30,
|
|
Fiscal year End (9/30)
|
|
2011E
|
|
|
2012E
|
|
|
2013E
|
|
|
2014E
|
|
|
2015E
|
|
|
|
($ in millions)
|
|
|
Revenue
|
|
$
|
293.9
|
|
|
$
|
307.8
|
|
|
$
|
321.8
|
|
|
$
|
336.5
|
|
|
$
|
351.8
|
|
% YoY Growth
|
|
|
|
|
|
|
4.7
|
%
|
|
|
4.6
|
%
|
|
|
4.6
|
%
|
|
|
4.6
|
%
|
Gross Profit
|
|
$
|
90.6
|
|
|
$
|
93.3
|
|
|
$
|
96.1
|
|
|
$
|
99.3
|
|
|
$
|
102.5
|
|
% Margin
|
|
|
30.8
|
%
|
|
|
30.3
|
%
|
|
|
29.8
|
%
|
|
|
29.5
|
%
|
|
|
29.1
|
%
|
EBITDA(2)
|
|
$
|
19.4
|
|
|
$
|
21.0
|
|
|
$
|
21.8
|
|
|
$
|
22.6
|
|
|
$
|
23.3
|
|
% YoY Growth
|
|
|
5.0
|
%
|
|
|
7.7
|
%
|
|
|
4.2
|
%
|
|
|
3.6
|
%
|
|
|
3.0
|
%
|
% Margin
|
|
|
6.6
|
%
|
|
|
6.8
|
%
|
|
|
6.8
|
%
|
|
|
6.7
|
%
|
|
|
6.6
|
%
|
Free Cash Flow(3)
|
|
$
|
8.9
|
|
|
$
|
9.8
|
|
|
$
|
10.4
|
|
|
$
|
11.8
|
|
|
$
|
11.0
|
|
|
|
|
(1)
|
|
2011E financial information based on Company management reports
to Board of Directors, as provided by management. Financial
information from 2012E to 2015E was based on projections
provided by Company management (excluding future acquisitions
and certain extraordinary acquisition-related costs).
Projections were converted to USD using an exchange rate of
$1.6331 as of July 27, 2011.
|
|
(2)
|
|
EBITDA includes add-back of non-cash stock based compensation
expenses. Stock based compensation was assumed to be
$0.6 million from fiscal 2011E to 2015E based on
compensation expense levels for the fiscal year ended
September 30, 2010.
|
|
(3)
|
|
Free cash flow was derived by Oppenheimer from management
projections as EBITDA minus the sum of (i) estimated tax
(at an assumed effective rate of 32.0%), (ii) estimated
capital expenditures and (iii) projected changes to net
working capital.
|
In preparing the five-year forecasts summarized above, the
Company made the following assumptions for the period from
fiscal 2011 to 2015:
|
|
|
|
|
a stable regulatory environment;
|
|
|
|
a continuing tightening of UK public expenditure due to the
comprehensive 4 year spending review;
|
|
|
|
moderate revenue growth in the expectation that despite UK
spending cuts, opportunities for growth in homecare provision
should materialize due to its lower cost solutions compared to
residential care and a continuing shift in demographics;
|
37
|
|
|
|
|
declining gross margins due to continued pricing pressure;
|
|
|
|
modest EBITDA growth, as sales, general and administrative
expenses are expected to continue to decline as a percentage of
revenues; and
|
|
|
|
flat capital expenditures from fiscal 2011 through 2015, in line
with our prior capital expenditure levels.
|
Any or all of these assumptions could prove to be wrong, in
light of economic, industry or Company-specific developments,
trends or other events.
The forecasts prepared by management also included supplemental
information relating to unidentified, hypothetical acquisitions,
representing incremental revenue of £4 million per
year in each of the years covered by the forecasts, and
incremental EBITDA of £400,000 per year. In light of the
speculative and uncertain nature of these assumptions, including
uncertainty over the cost to the Company of such acquisitions
and uncertainty over the willingness of future acquisition
targets to enter into definitive acquisition agreements with the
Company, Oppenheimer determined not to consider future
acquisitions in its analysis.
Forecasts
Provided to Parent
Although the Company did not provide Parent (or any other
interested bidders) with the five-year forecasts summarized
above, during the due diligence process the Company did provide
Parent (and other interested bidders) in February 2011 with a
copy of its budget for the remainder of fiscal 2011 and its 2012
forecast plan, denominated in pounds sterling, each of which had
previously been prepared by management for internal use in
assessing strategic direction, related capital and resource
needs and allocations and other management decisions.
Readers are cautioned that, in addition to their inherent
subjectivity and the other factors described above, the
projections provided to Parent and other bidders are not
directly comparable to the five year projections described above
or to the Companys historical operating results, in part
because the projections provided to Parent and other bidders
presented EBITDA prior to US corporate overhead. Forecasts
provided to Parent and other interested parties described below
were prepared and presented in pounds sterling only; dollar
amounts presented below are provided solely for the convenience
of the reader based upon the same July 2011 exchange rate used
in the translation of the five year projections described above.
The budget initially provided in February 2011 for the remainder
of fiscal 2011 contained the following forecasts for the full
fiscal year ending September 30, 2011: total revenue of
£177.9 million ($290.5 million); gross profit of
£54.5 million ($89.0 million); and EBITDA of
£13.4 million ($21.9 million).
Subsequent to February 2011, the Company prepared updated
forecasts for fiscal 2011 on a monthly basis through its monthly
Board reports, copies of which were made available to Parent.
The last of these was prepared in July 2011, after the
finalization of the Companys operating results for the
third fiscal quarter ended June 30, 2011, in which the
Company updated the forecasts for the full fiscal year ending
September 30, 2011 as follows: total revenue of
£180.0 million ($294.0 million); gross profit of
£55.5 million ($90.6 million); and EBITDA of
£13.7 million ($22.3 million).
The Companys fiscal 2012 plan provided to Parent and other
interested bidders in February 2011 included the following
summary forecasts for the year ending September 30, 2012
(in pounds sterling and translated into US dollars on the basis
described above): total revenues of £183.2 million
($299.1 million); gross profit of £55.6 million
($90.8 million); and total EBITDA of
£14.4 million ($23.5 million). These forecasts
for fiscal 2012 were not updated to Parent or other bidders at
any later date.
Adjusted for US corporate overhead, the Company considers the
projections provided to Parent and other interested parties to
be not materially different from the projections provided to
Oppenheimer for the relevant periods as described above. It
should be noted that the projections provided in February
reflect a different mix of revenue and margins compared to those
prepared in July and those used by Oppenheimer in its analysis,
as acquisitions completed subsequent to February 2011 make up
for lower organic profitability in the core British home and
social care business.
38
Financing
of the Merger
Using its freely available cash or borrowings under its existing
credit facilities, Parent will pay the aggregate merger
consideration, which consists of the amounts payable with
respect to Company stock and options. The consummation of the
merger is not subject to any financing condition.
Interests
of Company Directors and Executive Officers in the
Merger
In considering the recommendation of the Allied board of
directors that you vote to adopt the merger agreement, you
should be aware that our named executive officers and directors
have interests in the merger that are different from, or in
addition to, the interests of the shareholders generally. Our
board of directors was aware of these interests and considered
them, among others, in approving the merger agreement and the
merger and in recommending that the shareholders approve the
merger and adopt the merger agreement.
Indemnification
The merger agreement provides that the indemnification and
exculpation provisions of the certificate of incorporation,
bylaws or other similar organizational documents or in any
indemnification agreement of the surviving corporation of the
merger and its subsidiaries as in effect as of the effective
time of the merger shall survive the merger and requires that
such provisions not be amended, repealed or otherwise modified
from and after the effective time of the merger in any manner
that would adversely affect the rights of any present or former
director or officer of the Company or its subsidiaries.
Parent has also agreed to indemnify and hold harmless the
present and former directors and officers of the Company and its
subsidiaries as and to the extent provided in the Companys
Amended and Restated By-Laws as in effect on July 28, 2011
and, for a period of six years from and after the effective time
of the merger, to cause the surviving corporation of the merger
to provide directors and officers liability
insurance coverage for the benefit of the present and former
directors and officers of the Company and its subsidiaries.
Parent will not be required to pay premiums which on an annual
basis exceed 300% of the annual premiums currently paid by the
Company; however, Parent must obtain the greatest coverage
available at such cost. At the Companys option, the
Company may purchase a six-year tail policy prior to
the effective date of the merger on terms providing
substantially equivalent benefits as the current directors
and officers insurance policies maintained by the Company,
provided that the premium for the policy is not in excess of
300% of the last annual premium paid by the Company. If such a
tail policy is purchased, Parents obligation
to maintain existing insurance policies or substitute comparable
coverage will be deemed to be satisfied.
Treatment
of Executive Officers and Directors Equity-Based
Awards
Under the terms of the merger agreement, equity awards held by
our named executive officers and directors that are outstanding
immediately prior to the effective time of the merger will be
subject to the following treatment.
Options.
At the effective time of the merger,
each stock option then held by each executive officer that is
vested immediately prior to the effective time of the merger
(including any portion of the stock option that vests as a
result of the merger) will be cancelled and the holder will
receive, for each share subject to an option, a cash payment
equal to the difference, if any, between the per share exercise
price of the option and the merger consideration of $3.90, less
any applicable withholding taxes.
In April 2009, Mr. Young received a grant of 200,000 stock
options, which will vest on September 30, 2011 subject to
the satisfaction by our company of specified performance
criteria. If the closing of the merger occurs after our fiscal
year ending September 30, 2011, then the stock options
granted to Mr. Young will vest only if and to the extent
the performance measures for the performance period were
achieved, and the stock options that do not so vest will be
forfeited without any consideration as of September 30,
2011. It is expected that Mr. Youngs stock options
will be forfeited as of September 30, 2011, and such stock
options have not been included for purposes of the disclosure in
this section.
39
Under the terms of the stock option agreements with
Mr. Weston, any stock options granted to him shall become
immediately exercisable in full in the event that we undergo a
change in control. Likewise, under the terms of the stock option
agreements with our non-employee directors, all stock options
granted to our non-employee directors will vest and become
immediately exercisable in full as of the effective time of the
merger.
Stock Appreciation Rights.
In April 2009,
Mr. Young received a grant of 566,135 stock appreciation
rights, which will vest on September 30, 2011 subject to
the satisfaction by our company of specified performance
criteria. If the closing of the merger occurs after our fiscal
year ending September 30, 2011, then the stock appreciation
rights granted to Mr. Young will vest only if and to the
extent that the performance measures for the performance period
were achieved, and the stock appreciation rights that do not so
vest will be forfeited without any consideration as of
September 30, 2011. It is expected that
Mr. Youngs stock appreciation rights will be
forfeited as of September 30, 2011, and such stock
appreciation rights have not been included for purposes of the
disclosure in this section.
Summary
Table
The following table shows, for each executive officer and each
director, as applicable, as of September 15, 2011,
(1) the number of shares subject to vested options held by
him or her, (2) the cash consideration that he or she will
receive for such vested options upon completion of the merger,
(3) the number of shares subject to unvested options held
by him or her, (4) the cash consideration that he or she
will receive for such options upon completion of the merger, and
(5) the total cash consideration he or she will receive for
all outstanding equity awards upon completion of the merger.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Cash-Out
|
|
Number
|
|
Cash-Out
|
|
|
|
|
Shares
|
|
Payment
|
|
of Shares
|
|
Payment
|
|
Total Payment
|
|
|
Subject to
|
|
for Vested
|
|
Subject to
|
|
for
|
|
for Outstanding
|
|
|
Vested
|
|
Options
|
|
Unvested
|
|
Unvested
|
|
Equity Awards
|
Name
|
|
Options (#)
|
|
($)
|
|
Options (#)
|
|
Options ($)
|
|
($)
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alexander (Sandy) Young(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul Weston(2)
|
|
|
178,000
|
|
|
|
298,480
|
|
|
|
96,000
|
|
|
|
133,280
|
|
|
|
431,760
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sophia Corona
|
|
|
237,500
|
|
|
|
411,300
|
|
|
|
52,500
|
|
|
|
77,000
|
|
|
|
488,300
|
|
Mark Hanley
|
|
|
75,000
|
|
|
|
119,400
|
|
|
|
45,000
|
|
|
|
66,000
|
|
|
|
185,400
|
|
Wayne Palladino(3)
|
|
|
258,500
|
|
|
|
411,930
|
|
|
|
52,500
|
|
|
|
77,000
|
|
|
|
488,930
|
|
Jeffrey S. Peris(4)
|
|
|
319,000
|
|
|
|
525,700
|
|
|
|
60,000
|
|
|
|
88,000
|
|
|
|
613,700
|
|
Raymond J. Playford
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ann Thornburg
|
|
|
293,750
|
|
|
|
515,750
|
|
|
|
56,250
|
|
|
|
82,500
|
|
|
|
598,250
|
|
|
|
|
(1)
|
|
It is expected that Mr. Youngs unvested stock options
and unvested stock appreciation rights will be forfeited as of
September 30, 2011 and thus they have been excluded for
purposes of this table.
|
|
(2)
|
|
22,000 shares subject to vested options have an exercise
price in excess of the per share merger consideration; pursuant
to the merger agreement, such shares will be cancelled without
any payment therefor.
|
|
(3)
|
|
12,000 shares subject to vested options have an exercise
price in excess of the per share merger consideration; pursuant
to the merger agreement, such shares will be cancelled without
any payment therefor.
|
|
(4)
|
|
19,000 shares subject to vested options have an exercise
price in excess of the per share merger consideration; pursuant
to the merger agreement, such shares will be cancelled without
any payment therefor.
|
For additional information regarding the nature of each
directors and executive officers beneficial
ownership of Company common stock, see Security Ownership
of Certain Beneficial Owners and Management on
page 65.
40
Retention
Agreements with Executive Officers
In connection with the merger, the Company entered into a
retention bonus agreement, dated July 28, 2011, with
Mr. Young, and Allied Healthcare Group Limited, a
subsidiary of the Company, which we refer to as AHGL, entered
into retention bonus agreement, dated July 28, 2011, with
Mr. Weston.
The retention bonus agreement with Mr. Young provides that
if the merger is consummated, Mr. Young will receive a cash
bonus equal to £225,000 (approximately $356,153 at current
exchange rates) and a transaction bonus equal to $1,275,000. The
transaction bonus is equal to the product of (i)(A) the total
number of shares of common stock of the Company that are
outstanding immediately prior to the effective time of the
merger multiplied by (B) $3.90 and (ii) 0.75%, and
will be reduced by the amount Mr. Young receives in the
merger in respect of his vested stock options and vested stock
appreciation rights (which is expected to be zero). The cash
bonus will be paid to Mr. Young within 30 days after
the closing of the merger. The transaction bonus will be paid to
Mr. Young in two installments, with one-third of the
transaction bonus being paid within 30 days after the
closing of the merger and the remaining two-thirds of the
transaction bonus to be paid on the first anniversary of the
closing of the merger provided that Mr. Young is employed
by the Company or its affiliates on such date.
The retention bonus agreement with Mr. Young provides that
if Mr. Young is terminated by the Company other than for
gross misconduct (as defined in the agreement) or he
terminates employment with the Company for good
reason (as defined in the agreement) or his employment is
terminated due to death or disability, in each case, prior to
the first anniversary of the closing of the merger, he will
still be entitled to the second payment of the transaction bonus
described in the preceding paragraph. In this case,
Mr. Young will forfeit any severance payments remaining to
be paid to him under his employment agreement, which is
described below.
The retention bonus agreement with Mr. Young also provides
that if Mr. Youngs employment with the Company is
terminated by the Company for gross misconduct (as
defined in the agreement) or by Mr. Young other than for
good reason (as defined in the agreement), death or
disability, in each case, prior to the first anniversary of the
closing of the merger, Mr. Young will forfeit the second
payment of the transaction bonus. Further, any remaining
severance payments to be paid to Mr. Young under his
employment agreement will be reduced by the amount of the
transaction bonus previously paid to him, and to the extent the
amount of transaction bonus previously paid to him equal or
exceeds the remaining severance payments, the retention bonus
agreement requires Mr. Young to repay to the Company such
excess.
The retention bonus agreement with Mr. Weston provides that
if the merger is consummated, Mr. Weston will receive a
cash bonus equal to £150,000 (approximately $237,435 at
current exchange rates) and a retention bonus equal to
£164,472, which is the amount of his base salary at the
time of the closing of the merger (approximately $260,343 at
current exchange rates). The cash bonus will be paid to
Mr. Weston within 30 days after the closing of the
merger. The retention bonus will be paid to Mr. Weston in
two installments, with one-third of the retention bonus being
paid within 30 days after the closing of the merger and the
remaining two-thirds of the retention bonus to be paid on the
first anniversary of the closing of the merger provided that
Mr. Weston is employed by AHGL or its affiliates on such
date. The retention bonus agreement requires Mr. Weston to
repay AHGL the amount of the retention bonus previously paid to
him in the event Mr. Westons employment with AHGL or
its affiliates is terminated for any reason, including his
resignation, prior to the first anniversary of the closing of
the merger.
Employment Agreement with Mr. Young.
The
Company has an employment agreement with Mr. Young.
Mr. Youngs employment agreement does not provide for
payments to be made to him at, following, or in connection with
a change of control of our company. In lieu of the
12 months prior written notice of termination
otherwise required by the agreement, our employment agreement
with Mr. Young provides that we may terminate the
employment agreement at any time by making a payment to
Mr. Young equal to his salary for the notice period (or, if
applicable, the remainder of the notice period) and the cost to
us of providing Mr. Young with his health insurance, car
allowance and contribution to his U.K.-based private pension
fund for the notice period (or, if applicable, the remainder of
the notice period).
41
Employment Agreement with Mr. Weston.
The
Company has an employment agreement with Mr. Weston. Our
employment agreement with Mr. Weston provides that we are
required to pay him 12 months salary in the event he
is terminated due to an acquisition, or six months salary
if his employment is terminated in other circumstances.
Summary
of Merger-Related Executive Compensation
Arrangements
The following table sets forth the estimated amounts of
compensation that each named executive officer could receive
that are based on or otherwise relate to the merger. These
amounts have been calculated assuming that the merger is
consummated on November 1, 2011 and, where applicable,
assuming that each named executive officer experiences a
qualifying termination of employment as of November 1,
2011. To the extent applicable, calculations of cash severance
are based on the named executive officers current base
salary. When a named executive officers compensation
arrangement calls for amounts to be paid in pounds sterling,
those amounts have been converted into US dollars for purposes
of these tables at current exchange rates. Actual amounts
payable may vary depending on the actual dates of completion of
the merger and any qualifying termination. No named executive
officer is entitled to any pension or nonqualified defined
compensation, perquisites or other benefits, or tax
reimbursement payments from the Company in connection with the
merger.
Golden
Parachute Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
Equity
|
|
Total
|
Name
|
|
($)(1)
|
|
($)(2)(3)
|
|
($)(4)
|
|
Alexander (Sandy) Young
|
|
|
1,631,153
|
|
|
|
|
|
|
|
1,631,153
|
|
Paul Weston(5)
|
|
|
553,676
|
|
|
|
133,280
|
|
|
|
686,956
|
|
|
|
|
(1)
|
|
Cash
represents the value of the retention bonus
payments, which are payable under the retention bonus agreements
described above in the section titled Retention Agreements
with Executive Officers. The retention bonus payments are
single trigger, as eligibility to receive these
payments requires the occurrence of a change in control. In the
case of Mr. Weston,
Cash
also represents the value
of (i) cash severance in lieu of salary, (ii) cash
severance in lieu of health insurance, (iii) cash severance
in lieu of car allowance and (iv) cash severance in lieu of
payment towards a UK-based private pension fund, each of which
is payable under his employment agreement described above in the
section titled Retention Agreements with Executive
Officers Employment Agreement with
Mr. Weston, but gives effect to the forfeiture of the
$260,343 retention bonus required in the event
Mr. Westons employment is terminated prior to the
first anniversary of the merger. These other cash severance
payments are double trigger, as eligibility to
receive these payments requires the occurrence of a change in
control and a termination of employment. Elements of the
Cash
amount represented in the table above consist of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance in
|
|
|
|
|
|
|
|
|
|
|
|
|
Lieu of
|
|
|
|
|
|
|
|
|
Severance in
|
|
Severance in
|
|
Payment to
|
|
|
|
|
Retention
|
|
Severance in
|
|
Lieu of Health
|
|
Lieu of Car
|
|
UK-Based
|
|
|
|
|
Bonus
|
|
Lieu of Salary
|
|
Insurance
|
|
Allowance
|
|
Pension Plan
|
|
Total
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)
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($)
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|
($)
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Alexander (Sandy) Young
|
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1,631,153
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|
|
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|
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1,631,153
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Paul Weston
|
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237,435
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|
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|
260,343
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|
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|
2,601
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|
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|
14,246
|
|
|
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39,051
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|
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553,676
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(2)
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Equity
represents the aggregate payments to be made to
each named executive officer when his unvested stock options
become fully vested and exercisable in connection with the
merger, as described in greater detail above in the section
entitled Treatment of Executive Officers and
Directors Equity-Based Awards Such payments or
vesting are single-trigger in nature, as eligibility
to receive the payment is conditioned solely on the occurrence
of a change in control.
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(3)
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The number shown represents the amount by which the $3.90 price
per share payable under the merger agreement exceeds the
exercise price of the unvested stock options being accelerated.
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42
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(4)
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The following table shows, for each named executive officer, the
amounts of golden parachute compensation which are single
trigger or double trigger.
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Single Trigger
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Double Trigger
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Name
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($)
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($)
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Alexander (Sandy) Young
|
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1,631,153
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Paul Weston
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370,715
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316,241
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(5)
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The following table summarizes payments to Paul Weston if he is
employed by AHGL or its affiliates on or after the first
anniversary of the closing of the merger, but is subsequently
terminated in a manner not deemed to be due to the merger
(within the meaning of his employment agreement).
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Retention Bonus ($)(A)
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Severance ($)(B)
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Equity ($)
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Total ($)
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497,778
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158,121
|
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133,280
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789,179
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(A)
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This retention bonus amount represents the payments under
Mr. Westons retention bonus agreement of a cash bonus
of $237,435 and a retention bonus of $260,343. In accordance
with the terms of Mr. Westons retention bonus
agreement, if he is employed by AHGL or its affiliates on the
first anniversary of the closing of the merger, he will be
entitled to the retention bonus, as more fully described above
in the section titled Retention Agreements with Executive
Officers, to be paid in two installments, with one-third
of the retention bonus to be paid within 30 days after the
closing of the merger and the remaining two-thirds to be paid on
the first anniversary of the closing of the merger.
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(B)
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Severance includes the value of (i) cash severance in lieu
of salary, (ii) cash severance in lieu of health insurance,
(iii) cash severance in lieu of car allowance and
(iv) cash severance in lieu of payment towards a UK-based
private pension fund, in each case for six months, each of which
is payable under his employment agreement described above in the
section titled Retention Agreements with Executive
Officers Employment Agreement with
Mr. Weston. In the event Mr. Westons
termination would be deemed to be due to the merger, the
severance would be calculated on a twelve-month basis instead.
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Payment
in Lieu of Director Options
The Company will make a payment of $40,000 to Raymond Playford
prior to September 30, 2011. Mr. Playford joined our
board of directors in August 2010. Because discussions relating
to a potential acquisition of the Company were ongoing at that
time, as described in The Merger Background to
the Merger, the compensation committee of the board of
directors had suspended the regular option grants to directors
that had previously been a part of the director compensation
package. The $40,000 payment was proposed and approved by the
compensation committee and our board in lieu of the value of the
stock options that Mr. Playford would have ordinarily
received upon his appointment to the board. Such payment was not
conditioned upon the signing of the merger agreement, the
closing of the merger, or any other contingencies.
Governmental
and Regulatory Matters
General
We believe that the proposed merger is not subject to the
reporting and waiting provisions of the HSR Act. Thus, no
filings have been made or are presently contemplated with the
DOJ or the FTC. Nevertheless, the DOJ or the FTC as well as, in
certain circumstances, foreign governmental entities, state
attorneys general or private persons, could challenge the
transaction at any time before or after its completion. As
described below, Parent and Company have made a filing with the
competition authorities in Ireland, who have issued a
determination letter clearing the merger. No other
merger-related filings with competition authorities are
anticipated to be required.
Irish
Competition Act
Affiliates of Parent and the Company each conduct business in
Ireland. The Irish Competition Act 2002 requires notification to
and prior approval by the Competition Authority of the Republic
of Ireland of mergers or acquisitions involving parties
exceeding specified thresholds, which affiliates of Parent and
the Company
43
exceed. Parent and the Company filed the requisite merger
notification form under the Irish Competition Act 2002 with the
Competition Authority of the Republic of Ireland on
August 4, 2011. On August 22, 2011, the Competition
Authority issued a determination letter notifying the parties
that it had cleared the merger. Due to unrelated business
interests of the controlling persons of Parent, the merger is
treated under the Irish Competition Act as a media merger.
Consequently, there was an additional period of ten days
following the Competition Authoritys clearance of the
merger during which the Minister for Jobs, Enterprise and
Innovation of the Republic of Ireland could have intervened to
direct that the Competition Authority initiate a merger review.
On September 1, 2011, this additional period passed without
the Minister for Jobs, Enterprise and Innovation having taken
any action.
Certain
United States Federal Income Tax Matters
The following is a summary of the material U.S. federal
income tax consequences of the merger to
U.S. holders and
non-U.S. holders
(each, as defined below). This discussion is based on the United
States Internal Revenue Code of 1986, as amended, which we refer
to as the Code, applicable current and proposed
U.S. Treasury regulations, judicial authority and
administrative rulings and practice, all of which are subject to
change, possibly with retroactive effect.
This discussion applies only to U.S. holders and
non-U.S. holders
who hold our common stock as capital assets within the meaning
of Section 1221 of the Code (generally, property held for
investment). This discussion does not address all aspects of
U.S. federal income tax that may be relevant to a
beneficial owner in light of its particular circumstances, or
that may apply to certain types of beneficial owners who may be
subject to special rules (including, for example, insurance
companies, banks, tax-exempt organizations, financial
institutions, mutual funds, broker-dealers, partnerships or
other pass-through entities, controlled foreign corporations,
passive foreign investment companies, corporations that
accumulate earnings to avoid U.S. federal income tax,
retirement plans, traders or dealers in securities or
currencies, shareholders subject to the alternative minimum tax
or the tax imposed under Section 1411 of the Code,
shareholders who acquired their shares of our common stock
through the exercise of employee stock options or other
compensation arrangements, shareholders that have a functional
currency other than the U.S. dollar, shareholders that hold
an equity interest, directly or indirectly through constructive
ownership or otherwise, in Parent or us after the merger,
U.S. expatriates, U.S. holders who actually or
constructively own or have actually owned or constructively
owned at least 10% of the voting power of the Company at any
time during the five-year period ending at the effective time of
the merger,
non-U.S. holders
who actually or constructively own or have actually owned or
constructively owned more than 5% of our common shares at any
time during the five-year period ending at the effective time of
the merger, or shareholders who hold our common shares as part
of a hedge, straddle or a constructive sale or conversion
transaction). In addition, this discussion does not address any
aspect of state, local or foreign tax laws or U.S. federal
laws other than those pertaining to the U.S. federal income
tax.
For purposes of this discussion, a U.S. holder
is a beneficial owner of our common stock that is, for
U.S. federal income tax purposes:
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a citizen or individual resident of the United States;
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a corporation or other entity treated as a corporation for
U.S. federal income tax purposes created or organized in or
under the laws of the United States or any of its political
subdivisions;
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a trust (i) with respect to which a court within the United
States is able to exercise primary supervision over its
administration and one or more U.S. persons have the
authority to control all of its substantial decisions, or
(ii) that has a valid election in effect under applicable
U.S. Treasury Regulations to be treated as a domestic
trust; or
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an estate the income of which is subject to U.S. federal
income tax regardless of its source.
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A
non-U.S. holder,
for purposes of this discussion, is a beneficial owner of our
common stock (other than a partnership or other entity or
arrangement that is treated as a partnership for
U.S. federal income tax purposes) that is not a
U.S. holder.
44
If an entity or arrangement treated as a partnership holds our
common stock, the U.S. federal income tax treatment of such
partnership and each partner thereof generally will depend on
the status of the partner and the activities of the partnership.
A partner of a partnership holding our common stock should
consult its tax advisor.
The following discussion of the U.S. federal income tax
consequences of the merger is not intended to constitute a
complete description of all tax consequences relating to the
merger and is included for general information purposes only.
Shareholders should consult their own tax advisors regarding the
U.S. federal, state and local and foreign income and other
tax consequences of the merger.
U.S.
Holders
The exchange of our common stock for cash pursuant to the merger
will be a taxable transaction to U.S. holders for
U.S. federal income tax purposes. Subject to the discussion
below, a U.S. holder whose shares of common stock are
converted into the right to receive cash pursuant to the merger
generally will recognize capital gain or loss for
U.S. federal income tax purposes equal to the difference,
if any, between the amount of cash received with respect to such
shares (determined before the deduction of any applicable
withholding taxes) and the shareholders adjusted tax basis
in such shares. Gain or loss will be determined separately for
each block of shares (
i.e.
, shares acquired at the same
cost in a single transaction). Such gain or loss will be
long-term capital gain or loss provided that the
U.S. holders holding period for such shares is more
than 12 months at the time of the consummation of the
merger. For 2011, long-term capital gains recognized by
individuals are subject to a maximum U.S. federal income
tax rate of 15%. There are certain limitations on the
deductibility of capital losses.
To the extent that any U.S. holder is treated as owning at
least 10% of the voting power of the Company at any time during
the five-year period ending on the effective date of the merger,
some or all of such holders gains from the sale of our
common shares may be recharacterized as dividend income pursuant
to Section 1248(e) of the Internal Revenue Code. In such
case, the amount taxed as a dividend would be equal to earnings
and profits of each of our foreign subsidiaries (as determined
under U.S. federal income tax principles) attributable to
the stock held by such holder. In the case of a U.S. holder
that is an individual, such deemed dividend amounts may or may
not qualify for the 15% dividend rate. U.S. holders should
consult their tax advisors regarding the applicability of
Section 1248(e) of the Internal Revenue Code to them.
