<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 2)/1/
MARINER POST-ACUTE NETWORK, INC.
--------------------------------
(Name of Issuer)
COMMON STOCK
------------
(Title of Class of Securities)
698940 10 3
-----------
(CUSIP Number)
Robert W. Kadlec
Sidley & Austin
555 West Fifth Street
Los Angeles, California 90013-1010
(213) 896-6072
--------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 20, 1999
-----------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [_].
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b)
for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 11 Pages)
_______________________
/1/ The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing
information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE>
- -------------------------- ---------------------------
CUSIP NO. 698940 10 3 13D Page 2 of 11 Pages
- -------------------------- ---------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Apollo Investment Fund III, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X] (b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER
OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 3,852,780
REPORTING ------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
592,593
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
3,852,780
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES* [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
5.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- -------------------------- ---------------------------
CUSIP NO. 698940 10 3 13D Page 3 of 11 Pages
- -------------------------- ---------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Apollo UK Partners III, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X] (b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United Kingdom
- --------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER
OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 3,852,780
REPORTING ------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
592,593
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
3,852,780
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES* [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
5.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
________________________
<PAGE>
- -------------------------- ---------------------------
CUSIP NO. 698940 10 3 13D Page 4 of 11 Pages
- -------------------------- ---------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Apollo Overseas Partners III, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X] (b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER
OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 3,852,780
REPORTING ------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
592,593
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
3,852,780
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES* [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
5.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- -------------------------- ----------------------------
CUSIP NO. 698940 10 3 13D Page 5 of 11 Pages
- -------------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Apollo Management, L.P
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X] (b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER
OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 3,852,780
REPORTING ------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
592,593
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
3,852,780
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES* [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
5.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- -------------------------- ---------------------------
CUSIP NO. 698940 10 3 13D Page 6 of 11 Pages
- -------------------------- ---------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Apollo Advisors II, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X] (b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER
OF 0
SHARES ------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 3,852,780
REPORTING ------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
592,593
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
3,852,780
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES* [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
5.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
This Amendment No. 2 (this "Amendment") relates to the Statement on
Schedule 13D dated November 4, 1997, amended on April 13, 1998 and filed with
the Securities and Exchange Commission on behalf of Apollo Investment Fund III,
L.P., a Delaware limited partnership ("Fund III"), Apollo UK Partners III, L.P.,
a limited partnership organized under the laws of the United Kingdom ("UK
Partners"), Apollo Overseas Partners III, L.P., a Delaware limited partnership
("Overseas Partners", and together with Fund III and UK Partners, the "Apollo
Purchasers"), Apollo Advisors II, L.P., a Delaware limited partnership ("Apollo
Advisors") and Apollo Management, L.P., a Delaware limited partnership ("Apollo
Management") (collectively, the "Reporting Entities") with respect to the common
stock, par value $0.01 per share (the "Common Stock"), of Mariner Post-Acute
Network, Inc., a Delaware corporation (the "Issuer").
Item 3 is hereby amended to add the following:
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS
As previously reported, the Reporting Entities acquired beneficial
ownership of 14,367,591 shares of Common Stock (after giving effect to a 3-for-1
stock split effective December 30, 1997) and pursuant to the Proxy and Voting
Agreement, dated as of November 4, 1997, Apollo Management was granted a three
year irrevocable proxy to vote the 3,410,187 shares of Common Stock (after
giving effect to a 3-for-1 stock split effective December 30, 1997) acquired by
Chase Equity Associates, L.P., a California limited partnership ("Chase"),
Healthcare Equity Partners, L.P., a Delaware limited partnership, Healthcare
Equity QP Partners, L.P., a Delaware limited partnership, Key Capital
Corporation, a Delaware corporation, Key Equity Partners 97, a Delaware limited
partnership, Drax Holdings, L.P., a Delaware limited partnership, Walnut Growth
Partners Limited Partnership, a Delaware limited partnership, and Keith B. Pitts
(collectively, the "Remaining Purchasers" and together with the Apollo
Purchasers, the "Purchasers") (including transferees) on matters as to which the
Remaining Purchasers are entitled to vote.
