Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERICAN GENERAL CORPORATION,
AGC LIFE INSURANCE COMPANY
AND
INDEPENDENT INSURANCE GROUP, INC.
DATED AS OF OCTOBER 19, 1995
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . 1
Section 1.1 The Merger . . . . . . . . . . . . . . . . 1
Section 1.2 Closing . . . . . . . . . . . . . . . . . 1
Section 1.3 Effective Time of the Merger . . . . . . . 2
Section 1.4 Directors and Officers of the Surviving
Corporation . . . . . . . . . . . . . . . 2
ARTICLE II SHAREHOLDER APPROVAL . . . . . . . . . . . . . 2
Section 2.1 Shareholder Meeting . . . . . . . . . . . 2
Section 2.2 Proxy Statement/Prospectus; Registration
Statement . . . . . . . . . . . . . . . . 3
Section 2.3 No False or Misleading Statements . . . . 3
ARTICLE III CONVERSION AND EXCHANGE OF SECURITIES . . . . . 4
Section 3.1 Conversion of Shares . . . . . . . . . . . 4
Section 3.2 Allocation of Merger Consideration;
Election Procedures . . . . . . . . . . . 6
Section 3.3 Fractional Interests . . . . . . . . . . . 12
Section 3.4 Dissenting Shares . . . . . . . . . . . . 12
Section 3.5 Exchange of Certificates . . . . . . . . . 13
Section 3.6 No Liability . . . . . . . . . . . . . . . 14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
PURCHASER AND SUB . . . . . . . . . . . . . . . 15
Section 4.1 Organization . . . . . . . . . . . . . . . 15
Section 4.2 Capitalization . . . . . . . . . . . . . . 15
Section 4.3 Sub and Purchaser Subsidiaries . . . . . . 16
Section 4.4 Authority Relative to this Agreement . . . 17
Section 4.5 Consents and Approvals; No Violations . . 17
Section 4.6 Purchaser SEC Reports . . . . . . . . . . 18
Section 4.7 Statutory Financial Statements. . . . . . 19
Section 4.8 Absence of Certain Changes . . . . . . . . 19
Section 4.9 Litigation . . . . . . . . . . . . . . . . 19
Section 4.10 Absence of Undisclosed Liabilities . . . . 20
Section 4.11 No Default . . . . . . . . . . . . . . . . 20
Section 4.12 Taxes . . . . . . . . . . . . . . . . . . 21
Section 4.13 Title to Property . . . . . . . . . . . . 21
Section 4.14 Insurance Practices; Permit and Insurance
Licenses . . . . . . . . . . . . . . . . . 22
Section 4.15 Regulatory Filings . . . . . . . . . . . . 22
Section 4.16 Investments . . . . . . . . . . . . . . . 22
Section 4.17 Reserves . . . . . . . . . . . . . . . . . 23
Section 4.18 Ownership of Company Common Stock . . . . 23
Section 4.19 Information in Proxy Statement/Prospectus
and Registration Statement . . . . . . . . 23
Section 4.20 Brokers . . . . . . . . . . . . . . . . . 24
Section 4.21 Environmental Matters . . . . . . . . . . 24
Section 4.22 Disclosure . . . . . . . . . . . . . . . . 25
Section 4.23 Investigation by Purchaser . . . . . . . . 25
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE
COMPANY . . . . . . . . . . . . . . . . . . . . 26
Section 5.1 Organization . . . . . . . . . . . . . . . 26
Section 5.2 Capitalization . . . . . . . . . . . . . . 26
Section 5.3 Company Subsidiaries . . . . . . . . . . . 27
Section 5.4 Authority Relative to this Agreement . . . 28
Section 5.5 Consents and Approvals; No Violations . . 28
Section 5.6 Company SEC Reports . . . . . . . . . . . 29
Section 5.7 Statutory Financial Statements. . . . . . 30
Section 5.8 Absence of Certain Changes . . . . . . . . 30
Section 5.9 Litigation . . . . . . . . . . . . . . . . 30
Section 5.10 Absence of Undisclosed Liabilities . . . . 31
Section 5.11 No Default . . . . . . . . . . . . . . . . 31
Section 5.12 Taxes . . . . . . . . . . . . . . . . . . 31
Section 5.13 Title to Property . . . . . . . . . . . . 32
Section 5.14 Insurance Practices; Permits and Insurance
Licenses . . . . . . . . . . . . . . . . . 33
Section 5.15 Regulatory Filings . . . . . . . . . . . . 33
Section 5.16 Investments . . . . . . . . . . . . . . . 34