Backup withholding may apply to cash payments to which a
U.S. holder is entitled under the merger agreement, unless
such shareholder (i) provides a taxpayer identification
number (social security number, in the case of individuals, or
employer identification number, in the case of other
shareholders), certifies under penalty of perjury that such
number is correct, and otherwise complies with the backup
withholding rules or (ii) otherwise establishes an
exemption from backup withholding.
Backup withholding is not an additional tax and any amounts
withheld under the backup withholding rules may be refunded or
credited against a U.S. holders U.S. federal
income tax liability, if any, provided that such holder
furnishes the required information to the Internal Revenue
Service in a timely manner. Cash received by a U.S. holder
pursuant to the merger may also be subject to information
reporting unless an exemption applies.
Non-U.S.
Holders
Any gain realized on the receipt of cash in the merger by a
non-U.S. holder
generally will not be subject to U.S. federal income tax
unless:
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the gain is effectively connected with a trade or business of
the
non-U.S. holder
in the United States (and, if required by an applicable income
tax treaty, is attributable to a United States permanent
establishment of the
non-U.S. holder); or
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the
non-U.S. holder
is an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met.
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45
An individual
non-U.S. holder
described in the first bullet point immediately above will be
subject to tax on the net gain derived from the merger under
regular graduated U.S. federal income tax rates. If a
non-U.S. holder
is a foreign corporation whose gain is described in the first
bullet point immediately above, it will be subject to tax on its
net gain in the same manner as if it were a U.S. person as
defined under the Code and, in addition, may be subject to a
branch profits tax equal to 30% of its effectively connected
earnings and profits or at such lower rate as may be specified
by an applicable income tax treaty. An individual
non-U.S. holder
described in the second bullet point immediately above will be
subject to a flat 30% tax on the gain derived from the merger,
which may be offset by U.S. source capital losses
recognized in the same taxable year, even though the individual
is not considered a resident of the United States.
Backup withholding may apply to the cash received by a
non-U.S. holder
in the merger unless such holder certifies under penalty of
perjury that it is a
non-U.S. holder
or otherwise establishes an exemption from backup withholding in
a manner satisfactory to the relevant withholding agent.
Backup withholding is not an additional tax and any amounts
withheld under the backup withholding rules may be refunded or
credited against a
non-U.S. holders
U.S. federal income tax liability, if any, provided that
such
non-U.S. holder
furnishes the required information to the Internal Revenue
Service in a timely manner. Cash received pursuant to the merger
may also be subject to information reporting unless an exemption
applies.
The foregoing discussion of the U.S. federal income tax
consequences of the merger is not intended to constitute a
complete description of all tax consequences relating to the
merger and is included for general information purposes only.
Shareholders should consult their own tax advisors regarding the
U.S. federal, state and local and foreign income and other
tax consequences of the merger.
Anticipated
Accounting Treatment of the Merger
The merger will be accounted for as a purchase
transaction for financial accounting purposes, in
accordance with generally accepted accounting principles.
Delisting
and Deregistration of Shares of Company Common Stock
If the merger is consummated, our common stock will be delisted
from the NASDAQ Global Select Market and deregistered under the
Exchange Act. As such, we would no longer file periodic reports
with the SEC on account of our common stock.
Litigation
Concerning the Merger
On August 3, 2011, August 4, 2011 and August 16,
2011, five substantially similar putative class action
complaints were filed in the Supreme Court of the State of New
York for the County of New York by five shareholders of the
Company captioned as
Zimmerman v. Allied Healthcare
International Inc., et al.
, No. 652158/2011 (N.Y. Sup.
Ct. filed August 3, 2011),
Weber v. Allied
Healthcare International Inc., et al.
, Index
No. 652188/2011 (N.Y. Sup. Ct. filed August 4, 2011),
Reed v. Allied Healthcare International Inc., et
al.
, Index No. 652160/2011 (N.Y. Sup. Ct. filed
August 4, 2011),
Phillips v. Young, et. al.
,
No. 652284/2011 (N.Y. Sup. Ct. filed August 16, 2011),
and
Terranova v. Young, et. al.
, Index
No. 652287/2011 (N.Y. Sup. Ct. filed August 16, 2011),
naming the Company, the members of the Companys board of
directors, Saga, and Acquisition Sub as defendants. The
complaints alleged that the members of the board of directors
breached their fiduciary duties in negotiating and approving the
merger agreement, and in particular alleged that the merger
consideration negotiated under the merger agreement is
inadequate; that certain of the defendants have improper
conflicts of interest by reason of the retention agreements with
the Companys executive officers; and that the terms of the
merger agreement improperly impose deal protection devices that
will preclude competing offers. The complaints further alleged
that the Company, Saga, and Acquisition Sub aided and abetted
the members of the board in their alleged breaches of fiduciary
duties. The plaintiffs sought a determination that the
respective lawsuits were proper class actions and that the
plaintiffs were proper class representatives; a decree that the
members of the board of directors breached their fiduciary
duties; and orders enjoining the defendants and their agents
from consummating the proposed transaction unless and until the
46
Company adopts and implements a procedure to obtain a merger
agreement providing the best possible terms for shareholders,
directing the members of the board of directors to disclose all
material information to Company shareholders that is necessary
for them to make a fully informed decision whether to vote in
support of the proposed transaction, imposing a constructive
trust upon any benefits improperly received by the defendants,
rescinding any terms of the proposed transaction already
implemented, and awarding damages, costs and attorneys
fees.
On August 31, 2011, an amended complaint was filed in each
of the cases identified above, except for the
Reed
case.
In the amended complaints the claims and defendants remained the
same, but after having reviewed the preliminary proxy statement
filed by the Company the plaintiffs added details regarding
information that they allege should be disclosed to Company
shareholders for them to make a fully informed decision whether
to vote in support of the proposed transaction. On
September 2, 2011, the court consolidated all of the cases
identified above into one action identified as
In Re Allied
Healthcare International Inc. Shareholder Litigation
, Index
No. 652188/2011, and appointed the firm of Pomerantz Haudek
Grossman & Gross LLP as lead counsel for the
plaintiffs. On September 8, 2011, lead counsel for the
plaintiffs informed counsel for the Company defendants that
plaintiffs would not be filing a consolidated complaint and
instead would rely on the amended complaint (the Amended
Complaint) from the
Weber
action as the operative
complaint in the consolidated case. The claims and defendants in
the Amended Complaint are the same as were in the original
compliant as described above. In the Amended Complaint
plaintiffs added detail claiming that the proxy statement does
not disclose material information concerning (i) the number
of management projections that were created and the material
content of those projections; (ii) the underlying
methodologies, projections, and multiples relied upon by
Oppenheimer; (iii) the sales process leading up to the
execution of the merger agreement; and (iv) whether
Oppenheimer or Credit Suisse have any conflicts involving any
party to the proposed transaction or the litigation.
We intend to defend the consolidated lawsuit vigorously.
47
THE
MERGER AGREEMENT
The following description of the merger agreement describes
the material provisions of the merger agreement but does not
purport to describe all of the terms of the merger agreement.
The full text of the merger agreement is attached to this proxy
statement as Annex A and is incorporated by reference into
this proxy statement. You are urged to read the merger agreement
in its entirety because it is the legal document that governs
the merger.
The representations, warranties and covenants contained in the
merger agreement were made only for purposes of the merger
agreement and as of specified dates, were solely for the benefit
of the parties to the merger agreement, and may be subject to
limitations agreed upon by the contracting parties, including
being qualified by confidential disclosures exchanged between
the parties in connection with the execution of the merger
agreement. The representations and warranties may have been made
for the purposes of allocating contractual risk between the
parties to the merger agreement instead of establishing these
matters as facts, and may be subject to standards of materiality
applicable to the contracting parties that differ from those
applicable to investors. Investors are not third-party
beneficiaries under the merger agreement and should not rely on
the representations, warranties and covenants or any
descriptions thereof as characterizations of the actual state of
facts or condition of the Company, Parent or Merger Sub or any
of their respective subsidiaries or affiliates. Moreover,
information concerning the subject matter of the representations
and warranties may change after the date of the merger
agreement, which subsequent information may or may not be fully
reflected in this proxy statement or our other disclosures.
The
Merger
At the effective time of the merger, Merger Sub will merge with
and into the Company, with the Company becoming a wholly owned
subsidiary of Parent. At the effective time, all the properties,
rights, privileges, powers and franchises of the Company and
Merger Sub will vest in the Company, which will continue as the
surviving corporation, and all of the debts, liabilities and
duties of the Company and the Merger Sub will become the debts,
liabilities and duties of the surviving corporation.
If the merger is consummated, the Company will cease to be an
independent, publicly traded company and the Company common
stock will be delisted from the NASDAQ Global Select Market and
deregistered under the Exchange Act. As such, we would no longer
file periodic reports with the SEC on account of the Company
common stock. Following consummation of the merger, you will not
own any shares of the capital stock of the surviving corporation
of the merger.
Directors
and Officers; Certificate of Incorporation; Bylaws
The board of directors of the surviving corporation will, from
and after the effective time of the merger, consist of the
directors of Merger Sub until their successors have been duly
elected and qualified or until their earlier death, resignation
or removal. The officers of the Company at the effective time of
the merger will, from and after the effective time of the
merger, be the officers of the surviving corporation until their
successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal.
The certificate of incorporation of the surviving corporation
will be amended to read in its entirety as the certificate of
incorporation of Merger Sub read immediately prior to the
effective time of the merger (except with respect to the name of
the Company), until amended in accordance with applicable law.
The bylaws of the surviving corporation will be amended to read
in their entirety as the bylaws of Merger Sub as in effect
immediately prior to the effective time of the merger (except
with respect to the name of the Company), until amended in
accordance with applicable law.
48
Closing
and Effective Time of the Merger
The merger will become effective at the time a certificate of
merger is filed with the Department of State of the State of New
York or such later date or time as the Company and Parent
mutually agree and specify in the certificate of merger, which
we refer to as the effective time of the merger.
The closing of the merger will take place on the second business
day after satisfaction or waiver of the conditions described
below under Conditions to the Merger on page 57
(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), unless otherwise mutually agreed by
the Company and Parent.
Consideration
to be Received in the Merger
If the merger is consummated, each share of Company common stock
that is issued and outstanding immediately prior to the
effective time of the merger (other than shares held by Parent,
Merger Sub, the Company or any of their respective subsidiaries)
will be converted into the right to receive $3.90 in cash,
without interest, less any applicable withholding taxes, which
amount we refer to as the merger consideration.
Treatment
of Stock Options and SARs
If the merger is consummated, each Company stock option (whether
vested or unvested) that is outstanding immediately prior to the
effective time of the merger and has not otherwise been
forfeited will become fully vested and cancelled as of the
effective time of the merger, and converted into the right to
receive, for each share previously underlying such option, a
cash payment equal to the excess, if any, of the merger
consideration over the exercise price per share of such option,
without interest, less any applicable withholding taxes. If the
exercise price of any outstanding Company stock options is equal
to or greater than the merger consideration, then such options
will be cancelled as of the effective time of the merger without
any payment and will have no further force or effect.
Each Company stock appreciation right (SAR) that is
outstanding immediately prior to the effective time of the
merger and that is vested as of immediately prior to the
effective time of the merger (including any portion of a Company
SAR that vests as a result of the merger) will be cancelled and
converted into the right to receive a cash payment equal to the
excess, if any, of the merger consideration over the exercise
price per share of the Company common stock subject to the SAR,
multiplied by the number of shares of Company common stock
subject to such SAR, without interest, less any applicable
withholding taxes.
There are no outstanding equity-based awards other than Company
stock options and Company SARs.
Cancellation
of Shares
Each share of Company common stock held by the Company or any of
its subsidiaries (including treasury stock) and each share of
Company common stock owned, directly or indirectly, by Parent or
Merger Sub, in each case, immediately prior to the effective
time of the merger will be automatically cancelled and will not
be entitled to any merger consideration or any other payment or
distribution.
Payment
for Shares
Prior to the effective time of the merger, Parent will designate
a paying agent reasonably acceptable to the Company to act as
paying agent for the payment of the merger consideration. Prior
to the effective time of the merger, Parent will deposit, or
cause to be deposited, with the paying agent funds in
U.S. dollars sufficient to pay the aggregate merger
consideration payable in respect of shares of Company common
stock and the aggregate amounts payable in respect of Company
stock options and Company SARs.
As soon as practicable after the effective time of the merger,
but in no event later than three business days after the
effective time of the merger, the paying agent will mail
(i) to each record holder of shares of Company common stock
as of immediately prior to the effective time of the merger a
letter of transmittal containing instructions on how to
surrender stock certificates or book-entry shares in exchange
for the merger
49
consideration and (ii) to each holder of Company stock
options
and/or
Company SARs, a check in an amount due and payable to such
holder with respect to such Company stock options
and/or
Company SARs. If the surviving corporation of the merger instead
makes payment directly to the holders of Company stock options
and/or
Company SARs, the paying agent will reimburse the surviving
corporation for the amounts paid.
You should not return your stock certificates with the
enclosed proxy card.
No interest will be paid or accrued on the cash payable with
respect to shares of Company common stock, Company stock options
or Company SARs, as provided above. Each of Parent, the
surviving corporation of the merger and the paying agent will be
entitled to deduct and withhold any applicable taxes from such
amounts. Any sum that is withheld will be deemed to have been
paid to the person with regard to whom it is withheld.
At the effective time of the merger, the stock transfer books of
the Company will be closed, and there will be no further
registration of transfers on the stock transfer books of the
surviving corporation of the merger of the shares of Company
common stock that were outstanding immediately prior to the
effective time of the merger. If, after the effective time of
the merger, certificates or book-entry shares are presented to
the surviving corporation of the merger for transfer, they will
be cancelled and exchanged for a check in the proper amount
pursuant to the terms of the merger agreement, as provided above.
Any portion of the exchange fund (including the proceeds of any
investments thereof) that remains undistributed to the former
holders of shares of Company common stock and the former holders
of Company stock options and Company SARs for twelve months
after the effective time of the merger will be delivered to the
surviving corporation of the merger upon demand, and any such
holder who has not received the payments contemplated by the
merger agreement, as provided above, will thereafter be entitled
to look only to the surviving corporation for payment of their
claim for such payments, without any interest thereon.
Representations
and Warranties
We made customary representations and warranties in the merger
agreement that are subject, in some cases, to specified
exceptions and qualifications contained in the merger agreement
or in the disclosure schedules the Company delivered to Parent
and Merger Sub in connection therewith. These representations
and warranties relate to, among other things:
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corporate organization, good standing, qualification and similar
matters;
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corporate power and authority to enter into the merger agreement
and due execution, delivery and enforceability of the merger
agreement;
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the required vote of the Company shareholders for adoption of
the merger agreement;
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the absence of required governmental consents, other than those
specified in the merger agreement, in connection with the
execution and delivery of the merger agreement or the closing of
the merger;
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the absence of conflicts with charter documents, applicable laws
and material contracts;
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our capital structure and equity securities and the equity
securities of our subsidiaries;
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ownership of our subsidiaries;
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our SEC filings since September 30, 2010 and our compliance
with the Sarbanes-Oxley Act of 2002;
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our disclosure controls and procedures and internal controls
over financial reporting;
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the accuracy of our financial statements and the absence of
undisclosed liabilities;
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certain matters relating to this proxy statement;
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the absence of a Company material adverse effect (as defined
below) and certain other changes;
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tax matters;
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matters relating to our employee benefit plans;
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environmental matters and compliance with environmental laws;
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material legal proceedings;
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compliance with applicable laws, licenses, permits and other
regulatory matters;
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intellectual property matters;
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the existence and enforceability of material contracts;
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insurance policies;
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personal property and the absence of certain liens thereon;
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real estate matters;
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labor and employment matters;
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receipt of a fairness opinion from Oppenheimer;
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the absence of any undisclosed finders or brokers
fees payable in connection with the merger; and
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the inapplicability of state takeover statutes.
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Many of our representations and warranties are qualified by,
among other things, exceptions relating to
materiality or the absence of a Company
material adverse effect, which means any effect,
circumstance, change or development that, individually or in the
aggregate with other effects, circumstances, changes or
developments, is material and adverse to the financial
condition, business operations or results of operations of the
Company and its subsidiaries, taken as a whole, or that would
reasonably be expected to adversely affect our ability to
consummate the merger in a timely fashion. Notwithstanding the
foregoing, to the extent that any effect, change or development
is caused by or results from any of the following, it will not
be taken into account in determining whether there has occurred
a Company material adverse effect:
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the announcement or execution of the merger agreement, or the
performance of obligations under the merger agreement;
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any action or inaction taken at the direction of Parent;
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factors affecting the economy or financial markets as a whole or
generally affecting the industries in which we participate,
except to the extent such changes negatively affect us in a
disproportionate manner as compared to comparable participants
in our industry;
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failure to meet internal or analyst financial forecasts,
guidance or milestones;
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any change in the market price or trading volume of the Company
common stock after the date of the merger agreement;
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any change in generally accepted accounting principles in the
United States or in international accounting standards that we
are required to adopt; or
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changes in generally applicable laws, rules, regulations or
administrative policies, or published interpretations thereof,
except to the extent such changes negatively affect us in a
disproportionate manner as compared to comparable participants
in our industry.
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The merger agreement also contains a number of representations
and warranties by Parent and Merger Sub. These representations
and warranties relate to, among other things:
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corporate organization, good standing, qualification and similar
matters;
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corporate power and authority to enter into the merger agreement
and due execution, delivery and enforceability of the merger
agreement;
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the absence of required governmental consents, other than those
specified in the merger agreement, in connection with the
execution and delivery of the merger agreement or the closing of
the merger;
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the absence of conflicts with charter documents, applicable laws
and certain contracts;
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the accuracy of information provided by Parent and Merger Sub to
be included in this proxy statement;
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the capitalization of Merger Sub and the operation of Merger Sub
since its organization;
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the lack of ownership of shares of Company common stock by
Parent, Merger Sub and their subsidiaries;
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the availability of funds to Parent and Merger Sub on the
closing date of the merger, in cash or under existing credit
lines, to finance payment of the merger consideration
contemplated by the merger agreement and otherwise to perform
their obligations under the merger agreement;
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the absence of any undisclosed finders or brokers
fees payable in connection with the merger;
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material legal proceedings; and
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the absence of certain arrangements with management of the
Company.
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Some of the representations and warranties of Parent and Merger
Sub are qualified by, among other things, exceptions relating to
materiality or the absence of an acquiror
entity material adverse effect, which means any effect,
change or development that, individually or in the aggregate, is
material and adverse to the financial condition, business
operations or results of operations of Parent and Merger Sub
taken as a whole or that would reasonably be expected to prevent
or to materially delay or impede the ability of Parent or Merger
Sub to consummate the merger or the other transactions
contemplated by the merger agreement.
The representations and warranties in the merger agreement of
each of the Company, Parent and Merger Sub will terminate upon
the consummation of the merger or the termination of the merger
agreement in accordance with its terms.
Conduct
of Business Prior to the Closing
The merger agreement provides that during the period from the
date of the merger agreement until the effective time of the
merger, and except (1) as expressly permitted or required
by the merger agreement, (2) as required by applicable law,
(3) as previously disclosed to Parent in connection with
the merger agreement, or (4) as consented to in writing by
Parent (such consent not to be unreasonably withheld,
conditioned or delayed), we will:
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conduct our business, and cause each of our subsidiaries to
conduct their businesses, in the usual, regular and ordinary
course consistent with past practice; and
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use our commercially reasonable efforts to preserve our present
lines of business, maintain our rights, assets and franchises,
and preserve current relationships with customers, suppliers and
others having business dealings with the Company, and cause our
subsidiaries to do the same.
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In addition, and subject to the same exceptions, we will not
take, and will not permit any of our subsidiaries to take, any
of the following actions (subject to the thresholds and
exceptions specified in the merger agreement):
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making any capital expenditures, other than (a) capital
expenditures up to an aggregate amount set forth in our current
capital expenditures budget plan delivered to Parent, or
(b) after the period covered by such plan, in an aggregate
amount not to exceed £600,000 per quarter;
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declaring dividends;
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splitting, combining, reclassifying, redeeming or purchasing our
capital stock;
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issuing, granting, selling or otherwise disposing of any shares
of capital stock or securities convertible into capital stock;
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amending our organizational documents;
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engaging in certain acquisition transactions other than the
acquisition of assets in the ordinary course of our business;
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selling, disposing, leasing, licensing, divesting or pledging
assets, other than the disposition of assets in the ordinary
course of our business;
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incurring or guaranteeing indebtedness other than ordinary
borrowings under existing credit facilities;
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paying any retention, transaction bonus, severance or
termination pay, entering into employment, consulting, severance
or similar agreements, materially changing the terms of
employment, working practices or related agreements, increasing
materially the compensation or benefits payable to directors and
officers, adopting new employee benefit plans or amending any
existing benefit plan, in each case except as required or
contemplated by existing agreements or Company plans;
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changing our accounting practices or changing tax elections or
methods;
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entering into agreements that would limit or restrain our
business; or
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fail to maintain insurance policies.
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Each of Parent and Merger Sub has agreed that during the period
from the date of the merger agreement until the effective time
of the merger, they will not, and will not permit any of their
respective subsidiaries to, take or agree to take any action
(including entering into agreements with respect to any
acquisitions, mergers, consolidations or business combinations)
that would reasonably be expected to result in, individually or
in the aggregate, an acquiror entity material adverse effect.
Investigation
Subject to certain limitations, until the effective time of the
merger, we have agreed to afford to Parent, Merger Sub and their
representatives reasonable access to our offices, properties,
contracts, books and records. We will also make available to
Parent and its representatives certain financial and operating
data relating to the Company and its subsidiaries as they may
reasonably request. In both cases, we will provide such access
or information to the extent consistent with applicable law.
Parent has agreed to hold any such information provided in
confidence to the extent required by the provisions of the
confidentiality agreement between us and Parent.
Restrictions
on Solicitation of Other Offers
Until the effective time of the merger, we may not, and we must
instruct our subsidiaries and representatives not to:
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solicit, initiate, knowingly encourage or knowingly facilitate
any inquiries or the making or submission of any proposal or
transaction that constitutes an acquisition proposal;
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enter into, participate in
and/or
engage in discussions or negotiations with any person relating
to an acquisition proposal, or with any person who has made or
has disclosed to us that it is contemplating making, an
acquisition proposal, or disclose non-public information or
provide access to data relating to us or our subsidiaries to
such a person;
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accept or recommend an acquisition proposal or enter into any
agreement, letter of intent or agreement in principle relating
to an acquisition proposal, or any agreement, letter of intent
or agreement in principle that requires us to abandon or fail to
close the merger;
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waive, terminate, modify or fail to enforce any provision of a
standstill or similar agreement of any person other than Parent
(except for any portion of such a standstill or similar
obligation that restricts the ability of a person to communicate
an acquisition proposal to our board of directors); or
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agree or publicly propose to do any of the foregoing.
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As of the date of the merger agreement, we have agreed to cease
and cause to be terminated any discussions or negotiations with
any person that would otherwise be prohibited by the terms of
the merger agreement.
Notwithstanding the restrictions above, at any time prior to the
adoption of the merger by our shareholders at the special
meeting, if we are in compliance with the restrictions above but
receive an acquisition proposal from a third party, we may take
any of the actions otherwise prohibited under the second bullet
point above if, prior to taking such action:
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our board of directors determines in good faith, after
consultation with its independent outside legal and financial
advisors, that such acquisition proposal could reasonably be
expected to lead to a superior proposal,
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our board of directors determines in good faith, after
consultation with its independent outside legal and financial
advisors, that failure to take such actions would result in a
violation of its fiduciary responsibilities to our shareholders
under applicable laws.
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In addition, following the receipt of an acquisition proposal,
we and our representatives are permitted to contact the party
submitting the acquisition proposal in order to clarify and
understand the terms and conditions of such proposal to
determine whether it constitutes or would be reasonably likely
to lead to a superior proposal. Prior to taking any such action,
we will promptly provide notice to Parent of any determination
to take such action. We will not disclose any information to a
person submitting an acquisition proposal without entering into
a confidentiality agreement with such person that is no less
favorable to us than the terms of our confidentiality agreement
with Parent, and we will provide Parent with any non-public
information provided to such a person that has not already been
provided to Parent.
For purposes of the merger agreement:
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an acquisition proposal is any offer or proposal, including any
offer or proposal from or to our shareholders, made by any
person or group other than Parent or its subsidiaries or
affiliates regarding (i) a merger, consolidation, share
exchange, recapitalization, reclassification, liquidation or
other business combination involving us
and/or
any
of our subsidiaries whose business or businesses constitute
twenty percent (20%) or more of the assets, revenues or earnings
of the Company and our subsidiaries, taken as a whole,
(ii) the acquisition of assets of the Company
and/or
our
subsidiaries equal to twenty percent (20%) or more of the
consolidated assets of the Company and its Subsidiaries or to
which twenty percent (20%) or more of our revenues or earnings
on a consolidated basis are attributable, or (iii) the
acquisition of beneficial ownership of equity interests
representing a twenty percent (20%) or greater economic or
voting interest in the Company or a tender offer or exchange
offer that, if consummated, would result in any person or group
beneficially owning equity interests representing a twenty
percent (20%) or greater economic or voting interest in the
Company; and
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a superior proposal is a bona fide written acquisition proposal
(with all of the percentages included in the definition of
acquisition proposal increased to fifty percent (50%) instead)
which is on terms which our board of directors in good faith
determines, after consultation with its independent legal and
financial advisors, and considering such factors as the board
considers to be appropriate (including the conditionality,
timing and likelihood of consummation of such proposal), are
more favorable to our shareholders from a financial point of
view than the transactions provided for in the merger agreement.
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The
Boards Recommendation; Changes to Recommendation
As described above, and subject to the provisions described
below, our board of directors has made the recommendation that
the holders of shares of our common stock vote
FOR
the proposal to adopt the merger
agreement.
Under the merger agreement, and except as provided below, our
board of directors will not withdraw, modify or change (or
resolve to withdraw, modify or change) the recommendation in any
manner adverse to Parent or Merger Sub, nor may it take any
other action or make any public statement in connection with the
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special meeting that is inconsistent with the recommendation. We
refer to any of the actions in the previous sentence as a change
in recommendation.
Our board of directors is entitled to make a change in
recommendation prior to the special meeting, and is entitled not
to solicit proxies in favor of the merger agreement, if
(1) it has complied in all material respects with the
restrictions outlined above under Restrictions
on Solicitation of Other Offers, and (2) the board
has determined in good faith, after consultation with its
independent legal and financial advisors, that failure to take
such action would result in a violation of its fiduciary
responsibilities to our shareholders under applicable law. In
addition, if our board of directors intends to make a change in
recommendation following and as a result of an acquisition
proposal, then it can only make the change in recommendation if:
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it has concluded in good faith that the acquisition proposal
constitutes a superior proposal;
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it has provided five business days written notice advising
Parent that it intends to make a change in recommendation,
specifying reasons for the change, including the terms and
conditions of the superior proposal;
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during the five business day period, if requested by Parent, we
have engaged in good faith negotiations with Parent to amend the
merger agreement in such a way that the acquisition proposal
would cease to constitute a superior proposal; and
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at the end of the five business day period, the acquisition
proposal has not been withdrawn and continues to constitute a
superior proposal, taking into account any changes to the merger
agreement proposed by Parent.
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Nothing in the merger agreement prohibits us or our board of
directors from (i) taking and disclosing to our
shareholders a position contemplated by
Rules 14d-9
or
14e-2(a)
or Item 1012(a) of
Regulation M-A
promulgated under the Exchange Act, or from issuing a
stop, look and listen statement pending disclosure
of the boards position thereunder, or (ii) making any
disclosure to our shareholders if our board of directors
determines in good faith (after consultation with its outside
legal counsel) that the failure to make such disclosure would be
reasonably likely to be inconsistent with the directors
exercise of their fiduciary obligations to our shareholders
under applicable law or would constitute a violation of
applicable law, or (iii) making a factually accurate public
statement that describes our receipt of an acquisition proposal.
Shareholder
Meeting
Unless the merger agreement is validly terminated in accordance
with its terms, following the clearance of this proxy statement
by the SEC, we have agreed to promptly: (i) take all action
necessary in accordance with the NYBCL, our certificate of
incorporation and bylaws, and the rules of The Nasdaq Stock
Market to duly call, give notice of, convene and hold the
special meeting as promptly as practicable, and
(ii) recommend adoption of the merger agreement to our
shareholders and use commercially reasonable efforts to solicit
from our shareholders proxies in favor of the adoption of the
merger agreement.
We may postpone or adjourn the special meeting: (i) with
the consent of Parent; (ii) for the absence of a quorum;
(iii) to allow reasonable additional time for the filing
and distribution of any supplemental or amended disclosure which
our board of directors has determined in good faith (after
consultation with its outside legal counsel) is necessary under
applicable laws and for such supplemental or amended disclosure
to be disseminated to and reviewed by our shareholders prior to
the special meeting; or (iv) during the five business day
period contemplated under The Boards
Recommendation; Changes in Recommendation above if we have
provided Parent notice that we have received a superior proposal.
Employee
Matters
For a period of one year following the effective time of the
merger, the surviving corporation will provide, or cause to be
provided, to all affected employees (as defined below)
compensation, salary, wages, cash incentive opportunities,
severance, medical, retirement and other employee benefit plans,
programs and arrangements (in each case excluding equity-based
compensation) that are comparable, in the aggregate, to the
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compensation, salary, wages, cash incentive opportunities,
severance, medical, retirement and other written employee
benefit plans, programs and arrangements (in each case excluding
equity compensation) provided to our employees immediately prior
to the effective time of the merger. For purposes of the merger
agreement, an affected employee is any individual who is our
employee on the effective date of the merger, including any
individual who is not actively at work on account of illness,
disability or leave of absence.