Pursuant to a Transfer Agreement, dated as of December 20, 1999 ("Transfer
Agreement"), the Apollo Purchasers in a private transaction sold 13,774,998
shares of Common Stock of the Issuer held by them (the "Sale") to Credit Suisse
First Boston Management Corporation (the "Purchaser"), a privately held
affiliate of CS First Boston, for consideration consisting of an aggregate of
(i) $2,000,000 in cash, (ii) preferred equity securities of the Purchaser and
(iii) a "put option" to the Purchaser of the preferred equity securities.
Although the actual current or ultimate value of the preferred equity securities
of the Purchaser received by the Apollo Purchasers cannot be accurately
determined, the Apollo Purchasers believe that the value of the consideration
received by the Apollo Purchasers in the Sale, on a per share basis, exceeded
the current market price of the Issuer's Common Stock.
Page 7 of 11
<PAGE>
After giving effect to the Sale, the Apollo Purchasers will be the record
owner of 592,593 shares of Common Stock of the Issuer.
Item 4 is hereby amended to add the following:
ITEM 4. PURPOSE OF TRANSACTION
As previously reported, the Purchasers and the Issuer entered into a
Stockholders Agreement dated as of November 4, 1997, amended as of April 13,
1998 and amended and restated as of November 25, 1998 (the "Stockholders
Agreement"), providing Apollo Management certain board nomination rights and
"drag-along" rights relative to the other parties to the Stockholders Agreement.
Pursuant to the terms of the Stockholders Agreement, the disposition of the
shares of Common Stock of the Issuer by the Apollo Purchasers in the Sale
resulted in the termination of the nomination rights under the Stockholders
Agreement.
Page 8 of 11
<PAGE>
Item 5 is hereby amended to read in its entirety:
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) and (b)
As of December 22, 1999, the Apollo Purchasers are the record holders of
592,593 shares of Common Stock, and they may be deemed to be the beneficial
owners of an aggregate 3,852,780 shares of Common Stock pursuant to the terms of
the Proxy Agreement.
The Apollo Purchasers hold the 592,593 shares in the following allocations:
Fund III 540,327 shares
UK Partners 19,971 shares
Overseas Partners 32,295 shares
Total 592,593 shares
(c) The responses to Items 3 and 4 of this Schedule 13D are incorporated
herein.
(d) Not applicable.
(e) Not applicable.
Item 6 is hereby amended to add:
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The responses to Items 3 and 4 of this Schedule 13D are incorporated
herein.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit A: Transfer Agreement, dated as of December 20, 1999
Page 9 of 11
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete, and correct.
Dated as of this 23rd day of December, 1999.
APOLLO INVESTMENT FUND III, L.P.
By: Apollo Advisors II, L.P.,
Its General Partner
By: Apollo Capital Management II, Inc.,
Its General Partner
By: /s/ Michael D. Weiner
----------------------------
Name: Michael D. Weiner
Title: Vice President
APOLLO OVERSEAS PARTNERS III, L.P.
By: Apollo Advisors II, L.P.,
Its General Partner
By: Apollo Capital Management II, Inc.,
Its General Partner
By: /s/ Michael D. Weiner
----------------------------
Name: Michael D. Weiner
Title: Vice President
APOLLO UK PARTNERS III, L.P.
By: Apollo Advisors II, LP.,
Its General Partner
By: Apollo Capital Management II, Inc.,
Its General Partner
By: /s/ Michael D. Weiner
----------------------------
Name: Michael D. Weiner
Title: Vice president
Page 10 of 11
<PAGE>
APOLLO ADVISORS II, L.P.
By: Apollo Capital Management II, Inc.,
Its General Partner
By: /s/ Michael D. Weiner
-------------------------------
Name: Michael D. Weiner
Title: Vice President
APOLLO MANAGEMENT, L.P.
By: AIF III Management, Inc.,
Its General Partner
By: /s/ Michael D. Weiner
-------------------------------
Name: Michael D. Weiner
Title: Vice President
Page 11 of 11
<PAGE>
EXHIBIT A
Conformed Copy
--------------
TRANSFER AGREEMENT
------------------
CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION
Dated as of December 20, 1999
CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION, a Delaware
corporation ("CSFBM"), hereby agrees with each transferor named on the
-----
signature pages hereof (such transferors being referred to individually as a
"Transferor" and collectively as the "Transferors") and Apollo Management, L.P.
