<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14A
Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-12
PHOENIX INVESTMENT PARTNERS, LTD.
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock, par value $.01 per share
2) Aggregate number of securities to which transaction applies:
31,344,305 shares of Common Stock (as of September 29, 2000)
3) 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):
The approximate value of the transaction is the sum of (i) the product
of 19,424,865 outstanding shares of Common Stock and $15.75, the cash
price per share to be paid in the merger, plus (ii) cash consideration
of up to $58,232,771 to be paid for options to purchase 7,373,662
shares of Common Stock being surrendered in connection with the merger,
plus (iii) cash consideration up to $69,721,002 to be paid for the
4,545,778 shares of Common Stock into which the 6% convertible
subordinated debentures (including options to acquire such debentures)
may be converted prior to the merger.
4) Proposed maximum aggregate value of transaction:
$433,895,397
5) Total fee paid:
$86,779
[_] Fee paid previously with preliminary materials.
[_] 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.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
================================================================================
PHOENIX INVESTMENT PARTNERS, LTD.
56 Prospect Street
Hartford, Connecticut 06115
__________, 2000
Dear Stockholder:
You are cordially invited to attend a special meeting of the stockholders
of Phoenix Investment Partners, Ltd., or PXP, to be held on __________, 2000, at
10:00 A.M., local time, at ___________________.
At this meeting, you will be asked to consider and vote on the merger of a
subsidiary of Phoenix Home Life Mutual Insurance Company with and into PXP.
Phoenix Home Life Mutual Insurance Company, through a wholly-owned subsidiary,
owns approximately 58% of the outstanding common stock of PXP. PXP will continue
as the surviving company. After the merger, PXP will be wholly-owned by Phoenix
Home Life Mutual Insurance Company.
If the merger is completed, you will receive $15.75 for each share of PXP
common stock you own.
In order to consider the fairness of the merger to PXP's public
stockholders, PXP's board of directors formed the independent directors
committee, a committee of directors who are neither directors, officers or
employees of Phoenix Home Life Mutual Insurance Company nor employees or
officers of PXP, which negotiated the $15.75 per share merger consideration and
the other terms of the merger agreement. A copy of the merger agreement is
included as Appendix A to the attached proxy statement.
The independent directors committee has concluded that the terms of the
merger agreement are fair to and in the best interests of PXP's public
stockholders. In arriving at this conclusion, the committee considered the
opinion of Salomon Smith Barney, its independent financial advisor, to the
effect that, as of September 10, 2000 and based upon and subject to the
considerations set forth in that opinion, the merger consideration of $15.75 per
share was fair to the public stockholders from a financial point of view.
Salomon Smith Barney's opinion is subject to various limitations,
qualifications, and assumptions described in the opinion, which is reprinted as
Appendix B to the attached proxy statement. You should carefully read the
opinion in its entirety.
The independent directors committee unanimously recommended that the entire
board of directors of PXP approve the merger agreement. The board of directors
of PXP, after careful consideration of the recommendation of the independent
directors committee, unanimously approved the merger agreement, declared it to
be advisable and recommended that it be submitted to PXP's stockholders for
adoption.
<PAGE>
The affirmative vote of holders of a majority of the outstanding shares of
PXP common stock is required to adopt the merger agreement. Because Phoenix Home
Life Mutual Insurance Company owns a majority of the outstanding shares of PXP
common stock, its affirmative vote will be sufficient to adopt the merger
agreement.
The independent directors committee and the board of directors recommend
that you vote in favor of the adoption of the merger agreement.
The attached notice of meeting and proxy statement describe the merger and
the merger agreement. We urge you to read these materials carefully.
The merger is an important decision for PXP and its stockholders. Whether
or not you plan to attend the special meeting, I urge you to vote by completing,
dating, signing and promptly returning the enclosed proxy card to ensure that
your shares will be voted at the meeting.
Sincerely,
/s/ Philip R. McLoughlin
Philip R. McLoughlin
Chairman
--------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or Disapproved Of This Transaction, Passed Upon The
fairness or merits of this Transaction, or passed upon the accuracy or adequacy
of the disclosure in this document. Any representation to the contrary is a
criminal offense.
--------------------------------------------------------------------------------
This proxy statement and form of proxy are being mailed to PXP's
stockholders beginning on or about ________________, 2000.
<PAGE>
PHOENIX INVESTMENT PARTNERS, LTD.
56 Prospect Street
Hartford, Connecticut 06115
_______________________________________________
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
_______________________________________________
Date.................................. ___________, 2000
Time.................................. 10:00 A.M. local time
Place................................. _____________________
Items of Business..................... 1. To consider and vote on a proposal
to adopt the Agreement and Plan of
Merger, dated September 10, 2000, among
Phoenix Investment Partners, Ltd., or
PXP, PM Holdings, Inc., and Phoenix Home
Life Mutual Insurance Company, pursuant
to which a subsidiary of PM Holdings,
Inc. will be merged with and into PXP
and each share of PXP common stock held
by PXP's public stockholders will be
converted into the right to receive
$15.75 in cash; and
2. To transact such other business as
may properly come before the Special
Meeting or any adjournments or
postponements of the Special Meeting.
Record Date........................... You are entitled to vote if you were
a stockholder of record on ________,
2000.
Appraisal Rights...................... Any stockholder who does not vote in
favor of the merger agreement will
have the right to dissent and to seek
appraisal of the fair value of his or
her shares of common stock if the
merger is consummated. In order to
do so, however, stockholders must
properly perfect their appraisal
rights under Delaware law in
accordance with the procedures
described on pages of the accompanying
proxy statement.
Voting................................ Your vote is important. Please vote
in one of the following two ways:
. attend the special meeting and
vote in person; or
. mark, sign, date and promptly return
the enclosed proxy card in the
postage-paid envelope.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING.............. - 1 -
SUMMARY TERM SHEET........................................... - 2 -
The Companies........................................... - 2 -
The Merger.............................................. - 2 -
Vote Required/Security Ownership of Phoenix
and PXP's Directors and Executive Officers......... - 3 -
Consequences of the Merger.............................. - 3 -
Recommendations of the Independent Directors
Committee and PXP's Board of Directors............. - 4 -
Interests of Certain Persons in the Merger.............. - 4 -
Conditions to the Merger................................ - 5 -
Termination of the Merger Agreement..................... - 5 -
Reasons for the Merger.................................. - 5 -
Fairness Opinion of Salomon Smith Barney................ - 6 -
Appraisal Rights........................................ - 7 -
Financing; Source of Funds.............................. - 7 -
Material Federal Income Tax Consequences................ - 7 -
Accounting Treatment.................................... - 7 -
Stockholder Lawsuits Challenging the Merger............. - 7 -
Questions About The Merger.............................. - 8 -
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING INFORMATION............................. - 8 -
INFORMATION CONCERNING THE SPECIAL MEETING................... - 9 -
Date, Time, and Place of the Special Meeting............ - 9 -
Purpose of the Special Meeting.......................... - 9 -
Record Date, Quorum Requirement, and Vote Required...... - 9 -
Solicitation, Revocation and Use of Proxies............. - 10 -
Voting Procedures....................................... - 10 -
Additional Voting Information........................... - 11 -
APPRAISAL RIGHTS............................................. - 11 -
SPECIAL FACTORS.............................................. - 12 -
Background of the Merger................................ - 12 -
Recommendations of the Independent Directors Committee
and Board of Directors; Reasons for the Merger..... - 17 -
Opinion of the Financial Advisor for the Independent
Directors Committee................................ - 20 -
Financial Analyses...................................... - 23 -
Position of Phoenix as to Fairness of the Merger........ - 28 -
Interests of Certain Persons in the Merger.............. - 29 -
Consequences of the Merger.............................. - 30 -
Benefits and Detriments of the Merger to PXP and
PXP's Stockholders................................. - 31 -
Plans for Surviving Company After the Merger............ - 32 -
U.S. Federal Income Tax Consequences.................... - 32 -
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Accounting Treatment............................... - 35 -
Public Offerings and Repurchases of Common Stock.......... - 35 -
Fees and Expenses......................................... - 35 -
Regulatory Requirements................................... - 36 -
Stockholder Lawsuits Challenging the Merger............... - 36 -
THE MERGER AGREEMENT........................................... - 36 -
The Merger; Time of Closing............................... - 37 -
Exchange and Payment Procedures........................... - 37 -
Transfers of Shares....................................... - 37 -
Treatment of Stock Options................................ - 37 -
Representations and Warranties............................ - 38 -
PXP's Covenants........................................... - 39 -
PM Holdings' Covenants.................................... - 39 -
Phoenix's Performance Guarantee........................... - 39 -
Conditions................................................ - 39 -
Termination of the Merger Agreement....................... - 40 -
Expenses.................................................. - 40 -
Amendments; Waivers....................................... - 41 -
TREATMENT OF CONVERTIBLE SUBORDINATED DEBENTURES............... - 41 -
APPRAISAL RIGHTS............................................... - 41 -
You Have a Right to Dissent............................... - 41 -
We Must Provide You Notice................................ - 42 -
You Must Perfect Appraisal Rights......................... - 42 -
We Must Notify Each Stockholder Who Has Properly
Asserted Appraisal Rights............................ - 44 -
A Petition Must Be Filed in the Delaware Chancery Court... - 44 -
Stockholders May Request Information...................... - 44 -
A Court Will Determine Stockholders Entitled
to Appraisal Rights, Fair Value and
Allocation of Expenses............................... - 44 -
No Right to Vote Appraisal Shares or Receive
Dividends or Distribution on Appraisal Shares........ - 45 -
Failure to Perfect Appraisal Rights....................... - 46 -
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA................ - 46 -
FINANCIAL PROJECTIONS.......................................... - 48 -
COMMON STOCK MARKET PRICE AND DIVIDEND INFORMATION............. - 49 -
COMMON STOCK PURCHASE INFORMATION.............................. - 51 -
CURRENT MANAGEMENT OF PXP...................................... - 52 -
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ - 56 -
PHOENIX........................................................ - 59 -
RELATED PARTY TRANSACTIONS..................................... - 63 -
INDEPENDENT ACCOUNTANTS........................................ - 65 -
WHERE YOU CAN FIND MORE INFORMATION............................ - 66 -
DOCUMENTS INCORPORATED BY REFERENCE............................ - 66 -
</TABLE>
-ii-
<PAGE>
APPENDICES
Appendix A - Agreement and Plan of Merger............................ A-1
Appendix B - Fairness Opinion of Salomon Smith Barney................ B-1
Appendix C - Appraisal Rights - Section 262 of the Delaware General
Corporation Law.................................................... C-1
-iii-
<PAGE>
________________________________________
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
________________________________________
--------------------------------------------------------------------------------
Q: Who is entitled to vote at the vote your shares will have the effect
special meeting? of a vote "against" the merger. You
should follow the directions provided
A: Stockholders as of the close of by your broker on how to instruct
business on _________, 2000, the your broker to vote your shares.
record date.
Q: May I change my vote after I have
Q: What happens if I sell my shares mailed my signed proxy card?
before the special meeting?
A: Yes. You may revoke your proxy any
A: The record date for the special time before the special meeting by:
meeting is earlier than the expected
date of the merger. If you transfer . giving written notice of your
your shares of PXP common stock revocation to PXP's secretary;
after the record date, but before
the merger, you will retain your . filing a revoking instrument or a
right to vote at the special duly executed proxy bearing a later
meeting, but the right to receive date with PXP's secretary; or
the $15.75 per share will pass to
the person to whom you transferred . attending the special meeting and
your shares. voting in person.
Q: What approvals does the merger Q: What do I need to do now?
require?
A: Under Delaware law, the merger A: Please sign and mail your proxy
agreement must be adopted by the card in the enclosed return envelope
affirmative vote of the holders of as soon as possible so that your
at least a majority of the shares can be represented at the
outstanding shares of PXP common meeting, even if you plan to attend
stock. Phoenix, which owns a the meeting in person. Soon after
majority of the outstanding shares the merger is completed, we will send
of common stock, has indicated its you written instructions explaining
intention to vote in favor of the how to exchange your stock
merger. Accordingly, adoption of the certificates for cash.
merger agreement by PXP's
stockholders is assured.
Q: If my shares are held in "street Q: When do you expect the merger to
name" by my broker, will my broker be completed?
vote my shares for me?
A: Generally, your broker will not A: We are working towards completing
have the power to vote your shares. the merger as quickly as possible. We
Your broker will vote your shares expect to complete the merger
only if you provide him or her with promptly after the special meeting.
instructions on how to vote. Any
failure to instruct your broker on
how to
--------------------------------------------------------------------------------
-1-
<PAGE>
________________________________
SUMMARY TERM SHEET
________________________________
This summary term sheet highlights important selected information from this
proxy statement relating to our proposed merger with a subsidiary of Phoenix
Home Life Mutual Insurance Company, which is referred to in this proxy statement
as Phoenix. This summary term sheet and the question and answer section may not
contain all the information that is important to you. To more fully understand
the merger and for a more complete description of the legal terms of the merger
agreement, you should read carefully this entire proxy statement and all of its
appendices before voting on the merger. We have included page references
parenthetically to direct you to more complete descriptions of the topics
presented in this summary term sheet.
The Companies (Page ___)
Phoenix Investment Partners, Ltd., or PXP, a Delaware corporation, and its
subsidiaries provide a variety of investment management and advisory services to
a broad base of institutional, corporate and individual clients. PXP is a
publicly-held company. Its common stock trades on the New York Stock Exchange.
Approximately 58% of its outstanding common stock is held by Phoenix through its
wholly-owned subsidiary, PM Holdings, Inc. PXP's principal executive office is
located at 56 Prospect Street, Hartford, Connecticut 06115 and its telephone
number is (860) 403-1000.
Phoenix, a New York domiciled mutual life insurance company, is principally
engaged in the sale of life insurance. The principal executive office of Phoenix
and PM Holdings is located at One American Row, Hartford, Connecticut 06102 and
its telephone number is (860) 403-5000.
The Merger (Page ___)
Upon the effectiveness of the merger, PXP will be merged with a subsidiary
of Phoenix, and PXP will continue as the surviving corporation. The merger will
occur according to the terms and conditions of the merger agreement. The merger
agreement is described in this proxy statement and is attached as Appendix A.
You should carefully read the description of the merger agreement in this proxy
statement under the heading "THE MERGER AGREEMENT" and the attached merger
agreement itself.
If the merger is completed:
. You will receive $15.75 in cash for each of your shares of PXP's common
stock outstanding upon effectiveness of the merger unless you are a
dissenting shareholder and you perfect your appraisal rights. This cash
payment is referred to as the "merger consideration" in this proxy
statement;
-2-
<PAGE>
. Holders of PXP's 6% Convertible Subordinated Debentures due 2015 may
convert their debentures into shares of PXP common stock at any time prior
to the merger and receive the merger consideration in exchange for the
shares of PXP common stock issued upon conversion of the convertible
debentures. Prior to the merger, PXP intends to take action so that holders
of convertible debentures who convert after the effective time of the
merger will receive the merger consideration they would have received had
they converted prior to the merger. See "TREATMENT OF CONVERTIBLE
SUBORDINATED DEBENTURES" for a description of matters relating to
convertible debentures; and
. All outstanding options to purchase shares of PXP common stock that were
granted under PXP's employee benefit plans will become fully vested and
exercisable and will be converted into the right to receive cash in the
amount by which $15.75 exceeds the exercise price per share of the
particular option.
Vote Required/Security Ownership of Phoenix and PXP's Directors and Executive
Officers (Page __)
Under Delaware law, the merger agreement must be adopted by the affirmative
vote of the holders of a majority of the outstanding shares of PXP common stock
entitled to vote on the merger at the special meeting. Phoenix, through its
subsidiary PM Holdings, owns approximately 58% of the outstanding shares of PXP
common stock entitled to vote and has indicated its intent to vote in favor of
adoption of the merger agreement. We expect that PXP's directors and executive
officers, who beneficially own approximately 4% of the outstanding shares
entitled to vote, will vote their shares of PXP common stock in favor of the
merger agreement. Accordingly, adoption of the merger agreement by the PXP
stockholders is assured.
Consequences of the Merger (Page __)
After the merger:
. PXP will be wholly-owned by Phoenix;
. PXP will no longer be a public company;
. PXP common stock will no longer be traded on the New York Stock Exchange,
price quotations will no longer be available and the registration of PXP
common stock under the Securities Exchange Act of 1934 will terminate; and
. you will no longer have an ownership interest in or be a stockholder of PXP
and, therefore, you will not be able to participate in any future earnings
or growth of PXP.
-3-
<PAGE>
Recommendations of the Independent Directors Committee and PXP's Board of
Directors (Page __)
In order to evaluate the fairness of the merger to PXP's stockholders other
than Phoenix and its affiliates, PXP's board of directors formed the independent
directors committee of six directors who are neither directors, officers or
employees of Phoenix and its affiliates, nor officers or employees of PXP. PXP's
stockholders other than Phoenix and its affiliates are referred to in this proxy
statement as PXP's public stockholders. Based on all of the factors the
independent directors committee considered, including the written fairness
opinion of Salomon Smith Barney, dated September 10, 2000, to the effect that,
as of such date and based upon and subject to the considerations set forth in
that opinion, the merger consideration of $15.75 per share was fair from a
financial point of view to the public stockholders of PXP, the committee
unanimously recommended that the entire board of directors of PXP approve the
merger agreement. PXP's board of directors, acting on the recommendation of the
independent directors committee, unanimously approved the merger agreement and
recommended that it be submitted to PXP's stockholders for adoption.
Interests of Certain Persons in the Merger (Page __)
In considering the recommendations of the independent directors committee
and the board of directors with respect to the merger agreement, you should be
aware that Phoenix and some of PXP's officers and directors have interests in
the merger or have relationships, including those referred to below, that may
present actual or potential, or the appearance of actual or potential, conflicts
of interests in connection with the merger:
. Phoenix, through its wholly-owned subsidiary PM Holdings, owns
approximately 58% of PXP's outstanding common stock;
. four of the ten members of PXP's board of directors are also employed by
PXP and/or affiliated with or employed by Phoenix;
. PXP's board of directors and executive officers own approximately 408,697
shares of PXP common stock, entitling them to receive an aggregate of
approximately $6,436,978 in merger consideration; and
. All of PXP's directors and executive officers have outstanding vested and
unvested options that were granted to them under PXP's employee benefit
plans entitling them to receive an aggregate of approximately $18,253,335
in option consideration.
For a more detailed discussion of these interests, we refer you to "SPECIAL
FACTORS - Interests of Certain Persons in the Merger."
-4-
<PAGE>
Conditions to the Merger (Page __)
The obligations of PXP and PM Holdings to complete the merger are subject
to several conditions. For example:
. the merger agreement must be adopted by the affirmative vote of the holders
of a majority of the outstanding shares of PXP common stock;
. there must be no legal prohibition or material challenge to the merger;
. PXP's and PM Holdings' representations and warranties in the merger
agreement must be accurate at the time of closing;
. holders of more than five percent of PXP's outstanding common stock must
not have exercised their appraisal rights; and
. PXP must have no obligation to issue any shares of its capital stock or
other securities of PXP under any employee benefit plan or otherwise.
If these conditions are satisfied or waived by PXP or PM Holdings, as the
case may be, the merger should be completed within several days after the
special meeting.
If these conditions are not satisfied, PXP and/or PM Holdings may be able
to terminate the merger agreement.
Termination of the Merger Agreement (Page __)
The merger agreement may be terminated before the effective time of the
merger by mutual written consent of PM Holdings and PXP. Either PXP or PM
Holdings may terminate if the merger is not completed by December 31, 2000. PXP
and PM Holdings also have the right to terminate the merger agreement if the
independent directors committee changes its recommendation that the public
stockholders adopt the merger agreement after having concluded that there is a
reasonable probability that the failure to take such action would result in a
violation of its fiduciary obligations.
Reasons for the Merger (Page ___)
In reaching its conclusion to recommend the merger agreement, the
independent directors committee considered, among other factors, the following:
. the committee's knowledge of PXP's management and the history of its
business, operations, properties, assets, liabilities, liquidity, financial
condition, operating results, prospects, current business strategy and
competitive position in the industry;
-5-
<PAGE>
. the presentations and written opinion of Salomon Smith Barney regarding the
fairness of the merger consideration from a financial point of view;
. the fact that Phoenix's offer of $15.75 per share represents approximately
a 45.7% premium over the closing sale price on the New York Stock Exchange
per share of $10.81 on July 24, 2000, the last day of trading prior to the
public announcement of Phoenix's initial proposal, a premium of 42.6% over
the prior one-week average closing sale price, a premium of 45.0% over the
prior one-month average closing sale price and a premium of 65.9% over the
prior three month average closing sale price;
. the fact that the merger consideration will consist entirely of cash;
. the fact that Delaware law entitles those PXP stockholders who follow
statutory procedures to a judicial appraisal to determine the fair value of
their shares if the merger is completed and they believe that the merger
consideration does not reflect the "fair value" of the shares;
. the fact that Phoenix had stated that it would not consider selling its
interest in PXP to a third party, and that as a practical matter, no other
alternatives potentially available to PXP would be possible without the
support of Phoenix; and
. the fact that Salomon Smith Barney advised the independent directors
committee that the likelihood of finding a third party purchaser for the
publicly-held minority interest in PXP was low, and the fact that no
potential alternative offer had been presented to the independent directors
committee since Phoenix's first offer was publicly announced on July 25,
2000.
Fairness Opinion of Salomon Smith Barney (Page __)
The independent directors committee retained Salomon Smith Barney to act as
its financial advisor in connection with the merger and to render its opinion as
to the fairness to the PXP public stockholders from a financial point of view of
the consideration you will receive under the merger agreement.
Salomon Smith Barney delivered to the independent directors committee its
written opinion, dated September 10, 2000, stating that, as of that date and
based upon and subject to the factors and assumptions set forth in the opinion,
the consideration you will receive in the merger was fair to you from a
financial point of view.
The full text of Salomon Smith Barney's written opinion, which describes
the assumptions made, matters considered and limitations on its review, is
attached as Appendix B to this proxy statement. We urge you to read this opinion
carefully in its entirety. The opinion of Salomon Smith Barney is directed only
to the matters described in the opinion and does not constitute a recommendation
as to how you should vote at the special meeting.
-6-
<PAGE>
Appraisal Rights (Page __)
If you do not wish to accept the $15.75 per share merger consideration in
the merger and you do not vote in favor of the merger, you have the right under
Delaware law to seek a judicial appraisal of your shares to determine the "fair
value" of your shares, in lieu of the merger consideration if the merger is
completed.
We refer you to the information under the heading "APPRAISAL RIGHTS" in
this proxy statement and to the applicable Delaware statute attached as Appendix
C to this proxy statement for information on how to exercise your appraisal
rights. Failure to follow all of the steps required under Delaware law will
result in the loss of your appraisal rights.
Financing; Source of Funds (Page __)
Phoenix and PXP estimate that the amount of funds required to fund the
payment of the merger consideration, including payment with respect to options
and the convertible debentures is approximately $434 million. Phoenix intends to
obtain the funds required to pay the merger consideration from internal sources.
PXP intends to obtain the funds required to make the payments with respect to
the options and convertible debentures both from internal sources and from
borrowings under its existing five year $175,000,000 credit agreement with a
consortium of banks entered into on March 17, 1999. The interest rate under this
credit agreement is variable based on LIBOR. Phoenix has guaranteed PXP's
obligations under this credit agreement.
Material Federal Income Tax Consequences (Page __)
Generally, you will be taxed on your receipt of the $15.75 per share merger
consideration to the extent that the amount you receive exceeds your tax basis
in your shares. However, special rules may apply. Because determining the tax
consequences of the merger can be complicated, you should consult your tax
advisor in order to understand fully how the merger will affect you.
Accounting Treatment (Page __)
The merger will be accounted for under the purchase method of accounting in
accordance with generally accepted accounting principles.
Stockholder Lawsuits Challenging the Merger (Page __)
Five lawsuits seeking class action status have been filed in the Delaware
Court of Chancery on behalf of purported stockholders of PXP. These lawsuits
allege, among other things, that Phoenix, PXP and the PXP individual directors
breached fiduciary duties to PXP's public stockholders.
Management of both Phoenix and PXP and the PXP individual directors believe
that the allegations contained in these lawsuits are without merit and they
intend to vigorously defend these lawsuits.
-7-
<PAGE>
Questions About The Merger
If you have more questions about the merger or would like additional copies
of this proxy statement, you should contact:
Nancy J. Engberg, Secretary
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, Connecticut 06115
________________________________________
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING INFORMATION
________________________________________
This proxy statement and the documents to which we refer you and
incorporate into this proxy statement by reference contain forward-looking
statements. In addition, from time to time, we or our representatives may make
forward-looking statements orally or in writing. We base these forward-looking
statements on our expectations and projections about future events, which we
derive from the information currently available to us. Such forward-looking
statements relate to future events or our future performance, including
statements regarding the amount of assets under management.
Forward-looking statements are statements that are not historical in
nature, particularly those that use the words "may," "will," "should,"
"expects," "anticipates," "contemplates," "estimates," "believes," "plans,"
"projected," "predicts," "potential" or "continue" or the negative of these or
similar terms. In evaluating these forward-looking statements, you should
consider various factors, including the competitive environment of our business,
changes in interest rates, the performance of financial markets and general
economic conditions. These and other factors may cause our actual results to
differ materially from any forward-looking statement.
Forward-looking statements are only predictions and by their nature are
subject to risks, uncertainties and assumptions. The forward-looking events
discussed in this proxy statement, the documents to which we refer you and other
statements made from time to time by us or our representatives, may not occur,
and actual events and results may differ materially. We are not obligated to
publicly update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.
-8-
<PAGE>
________________________________________
INFORMATION CONCERNING THE SPECIAL MEETING
________________________________________
Date, Time, and Place of the Special Meeting
The special meeting will be held on ___________, 2000, 10:00 A.M., local
time, at _________.
Purpose of the Special Meeting
At the special meeting, you will be asked to consider and vote upon a
proposal to adopt the merger agreement. A copy of the merger agreement is
attached as Appendix A to this proxy statement.