If affected employees are transferred to Parent or a subsidiary
of Parent after the effective date of the merger (other than the
surviving corporation or its subsidiaries), Parent will give
them full credit for their years of service with us for purposes
of eligibility to participate, vesting or benefit accrual under
the employee benefit plans maintained by Parent or its
subsidiaries, unless the credit would lead to an unintended
duplication of benefits.
Indemnification
and Insurance
In the merger agreement, Parent agreed that all rights to
exculpation and indemnification for acts or omissions occurring
at or prior to the effective time of the merger now existing in
favor of our current or former directors and officers or the
current or former directors and officers of our subsidiaries as
provided in our or our applicable subsidiarys certificate
of incorporation or bylaws or other organizational documents, by
applicable law or in any agreement, will survive the merger and
will continue in full force and effect and will not be modified
in any manner that would adversely affect the rights thereunder
of any individuals who at the effective time of the merger were
current or former directors or officers of us or our
subsidiaries. In furtherance of that agreement, the Company will
indemnify and hold harmless, and after the effective time of the
merger Parent will cause the Surviving Corporation to indemnify
and hold harmless, each of the Companys current or former
directors or officers (and those of the Companys
subsidiaries) to the extent of the applicable provisions of the
Companys bylaws, as in effect on the date of the merger
agreement, as if those provisions were made part of the merger
agreement.
The merger agreement requires Parent to maintain the our current
directors and officers insurance policies (or
substitute insurance of at least the same coverage and amounts
with terms that are at least as favorable to the indemnified
parties) for six years following the effective time. Parent will
not be required to pay premiums which on an annual basis exceed
300% of the annual premiums currently paid by the Company;
however, Parent must obtain the greatest coverage available at
such cost. At the Companys option, the Company may
purchase a six-year tail policy prior to the
effective date of the merger on terms providing substantially
equivalent benefits as the current directors and
officers insurance policies maintained by the Company,
provided that the premium for the policy is not in excess of
300% of the last annual premium paid by the Company, in which
case Parents obligation to maintain existing insurance
policies or substitute comparable coverage will be deemed to be
satisfied.
Efforts
to Close the Merger; Regulatory Filings
Subject to the terms and conditions set forth in the merger
agreement, each of the Company, Parent and Merger Sub has agreed
to use its reasonable best efforts take, or cause to be taken,
all actions, and to do, or cause to be done, all things
necessary, proper or advisable to consummate the merger and the
other transactions contemplated by the merger agreement as soon
as practicable, including seeking any consents, approvals or
waivers required by third parties, and taking all actions
necessary, including prompt and full compliance with any
requests for information from government entities, in order to
obtain any necessary clearance, waiver, approval or
authorization with respect to the merger.
Without limiting the obligations set forth above, each of the
Company, Parent and Merger Sub has agreed to notify the merger
to the Competition Authority of the Republic of Ireland and to
use reasonable best efforts to take all actions necessary,
including complying promptly and fully with any requests for
information from antitrust authorities or other governmental
entities, to obtain any clearance, waiver, approval or
authorization that is necessary for completion of the merger.
The parties agreed to use their reasonable best efforts to take
such actions as may be necessary to resolve such objections, if
any, as any antitrust authority may assert under the Irish
Competition Act 2002 or similar laws in other jurisdictions, and
agreed to cooperate in seeking to
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have vacated or overturned any decree, injunction or similar
order that restricts or prevents the completion of the merger or
the transactions contemplated by the merger agreement. The
merger agreement states that in relation to any approvals or
consents required under Irish competition law, reasonable
best efforts includes agreeing to such undertakings,
agreements, divestitures or other actions that are reasonably
requested by the Competition Authority of the Republic of
Ireland that are required to avoid the entry of any injunction
or similar order that would prevent or delay the closing of the
merger beyond the end date (as described below under
Termination), provided that such
undertakings, agreements or divestitures would not individually
or in the aggregate be reasonably likely to have a Company
material adverse effect. Parent and the Company filed the
requisite merger notification form under the Irish Competition
Act 2002 with the Competition Authority of the Republic of
Ireland on August 4, 2011. On August 22, 2011, the
Competition Authority issued a determination letter clearing the
merger. Due to unrelated business interests of the controlling
persons of Parent, the merger is treated under the Irish
Competition Act as a media merger. Consequently, there was an
additional period of ten days following the Competition
Authoritys clearance of the merger during which the
Minister for Jobs, Enterprise and Innovation of the Republic of
Ireland could have intervened to direct that the Competition
Authority initiate a merger review. On September 1, 2011,
this additional period passed without the Minister for Jobs,
Enterprise and Innovation having taken any action. No other
merger-related filings with competition authorities are
anticipated to be required.
Takeover
Statutes
If any fair price, business combination,
control share acquisition or other form of
anti-takeover statute or regulation is or becomes applicable to
the merger agreement or the transactions contemplated by the
merger agreement, we, Parent and Merger Sub have agreed to take
such actions as are necessary so that the transactions
contemplated by the merger agreement may be consummated as
promptly as practicable on the terms and conditions contemplated
by the merger agreement and otherwise act to eliminate or
minimize the effects of such statute or regulation.
Additional
Covenants
The merger agreement contains additional agreements between us
and Parent
and/or
Merger Sub relating to, among other things:
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consultations regarding public announcements;
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the preparation and filing of this proxy statement with the SEC;
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notification of certain changes;
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the exemption of dispositions of Company equity securities
pursuant to the merger by directors and officers of the Company
under
Rule 16b-3
promulgated under the Exchange Act; and
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delisting of the Company common stock from the NASDAQ Global
Select Market following the effective time of the merger.
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Conditions
to the Merger
The obligations of Parent and Merger Sub, on the one hand, and
the Company, on the other hand, to complete the merger and the
other transactions contemplated by the merger agreement are
subject to the satisfaction (or waiver in writing by all
parties, to the extent permitted by applicable law) of the
following conditions:
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the adoption of the merger agreement by the holders of at least
two-thirds of the outstanding shares of our common stock
entitled to vote at the special meeting;
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the absence of any statute, law, ordinance, rule, regulation,
judgment, decree, injunction or other order by any governmental
entity of competent jurisdiction that is in effect and prohibits
consummation of the merger, or of any governmental proceeding
that is pending seeking any such judgment, decree or injunction
to prohibit the merger; and
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to the extent that the merger constitutes a merger or
acquisition that is mandatorily notifiable to the
Competition Authority of the Republic of Ireland under the Irish
Competition Act 2002, either (i) the Competition Authority
having informed the parties of its determination under such
statute that the merger may be put into effect, or (ii) the
period specified in such act (as may be extended under the
relevant provisions of such act) having elapsed without the
Competition Authority informing the parties of the
determination, if any, which it has made under the relevant
provisions of the act.
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The obligation of the Company to consummate the merger and the
other transactions contemplated by the merger agreement is
subject to the satisfaction (or waiver in writing by the
Company, to the extent permitted by applicable law) of the
following further conditions:
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The representations and warranties of Parent and Merger Sub set
forth in the merger agreement shall be true and correct in all
material respects both when made and at and as of the closing
date of the merger, as if made at and as of such date (except to
the extent expressly made as of an earlier date, in which case
as of such date, and except for changes contemplated by the
merger agreement), provided that the representations and
warranties of Parent and Merger Sub relating to having
sufficient funds to perform their obligations under the merger
agreement shall be true in correct in all respects;
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Each of Parent and Merger Sub shall have performed in all
material respects each of their respective agreements and
covenants contained in the merger agreement that are required to
be performed by them on or prior to the effective date of the
merger; and
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The Company must have received certificates signed on behalf of
Parent and Merger Sub, dated as of the closing date of the
merger and signed by an executive officer of each of Parent and
Merger Sub, certifying to the effect that the conditions set
forth in the preceding bullet points have been satisfied.
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The obligations of Parent and Merger Sub to consummate the
merger and the other transactions contemplated by the merger
agreement are subject to the satisfaction (or waiver in writing
by Parent and Merger Sub, to the extent permitted by applicable
law) of the following further conditions:
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Our representations and warranties relating to:
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our corporate power and authority to execute and deliver the
merger agreement, the authorization of the merger agreement by
our board of directors, the enforceability of the merger
agreement, the approval of the merger agreement by our board and
recommendation of the agreement to our shareholders, and the
vote required by our shareholders to adopt the merger agreement,
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the absence of required governmental consents, other than those
specified in the merger agreement, in connection with the
execution and delivery of the merger agreement or the closing of
the merger, and the absence of conflicts with charter documents,
applicable laws and material contracts,
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our capitalization,
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the absence of a Company material adverse effect, any dividend
or other distribution on our capital stock, and certain
combinations or reclassifications of our common stock, in each
case since March 31, 2011, and
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the receipt by our board of directors of a fairness opinion,
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shall each be true and correct in all material respects as of
the date of the merger agreement and as of the closing date of
the merger as if made on and as of such date (except to the
extent expressly made as of an earlier date, in which case as of
such date, and except for changes contemplated by the merger
agreement); and
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All of our other representations and warranties of the Company
in the merger agreement shall be true and correct both when made
and at and as of the closing date of the merger, as if made at
and as of such date (except to the extent expressly made as of
an earlier date, in which case as of such date, and except for
changes contemplated by the merger agreement), unless the
failure of all such representations and warranties to be true
and correct, individually or in the aggregate, has not had and
would not
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reasonably be expected to have a Company material adverse effect
(excluding for this purpose any materiality or material adverse
effect qualifications in such representations and warranties
themselves);
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We shall have performed in all material respects each of our
agreements and covenants contained in the merger agreement that
are required to be performed by us on or prior to the effective
date of the merger;
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Parent and Merger Sub must have received certificates signed on
behalf of the Company, dated as of the closing date of the
merger and signed by one of our executive officers, certifying
to the effect that the conditions set forth in the preceding
bullet points have been satisfied.
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The conditions to each of the parties obligations to
consummate the merger are for the sole benefit of such parties
and may be waived by such parties in whole or in part (to the
extent permitted by applicable laws). We can provide no
assurance that all of the conditions to each of the
parties obligations to consummate the merger and the other
transactions contemplated by the merger agreement will be
satisfied or waived by the party permitted to do so.
Termination
The merger agreement may be terminated at any time prior to the
effective time of the merger, whether before or after any
approval of the matters presented in connection with the merger
by our shareholders (unless otherwise indicated below), by the
mutual written consent of the Company and Parent and in the
other circumstances described below.
Either the Company or Parent may terminate the merger agreement:
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if the merger shall not have been consummated on or before
December 31, 2011, which we refer to as the end date,
except that (i) if the only reason for the parties
failure to consummate the merger on or before this date is the
failure to have received required approvals from the Competition
Authority of the Republic of Ireland, then the end date shall be
extended to February 29, 2012, and (ii) this
termination right will not be available to a party whose failure
to fulfill any obligation or other breach under the merger
agreement has been the cause of, or resulted in, the failure of
the merger to occur on or before the end date;
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if there shall be any order, decree or ruling of any
governmental entity (in the United States or elsewhere) or court
of competent jurisdiction that permanently enjoins or otherwise
prohibits the consummation of the transactions contemplated by
the merger agreement and such order, decree, ruling or other
action shall have become final and non-appealable; or
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if the special meeting (including any adjournments or
postponements thereof) shall have concluded and our shareholders
shall not have adopted the merger agreement.
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The Company may also terminate the merger agreement:
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if, prior to adoption of the merger agreement by our
shareholders, our board of directors shall have effected a
change in recommendation following receipt of a superior
proposal in accordance with the procedures outlined above under
The Boards Recommendation; Changes to
Recommendation and we have paid the termination fee
described below; or
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if Parent or Merger Sub shall have breached any of its
representations, warranties, covenants or agreements contained
in the merger agreement, such that (1) certain closing
conditions would not be satisfied, and (2) such breach has
not been cured (or is not capable of being cured) within 20
business days following receipt by Parent or Merger Sub of
written notice from us of the breach. However, we will not have
the right to terminate the merger agreement if we are then in
material breach of any of our own obligations under the merger
agreement.
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59
Parent may terminate the merger agreement:
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if (i) the Companys board of directors has failed to
recommend approval of the merger agreement to the Company
shareholders in the proxy statement or the board of directors
has effected a change in recommendation prior to adoption of the
merger agreement by the Company shareholders; (ii) the
Companys board of directors shall have determined that any
acquisition proposal is a superior proposal; or (iii) the
Company shall have materially breached the terms of its
agreement not to solicit competing bids, as described above
under Restrictions on Solicitation of Other
Offers; or
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if the Company shall have breached any of its representations,
warranties, covenants or agreements contained in the merger
agreement, such that (1) certain closing conditions would
not be satisfied, and (2) such breach has not been cured
(or is not capable of being cured) within 20 business days
following receipt by the Company of written notice from Parent
or Merger Sub of the breach. However, Parent will not have the
right to terminate the merger agreement if Parent or Merger Sub
is then in material breach of any of their own obligations under
the merger agreement.
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If the merger agreement is terminated in accordance with its
terms, subject to those designated provisions of the merger
agreement which survive (including the public announcement
limitations, termination fee and expense provisions, and certain
other provisions), there will be no further liability or
obligation on the part of any of the Company, Parent or Merger
Sub under the merger agreement.
Termination
Fees and Expenses
We will be required to pay Parent a termination fee equal to
$5.2 million, which we refer to as the termination fee, if:
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we terminate the merger agreement in order to effect a change in
recommendation following receipt of a superior proposal prior to
adoption of the merger agreement by our shareholders;
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Parent terminates the merger agreement as a result of
(i) our board of directors failure to recommend
approval of the merger agreement to our shareholders in the
proxy statement or has effected a change in recommendation prior
to adoption of the merger agreement by the Company shareholders;
(ii) our board of directors determination that any
acquisition proposal is a superior proposal; or (iii) the
material breach of our agreement not to solicit competing bids,
as described above under Restrictions on
Solicitation of Other Offers;
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either Parent or we terminate the merger agreement (i) at
the end date, without a vote of our shareholders to adopt the
merger agreement having occurred, or (ii) following the
conclusion of the special meeting if our shareholders shall not
have adopted the merger agreement, in each case so long as
(a) a bona fide acquisition proposal was publicly announced
or otherwise communicated to our board of directors prior to the
termination and not withdrawn at the time of the termination (or
at the time of the special meeting in the case of
clause (ii) above), and (b) within six months of the
termination, we or any of our subsidiaries enter into a
definitive agreement in respect of, or consummates, any
acquisition proposal relating to 50% of our consolidated assets,
revenues, earnings or voting securities.
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In the event we are required to pay a termination fee, we will
pay it concurrently with the termination of the merger agreement
in the circumstance described in the first bullet point above;
within three business days of the termination of the merger
agreement in the circumstance described in the second bullet
point above; and on the date of consummation of the relevant
acquisition proposal in the circumstance described in the third
bullet point above. If we pay a termination fee as a result of
the termination of the merger agreement, Parents right to
receive the termination fee will be its sole and exclusive
remedy.
Except as described above, whether or not the transactions
contemplated by the merger agreement are consummated, all costs
and expenses incurred in connection with such transactions and
the merger agreement will be paid by the party incurring or
required to incur such expenses.
60
Specific
Performance
In addition to any other remedy to which they are entitled at
law or in equity, the parties are entitled, subject to the
limitations described below, to enforce specifically the terms
of the merger agreement through a decree of specific
performance, in the manner and subject to the conditions
specified in the merger agreement.
Amendments,
Extensions and Waivers
At any time prior to the effective time of the merger, any
provision of the merger agreement may be amended or waived if
the amendment or waiver is in writing and signed, in the case of
an amendment, by the Company, Parent and Merger Sub, or in the
case of a waiver, by the party against whom the waiver is to be
effective. However, after adoption of the merger agreement by
our shareholders, if any such amendment or waiver requires
further approval of our shareholders by applicable law or in
accordance with the rules and regulations of the NASDAQ Global
Select Market, the effectiveness of such amendment or waiver
will be subject to the approval of our shareholders.
Governing
Law
The merger agreement is governed by New York law.
61
ADJOURNMENT
OF THE SPECIAL MEETING (PROPOSAL 2)
The
Adjournment Proposal
We are asking you to approve a proposal to adjourn the special
meeting, if necessary or appropriate, for the purpose of
soliciting additional proxies in respect of the proposal to
adopt the merger agreement if there are insufficient votes to
adopt the merger agreement. If our shareholders approve the
adjournment proposal, we could adjourn the special meeting and
any adjourned session of the special meeting and use the
additional time to solicit additional proxies, including the
solicitation of proxies from shareholders that have previously
returned properly executed proxies voting against adoption of
the merger agreement. Among other things, approval of the
adjournment proposal could mean that, even if we had received
proxies representing a sufficient number of votes against
adoption of the merger agreement such that the proposal to adopt
the merger agreement would be defeated, we could adjourn the
special meeting without a vote on the adoption of the merger and
seek to convince the holders of those shares to change their
votes to votes in favor of adoption of the merger agreement.
If the proposal to adjourn the special meeting is not approved
and the holders of at least two-thirds of our outstanding shares
of common stock do not vote in favor of the merger agreement at
the special meeting, the merger will not occur.
Additionally, we may seek to adjourn the special meeting if a
quorum is not present at the special meeting. Under our bylaws,
the chairman of the meeting or the holders of a majority of our
common stock present in person or by proxy at the meeting may
adjourn the meeting if a quorum is not present.
Vote
Required and Board Recommendation
Approval of the proposal to adjourn the special meeting, if
necessary, to allow for the solicitation of additional proxies
in favor of the proposal to adopt the merger agreement if there
are insufficient votes to adopt the merger agreement requires
the affirmative vote of the holders of a majority of the shares
of common stock present in person or represented by proxy and
entitled to vote on the matter at the special meeting, assuming
a quorum is present.
The Board believes that it is in the best interests of the
Company and its shareholders to be able to adjourn the special
meeting, if necessary, for the purpose of soliciting additional
proxies in respect of the proposal to adopt the merger agreement
if there are insufficient votes to adopt the merger agreement.
The Board recommends that you vote
FOR
adjournment of the special meeting.
62
MERGER-RELATED
EXECUTIVE COMPENSATION ARRANGEMENTS (PROPOSAL 3)
The
Merger-Related Executive Compensation Arrangements
Proposal
Section 951 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 and
Rule 14a-21(c)
under the Exchange Act require that we seek an advisory
(non-binding) vote from our shareholders to approve certain
golden parachute compensation arrangements for our
named executive officers, as disclosed in the table entitled
Golden Parachute Compensation in the section of this
proxy statement entitled The Merger Interests
of Company Directors and Executive Officers in the
Merger Summary of Merger-Related Executive
Compensation Arrangements and the accompanying footnotes.
We are asking our shareholders to indicate their approval of the
agreements and payments which our named executive officers will
or may be eligible to receive in connection with the merger.
Shareholders should note that this proposal is merely an
advisory vote and will not be binding on Allied, the Board or
Parent regardless of whether the merger agreement is approved.
Further, the underlying plans and arrangements are contractual
in nature and not, by their terms, subject to stockholder
approval. Accordingly, regardless of the outcome of the advisory
vote, if the merger is consummated, our named executive officers
will be eligible to receive the various merger-related
compensation payments in accordance with the terms and
conditions applicable to those payments.
Vote
Required and Board Recommendation
The Board believes that it is in the best interests of the
Company and its shareholders to approve the non-binding,
advisory vote regarding these merger-related executive
compensation arrangements.
The Board recommends that you vote
FOR
the
advisory non-binding proposal (set forth in the resolution
immediately below) regarding the merger-related executive
compensation arrangements described in this proxy statement.
RESOLVED
, that the shareholders approve, solely on
an advisory (non-binding) basis, the agreements and compensation
that may be paid or become payable to the Companys named
executive officers in connection with the merger, as disclosed
pursuant to Item 402(t) of
Regulation S-K
in the section entitled The Merger Interests
of Company Directors and Executive Officers in the
Merger Summary of Merger-Related Executive
Compensation Arrangements in the Companys proxy
statement for the special meeting.
63
MARKET
PRICE OF COMPANY COMMON STOCK
Our common stock trades on the NASDAQ Global Select Market under
the symbol AHCI. The table below sets forth, for the
periods indicated, the high and low sales prices per share of
our common stock on the NASDAQ Global Select Market.
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High
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Low
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FISCAL YEAR ENDED SEPTEMBER 30, 2009
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First Quarter
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$
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2.15
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$
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1.00
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Second Quarter
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$
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1.50
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$
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0.94
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Third Quarter
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$
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2.48
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$
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1.21
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Fourth Quarter
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$
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2.90
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$
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1.92
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FISCAL YEAR ENDED SEPTEMBER 30, 2010
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First Quarter
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$
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3.40
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$
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2.27
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Second Quarter
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$
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3.09
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$
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2.40
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Third Quarter
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$
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2.95
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$
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2.22
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Fourth Quarter
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$
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2.62
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$
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1.86
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FISCAL YEAR ENDED SEPTEMBER 30, 2011
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First Quarter
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$
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3.10
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$
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2.37
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Second Quarter
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$
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2.65
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$
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2.08
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Third Quarter
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$
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2.77
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$
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2.25
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Fourth Quarter (through September 15, 2011)
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$
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3.86
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$
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2.35
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The Company did not pay any dividends during any of the periods
set forth in the table above.
The closing sale price of our common stock on the NASDAQ Global
Select Market on July 28, 2011, the last trading day prior
to the public announcement of the proposed merger, was $2.45 per
share. On September 15, 2011, the most recent practicable
date before this proxy statement was printed, the closing price
for our common stock on the NASDAQ Global Select Market was
$3.82 per share. You are encouraged to obtain current market
quotations for our common stock in connection with voting your
shares.
64
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the number of shares of common
stock, and the percentage of shares of common stock,
beneficially owned as of September 15, 2011 (the
Determination Date) (except as noted in the
footnotes below) by (1) each director of our company,
(2) each named executive officer, (3) all persons
known by us to be the beneficial owner of more than 5% of our
outstanding shares of common stock, and (4) all current
directors and executive officers of our company as a group
(8 persons). The information as to the number of shares of
our common stock beneficially owned by the individuals and
entities listed below was derived from reports filed with the
SEC by such persons and company records. To our knowledge,
except as indicated in the footnotes to the table, the persons
named in the table have sole voting and investment power with
respect to all shares of our common stock shown as beneficially
owned by them. Except as set forth below, the address of each of
the following holders of shares of our common stock is
c/o Allied
Healthcare International Inc., 245 Park Avenue, New York, New
York 10167.
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Number of Shares
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Percent of
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Name of Beneficial Owner
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Beneficially Owned
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Shares(1)
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Alexander (Sandy) Young
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116,839
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(2)
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*
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Paul Weston
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178,000
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(3)
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*
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Sophia Corona
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237,500
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(4)
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*
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Mark Hanley
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75,000
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(5)
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*
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Wayne Palladino
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264,664
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(6)
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*
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Jeffrey S. Peris
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321,000
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(7)
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*
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Raymond J. Playford
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3,162
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*
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Ann Thornburg
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293,750
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(8)
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*
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Octavian Special Master Fund, L.P. and Tiberius OC Fund,
Ltd.
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3,600,000
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(9)
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8.3
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Dimensional Fund Advisors LP
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3,535,600
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(10)
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8.1
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Rutabaga Capital Management
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3,305,860
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(11)
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7.6
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Austin W. Marxe and David M. Greenhouse
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2,929,718
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(12)
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6.7
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Keane Capital Management, Inc.
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2,614,581
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(13)
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6.0
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Wellington Management Capital, LLP
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2,267,420
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(14)
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5.2
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All current executive officers and directors as a group
(8 persons)
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1,489,915
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(15)
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3.3
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*
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Less than 1%.
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(1)
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As of the Determination Date, there were 43,571,251 shares
of our common stock outstanding. The percentage given for each
shareholder assumes that such shareholder has exercised the
options held by such shareholder that are exercisable within
60 days of the Determination Date, but that no other
shareholders have exercised the options held by them.
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(2)
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Consists of 10,000 shares held by Mr. Young and
106,839 shares held by Mr. Youngs wife. Does not
include 200,000 shares subject to options and 566,135 stock
appreciation rights held by Mr. Young that are not
exercisable within 60 days of the Determination Date.
Because his options and stock appreciation rights contain
performance-related vesting conditions that are not expected to
be satisfied prior to the merger, none of Mr. Youngs
options or stock appreciation rights are expected to vest at or
prior to the merger.
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(3)
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Consists of 178,000 shares subject to options held by
Mr. Weston that are exercisable within 60 days of the
Determination Date. Does not include 96,000 shares subject
to options held by Mr. Weston that are not exercisable
within 60 days of the Determination Date, all of which will
vest immediately prior to the merger.
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(4)
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Consists of 237,500 shares subject to options held by
Ms. Corona that are exercisable within 60 days of the
Determination Date. Does not include 52,500 shares subject
to options held by Ms. Corona that are not exercisable
within 60 days of the Determination Date, all of which will
vest immediately prior to the merger.
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(5)
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Consists of 75,000 shares subject to options held by
Mr. Hanley that are exercisable within 60 days of the
Determination Date. Does not include 45,000 shares subject
to options held by Mr. Hanley that are not exercisable
within 60 days of the Determination Date, all of which will
vest immediately prior to the merger.
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(6)
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Consists of 5,914 shares of common stock held by
Mr. Palladino, 250 shares held jointly by
Mr. Palladino and his wife and 258,500 shares subject
to options that are exercisable within 60 days of the
Determination Date. Does not include an additional
52,500 shares subject to options held by Mr. Palladino
that are not exercisable within 60 days of the
Determination Date, all of which will vest immediately prior to
the merger.
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(7)
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Consists of 2,000 shares of common stock held by Marjon
Repjel, LP and 319,000 shares subject to options held by
Dr. Peris that are exercisable within 60 days of the
Determination Date. Dr. Peris has sole voting and sole
dispositive power over the shares of common stock held by Marjon
Repjel, LP. Does not include an additional 60,000 shares
subject to options held by Dr. Peris that are not
exercisable within 60 days of the Determination Date, all
of which will vest immediately prior to the merger.
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(8)
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Consists of 293,750 shares subject to options held by
Ms. Thornburg that are exercisable within 60 days of
the Determination Date. Does not include 56,250 shares
subject to options held by Ms. Thornburg that are not
exercisable within 60 days of the Determination Date, all
of which will vest immediately prior to the merger.
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(9)
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The number of shares owned is based on the joint filing of a
Schedule 13D amendment made on May 27, 2011 by
(i) Octavian Special Master Fund, L.P. (Octavian
Fund); (ii) Tiberius OC Fund, Ltd. (Tiberius
Fund); (iii) Octavian Advisors, LP, the investment
manager of each of Octavian Fund and Tiberius Fund
(Octavian Advisors); (iv) Octavian Asset
Management, LLC, the general partner of Octavian Advisors
(Octavian Asset Management); (v) Richard
Hurowitz, the chairman and chief executive officer of Octavian
Advisors and managing member of Octavian Asset Management; and
(vi) certain other entities. According to the
Schedule 13D amendment, Octavian Fund has sole voting and
sole dispositive power with respect to 3,079,037 shares of
our common stock, Tiberius Fund has sole voting and sole
dispositive power with respect to 520,963 shares of our
common stock and each of Octavian Advisors, Octavian Asset
Management and Mr. Hurowitz has shared voting and shared
dispositive power with respect to 3,600,000 shares of our
common stock. The address of each of the reporting persons is
650 Madison Avenue, 23rd Floor, New York, New York 10022.
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(10)
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The number of shares owned is based on a Schedule 13G
amendment filed by Dimensional Fund Advisors LP
(Dimensional) with the SEC on February 11,
2011. According to the Schedule 13G amendment, Dimensional
has sole voting power with respect to 3,446,051 shares of
our common stock and sole dispositive power with respect to
3,535,600 shares of our common stock. Dimensionals
address is Palisades West, Building One, 6300 Bee Cave Road,
Austin, Texas 78746.
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(11)
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The number of shares owned is based on a Schedule 13G
amendment filed by Rutabaga Capital Management
(Rutabaga) with the SEC on February 3, 2011.
According to the Schedule 13G amendment, Rutabaga has sole
voting power with respect to 2,822,598 shares of our common
stock, shared voting power with respect to 483,262 shares
of our common stock and sole dispositive power with respect to
3,305,860 shares of our common. Rutabagas address is
64 Broad Street, 3rd Floor, Boston, Massachusetts 02109.
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(12)
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The number of shares owned is based on a joint filing on
Schedule 13G by Mr. Marxe and Mr. Greenhouse with
the SEC on February 16, 2010. The Form 13F filed by
Messrs. Marxe and Greenhouse with the SEC on May 13,
2011 indicates that they hold 2,804,718 shares of our
common stock (6.4% of the outstanding shares as of the
Determination Date) as of March 31, 2011. According to the
Schedule 13G filed on February 16, 2010,
Messrs. Marxe and Greenhouse share voting and investment
power over 351,231 shares of our common stock owned by
Special Situations Cayman Fund, L.P. and 2,578,487 shares
of our common stock owned by Special Situations Fund III
QP, L.P. Messrs. Marxes and Greenhouses address
is 527 Madison Avenue, Suite 2600, New York, NY 10022.
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(13)
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The number of shares owned is based on the Schedule 13G
amendment filed by Keane Capital Management, Inc.
(Keane) with the SEC on February 17, 2009. The
Form 13F filed by Keane with the SEC on May 11, 2011
indicates that it holds 2,344,549 shares of our common
stock (5.4% of the outstanding shares as of the Determination
Date) as of March 31, 2011. According to the
Schedule 13G amendment
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filed on February 17, 2009, Keane has sole voting power
with respect to 2,614,581 shares of our common stock and
sole dispositive power with respect to 2,614,581 shares of
our common stock. Keanes address is 3440 Torringdon Way,
Suite 308, Charlotte, North Carolina 28277.