- ----------- -----------
and Apollo Advisors II, L.P., the manager and general partner, respectively, of
each of the Transferors ("Apollo" and, together with the Transferors, the
"Apollo Entities") as follows with respect to the transfer of certain interests,
rights and obligations described in Section 1.1 below:
1. The Shares.
----------
1.1 The Shares. Each Transferor is the owner of the number of
----------
shares of common stock, par value $0.01 per share, of Mariner Post Acute Network
Inc. (the "Common Stock"), a Delaware corporation (the "Company"), set forth
------------ -------
below its name on the signature pages hereto (all such Common Stock hereinafter
referred to as the "Shares").
------
1.2 The Transferors. Each of the Transferors hereby agrees,
---------------
severally and not jointly, to transfer to CSFBM all of the Shares set forth
below its name on the signature pages hereto. CSFBM shall not be obligated to
accept the transfer of any of the Shares unless the Transferors shall have
delivered all of the Shares to be transferred hereunder.
2. Closing. The closing (the "Closing") of the transactions
------- -------
contemplated by this Transfer Agreement shall take place as follows:
2.1 Transfer of the Shares.
----------------------
(a) On the basis of the representations and warranties
hereinafter set forth, each of the Transferors hereby shall, at the Closing,
transfer to CSFBM, and CSFBM shall accept the transfer from each of the
Transferors of, the Shares set forth below the respective names of the
Transferors on the signature pages hereto, for aggregate consideration (the
"Consideration") consisting of (i) $2,000,000 (the "Cash Consideration"); (ii)
------------- ------------------
80,000 shares of 9.75% Redeemable Preferred Stock of CSFBM, par value $1.00 per
share (the "Preferred Stock"), to be issued under and entitled to the benefits
---------------
of a Certificate of Designation, a copy of which has heretofore been delivered
to Transferor (the "Certificate"); and (iii) a put option on the terms
-----------
described in the Put Option Agreement dated as of December 20, 1999 by and
between the New York Branch of Credit Suisse
<PAGE>
First Boston and the Transferors (the "Put Option"). The consideration for the
Shares set forth below the name of each Transferor on the signature pages hereto
is the aggregate consideration for all of the Shares transferred by each
respective Transferor.
(b) At the Closing, in order that the Shares be transferred to
CSFBM, each of the Transferors will deliver to the Company certificates
representing such Tranferor's Shares, appropriate stock powers and any
instruments required by the terms of the Shares as necessary to effect the valid
transfer of ownership of the Shares against receipt by such Transferor of its
respective portion of (i) the Cash Consideration in federal (same day) funds by
wire transfer to an account at a bank designated by such Transferor, (ii)
certificates representing the Preferred Stock and (iii) the Put Option. The
Closing will take place at the offices of Shearman & Sterling, 599 Lexington
Avenue, New York, New York 10022, at 9:00 a.m., New York time, simultaneously
with the execution of this Transfer Agreement (the "Closing Date"). As promptly
------------
as practicable after the Closing Date, CSFBM shall request that the transfer
agent and registrar for the Company issue (x) a certificate in the name of CSFBM
for Shares transferred to CSFBM pursuant hereto and (y) certificates in the
names of the Transferors for the balance of any Shares covered by each stock
certificate delivered to CSFBM on the Closing Date.
3. Common Representations and Warranties. CSFBM and the Transferors,
-------------------------------------
severally and not jointly, represent, warrant and covenant to the other party
hereto as follows:
3.1 Organization. CSFBM, on its behalf, represents that it is a
------------
corporation duly incorporated under the laws of the State of Delaware, and each
of the Transferors, on its behalf, represents that it is a duly formed
partnership under the laws of its respective jurisdiction of formation, and each
of CSFBM and the Transferors (i) is validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation, as the case may
be; (ii) has the necessary power and authority, either corporate or partnership,
as the case may be, for the conduct of its business as presently conducted; and
(iii) is duly qualified to transact business and is in good standing in each
jurisdiction in which the nature of the business transacted or property owned or
leased by it requires such qualification, except, in the case of (ii) or (iii)
above, for such power and authority, either corporate or partnership, as the
case may be, the absence of which, or such jurisdictions where the failure to so
qualify, would not have a material adverse effect on its consolidated business,
assets, results of operations or condition, financial or otherwise (a "Material
--------
Adverse Effect").