The independent directors committee and the board of directors have
unanimously determined that the merger agreement and merger are fair to and in
the best interests of PXP and its public stockholders and upon the unanimous
recommendation of the independent directors committee, the board of directors
unanimously approved the merger agreement and declared it advisable.
Accordingly, the independent directors committee and the board of directors
recommend that you vote in favor of adoption of the merger agreement.
To review the background and reasons for the merger in greater detail, we
refer you to the information under the headings "SPECIAL FACTORS -- Background
of the Merger" and "--Recommendations of the Independent Directors Committee and
the Board of Directors; Reasons for the Merger."
Record Date, Quorum Requirement, and Vote Required
All stockholders of record at the close of business on ________, 2000 are
entitled to notice of, and to vote at, the special meeting. The presence, in
person or by proxy, of the holders of at least a majority of the shares of
common stock issued, outstanding and entitled to vote on the merger proposal is
required in order to constitute a quorum. At the close of business on ________,
2000, there were _______ shares of our common stock issued and outstanding with
___ record holders.
Each record holder of shares of our common stock at the close of business
on the record date of _________, 2000 is entitled to one vote for each share
then held on each matter submitted to a vote of the stockholders at the special
meeting. The merger agreement must be adopted by the affirmative vote of the
holders of at least a majority of the issued and outstanding shares of common
stock entitled to vote. PM Holdings owns approximately 58% of the outstanding
shares of PXP entitled to vote and has indicated its intent to vote in favor of
adoption of the merger agreement. Therefore, adoption of the merger agreement is
assured.
-9-
<PAGE>
Solicitation, Revocation and Use of Proxies
Our board of directors is requesting that, after you read this proxy
statement and the appendices attached to it, you complete, date and sign the
accompanying form of proxy and return it promptly in the enclosed postage-paid
envelope. Alternatively, you may vote in person at the special meeting. We refer
you to the heading "Voting Procedures" below for additional information on how
to vote at the special meeting.
We will pay the costs of soliciting proxies. These costs include the
preparation, assembly and mailing of this proxy statement, the notice of special
meeting of stockholders and the enclosed proxy card, as well as the cost of
forwarding these materials to the beneficial owners of our common stock. In
addition to the solicitation of proxies by mail, our directors, officers and
employees may solicit proxies by telephone, telecopy and personal contact, but
will not receive separate compensation for these activities. We do not expect to
retain a proxy solicitation firm for assistance in connection with the
solicitation of proxies for the special meeting. Copies of solicitation
materials will be furnished to fiduciaries, custodians and brokerage houses for
forwarding to beneficial owners of common stock, and these persons will be
reimbursed for their reasonable out-of-pocket expenses.
You may revoke your proxy at any time before the special meeting by:
. giving written notice of your revocation to PXP's secretary;
. filing a revoking instrument or a duly executed proxy bearing a later date
with PXP's secretary; or
. attending the special meeting and voting in person.
Voting Procedures
Vote by Mail. If you choose to vote by mail, simply mark your proxy card,
date and sign it, and return it in the postage-paid envelope provided. Please do
not send any certificates representing shares of PXP common stock with your
proxy card. If the merger is completed, the procedures for the exchange of share
certificates will be as described in this proxy statement. We refer you to the
information under the heading "THE MERGER AGREEMENT --Exchange and Payment
Procedures."
Vote at the Special Meeting. Voting by mail will not limit your right to
vote at the special meeting if you decide to attend in person. If your shares
are held in the name of a bank, broker or other nominee, however, you must
obtain a proxy, executed in your favor, from the holder of record to be able to
vote the shares at the special meeting.
How Shares are Voted. Subject to revocation, all shares represented by
each properly executed proxy received by the secretary of PXP will be voted in
accordance with the
-10-
<PAGE>
instructions indicated. If no instructions are indicated, the shares will be
voted to adopt the merger agreement.
Additional Voting Information
Proxies that are returned and reflect abstentions from voting will be
counted as present and entitled to vote for purposes of determining whether a
quorum exists at the special meeting. If you do not vote in person at the
special meeting and you do not return a proxy, or if you return a proxy
reflecting an abstention, this will have the same effect as a vote against
adoption of the merger agreement.
Brokers who hold shares in street name for customers have the authority to
vote on "routine" proposals when they have not received instructions from
beneficial owners. These brokers, however, are precluded from exercising their
voting discretion with respect to the approval of non-routine matters such as
approving the merger agreement. A broker "non-vote" occurs when a bank, broker
or other nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
for that particular item and has not received instructions from the beneficial
owner. Broker non-votes will be treated as shares that are present and entitled
to vote at the special meeting for purposes of determining whether a quorum
exists and will have the same effect as votes against adoption of the merger
agreement.
If the special meeting is adjourned for any purpose, at any subsequent
reconvening of the special meeting, all proxies will be voted in the same manner
as the proxies would have been voted at the original convening of the meeting,
except for any proxies which have been revoked or withdrawn, even though they
may have been voted on the same or any other matter at a previous meeting.
_________________________________
APPRAISAL RIGHTS
________________________________
Stockholders on the record date who do not vote in favor of approving the
merger agreement, who file with PXP before the vote on the merger agreement a
written notice of intent to demand the fair value of their shares and comply
with the other statutory requirements of Section 262 of the DGCL, will be
entitled to appraisal rights. If you vote in favor of approving the merger, you
will waive your appraisal rights. A copy of the Delaware appraisal statute is
attached as Appendix C to this proxy statement and is described in more detail
under the heading "APPRAISAL RIGHTS."
-11-
<PAGE>
_______________________________
SPECIAL FACTORS
_______________________________
Background of the Merger
During the fall of 1999, Phoenix began to examine its ownership interest in
PXP, particularly with the view to the possibility of the acquisition of the
publicly-held PXP common stock.
On November 29, 1999, the outside directors of PXP met informally with
Philip R. McLoughlin, Chairman and Chief Executive Officer of PXP, at Mr.
McLoughlin's request. Mr. McLoughlin, who also serves as Executive Vice
President - Investments and as a director of Phoenix, advised the outside
directors that Phoenix was evaluating its ownership interest in PXP and was,
among other things, considering the possibility of making an offer to acquire
the publicly-held shares of PXP common stock. In view of possible conflicts of
interest involved in this type of transaction, the directors present decided
that it would be advisable to form a committee of independent directors
consisting of Mr. Anderson, Mr. Churchill, Mr. Oates, Ms. Tuttle, Mr. Verdonck
and Mr. Williams to respond to such an offer on behalf of PXP if an offer was
made. None of these directors is employed by or affiliated with PXP or Phoenix
or any of its affiliates (except in the capacity as a director of PXP and, in
the case of Mr. Oates, as a director of several mutual funds advised by PXP and
as a founder and Chairman of the board of directors of IBEX Capital Markets,
Inc., a company in which Phoenix and its affiliates have investments totaling
approximately $20.5 million, a portion of which is convertible into
approximately a 19% equity interest). Mr. Anderson was identified as the person
who would serve as chairman of the independent directors committee. It was
agreed that it would be prudent for the independent directors committee to
retain an independent financial advisor and legal counsel to assist in reviewing
any offer by Phoenix. Shortly after the November 29 meeting, the independent
directors determined to retain the law firm of Lord, Bissell & Brook to act as
legal counsel.
On January 7, 2000, the independent directors met with a representative of
Lord, Bissell & Brook, who reviewed with the directors their duties under
applicable law should Phoenix make an offer to purchase all of PXP's common
stock held by the public stockholders. The independent directors then received
presentations from three nationally recognized investment banking firms seeking
to be retained as financial advisor to the independent directors committee.
After the presentations and discussion, the independent directors determined to
retain Salomon Smith Barney as financial advisor in the event an offer was
received from Phoenix.
At the next regularly scheduled meeting of the board of directors of PXP on
February 26, 2000, the board formally authorized the appointment of the
independent directors committee to consider and negotiate any offer by Phoenix
to purchase the publicly-held PXP common stock and to recommend whether such
offer would be fair to and in the best interest of the other stockholders, and
further authorized the independent directors committee to retain at PXP's
-12-
<PAGE>
expense an independent financial advisor and legal counsel to assist it in its
review of any such offer.
On April 20, 2000, Phoenix announced that its board of directors had
authorized the company to develop a plan for conversion from a mutual to a
publicly traded stock company.
During the spring and early summer of 2000, the executive committee of the
board of directors and management of Phoenix met on several occasions to
consider a possible offer to acquire the publicly held shares of PXP, the
appropriate structure of the possible acquisition and the treatment of PXP's
employee benefit plans in the event of an acquisition. During this time,
representatives of Phoenix met with Morgan Stanley Dean Witter, its financial
advisor, and Debevoise & Plimpton, its legal counsel, to discuss the financial
and legal aspects of the possible acquisition.
On June 20, 2000, David W. Searfoss, Executive Vice President and Chief
Financial Officer of Phoenix, contacted Mr. Anderson to request information from
PXP to allow Phoenix to consider whether to make an offer to purchase the
publicly-held PXP common stock. On June 22, Mr. Anderson responded to Mr.
Searfoss that PXP would be willing to provide the requested information on the
condition that Phoenix sign a confidentiality agreement in substantially the
form provided by PXP. The confidentiality agreement was executed on June 22,
and thereafter for the remainder of June and during July, Phoenix and its
financial advisor requested and reviewed financial and other information
regarding PXP.
On June 30, 2000, Mr. Searfoss telephoned Mr. Anderson to suggest that,
although the board of directors of Phoenix had not authorized the making of any
offer to purchase the publicly-held PXP common stock, Morgan Stanley Dean Witter
and Salomon Smith Barney engage in informal preliminary discussions regarding
the possibility of an offer. Mr. Anderson responded that he would discuss this
possibility with the independent directors committee.
The independent directors committee met by telephone on July 7, 2000. Mr.
Anderson described to the committee members his recent contacts with Mr.
Searfoss. At this meeting, the committee formally retained Salomon Smith Barney
as its financial advisor in connection with a possible transaction with Phoenix
and confirmed the engagement of Lord, Bissell & Brook as its legal counsel. The
committee authorized Salomon Smith Barney to commence an evaluation of PXP and
report back to the committee at its meeting scheduled for July 28.
Between July 7 and July 28, 2000, Salomon Smith Barney conducted a review
of the business, operations and prospects of PXP as well as a review of the
industry in general, and counsel to the independent directors committee
performed legal due diligence. On July 17, representatives from Salomon Smith
Barney and Lord, Bissell & Brook met with members of senior management of PXP to
discuss the business, operations and prospects of PXP.
On July 21, 2000, the independent directors committee met again by
telephone. Mr. Anderson reported that he had had further conversations with Mr.
Searfoss regarding the possibility of an offer from Phoenix for the publicly-
held shares of PXP common stock. The
-13-
<PAGE>
committee authorized Mr. Anderson to inform Mr. Searfoss that the committee
would not proceed further with discussion of a possible offer from Phoenix
unless a written offer from Phoenix was received.
After the close of regular trading hours on July 24, 2000, Phoenix
submitted a proposal to the independent directors committee for the acquisition
by Phoenix of all of the publicly-held shares of PXP common stock for $12.50 per
share in cash. In its proposal, Phoenix stated that it was interested only in
acquiring the publicly-held shares of PXP common stock and was not interested in
selling its interest in PXP. On July 25, 2000, prior to the opening of regular
trading hours, PXP and Phoenix each issued a press release announcing the
proposal.
On July 25, 2000, five lawsuits seeking class action status were filed in
the Delaware Court of Chancery by purported stockholders of PXP against Phoenix,
PXP and PXP's directors in connection with Phoenix's proposal. These lawsuits
alleged that Phoenix's offer to acquire the publicly held shares of PXP common
stock for $12.50 per share was unfair. See "-Stockholder Lawsuits Challenging
the Merger."
On July 28, 2000, the independent directors committee met with
representatives of Lord, Bissell & Brook and Salomon Smith Barney to review
Phoenix's proposal. Counsel to the committee reviewed the legal obligations of
the committee members in transactions such as that being contemplated. Salomon
Smith Barney provided a preliminary report on the progress of its due diligence
review to date and preliminary views as to various aspects of the offer. The
committee then authorized Salomon Smith Barney to contact Phoenix and its
financial advisor Morgan Stanley Dean Witter to complete its evaluation of the
offer and to report its findings to the committee.
Over the next two weeks, representatives from Salomon Smith Barney met with
representatives from Morgan Stanley Dean Witter to discuss various aspects of
Phoenix's offer. During this period, representatives of Salomon Smith Barney
also participated in a telephone conversation with senior management of Phoenix
to continue its due diligence.
On August 2, 2000, the independent directors committee met in person
(except for Ms. Tuttle who was unable to be present) to review possible
approaches to respond to Phoenix's offer.
On August 10, 2000, the independent directors committee met in person with
its counsel and Salomon Smith Barney to review and formulate a response to
Phoenix's offer. At the meeting, Salomon Smith Barney reviewed the financial
performance and prospects of PXP and presented various valuation analyses. The
committee members also discussed possible transaction structures. After
discussion, the committee authorized Salomon Smith Barney to meet with Morgan
Stanley Dean Witter to negotiate for a higher price. On August 10, Salomon Smith
Barney telephoned Morgan Stanley Dean Witter and conveyed the committee's
counteroffer of $18.00 per share. Representatives of Morgan Stanley Dean Witter
and Salomon Smith Barney thereafter met on August 14, and had further
discussions by telephone on August 16, during which Morgan Stanley Dean Witter
reported that Phoenix was willing to increase its offer to $14.00 per share.
-14-
<PAGE>
On August 16, 2000, the independent directors committee met by telephone to
discuss Phoenix's response to the committee's counteroffer. After discussion,
the committee authorized Salomon Smith Barney to report to Morgan Stanley Dean
Witter that the committee would lower its counteroffer to $16.75 per share. On
August 16, Salomon Smith Barney contacted Morgan Stanley Dean Witter to convey
the independent directors committee's revised counteroffer.
Mr. Searfoss telephoned Mr. Anderson later on August 16, and again the
following day, to discuss the independent directors committee's most recent
proposal and timing of a Phoenix response. Mr. Searfoss stated that there would
be no response until after a board meeting of Phoenix scheduled for Monday,
August 21. On August 23, Mr. Searfoss telephoned Mr. Anderson to report that
Phoenix had considered the PXP proposal in substantial detail at its meeting on
August 21, but that Phoenix had not yet formulated a response.
On August 29, Mr. Anderson received a telephone call from Mr. Searfoss and
Dona Young, President of Phoenix. Mr. Searfoss and Ms. Young informed Mr.
Anderson that Phoenix was prepared to authorize a transaction price of $15.00
per share.
The independent directors committee met by telephone on August 30 with its
legal and financial advisors to discuss Phoenix's increased offer. At this
meeting, the committee members also discussed a letter dated August 23 from a
law firm hired by one of PXP's largest institutional stockholders requesting an
opportunity for that stockholder and other institutional stockholders to meet
with PXP's board of directors or the independent directors committee to discuss
Phoenix's offer. After discussion, the committee determined it would be
appropriate to meet with these stockholders to hear their views, assuming the
appropriate protections for the committee process could be instituted. The
committee members and the committee's legal and financial advisors discussed the
nature and timing of such a meeting. Counsel to the committee was instructed to
contact the law firm requesting the meeting to arrange a meeting between the
committee members and the stockholders as soon as possible. The committee then
authorized Mr. Anderson to respond to Mr. Searfoss with a proposal for a
transaction at $16.25 per share, subject to the committee's consideration of the
presentation to be made by the institutional stockholders.
On the morning of September 5, 2000, a meeting was held at the offices of
Salomon Smith Barney with the institutional stockholders at which all of the
committee members participated by teleconference. At the meeting, the
institutional stockholders presented their views concerning the Phoenix offer of
$12.50 per share to the committee members and Salomon Smith Barney.
Later that afternoon, the independent directors committee met by telephone
with representatives of Salomon Smith Barney and Lord, Bissell & Brook. Salomon
Smith Barney reviewed with the committee the various financial analyses
presented by the institutional stockholders at the meeting earlier that day and
confirmed that Salomon Smith Barney had considered in connection with its
previous presentations to the committee all of the methodologies raised by the
institutional stockholders in the meeting. Mr. Anderson then updated the
independent directors committee on developments since the August 30 committee
-15-
<PAGE>
meeting, including his communication to Mr. Searfoss of the committee's
counterproposal of $16.25 per share, and Mr. Searfoss' request that the
committee designate representatives to negotiate with Mr. Searfoss and Ms. Young
with a view to concluding the negotiating process. After further discussion,
Mr. Anderson and Ms. Tuttle left the committee meeting and commenced negotiation
with Mr. Searfoss and Ms. Young by telephone. After discussion and negotiation,
Mr. Anderson and Ms. Tuttle rejoined the committee meeting to report that
Phoenix had increased its offer to $15.25 per share. After further discussion,
Mr. Anderson and Ms. Tuttle again left the meeting and continued negotiations
with Mr. Searfoss and Ms. Young. After further discussion and negotiations with
Mr. Searfoss and Ms. Young, Mr. Anderson and Ms. Tuttle rejoined the committee
members to report that Phoenix had agreed to increase its offer to $15.75 per
share, subject to negotiation of the non-price transaction terms. The committee
members agreed to proceed with the negotiation on this basis.
Later on September 5, counsel to Phoenix delivered a draft merger agreement
to counsel to the independent directors committee. Over the next two days,
counsel to the committee and counsel to Phoenix negotiated the terms and
conditions of the merger agreement. At a telephone meeting of the independent
directors committee on September 7, counsel reviewed with the committee the
merger agreement and the terms negotiated. After discussion, the committee
determined to schedule an independent directors committee meeting and, assuming
resolution of all outstanding issues, to request a full meeting of the PXP board
of directors in New York on September 10 to consider approval of the merger
agreement.
On September 10, the independent directors committee met in person (except
for Ms. Tuttle and Mr. Verdonck, who participated by telephone) with
representatives of Salomon Smith Barney and Lord, Bissell & Brook to consider
the terms of the merger agreement, as negotiated. Salomon Smith Barney
presented its financial analyses to the independent directors committee.
Counsel to the committee then reviewed the duties of the committee and
summarized the merger agreement and changes in the terms of the merger agreement
negotiated by counsel for the committee since receiving the initial draft.
Salomon Smith Barney delivered to the committee its written opinion to the
effect that, as of that date, and subject to the assumptions and limitations
stated in the opinion, the cash consideration of $15.75 per share to be received
in the merger by the public stockholders was fair from a financial point of view
to those stockholders. After further discussion and deliberation, the
independent directors committee unanimously determined that the merger agreement
was fair to and in the best interests of the public stockholders and unanimously
determined to recommend that the board of directors approve the merger
agreement, declare its advisability and recommend its adoption by the public
stockholders.
Immediately following the meeting of the independent directors committee on
September 10, the board of directors held a special meeting to hear the
recommendations of the independent directors committee and consider the merger.
All directors were present in person except for Mr. Fiondella, Ms. Tuttle and
Mr. Verdonck, who participated by telephone. Mr. Anderson reviewed for the
board of directors the process through which the independent directors committee
reached its conclusion that the merger was fair to and in the best interests of
the public stockholders of PXP. Mr. Anderson then reviewed the independent
directors committee's recommendation that
-16-
<PAGE>
the board of directors approve the merger agreement, declare its advisability
and recommend its adoption by the public stockholders. Salomon Smith Barney
presented to the board of directors a summary of its analysis and opinion
delivered orally to the committee earlier that day. Counsel to the independent
directors committee reviewed certain legal considerations in connection with the
transaction and the terms of the merger agreement. After a thorough discussion
and based on the recommendations of the committee, the board of directors
unanimously adopted resolutions determining that the merger was fair to and in
the best interests of the public stockholders, approving the merger agreement,
declaring its advisability and recommending its adoption by the public
stockholders.
Following the special meeting of the board of directors on September 10,
authorized representatives of PXP, PM Holdings and Phoenix executed and
delivered the merger agreement. Prior to the opening of regular trading on the
New York Stock Exchange on September 11, PXP and Phoenix each issued a press
release publicly announcing the execution of the merger agreement.
Recommendations of the Independent Directors Committee and Board of Directors;
Reasons for the Merger
Independent Directors Committee. In arriving at its recommendation and
determination that the merger agreement is fair to PXP's public stockholders,
the independent directors committee carefully considered the terms of the merger
agreement. As part of this process, the independent directors committee
considered the advice and assistance of its financial and legal advisors
regarding the terms of the merger agreement and the fairness of the merger
transaction to PXP's public stockholders. In determining to recommend approval
and adoption of the merger agreement, and in determining the fairness of the
merger agreement and merger to PXP's public stockholders, the independent
directors committee considered, among others, the following factors:
. the committee's knowledge of PXP's management and the history of its
business, operations, properties, assets, liabilities, liquidity,
financial condition, operating results, prospects, current business
strategy, and competitive position in its industry;
. the opinion of Salomon Smith Barney that, based upon and subject to
the assumptions and limitations set forth therein, as of the date of
the opinion, the $15.75 per share cash consideration to be received by
PXP's public stockholders in the merger was fair from a financial
point of view to those stockholders, see "SPECIAL FACTORS -- Opinion
of the Financial Advisor;"
. the presentations of Salomon Smith Barney regarding the fairness of
the consideration to be received in the merger from a financial point
of view that involved various valuation analyses of PXP, see "SPECIAL
FACTORS --Background of the Merger" and "-- Opinion of the Financial
Advisor;"
-17-
<PAGE>
. the historical market prices of PXP's stock and recent trading
activity of the stock, including the fact that the $15.75 per share
price represents a premium of 45.7% over the closing sale price on the
New York Stock Exchange on July 24, 2000, the last full trading day
prior to the public announcement of the submission of Phoenix's
initial proposal, a premium of 42.6% over the prior one-week average
closing sale price, a premium of 45.0% over the prior one-month
average closing sale price and a premium of 65.9% over the prior
three-month average closing sale price, see "SPECIAL FACTORS --
Opinion of the Financial Advisor;"
. the fact that the financial and other terms of the merger were
determined through arm's-length negotiations between Phoenix and the
independent directors committee and its financial and legal advisors,
all of whom are unaffiliated with Phoenix, which led to a 26% increase
in the original price offered by Phoenix. As a result of its
negotiations, the independent directors committee concluded that a
price higher than $15.75 per share could not likely be obtained;
. the fact that PXP has the right to terminate the merger agreement if
the independent directors committee or board of directors of PXP
withdraws its approval of the merger agreement or withdraws its
recommendation that public stockholders adopt the merger;
. the fact that the transaction has been structured as a single step
merger and that dissenters' rights would be available to dissenting
stockholders;
. the likelihood that the merger would be consummated, including the
fact that there are no unusual requirements or conditions to the
merger and the fact that Phoenix has the financial resources to
consummate the merger expeditiously;
. the fact that the consideration to be paid in the merger to the
holders of PXP common stock is all cash, eliminating any uncertainties
in valuing the consideration to be received by the public
stockholders;
. Phoenix's ownership, through its wholly-owned subsidiary PM Holdings,
of approximately 58% of the currently outstanding common stock of PXP
and the effects of that ownership on the alternatives available to
PXP;
. the fact that Phoenix had stated that it would not consider selling
its shares to a third party, and that as a practical matter, no other
alternatives potentially available to PXP would be possible without
the support of Phoenix;
. the fact that Salomon Smith Barney advised the committee that the
likelihood of finding a third party purchaser for the publicly held
minority interest in PXP was low, and the fact that no potential
alternative offer had been presented to the independent directors
committee after Phoenix's initial offer was publicly announced on July
25, 2000; and
-18-
<PAGE>
. the possible conflicts of interest of certain directors and members
of management of both PXP and Phoenix discussed below under "SPECIAL
FACTORS --Interests of Certain Persons in the Merger."
PXP Board. In reaching its determinations referred to above, the PXP board
considered the following factors, each of which, in the view of the PXP board,
supported such determinations:
. the conclusions and recommendations of the independent directors
committee;
. the factors referred to above as having been taken into account by
the independent directors committee, including the receipt by the
independent directors committee of the opinion of Salomon Smith Barney
that, based upon and subject to the assumptions and limitations stated
therein, as of the date of the opinion, the $15.75 per share to be
received by the public stockholders of PXP in the merger was fair from
a financial point of view to such holders; and
. the fact that the terms and conditions of the merger agreement were
the result of arm's-length negotiations between the independent
directors committee and Phoenix.
The members of the PXP board, including the members of the independent
directors committee, evaluated the merger in light of their knowledge of PXP's
management and the history of its business, operations, properties, assets,
liabilities, liquidity, financial condition, operating results, prospects,
current business strategy and competitive position, and based upon the advice of
financial and legal advisors.
PXP's board, including the members of the independent directors committee,
believes that the merger is procedurally fair because, among other things:
. the independent directors committee consisted of independent directors
appointed to represent the interests of the public stockholders of
PXP;
. the independent directors committee retained and was advised by its
own independent legal counsel;
. the independent directors committee retained and was advised by
Salomon Smith Barney, as its independent financial advisor, to assist
it in evaluating a potential transaction with Phoenix;
. the $15.75 per share price resulted from active arm's-length
bargaining between representatives of the independent directors
committee, on the one hand, and representatives of Phoenix, on the
other;
-19-
<PAGE>
. the independent directors committee engaged in detailed deliberations
in evaluating the merger and alternatives thereto; and
. the independent directors committee is a mechanism well established
under Delaware law in transactions of this type.