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(14)
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According to separate Schedules 13G filed by Wellington
Management Company, LLP and Wellington Trust Company, NA
with the SEC on February 14, 2011, each of these entities
has shared voting power with respect to 2,267,420 shares of
our common stock and shared dispositive power with respect to
2,267,420 shares of our common stock. The address of
Wellington Management Company, LLP and Wellington
Trust Company, NA is 280 Congress Street, Boston,
Massachusetts 02210.
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(15)
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Includes an aggregate of 1,361,750 shares subject to
options held by our executive officers and directors that are
exercisable within 60 days of the Determination Date,
106,839 shares held by Mr. Youngs wife,
250 shares held jointly by Mr. Palladino and his wife
and 2,000 shares held by Marjon Repjel, LP, an entity over
which Dr. Peris has sole voting and dispositive power.
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NO
DISSENTERS RIGHTS
Under the NYBCL, no dissenters rights exist with respect
to the merger.
SUBMISSION
OF SHAREHOLDER PROPOSALS
Once the merger is completed, there will be no public
participation in any future meetings of the Companys
shareholders. If the merger is not completed, our public
shareholders will continue to be entitled to attend and
participate in our shareholder meetings, and we would expect to
hold our 2012 annual meeting of shareholders prior to the end of
our 2012 fiscal year. If the merger is not completed, there will
be two different deadlines for submitting shareholder proposals
for consideration at the 2012 annual meeting of shareholders of
our company.
In order for a shareholder proposal submitted pursuant to
Rule 14a-8
under the Exchange Act to be included in the proxy statement
relating to our 2012 annual meeting of shareholders, it must be
received by us at our principal executive offices no later than
January 4, 2012.
In addition, our amended and restated by-laws provide that any
shareholder who wishes to bring any business at our next annual
meeting of shareholders, but does not intend that the matter be
included in our proxy statement relating to our next annual
meeting of shareholders, must give us written notice no earlier
than February 15, 2012 and not later than March 16,
2012. Any such notice must comply with the applicable provisions
of our amended and restated by-laws.
If the date of next years annual meeting changes by more
than 30 days (i.e., it is held earlier than May 15,
2012 or later than July 14, 2012) we will inform
shareholders of such change and the effect of such change on the
deadlines given above by including notice under Item 5 of
Part II in our earliest possible Quarterly Report on
Form 10-Q
or, if that is impracticable, by other means reasonably
calculated to inform our shareholders of such change and the new
deadlines.
HOUSEHOLDING
OF PROXY MATERIALS
The SEC permits companies and intermediaries (such as brokers
and banks) to satisfy delivery requirements for proxy statements
to shareholders with respect to two or more shareholders sharing
the same address by delivering a single proxy statement to those
shareholders. This process, which is commonly referred to as
householding, is intended to reduce the volume of
duplicate information shareholders receive and also reduce
expenses for companies. While we do not utilize householding,
some intermediaries may be householding our proxy materials to
shareholders. Once you have received notice from your broker or
another intermediary that they will be householding materials to
your address, householding will continue until you are notified
otherwise or until you revoke your consent. If you hold your
shares through an intermediary that sent a single copy of this
proxy statement to multiple shareholders in your household, we
will promptly deliver a separate copy of this document to you if
you send a written request to us at our principal executive
offices,
67
245 Park Avenue, New York, New York 10167 (Attn.: Secretary), or
call us at
212-750-0064.
If you hold your shares through an intermediary that is
utilizing householding and you want to receive separate copies
of our proxy statement in the future, you should contact your
bank, broker or other nominee record holder.
If you hold your shares through an intermediary who sends you
multiple copies of our proxy statement and wish to receive only
one, you should contact your bank, broker of other nominee
holder. If you a record holder of our shares of common stock who
receives multiple copies of this proxy statement and wish to
receive only one, send a written request to us at our principal
executive offices, 245 Park Avenue, New York, New York 10167
(Attn.: Secretary), or call us at
212-750-0064.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy any
document we file at the SEC public reference room located at
100 F Street, N.E., Room 1580,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference room. Our SEC
filings are also available to the public at the SEC website at
www.sec.gov.
The information contained in this proxy statement speaks only as
of the date indicated on the cover of this proxy statement
unless the information specifically indicates that another date
applies. The information that we later file with the SEC may
update
and/or
supersede the information in this proxy statement.
Any person, including any beneficial owner, to whom this proxy
statement is delivered may request copies of documents we file
with the SEC, by written or telephonic request directed to 245
Park Avenue, New York, New York 10167 (Attn.: Secretary), or
call us at
212-750-0064;
or from our proxy solicitor, Alliance Advisors LLC, at
1-877-777-8133; or from the SEC through the SEC website at the
address provided above. These documents are also available at
the investor relations section of our website, located at
www.alliedhealthcare.com. Our website address is provided as an
inactive textual reference only. The information on our website
is not a part of this proxy statement, and is therefore not
incorporated by reference.
THIS PROXY DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN
ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT
IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT
JURISDICTION. IN VOTING YOUR SHARES OF COMMON STOCK AT THE
SPECIAL MEETING YOU SHOULD RELY ONLY ON THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT
AND ANY INFORMATION THAT WE LATER FILE WITH THE SEC THAT UPDATES
AND/OR SUPERSEDES THE INFORMATION IN THIS PROXY STATEMENT. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT
IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT.
THIS PROXY STATEMENT IS DATED SEPTEMBER 21, 2011. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY
STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND
THE MAILING OF THIS PROXY STATEMENT TO SHAREHOLDERS DOES NOT
CREATE ANY IMPLICATION TO THE CONTRARY.
68
AGREEMENT
AND PLAN OF MERGER
by and among
SAGA GROUP LIMITED,
AHL ACQUISITION CORP.
and
ALLIED HEALTHCARE INTERNATIONAL INC.
Dated as of July 28, 2011
TABLE OF
CONTENTS
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Page
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ARTICLE I THE
MERGER
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A-1
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Section 1.1
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The Merger
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A-1
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Section 1.2
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Closing
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A-1
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Section 1.3
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Effective Time
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A-1
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ARTICLE II EFFECTS
OF THE MERGER
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A-1
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Section 2.1
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Effects of the Merger
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A-1
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Section 2.2
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Certificate of Incorporation
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A-2
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Section 2.3
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Bylaws
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A-2
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Section 2.4
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Officers
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A-2
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Section 2.5
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Directors
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A-2
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Section 2.6
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Cancellation of Treasury Stock and Parent Owned Stock;
Conversion of Common Stock Owned by the Companys
Subsidiaries
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A-2
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Section 2.7
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Merger Consideration for Company Common Stock
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A-2
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Section 2.8
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The Capital Stock of Acquisition Sub
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A-2
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Section 2.9
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Option and SAR Consideration
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A-2
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Section 2.10
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Exchange of Certificates
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A-3
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ARTICLE III REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
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A-6
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Section 3.1
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Organization
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A-6
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Section 3.2
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Authorization
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A-6
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Section 3.3
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Consents and Approvals; No Violations
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A-7
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Section 3.4
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Capitalization
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A-7
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Section 3.5
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Subsidiaries
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A-8
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Section 3.6
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SEC Documents; Controls
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A-8
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Section 3.7
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Financial Statements; No Undisclosed Liabilities
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A-9
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Section 3.8
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Proxy Statement
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A-9
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Section 3.9
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Absence of Certain Changes, etc
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A-9
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Section 3.10
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Taxes
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A-10
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Section 3.11
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Employee Benefit Plans
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A-10
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Section 3.12
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Environmental Matters
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A-11
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Section 3.13
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Litigation; Compliance with Laws
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A-12
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Section 3.14
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Intellectual Property
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A-12
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Section 3.15
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Material Contracts
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A-13
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Section 3.16
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Insurance
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A-13
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Section 3.17
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Real Estate; Assets
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A-14
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Section 3.18
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Labor and Employment
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A-14
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Section 3.19
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Opinion of Financial Advisors
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A-14
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Section 3.20
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Brokers
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A-14
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Section 3.21
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State Takeover Statutes
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A-14
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Section 3.22
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No Other Representations or Warranties
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A-15
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A-i
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Page
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ARTICLE IV REPRESENTATIONS
AND WARRANTIES OF PARENT AND ACQUISITION SUB
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A-15
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Section 4.1
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Organization
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A-15
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Section 4.2
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Authorization
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A-15
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Section 4.3
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Consents and Approvals; No Violations
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A-15
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Section 4.4
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Proxy Statement
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A-16
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Section 4.5
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Capitalization; Operations
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A-16
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Section 4.6
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Ownership of Company Common Stock
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A-16
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Section 4.7
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Financing
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A-16
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Section 4.8
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Brokers
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A-16
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Section 4.9
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Litigation
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A-16
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Section 4.10
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Absence of Arrangements with Management
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A-16
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Section 4.11
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No Other Representations or Warranties
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A-17
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ARTICLE V COVENANTS
OF THE PARTIES
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A-17
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Section 5.1
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Conduct of the Business of the Company
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A-17
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Section 5.2
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Stockholders Meeting; Proxy Material
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A-19
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Section 5.3
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Access to Information; Control
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A-20
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Section 5.4
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No Solicitation
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A-20
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Section 5.5
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Director and Officer Liability
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A-22
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Section 5.6
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Certain Filings
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A-23
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Section 5.7
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Public Announcements
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A-24
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Section 5.8
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State Takeover Laws
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A-24
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Section 5.9
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Certain Notifications
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A-24
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Section 5.10
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Employees and Employee Benefit Plans
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A-24
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Section 5.11
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Conduct of the Business of Acquiror Entities
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A-25
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Section 5.12
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Rule 16b-3
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A-25
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Section 5.13
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Delisting
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A-25
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ARTICLE VI CONDITIONS
PRECEDENT
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A-25
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Section 6.1
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Conditions to Each Partys Obligations to Effect the Merger
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A-25
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Section 6.2
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Conditions to the Companys Obligation to Effect the Merger
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A-26
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Section 6.3
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Conditions to Parents and Acquisition Subs
Obligations to Effect the Merger
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A-26
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Section 6.4
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Frustration of Closing Conditions
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A-27
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ARTICLE VII TERMINATION
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A-27
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Section 7.1
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Termination
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A-27
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Section 7.2
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Effect of Termination
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A-28
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Section 7.3
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Fees and Expenses
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A-28
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A-ii
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Page
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ARTICLE VIII MISCELLANEOUS
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A-29
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Section 8.1
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Definitions
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A-29
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Section 8.2
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Notices
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A-34
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Section 8.3
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Survival of Representations, Warranties and Covenants
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A-34
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Section 8.4
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Interpretation
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A-34
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Section 8.5
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Amendments, Modification and Waiver
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A-35
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Section 8.6
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Successors and Assigns
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A-35
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Section 8.7
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Specific Performance
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A-35
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Section 8.8
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Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury
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A-36
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Section 8.9
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Severability
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A-36
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Section 8.10
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Third Party Beneficiaries
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A-36
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Section 8.11
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Entire Agreement
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A-36
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Section 8.12
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Counterparts; Fax Signatures; Effectiveness
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A-37
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A-iii
AGREEMENT
AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 28, 2011 (as
it may be amended, restated, supplemented, or otherwise modified
from time to time, this
Agreement
), by and
among
Saga Group Limited
, a corporation organized under
the laws of England and Wales (
Parent
),
AHL Acquisition Corp.
, a New York corporation
(
Acquisition Sub
), and
Allied Healthcare
International Inc.
, a New York corporation (the
Company
).
W I T N E
S S E T H:
WHEREAS, the Board of Directors of the Company (the
Company Board
) has approved and adopted this
Agreement and the transactions contemplated hereby, has
determined that the merger of Acquisition Sub with and into the
Company (the
Merger
), with the Company being
the surviving corporation (the
Surviving
Corporation
), is advisable and is fair to and in the
best interests of the Company and its stockholders; and
WHEREAS, the respective Boards of Directors of Parent and
Acquisition Sub have each approved and adopted this Agreement
and the Merger, upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements
and conditions set forth herein, and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section
1.1
The
Merger
.
Upon the terms and subject to the
satisfaction or waiver (subject to Applicable Law) of the
conditions set forth in this Agreement, and in accordance with
the New York Business Corporation Law (the
NYBCL
), Acquisition Sub shall be merged with
and into the Company at the Effective Time and the separate
corporate existence of Acquisition Sub shall thereupon cease.
Following the Effective Time, the Company, as the Surviving
Corporation shall succeed to and assume all of the rights and
obligations of Acquisition Sub in accordance with the NYBCL.
Section
1.2
Closing
.
The
closing of the Merger (the
Closing
) shall
take place at 10:00 a.m., local time, on the second
Business Day after satisfaction or waiver (subject to Applicable
Law) of the conditions set forth in Article VI (other than
those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver (subject to
Applicable Law) of those conditions), at the offices of Edwards
Angell Palmer & Dodge LLP, 750 Lexington Avenue, New
York, NY 10022, unless another time, date
and/or
place
is agreed to by the parties hereto (the
Closing
Date
).
Section
1.3
Effective
Time
.
The Merger shall become effective as
set forth in the certificate of merger (the
Certificate
of Merger
), to be prepared by Parent and the Company
in such form as is required by and executed in accordance with
the relevant provisions of the NYBCL, that shall be filed with
the Department of State of the State of New York on the Closing
Date. When used in this Agreement, the term
Effective
Time
means the time of filing of the Certificate of
Merger with the Department of State of the State of New York or
such later time as is established by Parent and the Company and
set forth in the Certificate of Merger.
ARTICLE II
EFFECTS OF
THE MERGER
Section
2.1
Effects
of the Merger
.
The Merger shall have the
effects set forth in applicable provisions of the NYBCL. Without
limiting the generality of the foregoing and subject thereto, at
the Effective Time, all the properties, rights, privileges,
powers and franchises of the Company and Acquisition Sub shall
vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Acquisition Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
A-1
Section
2.2
Certificate
of Incorporation
.
At the Effective Time, the
Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended so as
to read in its entirety in the form of the Certificate of
Incorporation of Acquisition Sub, as in effect immediately prior
to the Effective Time, and as so amended shall be the
certificate of incorporation of the Surviving Corporation, until
thereafter changed or amended as provided therein or by
Applicable Law (subject to Section 5.5).
Section
2.3
Bylaws
.
At
the Effective Time, 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, by Applicable Law or the Certificate of
Incorporation of the Surviving Corporation.
Section
2.4
Officers
.
From
and after the Effective Time, the officers of the Company
immediately prior to the Effective Time shall be the officers of
the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
Section
2.5
Directors
.
From
and after the Effective Time, the directors of Acquisition Sub
shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the
case may be.
Section
2.6
Cancellation
of Treasury Stock and Parent Owned Stock; Conversion of Common
Stock Owned by the Companys
Subsidiaries
.
At the Effective Time, by
virtue of the Merger and without any action on the part of the
holder thereof, (i) each share of common stock of the
Company, par value $.01 per share (the
Company Common
Stock
)
,
that is held by the Company as treasury
stock or by a wholly owned Subsidiary of the Company, and
(ii) each issued and outstanding share of Company Common
Stock that is owned by Parent, Acquisition Sub or any other
wholly owned Subsidiary of Parent shall no longer be outstanding
and shall automatically be canceled and retired and shall cease
to exist, and no consideration shall be paid or delivered in
exchange therefor.
Section
2.7
Merger
Consideration for Company Common
Stock
.
Subject to Section 2.10, at the
Effective Time, by virtue of the Merger and without any action
on the part of any holder thereof, each share of Company Common
Stock issued and outstanding immediately prior to the Effective
Time (other than shares to be canceled in accordance with
Section 2.6) automatically shall be converted into the
right to receive $3.90 in cash, without interest thereon (the
Merger Consideration
). As of the
Effective Time, all such shares of Company Common Stock shall no
longer remain outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time
represented such shares of Company Common Stock (a
Certificate
) or of uncertificated shares of
Company Common Stock held in book-entry form (the
Book-Entry Shares
) shall cease to have any
rights with respect thereto, except the right to receive the
Merger Consideration to be paid in consideration therefor upon
surrender of such Certificate or such Book-Entry Shares in
accordance with Section 2.10.
Section
2.8
The
Capital Stock of Acquisition Sub
.
At the
Effective Time, by virtue of the Merger and without any action
on the part of the holder thereof, each issued and outstanding
share of capital stock of Acquisition Sub shall be automatically
converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share,
of the Surviving Corporation.
Section
2.9
Option
and SAR Consideration
.
(a) Each Cash-Out Option shall be automatically cancelled
and shall cease to exist as of the Effective Time, without the
need for any further action on the part of the holder thereof,
and shall be converted into the right to receive at the
Effective Time an amount in cash in U.S. dollars equal to
the product of (i) the excess, if any of (A) the
Merger Consideration over (B) the exercise price per share
of the Company Common Stock subject to such Cash-Out Option and
(ii) the total number of shares of Company Common Stock
subject to the Cash-Out Option, with the aggregate amount of
such payment rounded to the nearest cent (the aggregate amount
so payable referred to as the
Option
Consideration
), less such amounts are required to be
withheld or deducted under the Code or any provision of
U.S. state or local or foreign tax law with respect to
making of such payment. In the event that the exercise price per
share of the Company Common Stock subject to any Cash-Out Option
is equal to or greater than the Merger Consideration, such
Cash-Out Option shall be cancelled without payment therefore and
have no further force and effect. At the Effective Time, each
A-2
Company Option that is unvested, unexpired, unexercised and
outstanding immediately prior to the Effective Time shall be
cancelled and extinguished without the need for any further
action on the part of the holder thereof.
(b) Each Company SAR (or portion thereof) that is issued,
unexercised and outstanding as of immediately prior to the
Effective Time and vested as of immediately prior to the
Effective Time (including any portion of a Company SAR that
vests as a result of the transactions contemplated by this
Agreement) shall be automatically cancelled and shall cease to
exist as of the Effective Time, without the need for any further
action on the part of the holder thereof, and shall be converted
into the right to receive at the Effective Time an amount in
cash in U.S. dollars equal to the product of (i) the
excess, if any, of (A) the Merger Consideration over
(B) the exercise price per share of the Company Common
Stock subject to such Company SAR or portion thereof and
(ii) the total number of shares of Company Common Stock
subject to the Company SAR or portion thereof, with the
aggregate amount of such payment rounded to the nearest cent
(the aggregate amount so payable referred to as the
SAR
Consideration
), less such amounts are required to be
withheld or deducted under the Code or any provision of
U.S. state or local or foreign tax law with respect to
making of such payment. In the event that the exercise price per
share of the Company Common Stock subject to any Company SAR
Option is equal to or greater than the Merger Consideration,
such Company SAR shall be cancelled without payment therefor and
have no further force and effect. At the Effective Time, each
Company SAR that is unvested, unexpired, unexercised and
outstanding immediately prior to the Effective Time (and that
does not vest as a result of the transactions contemplated by
this Agreement) shall be cancelled and extinguished without the
need for any further action on the part of the holder thereof.
(c) Prior to the Effective Time, the Company shall take all
actions necessary in order to effectuate the provisions of this
Section 2.9, including making any determinations
and/or
resolutions of the Company Board or a committee thereof or any
administrator of a Company Incentive Plan as may be necessary,
which actions shall not result in any additional liability to
the Company, including pursuant to Sections 162(m), 280G
and 409A of the Code.
Section
2.10
Exchange
of Certificates
.
The procedures for
exchanging outstanding shares of Company Common Stock for the
Merger Consideration are as follows:
(a)
Paying Agent
.
Prior to the
Effective Time, a bank or trust company in the United States
reasonably acceptable to the Company shall be designated by
Parent to act as the Paying Agent (the
Paying
Agent
) for payment of the Merger Consideration, the
Option Consideration and the SAR Consideration.
(b)
Deposit with Paying
Agent
.
Prior to the Effective Time, Parent
shall deposit or shall cause to be deposited with the Paying
Agent, to be held separate and apart from its other funds, in
trust for the benefit of the holders of Company Common Stock,
the Company Stock Options and Company SARs (other than holders
of shares of Company Common Stock cancelled pursuant to
Section 2.6) (each, a
Holder
), cash in
U.S. dollars sufficient to pay (i) the aggregate
Merger Consideration which all Holders of Company Common Stock
are entitled to receive pursuant to this Article II, with
instructions and authority to such Paying Agent to pay to each
respective Holder thereof the Merger Consideration upon
surrender of their respective Certificates or Book-Entry Shares
as provided herein, and (ii) the aggregate Option
Consideration and SAR Consideration payable pursuant to
Sections 2.9(a) and 2.9(b) to Holders of Company Stock
Options and Company SARs (such cash referred to in
clauses (i) and (ii) above, the
Merger
Fund
), with instructions and authority to such Paying
Agent to pay to each respective Holder of Company Stock Options
and Company SARs, as applicable, in accordance with this
Article II. Except as provided in Sections 2.10(c),
2.10(d) and 2.10(e), any such deposit of funds shall be
irrevocable.
(c)
Exchange Procedures
.
As soon
as practicable after (and in any event within three
(3) Business Days after) the Effective Time, Parent shall
cause the Paying Agent to mail (A) to each Holder of
record, as of the Effective Time, of a Certificate or
Certificates or of Book-Entry Shares whose shares of Company
Common Stock were converted into the right to receive the Merger
Consideration, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and
title to the Certificates or Book-Entry Shares shall pass, only
upon proper delivery of the Certificates (or book-entry transfer
of Book-Entry Shares) to the Paying Agent and which shall be in
the form and have such other customary provisions as Parent and
the Company
A-3
may specify) and (ii) instructions for use in effecting the
surrender of the Certificates or Book-Entry Shares in exchange
for the Merger Consideration to be received by the Holder
thereof pursuant to this Agreement, and (B) to each Holder
of a Company Stock Option
and/or
Company SAR, as applicable, a check in an amount due and payable
to such Holder pursuant to Section 2.9 hereof in respect of
such Company Stock Option or Company SAR;
provided
that,
in lieu of the payments contemplated by this clause (B), Parent
and the Surviving Corporation may direct the Paying Agent to
reimburse the Surviving Corporation (or its designees) for (but
only to the extent of) any amounts actually paid by or on behalf
of the Surviving Corporation to the Holders of Company Stock
Options or Company SARs in respect of the consideration payable
therefor. Upon surrender of a Certificate (or, in the case of
Book-Entry Shares the receipt of an agents message
by the Paying Agent, or such other evidence of transfer as the
Paying Agent may reasonably request) for cancellation to the
Paying Agent, together with a letter of transmittal duly
completed and validly executed in accordance with the
instructions thereto, and such other documents as may be
reasonably required pursuant to such instructions, the Holder of
such Certificate or Book-Entry Share shall be entitled to
receive promptly in exchange therefor the Merger Consideration
for each share of Company Common Stock formerly represented by
such Certificate or Book-Entry Share, and the Certificate or
Book-Entry Share so surrendered shall be forthwith cancelled.
The Paying Agent shall accept such Certificates or Book-Entry
Shares upon compliance with such reasonable terms and conditions
as the Paying Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices. No
interest shall be paid or accrued for the benefit of Holders of
the Certificates or Book-Entry Shares on the Merger
Consideration payable upon the surrender of the Certificates or
Book-Entry Shares, or for the benefit of Holders of Company
Stock Options or Company SARs on the portion of the Option
Consideration or SAR Consideration payable to such Holder with
respect to any Company Stock Options or Company SARs, as
applicable. At the Effective Time, the stock transfer books of
the Company shall be closed, and thereafter there shall be no
further registration of transfers of shares of Company Common
Stock theretofore outstanding on the records of the Company. If
Certificates or Book-Entry Shares are presented to the Company
for transfer following the Effective Time, they shall be
canceled against delivery of the Merger Consideration. All cash
paid upon surrender of shares of Company Common Stock in
accordance with the terms of this Article II shall be
deemed to have been paid in full satisfaction of all rights
pertaining to such shares of Company Common Stock. Until so
surrendered, each such Certificate or Book-Entry Share shall
represent after the Effective Time, for all purposes, only the
right to receive the Merger Consideration. Notwithstanding
anything to the contrary in this Agreement, a holder of
Book-Entry Shares shall not be required to deliver a Certificate
to the Paying Agent to receive the consideration to which such
Holder is entitled pursuant to this Article II in respect
of such Book-Entry Shares.
(d)
Termination of Merger
Fund
.
Any portion of the Merger Fund
deposited with the Paying Agent pursuant to this
Section 2.10 and any interest received with respect thereto
that remain undistributed to the Holders of the Certificates,
Book-Entry Shares, Company Stock Options or Company SARs for
twelve (12) months after the Effective Time shall be
delivered to the Surviving Corporation, upon, and in accordance
with, any demand by the Surviving Corporation therefor, and any
holders of Certificates, Book-Entry Shares, Company Stock
Options or Company SARs who have not theretofore complied with
this Section 2.10 shall be entitled to receive only from
the Surviving Corporation payment, as general creditors thereof,
of their claim for Merger Consideration, Option Consideration
and SAR Consideration, as the case may be, to which such Holders
may be entitled at such time, without interest thereon, subject
to escheat and abandoned property and similar laws. The
Surviving Corporation shall pay all charges and expenses,
including those of the Paying Agent, in connection with the
exchange of Company Common Stock for the Merger Consideration
and the exchange of Company Stock Options and Company SARs for
the Option Consideration and SAR Consideration, respectively.
(e)
No Liability
.
None of the
Company, Parent, Acquisition Sub, the Surviving Corporation, any
of their respective Affiliates or the Paying Agent shall be
liable to any Person in respect of any Merger Consideration,
Option Consideration or SAR Consideration held in the Merger
Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate,
Company Stock Option or Company SAR shall not have been
surrendered prior to two (2) years after the Effective Time
(or immediately prior to such earlier date on which any cash in
respect of such Certificate, Company Stock Option or Company SAR
would otherwise escheat to or become the property of any
Governmental Entity), any such Merger
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Consideration in respect of such Certificate, Company Stock
Option or Company SAR shall, to the extent permitted by
Applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any
Person previously entitled thereto.
(f)
Investment of Merger Fund
.
The
Paying Agent shall invest the cash included in the Merger Fund
as directed by Parent;
provided
, that such investments
shall be in obligations of or guaranteed by the United States of
America, or in certificates of deposit, bank repurchase
agreements or bankers acceptances of commercial banks with
capital exceeding $1,000,000,000. Any interest or other income
resulting from such investments shall be paid to the Surviving
Corporation;
provided
, that any such investment or any
such payment of interest or other income may not delay the
receipt by Holders of any Merger Consideration. If for any
reason (including losses) the cash in the Merger Fund shall be
insufficient to fully satisfy all of the payment obligations of
the Paying Agent hereunder, Parent shall promptly deposit
additional cash into the Merger Fund in an amount equal to the
deficiency in the amount of cash fully required to satisfy such
payment obligations.
(g)
Transferred Certificates; Transfer
Taxes
.
If any Merger Consideration is to be
remitted to a Person (other than the Person in whose name the
Certificate surrendered in exchange therefor is registered), it
shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the Person requesting such exchange
shall pay to the Paying Agent any transfer or other Taxes
required by reason of the payment of the Merger Consideration to
a Person other than the registered holder of the Certificate so
surrendered, or shall establish to the satisfaction of the
Paying Agent that such Tax either has been paid or is not
applicable.
(h)
Withholding Rights
.
Each of
Parent, the Surviving Corporation and the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any Holder of a
Certificate or of Book-Entry Shares or to any Holder of Company
Stock Options or Company SARs such amounts as are required to be
deducted and withheld with respect to the making of such payment
under the Code or any provisions of applicable state, local or
foreign Tax law. To the extent that amounts are so deducted and
withheld and paid over to the appropriate Taxing authority by
Parent, the Surviving Corporation or the Paying Agent, such
deducted and withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the Holder of the
Certificate or of Book-Entry Shares or to the Holder of Company
Stock Options or Company SARs, as the case may be, in respect of
which such deduction and withholding was made by Parent, the
Surviving Corporation or the Paying Agent.
(i)
Lost, Stolen or Damaged
Certificates
.
If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the Holder claiming such Certificate to be lost,
stolen or destroyed and, if required by the Parent, the posting
by such Holder of a bond, in such reasonable amount as the
Parent may direct, as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying
Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration to which the Holder thereof
is entitled pursuant to this Agreement.
(j)
Dissenting Shares
.
In
accordance with Section 910(a)(1)(iii) of the NYBCL, no
appraisal rights shall be available to Holders of Company Common
Stock in connection with the Merger.
(k)
Further Action
.
After the
Effective Time, the officers and directors of Parent and the
Surviving Corporation will be authorized to execute and deliver,
in the name and on behalf of the Company and Acquisition Sub,
any deeds, bills of sale, assignments or assurances and to take
and do, in the name and on behalf of the Company and Acquisition
Sub, any other actions and things to vest, perfect or confirm of
record or otherwise in the Surviving Corporation any and all
right, title and interest in, to and under any of the rights,
properties or assets acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
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ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except (i) as set forth in the corresponding section of the
Company Disclosure Schedule, it being understood that matters
disclosed pursuant to one section of the Company Disclosure
Schedule shall be deemed disclosed with respect to any other
section of the Company Disclosure Schedule where it is
reasonably apparent that the matters so disclosed are applicable
to such other sections; (ii) as disclosed in the Company
SEC Documents filed prior to the date of this Agreement or
(iii) for events or matters expressly contemplated or
permitted under this Agreement or any agreement contemplated
hereby or thereby, the Company represents and warrants to Parent
and Acquisition Sub as follows:
Section
3.1
Organization
.