- ---------------
3.2 Authorization; Valid and Binding Agreements. Each has the requisite
-------------------------------------------
power and authority, either corporate or partnership, as the case may be, to
enter into, execute or deliver this Transfer Agreement and the other agreements,
instruments, documents and other materials to which it is a party to be entered
into, executed or delivered in connection herewith (collectively, the
"Implementing Agreements") and to transfer the Shares or to issue and sell the
-----------------------
shares of Preferred Stock and to deliver the Cash Consideration, as the case may
be, all as contemplated herein and to consummate the transactions contemplated
hereby and thereby (collectively, the "Transactions") and to perform all of its
------------
respective obligations and undertakings hereunder and thereunder. The execution,
delivery and performance of each of the Implementing Agreements has been duly
2
<PAGE>
authorized and each of the Implementing Agreements will constitute, upon
execution and delivery, a valid and legally binding obligation of such party
enforceable against it in accordance with its terms subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
3.3 No Violation. Neither the execution and delivery by it of the
------------
Implementing Agreements, nor the performance of its obligations under the
Implementing Agreements, nor the consummation of the Transactions, will (i)
violate any provision of its constitutional documents; (ii) violate any material
statute or law or any judgment, decree, order, regulation or rule of any court
or governmental authority to which it or any of its properties may be subject;
(iii) cause the acceleration of the maturity of any material debt or obligation
of it; or (iv) (with or without the giving of notice or lapse of time, or both)
violate, or be in conflict with, or constitute a default under, or permit the
termination of, or require the prior approval or consent of (or filing with) any
governmental authority or person under, or result in the creation of any lien
upon any of its property under, any material agreement to which it is a party or
by which it is bound, subject, in the case of the Transferors, to the notice and
tag-along rights as contemplated in Section 7(c) hereof and the Chase Warrant
(as defined in Section 4.1 hereof).
3.4 Private Offering. No securities of the same class as the Shares or
----------------
shares of Preferred Stock have been issued and sold by it within the six-month
period immediately prior to the date hereof. Each party hereto agrees that
neither it nor anyone acting on its behalf, has or will offer the Shares or
shares of Preferred Stock, as the case may be, so as to bring the transfer or
the issuance and sale thereof, as the case may be, within the provisions of
Section 5 of the Securities Act of 1933, as amended (the "Securities Act").
--------------
3.5 Investment Representations. Each party hereto represents that it is
--------------------------
receiving the transfer of all of the Shares or is acquiring the shares of
Preferred Stock, as the case may be, pursuant to the terms hereof for its own
account. Each party hereto further represents that (i) it has authority to make
the representations contained in this Article 3; (ii) it is an "accredited
investor" within the meaning of Rule 501 under the Securities Act; (iii) it is
acquiring all of the Shares or shares of Preferred Stock, as the case may be, to
be transferred or sold to it hereunder for investment purposes and with no view
or intention to offer for sale or to make distributions of any of the Shares or
shares of Preferred Stock, as the case may be, in a manner which would violate
federal or state securities laws; (iv) it acknowledges and understands that the
Shares or shares of Preferred Stock, as the case may be, to be transferred or
sold to it pursuant to this Transfer Agreement (x) will not be registered under
the Securities Act or qualified under state securities laws and that no party
has any obligation whatsoever to register or qualify the Shares or shares of
Preferred Stock, as the case may be, now or at any time in the future, (y) are
being transferred to it in reliance on its representations and warranties
contained in this Section 3.5 pursuant to a transaction that is exempt from the
registration requirements of the Securities Act, and (z) cannot be offered, sold
or otherwise transferred except pursuant to an exemption from the registration
requirements of the Securities Act or pursuant to an effective registration
statement under the Securities Act; and (v) it has conducted its own
investigation and/or appraisal and in connection therewith has received such
financial and
3
<PAGE>
other information about the Company or CSFBM, as the case may be, as it has
deemed necessary in connection with its execution and delivery of this Transfer
Agreement and the transfer to or acquisition by it of the Shares or shares of
Preferred Stock, as the case may be.
