Allied Conduct of Business. Pending the Merger. Allied covenants and agrees as to itself and the Allied Subsidiaries that, at all times up to and including the Effective Time, unless Nationwide shall otherwise consent in writing (Nationwide agreeing that it will use its best efforts to respond to any request received from Allied arising under this Article VI within 10 Business Days, or sooner as circumstances may require, after receipt of such request), or as otherwise expressly permitted or contemplated by this Agreement: (a) Subject to any applicable regulatory requirements, Allied shall, and shall cause each Allied Subsidiary to, conduct its Business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1997 and in a manner which is not inconsistent with the consummation of the transactions contemplated hereby, and Allied and each Allied Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with policyholders, insurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it to the end that its goodwill and ongoing Business shall not be impaired in any material respect; (b) Subject to any applicable regulatory requirements, Allied shall not, and shall not permit any Allied Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and Allied agrees that it will notify Nationwide and provide Nationwide with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of Allied or of any Allied Subsidiary and transactions involving 57 62 derivative securities), whether involving a purchase or sale, that it or any Allied Subsidiary is seriously considering;
Appears in 1 contract
Allied Conduct of Business. Pending the Merger. Allied --------------------------------------------- covenants and agrees as to itself and the Allied Subsidiaries that, at all times up to and including the Effective Time, unless Nationwide shall otherwise consent in writing (Nationwide agreeing that it will use its best efforts to respond to any request received from Allied arising under this Article VI within 10 Business Days, or sooner as circumstances may require, after receipt of such request), or as otherwise expressly permitted or contemplated by this Agreement:
(a) Subject to any applicable regulatory requirements, Allied shall, and shall cause each Allied Subsidiary to, conduct its Business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1997 and in a manner which is not inconsistent with the consummation of the transactions contemplated hereby, and Allied and each Allied Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with policyholders, insurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it to the end that its goodwill and ongoing Business shall not be impaired in any material respect;
(b) Subject to any applicable regulatory requirements, Allied shall not, and shall not permit any Allied Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and Allied agrees that it will notify Nationwide and provide Nationwide with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of Allied or of any Allied Subsidiary and transactions involving 57 62 derivative securities), whether involving a purchase or sale, that it or any Allied Subsidiary is seriously considering;
(c) Allied shall not, and shall not permit any Allied Insurer to, make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Law, GAAP or SAP;
(d) Allied shall not, and shall not permit any Allied Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $1,000,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for Allied and the Allied Subsidiaries in excess of $10,000,000 for any such indebtedness having a maturity of 90 days or less or $1,000,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, (v) prior to notifying Nationwide, enter into any partnership, joint venture or profit sharing Contract, (vi) enter into any Contract limiting the ability of Allied or of any Allied Subsidiary to engage in any Business, to compete with any Person, to do business with any Person or in any location or to employ any Person or limiting the ability of any Person to compete with such party or any of the Allied Subsidiaries, (vii) enter into any Contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) incur any material deterioration in its ability to maintain, access and update policyholder records which deterioration is not reasonably reparable, (ix) enter into any Contract that could materially and adversely affect the consummation of the transactions contemplated hereby, or (x) modify any Contract with respect to the subject of any of the foregoing clauses;
(e) Allied shall not permit any Allied Subsidiary to issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in any Allied Subsidiary, or otherwise take any actions that would alter the information set forth in the Allied Disclosure Schedule other than in the ordinary course of business consistent with existing agreements and arrangements;
(f) Except (x) as set forth in the Allied Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect, applicable Law or as envisioned in the Statement of Operating Principles, Allied shall not, and shall not permit any Allied Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit Contract, plan or policy, (ii) enter into or materially amend any severance Contract, (iii) increase in any manner the compensation of, or enter into any Contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect and except for annual employee compensation increases made in the ordinary course of business consistent with past practices; provided that in no event shall any such individual increase in annual compensation exceed $400,000 per year, (iv) increase by more than 0.5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of the Allied Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, Allied shall not, and shall not permit any Allied Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $500,000 or which in the aggregate for Allied and the Allied Subsidiaries taken as a whole exceed $2,500,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing Contracts to which Allied or any Allied Subsidiary is a party, which Contracts are set forth in the Allied Disclosure Schedule;