Section 5.17 Reserves . . . . . . . . . . . . . . . . . 34
Section 5.18 Redemption of Company Common Stock . . . . 35
Section 5.19 Information in Proxy Statement/Prospectus
and Registration Statement . . . . . . . . 35
Section 5.20 Brokers . . . . . . . . . . . . . . . . . 35
Section 5.21 Employee Benefit Plans; ERISA . . . . . . 36
Section 5.22 Labor Relations; Employees . . . . . . . . 38
Section 5.23 Environmental Matters . . . . . . . . . . 38
Section 5.24 Related Party Transactions . . . . . . . . 39
Section 5.25 Affiliates . . . . . . . . . . . . . . . . 40
Section 5.26 Opinion of Financial Advisor . . . . . . . 40
Section 5.27 Derivatives . . . . . . . . . . . . . . . 40
Section 5.28 Contracts . . . . . . . . . . . . . . . . 40
Section 5.29 Disclosure . . . . . . . . . . . . . . . . 42
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER . . . . 42
Section 6.1 Conduct of Business by the Company Pending
the Merger . . . . . . . . . . . . . . . . 42
Section 6.2 Conduct of Business by Purchaser Pending
the Merger . . . . . . . . . . . . . . . . 44
Section 6.3 Investment Restrictions. . . . . . . . . 46
ARTICLE VII ADDITIONAL AGREEMENTS . . . . . . . . . . . . . 47
Section 7.1 Access and Information . . . . . . . . . . 47
Section 7.2 Acquisition Proposals . . . . . . . . . . 48
Section 7.3 Filings; Other Action . . . . . . . . . . 49
Section 7.4 Public Announcements . . . . . . . . . . . 50
Section 7.5 Employee Benefits . . . . . . . . . . . . 50
Section 7.6 Stock Exchange Listing . . . . . . . . . . 51
Section 7.7 Company Indemnification Provision . . . . 51
Section 7.8 Comfort Letters . . . . . . . . . . . . . 52
Section 7.9 Tax Matters . . . . . . . . . . . . . . . 52
Section 7.10 Intercompany Dividends . . . . . . . . . . 52
Section 7.11 Certificate of Designation of Purchaser
Convertible Preferred Stock . . . . . . . 52
Section 7.12 Additional Matters . . . . . . . . . . . . 53
ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE MERGER . . . 53
Section 8.1 Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . 53
Section 8.2 Conditions to Obligation of the Company to
Effect the Merger . . . . . . . . . . . . 54
Section 8.3 Conditions to Obligations of Purchaser and
Sub to Effect the Merger . . . . . . . . . 55
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER . . . . . . . 56
Section 9.1 Termination by Mutual Consent . . . . . . 56
Section 9.2 Termination by Either Purchaser or the
Company . . . . . . . . . . . . . . . . . 56
Section 9.3 Termination by the Company . . . . . . . . 56
Section 9.4 Termination by Purchaser . . . . . . . . . 58
Section 9.5 Effect of Termination and Abandonment . . 58
ARTICLE X GENERAL PROVISIONS . . . . . . . . . . . . . . 61
Section 10.1 Survival of Representations, Warranties
and Agreements . . . . . . . . . . . . . . 61
Section 10.2 Notices . . . . . . . . . . . . . . . . . 61
Section 10.3 Descriptive Headings . . . . . . . . . . . 62
Section 10.4 Entire Agreement; Assignment . . . . . . . 62
Section 10.5 Governing Law . . . . . . . . . . . . . . 62
Section 10.6 Expenses . . . . . . . . . . . . . . . . . 62
Section 10.7 Amendment . . . . . . . . . . . . . . . . 63
Section 10.8 Waiver . . . . . . . . . . . . . . . . . . 63
Section 10.9 Counterparts; Effectiveness . . . . . . . 63
Section 10.10 Severability; Validity; Parties in
Interest . . . . . . . . . . . . . . . . . 63
Section 10.11 Enforcement of Agreement . . . . . . . . . 63
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 19,
1995, by and among AMERICAN GENERAL CORPORATION, a Texas
corporation ("Purchaser"), AGC LIFE INSURANCE COMPANY, a Missouri
corporation and a wholly-owned subsidiary of Purchaser ("Sub"),
and INDEPENDENT INSURANCE GROUP, INC., a Florida corporation (the
"Company").