The
Company and each of its Subsidiaries are duly organized, validly
existing and in good standing (with respect to jurisdictions
that recognize that concept) under the laws of the jurisdiction
of their respective organization and have the requisite power
and authority to carry on their respective businesses as now
being conducted, except where any failures to be in good
standing (with respect to jurisdictions that recognize that
concept) or to have such power and authority have not had and
would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. The Company and
each of its Subsidiaries are duly qualified to do business and
are in good standing (with respect to jurisdictions that
recognize that concept) in each jurisdiction in which the nature
of their respective businesses or the ownership or leasing of
their respective properties makes such qualification or
licensing necessary, except where any failure to be so duly
qualified and in good standing (with respect to jurisdictions
that recognize that concept) have not had and would not
reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. The Company has
heretofore made available to Parent and Acquisition Sub true and
complete copies of the certificate of incorporation of the
Company (the
Company Certificate of
Incorporation
) and the bylaws of the Company (the
Company Bylaws
) and the charter and bylaws
(or similar organizational documents) of each of its
Subsidiaries, in each case as amended to the date hereof.
Section
3.2
Authorization
.
(a) The Company has the requisite corporate power and
authority to execute and deliver this Agreement and (subject,
with respect to the consummation of the Merger, to receipt of
the Company Stockholder Approval) to perform its obligations
hereunder. The execution and delivery of this Agreement by the
Company and the performance of its obligations hereunder have
been duly and validly authorized, and this Agreement has been
approved by, the Company Board and no other corporate
proceedings on the part of the Company are necessary to
authorize the execution, delivery and performance of this
Agreement (subject, with respect to the consummation of the
Merger, to receipt of the Company Stockholder Approval and the
filing of the Certificate of Merger). This Agreement has been
duly executed and delivered by the Company, and, assuming due
authorization, execution and delivery of this Agreement by
Parent and Acquisition Sub, is a valid and binding obligation of
the Company, enforceable against the Company in accordance with
its terms, except that enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other
laws, now or hereafter in effect, relating to or affecting the
rights and remedies of creditors generally and to general
principles of equity, regardless of whether considered in a
proceeding in equity or at law (the
Bankruptcy and
Equitable Remedies Exception
).
(b) The Company Board, by resolution duly adopted at a
meeting duly called and held, subject to the terms and
conditions set forth herein, (i) has approved and declared
this Agreement and the Merger advisable and declared that the
Merger is fair to and in the best interest of the Company and
the Companys stockholders, (ii) directed that this
Agreement be submitted to the stockholders for their approval,
and (iii) has resolved to recommend that the stockholders
of the Company approve this Agreement and the Merger
(collectively, the
Company Recommendation
),
subject to the right of the Company Board to withdraw or modify
the Company Recommendation as expressly provided for in
Section 5.2. As of the date hereof, the Company Board has
not rescinded, modified or withdrawn such resolutions in any way.
A-6
(c) Under Applicable Law and the Company Certificate of
Incorporation, the affirmative vote of two-thirds of the votes
represented by the shares of Company Common Stock outstanding on
the record date, established by the Company Board in accordance
with the Company Bylaws, Applicable Law and this Agreement, at
the Special Meeting (the
Company Stockholder
Approval
) is the only vote of the Companys
stockholders required to approve this Agreement and the
transactions contemplated hereby.
Section
3.3
Consents
and Approvals; No Violations
.
The execution
and delivery of this Agreement by the Company do not, and except
for those filings, permits, authorizations, consents and
approvals as may be required under, and other applicable
requirements of, the Exchange Act, the NYBCL, state blue sky,
securities or takeover laws, Nasdaq Global Select Market
requirements and the Irish Competition Act 2002, and subject,
with respect to the consummation of the Merger, to obtaining the
Company Stockholder Approval, the performance of this Agreement
and the consummation by the Company of the transactions
contemplated hereby will not (i) conflict with or result in
any breach of any provision of the Company Certificate of
Incorporation or the Company Bylaws or of the similar
organizational documents of any Subsidiary thereof,
(ii) result in a violation or breach of, constitute (with
or without due notice or lapse of time or both) a default under,
require the consent from or the giving of notice to a Third
Party pursuant to, or give rise to any right of termination,
cancellation or acceleration or obligation to repurchase, repay,
redeem or acquire or any similar right or obligation under, any
of the terms, conditions or provisions of any Company Material
Contract or any Company Plan, (iii) require any filing or
registration with, or permit, authorization, consent or approval
of, any Governmental Entity on the part of the Company or any of
its Subsidiaries or (iv) assuming compliance with the
requirement described above, violate any Applicable Law to which
the Company or any of its Subsidiaries or any of their
respective properties or assets is subject, excluding from the
foregoing clauses (ii) (iv) such conflicts,
requirements, obligations, defaults, failures, breaches, rights
or violations that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
Section
3.4
Capitalization
.
(a) As of the date hereof, the authorized capital stock of
the Company consists of (i) 80,000,000 shares of
Company Common Stock and (ii) 10,000,000 shares of
preferred stock, par value $0.01 per share (the
Company
Preferred Stock
).
(b) (i) As of the date hereof, the issued and
outstanding capital stock of the Company consisted of
43,571,251 shares of Company Common Stock, all of which
were validly issued, fully paid and nonassessable and free of
preemptive rights;
(ii) As of the date hereof, no shares of Company Preferred
Stock were issued and outstanding;
(iii) As of the date hereof, 2,149,733 shares of
Company Common Stock were held in the treasury of the Company;
(iv) As of the date hereof, no Company Common Stock is
owned by any of the Companys Subsidiaries; and
(v) As of the date hereof, 3,122,534 shares of Company
Common Stock were reserved for issuance as awards under the
Companys 2002 Stock Option Plan (the
Company
Option Plan
) and 566,135 shares of Company Common
Stock were reserved for issuance under the Company SAR Agreement.
Except as set forth in clauses (i)-(v) above, as of the date
hereof, no shares of Company Common Stock or Company Preferred
Stock were outstanding or reserved for issuance.
(c) Section 3.4(c) of the Company Disclosure Schedule
sets forth a correct and complete list as of the date hereof of
each outstanding option (collectively, the
Company
Stock Options
) to purchase shares of Company Common
Stock and each outstanding stock-settled stock appreciation
rights (collectively, the
Company SARs
)
issued under the Company Option Plan and Company SAR Agreement
(collectively, the
Company Incentive Plans
),
including the name of the holder, date of grant, exercise or
base price, number of shares of Company Common Stock subject
thereto, and whether the Company Stock Option or Company SAR is
vested and exercisable.
A-7
(d) Except for the Company Stock Options and Company SARs
specified in Section 3.4(c) of the Company Disclosure
Schedule, there are no options, warrants, calls, rights or
agreements to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating the Company or
any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock
of the Company or any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to grant, extend or enter
into any such option, warrant, call, right or agreement. There
are no outstanding contractual obligations of the Company or any
Subsidiary thereof to repurchase, redeem or otherwise acquire
any shares of Company Common Stock or any capital stock of or
any equity interests in any Subsidiary of the Company.
(e) The Company does not have any outstanding bonds,
debentures, notes or other obligations the holders of which have
the right to vote (or which are convertible into or exercisable
for securities having the right to vote) with the stockholders
of the Company on any matter.
Section
3.5
Subsidiaries
.
Section 3.5
of the Company Disclosure Schedule sets forth a list of all of
the Subsidiaries of the Company and their respective
jurisdictions of incorporation, the number and type of
outstanding equity securities and a list of the holders thereof.
All of the issued and outstanding shares of capital stock or
other equity interests of each Subsidiary of the Company are
owned by the Company, by one or more Subsidiaries of the Company
or by the Company and one or more Subsidiaries of the Company,
free and clear of all Liens, and are validly issued, fully paid
and nonassessable and free of preemptive rights and there are no
outstanding subscriptions, options, calls, contracts, voting
trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants with respect to
any such Subsidiarys capital stock or equity interests,
including any right obligating any such Subsidiary to issue,
deliver or sell additional shares of its capital stock or other
equity interests. Except for the capital stock and equity
interests of its Subsidiaries, the Company does not own,
directly or indirectly, any capital stock or other ownership
interest in any corporation, partnership, joint venture, limited
liability company or other entity.
Section
3.6
SEC
Documents; Controls
.
(a) The Company has filed or furnished, as applicable, with
the SEC all reports, proxy statements, registration statements,
forms and other documents required to be filed or furnished by
it since September 30, 2010 (collectively, including any
amendments, supplements, exhibits and schedules thereto and all
documents incorporated by reference therein, and those documents
that the Company files or furnishes after the date hereof, the
Company SEC Documents
). No Subsidiary of the
Company is required to file any report, proxy statement,
registration statement, form or other document with the SEC. As
of their respective dates (or, if amended prior to the date
hereof, as of the date of the last such amendment), none of the
Company SEC Documents contained or, if not yet filed or
furnished, will contain any untrue statement of a material fact
or omitted or will 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. As of their respective dates (or, if amended prior
to the date hereof, as of the date of the last such amendment),
all of such Company SEC Documents complied or, if not yet filed
or furnished, will comply in form and substance, in all material
respects, with the applicable requirements of the Securities Act
and the Exchange Act, each as in effect on the date thereof. The
Company is in compliance in all material respects with the
applicable provisions of SOX. As of the date hereof, there are
no outstanding comments from or unresolved issues raised by the
SEC with respect to any of the Company SEC Documents.
(b) The Company has established and maintains disclosure
controls and procedures and internal control over financial
reporting (as such terms are defined in paragraphs (e) and
(f), respectively, of
Rule 13a-15
of the Exchange Act) as required by
Rule 13a-15
of the Exchange Act. The Companys disclosure controls and
procedures are reasonably designed to ensure that material
information relating to the Company, including its Subsidiaries,
required to be disclosed by the Company in the reports that it
files or furnishes under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in the rules and forms of the SEC, and that all such
material information is accumulated and communicated to the
Companys management as appropriate in order to allow
timely decisions regarding required disclosure. The
Companys management has completed an assessment of the
effectiveness of its internal control over financial
A-8
reporting in compliance with the requirements of
Section 404 of SOX for the year ended September 30,
2010, and such assessment concluded that such controls were
effective. Since September 30, 2010, any material change in
internal control over financial reporting required to be
disclosed in any Company SEC Documents has been so disclosed.
Section
3.7
Financial
Statements; No Undisclosed Liabilities
.
(a) The consolidated financial statements of the Company
(including any notes and schedules thereto) included in or
incorporated by reference into the Company SEC Documents
(i) complied or will comply as of their respective dates as
to form in all material respects with all applicable accounting
requirements and with the published rules and regulations of the
SEC with respect thereto as in effect on the date of filing
thereof (except as may be indicated in the notes thereto),
(ii) were prepared or will be prepared in accordance with
GAAP as in effect on the dates of such financial statements,
applied on a consistent basis (except as may be indicated
therein or in the notes thereto and, in the case of unaudited
statements, as permitted by the rules and regulations of the
SEC) throughout the periods involved and (iii) fairly
presented or will fairly present, 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 cash flows for the
periods therein indicated (subject, in the case of unaudited
statements, to normal and recurring year-end and audit
adjustments as permitted by the rules and regulations of the
SEC).
(b) Except (i) as set forth, reflected or reserved
against in the consolidated balance sheets (including the notes
thereto) of the Company included in the Company SEC Documents or
as otherwise disclosed in the Company SEC Documents,
(ii) for liabilities and obligations incurred since
March 31, 2011 in the ordinary course of business
consistent with past practice, (iii) liabilities and
obligations permitted or contemplated by this Agreement or
incurred in connection with this Agreement and the Merger, or
(iv) for liabilities or obligations which have been
discharged or paid in full in the ordinary course of business,
as of the date hereof, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by
GAAP to be reflected on a consolidated balance sheet (including
the footnotes thereof), other than those which would not have,
individually or in the aggregate, a Company Material Adverse
Effect.
Section
3.8
Proxy
Statement
.
Subject to the representations and
warranties of Parent and Acquisition Sub in Section 4.4,
the Proxy Statement will not, at the time of its mailing to the
Companys stockholders and at the time of the Special
Meeting, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. No representation is made by the
Company with respect to statements made or omitted in the Proxy
Statement relating to Parent, Acquisition Sub or their
respective Affiliates based on information supplied in writing
by Parent, Acquisition Sub or their respective Affiliates
expressly for inclusion in the Proxy Statement. The Proxy
Statement will comply as to form in all material respects with
the provisions of the Exchange Act.
Section
3.9
Absence
of Certain Changes, etc
.
Other than
activities undertaken in connection with or arising out of this
Agreement and the Merger, since March 31, 2011, the Company
and its Subsidiaries have conducted their respective businesses
in all material respects only in the ordinary course consistent
with past practice. Since March 31, 2011, there has not
been (i) a Company Material Adverse Effect nor have any
events occurred that, either individually or in the aggregate,
would reasonably be expected to have a Company Material Adverse
Effect, (ii) any declaration, setting aside or payment of
any dividend or other distribution with respect to the capital
stock of the Company or any of its Subsidiaries, (iii) any
split, combination or reclassification of any of the capital
stock of the Company or any of its Subsidiaries or any issuance
or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of the
capital stock of the Company or any of its Subsidiaries,
(iv) any material change in accounting methods, principles
or practices by the Company, except for changes required by
changes in GAAP, (v) any material damage, destruction or
other casualty loss with respect to any material asset or
property owned, leased or otherwise used by the Company or any
of its Subsidiaries not covered by insurance, (vi) any
material amendment, extension or termination of any Company
Plan, entry into a new Company Plan, any increase in
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the compensation payable to or to become payable to or the
benefits provided to any current or former director, officer or
employee, or any contribution to any Company Plan, other than
(A) regularly scheduled contributions and
(B) contributions required pursuant to the terms thereof or
Applicable Law, or (vii) any loan or advance of money or
other property to any current or former director, officer or
employee of the Company or any of its Subsidiaries, other than
(y) increases in salary or wages made to non-executive
officers or employees in the ordinary course consistent with
past practice, or (z) as described in the Company SEC
Documents.
Section
3.10
Taxes
.
Except
for such matters as could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect, (i) the Company and each of its Subsidiaries have
filed on a timely basis all Tax Returns required to be filed and
have paid on a timely basis all Taxes shown to be due on such
Tax Returns, and where payment is not yet due, have made
adequate provision for such Taxes in accordance with GAAP,
(ii) all Tax Returns filed by the Company and each of its
Subsidiaries are complete and accurate and disclose all Taxes
required to be paid by the Company and each of its Subsidiaries
for the periods covered thereby, (iii) neither the Company
nor any of its Subsidiaries has waived any statute of
limitations in respect of Federal income Taxes which waiver is
currently in effect, (iv) there is no action, suit,
investigation, audit, claim or assessment pending or, to the
Knowledge of the Company, proposed or threatened with respect to
Taxes of the Company or any of its Subsidiaries, (v) all
deficiencies asserted or assessments made in writing have been
paid in full, (vi) no written claim has been made by any
Governmental Authority in a jurisdiction where neither the
Company nor any of its Subsidiaries files Tax Returns that the
Company or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction, (vii) there are no Liens for
Taxes upon the assets of the Company or any of its Subsidiaries
except Liens relating to current Taxes not yet due,
(viii) neither the Company nor any of its Subsidiaries
(A) is or has ever been a member of a group of corporations
with which it has filed (or been required to file) consolidated,
combined or unitary Tax Returns, other than a group of which
only the Company and its Subsidiaries are or were members or
(B) has any actual or potential liability for any Tax
obligation of any taxpayer (including any affiliated group of
corporations or other entities that included the Company or any
of its Subsidiaries during a prior period) other than the
Company and its Subsidiaries, including liability under Treasury
Regulation Section 1.1502-6
(or any similar provision of federal, state, local, or foreign
law), or as a transferee or successor, (x) the Company and
each of its Subsidiaries have withheld and paid all Taxes
required to have been withheld and paid in connection with any
amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party, (xi) neither
the Company nor any of its Subsidiaries has any income or gain
attributable to a transaction or an event (such as a change in
accounting methods) occurring on or before the Closing Date that
will result in a deferred reporting (such as installment
reporting or reporting differences between book and Tax
accounting) of income or gain after the Closing Date,
(xii) neither the Company nor any of its Subsidiaries has
taken any position on any federal income Tax Return that would
require disclosure in order to avoid a substantial
understatement penalty within the meaning of Section 6662
of the Code, or participated in any reportable transactions
under Treasury
Regulation Section 1.6011-4(b)
and its predecessors (including any applicable administrative
authority), (xiii) neither the Company nor any of its
Subsidiaries is a party to, is bound by or has any obligation
under any Tax sharing or Tax indemnity agreement or similar
contract or arrangement, and (xiv) no closing agreement
pursuant to Section 7121 of the Code (or any similar
provision of state, local or foreign law) has been entered into
by or with respect to the Company or any of its Subsidiaries.
Section
3.11
Employee
Benefit Plans
.
(a) Section 3.11(a) of the Company Disclosure Schedule
sets forth each material (i) employee benefit
plan as such term is defined in section 3(3) of ERISA
(including any multi employer plan within the meaning of
Section 3(37) of ERISA), and (ii) employment,
consulting, bonus, deferred compensation, fringe benefit, deal
bonus, incentive compensation, stock purchase, stock option,
stock appreciation or other equity-based, severance or
termination pay, retention, change of control, hospitalization
or other medical, life or other employee benefit-related
insurance, supplemental unemployment benefits, profit-sharing,
pension, or retirement plan, program, policy, agreement or
arrangement sponsored, maintained or contributed to or required
to be contributed to by the Company, any Subsidiary of the
Company or any of their ERISA Affiliates for the benefit of any
current or former employee or director of the Company or any
Subsidiary of the Company or
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for which the Company or any Subsidiary of the Company has any
present or future liability (collectively, the
Company
Plans
) provided that any plan, program or arrangement
that qualifies as a Foreign Benefit Plan as defined below shall
be excluded from the definition of Company Plan for purposes of
clauses (a), (b), (c) and (e) of this
Section 3.11. For purposes of this Agreement,
ERISA Affiliate
means any entity which is a
member of (A) a controlled group of corporations (as
defined in Section 414(b) of the Code), (B) a group of
trades or businesses under common control (as defined in
Section 414(c) of the Code), or (C) an affiliated
service group (as defined under Section 414(m) of the Code
or the regulations under Section 414(o) of the Code), any
of which includes or included the Company or a Subsidiary of the
Company.
(b) With respect to each Company Plan, the Company has
provided or made available to the Parent or their representative
a complete and accurate copy of (i) such material Company
Plan (or, to the extent no such copy exists, an accurate
description thereof), (ii) the three most recent annual
reports (Form 5500) filed with the IRS and attached
schedules, (iii) each trust agreement, group annuity
contract and summary plan description, if any, relating to such
Company Plan and (iv) for the three most recent years,
audited financial statements and actuarial valuations, and
(v) the most recent IRS determination letter for each
Company Plan intended to be qualified under Section 401(a)
of the Code.
(c) Each Company Plan has been maintained and administered
in all material respects with its terms and with applicable Law,
including ERISA and the Code to the extent applicable thereto.
Each of the Company Plans intended to be qualified within the
meaning of Section 401(a) of the Code has received a
favorable determination letter from the IRS or is entitled to
rely upon a favorable opinion issued by the IRS, and to the
Knowledge of the Company, no circumstances exist nor any events
have occurred that could reasonably be expected to adversely
affect the qualified status of any such Company Plan. There are
no pending, or to the Knowledge of the Company, threatened or
anticipated claims (other than routine claims for benefits) by,
on behalf of, or against any Company Plan or any trusts related
thereto which could reasonably be expected to result in any
liability to the Company or any of its Subsidiaries.
(d) Section 3.11(d) of the Company Disclosure Schedule
sets forth a list of each compensation and benefit plan
maintained or contributed to by the Company or any Subsidiary
under the law or applicable custom or rule of the relevant
jurisdiction outside of the United States for the benefit of
employees who work outside of the United States (each a
Foreign Benefit Plans
). With respect to any
Foreign Benefit Plans, (i) all Foreign Benefit Plans have
been established, maintained and administered in compliance, in
all material respects, with their terms and all applicable
statutes, laws, ordinances, rules, orders, decrees, judgments,
writs, and regulations of any controlling governmental authority
or instrumentality; (ii) all Foreign Benefit Plans that are
required to be funded are fully funded, and with respect to all
other Foreign Benefit Plans, adequate reserves therefore have
been established on the accounting statements of the applicable
Company or Subsidiary entity; and (iii) no material
liability or obligation of the Company or its Subsidiaries
exists with respect to such Foreign Benefit Plans.
(e) No Company Plan is (i) a multiemployer plan within
the meaning of Section 3(37) of ERISA or (ii) subject
to Title IV of ERISA.
(f) The execution, delivery of and performance by the
Company of its obligations under the transactions contemplated
by this Agreement will not (either alone or in connection with
any subsequent event(s)), (i) constitute an event under any
Company Plan that will or may result in any payment,
acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund
benefits; or (ii) result in the triggering or imposition of
any restriction or limitation on the right of the Company or any
of its Subsidiaries to amend or terminate any Company Plan.
Section
3.12
Environmental
Matters
.
Except for matters that have not had
and would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect, (i) the
Company and its Subsidiaries are in compliance with all
applicable Environmental Laws, and possess and comply with all
Environmental Permits required under such Environmental Laws to
operate as they currently operate, and (ii) the operations
of the Company and its Subsidiaries have not resulted in any
contamination of any property currently or formerly owned or
operated by the Company or any of its Subsidiaries (including
soils, groundwater or surface water) with any Hazardous
Substance which contamination could reasonably be
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expected to give rise to any liability of the Company or any of
its Subsidiaries under any Environmental Law or result in costs
to the Company or any of its Subsidiaries arising out of any
Environmental Law. To the Knowledge of the Company, (x) no
property currently or formerly owned or operated by the Company
or any of its Subsidiaries was contaminated with any Hazardous
Substance during or prior to such period of ownership or
operation which contamination could be reasonably likely to
require remediation pursuant to any Environmental Law,
(y) neither the Company nor any of its Subsidiaries has
arranged for the treatment or disposal of any Hazardous
Substance on any Third Party property undergoing cleanup
pursuant to Environmental Laws, and (z) neither the Company
nor any of its Subsidiaries has received any written notice,
demand, letter, claim or request for information alleging that
the Company or any of its Subsidiaries may be in material
violation of or subject to material liability under any
Environmental Law, and there is no material basis for any such
notice, demand, letter, claim or request for information. The
Company has provided to the Acquiror Entities true and complete
copies of all reports, studies, assessments, audits or other
similar documents within the possession or control of the
Company that address any issue of actual or potential
noncompliance with, actual or potential liability under or cost
arising out of, or actual or potential impact on business in
connection with, any Environmental Law or any proposed or
anticipated change in or addition to Environmental Law, that may
affect the Company or any of its Subsidiaries in any material
respect. Neither the Company nor any of its Subsidiaries is
subject to any written order, decree, injunction or indemnity
with any Governmental Entity or any Third Party relating to
liability under any Environmental Law or relating to Hazardous
Substances. This Section 3.12, Section 3.7 and
Section 3.9 set forth the sole representations and
warranties of the Company with respect to environmental matters,
including all matters arising under Environmental Laws.
Section
3.13
Litigation;
Compliance with Laws
.
(a) There are no material actions, suits, litigations,
arbitrations, proceedings or investigations pending or, to the
Knowledge of the Company, threatened against, the Company or any
Subsidiary of the Company or any of their respective assets or
properties, nor, to the Knowledge of the Company, are there any
material and undischarged judgments, orders, injunctions, writs,
awards, settlements or decrees outstanding against the Company
or its Subsidiaries or any of their respective assets or
properties.
(b) To the Knowledge of the Company, since
September 30, 2010, the Company, each of its Subsidiaries
and their respective businesses have been in compliance in all
material respects with, and not in violation in any material
respect of, any Applicable Law. As of the date hereof, neither
the Company nor any of its Subsidiaries has received written
notice from any Governmental Entity that it has violated or is
violating any Applicable Law, except for alleged violations that
have been rectified or resolved or in respect of which there is
no reasonable likelihood of material penalty or other materially
adverse consequence. Each of the Company and its Subsidiaries
has all certificates of authority, franchises, grants,
authorizations, licenses, permits, easements, variances,
exceptions, consents, approvals and orders of any Governmental
Entity necessary for the Company or any of its Subsidiaries to
own, lease and operate its properties or to carry on its
business as it is now being conducted (the
Company
Permits
), except for those the absence of which have
not had and would not reasonably be expected to interfere
materially with the conduct of the Companys or such
Subsidiarys business or to subject the Company or its
Subsidiary to material fines or other material penalties. The
Company and its Subsidiaries are, and since March 31, 2011
have been, in compliance with the terms of the Company Permits
and no suspension or cancellation of any of the Company Permits
is pending or, to the Knowledge of the Company, threatened,
except for any such failures to be in compliance that would not
reasonably be expected to interfere materially with the conduct
of the Companys or such Subsidiarys business or to
subject the Company or its Subsidiary to material fines or other
material penalties.
Section
3.14
Intellectual
Property
.
To the Knowledge of the Company,
the Company or a Subsidiary thereof owns free and clear of all
Liens (other than Permitted Liens) or has the defensible right
to use, whether through ownership, licensing or otherwise, all
material Intellectual Property used in the businesses of the
Company and its Subsidiaries (
Company Intellectual
Property
) in each case in the same form and
substantially the same manner as such Company Intellectual
Property is used in connection with such businesses as conducted
on the date hereof. As of the date hereof, no material written
claim of invalidity or conflicting ownership rights has been
made or, to the Knowledge of the Company, threatened by a third
party with respect to any Company Intellectual Property owned by
the Company or a Subsidiary thereof
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(
Company-owned Intellectual Property
) and no
Company-owned Intellectual Property is the subject of any
material pending or, to the Knowledge of the Company, threatened
action, suit, claim, investigation, arbitration or other
proceeding challenging the Companys ownership rights in
such Company-owned Intellectual Property. Section 3.14(b)
of the Companys Disclosure Schedule sets forth a list of
all material Company Registered Intellectual Property as of the
date hereof and none of such listed registrations for any
Company-owned Intellectual Property have been cancelled,
abandoned or, to the Knowledge of the Company, adjudicated
invalid. Within the three year period prior to the date hereof,
no Person has given written notice to the Company or any
Subsidiary thereof that the conduct of the Companys or its
Subsidiarys business is infringing, violating, or
misappropriating, or has materially infringed, violated, or
misappropriated, any third partys domestic or foreign
rights in or to any Intellectual Property in any material
respect. To the Knowledge of the Company, none of the
Company-owned Intellectual Property has been or is currently
being infringed, misappropriated or otherwise violated by any
third party in any material respect. The Company and each
Subsidiary thereof have taken reasonable measures to safeguard
the confidentiality and value of all Company-owned Intellectual
Property comprising material trade secrets or other confidential
information. The execution, delivery and performance of this
Agreement and each ancillary agreement by the Company and the
consummation of the Transactions will not in any material
respect (x) breach, violate or conflict with any material
instrument or agreement concerning the Companys or its
Subsidiarys use of any Company Intellectual Property,
(y) cause the forfeiture or termination or give rise to a
right of forfeiture or termination of any rights in or to the
Company Intellectual Property or (z) impair the right of
Parent or the Surviving Corporation to (i) use any Company
Intellectual Property and (ii) make, use, sell, license or
dispose of, or to bring any action for the infringement of, any
Company-owned Intellectual Property, all in the same form and
manner as the Company or its Subsidiary has prior to the date
hereof.
Section
3.15
Material
Contracts
.
None of the Company nor any of its
Subsidiaries is a party to or bound by any Contract that
(i) is a material contract (as such term is
defined in Item 601(b)(10) of
Regulation S-K
promulgated by the SEC) except for Contracts that are filed as
exhibits to Company SEC Documents, (ii) limits or otherwise
restricts the Company or any of its Subsidiaries from engaging
or competing in any material line of business or in any
geographic area or with any Person, or that requires referrals
of business or provides for priority or exclusive status for any
Person, (iii) would be required to be disclosed under
Item 404 of
Regulation S-K
promulgated by the SEC, (iv) relates to the formation,
creation, operation, management or control of any partnership or
joint venture, (v) other than among wholly-owned
Subsidiaries of the Company, relates to indebtedness (or the
guarantee of indebtedness) for borrowed money,
(vi) required payments by the Company
and/or
any
Subsidiary thereof totaling more than £1,000,000 in
calendar year 2010 or in consideration of goods or services
valued at £100,000 or more per annum, or requires payments
or consideration at or above such levels in 2011, or
(viii) that would reasonably be expected to prevent,
materially delay or materially impede the consummation of any of
the transactions contemplated by this Agreement. Each Contract
of the type described in the first sentence of this
Section 3.15 is referred to herein as a
Company
Material Contract
. Subject to the Bankruptcy and
Equitable Remedies Exception, each Company Material Contract is
a valid and binding obligation of the Company (or, if a
Subsidiary of the Company is a party, such Subsidiary) and, to
the Knowledge of the Company, the other parties thereto, and is
in full force and effect, and the Company and each Subsidiary
thereof have performed all obligations required to be performed
by them to date under each Company Material Contract to which
they are a party, except where the Companys or its
Subsidiarys noncompliance or nonperformance has not had
and would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is in violation of or
default under (nor does there exist any condition which with the
passage of time or the giving of notice (or both) would cause
such a violation of or default under) or has Knowledge of, or
has received notice of, any violation of or default under (or
any condition which with the passage of time or the giving of
notice (or both) would cause such a violation of or default
under) any Company Material Contract, except for those
violations or defaults that have not had and would not
reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
Section
3.16
Insurance
.
Each
of the Company and its Subsidiaries maintains insurance policies
with reputable insurance carriers against risks of a character
and in such amounts as are usually insured against by similarly
situated companies in the same or similar businesses, all of
which are in full force and effect and, to
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the Companys Knowledge, are valid and enforceable in
accordance with their terms. Section 3.16 of the Company
Disclosure Schedule contains a true and complete list of all
material insurance policies in force on the date hereof with
respect to the business and assets of the Company and its
Subsidiaries. The Company and its Subsidiaries are in material
compliance with their insurance policies, and are not in default
under any of the material terms thereof.
Section
3.17
Real
Estate; Assets
.