(h) Other than in the ordinary course of business consistent with past practice or in connection with the redemption of outstanding guaranteed investment contracts in the exercise of Allied's reasonable judgment, Allied shall not, and shall not permit any Allied Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any Contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) Allied shall not, and shall not permit any Allied Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of Allied or of Allied and the Allied Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens and Liens not individually in excess of $500,000 and not aggregating in excess of $2,000,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any Contract relating thereto which is material to the financial condition of Allied or of Allied and the Allied Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Allied Disclosure Schedule attached hereto; and Allied shall furnish to Nationwide a monthly report, in detail reasonably acceptable to Nationwide, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of Allied or any Allied Subsidiary which took place since the last such report;
(j) Allied agrees that it shall not, nor shall it permit any Allied Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither Allied nor any Allied Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Nationwide, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $10,000,000 or more or (ii) an adverse impact on the surplus of Allied or of an Allied Subsidiary in an amount of $10,000,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, or as required by applicable regulations, Allied shall not, and shall not permit any Allied Subsidiary to, enter into any material Contract or amend or waive any material provision of any material Contract which would involve the payment by Allied or any Allied Subsidiary of $500,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, Allied shall not, and shall not permit any Allied Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for Allied and the Allied Subsidiaries in excess of $1,000,000;
(m) Allied shall not, and shall not permit any Allied Subsidiary to, purchase or otherwise acquire, except pursuant to a Contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $5,000,000 per transaction or $5,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC Class 4, 5 or 6, non- publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $5,000,000 per transaction or $5,000,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) Allied shall not, and shall not permit any Allied Subsidiary to, enter into any new, or materially amend any existing, reinsurance Contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) Allied shall, and shall cause each Allied Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available;
(p) Allied shall deliver to Nationwide as promptly as practicable after preparation thereof, but in no event later than the date of filing with respect to unaudited or audited, as the case may be, SAP Statements for each Allied Insurer filed by or on behalf of such Allied Insurer after the date hereof;
Appears in 1 contract
Samples: Merger Agreement (Allied Group Inc)
Allied Conduct of Business. Pending the Merger. Allied covenants and agrees as to itself and From the Allied Subsidiaries that, at all times up to and including date hereof until the Effective Time, unless Nationwide shall otherwise consent agree in writing (Nationwide agreeing that it will use its best efforts to respond to any request received from Allied arising under this Article VI within 10 Business Dayswriting, or sooner except as circumstances may require, after receipt of such request), set forth in the Allied Disclosure Letter or as otherwise expressly permitted or contemplated by this Agreement:
(a) Subject to any applicable regulatory requirements, Allied shall, and the Allied Subsidiaries shall cause each Allied Subsidiary to, conduct its Business only their respective businesses in the ordinary course consistent with past practice and in substantially the same manner as heretofore conducted since December 31, 1997 and in a manner which is not inconsistent with the consummation of the transactions contemplated hereby, and Allied and each Allied Subsidiary shall use all reasonable efforts to preserve intact its present their business organization organizations and preserve its regular services to, and maintain its relationships with third parties (including but not limited to their respective relationships with policyholders, insurersinsureds, agents, sales and distribution organizations, underwriters, brokers and investment customers) and to keep available the services of their present officers and key employees, brokers, suppliers and all others having business dealings with it subject to the end that terms of this Agreement. Except as set forth in the Allied Disclosure Letter or as otherwise provided in this Agreement, from the date hereof until the Effective Time, without the prior written consent of Nationwide:
(i) Allied shall not adopt or propose any change in its goodwill Restated Articles of Incorporation or Bylaws;