3.6 Other Acknowledgments. Each party represents, acknowledges and
---------------------
confirms as of the date of this Transfer Agreement with respect to the
Transactions or when agreeing to any other matter with such party (or any
affiliate thereof) that it has not (i) entered into any agreement, contract,
binding commitment or understanding to offer, sell, transfer or otherwise
dispose of any of the shares of the Preferred Stock either currently or after
the passage of a fixed or determinable period of time or upon the occurrence or
non-occurrence of any predetermined event or circumstance or (ii) offered for
sale or entered into any negotiations or discussions for the sale or transfer of
any of such shares of Preferred Stock.
3.7 Independent Parties. There is no agency or partnership between
-------------------
CSFBM, on the one hand, and any of the Apollo Entities, on the other hand, and
each has a valid business purpose independent of the other to enter into
transactions contemplated hereby.
4. Additional Representations by the Transferors. Each Transferor,
---------------------------------------------
severally and not jointly, represents, warrants and covenants to CSFBM as to
itself as follows:
4.1 Documentation; Title to Shares; Encumbrances. Such Transferor has
--------------------------------------------
provided to CSFBM copies of such documents and other material and information as
has been requested by CSFBM and all such documents, materials and the
information contained therein are true and correct in all material respects.
Such Transferor has good and valid title to all of the Shares to be transferred
by it pursuant hereto. Upon the transfer of such Shares to CSFBM in accordance
with the terms hereof, such Transferor will transfer to CSFBM good and valid
title to the Shares, free and clear of all liens, claims and encumbrances
created by the Transferor, subject only to the matters contemplated in
Section 7(c) hereof and the warrant held by chase Equity Associates, L.P. for an
aggregate of 592,593 Shares (the "Chase Warrant").
4.2 Investment with "Plan Assets". Such Transferor is not acquiring
-----------------------------
the shares of Preferred Stock to be acquired by it hereunder directly or
indirectly with "plan assets" within the meaning of Department of Labor
Regulation 29 C.F.R. Section 2510.3-101.
5. Additional Representations by CSFBM. CSFBM hereby represents,
-----------------------------------
warrants and covenants to the Transferors as follows:
5.1 Preferred Stock. The shares of Preferred Stock to be issued to
---------------
the Transferors pursuant to this Agreement will be duly authorized, executed and
delivered by CSFBM pursuant to the Certificate of Designations therefor and as
filed with the Secretary of State of the State of Delaware and when paid for
through the exchange of Shares as contemplated herein, will be validly issued,
fully paid and non-assessable and not subject to any pre-emptive rights and,
when issued and paid for as contemplated herein, will be free and clear of all
liens, claims and encumbrances created
4
<PAGE>
by CSFBM. CSFBM is a Delaware corporation and pursuant to Delaware law the
Transferors will not become subject to any liability of CSFBM solely by reason
of their acquiring shares of Preferred Stock as contemplated herein, nor as a
result of such acquisition alone, will the Transferors be deemed to be an
affiliate of CSFBM as defined in Rule 144 under the Securities Act.
5.2 Documentation. CSFBM has provided to the Transferors copies of
-------------
such documents and other material and information as has been requested by the
Transferors and all such documents and the information contained therein are
true and correct in all material respects.
6. Deliveries. Simultaneously with the Closing, the following
----------
additional documents will be delivered by or on behalf of the parties.