The Company and its
Subsidiaries (a) have good and valid title to, or valid
leasehold or sublease interests or other comparable contract
rights in and to, all properties and other assets which are,
individually or in the aggregate, material to the business or
financial condition of the Company and its Subsidiaries taken as
a whole, free and clear of all Liens (except for Permitted
Liens) and (b) have complied in all material respects with
the terms of each lease of property that is material to the
Company and its Subsidiaries, taken as a whole, except for
defects in title or failure to comply, have not had and would
not reasonably be excepted to have, individually or in the
aggregate, a Company Material Adverse Effect. Such leases are in
full force and effect (except for any scheduled expirations
after the date hereof in accordance with the terms of such
leases) and, subject to the Bankruptcy and Equitable Remedies
Exception, are enforceable in accordance with their respective
terms against the Company or its Subsidiary party thereto and,
to the Knowledge of the Company, the other parties thereto, and
as of the date hereof neither the Company nor any of its
Subsidiaries has received or provided any written notice of any
event or occurrence that has resulted or would reasonably be
expected to result (with or without the giving of notice, the
lapse of time or both) in a material default with respect to any
such lease.
Section
3.18
Labor
and Employment
.
The Company and its
Subsidiaries are in compliance in all material respects with all
Applicable Laws respecting employment and employment practices,
terms and conditions of employment (including termination of
employment), wages, hours of work, occupational safety and
health, and worker classification, and are not engaged in any
unfair labor practices, except for such violations which could
not reasonably be expected to have a Company Material Adverse
Effect. As of the date of this Agreement, neither the Company
nor any of its Subsidiaries has received written notice from any
Governmental Entity of an alleged or actual violation of any
such labor or employment laws, or of the intent of any
Governmental Entity to conduct an investigation with respect to
or relating to any such matters and, to the Knowledge of the
Company, no such investigation is in progress. Since
September 30, 2010, no strikes, work stoppages, slowdowns,
lockouts, material arbitrations or material grievances, or other
material labor disputes have occurred or, to the Knowledge of
the Company, threatened in writing, involving the Company or any
of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreements,
and there are not, to the Knowledge of the Company, any union
organizing activities concerning any employees of the Company.
Section
3.19
Opinion
of Financial Advisors
.
The Company Board has
received the oral opinion of Oppenheimer & Co. Inc. to
the effect that, as of the date of such opinion and subject to
the various assumptions and qualifications therein, the Merger
Consideration is fair, from a financial point of view, to the
holders of Company Common Stock and the Company will promptly
provide a written copy of such opinion to Parent solely for
information purposes following receipt thereof by the Company.
It is agreed and understood that such opinion is for the benefit
of the Company Board and may not be relied on by Parent or
Acquisition Sub.
Section
3.20
Brokers
.
Except
for Oppenheimer & Co. Inc., whose fees and expenses
shall be paid by the Surviving Corporation in accordance with
the Companys agreement with such firm, which agreement has
been previously disclosed to Parent, no agent, broker,
investment banker, financial advisor or other firm or Person is
or shall be entitled, as a result of any action, agreement or
commitment of the Company or any of its Affiliates, to any
brokers, finders, financial advisors or other
similar fee or commission in connection with any of the
transactions contemplated by this Agreement.
Section
3.21
State
Takeover Statutes
.
Subject to the accuracy of
the representations and warranties of Parent and Acquisition Sub
set forth in Section 4.6, the Company Board has, to the
extent such statutes are applicable, taken all action (including
appropriate approvals of the Company Board) necessary to render
the business combination provisions of the NYBCL inapplicable to
the Merger, this Agreement and the
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transactions contemplated hereby. No other fair
price, moratorium, control share
acquisition, business combination or other
similar anti-takeover statute or regulation enacted under state
or federal laws in the United States or similar charter or bylaw
provisions are applicable to the Merger, this Agreement or the
transactions contemplated hereby.
Section
3.22
No
Other Representations or Warranties
.
Except
for the representations and warranties contained in this
Agreement, including any modification or qualification thereto
included in the Company Disclosure Schedule, none of the
Company, the Companys Subsidiaries or any other Person on
behalf of the Company or its Subsidiaries makes any other
express or implied representation or warranty with respect to
the Company, any of the Companys Subsidiaries or any
information provided to Parent or Acquisition Sub with respect
to the Company or any of the Companys Subsidiaries.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF PARENT AND ACQUISITION SUB
Except (i) as set forth in the corresponding section of the
Parent Disclosure Schedule, it being understood that matters
disclosed pursuant to one section of the Parent Disclosure
Schedule shall be deemed disclosed with respect to any other
section of the Parent Disclosure Schedule where it is reasonably
apparent that the matters so disclosed are applicable to such
other sections, and (ii) for events or matters expressly
contemplated or permitted under this Agreement or any agreement
contemplated hereby or thereby, each of Parent and Acquisition
Sub (each, an
Acquiror Entity
) hereby
jointly and severally represents and warrants to the Company as
follows:
Section
4.1
Organization
.
Each
Acquiror Entity is a corporation duly organized, validly
existing and in good standing (with respect to jurisdictions
that recognize that concept) under the laws of its jurisdiction
of incorporation and has the requisite power and authority to
carry on its business as now being conducted. Each Acquiror
Entity is duly qualified to do business (with respect to
jurisdictions that recognize that concept) and is in good
standing (with respect to jurisdictions that recognize that
concept) in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes
such qualification or licensing necessary, except where any
failure to be so duly qualified, licensed and in good standing
(with respect to jurisdictions that recognize that concept) has
not had and would not reasonably be expected to have,
individually or in the aggregate, an Acquiror Entity Material
Adverse Effect.
Section
4.2
Authorization
.
Each
Acquiror Entity has the requisite corporate power and authority
to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this
Agreement by each Acquiror Entity and the performance of its
obligations hereunder have been duly and validly authorized, and
this Agreement has been approved and adopted by the Board of
Directors of each Acquiror Entity, and no other corporate
proceedings (such as approval by the stockholders or holders of
any other securities of Parent) on the part of either Acquiror
Entity are necessary to authorize the execution, delivery and
performance of this Agreement. Concurrently with the execution
of this Agreement, Parent, as the sole stockholder of
Acquisition Sub (either directly or indirectly through one or
more wholly-owned Subsidiaries), is approving this Agreement and
the transactions contemplated hereby, including the Merger. This
Agreement has been duly executed and delivered by each Acquiror
Entity and, assuming due authorization, execution and delivery
of this Agreement by the Company, constitutes a valid and
binding obligation of each Acquiror Entity, enforceable against
each Acquiror Entity in accordance with its terms, subject to
the Bankruptcy and Equitable Remedies Exception.
Section
4.3
Consents
and Approvals; No Violations
.
The execution
and delivery of this Agreement by each Acquiror Entity do not,
and except for those filings, permits, authorizations, consents
and approvals as may be required under, and other applicable
requirements of, the Exchange Act, the NYBCL, state blue sky,
securities or takeover laws, stock exchange and Nasdaq Stock
Market requirements and the Irish Competition Act 2002, the
performance of this Agreement by each Acquiror Entity and the
consummation by each Acquiror Entity of the transactions
contemplated hereby will not (i) conflict with or result in
a breach of any provision of the charter or bylaws (or
equivalent documents in the relevant jurisdiction) of such
Acquiror
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Entity, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, vesting,
amendment, cancellation or acceleration or impose on either of
the Acquiror Entities any obligation to repurchase, repay,
redeem or acquire or any similar right or obligation) under any
of the terms, conditions or provisions of any Contract to which
any Acquiror Entity is a party or by which it or its assets is
bound, (iii) require any filing or registration with, or
permit, authorization, consent or approval of, any Governmental
Entity on the part of either Acquiror Entity or
(iv) violate any Applicable Law to which such Acquiror
Entity or any of its properties or assets is subject, excluding
from the foregoing clauses (ii) (iv) such
conflicts, requirements, defaults, failures, breaches, rights or
violations that have not had and would not reasonably be
expected, individually or in the aggregate, to have an Acquiror
Entity Material Adverse Effect.
Section
4.4
Proxy
Statement
.
None of the information relating
to the Acquiror Entities and supplied or to be supplied by
either Acquiror Entity or its respective Affiliates specifically
for inclusion in the Proxy Statement, at the time of its mailing
to the Companys stockholders and at the time of the
Special Meeting, will contain any untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances under
which they were made, not misleading. No representation is made
by any Acquiror Entity with respect to statements made in the
Proxy Statement, or otherwise, based upon information not
supplied by an Acquiror Entity, including any information
supplied by the Company or its Subsidiaries or their respective
Affiliates.
Section
4.5
Capitalization;
Operations
.
All of the issued and outstanding
capital stock of Acquisition Sub is, and at the Effective Time
will be, owned by Parent or a direct or indirect wholly-owned
Subsidiary of Parent, free and clear of all Liens. Acquisition
Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has not and,
prior to the Effective Time will not have, other than in
connection with the transactions contemplated hereby or thereby
and other than those incidental to its organization and
maintenance of corporate existence, (i) engaged in any
business activities, (ii) conducted any operations,
(iii) incurred any liabilities or (iv) owned any
assets or property.
Section
4.6
Ownership
of Company Common Stock
.
Neither Acquiror
Entity nor any of its respective affiliates or
associates is the beneficial owner of
any shares of Company Common Stock or any securities convertible
into, exchangeable into or exercisable for shares of Company
Common Stock, or is an interested shareholder of the
Company (as such quoted terms are defined in Section 912 of
the NYBCL). There are no voting trusts or other agreements or
understandings to which Parent or any of its Subsidiaries is a
party with respect to the voting of the capital stock or other
equity interests of the Company or any of its Subsidiaries.
Section
4.7
Financing
.
Parent
and Acquisition Sub will have on the Closing Date, sufficient
funds available to them in cash or under existing credit lines
to finance the payment of the Merger Consideration and the
Option Consideration as contemplated by this Agreement and to
otherwise perform their obligations hereunder.
Section
4.8
Brokers
.
Except
for Credit Suisse, whose fees and expenses shall be paid by
Parent, no broker, finder or investment banker is entitled as a
result of any action, agreement or commitment of the Acquiror
Entities, to any brokers, finders, financial
advisors or other similar fee or commission in connection
with any of the transactions contemplated by this Agreement.
Section
4.9
Litigation
.
As
of the date of this Agreement, there is no action, suit,
proceeding or investigation pending or, to the Knowledge of
Parent or Acquisition Sub, threatened against either Acquiror
Entity, at law or in equity, that has had or would reasonably be
expected to have, individually or in the aggregate, an Acquiror
Entity Material Adverse Effect.
Section
4.10
Absence
of Arrangements with Management
.
Other than
this Agreement, as of the date hereof, there are no contracts,
undertakings, commitments, agreements or obligations or
understandings between Parent or Acquisition Sub or any of their
respective Affiliates, on the one hand, and any member of the
Companys management or the Company Board on the other
hand, relating to the transactions contemplated by this
Agreement or the operations of the Company after the Effective
Time.
A-16
Section
4.11
No
Other Representations or Warranties
.
Except
for the representations and warranties contained in this
Agreement, neither Parent nor Acquisition Sub nor any other
Person on its behalf makes any other express or implied
representation or warranty with respect to Parent or Acquisition
Sub or any information provided to the Company or any of its
Subsidiaries with respect to Parent or Acquisition Sub.
ARTICLE V
COVENANTS OF
THE PARTIES
Section
5.1
Conduct
of the Business of the Company
.
During the
period from the date of this Agreement and continuing until the
Effective Time or earlier termination of this Agreement, the
Company agrees, and agrees to cause each of its Subsidiaries,
except (i) as expressly permitted or required by any other
provision of this Agreement, (ii) as required by Applicable
Law, (iii) as set forth in Section 5.1 of the Company
Disclosure Schedule or (iv) to the extent that Parent shall
otherwise consent in writing (which consent shall not be
unreasonably withheld, conditioned or delayed), as follows:
(a)
Ordinary Course
.
The Company
and each of its Subsidiaries shall in all material respects
carry on their respective businesses in the usual, regular and
ordinary course consistent with past practice. Without limiting
the foregoing, the Company and its Subsidiaries shall use their
commercially reasonable efforts to preserve substantially intact
their present lines of business, maintain their rights, assets
and franchises and preserve substantially intact their current
relationships with customers, suppliers and others having
business dealings with them and keep available the services of
their present officers and employees.
(b)
Capital Expenditures
.
The
Company shall not, and shall not permit any of its Subsidiaries
to, incur or commit to any capital expenditures, except for
(x) capital expenditures up to the aggregate amount set
forth in a capital expenditure budget plan delivered to Parent
prior to the date of this Agreement, during the period covered
by such budget plan, or (y) capital expenditures after the
period covered by such plan in an aggregate amount not to exceed
£600,000 per quarter.
(c)
Dividends; Changes in Share
Capital
.
The Company shall not, and shall not
permit any of its Subsidiaries to, (i) declare, set aside
or pay any dividend or other distribution with respect to any of
its capital stock (except for dividends by wholly-owned
Subsidiaries of the Company payable to the Company or to another
wholly owned Subsidiary of the Company), (ii) split,
combine or reclassify any of its capital stock or issue any
other securities in respect of, in lieu of or in substitution
for, shares of its capital stock, except for any such
transaction by a wholly-owned Subsidiary of the Company which
remains a wholly-owned Subsidiary after consummation of such
transaction, or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital
stock (except for (A) transactions among the Company and
its wholly-owned Subsidiaries or among the Companys
wholly-owned Subsidiaries or (B) the acquisition of any
Company Common Stock tendered by current or former employees or
directors in order to pay Taxes or the exercise price in
connection with the settlement of Company Stock Options or
Company SARs under the terms or conditions of the Company
Incentive Plans).
(d)
Issuance of Securities
.
The
Company shall not, and shall not permit any of its Subsidiaries
to, grant, issue, pledge, dispose of, transfer, encumber,
deliver or sell any shares of any class of its capital stock or
any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares of
capital stock, other than (i) the issuance of shares of
Company Common Stock upon the exercise of options, stock
appreciation rights or other rights therefor, (ii) the sale
of shares of Company Common Stock pursuant to the exercise of
Company Stock Options if necessary to effectuate an optionee
direction upon exercise or for withholding of Taxes or
(iii) issuances by a wholly-owned Subsidiary of the Company
of capital stock to such Subsidiarys parent or another
wholly-owned Subsidiary of the Company.
(e)
Governing Documents; Mergers,
Etc
.
The Company shall not, and shall not
permit any of its Subsidiaries to, amend the Company Certificate
of Incorporation, the Company Bylaws or the certificate of
incorporation or bylaws (or comparable governing documents) of
any of its Subsidiaries or enter into a plan of consolidation,
merger, share exchange, reorganization or complete or partial
liquidation.
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(f)
No Acquisitions
.
The Company
shall not, and shall not permit any of its Subsidiaries to,
acquire (or agree to acquire), in a single transaction or in a
series of related transactions, any business, stock, other
equity interest, debt securities or assets, other than
transactions that involve solely the acquisition of assets in
the ordinary course consistent with past practice.
(g)
No Dispositions
.
The Company
shall not, and shall not permit any of its Subsidiaries to,
sell, dispose of, transfer, lease, license or divest any assets
(including capital stock of its Subsidiaries and Company-owned
Intellectual Property), businesses or divisions, or grant any
security interest in any assets, other than transactions that
involve solely the disposition of assets in the ordinary course
consistent with past practice or pursuant to contracts in
existence on the date hereof.
(h)
Indebtedness
.
The Company
shall not, and shall not permit any of its Subsidiaries to,
incur or guarantee any indebtedness or enter into any keep
well or other agreement to maintain the financial
condition of another person or enter into any arrangement having
the economic effect of any of the foregoing (including any
capital leases, synthetic leases or conditional sale
or other title retention agreements) other than (i) for
borrowings in the ordinary course of business consistent with
past practice under the Companys existing credit
facilities and loan agreements, (ii) indebtedness incurred
in connection with the refinancing of existing indebtedness
either at its stated maturity or at a lower cost of funds
(calculating such cost on an aggregate after-Tax basis), and
(iii) indebtedness and guarantees among the Company and its
Subsidiaries.
(i)
Compensation;
Severance
.
Except as required or contemplated
by existing written agreements or Company Plans, the Company
shall not, and shall not permit any of its Subsidiaries to,
(A) pay or commit to pay any retention, transaction bonus,
severance or termination pay, (B) enter into any
employment, deferred compensation, consulting, severance or
other similar agreement (or any amendment to any such existing
agreement) with any current or former director, officer,
employee or consultant of the Company or any of its
Subsidiaries, other than severance agreements entered into with
employees in the ordinary course of business in connection with
terminations of employment), (C) except as required by
Applicable Law, make any material change (from the point of view
of the relevant employee or category of employees) in the terms
or conditions of employment, working practices or agreements
relating to such terms, conditions or practices; (D) except
in the ordinary course of business consistent with past practice
or as required by Applicable Law, increase or commit to increase
in any material respect the compensation or other benefits
payable to the Companys or its Subsidiaries
directors or officers, (E) adopt or make any commitment to
adopt any additional employee benefit plan or other arrangement
that would be a Company Plan if it were in existence on the date
of this Agreement, (F) make any contribution to any Company
Plan, other than (1) regularly scheduled contributions and
(2) contributions required pursuant to the terms thereof or
Applicable Law, (G) amend or extend (or make any
commitments to amend or extend or terminate) any Company Plan,
except for amendments required by Applicable Law or to avoid
adverse tax consequences under Section 409A of the Code, or
(H) loan or advance any money or other property to any
current or former director, officer or employee of the Company
or any of its Subsidiaries.
(j)
Accounting Methods; Tax
Matters
.
The Company shall not, and shall not
permit any of its Subsidiaries to, (i) change in any
material respect its methods of accounting or accounting
practices as in effect on the date hereof, except for any such
change as required by GAAP, SEC rule or policy, or other
Applicable Law, (ii) change its fiscal year,
(iii) with respect to Taxes, make, change or revoke any
material Tax election, file any material amended Tax Return,
settle any material Tax claim or assessment relating to the
Company or any of its Subsidiaries, or surrender any material
right to claim a refund of Taxes (except in each case in respect
of Taxes for which reserves have been established in the
Companys financial statements, or (iv) prepare or
file any Tax Return materially inconsistent with past practice
or, on any such Tax Return, take any position, make any
election, or adopt any accounting method that is materially
inconsistent with positions taken, elections made or accounting
methods used in preparing or filing similar Tax Returns in prior
periods.
(k)
Certain Agreements
.
The
Company shall not, and shall not permit any of its Subsidiaries
to, enter into any Contracts that limit or restrain the Company
or any of its Subsidiaries or any of their respective Affiliates
or successors, or that would, after the Effective Time, limit or
restrict Parent, the Surviving
A-18
Corporation or any of their respective Affiliates or successors,
from engaging or competing in any business or in any geographic
area or location.
(l)
Maintenance of Insurance
.
The
Company shall, and shall cause its Subsidiaries to, maintain in
effect all existing insurance coverage and, if any such
insurance will (by its terms or otherwise) terminate prior to
the Closing Date either extend or renew such coverage or arrange
equivalent insurance coverage in accordance with past practice.
(m)
Certain Prohibited
Actions
.
The Company shall not, and shall not
permit any of its Subsidiaries to, agree, authorize or enter
into any commitment to take any action described in the
foregoing subsections (a)-(k) of this Section 5.1, except
as otherwise expressly permitted by this Agreement.
Section
5.2
Stockholders
Meeting; Proxy Material
.
(a) As promptly as is reasonably practicable following the
date of this Agreement, the Company shall prepare a preliminary
proxy statement relating to the approval of the Merger by the
Companys stockholders (as amended or supplemented, the
Proxy Statement
), which shall, subject to
Section 5.2(d), include the Company Recommendation. The
Company shall provide Parent with a reasonable opportunity to
review and comment on such draft, and once such draft is in a
form reasonably acceptable to each of Parent and the Company,
the Company shall file the Company Proxy Statement with the SEC.
Parent and Acquisition Sub will timely supply the Company with
such Acquiror Entity Information as is required or desirable to
be included in the Proxy Statement, it being understood that the
Company will not include any Acquiror Entity Information not
supplied or approved by Parent (which approval will not be
unreasonably withhold or delayed). The Company will use its
commercially reasonable efforts to have the Proxy Statement
cleared by the SEC as promptly as practicable after such filing.
(b) The Company shall as promptly as is reasonably
practicable notify Parent and Acquisition Sub of the receipt of
any oral or written comments from the SEC relating to the Proxy
Statement. The Company shall cooperate and provide Parent and
Acquisition Sub with a reasonable opportunity to review and
comment on each amendment or supplement to the Proxy Statement
and all responses to requests for additional information by and
replies to comments of the SEC, prior to filing such with or
sending such to the SEC, and the parties hereto will provide
each other with copies of all such filings made and
correspondence with the SEC. The Company will use its
commercially reasonable efforts to cause the Proxy Statement to
be mailed to the Companys stockholders as promptly as
practicable after the date the SEC staff advises that it has no
further comments thereon or that the Company may commence
mailing the Proxy Statement. If at any time prior to the
Effective Time, any information should be discovered by any
party which should be set forth in an amendment or supplement to
the Proxy Statement so that the Proxy Statement would not
include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, the party which discovers such information shall
promptly notify the other parties hereto and, to the extent
required by Applicable Law, an appropriate amendment or
supplement describing such information shall be promptly filed
by the Company with the SEC and disseminated by the Company to
the stockholders of the Company.
(c) Following the clearance of the Proxy Statement with the
SEC, and subject to the other provisions of this Agreement
(including Section 5.2(d)), the Company, acting through the
Company Board and in accordance with Applicable Law, the Company
Certificate of Incorporation, the Company Bylaws and the rules
of the Nasdaq Stock Market, shall use its commercially
reasonable efforts to duly call, give notice of, convene and
hold a special meeting of its stockholders (the
Special
Meeting
) as promptly as practicable after the date
hereof for the purpose of considering and taking action upon
this Agreement and the Merger and shall use its commercially
reasonable efforts to solicit proxies in favor of approval of
this Agreement and the transactions contemplated hereby,
including the Merger;
provided
,
however
, for the
avoidance of doubt, the Company may postpone or adjourn the
Special Meeting: (i) with the consent of Parent,
(ii) for the absence of a quorum, (iii) to allow
reasonable additional time for the filing and distribution of
any supplemental or amended disclosure which the Company Board
has determined in good faith (after consultation with its
outside legal counsel) is necessary under Applicable Law and for
such supplemental or amended disclosure to be disseminated to
and reviewed by the Companys stockholders prior to the
Company Meeting, or (iv) if the
A-19
Company has provided a Notice of Superior Proposal contemplated
by Section 5.2(d)(C)(ii), during the five Business Day
period contemplated thereby.
(d) Except as provided in this Section 5.2(d), the
Company Board shall neither withdraw, modify or change, nor
resolve to withdraw, modify or change, in any manner adverse to
Parent or Acquisition Sub, the Company Recommendation, nor take
any other action or make any other public statement in
connection with the Special Meeting inconsistent with such
recommendation (any of the foregoing, a
Change in
Recommendation
). Notwithstanding the foregoing or
anything else in this Agreement to the contrary, the Company
Board may determine (i) to effect a Change in
Recommendation and (ii) not to solicit proxies in favor of
approval of this Agreement and the transactions contemplated
hereby, including the Merger, if (A) the Company has
complied in all material respects with its obligations under
Section 5.4, (B) the Company Board has determined in
good faith, after consultation with its independent outside
legal and financial advisors, that failure to take such action
would result in a violation of its fiduciary responsibilities to
the Companys stockholders under Applicable Law and
(C) if the Company Board intends to effect a Change in
Recommendation following and as a result of an Acquisition
Proposal, (i) the Company Board has concluded in good faith
that such Acquisition Proposal constitutes a Superior Proposal,
(ii) the Company Board has provided five Business
Days prior written notice (a
Notice of Superior
Proposal
) advising Parent that the Company Board
intends to take such action and specifying the reasons therefor,
including the terms and conditions of the Superior Proposal that
is the basis of the proposed action by the Company Board (it
being understood and agreed that any amendment to the financial
terms or any other material term of such Superior Proposal shall
require a new Notice of Superior Proposal and a new five
Business Day period), (iii) during such five Business Day
period, if requested by Parent, the Company has engaged in and
has caused its legal and financial advisors to engage in good
faith negotiations with Parent (to the extent Parent desires to
negotiate) to amend this Agreement in such a manner that the
Acquisition Proposal which was determined to constitute a
Superior Proposal is no longer a Superior Proposal and
(iv) at the end of such five Business Day period, such
Acquisition Proposal has not been withdrawn and continues to
constitute a Superior Proposal (taking into account any changes
to the terms of this Agreement proposed by Parent in response to
a Notice of Superior Proposal, as a result of the negotiations
required by clause (iii) or otherwise).
Section
5.3
Access
to Information; Control
.
Between the date of
this Agreement and the Closing Date, the Company shall
(a) give Parent, Acquisition Sub, and its and their
respective counsel, financial advisors, auditors and other
authorized representatives (collectively,
Acquirors Representatives
)
reasonable access during normal business hours to the offices,
properties, Contracts, books and records (including Tax Returns
and other Tax-related information) of the Company and its
Subsidiaries, (b) furnish to Acquirors
Representatives such financial and operating data and other
information (including Tax Returns and other Tax-related
information) relating to the Company, its Subsidiaries and their
respective operations as such Persons may reasonably request and
(c) instruct the employees, counsel and financial advisors
of the Company and its Subsidiaries to cooperate with Parent and
Acquisition Sub in their investigation of the business of the
Company and its Subsidiaries;
provided
,
however
,
that such access shall only be provided to the extent that such
access would not violate Applicable Laws. Prior to the Effective
Time, any information relating to the Company or its
Subsidiaries made available pursuant to this Section 5.3,
shall be subject to the provisions of the Confidentiality
Agreement. Prior to the Effective Time, neither Parent nor
Acquisition Sub shall, and Parent and Acquisition Sub shall
cause each of the Acquirors Representatives not to, use
any information acquired pursuant to this Section 5.3 for
any purpose unrelated to the consummation of the transactions
contemplated hereby. Nothing contained in this Agreement shall
give Parent, directly or indirectly, the right to control or
direct the operations of the Company or any of its Subsidiaries
prior to the Effective Time.
Section
5.4
No
Solicitation
.
(a) From the date of this Agreement until the Effective
Time or, if earlier, the termination of this Agreement in
accordance with its terms, none of the Company, any of its
Subsidiaries or any of their respective directors or officers
shall (whether directly or indirectly through officers,
directors, employees, Affiliates, advisors, representatives,
agents or other intermediaries), and the Company shall direct
and use commercially reasonable efforts to cause its and its
Subsidiaries respective officers, directors, employees,
Affiliates, advisors, representatives or other agents of the
Company not to, directly or indirectly, (i) solicit,
A-20
initiate, knowingly encourage or knowingly facilitate (including
by way of furnishing non-public information) any inquiries or
the making or submission of any proposal or transaction that
constitutes an Acquisition Proposal, (ii) enter into,
participate
and/or
engage in discussions or negotiations with, or disclose any
non-public information or data relating to the Company or its
Subsidiaries or afford access to the properties, books or
records of the Company or its Subsidiaries to, any Person
relating to, or who has made or disclosed to the Company that it
is contemplating making, an Acquisition Proposal or
(iii) accept or recommend an Acquisition Proposal or enter
into any agreement, letter of intent or agreement in principle
(other than an Acceptable Confidentiality Agreement to the
extent expressly provided in the following sentence), providing
for or relating to an Acquisition Proposal or enter into any
agreement, letter of intent or agreement in principle requiring
the Company to abandon, terminate or fail to consummate the
transactions contemplated hereby, (iv) waive, terminate,
modify or fail to enforce any provision of any contractual
standstill or similar obligation of any Person other
than Parent (except for any portion of any such standstill or
similar obligation that restricts the ability of a person to
communicate an Acquisition Proposal to the Company Board) or
(v) agree or publicly propose to do any of the foregoing.
Notwithstanding the previous sentence, if at any time prior to
the adoption of this Agreement by the Companys
stockholders at the Special Meeting, (x) the Company
complies with Section 5.4(b) but receives an Acquisition
Proposal from a Third Party and (y) the Company Board
determines in good faith, after consultation with its
independent outside legal and financial advisors, that such
Acquisition Proposal could reasonably be expected to result in a
Superior Proposal, then the Company may take any of the actions
described in clause (ii) of the previous sentence to the
extent that the Company Board concludes in good faith, after
consultation with its independent outside legal and financial
advisors, that failure to take such actions would result in a
violation of its fiduciary responsibilities to the
Companys stockholders under Applicable Law;
provided
, that following receipt of an Acquisition
Proposal, the Company and its representatives may contact the
party submitting such Acquisition Proposal in order to clarify
and understand the terms and conditions of such proposal so as
to determine whether such Acquisition Proposal constitutes or
would possibly be likely to lead to a Superior Proposal or to
direct such Person to this Agreement;
provided
further
that the Company (A) will promptly, and in
any event within two (2) Business Days, provide notice to
Parent of any determination to take any such action,
(B) will not disclose any information to such Person
without entering into an Acceptable Confidentiality Agreement
with such Person and (C) will promptly provide to Parent
and Acquisition Sub any non-public information concerning the
Company or any of its Subsidiaries provided to such other Person
which was not previously provided to Parent and Acquisition Sub.
(b) As of the date of this Agreement, the Company shall
immediately cease and cause to be terminated all existing
discussions or negotiations with any Person and any other
activities conducted heretofore with respect to any Acquisition
Proposal and, subject to the other provisions of this
Section 5.4, will use its commercially reasonable efforts
to enforce any confidentiality, standstill or similar agreement
to which the Company or any of its Subsidiaries is a party
(except for any portion of any such confidentiality, standstill
or similar agreement that restricts the ability of a person to
communicate an Acquisition Proposal to the Company Board),
including by requesting the prompt return or destruction of all
confidential information previously furnished. Without limiting
the Companys obligations under Section 5.4(a), the
Company will promptly (within one Business Day) following the
receipt of any Acquisition Proposal advise Parent of the
substance thereof (including the identity of the Person making,
and the terms and conditions of, such Acquisition Proposal) and
will keep Parent apprised of any related developments,
discussions and negotiations on a current basis (and in any
event with 48 hours of the occurrence of such developments,
discussions or negotiations).