(ii) Allied shall not declare, set aside or pay any dividend or other distribution with respect to any shares of capital stock of Allied (except for regular quarterly dividends payable in an amount no greater than $0.14 per share on the Common Shares and ongoing Business the regular quarterly dividends per share on the Preferred Shares), or split, combine or reclassify any of Allied's capital stock, and Allied and the Allied Subsidiaries shall not repurchase, redeem or otherwise acquire any shares of capital stock or other securities of, or other ownership interests in, Allied;
(iii) Allied shall not, and shall not permit any Allied Subsidiary to, merge or consolidate with any other person or (except in the ordinary course of business) acquire a material amount of assets of any other person;
(iv) Allied shall not, and shall not permit any Allied Subsidiary to, sell, lease, license or otherwise surrender, relinquish or dispose of (i) any material facility owned or leased by Allied or any Allied Subsidiary or (ii) any assets or property which are material to Allied and the Allied Subsidiaries taken as a whole, except pursuant to existing contracts or commitments listed in Section 6.1(iv) of the Allied Disclosure Letter (the terms of which have been disclosed to Nationwide prior to the date hereof), or in the ordinary course of business consistent with past practice;
(v) Allied shall not, and shall not permit any Allied Subsidiary to, settle any material audit, make or change any material Tax election or file materially amended Tax Returns;
(vi) Allied and the Allied Subsidiaries shall not issue any capital stock or other securities or enter into any amendment of any material term of any outstanding security, and Allied and the Allied Subsidiaries shall not incur any material indebtedness except in the ordinary course of business pursuant to existing credit facilities or arrangements, amend or otherwise increase, accelerate the payment or vesting of the amounts payable or to become payable under or fail to make any required contribution to, any Benefit Plan (as hereinafter defined) or materially increase any non-salary benefits payable to any employee or former employee, except in the ordinary course of business consistent with past practice or as otherwise permitted by this Agreement;
(vii) Allied shall not, and shall not permit any Allied Subsidiary to, grant any increase in the compensation or benefits of directors, officers, employees, consultants or agents of Allied or any Allied Subsidiary other than increases in the ordinary course of business consistent with past practice;
(viii) Allied shall not, and shall not permit any Allied Subsidiary to, enter into or amend any employment agreement or other employment arrangement with any employee of Allied or any Allied Subsidiary, except in the ordinary course of business consistent with past practices (which past practices shall not be impaired deemed to include actions taken in any material respectconnection with the Merger);
(bix) Subject Allied shall not change any method of accounting or accounting practice by Allied or any Allied Subsidiary, except for any such required change in GAAP or SAP;
(x) Allied shall not permit any Allied Insurer to conduct transactions in Allied Investments except in compliance with the investment policies of such Allied Insurer in effect on the date hereof and all applicable insurance laws and regulations;
(xi) Allied shall not, and shall not permit any Allied Subsidiary to, enter into any agreement to purchase, or to lease for a term in excess of one year, any real property, provided that Allied, or any Allied Subsidiary, (i) may as a tenant, or a landlord, renew any existing lease for a term not to exceed eighteen months and (ii) nothing herein shall prevent the Allied, in its capacity as a landlord, from renewing any lease pursuant to an option granted prior to the date hereof;
(xii) amend any agreement with Allied Mutual, Allied Life or any of their affiliates;
(xiii) Allied shall not, and shall not permit any Allied Subsidiary to, agree or commit to do any of the foregoing;
(xiv) except to the extent necessary to comply with the requirements of applicable regulatory requirementslaws and regulations, Allied shall not, and shall not permit any Allied Subsidiary to, make (i) take, or propose agree or commit to take, any action that would make any representation and warranty of Allied hereunder inaccurate in any material respect at, or as of any time prior to, the Effective Time, (ii) omit, or agree or commit to omit, to take any action necessary to prevent any such representation or warranty from being inaccurate in any material respect at any such time, provided however, that Allied shall be permitted to take or omit to take such action which (without any uncertainty) can be cured, and in fact is cured, at or prior to the Effective Time or (iii) take, or agree or commit to take, any action that would result in, or is reasonably likely to result in, any of the conditions of the Merger set forth in Article VIII not being satisfied; and
(xv) none of the Allied Insurers shall make any material change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices claims management or policies in any material respect; and Allied agrees that it will notify Nationwide and provide Nationwide with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of Allied or of any Allied Subsidiary and transactions involving 57 62 derivative securities), whether involving a purchase or sale, that it or any Allied Subsidiary is seriously considering;reserving practices.