WHEREAS, the respective Boards of Directors of
Purchaser, Sub and the Company have approved the merger of the
Company with and into Sub upon the terms and subject to the
conditions set forth herein (the "Merger"); and
WHEREAS, Purchaser, Sub and the Company intend that the
Merger qualify as a tax-free reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code").
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to
the conditions hereof, at the Effective Time (as defined in
Section 1.2 hereof), the Company shall be merged with and into
Sub in accordance with the applicable provisions of the Florida
Business Corporation Act (the "FBCA") and The General and
Business Corporation Law of Missouri and the separate corporate
existence of the Company shall thereupon cease, and Sub shall be
the surviving corporation in the Merger (the "Surviving
Corporation") and all of its rights, privileges, powers,
immunities, purposes and franchises shall continue unaffected by
the Merger. The Merger shall have the effects set forth in the
FBCA and in The General and Business Corporation Law of Missouri.
Pursuant to the Merger, (a) the Articles of Incorporation of Sub
as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation, until
thereafter amended as provided by law and such Articles of
Incorporation and (b) the By-laws of Sub as in effect immediately
prior to the Effective Time shall be the By-laws of the Surviving
Corporation, until thereafter amended as provided by law, such
By-laws and the Articles of Incorporation of the Surviving
Corporation.
Section 1.2 Closing. The Company shall as promptly as
practicable notify Purchaser, and Purchaser and Sub shall as
promptly as practicable notify the Company, when the conditions
to such party's or parties' obligation to effect the Merger
contained in Article VIII have been satisfied. The closing of
the Merger (the "Closing") shall take place at the offices of
Skadden, Arps, Slate, Xxxxxxx & Xxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, at 10:00 a.m., New York City time, on the sixth
business day after the later of these notices has been given (the
"Closing Date"), unless another date or place is agreed to in
writing by the parties hereto; provided, however, that the
parties hereto agree to use all reasonable efforts to consummate
the Closing on January 2, 1996, or as soon as practicable
thereafter.
Section 1.3 Effective Time of the Merger. The Merger
shall become effective when an appropriate Articles of Merger is
executed and filed with the Secretary of State of the State of
Florida as provided by the FBCA and the Secretary of State of the
State of Missouri as provided in The General and Business
Corporation Law of Missouri, or at such later time as the parties
hereto shall have designated in such filings as the Effective
Time of the Merger (the "Effective Time"), which filings shall be
made as soon as practicable after the closing of the transactions
contemplated by this Agreement in accordance with Section 1.2
hereof.
Section 1.4 Directors and Officers of the Surviving
Corporation. The directors and officers of Sub immediately prior
to the Effective Time shall be the directors and officers of the
Surviving Corporation at the Effective Time. The directors and
officers of the Surviving Corporation shall hold office until
their respective successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation
or removal in accordance with the Articles of Incorporation and
By-laws of the Surviving Corporation.
ARTICLE II
SHAREHOLDER APPROVAL
Section 2.1 Shareholder Meeting. In order to
consummate the Merger, the Company, acting through its Board of
Directors, shall, in accordance with applicable law, duly call,
give notice of, convene and hold a special meeting of its
shareholders (the "Company Special Meeting"), as soon as
practicable after the Registration Statement (as hereinafter
defined) is declared effective, for the purpose of voting upon
the adoption of this Agreement. The Company shall include in the
Proxy Statement/Prospectus (as hereinafter defined) the
recommendation of the Board of Directors of the Company that
shareholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement, unless the inclusion
of such recommendation would, in the written opinion of outside
legal counsel to the Company, result in a breach of the Board of
Directors' fiduciary duties under applicable law.