The PXP board of directors and the independent directors committee
recognized that, while consummation of the merger will result in all public
stockholders being entitled to receive $15.75 for each of their shares, it will
eliminate the opportunity for current public stockholders to participate in the
benefit of increases, if any, in the value of PXP's business following the
merger. They also recognized that the merger agreement does not require adoption
by the holders of a majority of the shares of common stock held by PXP's public
stockholders. Nevertheless, the independent directors committee and the PXP
board have concluded that these facts do not justify foregoing the receipt of
the immediate cash premium represented by the $15.75 per share price. Neither
the independent directors committee nor the PXP board considered the liquidation
of PXP's assets to be a viable course of action based on Phoenix's desire for
PXP to continue to conduct its business as a subsidiary of Phoenix. Therefore,
no appraisal of liquidation values was sought for purposes of evaluating the
merger. In view of the wide variety of factors considered in connection with
their respective evaluations of the merger, neither the independent directors
committee nor the PXP board found it practicable to, and accordingly, did not,
quantify or otherwise attempt to assign relative weights to the specific factors
they each considered in reaching their determinations. The foregoing discussion
of the information and factors considered by the independent directors committee
and the PXP board is not intended to be exhaustive but is believed to include
all material factors considered by the independent directors committee and the
PXP board. The PXP board, based upon the unanimous recommendation of the
independent directors committee: (a) unanimously determined that the terms of
the merger and the merger agreement are fair to and in the best interests of
PXP's public stockholders; (b) unanimously approved the merger agreement and
declared it advisable; and (c) unanimously recommended that PXP's stockholders
adopt the merger agreement.
Opinion of the Financial Advisor for the Independent Directors Committee
The independent directors committee retained Salomon Smith Barney as its
financial advisor in connection with the merger. Pursuant to Salomon Smith
Barney's engagement letter, Salomon Smith Barney rendered a written opinion to
the independent directors committee on September 10, 2000 to the effect that,
based upon and subject to the considerations and limitations set forth in its
opinion, its work described below and other factors it deemed relevant, as of
that date, the merger consideration of $15.75 per share was fair, from a
financial point of view, to PXP's public stockholders.
The full text of Salomon Smith Barney's opinion, which sets forth the
assumptions made, general procedures followed, matters considered and limits on
the review undertaken, is included as Appendix B to this proxy statement. The
summary of Salomon Smith Barney's opinion set forth below is qualified in its
entirety by reference to the full text of the opinion. Shareholders are urged to
read Salomon Smith Barney's opinion carefully and in its entirety. Salomon
-20-
<PAGE>
Smith Barney's opinion is directed only to the fairness, from a financial point
of view, of the merger consideration to be received by PXP's public
stockholders, and it does not address the underlying business decision to effect
the merger. Salomon Smith Barney's opinion was provided for the information of
the independent directors committee in the evaluation of the merger, and is not
intended to be and does not constitute a recommendation to any holder of shares
of PXP common stock as to how such holder should vote on any matters relating to
the merger.
In connection with rendering its opinion, Salomon Smith Barney, among other
things:
. Reviewed a draft of the merger agreement dated September 7, 2000;
. reviewed certain publicly available business and financial information
that Salomon Smith Barney deemed relevant relating to PXP and the
industry in which it operates;
. reviewed and analyzed certain financial projections and other non-
public financial and operating data concerning the business and
operations of PXP that were provided to or reviewed with Salomon Smith
Barney by the management of PXP;
. reviewed certain publicly available business and financial information
with respect to certain other companies that Salomon Smith Barney
believed to be relevant or comparable in certain respects to PXP, and
the trading markets for such other companies' securities;
. reviewed and analyzed certain publicly available and other information
concerning the trading of, and the trading market for, PXP common
stock;
. reviewed the financial terms of certain business combinations and
acquisition transactions that Salomon Smith Barney deemed reasonably
comparable to the merger and otherwise relevant to Salomon Smith
Barney's inquiry;
. discussed with members of PXP's senior management and certain officers
and employees of PXP the foregoing, including the past and current
business operations, financial condition and prospects of PXP, as well
as other matters that Salomon Smith Barney believed relevant to its
inquiry; and
. considered such other information, financial studies, analyses,
investigations and financial, economic, market and trading criteria as
Salomon Smith Barney deemed relevant to its inquiry.
In its review and analysis and in arriving at its opinion, Salomon
Smith Barney assumed and relied upon, without assuming any responsibility for
verification, the accuracy and completeness of all of the financial and other
information publicly available or provided to, discussed with, or reviewed by or
for Salomon Smith Barney. Salomon Smith Barney also
-21-
<PAGE>
assumed that the final form of the merger agreement would not vary in any
respect that is material to Salomon Smith Barney's analysis from the last draft
reviewed by Salomon Smith Barney. With respect to the information contained in
the financial projections for PXP provided to, discussed or reviewed with
Salomon Smith Barney by the management of PXP, Salomon Smith Barney was advised
by management of PXP, and Salomon Smith Barney assumed, that the projections
were reasonably prepared on bases reflecting the best available estimates and
judgments on the part of management of PXP, as to the future financial
performance of PXP at that time. We refer you to the information under the
heading "FINANCIAL PROJECTIONS." Salomon Smith Barney expressed no view as to
the projections or the information or the assumptions on which they were based.
Salomon Smith Barney did not assume any responsibility for making or
obtaining any independent evaluations or appraisals of any of the assets or
liabilities (contingent or otherwise) of PXP, nor for conducting a physical
inspection of the properties and facilities of PXP, and Salomon Smith Barney was
not furnished with any such evaluation or appraisal. Salomon Smith Barney's
opinion necessarily was based on the information available to it, and market,
economic and other conditions as they existed and could be evaluated on
September 10, 2000, and Salomon Smith Barney assumed no responsibility to update
or revise its opinion based upon circumstances or events occurring after
September 10, 2000.
Salomon Smith Barney's opinion, and the presentation of Salomon Smith
Barney to the independent directors committee, was only one of the many factors
taken into consideration by the independent directors committee in making its
determination to recommend that the board of directors approve the merger
agreement and declare its advisability. See "SPECIAL FACTORS - Recommendations
of the Independent Directors Committee and Board of Directors; Reasons for the
Merger." The terms of the merger agreement were determined through negotiations
between the independent directors committee and Phoenix. The decision to
approve the merger agreement and declare its advisability was solely that of the
PXP board of directors, based upon the recommendation of the independent
directors committee. In connection with the preparation of its opinion, Salomon
Smith Barney was not authorized to solicit, nor did it solicit, third-party
indications of interest for the acquisition of all or any part of PXP. Salomon
Smith Barney noted in rendering its opinion that PHL stated in its initial offer
letter of July 24, 2000 that it was not interested in selling its interest in
PXP.
In connection with rendering its opinion to the independent directors
committee, Salomon Smith Barney performed a variety of financial analyses, the
material portions of which are summarized below. The summary of such analyses
set forth below does not purport to be a complete description of the analyses
underlying Salomon Smith Barney's opinion or of Salomon Smith Barney's
presentation to the independent directors committee. In addition, Salomon Smith
Barney believes that its analyses must be considered as a whole and that
selecting portions of such analyses and the factors considered therein, without
considering all such analyses and factors, could create an incomplete view of
the analyses and the process underlying Salomon Smith Barney's opinion. While
the conclusions reached in connection with each analysis were considered
carefully by Salomon Smith Barney in arriving at Salomon Smith Barney's opinion,
Salomon Smith Barney made various subjective judgments in arriving at its
opinion and did not
-22-
<PAGE>
consider it practicable to, nor did it attempt to, assign relative weights to
the individual analyses and specific factors considered in reaching its opinion.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. In
addition, the process of preparing a fairness opinion necessarily requires a
broad range of subjective judgments with respect to appropriate comparable
companies and transactions, appropriate multiples of various selected financial
data, appropriate discount rates and other financial and other factors.
Analyses and estimates of the values of companies do not purport to be
appraisals or necessarily reflect the prices at which companies or their
securities actually may be sold. No public company utilized as a comparison is
identical to PXP, and none of the other transactions utilized as a comparison is
identical to the proposed merger. Accordingly, any analysis of publicly traded
comparable companies or comparable transactions is not mathematical; rather, it
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the companies involved and other
factors that could affect the public trading value of the companies or company
to which they are being compared. The range of valuation for any particular
analysis should not be taken to be the view of Salomon Smith Barney of the
actual value of PXP. In its analyses, Salomon Smith Barney made numerous
assumptions with respect to PXP, industry performance, general business,
economic, market and financial conditions and other matters, many of which are
beyond the control of PXP. The estimates contained in such analyses and the
valuation ranges resulting from any particular analysis are not necessarily
indicative of actual values or predictive of future results or values, which may
be significantly more or less favorable than those suggested by such analyses.
Financial Analyses
The following is a summary of the material financial analyses
performed by Salomon Smith Barney in connection with its opinion dated September
10, 2000.
Normalized Price Analysis. As an initial step in its analysis,
Salomon Smith Barney considered the closing market price per share of PXP common
stock as of July 24, 2000, the day of PHL's initial offer regarding a potential
transaction between PHL and PXP (which was received after the market closed),
and found the price to be $10.81.
Since the market price of PXP common stock following the initial offer
included the effects of speculation regarding the terms and timing of a
potential transaction, Salomon Smith Barney selected a group of investment
advisors having a market capitalization of less than $2 billion which included
Affiliated Managers Group, Inc., Gabelli Asset Management Inc., Eaton Vance
Corporation, The John Nuveen Company and Waddell & Reed Financial Inc., referred
to herein as the Selected Small Cap Peer Group, and examined the changes in the
market prices of this group, for the period from July 24, 2000 until September
8, 2000 (the last trading day prior to the date Salomon Smith Barney rendered
its opinion to the independent directors committee). Salomon Smith Barney
calculated the change in the price level of the Selected Small Cap Peer Group
and found that the change in the index over that period was an increase of
13.6%. Applying that percentage increase to the closing market price per share
of PXP common stock on
-23-
<PAGE>
July 24, 2000, Salomon Smith Barney obtained a "normalized" price per share of
PXP common stock of $12.29, which it considered to be a reasonable approximation
of the price per share of PXP common stock that might have been expected to
exist on September 8, 2000 absent public statements regarding a potential
transaction.
Premium Analysis. Salomon Smith Barney calculated that the merger
consideration of $15.75 per share represented the following premiums over the
trading price for PXP common stock:
. A 28.2% premium over the "normalized" price per share of PXP
common stock as of September 8, 2000;
. A 30.6% premium over the highest closing price of PXP common stock
during the year prior to PHL's initial offer, and a 147.1% premium
over the lowest closing price of PXP common stock during that year;
. A 45.7% premium over the closing price per share of PXP common stock
the day prior to PHL's initial offer;
. A 40.0% premium over the closing price per share of PXP common stock
one week prior to PHL's initial offer;
. A 42.6% premium over the average closing price per share of PXP
common stock for the week prior to PHL's initial offer;
. A 62.6% premium over the closing price per share of PXP common
stock four weeks prior to PHL's initial offer;
. A 45.0% premium over the average closing price per share of PXP common
stock for the four weeks prior to PHL's initial offer;
. A 98.4% premium over the closing price per share of PXP common stock
three months prior to PHL's initial offer; and
. A 65.9% premium over the average closing price per share of PXP common
stock for the three month period before PHL's initial offer.
Going Private Implied Premium Analysis. Salomon Smith Barney also
analyzed the premiums offered in other domestic "going private" transactions for
the periods since 1992 and 1999 where the transaction value was at least $40
million and the acquiring party owned at least 40% of the target firm prior to
the transaction, in each case separately for (1) financial institutions as a
group and (2) all target firms as a group where the consideration offered
consisted solely of cash. Based upon these analyses, Salomon Smith Barney
calculated implied valuations for PXP common stock as follows:
-24-
<PAGE>
<TABLE>
<CAPTION>
Based on Median Premium to Price of Implied Value per share of PXP
Target Stock Common Stock based on Median
Premium
Four weeks prior One week prior to Four weeks prior One week prior to
to initial offer initial offer to initial offer initial offer
Cash Transactions:
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Since 1992 24.9% 22.1% $12.09 $13.74
Since 1999 40.6 26.0 13.62 14.17
</TABLE>
Financial
Institution
Transactions:
-------------------------------------------------------------------------------
Since 1992 21.5 20.0 11.77 13.49
Since 1999 46.3 39.7 14.17 15.72
Finally, Salomon Smith Barney analyzed the premiums paid in the following
recent selected "going private" transactions involving financial institution
targets, and based upon these analyses, calculated implied valuations for PXP
common stock as follows:
<TABLE>
<CAPTION>
Premium to Price of Target Implied value per share of PXP
Stock Common Stock based on Premium Paid
Four weeks One week Four weeks prior to One week prior
prior to prior to announcement to announcement
announcement announcement
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Metropolitan Life 52.1% 38.9% $14.73 $15.63
Insurance Company/
Conning Corporation
(target)
------------------------------------------------------------------------------------------------------------------------------------
Hartford Financial Services 43.3 40.3 13.88 15.78
Group Inc./Hartford Life
Inc. (target)
-----------------------------------------------------------------------------------------------------------------------------------
Citigroup Inc./Travelers 35.1 39.5 13.08 15.70
Property Casualty Corp.
(target)
</TABLE>
-25-
<PAGE>
Public Market Comparable Company Analysis. Using publicly available
information, Salomon Smith Barney analyzed, among other things, the operating
performance and market valuation of two groups of publicly traded investment
advisors considered by Salomon Smith Barney to be comparable to PXP. In order
to analyze market valuation, Salomon Smith Barney calculated a variety of
trading multiples, including firm value as a multiple of last twelve months, or
LTM, revenues and earnings before interest, taxes, depreciation and
amortization, or EBITDA, firm value as a multiple of last quarter annualized, or
LQA, EBITDA, and market value as a multiple of LTM cash flow, pre-tax earnings
and earnings, and as a multiple of estimated earnings per share for 2000 and
2001.
The first group utilized by Salomon Smith Barney consisted of broadly
comparable "pure play" investment advisors or the Peer Group, and included
Affiliated Managers Group, Inc., AMVESCAP PLC, BlackRock Inc., Eaton Vance
Corporation, Federated Investors, Inc., Franklin Resources, Inc., Gabelli Asset
Management Inc., The John Nuveen Company, Neuberger Berman Inc., Stilwell
Financial Inc., T. Rowe Price Associates, Inc., and Waddell & Reed Financial
Inc. The second group consisted of the Selected Small Cap Peer Group, members
of which had market capitalizations more similar to that of PXP.
Using the comparable operating data for PXP, Salomon Smith Barney
calculated the implied valuation range for a share of PXP common stock based
upon the median multiple for each of the measures described above and the
average of the implied valuation ranges calculated for each such median
multiple. Salomon Smith Barney performed this analysis once using each of the
measures of value described above, or the all metrics analysis, and a second
time using only the prospective measures of value, LQA EBITDA, and estimated
2000 and 2001 earnings, or the prospective metrics analysis. The results of
these analyses are as follows:
<TABLE>
<CAPTION>
Implied Value Range
Selected Small Cap Peer Group:
<S> <C> <C>
All Metrics 12.08 - 13.50
Prospective Metrics 10.80 - 12.07
Peer Group:
All Metrics 15.64 - 17.44
Prospective Metrics 13.28 - 14.81
</TABLE>
26
<PAGE>
Discounted Cash Flow Analysis. Based on the projections provided by PXP's
management, Salomon Smith Barney performed a discounted cash flow, or DCF,
analysis on PXP to estimate an implied valuation range for a share of PXP common
stock. This range was determined by adding (i) the present value of the
estimated future after-tax cash flow stream that PXP could generate over a five-
year period and (ii) the present value of the "terminal value" of a share of PXP
common stock at the end of the five year period, December 31, 2004.
In calculating the terminal value of PXP common stock at the end of the
five-year period, Salomon Smith Barney applied a range of multiples of 8.0x to
10.0x to forecasted EBITDA for 2004. The after-tax cash flows and terminal
values were then discounted back to June 30, 2000 using a range of discount
rates from 12.0% to 14.0%.
Based upon such analyses, Salomon Smith Barney estimated an implied
valuation range for a share of PXP common stock of $15.85 to $21.23.
Private Market Analysis. Salomon Smith Barney reviewed publicly available
information with respect to the following nine acquisitions of domestic asset
managers occurring from 1997 to 2000 in transactions involving a purchase price
greater than $300 million for which sufficient data was available. In connection
with its analysis, Salomon Smith Barney noted that such transactions, unlike the
merger, involved the sale of all or substantially all of the target company's
stock.
Date of Announcement Acquiror Target
June 20, 2000 Alliance Capital Management Sanford C. Bernstein & Co.
June 20, 2000 Old Mutual Plc United Asset Management
June 16, 2000 CDC Asset Mgmt. Nvest, L.P.
June 12, 2000 Liberty Financial Companies Wanger Asset Mgmt., LP
May 15, 2000 Unicredito Italiano Group Pioneer Group
January 13, 2000 Charles Schwab U.S. Trust Corp.
November 1, 1999 Allianz AG PIMCO Advisors LP
August 10, 1998 Northwestern Mutual Life Frank Russell Company
November 5, 1997 PIMCO Advisors LP Oppenheimer Capital
For each transaction, Salomon Smith Barney calculated a variety of
transaction multiples, including firm value as a percentage of assets under
management and as a multiple of LTM revenues and EBITDA, and equity value as a
multiple of LTM pre-tax income and net income.
Using the comparable data for PXP, Salomon Smith Barney calculated an
implied valuation range for PXP common stock based upon the median multiple for
each of the measures of value described above, and the average of such implied
valuation ranges for each share of PXP common stock. Based upon such analysis,
Salomon Smith Barney estimated an implied valuation range for a share of PXP
common stock of $18.33 to $20.45.
Salomon Smith Barney is an internationally recognized investment banking
firm that regularly engages in, among other things, the valuation of companies
and their securities in
-27-
<PAGE>
connection with mergers and acquisitions, negotiated underwritings, competitive
bids, secondary distributions of listed and unlisted securities, and corporate,
estate and other purposes. The independent directors committee retained Salomon
Smith Barney as its financial advisor because of its reputation, expertise in
the valuation of companies, substantial experience in transactions such as those
contemplated by the merger agreement and familiarity with the investment
management industry.
Salomon Smith Barney, in the ordinary course of business, may have from
time to time provided, and in the future may continue to provide, investment
banking, financial advisory and other related services to PXP, PHL and/or their
respective affiliates, as the case may be, for which it has received or will
receive fees. In the ordinary course of business, Salomon Smith Barney or its
affiliates may hold or actively trade in the debt and equity securities of PXP,
PHL and/or their respective affiliates, as the case may be, for its own account
and for the accounts of its customers and, accordingly, may at any time hold a
long or short position in such securities. In addition, Salomon Smith Barney and
its affiliates (including Citigroup Inc. and its affiliates) may maintain other
business relationships with PXP, PHL and/or their respective affiliates.
Pursuant to the terms of Salomon Smith Barney's engagement, PXP has paid
and agreed to pay Salomon Smith Barney the following fees for its services
rendered in connection with the merger:
(i) A retainer fee of $50,000, which was paid upon the commencement of
Salomon Smith Barney's engagement; and
(ii) An additional fee equal to $1,250,000, plus 0.80% of the additional
consideration payable under the merger agreement to holders of PXP common stock,
convertible securities and options resulting from merger consideration in excess
of $14.00 per share of PXP common stock, plus 0.20% of the additional
consideration resulting from merger consideration in excess of $15.50 per share
of PXP common stock, 25% of which was paid upon delivery of Salomon Smith
Barney's opinion, and 75% of which will be payable upon the consummation of the
merger (less the retainer fee paid under clause (i) above).
PXP has also agreed to reimburse Salomon Smith Barney for its reasonable
travel and other expenses incurred in connection with its engagement (including
the reasonable fees and expenses of its counsel), and to indemnify Salomon Smith
Barney and certain related persons against certain liabilities and expenses,
including liabilities under the federal securities laws, arising out of or
relating to Salomon Smith Barney's engagement.
Position of Phoenix as to Fairness of the Merger
Phoenix has considered the factors examined by the independent directors
committee and the board of directors of PXP described in detail above. Based on
these factors, Phoenix believes that the merger agreement is fair to PXP's
public stockholders. Some of the directors of Phoenix are directors and
executive officers of PXP and have interests in the merger not shared by PXP's
public stockholders. These interests are described below under the heading
"Interests of Certain
-28-
<PAGE>
Persons in the Merger". Phoenix has indicated its intention to vote in favor of
the adoption of the merger agreement at the special meeting.
Interests of Certain Persons in the Merger
General. In considering the recommendations of the independent directors
committee and the PXP board of directors, you should be aware that some of PXP's
officers and directors have interests in the merger or have relationships,
including those referred to below, that present actual or potential, or the
appearance of actual or potential, conflicts of interest in connection with the
merger. The independent directors committee and the PXP board were aware of
these actual or potential conflicts of interest and considered them along with
other matters which have been described in this proxy statement under the
heading "SPECIAL FACTORS --Recommendations of the Independent Directors
Committee and Board of Directors; Reasons for the Merger".
Relationship between PXP and its Officers and Directors. We refer you to
the information under the heading "CURRENT MANAGEMENT OF PXP" and under the
heading "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" for
information regarding our current officers and directors and their stock
ownership in PXP. PXP's officers and directors who own PXP common stock at the
effective time of the merger will be entitled to receive the $15.75 per share
merger consideration for their shares.
Ownership of Phoenix. Phoenix is a mutual insurance company owned by its
members. On April 20, 2000, Phoenix announced that its board of directors had
authorized the company to develop a plan for conversion from a mutual to a
publicly traded stock company.
Treatment of PXP Options. PXP's chief executive officer and the four most
highly compensated executive officers other than the chief executive officer
currently hold options to purchase an aggregate of 1,279,908 shares of PXP
common stock that were granted under PXP's employee benefit plans at exercise
prices ranging from $6.31 to $8.44 per share.
At the effective time of the merger, each unexercised stock option
outstanding under PXP's employee benefit plans, whether or not vested or
exercisable, will become fully vested and exercisable, and will be converted
into the right to receive an amount in cash equal to the merger consideration of
$15.75 per share less the exercise price of the stock option. Upon such
conversion, each stock option will automatically be cancelled.
Any amounts actually paid to these officers and directors of PXP for the
cancellation of their stock options under PXP's employee benefit plans will be
reduced by any applicable federal and state income and payroll tax withholdings.
Continued Employment by PXP. Following the merger, the current officers of
PXP will continue to provide services to PXP, the surviving corporation, as they
did prior to the merger.
-29-
<PAGE>
Indemnification and Insurance of PXP's Directors and Officers. Phoenix also
agreed that, for six years after the effective time of the merger, the surviving
company will maintain PXP's current provisions in its certificate of
incorporation and bylaws with respect to officers and directors indemnification.
Phoenix has also agreed that, for six years after the effective time of the
merger, the surviving company will maintain PXP's officers' and directors'
liability insurance to the extent available on commercially reasonable terms.
Consequences of the Merger
Pursuant to the merger agreement, subject to the fulfillment or waiver of
specified conditions, PXP will be merged with a subsidiary of Phoenix, and PXP
will continue as the surviving company in the merger. As a result of the merger,
PXP's public stockholders will be entitled to receive $15.75 in cash, without
interest, for each share of PXP common stock outstanding at the time of the
merger unless they are dissenting shareholders who perfect their appraisal
rights. Following the merger, PXP's public stockholders will cease to have any
ownership interest in PXP and to participate in PXP's future earnings or growth,
if any, or benefit from any increases, if any, in the value of PXP common stock.
As a result of the merger, Phoenix, through its wholly-owned subsidiary PM
Holdings, will own 100% of the outstanding common stock of PXP. In addition,
Phoenix will have 100% of the benefit of any future earnings of PXP or increases
in the value of PXP and will bear 100% of the risk of any future losses of PXP
or decrease in value of PXP.
PXP will delist its common stock from the New York Stock Exchange and price
quotations will no longer be available. PXP common stock is currently registered
under the Securities Exchange Act of 1934. Following the merger, PXP will
terminate the registration of its common stock under the Exchange Act and will
be relieved of the obligation to comply with the public reporting requirements
of the Exchange Act. Accordingly, PXP will no longer be required to file
periodic reports with the Securities and Exchange Commission, or SEC, for
example Form 10-Ks, 10-Qs and 8-Ks. In addition, PXP will no longer be subject
to the proxy rules of Regulation 14A, the short-swing trading profit provisions
of Section 16 and, with respect to future transactions, the going-private
provisions of Rule 13e-3 of the Exchange Act.
At the close of the merger, each outstanding option to purchase shares of
PXP common stock under PXP's employee benefit plans, whether vested or not
vested and whether exercisable or not exercisable, will become fully vested and
exercisable and will be converted into and become the right to receive cash
equal to $15.75 minus the exercise price of the particular option. Thereafter,
all options to purchase shares of PXP common stock granted under our employee
benefit plans, whether vested or not, will be canceled and will cease to exist.
PXP's certificate of incorporation and bylaws in effect immediately before
the merger will become the surviving company's certificate of incorporation and
bylaws immediately after the merger.
30
<PAGE>
The directors of the newly-formed company, with which PXP will be merged,
will become the surviving company's directors immediately after the merger.
PXP's executive officers immediately before the merger will continue as the
surviving company's executive officers immediately after the merger.
Benefits and Detriments of the Merger to PXP and PXP's Stockholders
Benefits and Detriments of the Merger to PXP. PXP believes that the merger
will have the following benefits to PXP:
. as a private company (which will occur as a result of the merger), PXP
will have greater operating flexibility, and it is anticipated that
PXP's management will be able to react with greater speed and
flexibility to changing conditions and opportunities and to make
decisions based on PXP's long-range business interests without having
to consider the possible adverse short-term effect of such decisions
upon the market price of PXP common stock and the interests of PXP's
public shareholders;
. the operational and administrative costs currently incurred in
connection with PXP's status as a reporting public company will be
eliminated.
PXP believes the detriments of the merger to PXP are:
. PXP will no longer have direct access to the public securities
markets;
. PXP will be unable to use its own publicly traded securities as
acquisition capital; and
. PXP will be unable to grant options to its employees to purchase
its own publicly traded securities.
Benefits and Detriments of the Merger to PXP's Stockholders. PXP
believes that the merger will result in the following benefits to you:
. it will allow you to immediately realize the value of your investment
in PXP in cash at a price which represents a significant premium to
the market price for PXP common stock before the public announcement
of Phoenix's proposal to acquire all of the outstanding shares of PXP
common stock not owned or controlled by it. The merger consideration
of $15.75 per share represents a 45.7% premium over the $10.81 closing
price of PXP common stock on July 24, 2000; and
. it will eliminate the risk of any future decline in the value of
your investment in PXP.