Appears in 1 contract
Allied Conduct of Business. Pending the Merger. Allied --------------------------------------------- covenants and agrees as to itself and the Allied Subsidiaries that, at all times up to and including the Effective Time, unless Nationwide shall otherwise consent in writing which consent shall not be unreasonably withheld (Nationwide agreeing that it will use its best efforts to respond to any request received from Allied arising under this Article VI within 10 2 Business Days, or sooner as circumstances may require, after receipt of such request), or as otherwise expressly permitted or contemplated by this AgreementAgreement or as set forth on the Allied Disclosure Schedule:
(a) Subject to any applicable regulatory requirements, Allied shall, and shall cause each Allied Subsidiary to, conduct its Business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1997 and in a manner which is not inconsistent with the consummation of the transactions contemplated hereby1997, and Allied and each Allied Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with with, policyholders, insurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it to the end that its goodwill and ongoing Business shall not be impaired in any material respectrespect at the Effective Time;
(b) Subject to any applicable regulatory requirementsExcept as contemplated by this Agreement, Allied shall not, and shall not permit any Allied Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and Allied agrees that it will notify Nationwide and provide Nationwide with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of Allied or of any Allied Subsidiary and transactions involving 57 62 derivative securities), whether involving a purchase or sale, that it or any Allied Subsidiary is seriously considering;
(c) Allied shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Law, GAAP or SAP;
(d) Allied shall not, and shall not permit any Allied Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $1,000,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for Allied and the Allied Subsidiaries in excess of $10,000,000 for any such indebtedness having a maturity of 90 days or less or $1,000,000 for any such indebtedness having a maturity of more than 90 days, (iii) agree to any Merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, (iv) prior to notifying Nationwide, enter into any material partnership, joint venture or profit sharing Contract, other than as envisioned by the Statement of Operating Principles, (v) enter into any Contract limiting the ability of Allied or of any Allied Subsidiary to engage in any Business, to compete with any Person, to do business with any Person or in any location or to employ any Person or limiting the ability of any Person to compete with such party or any of its Subsidiaries, (vi) enter into any Contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (vii) enter into any Contract that could materially and adversely affect the consummation of the transactions contemplated hereby, (viii) violate any of its covenants under the Pooling Agreement, or (ix) modify any Contract with respect to the subject of any of the foregoing clauses;
(e) Allied shall not permit any Allied Subsidiary to issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in any Allied Subsidiary;
(f) Except (x) as set forth in the Allied Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect, applicable Law or as envisioned in the Statement of Operating Principles, Allied shall not, and shall not permit any Allied Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit Contract, plan or policy, (ii) enter into or materially amend any severance Contract, (iii) increase in any manner the compensation of, or enter into any Contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $400,000 per year, (iv) increase by more than 10% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person; provided that Allied may amend the terms of the Rabbi Trust to provide for specified investment guidelines with respect to the assets of the Rabbi Trust;
(g) Other than in the ordinary course of business consistent with past practice, Allied shall not, and shall not permit any Allied Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $1,000,000 or which in the aggregate for Allied and the Allied Subsidiaries taken as a whole exceed $2,500,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing Contracts to which Allied or any Allied Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice or in connection with the redemption of outstanding guaranteed investment contracts in the exercise of Allied's reasonable judgment, Allied shall not, and shall not permit any Allied Subsidiary to, waive any rights with a value in excess of $500,000 or any other rights which are material to any Contract or make any payment, direct or indirect, of any Liability in excess of $500,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) Allied shall not, and shall not permit any Allied Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of Allied or of Allied and the Allied Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens and Liens not individually in excess of $500,000 and not aggregating in excess of $2,000,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any Contract relating thereto which is material to the financial condition of Allied or of Allied and the Allied Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Allied Disclosure Schedule attached hereto; and Allied shall furnish to Nationwide a monthly report, in detail reasonably acceptable to Nationwide, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of Allied or any Allied Subsidiary which took place since the last such report;