6.1 Existing Stockholder Arrangements; Etc. CSFBM shall have
--------------------------------------
received evidence in form and substance resonably satisfactory to it that the
existing shareholders' agreement and other agreements or arrangements in place
among the Transferors and other persons or entities holding shares of Common
Stock either (i) have been terminated and no longer are in effect with respect
to the Shares or (ii) shall not be applicable to the Shares being acquired by
CSFBM (which shall be deemed to be satisfied either by delivery of releases from
all parties to such shareholders' agreement or an opinion of counsel to the
Transferors to the effect of (i) above, in each case in form and substance
reasonably satisfactory to CSFBM), subject in either case to fulfillment of
CSFBM's obligations as contemplated by Section 7(c) hereof.
7. Acknowledgment; Covenants.
-------------------------
(a) CSFBM hereby acknowledges that the Transferors or their
affiliates by reason of their relationship to the Company have had access to
certain information (the "Information") which may be material regarding the
Company, its financial condition, results of operations, management, projections
and businesses. CSFBM acknowledges that the Transferors have offered the
Information to CSFBM and that CSFBM has refused that offer and therefore agrees
that the Transferors shall have no obligation to disclose to CSFBM any of the
Information. CSFBM further acknowledges that it has conducted its own
investigation, to the extent that it has determined necessary or desirable
regarding the Company and the transaction contemplated hereby, and that CSFBM
has determined to enter into and complete this transaction based on, among other
things, such investigation. In connection with the foregoing, and to the fullest
extent permitted by law, CSFBM hereby waives and releases any and all claims it
may have against the Transferors or their affiliates and their respective
officers, directors and employees by reason of such nondisclosure of the
Information.
(b) Each of the Apollo Entities hereby repeats the acknowledgment
appearing in (a) above, mutatis mutandis, with respect to certain information
known to CSFBM, which may be material regarding CSFBM, its financial condition,
results of operations, management, projections and businesses.
5
<PAGE>
(c) CSFBM hereby acknowledges that the Transferors are subject to
the tag-along rights of various other shareholders of the Company under that
certain Shareholders' Agreement to which each of the Transferors is a party.
CSFBM shall offer to purchase any Shares held by such other shareholders (i) for
the same consideration per Share as is received by the Transferors and (ii)
under substantially similar terms and conditions as are provided for under this
Transfer Agreement.
8. Consent to Transfers: Minimum Number of Shares. Notice of
----------------------------------------------------------
Proposed Transfers. The shares of Preferred Stock issued hereunder may be
- ------------------
transferred only with the consent of CSFBM, which consent shall be deemed to
have been given if not objected to within five business days; provided, however,
that no such consent shall be required (i) in the case of any transfer of such
shares from one of the Transferors (or any of their respective affiliates) to an
affiliate of such Transferor or (ii) in the case of any transfer of such shares
of Preferred Stock from a Transferor (but not any subsequent transferor of such
shares) to a person that is an institutional "accredited investor" (as defined
in Regulation D under the Securities Act) in a transaction that is exempt from
the registration requirements thereunder and, prior to such transfer, CSFBM
shall have received an opinion of counsel confirming the availability of such
exemption. CSFBM shall respond as promptly as reasonably practicable to any
request for such consent hereunder. Any attempted transfer of shares of
Preferred Stock in violation of the other terms of this Section 8 shall be null
and void. In addition, any transfer of such shares issued hereunder shall
involve the transfer of at least the lesser of (i) 20,000 shares of Preferred
Stock and (ii) all such shares of Preferred Stock held by the particular
transferor, as the case may be. As used in this Section 8, (i) the term
"transfer" encompasses (x) any offer, pledge, sale, contract to sell, the sale
of any option or contract to purchase, the purchase of any option or contract to
sell, the grant of any option, right or warrant to purchase, transfer, or other
disposition of any securities referred to herein or any securities convertible
into or exercisable or exchangeable for the securities referred to herein and
(y) entering into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of any of the
securities referred to herein (regardless of whether any transaction described
in clause (x) or (y) is to be settled by the delivery of the securities referred
to herein, or such other securities, in cash or otherwise) and (ii) the term
"affiliate" shall have the meaning ascribed to it in Rule 144 under the
Securities Act.