PXP believes the detriments to you of the completion of the merger are:
-31-
<PAGE>
. you will cease to have any ownership interest in PXP and will cease to
participate in PXP's future earnings or growth, if any, or benefit
from increases, if any, in PXP's value; and
. you may recognize a taxable gain as a result of the merger (see
"SPECIAL FACTORS -- U.S. Federal Income Tax Considerations").
Phoenix and its affiliates will have the opportunity to participate in
PXP's future earnings and growth, but they will bear the risk of any decrease in
the value, or increase in the leverage, of PXP.
All holders of options to purchase shares of PXP common stock, including
directors and officers of PXP, will receive a cash payment for cancellation of
their outstanding options granted under PXP's employee benefit plans equal to
the merger consideration less the exercise prices of their options.
Additionally, holders of convertible debentures may convert at any time prior to
the merger and receive the merger consideration in exchange for the shares of
PXP common stock issued upon conversion of the convertible debentures. Prior to
the merger, PXP intends to take action so that holders of convertible debentures
who convert after the effective time of the merger will receive the merger
consideration they would have received had they converted prior to the merger.
Plans for Surviving Company After the Merger
It is expected that, following consummation of the merger, the operations
and business of PXP will be conducted substantially as, and as independently as,
they are currently conducted. The merger will allow PXP and Phoenix to work more
collaboratively in the execution of a wealth management strategy. Neither PXP
nor Phoenix has any present plans or proposals that relate to or would result in
an extraordinary corporate transaction involving PXP's corporate structure,
business or management, such as a merger, reorganization, liquidation,
relocation of any operations or sale or transfer of a material amount of assets.
However, PXP and Phoenix will continue to evaluate PXP's business and operations
after the merger from time to time, and may propose or develop new plans and
proposals which either considers to be in the best interests of PXP and Phoenix.
U.S. Federal Income Tax Consequences
The following discussion is a summary of material United States federal
income tax consequences of the merger to PXP's stockholders whose shares of
common stock are held as capital assets and converted into the right to receive
$15.75 cash per share as a result of the merger. Because it is a summary, it
does not include an analysis of all potential tax effects of the merger. For
example, this summary:
. does not consider the effect of any applicable state, local or
foreign tax laws;
-32-
<PAGE>
. does not address all aspects of federal income taxation that may
affect particular stockholders in light of their particular
circumstances;
. is not intended for stockholders who may be subject to special federal
income tax rules, such as:
. insurance companies;
. tax-exempt organizations;
. financial institutions or broker-dealers;
. stockholders who hold their common stock as part of a hedge,
straddle or conversion transaction;
. stockholders who acquired their common stock pursuant to the
exercise of an employee stock option or otherwise as
compensation; and
. stockholders who are not citizens or residents of the United
States or that are foreign corporations, foreign partnerships or
foreign estates or trusts as to the United States;
. does not address tax consequences to holders of stock options;
and
. does not address tax consequences to Phoenix, its affiliates or any
person who would be treated as constructively owning PXP's common
stock immediately after the merger by reason of the attribution rules
of Section 318 of the Internal Revenue Code; these persons must
consult with their tax advisor to determine the tax consequences to
them.
This summary assumes that stockholders have held their PXP common stock as
a "capital asset" under the Internal Revenue Code. Generally, a "capital asset"
is property held for investment.
This summary is based on the current provisions of the Internal Revenue
Code, applicable Treasury Regulations, judicial authorities and administrative
rulings and practice. Neither PXP nor Phoenix nor any of its affiliates has
sought or intends to seek a ruling from the Internal Revenue Service with
respect to any aspect of the merger. Future legislative, judicial or
administrative changes or interpretations could alter or modify the statements
and conclusions set forth in this section. Any of these changes or
interpretations could be retroactive and could affect the tax consequences of
the merger to you.
You should consult your own tax advisor with respect to the particular tax
consequences of the merger, including the applicability and effect of any state,
local or foreign tax laws, and of changes in applicable tax laws.
-33-
<PAGE>
Treatment of Holders of Common Stock. The conversion of your shares of PXP
common stock into the right to receive $15.75 per share as a result of the
merger, or cash received pursuant to the exercise of your appraisal rights, will
be fully taxable to you. Subject to the assumptions and limitations described
above, you will recognize a capital gain or loss equal to the difference
between:
. the amount of cash you receive in the merger; and
. your tax basis in your PXP common stock.
Generally, your tax basis in your common stock will be equal to what you
paid for your stock. If you are an individual:
. long-term capital gain will be taxable at a maximum capital gains rate
of 20% if you held your shares for more than one year at the time of
the merger;
. gain on shares held for one year or less will be subject to ordinary
income tax rates; and
. capital loss may only be offset against capital gains or up to $3,000
per year of ordinary income, with a carryover of capital loss to
subsequent years to the extent unused.
Backup Withholding. You may be subject to backup withholding at the rate of
31% with respect to the gross proceeds you receive from the conversion of your
common stock into cash unless you:
. are a corporation or other exempt recipient and, when required,
establish this exemption; or
. provide your correct taxpayer identification number, certify that you
are not currently subject to backup withholding and otherwise comply
with applicable requirements of the backup withholding rules.
If, after the merger, you do not provide the paying agent with your correct
taxpayer identification number, and any other documents or certifications
required by the Internal Revenue Service, including, among others, Form W-9 or a
substitute for this Form, you may be subject to penalties imposed by the
Internal Revenue Service. Any amount withheld under these backup withholding
rules will be creditable against your federal income tax liability. The paying
agent will report to you and to the Internal Revenue Service the amount of any
reportable payment made to you (including payments made to you pursuant to the
merger) and any amount withheld pursuant to the merger.
-34-
<PAGE>
Accounting Treatment
The merger will be accounted for under the purchase method of accounting in
accordance with generally accepted accounting principles. Under this method the
total consideration paid in the merger will be allocated among PXP's
consolidated assets and liabilities based on the fair values of the assets
acquired and liabilities assumed.
Public Offerings and Repurchases of Common Stock
PXP has not made an underwritten public offering for cash in the past three
years. On November 7, 1996, PXP's board of directors voted to authorize a stock
repurchase plan for up to two million shares of outstanding PXP common stock.
Repurchases were made from time to time in the open market or through privately
negotiated transactions at market prices. The stock repurchase program was
completed in 1999 at a total cost of $14.7 million.
Financing; Source of Funds
Phoenix and PXP estimate that the amount of funds required to fund the
payment of the merger consideration, including payment with respect to options
and the convertible debentures is approximately $434 million. Phoenix intends to
obtain the funds required to pay the merger consideration from internal sources.
PXP intends to obtain the funds required to make the payments with respect to
the options and convertible debentures both from internal sources and from
borrowings under its existing five year $175,000,000 credit agreement with a
consortium of banks entered into on March 17, 1999. The interest rate under this
credit agreement is variable based on LIBOR. Phoenix has guaranteed PXP's
obligations under this credit agreement.
Fees and Expenses
PXP will be responsible for paying its merger-related fees and expenses,
consisting primarily of fees and expenses of investment bankers, attorneys and
accountants, SEC filing fees and other related charges, which it estimates will
total approximately $2.4 million, assuming the merger is completed. This amount
consists of the following estimated fees:
Description Amount
Advisory fees and expenses............ $1,750,000
Legal fees and expenses............... 400,000
Accounting fees and expenses.......... 25,000
SEC filing fee........................ 87,000
Printing, solicitation and
mailing costs....................... 100,000
Miscellaneous expenses................ 38,000
----------
Total....................... $2,400,000
==========
-35-
<PAGE>
In addition, Phoenix estimates that it will incur merger related fees and
expenses of approximately $2,800,000, consisting primarily of fees and expenses
of investment bankers, attorneys and accountants and other related charges.
Regulatory Requirements
In connection with the merger, PXP will be required to make filings with
and obtain approvals from various federal and state governmental agencies,
including:
. filing a certificate of merger with the Secretary of State of the
State of Delaware in accordance with the Delaware General Corporation
Law after the adoption of the merger agreement by PXP's stockholders;
and
. compliance with federal and state securities laws.
Stockholder Lawsuits Challenging the Merger
On July 25, 2000, five lawsuits seeking class action status were filed by
purported PXP stockholders in Delaware Court of Chancery against Phoenix, PXP
and the directors of PXP. The plaintiffs allege, among other things, that
Phoenix, PXP and the directors of PXP have breached fiduciary duties owed to PXP
shareholders (other than Phoenix and its affiliates) in connection with
Phoenix's initial offer to acquire the publicly held shares of PXP stockholders
for $12.50 per share, which the plaintiffs contend is an unfair price.
The plaintiffs seek, among other things:
. an order enjoining Phoenix's initial offer from being consummated (or,
if consummated, an order rescinding the transaction); and
. an award of attorneys' fees and other costs of litigation.
Phoenix and PXP intend to vigorously defend these lawsuits.
____________________
THE MERGER AGREEMENT
____________________
On September 10, 2000, Phoenix, PM Holdings and PXP entered into the merger
agreement. The following is a summary of the material provisions of the merger
agreement. Because it is a summary, it does not include all of the information
that is included in the merger agreement. The text of the merger agreement,
which is attached as Appendix A to this proxy statement, is incorporated into
this section by reference. We encourage you to carefully read the merger
agreement in its entirety.
-36-
<PAGE>
The Merger; Time of Closing
At the effective time of the merger, PXP will be merged with a subsidiary
of Phoenix and PXP will continue as the surviving company. As a result of the
merger, you will be entitled to receive $15.75 in cash, without interest, in
exchange for each of your shares of PXP common stock outstanding at the time of
the merger.
The merger will close as soon as possible after satisfaction or waiver of
the conditions to the merger.
Exchange and Payment Procedures
PXP has appointed ComputerShare Investor Services LLC as its paying agent
to handle the exchange of PXP common stock certificates for cash in the merger.
Soon after the merger becomes effective, the paying agent will mail to you a
letter of transmittal and instructions explaining how to exchange your stock
certificates for cash. Upon surrender to the paying agent of a valid share
certificate and a properly completed letter of transmittal, together with such
other documents as the paying agent may reasonably require, you will be entitled
to receive $15.75 per share. Until surrendered in this manner, each stock
certificate will represent only the right to receive the merger consideration.
You should not send your stock certificates now. You should send them only
after you receive a letter of transmittal from the paying agent. A letter of
transmittal will be mailed to you soon after the merger is completed.
Any merger consideration made available to the paying agent that remains
unclaimed by PXP's stockholders for six months after the time the merger is
completed will be returned to PXP, as the surviving company after the merger,
and any of PXP's stockholders who have not by that time made an exchange must
then look to the surviving company for payment of their claim for merger
consideration.
Transfers of Shares
No transfers of shares of PXP common stock will be made on PXP's share
transfer books after the merger is completed.
Treatment of Stock Options
At the time the merger becomes effective, all outstanding options to
purchase shares of PXP common stock that were granted under PXP's employee
benefit plans, whether or not vested or exercisable, will become fully vested
and exercisable, and will be converted into the right to receive an amount equal
to the amount by which $15.75 exceeds the exercise price per share of the
particular option. When so converted, each option will be automatically
cancelled and cease to exist.
-37-
<PAGE>
Representations and Warranties
In the merger agreement, PXP has represented and warranted particular
matters to PM Holdings. These include, among other things, representations and
warranties relating to:
. its organization, standing and similar corporate matters;
. its capital structure;
. its subsidiaries;
. its authorization to enter into the merger agreement;
. the independent directors committee's recommendation of the merger
agreement and the receipt of a written fairness opinion from Salomon
Smith Barney;
. the absence of brokers' or finders' fees and expenses (other than
to Salomon Smith Barney);
. the accuracy of its SEC filings;
. the absence of certain changes or events since the date of its
most recent quarterly financial statements filed with the SEC;
. the absence of material undisclosed liabilities; and
. compliance with applicable laws.
The merger agreement also contains representations and warranties by PM
Holdings relating to:
. its organization, standing and similar corporate matters;
. its authorization to enter into the merger agreement;
. the absence of brokers' or finders' fees and expenses (other than
to Morgan Stanley Dean Witter);
. the accuracy of information supplied by Phoenix for PXP's SEC
documents; and
. its financial ability to consummate the merger.
The representations and warranties in the merger agreement do not survive
the closing of the merger or termination of the merger agreement.
-38-
<PAGE>
PXP's Covenants
PXP has agreed to certain covenants in the merger agreement. The most
significant of these covenants is that PXP has agreed to call a special meeting
to vote on the merger agreement, prepare and mail this proxy statement and
solicit your vote to adopt the merger agreement.
PM Holdings' Covenants
PM Holdings has agreed, among other things, that:
. for six years after the effective time of the merger, the surviving
company will maintain PXP's current provisions in its certificate of
incorporation and bylaws with respect to indemnification of officers
and directors; and
. for six years after the effective time of the merger, the surviving
company will maintain PXP's officers' and directors' liability
insurance to the extent available on commercially reasonable terms.
Phoenix's Performance Guarantee
Phoenix is a party to the merger agreement only to guarantee PM Holdings'
performance of its financial obligations and liabilities under the merger
agreement.
Conditions
Mutual Closing Conditions. Both PXP's and PM Holdings' obligations to
complete the merger are subject to the satisfaction or waiver by PXP and PM
Holdings of the following conditions:
. the absence of any legal prohibition or material challenge to the
merger;
. obtaining all required consents and authorizations;
. adoption of the merger agreement by the affirmative vote of the
holders of a majority of the outstanding shares of PXP common stock;
and
. non-revocation of the fairness opinion of Salomon Smith Barney.
Additional Closing Conditions for PM Holdings' Benefit. PM Holdings'
obligation to complete the merger is subject to the satisfaction or waiver of
the following additional conditions:
. the accuracy of PXP's representations and warranties in the merger
agreement as of the effective time of the merger;
-39-
<PAGE>
. the performance by PXP in all material respects of its obligations
under the merger agreement;
. appraisal rights must not have been exercised by holders of more than
five percent of PXP's outstanding common stock; and
. PXP must have no obligation to issue any shares of its capital stock
or other securities of PXP under any employee benefit plan or
otherwise.
Additional Closing Conditions for PXP's Benefit. PXP's obligation to
complete the merger is subject to the satisfaction or waiver of the following
additional conditions:
. the accuracy of PM Holdings' representations and warranties in the
merger agreement as of the effective time of the merger; and
. the performance by PM Holdings in all material respects of its
obligations under the merger agreement,
Termination of the Merger Agreement
Right to Terminate. The merger agreement may be terminated at any time
before the effective time of the merger in any of the following ways:
. by mutual written consent of PXP and PM Holdings;
. by either PXP or PM Holdings if the merger is not completed by
December 31, 2000, so long as the failure of the terminating party to
fulfill any obligation under the merger agreement is not the cause of
the failure of the merger to occur on or prior to such date; or
. by either PXP or PM Holdings if the independent directors committee
withdraws, modifies or changes in any manner adverse to PM Holdings,
its approval of the merger agreement or the merger after having
concluded in good faith after consultation with independent legal
counsel that there is a reasonable probability that the failure to
take such action would result in a violation of its fiduciary
obligations under applicable law.
If the merger agreement is terminated, it will become void. However,
termination will not affect the rights of either party against the other for
breach of the merger agreement.
Expenses
Except as described above, all costs and expenses incurred in connection
with the merger agreement will be paid by the party incurring those costs or
expenses.
-40-
<PAGE>
Amendments; Waivers
Any provision of the merger agreement may be amended or waived before the
merger becomes effective.
________________________________________
TREATMENT OF CONVERTIBLE SUBORDINATED DEBENTURES
________________________________________
PXP has outstanding 6% convertible subordinated debentures due 2015, and
options therefor, which are convertible into shares of PXP's common stock.
Holders of PXP's convertible debentures may convert at any time prior to the
merger and receive the merger consideration in exchange for the shares of PXP
common stock issued upon conversion of the convertible debentures. PXP intends
to take action so that holders of convertible debentures who convert after the
effective time of the merger will receive the merger consideration they would
have received had they converted prior to the merger. The conversion rate is
3.11 shares of PXP common stock, or approximately $49 of merger consideration,
for every $25 principal amount of the convertible debentures. Holders of
convertible debentures should be aware that after November 1, 2000, PXP will
have the right to redeem the convertible debentures for face value, plus accrued
interest, upon prior notice. Therefore, assuming that the merger has been
consummated, holders who convert will receive more money for their convertible
debentures than those whose convertible debentures are redeemed by PXP if PXP
redeems the convertible debentures after November 1. Holders of options to
purchase PXP's convertible debentures will, upon exercise, be treated in the
same manner as holders of the convertible debentures.
_____________________________
APPRAISAL RIGHTS
_____________________________
You Have a Right to Dissent
Under the Delaware General Corporation Law, or DGCL, if you do not wish to
accept the merger consideration of $15.75 per share for your shares of PXP
common stock as provided in the merger agreement, you have the right to dissent
from the merger and to seek an appraisal of, and to be paid the fair value
(exclusive of any element of value arising from the accomplishment or
expectation of the merger) for, the shares of PXP common stock held by you,
provided that you comply with the provisions of Section 262 of the DGCL.
Holders of record of PXP common stock who do not vote in favor of the
merger agreement and who otherwise comply with the applicable statutory
procedures will be entitled to appraisal rights under Section 262 of the DGCL. A
person having a beneficial interest in shares of PXP common stock held of record
in the name of another person, such as a broker or nominee,
-41-
<PAGE>
must act promptly to cause the record holder to follow the steps summarized
below properly and in a timely manner to perfect appraisal rights.
The following discussion is a summary of the provisions of Section 262 of
the DGCL. The following summary is qualified in its entirety by the full text of
Section 262 of the DGCL which is reprinted in its entirety in Appendix C
attached to this proxy statement. All references in Section 262 of the DGCL and
in this summary to a "stockholder" or "holder" are to the record holder of the
shares of PXP common stock as to which appraisal rights are asserted.
Under Section 262 of the DGCL, holders of shares of PXP common stock who
follow the procedures set forth in Section 262 of the DGCL will be entitled to
have their shares appraised by the Delaware Chancery Court and to receive
payment in cash of the "fair value" of these shares, exclusive of any element of
value arising from the accomplishment or expectation of the merger, together
with a fair rate of interest, if any, as determined by such court.
We Must Provide You Notice
Under Section 262 of the DGCL, since we are submitting for adoption at a
meeting of stockholders the merger agreement, we must notify, not less than 20
days prior to the stockholder meeting, each of our stockholders who was a
stockholder on the record date for the meeting with respect to shares for which
appraisal rights are available, that appraisal rights are so available, and must
include in such notice a copy of Section 262 of the DGCL.
This proxy statement constitutes notice to the holders of shares for which
appraisal rights are available and the applicable statutory provisions of the
DGCL are attached to this proxy statement as Appendix C. If you wish to exercise
your appraisal rights or you wish to preserve your right to do so you should
review the following discussion and Appendix C to this proxy statement
carefully, because failure to timely and properly comply with the procedures
therein specified will result in the loss of appraisal rights under the DGCL.
You Must Perfect Appraisal Rights
A holder of shares for which appraisal rights are available wishing to
exercise the holder's appraisal rights
. must not vote in favor of the merger agreement or consent to it in
writing and
. must deliver to PXP, prior to the vote on the merger agreement at the
special meeting, a written demand for appraisal of the holder's
shares.
Any proxy that does not contain voting instructions will, unless revoked,
be voted for adoption of the merger agreement. Therefore, a shareholder who
votes by proxy and who wishes to exercise his, her, or its appraisal rights must
vote against adoption of the merger agreement or abstain from voting on adoption
of said merger agreement.
-42-
<PAGE>
A written demand for appraisal must be in addition to and separate from any
proxy or vote abstaining from or against approving the merger. This demand must
reasonably inform PXP of the identity of the stockholder and of the
stockholder's intent to demand appraisal of his, her or its shares. A holder of
appraisal shares wishing to exercise such holder's appraisal rights must be the
record holder of the shares for which appraisal rights are available on the date
the written demand for appraisal is made and must continue to hold these shares
until the completion of the merger. Accordingly, a holder of shares for which
appraisal rights are available who is the record holder of these shares on the
date the written demand for appraisal is made, but who thereafter transfers
these shares prior to the completion of the merger, will lose any right to
appraisal in respect of these shares.
Only a record holder of shares for which appraisal rights are available is
entitled to assert appraisal rights for the shares registered in that holder's
name. A demand for appraisal should be executed by or on behalf of the record
holder, fully and correctly, as the holder's name appears on the holder's stock
certificates. If the shares for which appraisal rights are available are owned
of record in a fiduciary capacity, for example by a trustee, guardian or
custodian, execution of the demand should be made in that capacity, and if these
shares are owned of record by more than one owner as in a joint tenancy or
tenancy in common, the demand should be executed by or on behalf of all joint
owners. An authorized agent, including one or more joint owners, may execute a
demand for appraisal on behalf of a holder of record. The agent, however, must
identify the record owner or owners and expressly disclose the fact that, in
executing the demand, the agent is agent for such owner or officers.
A record holder that is a broker who holds shares for which appraisal
rights are available as nominee for several beneficial owners may exercise
appraisal rights with respect to these shares for which appraisal rights are
available held for one or more beneficial owners while not exercising these
rights with respect to the shares held for other beneficial owners. In such
case, the written demand should set forth the number of shares for which
appraisal rights are available and is being sought. When no number of shares for
which appraisal rights are available is expressly mentioned, the demand will be
presumed to cover all the shares in brokerage accounts or other nominee forms
and those who wish to exercise appraisal rights under Section 262 of the DGCL
are urged to consult with their brokers to determine the appropriate procedures
for the making of a demand for appraisal by such a nominee.
All written demands for appraisal should be sent or delivered to:
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, Connecticut 06115
Attention: Nancy Engberg, Secretary
-43-
<PAGE>
We Must Notify Each Stockholder Who Has Properly Asserted Appraisal Rights
Within 10 days after the completion of the merger, the surviving company
will notify each stockholder who has properly asserted appraisal rights under
Section 262 of the DGCL, and who has not voted in favor of the merger agreement,
of the date the merger became effective.
A Petition Must Be Filed in the Delaware Chancery Court
Within 120 days after the completion of the merger, but not thereafter, the
surviving company, or any stockholder who has complied with the statutory
requirements summarized above may file a petition in the Delaware Chancery Court
demanding a determination of the fair value of the shares whose holders are
entitled to appraisal rights. PXP is under no obligation to, and has no present
intention to file, a petition with respect to the appraisal of the fair value of
the shares that are entitled to appraisal rights. Accordingly, it will be the
obligation of stockholders wishing to assert appraisal rights to initiate all
necessary action to perfect their appraisal rights within the time prescribed in
Section 262 of the DGCL.
Stockholders May Request Information
Within 120 days after the completion of the merger, any stockholder who has
complied with the requirements for exercise of appraisal rights will be
entitled, upon written request, to receive from the surviving company a
statement setting forth the aggregate number of shares of PXP common stock not
voted in favor of adoption of the merger agreement and with respect to which
demands for appraisal have been received and the aggregate number of holders of
these shares. These statements must be mailed within 10 days after a written
request has been received by the surviving company, or within 10 days after
expiration of the period for delivery of demands for appraisal under Section 262
of the DGCL, whichever is later.
A Court Will Determine Stockholders Entitled to Appraisal Rights, Fair Value and
Allocation of Expenses
If a petition for appraisal is duly filed by a holder of shares of common
stock and a copy is delivered to the surviving corporation, the surviving
corporation will then be obligated within 20 days to provide the Delaware Court
of Chancery with a duly verified list containing the names and addresses of all
holders of shares of common stock who have demanded appraisal of their shares.
After notice to such holders, the Delaware Court of Chancery is empowered to
conduct a hearing upon the petition to determine those holders who have complied
with Section 262 of the DGCL and who have become entitled to appraisal rights
under that section and will appraise the "fair value" of their shares of PXP
common stock, exclusive of any element of value arising from the accomplishment
or expectation of the merger, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. The Delaware Court of
Chancery may require the holders who have demanded payment for their shares of
common stock to submit their stock certificates to the Register in Chancery for
a notation thereon of the pendency of the appraisal proceedings; and if any
holder fails to comply with such direction, the Delaware Court of Chancery may
dismiss the proceedings as to such holder.
-44-
<PAGE>
Stockholders should be aware that the fair value of their shares of PXP
common stock as determined under Section 262 of the DGCL could be more than, the
same as or less than the value of the merger consideration they would
receive pursuant to the merger agreement if they did not seek appraisal of their
shares of PXP common stock and that investment banking opinions as to fairness
from a financial point of view are not necessarily opinions as to fair value
under section 262 of the DGCL. In determining fair value and, if applicable, a
fair rate of interest, the Delaware Court of Chancery must take into account all
relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court
discussed the factors that could be considered in determining fair value in an
appraisal proceeding, stating that "proof of value by any techniques or methods
which are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered, and that "fair price
obviously requires consideration of all relevant factors involving the value of
a company." The Delaware Supreme Court stated that, in making this determination
of fair value, the court must consider market value, asset value, dividends,
earnings prospects, the nature of the enterprise and any other facts that could
be ascertained as of the date of the merger that shed any light on future
prospects of the merged corporation. In Weinberger, the Delaware Supreme Court
further stated that "elements of future value, including the nature of the
enterprise, which are known or susceptible of proof as of the date of the merger
and not the product of speculation, may be considered." Section 262 provides
that fair value is to be "exclusive of any element of value arising from the
accomplishment or expectation of the merger."
In addition, Delaware courts have decided that the statutory appraisal
remedy, depending on factual circumstances, may or may not be a dissenter's
exclusive remedy. The Delaware Chancery Court will determine the amount of
interest, if any, to be paid upon the amounts to be received by stockholders
whose appraisal shares have been appraised. The costs of the action may be
determined by the Delaware Chancery Court and taxed upon the parties as the
Delaware Chancery Court deems equitable. The Delaware Chancery Court may also
order that all or a portion of the expenses incurred by any stockholder in
connection with an appraisal, including, without limitation, reasonable
attorneys' fees and the fees and expenses of experts utilized in the appraisal
proceeding, be charged pro rata against the value of all of the appraisal shares
entitled to appraisal.