(j) Allied agrees that it shall not, nor shall it permit any Allied Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither Allied nor any Allied Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Nationwide, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $10,000,000 or more or (ii) an adverse impact on the surplus of Allied or of an Allied Subsidiary in an amount of $10,000,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, Allied shall not, and shall not permit any Allied Subsidiary to, enter into any material Contract or amend or waive any material provision of any material Contract which would involve the payment by Allied or any Allied Subsidiary of $1,000,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, Allied shall not, and shall not permit any Allied Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for Allied and the Allied Subsidiaries in excess of $2,000,000;
(m) Allied shall not, and shall not permit any Allied Subsidiary to, purchase or otherwise acquire, except pursuant to a Contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $5,000,000 per transaction or $5,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC Class 4, 5 or 6, non- publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $5,000,000 per transaction or $5,000,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) Allied shall not, and shall not permit any Allied Subsidiary to, enter into any new, or materially amend any existing, reinsurance Contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) Allied shall, and shall cause each Allied Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Material Adverse Effect;
(p) Allied shall deliver to Nationwide as promptly as practicable after preparation thereof, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of Allied after the date hereof;
(q) Allied shall not, nor shall Allied permit any Allied Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither Allied nor any Allied Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a Tax Ruling or enter into a Closing Agreement, settlement or compromise with respect to any material Tax matter or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for Federal income Tax purposes from those employed in the preparation of its Federal income Tax Return for the Taxable year ending December 31, 1997, except as may be required by Law;
(s) Other than in the ordinary course of Business and consistent with past practice, neither Allied nor any Allied Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of any Allied Subsidiary or redeem, purchase or otherwise acquire any of such Allied Subsidiary's capital stock;
(t) Neither Allied nor any Allied Subsidiary shall settle pending or threatened litigation in an amount exceeding $1,000,000, other than settlement of pending or threatened litigation with respect to claims arising under contracts of insurance or reinsurance underwritten, ceded or assumed by any Allied Subsidiary which settlement will not have a Material Adverse Effect;
(u) Allied shall not amend any agreement with Allied Group, Allied Life or any Subsidiaries thereof; and
(v) Neither Allied nor any Allied Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (u).
Appears in 1 contract
Samples: Merger Agreement (Allied Group Inc)
Allied Conduct of Business. Pending the Merger. Allied covenants and agrees as to itself and From the Allied Subsidiaries that, at all times up to and including date --------------------------------------------- hereof until the Effective Time, unless Nationwide shall otherwise consent agree in writing (Nationwide agreeing that it will use its best efforts to respond to any request received from Allied arising under this Article VI within 10 Business Dayswriting, or sooner except as circumstances may require, after receipt of such request), set forth in the Allied Disclosure Letter or as otherwise expressly permitted or contemplated by this Agreement:
(a) Subject to any applicable regulatory requirements, Allied shall, and the Allied Subsidiaries shall cause each Allied Subsidiary to, conduct its Business only their respective businesses in the ordinary course consistent with past practice and in substantially the same manner as heretofore conducted since December 31, 1997 and in a manner which is not inconsistent with the consummation of the transactions contemplated hereby, and Allied and each Allied Subsidiary shall use all reasonable efforts to preserve intact its present their business organization organizations and preserve its regular services to, and maintain its relationships with third parties (including but not limited to their respective relationships with policyholders, insurersinsureds, agents, sales and distribution organizations, underwriters, brokers and investment customers) and to keep available the services of their present officers and key employees, brokers, suppliers and all others having business dealings with it subject to the end that terms of this Agreement. Except as set forth in the Allied Disclosure Letter or as otherwise provided in this Agreement, from the date hereof until the Effective Time, without the prior written consent of Nationwide:
(i) Allied shall not adopt or propose any change in its goodwill Restated Articles of Incorporation or Bylaws;