(c) Nothing contained in this Agreement, including in this
Section 5.4, shall prohibit the Company or the Company
Board, directly or indirectly through advisors, agents or other
intermediaries, from (i) taking and disclosing to its
stockholders a position contemplated by
Rules 14d-9
or
14e-2(a)
or Item 1012(a) of
Regulation M-A
promulgated under the Exchange Act, or from issuing a
stop, look and listen statement pending disclosure
of its position thereunder, or (ii) making any disclosure
to its stockholders if the Company Board determines in good
faith (after consultation with its outside legal counsel) that
the failure to make such disclosure would be reasonably likely
to be inconsistent with the directors exercise of their
fiduciary obligations to the Companys stockholders under
Applicable Law or would constitute a violation of Applicable
Law. It is understood and agreed that, for purposes of this
Agreement (including Article VII), a factually
A-21
accurate public statement by the Company that describes the
Companys receipt of an Acquisition Proposal and the
operation of this Agreement with respect thereto, or any
stop, look and listen communication by the Company
Board, shall not constitute a Change of Recommendation or an
approval or recommendation with respect to any Acquisition
Proposal.
Section
5.5
Director
and Officer Liability
.
(a) Parent shall cause the Surviving Corporation and its
Subsidiaries to honor all rights to indemnification and
exculpation from liability for acts and omissions occurring at
or prior to the Effective Time and rights to advancements of
expenses relating thereto now existing in favor of the current
or former directors or officers of the Company and its
Subsidiaries, in their capacity as such (the
Indemnitees
) as provided in their respective
charters (or similar constitutive documents) or bylaws, by all
Applicable Laws, or in any indemnification agreement set forth
in Section 5.5 of the Company Disclosure Schedule, and all
such rights shall survive the Merger and shall not be amended,
repealed or otherwise modified in any manner that would
adversely affect the rights thereunder of any such Indemnitees,
unless an alteration or modification of such documents is
required by Applicable Law or any Indemnitee affected thereby
otherwise consents in writing thereto.
(b) In furtherance of, and not in limitation of the
foregoing, the Company shall indemnify and hold harmless, and
after the Effective Time Parent shall cause the Surviving
Corporation to indemnify and hold harmless, each Indemnitee as
and to the extent provided in Section 8.2 of the
Companys Amended and Restated By-laws, as in effect on the
date of this Agreement, as if such Section 8.2 were
restated herein,
mutatis mutandis
.
(c) For six years after the Effective Time, the Surviving
Corporation shall maintain in effect officers and
directors liability insurance and fiduciary liability
insurance in respect of acts or omissions occurring at or prior
to the Effective Time committed by directors or officers of the
Company in their capacity as such, covering each director and
officer of the Company serving as such immediately prior to the
Effective Time and covered immediately prior to the Effective
Time by the Companys officers and directors
liability insurance policy maintained by the Company and in
effect as of the date hereof, on terms with respect to coverage
and amount not materially less favorable in the aggregate than
those of the policy in effect on the date hereof, so long as the
Surviving Corporation is not required to pay an annual premium
in excess of 300% of the last annual payment paid by the Company
for such insurance prior to the date of this Agreement (the
Maximum Premium). If the Surviving Corporation is
unable to obtain the insurance described in the prior sentence
for an amount less than or equal to the Maximum Premium, it
shall instead obtain as much comparable insurance as possible
for an annual premium equal to the Maximum Premium. At the
Companys option, the Company may purchase at or prior to
the Effective Time, a six-year tail policy on terms
and conditions providing substantially equivalent benefits as
the current policies of officers and directors
liability insurance and fiduciary liability insurance maintained
by the Company and its Subsidiaries with respect to matters
arising on or before the Effective Time, covering without
limitation the transactions contemplated by this Agreement;
provided
, that the premium for any such tail
policy shall not be in excess of 300% of the last annual payment
made by the Company for such insurance prior to the date hereof
in respect of the coverage required to be obtained pursuant
hereto. If such tail prepaid policy has been
obtained by the Company prior to the Effective Time, it shall be
deemed to satisfy all obligations to obtain insurance pursuant
to this Section 5.5(c) and Parent shall cause such policy
to be maintained in full force and effect, for its full term,
and cause all obligations thereunder to be honored by the
Surviving Corporation, and no other party shall have any further
obligation to purchase or pay for insurance hereunder.
(d) This Section 5.5 shall survive the consummation of
the Merger and is intended to be for the benefit of, and shall
be enforceable by, the Indemnitees referred to herein, their
heirs and personal representatives and shall be binding on the
Surviving Corporation and its successors and assigns.
(e) If the Surviving Corporation or any of its successors
or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers
or conveys all or substantially all of its properties and assets
to any Person or (iii) dissolves or liquidates, then, and
in each case, to the extent necessary, proper provision shall be
made so
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that the successors and assigns of the Surviving Corporation or
the transferee of its assets upon dissolution or liquidation
shall assume the obligations set forth in this Section 5.5.
In addition, the Surviving Corporation shall not distribute,
sell, transfer or otherwise dispose of any assets in a manner
that would reasonably be expected to render the Surviving
Corporation or its successor unable to satisfy its obligations
hereunder.
Section
5.6
Certain
Filings
.
(a) Subject to the terms and conditions of this Agreement,
each of Parent, Acquisition Sub and the Company shall, and shall
cause its respective Subsidiaries to, use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to
consummate the Merger and the other transactions contemplated by
this Agreement as soon as practicable after the date hereof. In
furtherance and not in limitation of the foregoing, Parent,
Acquisition Sub and the Company shall cooperate with one another
(i) in determining whether any action by or in respect of,
or filing with, any Governmental Entity is required, or any
actions, consents, approvals or waivers are required to be
obtained from any non-governmental Third Parties to any Company
Material Contracts, in connection with the consummation of the
transactions contemplated hereby and (ii) in seeking any
such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents,
approvals or waivers. Without limiting the foregoing, the
Company and the Parent shall make such filings with the
Competition Authority as may be required under the Irish
Competition Act 2002. Subject to Section 5.6(c), each party
will use its reasonable best efforts to take or cause to be
taken all actions necessary, including to comply promptly and
fully with any requests for information from Governmental
Entities, to obtain any clearance, waiver, approval or
authorization that is necessary to enable the parties to
consummate the transactions contemplated hereby as soon as
practicable after the date hereof.
(b) Subject to Section 5.6(c), (i) the Company,
Parent and Acquisition Sub shall each use its reasonable best
efforts to resolve such objections, if any, as may be asserted
with respect to the transactions contemplated hereby under any
Regulatory Law and (ii) if any administrative, judicial or
legislative action or proceeding, including any proceeding by a
private party, is instituted (or threatened to be instituted)
challenging the transactions contemplated hereby, the Company,
Parent and Acquisition Sub shall each cooperate with the other
parties and use its respective reasonable best efforts to
contest and resist any such action or proceeding and to have
vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order (whether temporary, preliminary or
permanent) that is in effect and that restricts, prevents or
prohibits consummation of the transactions contemplated hereby,
including by pursuing all reasonable avenues of administrative
and judicial appeal. For purposes of Section 5.6(a) and
clause (i) of this Section 5.6(b), reasonable
best efforts in relation to any approvals or consents
required under the Irish Competition Act 2002 shall include
agreeing to such undertakings, agreements, divestitures or other
actions as are reasonably requested by the Competition Authority
or that are required to avoid the entry of, or to effect the
dissolution of, any injunction, temporary restraining order or
other order in any suit or proceeding under the Irish
Competition Act 2002 that would otherwise have the effect of
preventing the Closing or delaying the Closing beyond the
outside date specified in the proviso to Section 7.1(b), or
to obtain the consent, clearance, waiver or authorization of the
Competition Authority without which the Closing would be
prevented or delayed beyond the outside date specified in the
proviso
to Section 7.1(b);
provided,
that
such undertakings, agreements, divestitures
and/or
other
actions would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect.
(c) Each of the Company, Parent and Acquisition Sub shall
(i) subject to any restrictions under any Applicable Law,
to the extent practicable, promptly notify each other of any
communication to that party from any Governmental Entity
(including the Federal Trade Commission, the Antitrust Division
of the Department of Justice and the Competition Authority) with
respect to this Agreement and the transactions and other
agreements contemplated hereby, (ii) subject to any
restrictions under any Applicable Law, use reasonable best
efforts to consult with the other party in advance of any
meeting with any Governmental Entity in respect of any filings,
investigation or other inquiry with respect to this Agreement
and the transactions and other agreements contemplated hereby,
(iii) subject to any restrictions under any Applicable Law,
furnish the other party with copies of all correspondence,
filings and communications (and memoranda setting forth the
substance thereof) received by it, its Affiliates and their
respective representatives from any Governmental
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Entity or members of its staff with respect to this Agreement
and the transactions and other agreements contemplated hereby
(excluding documents and communications which are subject to
preexisting confidentiality agreements and to the attorney
client privilege or work product doctrine) and (iv) furnish
the other party with such necessary information and reasonable
assistance as such other party and its Affiliates may reasonably
request in connection with their preparation of necessary
filings, registrations, or submissions of information to any
Governmental Entities in connection with this Agreement and the
transactions and other agreements contemplated hereby and
thereby, including any filings necessary or appropriate under
the provisions of any Regulatory Law.
(d)
Third Party Consents
.
Between
the date hereof and the Effective Time, the Company shall use
commercially reasonable efforts to obtain the third party
consents set forth in Section 3.3 of the Company Disclosure
Schedule.
Section
5.7
Public
Announcements
.
None of the Company, Parent,
Acquisition Sub, or any of their respective Affiliates shall
issue or cause the publication of any press release or other
public announcement with respect to this Agreement or the
transactions contemplated hereby without the prior approval of
the other parties, except to the extent required, based upon the
advice of outside counsel, by Applicable Law or by any listing
agreement with, or the rules and regulations of, the Nasdaq
Stock Market and after such prior notice to the other parties
hereto as is practicable under the circumstances.
Section
5.8
State
Takeover Laws
.
If any fair price,
business combination or control share
acquisition statute or other similar statute or regulation
is or may become applicable to the transactions contemplated
hereby, the Company, Parent and Acquisition Sub shall use
reasonable best efforts to take such actions as are necessary so
that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of any such
statute or regulation on the transactions contemplated hereby.
Section
5.9
Certain
Notifications
.
Between the date hereof and
the Effective Time, the Company shall promptly notify Parent and
Acquisition Sub of (i) any notice or other communication
from any Person alleging that the consent of such Person is or
may be required in connection with the transactions contemplated
hereby, if the failure to obtain such consent would reasonably
be expected to have a Company Material Adverse Effect,
(ii) any notice or communication from any Governmental
Entity in connection with the transactions contemplated hereby
and (iii) any action, suit, charge, complaint, grievance or
proceeding commenced or, to the Companys Knowledge,
threatened against the Company or any Subsidiary which, if
pending on the date of this Agreement, would have been required
to have been disclosed pursuant to Section 3.13 or which
relates to the consummation of the transactions contemplated
hereby. Between the date hereof and the Effective Time, Parent
and Acquisition Sub shall promptly notify the Company of any
action, suit, charge, complaint, grievance or proceeding
commenced or, to the Knowledge of Parent, threatened against
Parent or Acquisition Sub which, if pending on the date of this
Agreement, would have been required to have been disclosed
pursuant to Section 4.9 or which relates to the
consummation of the transactions contemplated hereby. Between
the date hereof and the Effective Time, each party shall
promptly notify the other parties hereto in writing after
becoming aware of the occurrence of any event which will, or is
reasonably likely to, result in the failure to satisfy any of
the conditions specified in Article VI.
Section
5.10
Employees
and Employee Benefit Plans
.
(a) For a period of not less than one year following the
Closing Date, the Surviving Corporation shall provide, or cause
to be provided to, all individuals who are employees of the
Company and the Subsidiaries (including employees who are not
actively at work on account of illness, disability or leave of
absence) on the Closing Date (the
Affected
Employees
) compensation, salary, wages, cash incentive
opportunities, severance, medical, retirement and other employee
benefit plans, programs and arrangements (excluding equity-based
compensation) that are comparable, in the aggregate, to the
compensation, salary, wages, cash incentive opportunities,
severance, medical, retirement and other written employee
benefit plans, programs and arrangements (excluding equity-based
compensation) provided to such Affected Employees immediately
prior to the Closing, as such plans, programs and arrangements
are disclosed to the Parent pursuant to Section 3.11.
Parent
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acknowledges that a change of control (or similar
phrase) within the meaning of the Company Incentive Plans and
the Company Plans, as applicable, will occur at or prior to the
Effective Time, as applicable.
(b) If and to the extent that Affected Employees are after
the Closing Date transferred to the Parent or Subsidiaries of
the Parent other than the Surviving Corporation and its
Subsidiaries, the Parent will give or cause its relevant
Subsidiary to give the Affected Employees full credit for
purposes of eligibility to participate, vesting and benefit
accrual (other than benefit accrual under any defined benefit
pension plan) under the employee benefit plans and arrangements
maintained by Parent or any of its Subsidiaries in which such
Affected Employees participate for such Affected Employees
service with the Company or any Subsidiary of the Company or any
of their respective predecessors (to the extent such service was
credited under the analogous predecessor plan), except to the
extent such credit would result in an unintended duplication of
benefits.
(c) The provisions of this Section 5.10 are for the
sole benefit of the parties to this Agreement and nothing
herein, expressed or implied, is intended or shall be construed
to confer upon or give to any person (including for the
avoidance of doubt any current or former employees, directors,
or independent contractors of any of Company or any of its
Subsidiaries, Parent or any of its Subsidiaries, or on or after
the Effective Time, the Surviving Company or any of its
Subsidiaries), other than the parties hereto and their
respective permitted successors and assigns, any legal or
equitable or other rights or remedies (with respect to the
matters provided for in this Section 5.10) under or by
reason of any provision of this Agreement. Nothing in this
Agreement, express or implied, shall affect the right of Parent
(or after the Effective Time, the Surviving Corporation or its
Subsidiaries) to terminate the employment of its employees,
including any Affected Employee. Nothing in this Agreement shall
be construed to grant any employee a right to continued
employment by the Parent, the Company, Surviving Corporation or
any of their respective Subsidiaries. Nothing contained in this
Agreement, express or implied, shall constitute an amendment to
any Company Plan.
Section
5.11
Conduct
of the Business of Acquiror Entities
.
During
the period from the date of this Agreement and continuing until
the Effective Time or earlier termination of this Agreement,
Parent and Acquisition Sub shall not, and shall not permit any
of their respective Subsidiaries to, take or agree to take any
action (including entering into agreements with respect to any
acquisitions, mergers, consolidations or business combinations)
that would reasonably be expected to result in, individually or
in the aggregate, an Acquiror Entity Material Adverse Effect.
Section
5.12
Rule 16b-3
.
Prior
to the Effective Time, the Company shall be permitted to take
such steps as may be reasonably necessary or advisable to cause
dispositions of Company equity securities (including derivative
securities) pursuant to the transactions contemplated by this
Agreement by each individual who is a director or officer of the
Company to be exempt under
Rule 16b-3
promulgated under the Exchange Act.
Section
5.13
Delisting
.
Each
of the parties agrees to cooperate with each other in taking, or
causing to be taken, all actions necessary to delist the Company
Common Stock from the Nasdaq Stock Market and terminate
registration of the Company Common Stock under the Exchange Act;
provided
, that such delisting and termination shall not
be effective until after the Effective Time.
ARTICLE VI
CONDITIONS
PRECEDENT
Section
6.1
Conditions
to Each Partys Obligations to Effect the
Merger
.
The respective obligations of the
Company, Parent and Acquisition Sub to effect the Merger are
subject to the satisfaction or, to the extent permitted by
Applicable Law, the waiver on or prior to the Effective Time of
each of the following conditions:
(a) The Company Stockholder Approval shall have been
obtained at the Special Meeting.
(b) No Governmental Entity of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any
statute, law, ordinance, rule, regulation, judgment, decree,
injunction or other order (whether
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temporary, preliminary or permanent) that is in effect and
prohibits consummation of the Merger, and no Governmental Entity
shall have instituted any proceeding that is pending seeking any
such judgment, decree, injunction or other order to prohibit the
consummation of the Merger.
(c) To the extent that the Merger constitutes a
merger or acquisition that is mandatorily notifiable
to the Competition Authority under Part 3 of the Irish
Competition Act 2002, one of the following shall have occurred:
(i) the Competition Authority informing the parties that it
has determined under Section 21(2)(a) or
Section 22(3)(a) of the Irish Competition Act 2002 that the
Merger may be put into effect; or
(ii) the period specified in Section 21(2) of the
Irish Competition Act 2002 (as may be extended under
Section 21(4) of such Act) having elapsed without the
Competition Authority having informed the parties of the
determination (if any) which it has made under
Section 21(2) of the Irish Competition Act 2002.
Section
6.2
Conditions
to the Companys Obligation to Effect the
Merger
.
The obligation of the Company to
effect the Merger shall be further subject to the satisfaction
or, to the extent permitted by Applicable Law, the waiver by the
Company at or prior to the Effective Time of each of the
following conditions:
(a) The representations and warranties of Parent and
Acquisition Sub set forth in Article IV of this Agreement
shall have been true and correct as of the date of this
Agreement and shall be true and correct as of the Closing Date
as though made on and as of the Closing Date, in each case in
all material respects, except (i) to the extent such
representations and warranties are specifically made as of a
particular date, in which case such representations and
warranties shall be true and correct as of such date, and
(ii) for changes contemplated by this Agreement; provided
further that the representations and warranties of Parent and
Acquisition Sub in Section 4.7 shall be true and correct in
all respects.
(b) Parent and Acquisition Sub shall have performed in all
material respects their respective agreements and covenants
contained in or contemplated by this Agreement that are required
to be performed by them at or prior to the Effective Time
pursuant to the terms hereof.
(c) The Company shall have received certificates signed on
behalf of Parent and Acquisition Sub by an executive officer of
each of Parent and Acquisition Sub, dated the Closing Date, to
the effect that the conditions set forth in Sections 6.2(a)
and 6.2(b) have been satisfied.
Section
6.3
Conditions
to Parents and Acquisition Subs Obligations to
Effect the Merger
.
The obligations of Parent
and Acquisition Sub to effect the Merger shall be further
subject to the satisfaction, or to the extent permitted by
Applicable Law, the waiver by Parent at or prior to the
Effective Time of each of the following conditions:
(a) The representations and warranties of the Company set
forth in Sections 3.2, 3.3, 3.4, 3.9(a)(i)-(iii) and 3.19
of this Agreement shall have been true and correct in all
material respects as of the date of this Agreement and shall be
true and correct in all material respects as of the Closing Date
as though made on and as of the Closing Date (except (i) to
the extent such representations and warranties are specifically
made as of a particular date, in which case such representations
and warranties shall be true and correct as of such date, and
(ii) for changes contemplated by this Agreement). All other
representations and warranties of the Company set forth in
Article III of this Agreement shall be true and correct as
of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except (i) to
the extent such representations and warranties are specifically
made as of a particular date, in which case such representations
and warranties shall be true and correct as of such date, and
(ii) for changes contemplated by this Agreement), unless
the failure of all such representations and warranties to be so
true and correct, individually or in the aggregate, and
excluding for this purpose any materiality or Company Material
Adverse Effect qualifications therein, has not had and would not
reasonably be expected to have a Company Material Adverse Effect.
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(b) The Company shall have performed in all material
respects each of its agreements and covenants contained in or
contemplated by this Agreement that are required to be performed
by it at or prior to the Effective Time pursuant to the terms
hereof.
(c) Parent and Acquisition Sub shall have received
certificates signed on behalf of the Company by an executive
officer of the Company, dated the Closing Date, to the effect
that the conditions set forth in Sections 6.3(a) and 6.3(b)
have been satisfied.
Section
6.4
Frustration
of Closing Conditions
.
Neither the Company,
Parent nor Acquisition Sub may rely, either as a basis for not
consummating the Merger or for terminating this Agreement and
abandoning the Merger, on the failure of any condition set forth
in Section 6.1, Section 6.2 or Section 6.3, as
the case may be, to be satisfied if such failure was caused by
such partys breach of any provision of this Agreement or
failure to use its reasonable best efforts to satisfy such
conditions and consummate the Merger and the other transactions
contemplated by this Agreement, as required by and subject to
Section 5.6.
ARTICLE VII
TERMINATION
Section
7.1
Termination
.
This
Agreement may be terminated at any time prior to the Effective
Time, whether before or after obtaining the Company Stockholder
Approval, by action taken by the Board of Directors of the
terminating party or parties:
(a) by mutual written consent of Parent and the Company;
(b) by the Company or Parent if the Closing shall not have
occurred on or before December 31, 2011 (the
Termination Date
);
provided
, that if
the only reason for the parties failure to consummate the
Closing on or before such date shall be the failure to have
satisfied Section 6.1(c) of this Agreement, then the
Termination Date shall be extended to February 29, 2012;
provided further
,
however
, that the right to
terminate this Agreement under this Section 7.1(b) shall
not be available to any party whose failure to fulfill any
obligation or other breach under this Agreement has been the
cause of, or resulted in, the failure of the Merger to occur on
or before the Termination Date;
(c) by the Company or Parent if any Governmental Entity of
competent jurisdiction shall have issued an order, decree or
ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated
hereby, and such order, decree, ruling or other action shall
have become final and non-appealable;
(d) by the Company or Parent if the Special Meeting
(including any adjournment or postponement thereof) shall have
concluded and the Company Stockholder Approval shall not have
been obtained;
(e) by the Company, if the Company Board has effected a
Change in Recommendation following receipt of a Superior
Proposal in accordance with the requirements of
Section 5.2(d) and the Company has paid the Termination Fee;
(f) by Parent, if (i) the Company Board or any
committee thereof shall have failed to make the Company
Recommendation or effected a Change in Recommendation,
(ii) the Company Board or any committee thereof shall have
determined any Acquisition Proposal is a Superior Proposal, or
(iii) the Company shall have materially breached the terms
of Section 5.4 in any respect adverse to Parent.
(g) by the Company,
provided
that it is not then in
material breach of its obligations under this Agreement, if
there is a breach by Parent or Acquisition Sub of any of their
representations, warranties, covenants or agreements contained
in this Agreement that would give rise to a failure of a
condition set forth in Section 6.2(a) or 6.2(b) and which
has not been cured (or is not capable of being cured) within
twenty (20) Business Days following receipt by Parent or
Acquisition Sub, as the case may be, of written notice from the
Company of such breach; or
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(h) by Parent,
provided
that neither Parent nor
Acquisition Sub is then in material breach of its obligations
under this Agreement, if there is a breach by the Company of any
of its representations, warranties, covenants or agreements
contained in this Agreement that would give rise to a failure of
a condition set forth in Section 6.3(a) or 6.3(b) and which
has not been cured (or is not capable of being cured) within
twenty (20) Business Days following receipt by the Company
of written notice from Parent and Acquisition Sub of such breach.
The party desiring to terminate this Agreement shall give
written notice of such termination to the other party.
Section
7.2
Effect
of Termination
.
If this Agreement is validly
terminated by either the Company or Parent as provided in
Section 7.1, there shall be no further liability or
obligation on the part of any of the Company, Parent or
Acquisition Sub or their respective officers, directors,
stockholders, members, partners, employees, Affiliates, agents
or other representatives, except that
(i) Section 3.20, Section 4.8, Section 5.7,
Article VII, Article VIII and the Confidentiality
Agreement shall survive the termination of this Agreement and
remain enforceable thereafter, and (ii) subject to
Section 7.3, nothing in this Agreement shall relieve any
party or parties hereto, as applicable, from liability for any
breach of this Agreement prior to its termination.
Section
7.3
Fees
and Expenses
.
(a) The Company agrees to pay Parent the sum of $5,200,000
(the
Termination Fee
) if (i) this
Agreement is terminated by the Company pursuant to
Section 7.1(e), or (ii) this Agreement is terminated
by Parent pursuant to Section 7.1(f), such payment to be
made concurrently with the termination of this Agreement by the
Company in the case of clause (i), or within three
(3) Business Days after termination of this Agreement by
Parent in the case of clause (ii).
(b) If (i) this Agreement is terminated by either the
Company or Parent (x) pursuant to Section 7.1(b)
without a vote of the stockholders of the Company with respect
to the adoption of this Agreement at the Special Meeting having
occurred or (y) pursuant to Section 7.1(d),
(ii) on or before the date of any such termination, a
bona fide
Acquisition Proposal was publicly announced,
disclosed or otherwise communicated to the Company Board and
such Acquisition Proposal was not publicly withdrawn prior to
such termination (or prior to the Special Meeting with respect
to a termination pursuant to Section 7.1(d)), and
(iii) within six months after such termination the Company
or any of its Subsidiaries enters into a definitive agreement in
respect of or consummates any Acquisition Proposal, then the
Company shall pay to Parent (or its designees) the Termination
Fee on the date of such consummation. For the purpose of this
clause (b), all references in the definition of Acquisition
Proposal to twenty percent (20%) shall instead be
read to refer to fifty percent (50%).
(c) For the avoidance of doubt, in no event shall the
Company be required to pay the Termination Fee on more than one
occasion. All payments under this Section 7.3 shall be made
by wire transfer of immediately available funds to an account
designated by Parent. Any such payment shall be net of any
amounts as may be required to be deducted or withheld therefrom
in respect of applicable Taxes.
(d) Each of the parties hereto acknowledges that the
agreements contained in this Section 7.3 are an integral
part of the transactions contemplated by this Agreement and that
the Termination Fee is not a penalty, but rather represents
liquidated damages in a reasonable amount that will compensate
Parent and Acquisition Sub for the efforts and resources
expended and opportunities foregone while negotiating this
Agreement and on the expectation of the consummation of the
transactions contemplated by this Agreement, which amount would
otherwise be impossible to calculate with precision.
Notwithstanding anything to the contrary in this Agreement, in
the event that the Termination Fee is paid as a result of a
termination of this Agreement, Parents right to receive
payment of the Termination Fee pursuant to this Section 7.3
shall be the sole and exclusive remedy of Parent, Acquisition
Sub and their respective Affiliates, if applicable for
(A) the loss suffered as a result of the failure of the
Merger to be consummated and (B) any other losses, damages,
obligations or liabilities suffered as a result of or under this
Agreement and the transactions contemplated by this Agreement,
and upon payment of the Termination Fee in accordance with this
Section 7.3, none of the Company or any of its respective
stockholders, directors, officers, agents or Affiliates, as the
case may be,
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shall have any further liability or obligation relating to or
arising out of this Agreement or the transactions contemplated
by this Agreement.
(e) Except as otherwise provided in this Section 7.3,
all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid
by the party incurring such expenses.
ARTICLE VIII
MISCELLANEOUS
Section
8.1
Definitions
.
As
used in this Agreement, the following terms have the meanings
specified or referred to in this Section 8.1 and shall be
equally applicable to both singular and plural forms. Any
agreement referred to below means such agreement as amended,
supplemented or modified from time to time to the extent
permitted by the applicable provisions thereof and by this
Agreement.
Acceptable Confidentiality Agreement
means a confidentiality agreement with terms and conditions
no less favorable to the Company than the Confidentiality
Agreement.
Acquiror Entity
has the meaning set
forth in the first sentence of Article IV.
Acquisition Entity Information
means
information included in the Proxy Statement relating to any
Acquiror Entity or its directors, officers, advisors or
representatives.
Acquiror Entity Material Adverse Effect
means any effect, change or development that, individually
or in the aggregate, with other effects, changes or
developments, is material and adverse to the financial
condition, business operations or results of operations of the
Acquiror Entities taken as a whole or that would be reasonably
expected to prevent, materially delay or materially impede the
ability of any Acquiror Entity to consummate the Merger or other
transactions contemplated hereby.
Acquirors Representatives
has
the meaning set forth in Section 5.3.
Acquisition Proposal
means any offer
or proposal, including any offer or proposal from or to the
Companys stockholders, made by any Person or group (within
the meaning of
Rule 13d-5
of the Exchange Act) other than Parent or its Subsidiaries
and/or
any
of their respective Affiliates regarding (i) a merger,
consolidation, share exchange, recapitalization,
reclassification, liquidation or other business combination
involving the Company
and/or
any
Subsidiary or Subsidiaries of the Company whose business or
businesses constitute twenty percent (20%) or more of the
assets, revenues or earnings of the Company and its
Subsidiaries, taken as a whole, (ii) the acquisition of
assets of the Company
and/or
its
Subsidiaries equal to twenty percent (20%) or more of the
consolidated assets of the Company and its Subsidiaries or to
which twenty percent (20%) or more of the Companys
revenues or earnings on a consolidated basis are attributable,
or (iii) acquisition of beneficial ownership (as defined
under section 13(d) of the Exchange Act) of equity
interests representing a twenty percent (20%) or greater
economic or voting interest in the Company or tender offer or
exchange offer that, if consummated, would result in any Person
or group (within the meaning of
Rule 13d-5
of the Exchange Act) beneficially owning equity interests
representing a twenty percent (20%) or greater economic or
voting interest in the Company.
Acquisition Sub
has the meaning set
forth in the introductory paragraph of this Agreement.
Affected Employees
has the meaning set
forth in Section 5.10(a).
Affiliate
has the meaning as defined
in
Rule 12b-2
under the Exchange Act.
Agreement
has the meaning set forth in
the introductory paragraph hereof.
Applicable Law
means all applicable
laws, statutes, orders, ordinances, rules, regulations and all
applicable legally binding policies or guidelines promulgated,
or judgments, decisions, writs, decrees or orders entered, by
any Governmental Entity.