No Right to Vote Appraisal Shares or Receive Dividends or Distribution on
Appraisal Shares
Any holder of shares for which appraisal rights are available who has duly
demanded an appraisal in compliance with Section 262 of the DGCL will not be
entitled to vote those shares subject to such demand for any purpose or be
entitled to the payment of dividends or other distributions on those shares
(except dividends or other distributions payable to holders of record of these
shares as of a record date prior to the completion of the merger).
-45-
<PAGE>
Failure to Perfect Appraisal Rights
If any stockholder who properly demands appraisal of his, her or its
appraisal shares under section 262 of the DGCL fails to perfect, or effectively
withdraws or loses, his, her or its right to appraisal, as provided in section
262 of the DGCL, the stockholder's shares of PXP common stock will be converted
into the right to receive the merger consideration of $15.75 per share. A
stockholder will fail to perfect, or effectively lose or withdraw, his, her or
its right to appraisal if, among other things, no petition for appraisal is
filed within 120 days after the completion of the merger, or if this stockholder
delivers to PXP a written withdrawal of his, her or its demand for appraisal.
Any attempt to withdraw an appraisal demand more than 60 days after the
completion of the merger will require the written approval of the surviving
company.
Cash received pursuant to the exercise of appraisal rights will be subject
to income tax. For additional information, we refer you to the information under
the heading "SPECIAL FACTORS -- U.S. Federal Income Tax Consequences."
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of your rights. Under these
circumstances, you will be entitled to receive the $15.75 per share merger
consideration with respect to your shares of PXP's common stock in accordance
with the merger agreement.
_____________________________
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
_____________________________
The tables below set forth selected consolidated financial information for
PXP for the dates and time periods indicated. We derived the consolidated
statement of income and consolidated balance sheet data as of and for the years
ended December 31, 1999 and 1998 from our consolidated financial statements
which have been audited by PricewaterhouseCoopers, LLP, independent public
accountants, as of and for the years ended December 31, 1999 and 1998. We
derived the consolidated statement of income and consolidated balance sheet data
as of and for the six month periods ended June 30, 2000 and 1999 from our
unaudited consolidated financial statements, which include all adjustments,
consisting only of normal recurring adjustments, which management considers
necessary for a fair presentation of results for these unaudited periods. The
results of operations for the six months ended June 30, 2000 are not necessarily
indicative of the results of operations that may be expected for the full fiscal
year 2000. You should read the selected consolidated financial data presented
below in conjunction with the "Management's Discussion and Analysis of Financial
Condition and Results of Operations," our consolidated financial statements with
related notes and other financial information contained or incorporated by
reference in our Annual Report on Form 10-K for the year ended December 31,
1999, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000,
which we incorporate by reference in this proxy statement. For additional
information, we refer you to the information under the heading "DOCUMENTS
INCORPORATED BY REFERENCE."
-46-
<PAGE>
<TABLE>
<CAPTION>
For the Six Months For the Year Ended,
Ended,
(in thousands, except per share data) June 30, June 30, December 31, December 31,
2000 1999* 1999* 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenues $165,001 $135,964 $286,628 $221,547
Operating income 45,694 31,810 69,089 48,685
Net income 25,981 13,418 26,711 34,640
Basic earnings per share 0.59 0.31 0.61 0.76
Diluted earnings per share 0.51 0.28 0.55 0.68
Current assets 111,491 99,289 92,140 83,539
Noncurrent assets 561,153 582,297 610,875 480,179
Current liabilities 64,556 50,501 64,897 53,223
Long-term obligations 214,719 280,083 239,513 146,561
Convertible subordinated debentures 76,244 76,364 76,364 76,364
Other noncurrent liabilities 43,728 52,057 45,656 53,446
Minority interest 1,092 2,139 4,255 2,531
Book value per share 6.14 5.51 5.74 5.30
Cash dividends declared per common
share 0.16 0.12 0.24 0.24
</TABLE>
*1999 includes the Zweig Fund Group from March 1, 1999 to December 31, 1999.
-47-
<PAGE>
_____________________________
FINANCIAL PROJECTIONS
_____________________________
We do not as a matter of course make public forecasts as to future
revenues, earnings or other financial information. We did, however, prepare
projections which we provided to Salomon Smith Barney in connection with its
analysis of the fairness, from a financial point of view, of the merger
consideration to be received by PXP's public stockholders and to Phoenix and its
financial advisor, Morgan Stanley Dean Witter. The projections set forth below
are included in this proxy statement solely because this information was
provided to Salomon Smith Barney and Morgan Stanley Dean Witter. We refer you to
the information under the heading "SPECIAL FACTORS -- Background of the Merger"
and "SPECIAL FACTORS -- Opinion of the Financial Advisor for the Independent
Directors Committee" for more information about Salomon Smith Barney's role in
the merger and "SPECIAL FACTORS -- Background of the Merger."
The projections set forth below were prepared as of February, 2000. They
were not prepared by PXP with a view to public disclosure or compliance with
published guidelines of the SEC or the American Institute of Certified Public
Accountants regarding prospective financial information. In addition, the
projections were not prepared with the assistance of or reviewed, compiled or
examined by, PXP's independent auditors, or any other independent accountants.
The projections reflect numerous assumptions, all made by PXP's management, with
respect to industry performance, general business, economic, market and
financial conditions and other matters, all of which are difficult to predict
and many of which are beyond PXP's control. In the view of PXP's management,
however, this information was prepared on a reasonable basis and reflects the
best available estimates and judgments and presents, to the best knowledge and
belief of PXP's management, as of the date they were prepared, the expected
course of action and the expected future financial performance of PXP. The
following projections and information are not facts. Accordingly, there can be
no assurance that the assumptions made in preparing the projections set forth
below will prove accurate, and actual results could be materially greater or
less than those contained in the projections set forth below. In addition, we
refer you to the information under the heading "CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING INFORMATION."
The inclusion of the projections in this proxy statement should not be
regarded as an indication that PXP or any of its respective representatives, or
respective officers and directors, consider such information to be an accurate
prediction of future events or necessarily achievable. In light of the
uncertainties inherent in forward-looking information of any kind, we caution
against undue reliance on such information. We do not intend to update or revise
such projections to reflect circumstances existing after the date when prepared
or to reflect the occurrence of future events, unless required by law.
The table below summarizes the material aspects of the projections that
were provided to Salomon Smith Barney and Morgan Stanley Dean Witter:
-48-
<PAGE>
Projected Consolidated Statements of Income
(in thousands)
2000 2001 2002
-------- -------- --------
Total Revenues $331,207 $353,412 $392,154
Total Operating Expenses 234,094 248,806 265,560
-------- -------- --------
Operating Income 97,113 104,606 126,594
Net Income 40,495 44,046 57,135
EBITDA Margin 39.10% 38.85% 40.36%
In preparing the above financial projections, PXP has made assumptions
about its market, growth rates and other factors that may affect the accuracy of
these financial projections. These projections assume that revenues would
increase 16%, 7% and 11% in years 2000 through 2002. Redemption and withdrawal
rates were based primarily on industry averages and management's best estimates.
Performance rates assumed returns of approximately 10% for equity investments,
6.5% for fixed income investments and 5% for money market investments. Expense
estimates for year 2000 assumed increases in base compensation averaging
approximately 5% and incentive compensation in line with industry averages.
Employment expenses for years 2001 and 2002 assumed increases of 4% each year
over the prior year. Other operating expenses were assumed to increase 8% in
year 2000 and 3% in each of years 2001 and 2002.
The projections set forth above should be read together with the "SELECTED
HISTORICAL CONSOLIDATED FINANCIAL DATA" included in this proxy statement. These
projections should also be read together with our historical financial
statements, and other financial information, and the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" set forth in our
1999 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000, each of which is incorporated by reference into
this proxy statement.
_____________________________
COMMON STOCK MARKET PRICE AND DIVIDEND INFORMATION
_____________________________
Our common stock is traded on the New York Stock Exchange under the symbol
"PXP". The table below sets forth the high and low sales prices per share, and
the cash dividend paid per share, in each quarterly period for the two most
recent fiscal years and for the current fiscal year to date as reported by the
New York Stock Exchange. The common stock prices do not include adjustments for
retail markups, markdowns or commissions.
-49-
<PAGE>
HIGH LOW DIVIDENDS
---- --- ---------
FISCAL YEAR ENDING DECEMBER 31, 2000
Third Quarter......................... $15.75 $10.50 $0.08
Second Quarter........................ 10.50 7.13 0.08
First Quarter......................... 8.38 6.38 0.08
FISCAL YEAR ENDED DECEMBER 31, 1999
Fourth Quarter........................ $ 9.00 $ 7.50 $0.06
Third Quarter......................... 9.25 8.19 0.06
Second Quarter........................ 10.13 8.38 0.06
First Quarter......................... 9.19 7.00 0.06
FISCAL YEAR ENDED DECEMBER 31, 1998
Fourth Quarter........................ $ 8.75 $ 6.69 $0.06
Third Quarter......................... 9.44 6.63 0.06
Second Quarter........................ 9.88 8.19 0.06
First Quarter......................... 9.38 7.38 0.06
On July 24, 2000, the last day of trading prior to our public announcement
of Phoenix's proposal to acquire all of the outstanding shares of PXP common
stock (other than those held by Phoenix and its affiliates), the high, low and
closing sales prices per share of our common stock as reported by New York Stock
Exchange were $10.94, $10.69 and $10.81, respectively. On September 8, 2000, the
last trading day before the public announcement of the merger agreement, the
high, low and closing sales prices per share of our common stock as reported by
New York Stock Exchange were $14.88, $14.50 and $14.50, respectively. On
____________, 2000, the last trading day before the printing of this proxy
statement, the high, low and closing sales prices per share of our common stock
as reported by New York Stock Exchange were $____, $____ and $____,
respectively. You should obtain current market price quotations for PXP common
stock in connection with voting your shares.
On the record date for the special meeting, there were approximately ___
holders of record of PXP common stock.
-50-
<PAGE>
_____________________________
COMMON STOCK PURCHASE INFORMATION
_____________________________
The following sets forth information with respect to purchases of shares of
PXP common stock by PXP, Phoenix and PM Holdings during the past two years.
<TABLE>
<CAPTION>
No. of Shares Average Price
Purchased During Paid During
Quarter/Year Purchaser Quarter Quarter
------------ --------- ---------------- -------------
<S> <C> <C> <C>
Q3-2000 - - -
Q2-2000 - - -
Q1-2000 PXP 34,899 8.13
Q4-1999 PXP 106,200 8.26
Q3-1999 PXP 161,700 8.31
Q2-1999 - - -
Q1-1999 PXP 270,300 7.00
Q4-1998 PXP 189,600 6.76
</TABLE>
During the past 60 days, the following purchases of PXP common stock were
made for the account of the executive officers of PXP and Phoenix listed below
in open market transactions pursuant to automatic payroll deductions through
employee benefit plans:
Number of Price
Purchase Shares per
Name Date Purchased Share
---- ---- --------- -----
Philip R. McLoughlin 8/17/2000 162 14.63
William R. Moyer 8/17/2000 19 14.63
John F. Sharry 8/17/2000 182 14.63
Thomas N. Steenburg 8/17/2000 32 14.63
Dona Young 8/17/2000 42 14.63
-51-
<PAGE>
David Searfoss 8/17/2000 105 14.63
Carl Chadburn 8/17/2000 1 14.63
Philip R. McLoughlin 9/14/2000 155 15.31
William R. Moyer 9/14/2000 6 15.31
John F. Sharry 9/14/2000 174 15.31
Thomas N. Steenburg 9/14/2000 30 15.31
Dona Young 9/14/2000 41 15.31
David Searfoss 9/14/2000 100 15.31
Carl Chadburn 9/14/2000 1 15.31
Philip R. McLoughlin 9/28/2000 151 15.68
William R. Moyer 9/28/2000 18 15.68
John F. Sharry 9/28/2000 169 15.68
Thomas N. Steenburg 9/28/2000 29 15.68
Dona Young 9/28/2000 39 15.68
David Searfoss 9/28/2000 98 15.68
Carl Chadburn 9/28/2000 1 15.68
_____________________________
CURRENT MANAGEMENT OF PXP
_____________________________
Neither PXP nor any of its current executive officers or directors have,
during the last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), nor have they been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and, as a result of this proceeding, was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, United States federal or state securities laws or finding
any violation with respect to these laws.
The following sets forth (1) the names and business address of our current
directors and executive officers, (2) information regarding their current
positions with PXP and their period of service in such positions, and (3) their
business experience for the past five years. All of the individuals listed below
are citizens of the United States, except for Mr. Verdonck who is a citizen of
Belgium and Mr. Williams who is a citizen of Canada.
-52-
<PAGE>
<TABLE>
<CAPTION>
Name Business Address Position
---- ---------------- --------
<S> <C> <C>
Philip R. McLoughlin Phoenix Investment Partners, Chairman of the Board and Chief
Ltd. Executive Officer
56 Prospect Avenue
Hartford, CT 06115
Michael E. Haylon Phoenix Investment Partners, Executive Vice President and
Ltd. Director
56 Prospect Avenue
Hartford, CT 06115
Robert W. Fiondella Phoenix Home Life Director
One American Row
Hartford, CT 06115
Marilyn E. LaMarche Lazard Freres & Co. LLC Director
30 Rockefeller Plaza
59th Floor
New York, NY 10020
James M. Oates IBEX Capital Markets Director
60 State St., Suite 950
Boston, MA 02109
Ferdinand L.J. Verdonck Almanij N.V. Director
Havenlaan 2
Brussels, Belguim
B-1080
John T. Anderson 2313 Cassia Court Director
Naples, FL 31409
Glen D. Churchill 33 Tamarisk Circle Director
Abilene, TX 79606
Donna F. Tuttle Korn Tuttle Capital Group Director
12733 Parkyns Street
Los Angeles, CA 90049
David A. Williams Roxborough Holdings, Ltd. Director
One First Canadian Place,
Suite 6250 Toronto, Ontario
M5X 1C7 Canada
John F. Sharry Phoenix Investment Partners, President, Private Client
Ltd. Group
56 Prospect Avenue
Hartford, CT 06115
</TABLE>
-53-
<PAGE>
<TABLE>
<CAPTION>
Name Business Address Position
---- ---------------- --------
<S> <C> <C>
William R. Moyer Phoenix Investment Partners, Executive Vice President and
Ltd. Chief Financial Officer
56 Prospect Avenue
Hartford, CT 06115
Michael A. Kearney Phoenix Investment Partners, Senior Vice President
Ltd.
56 Prospect Avenue
Hartford, CT 06115
Thomas N. Steenburg Duff & Phelps Investment Senior Vice President
Management Co.
55 E. Monroe St.
Suite 3600
Chicago, IL 60603
Elizabeth R. Rudden Phoenix Investment Partners, Vice President
Ltd.
56 Prospect Avenue
Hartford, CT 06115
Nancy J. Engberg Phoenix Investment Partners, Secretary, Vice President and
Ltd. Counsel
56 Prospect Avenue
Hartford, CT 06115
</TABLE>
Mr. McLoughlin has been Chairman of the Board of PXP since May 1997 and
Chief Executive Officer of PXP since November 1, 1995. Mr. McLoughlin has also
been a Director of Phoenix since February 1994 and has been employed by Phoenix
as Executive Vice President -Investments since December 1988. In addition, Mr.
McLoughlin serves as an officer and/or a director of various PXP subsidiaries.
Mr. Haylon has been an Executive Vice President and a Director of PXP since
November 1, 1995, and serves as President of Phoenix Investment Counsel, Inc. In
addition, Mr. Haylon serves as an officer and/or a director of various other PXP
subsidiaries.
Mr. Fiondella has been Chairman of the Board and Chief Executive Officer of
Phoenix since February 1994. Mr. Fiondella served as President of Phoenix from
1989 to February 2000.
Ms. LaMarche has been a Director of Phoenix since 1989. Ms. LaMarche has
been a Limited Managing Director of Lazard Freres & Co., L.L.C. (and a general
partner of its predecessor), a New York based investment banking company, since
January 1983.
-54-
<PAGE>
Mr. Oates has been Chairman of IBEX Capital Markets, Inc. since October 1996
and Managing Director of The Wydown Group since April 1994. From 1984 through
1994, he served as President and Chief Executive Officer of Neworld Bank. Mr.
Oates is also a Director or Trustee of the Phoenix Mutual Funds. In addition,
Mr. Oates is a Director of AIB Govett, Inc., Investor Financial Services
Corporation, Investors Bank & Trust Co., Connecticut River Bancorp, Plymouth
Rubber Company, Stifel Financial, Emerson Investment Management, Inc. and
Command Systems. He also serves as Vice Chairman of Massachusetts Housing
Partnership.
Mr. Verdonck has been Managing Director of Almanij N.V., the holding company
of the Almanij Group, since 1992. He also serves as a Director of Almanij N.V.,
KBC Bank & Insurance Holding Company N.V., KBC Bank N.V., KBC Insurance N.V.,
Brussels, Belgium, Kredietbank S.A. Luxembourgeoise, and of various affiliated
companies in the Group. From 1984 to 1992, Mr. Verdonck served in various senior
executive capacities with N.V. Bekaert S.A., a Belgian steel wire and cord
manufacturer, both in Belgium and New York City. He also serves as Director of
The Fleming Continental European Investment Trust plc. He was a Senior Vice
President of Lazard Freres & Co., L.L.C. in New York from 1977 to 1984, having
previously served as an International Banking Officer of Continental Illinois
Bank in Chicago.
Mr. Anderson is retired. From January 2, 1996 to December 31, 1998, Mr.
Anderson was of counsel to Lord, Bissell & Brook, a Chicago law firm. From 1966
to January 2, 1996, Mr. Anderson was a partner of Lord, Bissell & Brook.
Mr. Churchill is retired. Prior to May 1, 1992, Mr. Churchill was President
and Chief Executive Officer of West Texas Utilities Company for more than the
preceding five years.
Ms. Tuttle has been President of Korn Tuttle Capital Group, a Los Angeles,
California investment consulting firm, since March 1992. From January 1990 to
March 1992, Ms. Tuttle was Chairman and Chief Executive Officer of Ayer Tuttle,
a division of an international advertising agency. From January 1983 to January
1989, Ms. Tuttle served as U.S. Deputy Secretary of Commerce and Under Secretary
of Commerce. Ms. Tuttle is also a member of the Board of Directors of Hilton
Hotels Corp.
Mr. Williams is President of Roxborough Holdings Ltd. Mr. Williams was
President and Chief Executive Officer of Beutel, Goodman & Company Ltd., or BG,
a Toronto, Canada investment counseling firm, from 1991 to December 1994. From
1971 to 1991, he served as Vice President of BG. Mr. Williams joined BG in 1969.
PXP owned 49% of the outstanding voting capital stock of BG until December 3,
1998. Mr. Williams is also a member of the Boards of Directors of Enhanced
Marketing Services, Equisure Financial Network, FRI Corporation, Krystal Bond
Corporation, PICO Holdings, Inc., Pinetree Capital Corporation, Octagon
Industries Ltd., Radiant Energy Corporation, Drug Royalty Corporation, Oxylene
Limited, Canenerco Ltd., Carbite Golf, David S. Reid Ltd., Metro One
Telecommunications, Inc. and First International Asset Management.
Mr. Sharry has been President of the Private Client Group of PXP since January
1, 1999. From January 1, 1998 to December 31, 1998, Mr. Sharry was Executive
Vice President of PXP.
-55-
<PAGE>
From November 1995 to December 31, 1997, Mr. Sharry was Senior Vice President of
the Retail Line of Business. In addition, Mr. Sharry serves as an officer of
various PXP subsidiaries.
Mr. Moyer has been Executive Vice President and Chief Financial
Officer of PXP since August 1, 1999. Prior to that date, Mr. Moyer was Senior
Vice President and Chief Financial Officer of PXP since November 1, 1995. In
addition, Mr. Moyer serves as an officer and/or a director of various PXP
subsidiaries.
Mr. Kearney joined PXP on October 4, 1999 as Senior Vice President,
Information Technology. From June 1995 to October 3, 1999, Mr. Kearney was Vice
President, Information Systems of Phoenix.
Mr. Steenburg has been Senior Vice President of PXP since January 1,
1999. From November 1, 1995 to December 31, 1998, Mr. Steenburg was Vice
President and Counsel of PXP. In addition, Mr. Steenburg is Chairman and Chief
Executive Officer of DPIM. In addition, Mr. Steenburg serves as an officer
and/or a director of various PXP subsidiaries.
Ms. Rudden currently holds the position of Vice President, Human
Resources. From May 22, 1995 to December 31, 1995, she was Vice President,
Mutual Fund Customer Service with Phoenix Equity Planning Corporation, or PEPCO.
Ms. Engberg joined PXP on April 15, 1999 as Vice President and
Counsel. From June 1997 to April 14, 1999, Ms. Engberg served as Second Vice
President and Corporate Counsel for Phoenix and as counsel for Phoenix since
December 1994.
_____________________________
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
_____________________________
The following table provides information as of the record date
concerning the beneficial ownership of our common stock by: (1) each director
and executive officer of PXP; (2) all executive officers and directors as a
group, and (3) persons known to PXP to be the beneficial owners of more than 5%
of our outstanding common stock as of the record date.
-56-
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of Percent of
Name of Beneficial Owner (and Address of 5% Holders) Beneficial Common
--------------------------------------------------- Ownership(1)(5) Stock
--------------- -----------
<S> <C> <C>
Phoenix Home Life Mutual Insurance Company.......................... 30,754,000(2) 63.30%
One American Row
Hartford, Connecticut 06102
Wanger Asset Management, L.P........................................ 3,857,000(3) 8.72%
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
Dimensional Fund Advisors Inc....................................... 2,233,500(4) 5.05%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Philip R. McLoughlin................................................ 380,682 *
Michael E. Haylon................................................... 223,249 *
John F. Sharry...................................................... 151,421 *
William R. Moyer.................................................... 181,732 *
Michael A. Kearney.................................................. 0 *
Thomas N. Steenburg................................................. 81,254 *
Elizabeth R. Rudden................................................. 42,774 *
Nancy J. Engberg.................................................... 5,246 *
Robert W. Fiondella................................................. 115,154 *
Marilyn E. LaMarche................................................. 62,355 *
James M. Oates...................................................... 102,846 *
Ferdinand L.J. Verdonck............................................. 72,846 *
John T. Anderson.................................................... 42,423 *
Glen D. Churchill................................................... 64,321 *
Donna F. Tuttle..................................................... 75,927 *
David A. Williams................................................... 74,012 *
All directors and executive officers as a group (16 persons)........ 1,686,242 4.06%
</TABLE>
-57-
<PAGE>
_______________________
* Less than one percent.
(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934. Unless otherwise stated below, each such person has sole voting and
investment power with respect to all such shares. Under Rule 13d-3(d),
shares not outstanding which are subject to options, warrants, rights or
conversion privileges exercisable within 60 days are deemed outstanding
for the purpose of calculating the number and percentage owned by such
person, but are not deemed outstanding for the purpose of calculating the
percentage owned by each other person listed.
(2) Based upon the number of shares of common stock and the principal amount
of PXP's 6% Convertible Subordinated Debentures due November 1, 2015
reported in the most recent Schedule 13D filed by Phoenix with the SEC.
Includes 26,400,000 shares of common stock beneficially owned by Phoenix
and 4,354,000 shares of common stock which could be acquired through the
conversion of $35,000,000 principal amount of Debentures beneficially
owned by Phoenix. Each $25 principal amount of convertible debentures is
convertible at any time into 3.11 shares of common stock.
(3) Number of shares reported in the most recent Schedule 13G filed by Wanger
Asset Management, L.P., or Wanger, with the SEC. These securities have
been acquired on behalf of discretionary clients of Wanger. Includes
3,857,000 shares as to which Wanger has shared voting power and shared
dispositive power.
(4) Number of shares reported in the most recent Schedule 13G filed by
Dimensional Fund Advisors Inc., or Dimensional, with the SEC. Dimensional
serves as investment adviser to certain funds, commingled group trusts
and separate accounts. In its role as investment adviser, Dimensional
possesses voting and/or investment power over the securities of PXP that
are owned by these funds. These securities are owned by the funds.
Includes 2,233,500 shares as to which Dimensional has sole voting power
and sole dispositive power.
(5) Includes shares of common stock which could be acquired through the
exercise of options and the conversion of Debentures as follows: Mr.
McLoughlin, 276,667 shares; Mr. Haylon, 147,500 shares; Mr. Sharry,
90,834 shares; Mr. Moyer, 126,667 shares; Mr. Fiondella, 85,154 shares;
Ms. LaMarche, 62,355 shares; Mr. Oates, 72,846 shares; Mr. Verdonck,
72,846 shares; Mr. Anderson, 41,423 shares; Mr. Churchill, 62,355 shares;
Ms. Tuttle, 73,577 shares; Mr. Williams, 74,012 shares; Mr. Steenburg,
59,601 shares; Ms. Rudden, 33,767 shares; all directors and executive
officers as a group, 1,279,604 shares. Also includes shares of restricted
common stock as follows: Mr. McLoughlin, 52,742 shares; Mr. Haylon,
43,181 shares; Mr. Sharry, 33,990 shares; Mr. Moyer, 21,244 shares; Mr.
Steenburg, 12,586 shares; Ms. Rudden, 5,245 shares; Ms. Engberg, 5,246
shares; all directors and executive officers as a group, 178,823 shares.
Each $25 principal amount of Debentures is convertible at any time into
3.11 shares of common stock.
-58-
<PAGE>
_____________________________
PHOENIX
_____________________________
Phoenix is a New York domiciled mutual life insurance company and is
principally engaged in the sale of life insurance. On April 20, 2000, Phoenix
announced that its board of directors had authorized the company to develop a
plan for conversion from a mutual to a publicly traded stock company. Phoenix's
principal business address is One American Row, Hartford, Connecticut 06102.