(ii) Allied shall not declare, set aside or pay any dividend or other distribution with respect to any shares of capital stock of Allied (except for regular quarterly dividends payable in an amount no greater than $0.14 per share on the Common Shares and ongoing Business the regular quarterly dividends per share on the Preferred Shares), or split, combine or reclassify any of Allied's capital stock, and Allied and the Allied Subsidiaries shall not repurchase, redeem or otherwise acquire any shares of capital stock or other securities of, or other ownership interests in, Allied;
(iii) Allied shall not, and shall not permit any Allied Subsidiary to, merge or consolidate with any other person or (except in the ordinary course of business) acquire a material amount of assets of any other person;
(iv) Allied shall not, and shall not permit any Allied Subsidiary to, sell, lease, license or otherwise surrender, relinquish or dispose of (i) any material facility owned or leased by Allied or any Allied Subsidiary or (ii) any assets or property which are material to Allied and the Allied Subsidiaries taken as a whole, except pursuant to existing contracts or commitments listed in Section 6.1(iv) of the Allied Disclosure Letter (the terms of which have been disclosed to Nationwide prior to the date hereof), or in the ordinary course of business consistent with past practice;
(v) Allied shall not, and shall not permit any Allied Subsidiary to, settle any material audit, make or change any material Tax election or file materially amended Tax Returns;
(vi) Allied and the Allied Subsidiaries shall not issue any capital stock or other securities or enter into any amendment of any material term of any outstanding security, and Allied and the Allied Subsidiaries shall not incur any material indebtedness except in the ordinary course of business pursuant to existing credit facilities or arrangements, amend or otherwise increase, accelerate the payment or vesting of the amounts payable or to become payable under or fail to make any required contribution to, any Benefit Plan (as hereinafter defined) or materially increase any non-salary benefits payable to any employee or former employee, except in the ordinary course of business consistent with past practice or as otherwise permitted by this Agreement;
(vii) Allied shall not, and shall not permit any Allied Subsidiary to, grant any increase in the compensation or benefits of directors, officers, employees, consultants or agents of Allied or any Allied Subsidiary other than increases in the ordinary course of business consistent with past practice;
(viii) Allied shall not, and shall not permit any Allied Subsidiary to, enter into or amend any employment agreement or other employment arrangement with any employee of Allied or any Allied Subsidiary, except in the ordinary course of business consistent with past practices (which past practices shall not be impaired deemed to include actions taken in any material respectconnection with the Merger);
(bix) Subject Allied shall not change any method of accounting or accounting practice by Allied or any Allied Subsidiary, except for any such required change in GAAP or SAP;
(x) Allied shall not permit any Allied Insurer to conduct transactions in Allied Investments except in compliance with the investment policies of such Allied Insurer in effect on the date hereof and all applicable insurance laws and regulations;
(xi) Allied shall not, and shall not permit any Allied Subsidiary to, enter into any agreement to purchase, or to lease for a term in excess of one year, any real property, provided that Allied, or any Allied Subsidiary, (i) may as a tenant, or a landlord, renew any existing lease for a term not to exceed eighteen months and (ii) nothing herein shall prevent the Allied, in its capacity as a landlord, from renewing any lease pursuant to an option granted prior to the date hereof;
(xii) amend any agreement with Allied Mutual, Allied Life or any of their affiliates;
(xiii) Allied shall not, and shall not permit any Allied Subsidiary to, agree or commit to do any of the foregoing;
(xiv) except to the extent necessary to comply with the requirements of applicable regulatory requirementslaws and regulations, Allied shall not, and shall not permit any Allied Subsidiary to, make (i) take, or propose agree or commit to take, any action - that would make any representation and warranty of Allied hereunder inaccurate in any material respect at, or as of any time prior to, the Effective Time, (ii) omit, or agree or commit to omit, to take any action -- necessary to prevent any such representation or warranty from being inaccurate in any material respect at any such time, provided however, that Allied shall be permitted to take or omit to take such action which (without any uncertainty) can be cured, and in fact is cured, at or prior to the Effective Time or (iii) take, or agree or commit to take, any action --- that would result in, or is reasonably likely to result in, any of the conditions of the Merger set forth in Article VIII not being satisfied; and
(xv) none of the Allied Insurers shall make any material change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices claims management or policies in any material respect; and Allied agrees that it will notify Nationwide and provide Nationwide with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of Allied or of any Allied Subsidiary and transactions involving 57 62 derivative securities), whether involving a purchase or sale, that it or any Allied Subsidiary is seriously considering;reserving practices.
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Samples: Merger Agreement (Allied Group Inc)