Bankruptcy and Equitable Remedies
Exception
has the meaning set forth in
Section 3.2(a).
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Book-Entry Shares
has the meaning set
forth in Section 2.7.
Business Day
means any day on which
banks are not required or authorized to close in the City of New
York.
Cash-Out Option
means that portion of
a Company Stock Option that is issued, unexercised and
outstanding as of immediately prior to the Effective Time and
vested as of immediately prior to the Effective Time (including
any portion of a Company Stock Option that is vested as a result
of the transactions contemplated by this Agreement) under the
terms of an agreement with the Company governing such Company
Stock Option.
Certificate
has the meaning set forth
in Section 2.7.
Certificate of Merger
has the meaning
set forth in Section 1.3.
Change in Recommendation
has the
meaning set forth in Section 5.2(d).
Closing
has the meaning set forth in
Section 1.2.
Closing Date
has the meaning set forth
in Section 1.2.
Code
means the Internal Revenue Code
of 1986, as amended.
Company
has the meaning set forth in
the introductory paragraph of this Agreement.
Company Board
has the meaning set
forth in the first recital of this Agreement.
Company Bylaws
has the meaning set
forth in Section 3.1.
Company Certificate of Incorporation
has the meaning set forth in Section 3.1.
Company Common Stock
has the meaning
set forth in Section 2.6.
Company Disclosure Schedule
means the
disclosure schedule delivered by the Company to Parent dated the
date hereof.
Company Incentive Plans
has the
meaning set forth in Section 3.4(c).
Company Intellectual Property
has the meaning set forth in Section 3.14.
Company Leased Property
has the
meaning set forth in Section 3.17(a).
Company Material Adverse Effect
means
any effect, circumstance, change or development that,
individually or in the aggregate with other effects,
circumstances, changes or developments, (x) is material and
adverse to the financial condition, business operations or
results of operations of the Company and its Subsidiaries taken
as a whole, or (y) that would be reasonably expected to
adversely affect the ability of the Company to timely consummate
the Merger or other transactions contemplated hereby;
provided
,
however
, that to the extent any effect,
change or development is caused by or results from any of the
following, it shall not be taken into account in determining
whether there has been a
Company Material Adverse
Effect
pursuant to the preceding clause (x):
(i) the announcement of the execution of this Agreement, or
the performance of obligations under this Agreement,
and/or
any
action or inaction taken at the direction of Parent,
(ii) factors affecting the economy or financial markets as
a whole or generally affecting the industries in which the
Company participates, except to the extent such changes
negatively affect the Company in a disproportionate manner as
compared to comparable participants in the Companys
industry, (iii) failure to meet internal or analyst
financial forecasts, guidance or milestones, (iv) any
change in the market price or trading volume of the Company
Common Stock after the date hereof, (v) any change in GAAP
or in international accounting standards that the Company is
required to adopt, or (vi) changes in generally applicable
laws, rules, regulations or administrative policies, or
published interpretations thereof, except to the extent such
changes negatively affect the Company in a disproportionate
manner as compared to comparable participants in the
Companys industry.
Company Material Contract
has the
meaning set forth in Section 3.15.
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Company Option Plan
has the meaning
set forth in Section 3.4(b)(v).
Company-owned Intellectual Property
has the meaning set forth in Section 3.14.
Company Permits
has the meaning set
forth in Section 3.13(b).
Company Plans
has the meaning set
forth in Section 3.11(a).
Company Preferred Stock
has the
meaning set forth in Section 3.4(a).
Company Real Property
has the meaning
set forth in Section 3.17(a).
Company Recommendation
has the meaning
set forth in Section 3.2(b).
Company Registered Intellectual
Property
means all Intellectual Property that is
the subject of a pending application or an issued patent,
trademark, copyright, design right, Domain Name, or other
similar registration formalizing exclusive rights and that are
owned by, or registered or currently applied for under the name
of, the Company or a Subsidiary thereof.
Company SARs
has the meaning set forth
in Section 3.4(c).
Company SAR Agreement
means the Allied
Healthcare International Inc. Stock Appreciation Rights
Agreement dated April 21, 2009, by and between the Company
and Alexander Young.
Company SEC Documents
has the meaning
set forth in Section 3.6(a).
Company Stock Options
has the meaning
set forth in Section 3.4(c).
Company Stockholder Approval
has the
meaning set forth in Section 3.2(c).
Competition Authority
means the
Competition Authority of the Republic of Ireland, as established
under section 10 of the Irish Competition Act 1991 and as
continued in being under section 29 of the Irish
Competition Act 2002.
Confidentiality Agreement
means the
Confidentiality Agreement dated as of August 27, 2010 by
and between Saga Independent Company Limited and the Company.
Contract
means any written or oral
agreement, contract, commitment, understanding, lease, license,
contract, note, bond, mortgage, indenture, arrangement or other
instrument or obligation, in each case whether written or oral.
Effective Time
has the meaning set
forth in Section 1.3.
Environmental Law
means any applicable
federal, state, local or foreign statute, law, regulation,
order, decree, permit, authorization, common law, legally
binding agency requirement or other legally enforceable
requirement relating to: (i) the protection, investigation
or restoration of the environment, health, safety or natural
resources, (ii) the handling, use, presence, disposal,
release or threatened release of any Hazardous Substance or
(iii) noise, odor, indoor air, employee exposure, wetlands,
pollution, contamination or any injury or threat of injury to
Persons or property relating to any Hazardous Substance.
Environmental Permits
means any and
all permits, licenses, registrations, approvals, notifications,
exemptions and any other authorization issued under or pursuant
to any Environmental Law.
ERISA
means the Employee Retirement
Income Security Act of 1974, as amended.
ERISA Affiliate
has the meaning set
forth in Section 3.11(a).
Exchange Act
means the Securities
Exchange Act of 1934.
Foreign Benefit Plans
has the meaning
set forth in Section 3.11(d).
GAAP
means United States generally
accepted accounting principles.
Governmental Entity
means any
domestic, or foreign, supranational, national, federal, state or
local governmental authority or any court, arbitrator, agency,
commission, stock exchange or interdealer quotation
A-31
system, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, domestic,
foreign or supranational.
Hazardous Substance
means (i) any
substance that is listed, classified, regulated or for which
liability may be imposed pursuant to any Environmental Law,
(ii) any petroleum product or by-product,
asbestos-containing material, polychlorinated biphenyls,
radioactive material or radon and (iii) any other substance
which is the subject of regulatory action by any Governmental
Entity in connection with any Environmental Law.
Holder
has the meaning set forth in
Section 2.10(b).
Indemnitees
has the meaning set forth
in Section 5.5(a).
Intellectual Property
means any or all
of the following: (i) patents and applications therefor and
all reissues, divisions, renewals, extensions, provisionals,
continuations and
continuations-in-part
thereof and inventions; (ii) copyrights, copyright
registrations and applications therefor, and all other rights
corresponding thereto including moral and economic rights of
authors and inventors, however denominated;
(iii) industrial designs and any registrations and
applications therefor; (iv) trade names, logos, common law
trademarks and service marks, trademark and service mark
registrations and applications therefor; and (v) trade
secrets (including trade secrets defined in the Uniform Trade
Secrets Act and under corresponding foreign statutory and common
law), know-how, and non-public business and technical, and other
confidential information.
IRS
means the Internal Revenue Service.
Knowledge
means the actual knowledge,
without inquiry, of (i) with respect to the Company, the
executive officers of the Company identified on Section 8.1
of the Company Disclosure Schedule and (ii) with respect to
Parent, the executive officers of Parent identified on
Section 8.1 of the Parent Disclosure Schedule.
Liens
means any mortgages, pledges,
claims, liens, charges, encumbrances, easements, servitudes,
restrictive covenants, options, rights of first refusal,
transfer restrictions, conditional sale or other title
restrictions and security interests of any kind or nature
whatsoever, except, in the case of securities, for limitations
on transfer imposed by federal or state securities laws.
Merger
has the meaning set forth in
the first recital of this Agreement.
Merger Consideration
has the meaning
set forth in Section 2.7.
Merger Fund
has the meaning set forth
in Section 2.10(b).
Notice of Superior Proposal
has the
meaning set forth in Section 5.2(d).
NYBCL
has the meaning set forth in
Section 1.1.
Option Consideration
has the meaning
set forth in Section 2.9(a).
Parent
has the meaning set forth in
the introductory paragraph of this Agreement.
Parent Disclosure Schedule
means the
disclosure schedule delivered by Parent to the Company dated the
date hereof.
Paying Agent
has the meaning set forth
in Section 2.10(a).
Permitted Liens
means
(i) statutory Liens for Taxes, assessments or other similar
charges by Governmental Entities securing payments not yet due,
(ii) mechanics, materialmens, carriers,
workmens, warehousemans, repairmens,
landlords and similar Liens which arise in the ordinary
course of business and (iii) such other Liens or
imperfections of title that, individually or in the aggregate,
do not, and would not reasonably be expected to, materially
detract from the value of, or materially impair the existing use
of, the property or asset affected by the applicable Lien.
Person
means any person, employee,
individual, corporation, limited liability company, partnership,
trust, joint venture, or any other non-governmental entity or
any governmental or regulatory authority or body or any group
consisting of one or more of the foregoing.
A-32
Proxy Statement
has the meaning set
forth in Section 5.2(a).
Regulatory Law
means the Sherman Act,
the Clayton Act, the
Hart-Scott-Rodino
Antitrust Improvements Act, the Federal Trade Commission Act,
the U.K. Enterprise Act 2002, the Irish Competition Act 2002 and
all other federal, state and foreign statutes, rules,
regulations, orders, decrees, administrative and judicial
doctrines and other laws that are designed or intended to
prohibit, restrict or regulate (x) foreign investment,
(y) foreign exchange or currency controls or
(z) actions having the purpose or effect of monopolization
or restraint of trade or lessening of competition.
SAR Consideration
has the meaning set
forth in Section 2.9(b).
SOX
means the Sarbanes-Oxley Act of
2002.
SEC
means the Securities and Exchange
Commission.
Securities Act
means the Securities
Act of 1933.
Significant Subsidiary
of any Person
means a Subsidiary of such Person that would constitute a
significant subsidiary of such Person within the
meaning of Rule 1.02(w) of
Regulation S-X
as promulgated by the SEC.
Special Meeting
has the meaning set
forth in Section 5.2(c).
Subsidiary
of any Person means another
Person (i) an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient
to directly or indirectly control such other Person or elect at
least a majority of its Board of Directors or other governing
body, or (ii) 50% or more of the equity interests of which,
in either case, is owned directly or indirectly by such first
Person.
Superior Proposal
means a bona fide
written Acquisition Proposal (except that references to
twenty percent (20%) therein will be deemed to be
references to fifty percent (50%) instead) which is
on terms which the Company Board in good faith determines (after
consultation with its independent legal and financial advisors),
considering such factors as the Company Board considers to be
appropriate (including the conditionality, timing and likelihood
of consummation of such proposal), are more favorable to its
stockholders (in their capacities as stockholders), from a
financial point of view, than the transactions contemplated
hereby.
Surviving Corporation
has the meaning
set forth in the first recital of this Agreement.
Tax
or
Taxes
means any federal, national, state, provincial, municipal,
local, or foreign income, corporate, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under
Code § 59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar),
unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax, custom, duty,
governmental fee or other like assessment or charge of any kind
whatsoever, including any interest, penalty, or addition thereto
whether disputed or not and including any obligations to
indemnify or otherwise assume or succeed to the Tax Liability of
any other Person.
Tax Return
means any return,
declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
Termination Date
has the meaning set
forth in Section 7.1(b).
Termination Fee
has the meaning set
forth in Section 7.3(a).
Third Party
means any Person or group
of Persons (other than Parent and its Affiliates).
A-33
Section
8.2
Notices
.
All
notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement to any
party hereunder shall be in writing and deemed given if
addressed as provided below (or at such other address as the
addressee shall have specified by notice actually received by
the addressor) and if either (i) actually delivered in
fully legible form, to such address, (ii) in the case of
any nationally recognized express mail service, one
(1) Business Day shall have elapsed after the same shall
have been deposited with such service or (iii) if by fax,
on the day on which such fax was sent and telephonic
confirmation of receipt thereof has been received;
provided
, that a copy is sent the same day by overnight
courier or express mail service.
If to the Company, to:
Allied Healthcare International Inc.
245 Park Avenue
New York, NY 10167
Attention: Sandy Young
Telephone: (44) 1785 810 622
Facsimile: (44) 1785 288 849
with a copy (which shall not constitute notice) to:
Edwards Angell Palmer & Dodge LLP
750 Lexington Avenue
New York, New York 10022
Attention: Leslie Levinson, Esq.
Eugene
McDermott, Esq.
Telephone:
(212) 308-4411
Facsimile:
(212) 308-4844
If to Parent or Acquisition Sub, to:
Saga Group Limited
Enbrook Park
Sandgate
Folkestone
Kent
CT20 SSE
Attention: John Davies
Telephone: (44) 1303 771 199
Facsimile: (44) 1303 776 676
with a copy (which shall not constitute notice) to:
Herbert Smith LLP
Exchange House
Primrose Street
London
EC2A 2HS
Attention: Ben Ward
Telephone: 44 2074 662 093
Facsimile: 44 2070 985 493
Section
8.3
Survival
of Representations, Warranties and
Covenants
.
The representations and warranties
contained herein and in any certificate or other writing
delivered pursuant hereto shall not survive the Effective Time.
All other covenants and agreements contained herein which by
their terms are to be performed in whole or in part, or which
prohibit actions, subsequent to the Effective Time, shall
survive the Effective Time in accordance with their terms.
Section
8.4
Interpretation
.
For
purposes of this Agreement, (i) the words
include, includes and
including shall be deemed to be followed by the
words without limitation, (ii) the word
or is not
A-34
exclusive and (iii) the words herein,
hereof, hereby, hereto and
hereunder refer to this Agreement as a whole. Unless
the context otherwise requires, a reference herein: (i) to
an Article or Section means an Article and Section of this
Agreement, (ii) to an agreement, instrument or other
document means such agreement, instrument or other document as
amended, supplemented and modified from time to time to the
extent permitted by the provisions thereof and by this Agreement
and (iii) to a statute means such statute as amended from
time to time and includes any successor legislation thereto and
any rules or regulations promulgated thereunder. Titles to
Articles and headings of Sections are inserted for convenience
of reference only and shall not be deemed a part of or to affect
the meaning or interpretation of this Agreement. This Agreement
shall be construed without regard to any presumption or rule
requiring construction or interpretation against the party
drafting an instrument or causing any instrument to be drafted.
Each of the Company Disclosure Schedule and the Parent
Disclosure Schedule is hereby incorporated in and made a part of
this Agreement as if set forth in full herein. Any capitalized
term used in the Company Disclosure Schedule or the Parent
Disclosure Schedule shall have the same meaning assigned to such
term herein. The description or listing of a matter, event or
thing within the Company Disclosure Schedule or the Parent
Disclosure Schedule (whether in response for a description or
listing of material items or otherwise) shall not be deemed an
admission or acknowledgment that such matter, event or thing is
material. Matters reflected in the Company
Disclosure Schedule or the Parent Disclosure Schedule are not
necessarily limited to matters required by this Agreement to be
reflected in the Company Disclosure Schedule or the Parent
Disclosure Schedule. Such additional matters are set forth for
informational purposes only and do not necessarily include other
matters of a similar nature.
Section
8.5
Amendments,
Modification and Waiver
.
(a) Except as may otherwise be provided herein, any
provision of this Agreement may be amended, modified or waived
by the parties hereto, by action taken by or authorized by their
respective Boards of Directors, prior to the Closing Date if,
and only if, such amendment or waiver is in writing and signed,
in the case of an amendment, by the Company, Parent and
Acquisition Sub or, in the case of a waiver, by the party
against whom the waiver is to be effective;
provided
,
that no such amendment, modification or waiver by the Company
shall be effective unless it is authorized by the Company Board;
and
provided
,
further
, that, after the Company
Stockholder Approval has been obtained, there shall not be made
any amendment that by Applicable Law requires further approval
by the Companys stockholders without first obtaining such
further approval.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law or in equity.
Section
8.6
Successors
and Assigns
.
The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns;
provided
, that none of the Company, Parent or Acquisition
Sub may assign, delegate or otherwise transfer any of its rights
or obligations under this Agreement, in whole or in part
(whether by operation of law or otherwise), without the consent
of the other parties hereto and, in the case of the Company, the
Company Board. Notwithstanding anything to the contrary herein,
Acquisition Sub may assign any of its rights hereunder to any
Subsidiary of Parent and Parent may assign its rights hereunder
to any affiliate of Parent; provided that, such assignment shall
not relieve Acquisition Sub or Parent of their obligations
hereunder without the prior written consent of the Company.
Section
8.7
Specific
Performance
.
The parties acknowledge and
agree that any breach of the terms of this Agreement would give
rise to irreparable harm for which money damages would not be an
adequate remedy and accordingly the parties agree that, in
addition to any other remedies, each party shall be entitled to
enforce the terms of this Agreement by a decree of specific
performance without the necessity of proving the inadequacy of
money damages as a remedy and without the need for posting a
bond or other security.
A-35
Section
8.8
Governing
Law; Consent to Jurisdiction; Waiver of Trial by
Jury
.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable principles
of conflicts of laws thereof).
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the
exclusive jurisdiction of the Supreme Court of the State of New
York or any federal court, in each case, sitting in the borough
of Manhattan in any action or proceeding arising out of or
relating to this Agreement or the agreements delivered in
connection herewith or the transactions contemplated hereby or
thereby or for recognition or enforcement of any judgment
relating thereto, and each of the parties hereby irrevocably and
unconditionally (i) agrees not to commence any such action
or proceeding except in such court, (ii) agrees that any
claim in respect of any such action or proceeding may be heard
and determined in such court, (iii) waives, to the fullest
extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any such
action or proceeding in such court and (iv) waives, to the
fullest extent permitted by Applicable Law, the defense of an
inconvenient forum to the maintenance of such action or
proceeding in such court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by Applicable Law.
Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8.2.
Nothing in this Agreement shall affect the right of any party to
this Agreement to serve process in any other manner permitted by
Applicable Law.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY
OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS,
(C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 8.7(c).
Section
8.9
Severability
.
If
any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated herein are not affected in any manner materially
adverse to any party hereto. Upon such determination that any
term or other provision is invalid, illegal or incapable of
being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated by this
Agreement may be consummated as originally contemplated to the
fullest extent possible.
Section
8.10
Third
Party Beneficiaries
.
Except as provided in
Section 5.5, this Agreement is solely for the benefit of
the Company and its successors and permitted assigns, with
respect to the obligations of Parent and Acquisition Sub under
this Agreement, and for the benefit of Parent and Acquisition
Sub and their respective successors and permitted assigns, with
respect to the obligations of the Company under this Agreement,
and this Agreement shall not be deemed to confer upon or give to
any other third party any remedy, claim, liability,
reimbursement, cause of action or other right. The Indemnitees
referred to in Section 5.5 shall be third party
beneficiaries entitled to enforce the provisions of
Section 5.5 of this Agreement.
Section
8.11
Entire
Agreement
.
This Agreement, including any
exhibits or schedules hereto, and the Confidentiality Agreement
constitute the entire agreement among the parties hereto with
respect to the subject
A-36
matter hereof and supersede all other prior agreements or
understandings, both written and oral, between the parties or
any of them with respect to the subject matter hereof.
Section
8.12
Counterparts;
Fax Signatures; Effectiveness
.
This Agreement
may be signed in any number of counterparts, each of which shall
be deemed an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. Each of the
parties hereto (i) has agreed to permit the use, from time
to time and where appropriate, of faxed signatures in order to
expedite the Closing, (ii) intends to be bound by its
respective faxed signature, (iii) is aware that the other
parties hereto will rely on the faxed signature and
(iv) acknowledges such reliance and waives any defenses to
the enforcement of the documents effecting the transactions
contemplated hereby contemplated by this Agreement based on the
fact that a signature was sent by fax. This Agreement shall
become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
A-37
IN WITNESS WHEREOF
, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
SAGA GROUP LIMITED
Name: Stuart Howard
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Title:
|
Group Finance Director
|
AHL ACQUISITION CORP.
Name: John Ivers
ALLIED HEALTHCARE INTERNATIONAL INC.
Name: Alexander Young
Title: Chief Executive
[Signature
Page to Merger Agreement]
A-38
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|
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Oppenheimer & Co. Inc.
300 Madison Avenue
New York, NY 10017
Member of All Principal Exchanges
|
July 28, 2011
The Board of Directors
Allied Healthcare International Inc.
245 Park Avenue
New York, New York 10167
Members of the Board:
You have asked Oppenheimer & Co. Inc.
(Oppenheimer) to render a written opinion
(Opinion) to the Board of Directors of Allied
Healthcare International Inc. (Allied Healthcare) as
to the fairness, from a financial point of view, to the holders
of Allied Healthcare common stock, par value $0.01 per share
(the Shares), of the $3.90 in cash per share (the
Per Share Consideration) to be received by such
holders as provided for in an Agreement and Plan of Merger (the
Agreement) proposed to be entered into among Saga
Group Limited (Parent), AHL Acquisition Corp., a
wholly owned subsidiary of Parent (Merger Sub) and
Allied Healthcare. The Agreement provides for, among other
things, the merger of Merger Sub with and into Allied Healthcare
(the Merger) pursuant to which each outstanding
Share will be converted into the right to receive the Per Share
Consideration.
In arriving at our Opinion, we:
(a) reviewed the execution version, dated July 28,
2011, of the Agreement;
(b) reviewed publicly available audited financial
statements of Allied Healthcare for the fiscal years ended
September 30, 2010, September 30, 2009 and
September 30, 2008 and unaudited financial statements of
Allied Healthcare for the periods ended March 31, 2011 and
December 31, 2010;
(c) reviewed financial forecasts and estimates relating to
Allied Healthcare prepared by management of Allied Healthcare;
(d) reviewed historical market prices and trading volumes
for the Shares;
(e) held discussions with the senior management of Allied
Healthcare with respect to the business, financial condition,
operating results and future prospects of Allied Healthcare;
(f) reviewed and analyzed certain publicly available
financial data for companies that we deemed relevant;
(g) reviewed and analyzed certain publicly available
financial information for transactions we deemed relevant;
(h) analyzed the estimated present value of future cash
flows of Allied Healthcare based on financial forecasts, budgets
and estimates prepared by the management of Allied Healthcare;
(i) reviewed the premiums paid, based on publicly available
information, in merger and acquisition transactions we deemed
relevant in evaluating the Merger;
(j) reviewed other public information concerning Allied
Healthcare that we deemed relevant; and
(k) performed such other analyses, reviewed such other
information and considered such other factors as we deemed
appropriate.
B-1
The Board of Directors
Allied Healthcare International Inc.
July 28, 2011
In rendering our Opinion, we relied upon and assumed, without
independent verification or investigation, the accuracy and
completeness of all of the financial and other information
provided to or discussed with us by Allied Healthcare and its
employees, representatives and affiliates or otherwise reviewed
by us. With respect to the financial forecasts and estimates
relating to Allied Healthcare utilized in our analyses, we have
assumed, at the direction of management of Allied Healthcare and
with your consent, without independent verification or
investigation, that such forecasts and estimates were reasonably
prepared on bases reflecting the best available information,
estimates and judgments of the management of Allied Healthcare
as to the future financial condition and operating results of
Allied Healthcare. We have also assumed, with your consent, that
the Merger will be consummated in accordance with its terms
without waiver, modification or amendment of any material term,
condition or agreement and in compliance in all material
respects with all applicable laws and other requirements and
that, in the course of obtaining the necessary regulatory or
third party approvals and consents with respect to the Merger,
no delay, limitation, restriction or condition will be imposed
that would have an adverse effect on Allied Healthcare or the
Merger.
We have neither made nor obtained any independent evaluations or
appraisals of the assets or liabilities, contingent or
otherwise, of Allied Healthcare. We are not expressing any
opinion as to the underlying valuation, future performance or
long-term viability of Allied Healthcare or the price at which
the Shares will trade at any time. We also express no view as
to, and our Opinion does not address, the solvency of Allied
Healthcare under any state, federal or other laws relating to
bankruptcy, insolvency or similar matters. In addition, we
express no view as to, and our Opinion does not address, any
terms or other aspects or implications of the Merger (other than
the Per Share Consideration to the extent expressly specified
herein) or any aspect or implication of any other agreement,
arrangement or understanding entered into in connection with the
Merger or otherwise or the fairness of the amount or nature of,
or any other aspect relating to, the compensation to be received
by any individual officers, directors or employees of any
parties to the Merger, or any class of such persons, relative to
the Per Share Consideration or otherwise. In addition, we
express no view as to, and our Opinion does not address, the
underlying business decision of Allied Healthcare to proceed
with or effect the Merger nor does our Opinion address the
relative merits of the Merger as compared to any alternative
business strategies that might exist for Allied Healthcare or
the effect of any other transaction in which Allied Healthcare
might engage. Our Opinion is necessarily based on the
information available to us and general economic, financial and
stock market conditions and circumstances as they exist and can
be evaluated by us on the date hereof.
The issuance of this Opinion was approved by an authorized
committee of Oppenheimer. As part of our investment banking
business, we are regularly engaged in valuations of businesses
and securities in connection with acquisitions and mergers,
underwritings, secondary distributions of securities, private
placements and valuations for other purposes.
We are acting as a financial advisor to Allied Healthcare in
connection with the Merger and will receive a fee for our
services, a portion of which was paid upon our initial
retention, a portion of which will be payable upon delivery of
this Opinion and a significant portion of which is contingent
upon consummation of the Merger. In addition, Allied Healthcare
has agreed to reimburse our expenses arising, and indemnify us
against certain liabilities that may arise, out of our
engagement. In the ordinary course of business, we and our
affiliates may actively trade securities of Allied Healthcare,
Parent and its and their respective affiliates for our and our
affiliates own accounts and for the accounts of customers
and, accordingly, may at any time hold a long or short position
in such securities. We in the past have performed investment
banking services for Allied Healthcare unrelated to the Merger,
for which services we have received compensation.
This Opinion is for the use of the Board of Directors of Allied
Healthcare (in its capacity as such) in connection with its
evaluation of the Merger and does not constitute a
recommendation to any stockholder as to how such stockholder
should vote or act with respect to any matters relating to the
Merger or otherwise.
B-2
Based upon and subject to the foregoing, and such other factors
as we deemed relevant, it is our opinion that, as of the date
hereof, the Per Share Consideration to be received in the Merger
by holders of Shares is fair, from a financial point of view to
such holders.
Very truly yours,
/s/ Oppenheimer &
Co, Inc.
OPPENHEIMER & CO. INC.
B-3
REVOCABLE
PROXY CARD ALLIED HEALTHCARE INTERNATIONAL
INC.
This proxy card is being solicited on behalf of the Board of
Directors.
The undersigned shareholder of Allied Healthcare International
Inc. (the Company) hereby appoints each of Alexander
(Sandy) Young, Paul Weston and Marvet Abbassi, attorneys and
proxies, each with full power of substitution, to represent the
undersigned and vote all shares of the common stock of the
Company which the undersigned is entitled to vote, with all
powers the undersigned would possess if personally present, at
the special meeting of shareholders of the Company, to be held
at the offices of Edwards Angell Palmer & Dodge LLP,
750 Lexington Avenue, New York, NY 10022 on October 19,
2011 at 11:00 a.m., Eastern Time, and any adjournments or
postponements thereof, with respect to the proposals hereinafter
set forth.
This proxy card, when properly executed, will be voted in the
manner directed herein by the undersigned shareholder.
Unless otherwise specified, this proxy card will be voted
FOR adoption of the merger agreement,
FOR the adjournment proposal and FOR the
non-binding proposal regarding merger-related executive
compensation.
The undersigned acknowledges receipt of
the accompanying Chairmans Letter, Notice of Special
Meeting of Shareholders and Proxy Statement (the Proxy
Statement), each dated September 21, 2011. The
undersigned hereby revokes any proxy or proxies heretofore given.
ELECTRONIC
VOTING INSTRUCTIONS
You can
vote by Internet or telephone
Available
24 hours a day, 7 days a week
Instead of mailing your proxy, you may choose one of the two
voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be
received by 11:59 p.m., Eastern Time, on October 18,
2011.
VOTE BY
INTERNET
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Log on to the Internet and go to www.investorvote.com/AHCI.
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Follow the steps outlined on the secured website.
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VOTE BY
TELEPHONE
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Call toll free
1-800-652-VOTE
(8683) within the USA, US territories & Canada
any time on a touch tone telephone. There is
NO CHARGE
to
you for the call.
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Follow the instructions provided by the recorded message.
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(Continued
and to be signed on the reverse side)
SPECIAL
MEETING PROXY CARD
The Board
of Directors recommends a vote
FOR
proposals 1, 2 and 3.
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FOR
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AGAINST
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ABSTAIN
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1.
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To consider and vote upon a proposal to adopt the Agreement and
Plan of Merger, dated as of July 28, 2011 (as it may be
amended from time to time) by and among Saga Group Limited, AHL
Acquisition Corp. and Allied Healthcare International Inc.
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2.
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To consider and vote upon a proposal to adjourn the special
meeting, if necessary, to allow for the solicitation of
additional proxies in favor of the proposal to adopt the merger
agreement if there are insufficient votes to adopt the merger
agreement.
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3.
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To consider and vote upon an advisory (non-binding) proposal to
approve the compensation arrangements described in the Proxy
Statement for the Companys named executive officers in
connection with the merger.
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Change of Address Please print new address below.
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Authorized Signatures This section must be completed
for your vote to be counted. Date and Sign Below
Please sign exactly as name(s) appear hereon. Joint owners
should each sign. When signing as an attorney, administrator,
corporate officer, trustee, guardian, or custodian, please give
full title.
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Please keep signature within the box
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Please keep signature within the box
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Signature 1
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Signature 2
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Date:
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