9. Expenses Etc. All fees and expenses incurred by the Transferors
------------
and CSFBM in connection with this Transfer Agreement, the Implementing
Agreements and the transactions contemplated hereby and thereby shall be paid by
CSFBM; provided, however, that if such fees and expenses incurred by the
Transferors in connection herewith (i) exceed $275,000, the Transferors shall
provide detailed support therefor (including lawyers involved, hours billed,
rates, etc.) and (ii) appear reasonably likely to exceed $400,000, the
Transferors must give written notice to CSFBM to this effect prior to incurring
expenses in excess of such amount. The agreement of the parties in this Section
9 shall survive the payment for or transfer of any of the Shares or shares of
Preferred Stock.
10. Indemnification.
---------------
6
<PAGE>
(a) CSFBM agrees to indemnify, defend, protect and hold harmless each
of the Apollo Entities and each of their (and their affiliates') respective
officers, directors, employees, agents and representatives from and against any
and all losses, claims, damages and liabilities (including, without limitation,
any legal or other out-of-pocket expenses reasonably incurred in connection
therewith) arising out of or caused by or resulting from, any breach or
violation by CSFBM of any of its representations, warranties or covenants
contained in the Implementing Agreements, except insofar as such losses, claims,
damages or liabilities are caused by any breach or violation by any of the
Transferors of any of their respective representations, warranties or covenants
contained in this Transfer Agreement.
(b) Each Transferor agrees, severally and not jointly, to indemnify
and hold harmless CSFBM and each of its (and each of its affiliates') officers,
directors, employees, agents and representatives from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other out-of-pocket expenses reasonably incurred in connection
therewith) arising out of or caused by or resulting from, any breach or
violation by such Transferor of any of its representations, warranties or
covenants contained in Article 3 of this Transfer Agreement, except insofar as
such losses, claims, damages or liabilities are caused by any breach or
violation by CSFBM of any of its representations, warranties or covenants
contained in or made in connection with this Transfer Agreement; provided,
however, that the Transferors' maximum liability under this indemnity shall not
exceed the aggregate Cash Consideration.
11. Counterparts. This Transfer Agreement may be executed in two or
------------
more counterparts, but all such counterparts shall constitute but one and the
same instrument.
12. Survival of Covenants. All covenants, agreements, representations
---------------------
and warranties made by the parties in the Implementing Agreements shall survive
indefinitely any investigation made by, or on behalf of, CSFBM, the Transferors
or any person controlling any of them or acting on their behalf, and the Closing
of the transactions contemplated hereby and thereby.
13. Law Governing. THIS TRANSFER AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CHOICE OF LAW PRINCIPLES THEREOF.
14. Integration and Severability. The Implementing Agreements embody
----------------------------
the entire agreement and understanding between the Transferors and CSFBM with
respect to the subject matter hereof, and supersedes all prior agreements and
understandings relating to the subject matter hereof. In case any one or more of
the provisions contained in this Transfer Agreement or in any instrument
contemplated hereby, or any application thereof, shall be invalid, illegal or
unenforceable in any respect, under the laws of any jurisdiction, the validity,
legality and enforceability of the remaining provisions contained herein and
therein, and any other application thereof, shall not in any way be affected or
impaired thereby or under the laws of any other jurisdiction.
7
<PAGE>
15. Binding Effect: Assignment: Third Party Beneficiaries. This
------------------------------------------------------
Transfer Agreement shall be binding upon and inure to the benefit of the parties
and their respective successors, assigns, heirs, executors, administrators and
other legal representatives. At any time or from time to time following the
Closing, CSFBM shall be permitted to assign any and all of its rights and
obligations hereunder to any affiliate of CSFBM; provided, however, that, at the
time of any such assignment, the overall financial condition and prospects of
such affiliate shall be at least comparable to that of CSFBM; provided, further,
however, that such affiliate shall assume in writing all of the obligations and
duties of CSFBM hereunder), and thereafter any and all references herein to
CSFBM shall refer to such affiliate. Except as set forth in the preceding
sentence, no party shall assign any of its rights or delegate any of its duties
under this Transfer Agreement (by operation of law or otherwise) without the
prior written consent of CSFBM or holders of a majority of the shares of
Preferred Stock outstanding and acquired hereunder at the time of such proposed
assignment, as applicable. Any assignment of rights or delegation of duties
under this Transfer Agreement by a party without the prior written consent of
the other party or parties, if such consent is required hereby, shall be void.