Neither Phoenix nor any of its current officers or directors have, during the
last five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), nor have they been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction, and
as a result of this proceeding, was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, United States federal or state securities laws or finding any
violation with respect to these laws.
The following sets forth (1) the names and business address of each of
Phoenix's current directors and executive officers, (2) information regarding
their current positions with Phoenix and their period of service in such
positions, and (3) their business experience for the past five years. All of the
individuals listed below are citizens of the United States.
<TABLE>
<CAPTION>
Current Occupation/Business Offices and Positions Held During Past
Name Address 5 Years
---- ------- -------
Directors
---------
<S> <C> <C>
Salvatore H. Alfiero Chairman and CEO 1992-Present: Director, Phoenix Home
Mark IV Industries, Inc. until Life Mutual Insurance Company
September 14, 2000 1969-September 14, 2000: Various
501 John James Audubon Parkway positions with Mark IV Industries
Amherst, NY 14228
J. Carter Bacot Director, Retired 1992-Present: Director, Phoenix Home
Chairman and CEO Life Mutual Insurance Company
The Bank of New York 1969-Present: Various positions with
48 Wall Street, 10th Floor The Bank of New York
New York, NY 10286
Arthur P. Byrne President, CEO & Chairman 1997-Present: Director, Phoenix Home
The Wiremold Company Life Mutual Insurance Company
60 Woodlawn Street 1986-Present: Group Executive, The
West Hartford, CT 06110 Wiremold Company
</TABLE>
-59-
<PAGE>
<TABLE>
<CAPTION>
Current Occupation/Business Offices and Positions Held During Past
Name Address 5 Years
---- ------- -------
<S> <C> <C>
Richard N. Cooper Professor 1992-Present: Director, Phoenix Home
Center for International Affairs Life Mutual Insurance Company
Harvard University 1995-1997: National Intelligence
1737 Cambridge Street, Room 403 Council,
Cambridge, MA 02138 Chairman
1981-Present: Professor, Harvard
University
Gordon J. Davis Partner 1994-Present: Director, Phoenix Home
LeBoeuf, Lamb Greene & MacRae Life Mutual Insurance Company
125 West 55th Street 1994-Present: Partner, LeBoeuf, Lamb,
New York, NY 10019 Greene & MacRae
1983-1994: Partner, Lord Day & Lord,
Barrett, Smith
Robert W. Fiondella Chairman & CEO 1987-Present: Director, Phoenix Home
Phoenix Home Life Mutual Ins. Life Mutual Insurance Company
Co. 1969-Present: Various positions with
One American Row Phoenix and its various subsidiaries.
Hartford, CT 06102-5056
John E. Haire President 1999-Present: Director, Phoenix Home
The Fortune Group Life Mutual Insurance Company
1271 Avenue of the Americas 1978-Present: President, The Fortune
New York, NY 10020 Group
Jerry J. Jasinowski President 1996-Present: Director, Phoenix Home
National Association of Life Mutual Insurance Company
Manufacturers 1981-Present: Various positions with the
1331 Pennsylvania Avenue, N.W. National Association of Manufacturers
Washington, DC 20004
John W. Johnstone, Jr. Retired 1992-Present: Director, Phoenix Home
Life Mutual Insurance Company
1986-1996: Chairman and CEO, Olin
Corporation
Marilyn E. LaMarche Limited Managing Director 1992-Present: Director, Phoenix Home
Lazard Freres & Co. L.L.C. Life Mutual Insurance Company
30 Rockefeller Plaza 1983-Present: Various positions with
New York, NY 10020 Lazard Freres & Co. L.L.C.
Philip R. McLoughlin Executive Vice President 1994-Present: Director, Phoenix Home
Phoenix Home Life Mutual Ins. Life Mutual Insurance Company
Co. 1983-Present: Various positions with
56 Prospect Street, 1st Floor Phoenix and its various subsidiaries.
Hartford, CT 06115
Robert F. Vizza President & CEO 1992-Present: Director, Phoenix Home
The Dematties Center of St. Life Mutual Insurance Company
Francis Hospital St. Francis Hospital
Northern Boulevard
Old Brookville, NY 11545
</TABLE>
-60-
<PAGE>
<TABLE>
<CAPTION>
Current Occupation/Business Offices and Positions Held During Past
Name Address 5 Years
---- ------- -------
<S> <C> <C>
Robert G. Wilson Retired 1992-Present: Director, Phoenix Home
Life Mutual Insurance Company
Dona D. Young President
Phoenix Home Life Mutual Ins. 1998-Present: Director, Phoenix Home
Co. Life Mutual Insurance Company
One American Row 1980-Present: Various positions with
Hartford, CT 06102-5056 Phoenix and its various subsidiaries.
____________________________________________________________________________________________________________________________
Executive Officers
------------------
Carl T. Chadburn Executive Vice President 1972-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row
Hartford, CT 06102-5056
Robert W. Fiondella Chairman & CEO 1987-Present: Director, Phoenix Home
Phoenix Home Life Mutual Ins. Co. Life Mutual Insurance Company
One American Row 1969-Present: Various positions with
Hartford, CT 06102-5056 Phoenix and its various subsidiaries.
Philip R. McLoughlin Executive Vice President 1994-Present: Director, Phoenix Home
Phoenix Home Life Mutual Ins. Co. Life Mutual Insurance Company
56 Prospect Street, 1st Floor 1983-Present: Various positions with
Hartford, CT 06102-5056 Phoenix and its various subsidiaries.
David W. Searfoss Executive Vice President 1987-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row
Hartford, CT 06102-5056
Simon Y. Tan Executive Vice President 1982-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row
Hartford, CT 06102-5056
Dona D. Young President 1980-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row
Hartford, CT 06102-5056
Senior Officers
---------------
Michael J. Gilotti Senior Vice President 1999-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row
Hartford, CT 06115
</TABLE>
-61-
<PAGE>
<TABLE>
<S> <C> <C>
Edward P. Hourihan Senior Vice President 1972-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row
Hartford, CT 06102-5056
Joseph E. Kelleher Senior Vice President 1992-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row
Hartford, CT 06102-5056
Robert G. Lautensack Senior Vice President 1992-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row
Hartford, CT 06102-5056
Maura L. Melley Senior Vice President 1993-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row
Hartford, CT 06102-5056
Charles L. Olson Senior Vice President 1997-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
38 Prospect Street 1990-1997: Various positions with
Hartford, CT 06115-0479 Phoenix Duff & Phelps.
Richard R. Paton Senior Vice President 2000-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row 1996-1999: Chief Risk Management
Hartford, CT 06102-5056 Officer, MPTN Foxwoods Casino Resort.
1994-1996: Director, Corporate Risk
Management, Berkshire Health Systems.
Robert E. Primmer Senior Vice President 1982-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row
Hartford, CT 06102-5056
Tracy L. Rich Senior Vice President 01/00-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row 03/96-01/00: Various positions with
Hartford, CT 06102-5056 Massachusetts Mutual Life.
08/82-03/96: Various positions with
Connecticut Mutual Life
John F. Solan, Jr. Senior Vice President 1998-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row 1964-1998: Various positions with Ernst
Hartford, CT 06102-5056 & Young.
Walter H. Zultowski Senior Vice President 1998-Present: Various positions with
Phoenix Home Life Mutual Ins. Co. Phoenix and its various subsidiaries.
One American Row 1978-1997: Senior Vice President,
Hartford, CT 06102-5056 LIMRA International
</TABLE>
-62-
<PAGE>
_____________________________
RELATED PARTY TRANSACTIONS
_____________________________
Phoenix and PXP maintain relationships that are described below.
License Agreement. On November 1, 1995, PXP and Phoenix entered into a
license agreement pursuant to which Phoenix granted PXP an exclusive license
(subject to the limited non-exclusive license granted to Merrill Lynch Phoenix
Fund, Inc.) to use the name "Phoenix" and the related design in the United
States and all other jurisdictions where Phoenix has rights to such trademarks
in connection with the provision of investment advisory services to public
mutual funds and other institutional investors with respect to equity and fixed
income securities other than securities of entities primarily engaged in the
ownership and/or operation of real estate or real estate mortgages or other
interests in real estate. PXP has also been granted the right to sublicense the
trademarks for use as the name or as a component of the name of any mutual fund
of which PXP is the investment adviser. The exclusive license will remain in
force as long as Phoenix, PM Holdings and other subsidiaries of Phoenix
collectively continue to beneficially own shares of capital stock of PXP
representing at least a majority of the voting power of PXP and for a period of
five years from the date that Phoenix, PM Holdings and other subsidiaries of
Phoenix collectively no longer beneficially own shares of capital stock of PXP
representing at least a majority of the voting power of PXP. The license
agreement also prohibits Phoenix and its subsidiaries from competing with PXP by
conducting the licensed services during the term. The license agreement does
not, however, preclude Phoenix and its subsidiaries from conducting business in,
and rendering investment advisory services in connection with, life insurance,
variable products, pension products, short-term debt investment management,
management of their general accounts and separate accounts, underwriting and
distribution activities, real estate and securities of entities primarily
engaged in the ownership and/or operation of real estate or real estate
mortgages or other interests in real estate and any other activities (other than
the licensed services) currently engaged in by Phoenix and its subsidiaries. In
the event Phoenix or any of its subsidiaries acquires a company conducting the
business of the licensed services, Phoenix, through the acquired company, will
have the right to continue to engage in such business and to use the trademarks
in connection with the licensed services for a period of three years.
Registration Rights Agreement. On November 1, 1995, PXP and PM Holdings
entered into a registration rights agreement pursuant to which PXP has granted
PM Holdings and its transferees the right to require PXP to effect the
registration under the Securities Act of 1933 of all or any part of the shares
of common stock issued to PM Holdings. As long as PXP is eligible to use a Form
S-3 registration statement (or any successor form), the number of registrations
that PXP will be required to effect will be unlimited; provided, however, that
PXP will not be required to effect more than three registrations on a
registration statement other than Form S-3 (or any successor form).
Additionally, subject to conditions, PM Holdings will also be entitled to
piggyback registration rights. Pursuant to the registration rights agreement,
PXP will be required
-63-
<PAGE>
to pay all expenses in connection with any registration, except underwriting
discounts and selling commissions.
Management of Phoenix General Account and Variable Contract Assets. Phoenix
Investment Council, Inc., or PIC, manages all of the investment assets of
Phoenix's General Account, excluding investments in real estate and mortgages,
under an agreement with Phoenix effective January 1, 1995. The agreement
provides, however, that either party thereto may terminate the agreement by
giving 30 days' prior written notice of termination. As of December 31, 1998 and
1999, Phoenix's General Account assets under management by PIC totaled $8.8
billion and $9.1 billion, respectively. Fees paid to PIC by Phoenix for the
management of its General Account assets totaled $9.5 million in 1998 and $10.5
million in 1999. In addition, PIC and Duff & Phelps Investment Management Co.,
or DPIM, manage the mutual fund subaccounts of Phoenix sponsored variable
contracts, under an agreement with Phoenix effective January 1, 1993. As of
December 31, 1998 and 1999, Phoenix sponsored variable contract assets under
management by PIC and DPIM totaled $3.2 billion and $3.9 billion, respectively.
Fees paid to PIC and DPIM by Phoenix for the management of its variable contract
assets totaled $6.3 million in 1998 and $7.3 million in 1999.
Services and Office Space. Phoenix provides various support services to PXP
pursuant to an administrative agreement dated as of October 1, 1995. Currently,
these services are legal, human resources, payroll processing, purchasing,
facility management, communications and creative services and other
miscellaneous services. Phoenix also provides various computer hardware,
software and support services to PXP under a computer services agreement dated
as of October 1, 1995. Either party may terminate (i) the administrative
agreement at the end of any calendar year upon 90 days' prior notice and (ii)
the computer services agreement upon 180 days' prior notice. Phoenix charged PXP
and its subsidiaries $4.9 million and $6.0 million for these services (exclusive
of rent and direct costs of employee benefits) in 1999 and 1998, respectively.
All such services are provided at rates established from time to time by
negotiation between Phoenix and PXP. Changes in such rates are subject to the
approval of those disinterested directors of PXP who are neither employees nor
directors of Phoenix or its other subsidiaries.
Phoenix also leases office space to PXP in Hartford, Connecticut, and has
leased office space to PXP in Enfield, Connecticut, and Greenfield,
Massachusetts. Phoenix charged PXP and its subsidiaries $3.2 million for office
space rentals in each of 1998 and 1999. Management of PXP believes that the
rental rates under these leases are generally at current market rates.
Retail Distribution. WS Griffith & Co., Inc., or Griffith, a registered
broker-dealer subsidiary of Phoenix, is one of the largest retail distributors
of PXP's investment products, distributing shares of the Phoenix Mutual Funds
managed by PXP's subsidiaries. In addition, Griffith is the largest distributor
of Phoenix sponsored variable contracts whose mutual fund subaccounts are
invested in the Phoenix Edge Series Fund, which is managed by PXP's
subsidiaries. Griffith's retail sales force consists of approximately 1,080
registered representatives, most of whom are also members of Phoenix's insurance
agent and broker field force. Mutual fund sales by Griffith accounted for
approximately 5% and 4% of PXP's total mutual fund sales other than with respect
to money market funds in 1998 and 1999, respectively.
-64-
<PAGE>
Sales of variable products by Griffith accounted for 78% and 88% of total
variable product sales in 1998 and 1999, respectively.
Griffith distributes Phoenix investment products under a sales agreement
with PEPCO pursuant to which Griffith receives commissions for shares of mutual
funds sold by it ranging from 2.0% to 5.75% of the per share offering price.
Griffith also receives commissions under the sales agreement for variable
products offered by Phoenix sold by it ranging from 3.0% to 6.0% of purchase or
premium payments under such products. The commissions payable to Griffith under
its sales agreement with PEPCO are payable on the same basis as those
commissions paid to unaffiliated brokers for these types of products.
Commissions paid to Griffith by PEPCO totaled $23.4 million in 1998 and $25.8
million in 1999.
Participation in Phoenix's Employee Benefit Plans. In 1999, employees of
PIC, PEPCO and DPIM and certain employees of PXP participated in various
retirement, supplemental insurance and health care and welfare benefit plans
sponsored by Phoenix. Phoenix charged PXP the cost of employees' participation
in the plans. Fees paid to Phoenix relating to participation of employees of
PIC, PEPCO and DPIM and certain employees of PXP in plans sponsored by Phoenix
were $3.9 million in 1998 and $4.1 million in 1999.
Certain Other Matters. Transactions between Phoenix and PXP entered into in
the future, including changes to investment management fees with respect to the
General Account, service fees, leases for office space and sales commissions to
be paid to Griffith, will be determined by negotiation, will be fair, equitable
and reasonable, and will be subject to the approval by a majority of the
directors of PXP who are disinterested for purposes of Delaware corporate law
(consisting in these circumstances of directors who are neither employees nor
directors of Phoenix or its other subsidiaries). PXP believes that the financial
aspects of these relationships will be no less favorable to PXP than those
available through unaffiliated third parties.
_____________________________
INDEPENDENT ACCOUNTANTS
_____________________________
Our consolidated balance sheets, and related consolidated statements of
operations, changes in stockholders' equity and cash flows, have been audited by
PricewaterhouseCoopers, LLP, independent auditors, as stated in their reports,
which are incorporated by reference in this proxy statement. A representative of
PricewaterhouseCoopers, LLP will be at the special meeting to answer questions
from stockholders and will have the opportunity to make a statement.
-65-
<PAGE>
_____________________________
WHERE YOU CAN FIND MORE INFORMATION
_____________________________
We file annual, quarterly and current reports, proxy statements, and other
documents with the Securities and Exchange Commission under the Securities
Exchange Act of 1934. The Exchange Act file number for our SEC filings is 1-
10994. Our SEC filings made electronically through the SEC's EDGAR system are
available to the public at the SEC's website at http://www.sec.gov. You may also
read and copy any document we file with the SEC at the following SEC public
reference rooms:
Judiciary Plaza Citicorp Center 7 World Trade Center
450 Fifth Street, N.W. 500 West Madison Street Suite 1300
Washington, D.C. 20549 Chicago, Illinois 60621 New York, New York 10048
You may obtain information regarding the operation of the SEC's public
reference rooms by calling the SEC at 1-800-SEC-0330.
No provisions have been made in connection with the merger to grant the
public stockholders access to the corporate files of PXP or Phoenix or to obtain
counsel or appraisal services at the expense of PXP or Phoenix.
PXP and Phoenix have filed with the SEC a Rule 13e-3 Transaction Statement
on Schedule 13E-3 with respect to the merger. As permitted by the SEC, this
proxy statement omits information contained in the Schedule 13E-3. The Schedule
13E-3, including any amendments and exhibits filed or incorporated by reference
as a part thereof, is available for inspection or copying as set forth above.
_____________________________
DOCUMENTS INCORPORATED BY REFERENCE
_____________________________
The SEC permits us to "incorporate by reference" certain documents, which
means that we can disclose important information to you by referring you to
those documents. The information in the documents incorporated by reference is
considered to be part of this proxy statement, except to the extent that this
proxy statement updates or supersedes the information. We incorporate by
reference the documents listed below that we have previously filed with the SEC
(SEC file no. 1-10994);
. Our Annual Report on Form 10-K for the fiscal year ended December 31, 1999;
. Our Quarterly Reports on Form 10-Q for the quarters ended March 31 and June
30, 2000; and
-66-
<PAGE>
. Our Current Reports on Form 8-K dated May 17, 1999 and August 8 and
September 13, 2000.
We also incorporate by reference the information contained in all other
documents we file with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act after the date of this proxy statement and before the date of the
special meeting. The information will be considered part of this proxy
statement from the date the document is filed and will supplement or amend the
information contained in this proxy statement.
We will provide you upon your request, at no charge, a copy of the
documents we incorporate by reference in this proxy statement. To obtain timely
delivery, requests for copies should be made no later than _______________,
2000. To request a copy of any or all of these documents, you should write us
at:
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, Connecticut 06115
Attention: Investor Relations
These documents are also included in our SEC filings that are made
electronically through the SEC's EDGAR system and are available to the public at
the SEC's website at http://www.sec.gov.
You should rely only on the information contained in this proxy statement
or to which we have referred you to vote your shares at the special meeting. We
have not authorized anyone to provide you with information that is different.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Nancy J. Engberg
Nancy J. Engberg
Secretary
________, 2000.
-67-
<PAGE>
Execution Copy
APPENDIX A
AGREEMENT AND PLAN OF MERGER
among
PM HOLDINGS, INC.
and
PHOENIX INVESTMENT PARTNERS, LTD.
and
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
Dated as of September 10, 2000
A-1
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. The Merger....................................................................... A-5
Section 1.1 Formation of Acquisition Co...................................................... A-5
Section 1.2 The Merger....................................................................... A-5
Section 1.3 Effective Time................................................................... A-6
Section 1.4 Closing.......................................................................... A-6
Section 1.5 Certificate of Incorporation; By-laws; Officers and Directors.................... A-6
Section 1.6 Effect on Common Stock........................................................... A-6
Section 1.7 Dissenting Shares................................................................ A-7
Section 1.8 Stock Options.................................................................... A-8
Section 1.9 Exchange of Certificates......................................................... A-8
Section 1.10 Proxy Statement and Schedule 13E-3............................................... A-11
Section 1.11 Additional Agreement and Provisions.............................................. A-12
ARTICLE II. Representations and Warranties of PXP............................................ A-12
Section 2.1 Organization of PXP and its Subsidiaries......................................... A-12
Section 2.2 Capitalization of PXP Ownership.................................................. A-13
Section 2.3 Subsidiaries of PXP.............................................................. A-13
Section 2.4 Authorization.................................................................... A-13
Section 2.5 Fairness Opinion and Approval by the Committee.................................. A-15
Section 2.6 Brokers and Finders............................................................. A-15
Section 2.7 Proxy Statement and other Disclosure Documents.................................. A-15
Section 2.8 SEC Documents; Undisclosed Liabilities.......................................... A-16
Section 2.9 Absence of Certain Changes or Events............................................ A-16
</TABLE>
A-2
<PAGE>
Table of Contents
-----------------
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 2.10 No Undisclosed Material Liabilities............................................. A-17
Section 2.11 Compliance with Laws and Court Orders........................................... A-18
ARTICLE III. Representations and Warranties of PMH........................................... A-18
Section 3.1 Organization of PMH............................................................. A-18
Section 3.2 Organization and Authority of Acquisition Co.................................... A-18
Section 3.3 Authorization................................................................... A-18
Section 3.4 Brokers and Intermediaries...................................................... A-20
Section 3.5 PXP Disclosure Document......................................................... A-20
Section 3.6 Financial Ability............................................................... A-20
ARTICLE IV. Certain Covenants and Agreements................................................ A-20
Section 4.1 Announcement.................................................................... A-20
Section 4.2 Notification of Certain Matters................................................. A-20
Section 4.3 Directors' And Officers' Indemnification........................................ A-21
Section 4.4 Stockholder Meeting............................................................. A-21
ARTICLE V. Conditions Precedent............................................................ A-21
Section 5.1 Conditions to each Party's Obligation to Effect the Merger...................... A-21
Section 5.2 Conditions to the Obligation of PXP to Effect the Merger........................ A-22
Section 5.3 Conditions to the Obligation of PMH to Cause Acquisition Co. to
Effect the Merger......................................................... A-22
ARTICLE VI. Termination, Amendment and Waiver............................................... A-23
Section 6.1 Termination..................................................................... A-23
</TABLE>
A-3
<PAGE>
Table of Contents
-----------------
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 6.2 Effect of Termination........................................................... A-23
Section 6.3 Amendment....................................................................... A-24
Section 6.4 Waiver.......................................................................... A-24
ARTICLE VII. Miscellaneous................................................................... A-24
Section 7.1 Definitions..................................................................... A-24
Section 7.2 Performance Guarantee by PHL.................................................... A-27
Section 7.3 Non-survival of Representations and Warranties.................................. A-27
Section 7.4 Expenses........................................................................ A-27
Section 7.5 Applicable Law.................................................................. A-27
Section 7.6 Notices......................................................................... A-27
Section 7.7 Entire Agreement................................................................ A-29
Section 7.8 Assignment...................................................................... A-29
Section 7.9 Headings References............................................................. A-29
Section 7.10 Counterparts.................................................................... A-29
Section 7.11 No Third Party Beneficiaries.................................................... A-29
Section 7.12 Severability; Enforcement....................................................... A-29
</TABLE>
A-4
<PAGE>
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of September 10,
2000, by and among PM Holdings, Inc., a Connecticut corporation ("PMH"), Phoenix
Investment Partners, Ltd., a Delaware corporation ("PXP"), and for the purposes
of Section 7.2 and Section 7.8 only, Phoenix Home Life Mutual Insurance Company,
a New York mutual life insurance company ("PHL").
RECITALS:
A. PMH currently owns approximately 57% of the outstanding common stock,
par value $.01 per share, of PXP (the "PXP Common Stock").
B. PMH desires to acquire all of the shares of PXP Common Stock not
owned by it, and to provide for the payment of $15.75 per share in cash for all
such shares, by means of a merger of a newly-formed, wholly-owned subsidiary of
PMH ("Acquisition Co.") with and into PXP in accordance with Section 251 of the
Delaware General Corporation Law (the "DGCL"), upon the terms and subject to the
conditions of this Agreement (the "Merger").
C. The Board of Directors of PXP, upon the recommendation of a Committee
of independent directors (the "Committee"), has unanimously approved this
Agreement and the Merger and deems the Merger advisable and in the best
interests of the stockholders of PXP.
D. All capitalized terms used in this Agreement have the meaning
specified in Section 7.1.
ARTICLE I.
The Merger
Section 1.1 Formation of Acquisition Co. Prior to consummation of the
---------------------------
Merger, PMH will incorporate and organize Acquisition Co. as a Delaware
corporation and contribute to Acquisition Co., in exchange for all of the issued
and outstanding shares of common stock of Acquisition Co., par value $.01 per
share (the "Acquisition Co. Common Stock"), all shares of PXP Common Stock owned
by PMH, which shares will constitute at least a majority of the issued and
outstanding shares of PXP Common Stock.
Section 1.2 The Merger. At the Effective Time, upon the terms and subject
----------
to the conditions set forth in this Agreement and in accordance with the DGCL,
Acquisition Co. will be merged with and into PXP, the separate existence of
Acquisition Co. will cease, and PXP will continue as the surviving corporation
(the "Surviving Corporation"). The Merger will have the effects as provided by
the DGCL and other applicable law.
A-5
<PAGE>
Section 1.3 Effective Time. As soon as practicable following the
--------------
satisfaction or waiver of the conditions set forth in Article V, Acquisition Co.
and PXP will file with the Secretary of State of the State of Delaware a
certificate of merger (the "Certificate of Merger") executed in accordance with
the relevant provisions of the DGCL. The Merger will become effective at such
time as the Certificate of Merger is duly filed with the Secretary of State of
the State of Delaware, or at such other time as is permissible in accordance
with the DGCL and as PMH and PXP may agree and as specified in the Certificate
of Merger (the time the Merger becomes effective, the "Effective Time").
Section 1.4 Closing. The closing of the Merger (the "Closing") will take
-------
place at the offices of Debevoise & Plimpton, 875 Third Avenue, New York, New
York 10022 at 10:00 a.m. (New York time) on the date of the satisfaction of the
conditions provided in Article V, or at such other time (the "Closing Date") and
place as PMH and PXP may agree.
Section 1.5 Certificate of Incorporation; By-laws; Officers and Directors.
-------------------------------------------------------------
Pursuant to the Merger:
(a) the Certificate of Incorporation and By-laws of PXP as in effect
immediately prior to the Effective Time will be the Certificate of Incorporation
and By-laws of the Surviving Corporation following the Merger, until thereafter
changed or amended as provided in such Certificate of Incorporation or By-laws
and in accordance with applicable law;
(b) the directors of Acquisition Co. will be the directors of the
Surviving Corporation following the Merger until the earlier of (i) their death,
resignation or removal or (ii) such time as their respective successors are duly
elected or appointed and-qualified; and
(c) the officers of PXP immediately prior to the Effective Time will be
the officers of the Surviving Corporation until the earlier of (i) their death,
resignation or removal or (ii) such time as their respective successors are duly
elected or appointed and qualified.
Section 1.6 Effect on Common Stock. As of the Effective Time, by virtue
----------------------
of the Merger and without any action on the part of Acquisition Co., PXP or the
holders of any shares of PXP Common Stock:
(a) Common Stock of Acquisition Co. Each share of the Acquisition Co.
------------------------------
Common Stock that is issued and outstanding immediately prior to the Effective
Time will be converted into and become one share of the common stock, par value
$.01 per share, of the Surviving Corporation (the "Surviving Corporation Common
Stock").
A-6
<PAGE>
(b) Common Stock of PXP. Subject to Section 1.6(c), Section 1.6(d), and
-------------------
Section 1.7:
(i) each share of PXP Common Stock that is issued and outstanding
immediately prior to the Effective Time (including all issued and
outstanding shares of PXP Common Stock subject to restrictions under any
PXP incentive compensation plans) will be converted into and become the
right to receive $15.75 in cash (the "Merger Consideration"), and, when so
converted, will automatically be canceled and retired and will cease to
exist; and
(ii) each holder of a certificate representing any such shares of PXP
Common Stock will cease to have any rights with respect to such shares to
the extent such certificate represents such shares, except for the right to
receive the Merger Consideration allocable to the shares formerly
represented by such certificate upon surrender of such certificate in
accordance with Section 1.9.
(c) Cancellation of Treasury Stock. Each share of PXP Common Stock that is
------------------------------
owned immediately prior to the Effective Time by PXP or any Subsidiary of PXP
that constitutes treasury stock in the hands of its holder, will be canceled and
retired and will cease to exist, no consideration will be delivered in exchange
for such share, and each holder of a certificate representing any such shares
will cease to have any rights with respect to such shares.
(d) PXP Common Stock Held by Acquisition Co. Each share of PXP Common
---------------------------------------
Stock that is owned immediately prior to the Effective Time by Acquisition Co.
will be canceled and retired and will cease to exist, no consideration will be
delivered in exchange for such share, and Acquisition Co. will cease to have any
rights with respect to any certificates representing any such shares.
Section 1.7 Dissenting Shares
-----------------
(a) Notwithstanding anything in this Agreement to the contrary, shares of
PXP Common Stock outstanding immediately prior to the Effective Time and held by
a holder who has demanded and perfected such holder's right to appraisal of such
shares in accordance with Section 262 of the DGCL (the "Dissenting Shares") will
not be converted into the right to receive the Merger Consideration, but their
holder will instead be entitled to such rights as are afforded under the DGCL
with respect to Dissenting Shares, unless such holder fails to perfect or
withdraws or otherwise loses its right to appraisal.
(b) If any holder of shares of PXP Common Stock who demands appraisal of
its shares pursuant to the DGCL fails to perfect or withdraws or otherwise loses
such holder's right to appraisal, at the later of the Effective Time or upon the
occurrence of
A-7
<PAGE>
such event, such holder's Dissenting Shares will be converted into and will
represent the right to receive the Merger Consideration, without interest, in
accordance with Section 1.6(b).
(c) PXP will give PMH:
(i) prompt notice of any written demand for appraisal or payment of
the fair value of any shares of PXP Common Stock, withdrawals of such
demands, and any other instruments served pursuant to the DGCL received by
PXP; and
(ii) the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under the DGCL.
(d) PXP will not voluntarily make any payment with respect to any demand
for appraisal and will not settle or offer to settle any such demands, except
with the prior written consent of PMH.
Section 1.8 Stock Options. Immediately prior to the Effective Time, each
-------------
outstanding option to purchase shares of PXP Common Stock granted under any PXP
stock option or compensation plan or arrangement outstanding immediately prior
to the Effective Time ("PXP Stock Option"), whether or not vested or
exercisable:
(i) will become fully vested and exercisable; and
(ii) will be converted into and become the right to receive from the
Surviving Corporation, promptly following the Effective Time, an amount in
cash equal to the amount by which the Merger Consideration exceeds the
exercise price of the PXP Stock Option, and when so converted, will
automatically be cancelled and retired and will cease to exist.
Section 1.9 Exchange of Certificates.
------------------------
(a) Exchange Agent. Prior to the Effective Time, PXP will appoint a bank
--------------
or trust company to act as exchange agent (the "Exchange Agent") for the payment
of the Merger Consideration. As of the Effective Time, PMH will have deposited,
or caused to be deposited, with the Exchange Agent, for the benefit of the
holders of shares of PXP Common Stock, the aggregate amount of cash payable
under Section 1.6(b) in exchange for outstanding shares of PXP Common Stock in
accordance with this Section 1.9 (the "Exchange Fund").
A-8
<PAGE>
(b) Exchange Procedures.
-------------------
(i) Promptly after the Effective Time, the Exchange Agent will mail
to each holder of record of a certificate or certificates, which
represented outstanding shares of PXP Common Stock immediately prior to the
Effective Time, whose shares were converted into the right to receive cash
pursuant to Section 1.6(b):
(1) a letter of transmittal (the "Letter of Transmittal")
specifying that delivery will be effected, and risk of loss and title
to the certificates representing such shares of PXP Common Stock will
pass, only upon delivery of the certificates representing such shares
of PXP Common Stock to the Exchange Agent, which certificates must be
in such form and have such other provisions as the Exchange Agent may
reasonably specify; and
(2) instructions for use in effecting the surrender of the
certificates representing such shares of PXP Common Stock, in exchange
for the Merger Consideration.
(ii) Upon surrender to, and acceptance by, the Exchange Agent of a
certificate or certificates formerly representing shares of PXP Common
Stock, the holder will be entitled to the amount of cash into which the
number of shares of PXP Common Stock formerly represented by such
certificate or certificates surrendered have been converted under this
Agreement.
(iii) The Exchange Agent will accept certificates formerly
representing shares of PXP Common Stock upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect
an orderly exchange of the certificates in accordance with normal exchange
practices.
(iv) After the Effective Time, no further transfers may be made on
the records of PXP or its transfer agent of certificates representing
shares of PXP Common Stock and if such certificates are presented to PXP
for transfer, they will be canceled against delivery of the Merger
Consideration allocable to the shares of PXP Common Stock represented by
such certificate or certificates.
(v) If any Merger Consideration is to be remitted to a name other
than that in which the certificate for the PXP Common Stock surrendered for
exchange is registered, no Merger Consideration may be paid in exchange for
such certificate unless:
(1) the certificate so surrendered is properly endorsed, with
signature guaranteed, or otherwise in proper form for transfer; and
A-7
<PAGE>
(2) the person requesting such exchange pays to PXP, or its
transfer agent, any transfer or other taxes required by reason of the
payment of the Merger Consideration to a name other than that of the
registered holder of the certificate surrendered, or establishes to
the satisfaction of PXP or its transfer agent that such tax has been
paid or is not applicable.
(vi) Until surrendered as contemplated by this Section 1.9 and at any
time after the Effective Time, each certificate for shares of PXP Common
Stock will be deemed to represent only the right to receive upon such
surrender the Merger Consideration allocable to the shares represented by
such certificate as contemplated by Section 1.6(b). No interest will be
paid or will accrue on any amount payable as Merger Consideration.
(c) No Further Ownership Rights in PXP Stock. The Merger Consideration
----------------------------------------
paid upon the surrender for exchange of certificates formerly representing
shares of PXP Common Stock in accordance with this Section 1.9 will be deemed to
have been paid in full satisfaction of all rights pertaining to the shares of
PXP Common Stock formerly represented by such certificates.
(d) Termination of Exchange Fund. The Exchange Agent will deliver to the
----------------------------
Surviving Corporation any portion of the Exchange Fund (including any interest
and other income received by the Exchange Agent in respect of all such funds)
which remains undistributed to the holders of the certificates formerly
representing shares of PXP Common Stock upon expiry of the period of six (6)
months following the Effective Time. Any holders of shares of PXP Common Stock
prior to the Merger who have not complied with this Section 1.9 prior to such
time, may look only to the Surviving Corporation, and then only as general
creditors, for payment of their claim for Merger Consideration to which such
holders may be entitled.
(e) No Liability. No party to this Agreement will be liable to any Person
------------
in respect of any amount from the Exchange Fund delivered to a public official
in accordance with any applicable abandoned property, escheat or similar law.
(f) Lost Certificates. If any certificate or certificates formerly
-----------------
representing shares of PXP Common Stock is lost, stolen or destroyed, the
Exchange Agent will issue the Merger Consideration deliverable in respect of,
and in exchange for, such lost, stolen or destroyed certificate, as determined
in accordance with this Section 1.9, only upon:
(i) the making of an affidavit of such loss, theft or destruction by
the Person claiming such certificate or certificates to be lost, stolen or
destroyed; and
A-10
<PAGE>
(ii) if required by the Surviving Corporation, the posting by such
Person of a bond in such amount as the Surviving Corporation may reasonably
require as indemnity against any claim that may be made against it with
respect to such certificate.
(g) Withholding Rights. The Surviving Corporation and the Exchange Agent
------------------
may deduct and withhold from the consideration otherwise payable under this
Agreement to any holder of shares of PXP Common Stock such amounts as the
Surviving Corporation or the Exchange Agent is required to deduct and withhold
under the United States Internal Revenue Code of 1986, as amended (the "Code"),
or any provision of state, local or foreign tax law with respect to the making
of such payment. Any amounts so withheld by the Surviving Corporation or the
Exchange Agent will be treated as having been paid to the holder of the shares
of PXP Common Stock in respect of which such deduction and withholding was made
for all purposes of this Agreement.
Section 1.10 Proxy Statement and Schedule 13E-3.
----------------------------------
(a) PXP will prepare, in consultation with PMH, the Proxy Statement on
Schedule 14A (the "Proxy Statement") to be distributed to holders of the PXP
Common Stock for the purpose of soliciting proxies for use at the annual or
special meeting of stockholders of PXP at which the adoption of, and the
approval of the transactions contemplated by, this Agreement are sought.
(b) Subject to the fiduciary duties of the PXP Board of Directors and the
Committee, PXP will recommend to its stockholders in the Proxy Statement the
approval of the Merger, this Agreement and the transactions contemplated by this
Agreement. PXP will file the Proxy Statement with the SEC as soon as is
reasonably practicable after the date of this Agreement and will use all
reasonable efforts to respond promptly to comments from the SEC and to cause the
Proxy Statement to be mailed to PXP's stockholders at the earliest practicable
time.
(c) PXP will not mail, amend or supplement the Proxy Statement unless the
Proxy Statement or any amendment or supplement of the Proxy Statement is
satisfactory in content to PMH in the exercise of its reasonable judgment.
(d) As soon as practicable after the date of this Agreement, PMH and PXP
will file with the SEC, and will use their reasonable best efforts to cause any
of their respective affiliates engaging in this transaction to file with the
SEC, a Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3
Transaction Statement") with respect to the Merger.
(e) Each of the Parties agrees to use its reasonable best efforts to
cooperate and to provide the other Party with such information as the other
Party may reasonably
A-11
<PAGE>
request in connection with the preparation of the Proxy Statement and the
Schedule 13E-3 Transaction Statement.
(f) Each Party agrees promptly to supplement, update and correct any
information provided by it for use in the Proxy Statement and the Schedule 13E-3
Transaction Statement if and to the extent that such information is or becomes
incomplete, false or misleading.
Section 1.11 Additional Agreement and Provisions. Upon the terms and
-----------------------------------
subject to the conditions of this Agreement:
(a) each Party agrees to use its reasonable best efforts to take, or cause
to be taken, all additional action and to do, or cause to be done, all
additional things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement;
(b) each Party will cause its proper officers to take all further action
that is necessary or desirable to carry out the purposes of this Agreement or to
vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of either PXP or Acquisition Co. at
any time after the Effective Time; and
(c) each Party agrees to use its reasonable best efforts to challenge any
action brought against any of the Parties seeking a temporary restraining order
or preliminary or permanent injunctive relief which would prohibit, or
materially interfere with, the consummation of the transactions contemplated by
this Agreement.
ARTICLE II.
Representations and Warranties of PXP
PXP hereby represents and warrants to PMH as follows:
Section 2.1 Organization of PXP and its Subsidiaries.
----------------------------------------
(a) PXP and each of its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and has all the requisite corporate power and authority to carry on
its business as now being conducted and to own, lease, use and operate the
properties owned and used by it.
(b) PXP and each of its Subsidiaries is qualified and in good standing to
do business in each jurisdiction in which the nature of its business requires it
to be so qualified, except to the extent the failure to be so qualified has not
had, and would not reasonably be expected to have, a Material Adverse Effect on
PXP.
A-12
<PAGE>
Section 2.2 Capitalization of PXP Ownership.
-------------------------------
(a) The authorized capital stock of PXP consists of (i) 100,000,000 shares
of PXP Common Stock, of which 45,227,931 shares are issued and outstanding and
2,027,918 shares are held in treasury as of the date of this Agreement and (ii)
10,000,000 shares of preferred stock, none of which are outstanding. All of the
issued and outstanding shares of capital stock of PXP are duly authorized,
validly issued, fully paid and non-assessable and free of preemptive rights.
(b) Except for outstanding PXP Stock Options to purchase an aggregate of
no more than 7,418,317 shares of PXP Common Stock and the 6% Convertible
Subordinated Debentures due 2015 of PXP and options therefor which are
convertible into 9,517,774 shares of PXP Common Stock (the "PXP Debentures"),
there are no outstanding options, warrants or other rights of any kind to
acquire (including preemptive rights) any additional shares of capital stock of
PXP or securities convertible into or exchangeable for, or which otherwise
confer on the holder thereof any right to acquire, any such additional shares,
nor is PXP committed to issue any such option, warrant, right or security.
Section 2.3 Subsidiaries of PXP. Schedule 2.3 sets forth the name and
-------------------
jurisdiction of organization of each Subsidiary. All shares of the capital stock
of each Subsidiary that is a corporation have been validly issued and are fully
paid and non-assessable and held beneficially and of record by PXP. Except as
listed on Schedule 2.3A, there are no outstanding options, warrants or other
rights of any kind to acquire (including preemptive rights) any additional
equity interests of any Subsidiary or securities convertible into or
exchangeable for, or which otherwise confer on the holder thereof any right to
acquire, any additional equity interests of any Subsidiary, nor is any
Subsidiary committed to issue any such option, warrant, right or security. Other
than the Subsidiaries referred to in this Section 2.3 and except as listed on
Schedule 2.3B, PXP does not own, directly or indirectly, any equity interest in
any other corporation, joint venture, partnership, limited liability company or
other entity.
Section 2.4 Authorization.
-------------
(a) PXP has all requisite corporate power and authority to enter into this
Agreement and, subject to any necessary approval of the Merger by the
stockholders of PXP, to carry out its obligations under and to consummate the
transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement have been duly authorized by all
requisite corporate action on the part of PXP (other than the approval of this
Agreement and the transactions contemplated by this Agreement by the
stockholders of PXP). The
A-13
<PAGE>
Board of Directors of PXP has unanimously adopted resolutions approving this
Agreement and the Merger, and has determined that the terms of the Merger are
fair to, and in the best interests of, PXP and the Public Stockholders.
(c) PXP has taken all action necessary to exempt the Merger and the other
transactions contemplated by this Agreement with PMH, Acquisition Co. and their
affiliates from the operation of the "Business Combination Statute" contained in
Section 203 of the DGCL.
(d) This Agreement has been duly executed and delivered by PXP and,
assuming the due authorization, execution and delivery of this Agreement by PMH,
constitutes the valid and binding obligation of PXP, enforceable against PXP in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally or by general equitable principles.
(e) Consents.
--------
(i) Assuming that the consents, approvals, qualifications, orders,
authorizations and filings referred to in Section 2.4(e)(ii) have been made
or obtained, the execution, delivery and performance by PXP of this
Agreement will not result in any violation of or be in conflict with, or
result in a breach of, or constitute a default under:
(1) any term or provision of any state or federal law,
ordinance, rule or regulation to which PXP or any of its Subsidiaries
is subject, except for such violations, breaches or defaults that
would not have, together with all such other violations, breaches and
defaults, a Material Adverse Effect on PXP; or
(2) the Certificate of Incorporation or By-Laws of PXP or any of
its Subsidiaries, as amended and in effect on the date of this
Agreement or the Closing Date; or
(3) any Contract or Judgment or other restriction to which PXP
or any of its Subsidiaries is a party or by which PXP or any of its
Subsidiaries is bound, or result in the creation of any Lien upon any
of the properties or assets of PXP or any of its Subsidiaries, except
for such violations, breaches, defaults or Liens that would not have,
together with all such other violations, breaches, defaults and Liens,
a Material Adverse Effect on PXP.
(ii) No consent, approval, qualification, order or authorization of,
or filing with, any Governmental Entity is required in connection with
PXP's valid
A-14
<PAGE>
execution, delivery or performance of this Agreement, or the consummation
of any other transaction contemplated on the part of PXP under this
Agreement, except (1) in connection, or in compliance, with the Securities
Act and the Exchange Act, (2) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which PXP or any of its
Subsidiaries is qualified to do business, (3) such approvals,
qualifications, orders, authorizations, or filings as may be required under
state takeover laws, (4) applicable requirements, if any, of state
securities or "blue sky" laws, and (5) approvals, qualifications, orders,
authorizations, or filings, the failure to obtain which would not have a
Material Adverse Effect on PXP.
Section 2.5 Fairness Opinion and Approval by the Committee.
----------------------------------------------
(a) On or prior to the date of this Agreement, the Committee has (i)
approved the terms of this Agreement and the transactions contemplated by this
Agreement as they related to the Public Stockholders, including without
limitation, the Merger, (ii) determined that the Merger is fair to and in the
best interest of the Public Stockholders, and (iii) recommended that the Board
of Directors of PXP approve this Agreement and such transactions.
(b) The Committee has received an opinion of Salomon Smith Barney Inc. to
the effect that the consideration to be received by the Public Stockholders in
the Merger is fair to the Public Stockholders from a financial point of view.
Section 2.6 Brokers and Finders. Other than Salomon Smith Barney Inc.,
-------------------
neither PXP nor any Subsidiary has employed any broker, finder, advisor or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to a broker's, finder's or similar fee or commission in
connection with or upon the consummation of the transactions contemplated by
this Agreement. PXP will be liable for any such fees due to Salomon Smith
Barney Inc.
Section 2.7 Proxy Statement and other Disclosure Documents.
----------------------------------------------
(a) None of the information to be supplied by PXP for inclusion in the
Proxy Statement and any other document required to be filed by PXP with the SEC
in connection with the transactions contemplated by this Agreement (each, a "PXP
Disclosure Document"), will contain any untrue statement of a material fact or
omit to state any material fact required to be stated in, or necessary in order
to make the statements in, the PXP Disclosure Document, in light of the
circumstances under which they are made, not misleading at the time of the
mailing or filing of the PXP Disclosure Document, or of any amendments or
supplements to the PXP Disclosure Document.
A-15
<PAGE>
(b) Each Disclosure Document will, as of its effective date, comply as to
form in all material respects with all applicable laws, including the Exchange
Act.
Section 2.8 SEC Documents; Financial Statements.
-----------------------------------
(a) Each of PXP and its Subsidiaries has filed all required reports,
schedules, forms, statements and other documents with the SEC since January 1,
1995 (collectively, the "SEC Documents").
(b) As of their respective dates, the SEC Documents complied in all
material respects with all applicable requirements of the Securities Act, the
Exchange Act and the Investment Act. Except to the extent that information
contained in any SEC Document has been revised or superseded by a later filed
SEC Document, none of the SEC Documents contains any untrue statement of a
material fact or omits to state any material fact required to be stated in or
necessary in order to make the statements in the SEC Documents, in light of the
circumstances under which they were made, not misleading.
(c) The financial statements of PXP and its Subsidiaries included in the
SEC Documents (i) comply as to form in all material respects with applicable
accounting requirements and the applicable published rules and regulations of
the SEC, (ii) have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by applicable instructions or regulations of
the SEC relating to the preparation of quarterly reports on Form 10-Q) applied
on a consistent basis during the period involved (except as may be indicated in
the notes to the financial statements), and (iii) fairly present the financial
position of PXP or its Subsidiaries as of their dates and the results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
Section 2.9 Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
the SEC Documents filed and publicly available prior to the date of this
Agreement, since the date of the most recent audited financial statements
included in the filed SEC Documents, each of PXP and its Subsidiaries has
conducted its business only in the ordinary course, and there has not been:
(a) any event, occurrence, development or state of circumstances or facts
which has had, or would have a reasonable probability of having, individually or
in the aggregate, a Material Adverse Effect on PXP;
(b) any incurrence, assumption or guarantee by PXP or any of its
Subsidiaries of any material indebtedness for borrowed money other than (i) in
the ordinary course of business consistent with past practices, (ii)under credit
facilities of PXP or any of its Subsidiaries as in effect as of the date of this
Agreement or (iii) indebtedness of a wholly-
A-16
<PAGE>
owned Subsidiary of PXP to PXP or another wholly-owned Subsidiary of PXP, or of
PXP to a wholly-owned Subsidiary of PXP;
(c) any creation or other incurrence by PXP or any of its Subsidiaries of
any material Lien on any material asset other than in the ordinary course of
business consistent with past practices;
(d) any making of any material loan, advance or capital contributions to
or investment in any Person other than loans, advances, capital contributions or
investments made (i) in the ordinary course of business consistent with past
practices, or (ii) by a wholly-owned Subsidiary of PXP to PXP or another wholly-
owned Subsidiary of PXP, or by PXP to a wholly-owned Subsidiary of PXP; or (e)
except as set forth in Schedule 2.9(h), any (i) grant of any severance or
termination pay to any director or officer of PXP or any president of any of its
material Subsidiaries, (ii) increase in benefits payable to any director or
officer of PXP or any president of any of its material Subsidiaries under any
existing severance or termination pay policies or employment agreements, (iii)
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director or
officer of PXP or any president of any of its material Subsidiaries or (iv)
establishment, adoption or amendment (except as required by applicable law) of
any collective bargaining, bonus, profit sharing, thrift, pension, retirement,
deferred compensation, compensation, stock option, restricted stock or other
benefit plan or arrangement covering any director or officer of PXP or any
president of any of its material Subsidiaries.
Section 2.10 No Undisclosed Material Liabilities. There are no liabilities
-----------------------------------
of PXP or any of its Subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, which would be
required to be reflected, reserved for or disclosed under GAAP in the
consolidated financial statements of PXP, other than:
(a) liabilities or obligations reflected, reserved for or otherwise
provided for in the balance sheet comprising part of the most recent audited
financial statements included in the filed SEC Documents;
(b) liabilities or obligations which would not, individually or in the
aggregate, have a reasonable probability of having a Material Adverse Effect on
PXP;
(c) liabilities or obligations incurred under this Agreement or in
connection with the transactions contemplated hereby; and
A-17
<PAGE>
(d) liabilities or obligations incurred in the ordinary course of business
since the date of the most recent audited financial statements included in the
filed SEC Documents.
Section 2.11 Compliance with Laws and Court Orders. Except as set forth
-------------------------------------
in SEC Documents prior to the date of this Agreement, each of PXP and its
Subsidiaries is and has been in compliance with and, to the knowledge of PXP, is
not under investigation with respect to and has not been threatened to be
charged with or given notice of any violation of, any applicable law, rule
regulation, judgment, injunction, order or decree, except for such matters as
would not, individually or in the aggregate, have a reasonable probability of
having a Material Adverse Effect on PXP.
ARTICLE III.
Representations and Warranties of PMH
PMH hereby represents and warrants to PXP as follows:
Section 3.1 Organization of PMH. PMH is a corporation duly organized,
------------------- ---
validly existing and in good standing under the laws of the State of
Connecticut.
Section 3.2 Organization and Authority of Acquisition Co.. Acquisition
---------------------------------------------
Co. will be a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. Acquisition Co. will be
incorporated solely for the purpose of merging with and into PXP and taking
action incident to the Merger. Except for obligations or liabilities and
activities contemplated by this Agreement, Acquisition Co. will not have
incurred any obligations or liabilities or engaged in any business activities of
any kind prior to the Closing.
Section 3.3 Authorization.
-------------
(a) PMH has all corporate power and authority to enter into this
Agreement, to perform its obligations under this Agreement and to consummate the
transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement have been duly authorized by all
corporate action on the part of PMH.
(c) This Agreement has been duly executed and delivered by PMH and,
assuming the due authorization, execution and delivery of this Agreement by PXP,
constitutes the valid and binding obligation of PMH, enforceable against PMH in
accordance with its terms, except as such enforceability may be limited by
applicable
A-18
<PAGE>
bankruptcy, insolvency, reorganization, or similar laws affecting creditors'
rights generally or by general equitable principles.
(d) Upon the formation of Acquisition Co. and the assignment of this
Agreement to Acquisition Co. in accordance with Section 7.8, assuming the due
authorization, execution and delivery of this Agreement by PXP, this Agreement
will constitute the valid and binding obligation of Acquisition Co., enforceable
against Acquisition Co. in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, or similar laws affecting creditors' rights generally or by
general equitable principles.
(e) Consents.
--------
(i) Assuming that the consents, approvals, qualifications, orders,
authorizations and filings referred to in Section 3.3(e)(ii) have been
made or obtained, the execution, delivery and performance by PMH of this
Agreement will not result in any violation of or be in conflict with, or
result in a breach of, or constitute a default under:
(1) any term or provision of any state or federal law,
ordinance, rule or regulation to which PMH or any of its respective
Subsidiaries is subject and which violation, breach or default would
have, together with all such other violations, breaches and defaults,
a Material Adverse Effect on PMH; or
(2) the Certificate of Incorporation or By-Laws of
PMH and its Subsidiaries, as amended and in effect on the date of this
Agreement or the Closing Date, or any Contract or Judgment or other
restriction to which PMH or any of its Subsidiaries is a party or by
which PMH or any of its Subsidiaries is bound, or result in the
creation of any Lien upon any of the properties or assets of PMH or
any of its Subsidiaries.