8
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and complete the enclosed copy of this letter on the signature page provided and
return it to CSFBM, whereupon this letter shall then become a binding agreement
in accordance with its terms.
Very truly yours,
CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION
By: /s/ Chung W. Choy
------------------------
Name: Chung W. Choy
Title: Attorney-in-fact
<PAGE>
TRANSFER AGREEMENT SIGNATURE PAGE
---------------------------------
The undersigned hereby agrees to transfer the Shares as set forth
below and agrees to the manner of payment specified below:
TRANSFEROR: APPOLLO INVESTMENT FUND III, L.P.
By its General Partner,
APOLLO ADVISORS II, L.P.
By: /s/ Michael D. Weiner
----------------------------
Name: Michael D. Weiner
Title: Vice President
Address: c/o Apollo Advisors II, L.P.
Two Manhattanville Road
Purchase, NY 10577
Telecopy: (914)694-8032
SHARES TO BE TRANSFERRED: 8,373,362 shares (Certificates No. PHN 0414)
4,186,681 shares (Certificate No. PHN 0361)
CONSIDERATION:
Cash Consideration: $1,823,609
Shares of Preferred Stock: 72,944
MANNER OF PAYMENT:
The Chase Manhattan Bank, NA
ABA: 021000021
A/C#: 900-9-002206
BBK: Chase Manhattan Bank, NA
A/C#: 89922144
ATTN: Mike Mooney (212)623-2357
Ref:
10
<PAGE>
TRANSFER AGREEMENT SIGNATURE PAGE
---------------------------------
The undersigned hereby agrees to transfer the Shares as set forth
below and agrees to the manner of payment specified below:
TRANSFEROR: APOLLO (UK) PARTNERS III, L.P.
By its General Partner,
APOLLO ADVISORS II, L.P.
By: /s/ Michael D. Weiner
---------------------
Name: Michael D. Weiner
Title: Vice President
Address: c/o Apollo Advisors II, L.P.
Two Manhattanville Road
Purchase, NY 10577
Telecopy: (914)694-8032
SHARES TO BE TRANSFERRED: 309,545 shares (Certificates No. PHN 0412)
154,672 shares (Certificate No. PHN 0359)
CONSIDERATION:
Cash Consideration: $67,390.60
Shares of Preferred Stock: 2,696
MANNER OF PAYMENT:
The Chase Manhattan Bank, NA
ABA: 021000021
A/C# 900-9-002206
BBK: Chase Manhattan Bank, NA
A/C# 89922146
ATTN: Mike Mooney (212)623-2357
Ref:
11
<PAGE>
TRANSFER AGREEMENT SIGNATURE PAGE
---------------------------------
The undersigned hereby agrees to transfer the Shares as set forth below and
agrees to the manner of payment specified below:
TRANSFEROR: APOLLO OVERSEAS PARTNERS III, L.P.
By its General Partner,
APOLLO ADVISORS II, L.P.
By: /s/ Michael D. Weiner
------------------------------
Name: Michael D. Weiner
Title: Vice President
Address: c/o Apollo Advisors II, L.P.
Two Manhattanville Road
Purchase, NY 10577
Telecopy: (914) 694-8032
SHARES TO BE TRANSFERRED: 500,492 shares (Certificates No. PHN 0413)
250,246 shares (Certificate No. PHN 0360)
CONSIDERATION:
Cash Consideration: $109,000.40
Shares of Preferred Stock: 4,360
MANNER OF PAYMENT:
The Chase Manhattan Bank, NA
ABA: 021000021
A/C#: 900-9-002206
BBK: Chase Manhattan Bank, NA
A/C#: 89922145
ATTN: Mike Mooney (212)623-2357
Ref:
12
<PAGE>
APOLLO ADVISORS II, L.P.
By: /s/ Michael D. Weiner
----------------------------
Name: Michael D. Weiner
Title: Vice President
13
<PAGE>
APOLLO MANAGEMENT, L.P.
By : /s/ Michael D. Weiner
----------------------------
Name: Michael D. Weiner
Title: Vice President
14