(ii) No consent, approval, qualification, order or authorization of,
or filing with, any Governmental Entity is required in connection with the
valid execution, delivery or performance of this Agreement by PMH, or the
consummation of any other transaction contemplated on the part of PMH or
Acquisition Co. under this Agreement, except (1) in connection, or in
compliance, with the Securities Act and the Exchange Act, (2) the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware, (3) such approvals, qualifications, orders, authorizations, or
filings as may be required under state takeover laws, (4) applicable
requirements, if any, of state securities or "blue sky" laws, and (5)
approvals, qualifications, orders, authorizations, or filings, the failure
to obtain which would not have a Material Adverse Effect on PMH.
A-19
<PAGE>
Section 3.4 Brokers and Intermediaries. Other than Morgan Stanley & Co,
--------------------------
Incorporated ("Morgan Stanley"), PMH has not employed any broker, finder,
advisor or intermediary in connection with the transactions contemplated by this
Agreement which would be entitled to a broker's, finder's, or similar fee or
commission in connection with or upon the consummation of the transactions
contemplated by this Agreement. PMH will be liable for any such fees due to
Morgan Stanley.
Section 3.5 PXP Disclosure Document. None of the information to be
-----------------------
supplied by PMH for inclusion in any PXP Disclosure Document will contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in or necessary in order to make the statements in the PXP
Disclosure Document, in light of the circumstances under which they are made,
not misleading at the time of the mailing or filing of the PXP Disclosure
Document and of any amendments or supplements to the PXP Disclosure Document.
Section 3.6 Financial Ability. PMH has the financial ability to cause
-----------------
Acquisition Co. to pay the Merger Consideration and to consummate the other
transactions contemplated by this Agreement.
ARTICLE IV.
Certain Covenants and Agreements
Section 4.1 Announcement. None of PXP, PMH or their respective Affiliates
------------
will issue any press release or otherwise make any public statement with respect
to this Agreement and the transactions contemplated by this Agreement without
the prior consent of the other Party (which consent will not be unreasonably
withheld), except as may be required by applicable law or stock exchange
regulation. PMH and PXP will, to the extent practicable, consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any such press release or other public statement with respect to this
Agreement and the transactions contemplated by this Agreement whether or not
required by law.
Section 4.2 Notification of Certain Matters. PXP will give prompt notice
-------------------------------
to PMH, and PMH will give prompt notice to PXP, of:
(a) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be reasonably likely to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Effective Time; and
(b) any material failure of PXP or of PMH, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement.
A-20
<PAGE>
The delivery of any notice under this Section 4.2 will not limit or otherwise
affect the remedies available under this Agreement to the Party receiving the
notice.
Section 4.3 Directors' And Officers' Indemnification.
----------------------------------------
(a) The Certificate of Incorporation and the By Laws of the Surviving
Corporation will contain the provisions with respect to indemnification and
limitation of liability of directors and officers set forth in PXP's Certificate
of Incorporation and By Laws on the date of this Agreement. These provisions may
not be amended, repealed or otherwise modified for a period of six (6) years
following the Effective Time in any manner that would adversely affect the
rights under the Certificate of Incorporation and By Laws of individuals who on
or prior to the Effective Time were directors or officers of PXP, unless such
modification is required by law.
(b) The Surviving Corporation will maintain in effect for six (6) years
from the Effective Time policies of directors' and officers' liability insurance
containing terms and conditions which are not less advantageous to the insured
than any such policies of PXP currently in effect on the date of this Agreement
(the "PXP Insurance Policies"), with respect to matters occurring prior to the
Effective Time, to the extent available to the Surviving Corporation on
commercially reasonable terms.
Section 4.4 Stockholder Meeting. PXP will call and hold a meeting of the
-------------------
stockholders of PXP for the purpose of approving the adoption and approval of
this Agreement and the transactions contemplated by this Agreement. PMH agrees
to vote all shares of PXP Common Stock owned by it, and to cause Acquisition Co.
to vote all shares of PXP Common Stock owned by Acquisition Co., at the
Stockholders Meeting in favor of the adoption and approval of this Agreement and
the transactions contemplated by this Agreement.
ARTICLE V.
Conditions Precedent
Section 5.1 Conditions to each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligation of each Party to effect the Merger is subject to the
satisfaction on or prior to the Closing Date of each of the following conditions
(any of which may be waived by the Parties in writing, in whole or in part, to
the extent permitted by applicable law):
(a) No Injunction or Proceeding. No preliminary or permanent injunction,
---------------------------
temporary restraining order or other decree of any Governmental Entity and no
action, suit or proceeding by, or before, any Governmental Entity may have been
instituted or threatened that prohibits the consummation of the Merger or
materially challenges the transactions contemplated by this Agreement.
A-21
<PAGE>
(b) Consents. Other than the filing of the Certificate of Merger, all
--------
consents, approvals and authorizations of and filings with Governmental Entities
required for the consummation of the transactions contemplated by this Agreement
must have been obtained or effected or filed.
(c) Approval of Holders of PXP Common Stock. This Agreement and the Merger
---------------------------------------
must have been adopted by the affirmative vote or written consent of a majority
of the outstanding shares of PXP Common Stock.
(d) Opinion of Financial Advisor. The opinion of Salomon Smith Barney Inc.
----------------------------
referred to in Section 2.5 must not have been withdrawn or revoked.
Section 5.2 Conditions to the Obligation of PXP to Effect the Merger. The
--------------------------------------------------------
obligation of PXP to effect the Merger is further subject to the satisfaction or
waiver of each of the following conditions prior to or at the Closing Date:
(a) Representations and Warranties. The representations and warranties of
------------------------------
PMH contained in this Agreement must be true and correct in all material
respects at and as of the Effective Time as though made at and as of the
Effective Time;
(b) Agreements. PMH must have performed and complied in all material
----------
respects with all its undertakings and agreements required by this Agreement to
be performed or complied with by it prior to or at the Closing Date; and
(c) Certificate. PXP must have received a certificate of an executive
-----------
officer of PMH , dated the Closing Date, certifying that the conditions
specified in Section 5.2(a) and Section 5.2(b), as the case may be, have been
fulfilled.
Section 5.3 Conditions to the Obligation of PMH to Cause Acquisition Co.
-----------------------------------------------------------
to Effect the Merger. The obligation of PMH to cause Acquisition Co. to effect
--------------------
the Merger is further subject to the satisfaction or waiver of each of the
following conditions prior to or at the Closing Date:
(a) Representations and Warranties. The representations and warranties of
------------------------------
PXP contained in this Agreement must be true and correct in all material
respects at and as of the Effective Time as though made at and as of the
Effective Time (except, in the case of the representation and warranty contained
in Section 2.9, with respect to events occurring after the date hereof in the
ordinary course of business consistent with past practice or approved in writing
by PMH);
(b) Agreements. PXP must have performed and complied in all material
----------
respects with all of its undertakings and agreements required by this Agreement
to be performed or complied with by it prior to or at the Closing Date;
A-22
<PAGE>
(c) Certificate. PMH must have received a certificate of an executive
-----------
officer of PXP, dated the Closing Date, certifying that the conditions specified
in Section 5.3(a) and Section 5.3(b) have been fulfilled;
(d) Appraisal Rights. The holders of not more than 5% of the issued and
----------------
outstanding shares of PXP Common Stock may have exercised their rights to
dissent from the Merger in accordance with Section 262 of the DGCL and Section
1.7 of this Agreement; and
(e) PXP Benefit Plans. PXP will have no obligation to issue, transfer or
-----------------
sell any shares of its capital stock or other securities of PXP pursuant to any
employee benefit plan or otherwise.
ARTICLE VI.
Termination, Amendment and Waiver
Section 6.1 Termination. This Agreement may be terminated and the Merger
-----------
may be abandoned at any time prior to the Effective Time, whether before or
after the after the approval of the holders of PXP Common Stock referred to in
Section 5.1(c):
(a) by the mutual written consent of PMH and PXP,
(b) by either PMH or PXP, in each case by written notice to the other, if:
(i) the Merger has not been consummated on or prior to December 31,
2000; provided that the right to terminate this Agreement under this
--------
Section 6.1(b)(i) will not be available to any Party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Merger to occur on or prior to such date;
or
(ii) the Committee or the PXP Board of Directors withdraws, or
modifies or changes in any manner adverse to PMH, its approval of this
Agreement or the Merger, or its recommendation that the Public Stockholders
of PXP adopt this Agreement, after having concluded in good faith after
consultation with independent legal counsel that there is a reasonable
probability that the failure to take such action would result in a
violation of its fiduciary obligations under applicable law.
Section 6.2 Effect of Termination. If this Agreement is terminated as
---------------------
provided in Section 6.1, this Agreement will become null and void, and there
will be no liability on the part of PMH, or PXP or their Affiliates (except that
the provisions of Section 7.4 will survive any termination of this Agreement);
provided that nothing in this Agreement will
--------
A-23
<PAGE>
relieve any party from any liability or obligation with respect to any breach of
this Agreement prior to such termination.
Section 6.3 Amendment. This Agreement may be amended only by an agreement
---------
in writing executed by both Parties.
Section 6.4 Waiver. At any time prior to the Effective Time. whether
------
before or after the approval of the holders of PXP Common Stock referred to in
Section 5.1(c), either Party may:
(a) extend the time for the performance of any of the obligations or other
acts of the other Party; or
(b) waive compliance with any of the agreements of the other Party or
fulfillment of any conditions to its own obligations under this Agreement.
Any agreement on the part of a Party to any such extension or waiver will be
valid only if set forth in an instrument in writing signed on behalf of such
Party by a duly authorized officer.
ARTICLE VII.
Miscellaneous
Section 7.1 Definitions. In this Agreement, unless the context otherwise
-----------
provides, the following terms have the following meanings:
"Acquisition Co." has the meaning specified in Recital B.
"Acquisition Co. Common Stock" has the meaning specified in
Section 1.1.
"Affiliates" means, with respect to any Person, (i) any other Person
that directly or indirectly Controls, is Controlled by or is under common
Control with, such Person, or (ii) any director, officer, partner, member of
management or employee of such Person, provided that none of PMH and its
Subsidiaries will be deemed to be Affiliates of PXP and its Subsidiaries.
"Certificate of Merger" has the meaning specified in Section 1.3.
"Closing" has the meaning specified in Section 1.4.
"Closing Date" has the meaning specified in Section 1.4.
"Code" has the meaning specified in Section 1.9(g).
A-24
<PAGE>
"Committee" has the meaning specified in the Recitals.
"Contract" means any contract, license, lease, grant of immunity from
suit in relation to intellectual property rights, commitment, arrangement,
purchase or sale order, undertaking, understanding or other agreement, whether
written or oral.
"Control" means the power to direct or cause the direction of
management or policies of a Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
"DGCL" has the meaning specified in Recital B.
"Dissenting Shares" has the meaning specified in Section 1.7.
"Effective Time" has the meaning specified in Section 1.3.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated under such Act from time to
time.
"Exchange Agent" has the meaning specified in Section 1.9(a).
"Exchange Fund" has the meaning specified in Section 1.9(a).
"GAAP" means accounting principles and practices generally accepted
from time to time in the United States.
"Government Entity" means a court, legislature or other agency or
instrumentality or political subdivision of federal, state or local government.
"Investment Act" means the Investment Company Act of 1940, as amended,
and the Investment Advisors Act of 1940, as amended, and the rules and
regulations of the SEC promulgated under such Acts from time to time.
"Judgment" means any judgment, order, award, writ, injunction or decree
of any Governmental Entity or arbitrator.
"Letter of Transmittal" has the meaning specified in Section 1.9(b)(i).
"Lien" means any mortgage, pledge, lien, charge, restriction, claim or
encumbrance of any nature whatsoever, including but not limited to, any
restriction on use, transfer, voting, receipt of income or other exercise of any
attributes of ownership.
"Material Adverse Effect" means, in relation to a Party, any effect,
condition, circumstance or development preventing or significantly impairing the
ability of that Party to consummate the transactions contemplated by this
Agreement or materially
A-25
<PAGE>
delaying the consummation of any of the transactions contemplated by this
Agreement, including, in relation to PXP only, any effect, condition,
circumstance or development having a material adverse effect on the business,
assets, liabilities, results of operations, or financial condition of PXP and
its Subsidiaries, taken as a whole.
"Merger" has the meaning specified in Recital B.
"Merger Consideration" has the meaning specified in Section 1.6(b)(i).
"Morgan Stanley" has the meaning specified in Section 3.4.
"Party" means each of PMH and PXP, and any other Person that may become
a party to this Agreement from time to time.
"Person" means any individual, corporation, joint venture, partnership,
limited liability company, trust, unincorporated organization, Governmental
Entity or other entity.
"Proxy Statement" has the meaning specified in Section 1.10(a).
"Public Stockholders" means all of the holders of shares of PXP Common
Stock, excluding PMH and members of management of PXP.
"PXP Common Stock" has the meaning specified in Recital A.
"PXP Debentures" has the meaning specified in Section 2.2(b).
"PXP Disclosure Document" has the meaning specified in Section 2.7(a).
"PXP Insurance Policies" has the meaning specified in Section 4.3(b).
"PXP Stock Option" has the meaning specified in Section 1.7(d).
"Schedule 13E-3 Transaction Statement" has the meaning specified in
Section 1.10(d).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated under such Act from time to time.
"SEC" means the Securities and Exchange Commission, and any successor
or replacement entity.
"SEC Documents" has the meaning specified in Section 2.8.
A-26
<PAGE>
"Subsidiary" means any Person of which PXP, directly or indirectly,
owns or controls capital stock (or other equity interests) representing more
than 50% of the general voting power of such entity under ordinary
circumstances.
"Surviving Corporation" has the meaning specified in Section 1.2.
"Surviving Corporation Common Stock" has the meaning specified in
Section 1.6(a).
Section 7.2 Performance Guarantee by PHL. PHL hereby unconditionally and
----------------------------
irrevocably guarantees for the benefit of PXP, the punctual and complete
performance and discharge by PMH, and following an assignment by PMH of all of
its rights, interests and obligations under this Agreement to Acquisition Co.
under Section 7.8, Acquisition Co., of all their financial obligations and
liabilities under this Agreement.
Section 7.3 Non-survival of Representations and Warranties. None of the
----------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
under this Agreement will survive the Effective Time, and none of PMH, PXP,
their respective Affiliates and any of the officers, directors, employees or
stockholders of any of the foregoing, will have any liability whatsoever with
respect to any such representation or warranty after such time. This Section 7.3
will not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 7.4 Expenses. Except as contemplated by this Agreement, all costs
--------
and expenses incurred in connection with the Agreement and the consummation of
the transactions contemplated by this Agreement will be the obligation of the
Party incurring such expenses.
Section 7.5 Applicable Law. This Agreement will be governed by the laws of
--------------
the State of Delaware.
Section 7.6 Notices. All notices and other communications under this
-------
Agreement must be in writing and will be deemed to have been duly given or made
as follows: (a) if sent by registered or certified mail in the United States,
return receipt requested. upon receipt; (b) if sent by reputable overnight air
courier, two business days after being so sent; (c) if sent by telecopy
transmission, with a copy mailed on the same day in the manner provided in
clause (a) or (b) above, when transmitted and receipt is confirmed by telephone;
or (d) if otherwise actually personally delivered, when delivered, and shall be
sent or delivered as follows:
If to PXP, to:
Phoenix Investment Partners, Ltd.
One American Row
A-27
<PAGE>
Hartford, Connecticut 06102
Attention: Nancy Engberg
Fax: 860-403-7600
Tel: 860-403-5973
with a copy to:
Lord Bissell & Brook
115 South La Salle Street
Chicago, Illinois 60603
Attention: John S. Chapman
Fax: 312-443-0336
Tel: 312-443-0700
If to PMH or Acquisition Co., to:
PM Holdings, Inc.
One American Row
Hartford, Connecticut 06115
Attention: Tracy L. Rich
Fax: 860-403-7203
Tel: 860-403-5566
with a copy to:
Debevoise & Plimpton.
875 Third Avenue
New York, NY 10022
Attention: Gregory V. Gooding
Fax: 212-909-6836
Tel: 212-909-6870
If to PHL, to:
Phoenix Home Life Mutual Insurance Company
One American Row
Hartford, Connecticut 06115
Attention: Tracy L. Rich
Fax: 860-403-7203
Tel: 860-403-5566
with a copy to:
A-28
<PAGE>
Debevoise & Plimpton.
875 Third Avenue
New York, NY 10022
Attention: Gregory V. Gooding
Fax: 212-909-6836
Tel: 212-909-6870
Such names and addresses may be changed by such notice.
Section 7.7 Entire Agreement. This Agreement (including the documents and
----------------
instruments referred to in this Agreement) contains the entire understanding of
the Parties with respect to the subject matter hereof, and supersedes and
cancels all prior agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, respecting such subject matter.
Section 7.8 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations under this Agreement may be assigned by either Party
(whether by operation of law or otherwise) without the prior written consent of
the other Party, provided that PMH may assign all of its rights, interests and
obligations under this Agreement to Acquisition Co. following the formation
thereof (in which event PMH will cause Acquisition Co. to comply with all of its
obligations hereunder).
Section 7.9 Headings References. The article, section and paragraph
-------------------
headings contained in this Agreement are for reference purposes only and will
not affect in any way the meaning or interpretation of this Agreement.
Section 7.10 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed to be an original but all of which
will be considered one and the same agreement.
Section 7.11 No Third Party Beneficiaries. Except as provided in
----------------------------
Section 1.9 and Section 4.3, nothing in this Agreement, express or implied, is
intended to confer upon any Person not a party to this Agreement any rights or
remedies under or by reason of this Agreement.
Section 7.12 Severability; Enforcement. Any term or provision of this
-------------------------
Agreement that is invalid or unenforceable in any jurisdiction will, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or unenforceability
of any of the terms or provisions of this Agreement in any other jurisdiction.
If any provision of this Agreement is so broad as to be unenforceable, the
provisions will be interpreted to be only so broad as is enforceable.
[remainder of this page left intentionally blank]
A-29
<PAGE>
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first above written.
PHOENIX INVESTMENT PARTNERS, LTD.
By:____________________________
Name:
Title:
PM HOLDINGS, INC.
By ___________________________
Name:
Title:
With respect to Section 7.2 and
Section 7.8 only:
PHOENIX HOME LIFE MUTUAL
INSURANCE COMPANY
By:____________________________
Name:
Title:
A-30
<PAGE>
Appendix B
[Salomon Smith Barney letterhead]
September 10, 2000
Independent Directors Committee
of the Board of Directors
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, CT 06115
Dear Members of the Independent Directors Committee:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the holders of common stock, par
value $0.01 per share (the "Common Stock"), of Phoenix Investment Partners, Ltd.
("PXP"), other than Phoenix Home Life Mutual Insurance Company ("PHL") and its
affiliates, (such holders, the "Public Shareholders") of the Merger
Consideration (as defined below) contemplated by the Agreement and Plan of
Merger (the "Merger Agreement") to be entered into between PM Holdings, Inc.
("PMH"), a wholly-owned subsidiary of PHL, and PXP in connection with the
proposed merger (the "Merger") of a newly-formed, wholly-owned subsidiary of PMH
with and into PXP. Pursuant to the Merger Agreement, each share of Common Stock
issued and outstanding immediately prior to the effective time of the Merger
(other than shares cancelled in accordance with Sections 1.6(c) and (d) of the
Merger Agreement, and other than shares of Common Stock in respect of which
dissenters' rights have been perfected) will be converted into the right to
receive $15.75 in cash (the "Merger Consideration").
In connection with rendering our opinion, we have, among other
things: (i) reviewed a draft of the Merger Agreement dated September 7, 2000 in
the form provided to us, and have assumed that the final form of such agreement
will not vary in any respect that is material to our analysis; (ii) reviewed
certain publicly available business and financial information that we deemed
relevant relating to PXP and the industry in which it operates; (iii) reviewed
and analyzed certain financial projections and other non-public financial and
operating data concerning the business and operations of PXP that were provided
to or reviewed for us by the management of PXP; (iv) reviewed certain publicly
available business and financial information with respect to certain other
companies that we believed to be relevant or comparable in certain respects to
PXP, and the trading markets for such other companies' securities; (v) reviewed
and analyzed certain publicly available and other information concerning the
trading of, and the trading market for, the Common Stock; (vi) reviewed the
financial terms of certain recent business combinations and acquisition
transactions we deem reasonably comparable to the Merger and otherwise relevant
to our inquiry; and (vii) considered such other information, financial studies,
analyses, investigations and financial, economic, market and trading criteria as
we deemed relevant to our inquiry. We have also discussed with members of PXP's
senior management and certain officers and employees of PXP the foregoing,
including
B-1
<PAGE>
the past and current business operations, financial condition and prospects of
PXP, as well as other matters we believed relevant to our inquiry.
In our review and analysis and in arriving at our opinion, we
have assumed and relied upon, without assuming any responsibility for
verification, the accuracy and completeness of all of the financial and other
information provided to, discussed with, or reviewed by or for us, or publicly
available. With respect to PXP's financial projections provided to, discussed
with or reviewed for us by the management of PXP, we have been advised by
management of PXP, and have assumed, that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments on the
part of management of PXP, as to the future financial performance of PXP. We
express no view as to such projections or information or the assumptions on
which they are based. We have not assumed any responsibility for making or
obtaining any independent evaluations or appraisals of any of the assets or
liabilities of PXP, nor for conducting a physical inspection of the properties
and facilities of PXP, and we have not been furnished with any such evaluation
or appraisal. Our opinion necessarily is based on market, economic and other
conditions as they exist and can be evaluated on the date hereof, and we assume
no responsibility to update or revise our opinion based upon circumstances or
events occurring after the date hereof.
In connection with the preparation of this opinion, we have not
been authorized by PXP to solicit, nor have we solicited, third-party
indications of interest for the acquisition of all or any part of PXP. We note
that PHL has stated in its initial offer letter of July 24, 2000 that PHL is not
interested in selling its interest in PXP.
As you are aware, we have acted as the financial advisor to the
Independent Directors Committee of the Board of Directors of PXP in connection
with the Merger and will receive a fee for our services, a portion of which will
be received in connection with the delivery of this opinion and a portion of
which will be received upon the consummation of the Merger. In addition, PXP has
agreed to indemnify us for certain liabilities arising out of our engagement.
We, in the ordinary course of business, may have from time to time provided, and
in the future may continue to provide, investment banking, financial advisory
and other related services to PXP, PHL and/or their respective affiliates, as
the case may be, for which we have or will receive fees. In the ordinary course
of business, we or our affiliates may hold or actively trade in the debt and
equity securities of PXP, PHL and/or their respective affiliates, as the case
may be, for our own accounts and for the accounts of our customers and,
accordingly, may at any time hold a long or short position in such securities.
In addition, we and our affiliates (including Citigroup Inc. and its affiliates)
may maintain business relationships with PXP, PHL and/or their respective
affiliates.
This opinion is for the use and benefit of the Independent
Directors Committee of the Board of Directors of PXP and the Board of Directors
of PXP. Our opinion does not address PXP's underlying business decision to
effect the Merger or constitute a recommendation to any holder of Common Stock
as to how such holder should vote with respect to the Merger.
B-2
<PAGE>
Based upon and subject to the foregoing, we are of the opinion
that, as of the date hereof, the Merger Consideration is fair, from a financial
point of view, to the Public Shareholders.
Very truly yours,
SALOMON SMITH BARNEY INC.
B-3
<PAGE>
APPENDIX C
Delaware General Corporation Law, Section 262. Appraisal rights.
(a) Any stockholder of a corporation of this State who holds shares of stock on
the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to (S) 228 of this
title shall be entitled to an appraisal by the Court of Chancery of the fair
value of the stockholder's shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of
stock of a constituent corporation in a merger or consolidation to be effected
pursuant to (S) 251 (other than a merger effected pursuant to (S) 251(g) of this
title), (S) 252, (S) 254, (S) 257, (S) 258, (S) 263 or (S) 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of (S) 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to (S)(S) 251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in respect
thereof) or depository receipts at
C-1
<PAGE>
the effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this paragraph;
or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts described in
the foregoing subparagraphs a., b., and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S) 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsections (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of
such stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such stockholder's shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or
C-2
<PAGE>
(2) If the merger or consolidation was approved pursuant to (S) 228 or (S)
253 of this title, each constituent corporation, either before the effective
date of the merger or consolidation or within ten days thereafter, shall notify
each of the holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval of the merger
or consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section; provided that, if the notice is
given on or after the effective date of the merger or consolidation, such notice
shall be given by the surviving or resulting corporation to all such holders of
any class or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective date
of the merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation the appraisal of
such holder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such notice
did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a second
notice before the effective date of the merger or consolidation notifying each
of the holders of any class or series of stock of such constituent corporation
that are entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send such a
second notice to all such holders on or within 10 days after such effective
date; provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be sent
to each stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer agent of
the corporation that is required to give either notice that such notice has been
given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such
C-3
<PAGE>
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders
who have complied with this section and who have become entitled to appraisal
rights. The Court may require the stockholders who have demanded an appraisal
for their shares and who hold stock represented by certificates to submit their
certificates of stock to the Register in Chancery for notation thereon of the
pendency of the appraisal proceedings; and if any stockholder fails to comply
with such direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be
C-4
<PAGE>
simple or compound, as the Court may direct. Payment shall be so made to each
such stockholder, in the case of holders of uncertificated stock forthwith, and
the case of holders of shares represented by certificates upon the surrender to
the corporation of the certificates representing such stock. The Court's decree
may be enforced as other decrees in the Court of Chancery may be enforced,
whether such surviving or resulting corporation be a corporation of this State
or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon application
of a stockholder, the Court may order all or a portion of the expenses incurred
by any stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorney's fees and the fees and expenses of
experts, to be charged pro rata against the value of all the shares entitled to
an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the shares of
such objecting stockholders would have been converted had they assented to the
merger or consolidation shall have the status of authorized and unissued shares
of the surviving or resulting corporation.
C-5