Section 2.2 Proxy Statement/Prospectus; Registration
Statement. In connection with the solicitation of approval of
the principal terms of this Agreement and the Merger by the
Company's shareholders, the Company and Purchaser shall as
promptly as practicable prepare and file with the Securities and
Exchange Commission ("SEC") a preliminary proxy statement
relating to the Merger and this Agreement and use all reasonable
efforts to obtain and furnish the information required to be
included by the SEC in the Proxy Statement/Prospectus (as
hereinafter defined). The Company, after consultation with
Purchaser, shall respond as promptly as practicable to any
comments made by the SEC with respect to the preliminary proxy
statement and shall cause a definitive proxy statement to be
mailed to its shareholders at the earliest practicable date.
Such definitive proxy statement shall also constitute a
prospectus of Purchaser with respect to the Purchaser Stock (as
hereinafter defined) to be issued in the Merger (such proxy
statement and prospectus are referred to herein as the "Proxy
Statement/Prospectus"), which prospectus is to be filed with the
SEC as part of a registration statement on Form S-4 (the
"Registration Statement") for the purpose of registering such
shares of Purchaser Stock under the Securities Act of 1933, as
amended (the "Securities Act"). Purchaser shall prepare and as
promptly as practicable file with the SEC the Registration
Statement. Purchaser, after consultation with the Company, shall
respond as promptly as practicable to any comments made by the
SEC with respect to the Registration Statement, and shall use all
reasonable efforts to have the Registration Statement declared
effective by the SEC. Purchaser shall also take any action
required to be taken under applicable state securities laws in
connection with the issuance of Purchaser Stock in the Merger,
and the Company shall furnish all information concerning the
Company and the holders of Company Common Stock as may be
reasonably requested by Purchaser in connection with such action.
Section 2.3 No False or Misleading Statements. The
information provided and to be provided by each of Purchaser and
the Company specifically for use in the Registration Statement
and the Proxy Statement/Prospectus shall not, with respect to the
information supplied by such party, in the case of the
Registration Statement, on the date the Registration Statement
becomes effective and, in the case of the Proxy
Statement/Prospectus, on the date upon which the Proxy
Statement/Prospectus is mailed to the shareholders of the Company
or on the date upon which approval of the Merger by the
shareholders of the Company is obtained, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. Each of Purchaser and the
Company agrees to correct as promptly as practicable any such
information provided by it that shall have become false or
misleading in any material respect and to take all steps
necessary to file with the SEC and have declared effective or
cleared by the SEC any amendment or supplement to the
Registration Statement or the Proxy Statement/Prospectus so as to
correct the same and to cause the Proxy Statement/Prospectus as
so corrected to be disseminated to the Company's shareholders to
the extent required by applicable law. The Registration
Statement and the Proxy Statement/Prospectus shall comply as to
form in all material respects with the provisions of the
Securities Act, the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and other applicable law.
ARTICLE III
CONVERSION AND EXCHANGE OF SECURITIES
Section 3.1 Conversion of Shares. At the Effective
Time, by virtue of the Merger and without any action on the part
of any of the parties hereto or any holder of any of the
following securities:
(a) All shares of Voting Common Stock of the
Company, par value One Dollar per share (the "Company Voting
Stock"), and all shares of Non-Voting Common Stock of the
Company, par value One Dollar per share (the "Company Non-Voting
Stock"; the Company Voting Stock and the Company Non-Voting
Stock, collectively, the "Company Common Stock"), that are owned
by the Company as treasury stock and any shares of Company Common
Stock owned by Purchaser, Sub or any other direct or indirect
subsidiary of Purchaser (other than 3,000 shares of Company
Common Stock held in a separate account of a subsidiary of
Purchaser) shall be cancelled and retired and shall cease to
exist and no payment or other consideration shall be made in
respect thereof.
(b) Each share of Common Stock of Sub, par value
$100.00 per share, issued and outstanding immediately prior to
the Effective Time, shall remain outstanding and shall be
unchanged after the Merger and shall thereafter constitute all of
the issued and outstanding capital stock of the Surviving
Corporation.
(c) Except as otherwise provided herein and
subject to the limitations set forth in Section 3.2, each
remaining share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than Dissenting
Shares (as hereinafter defined)), shall be converted into,
exchanged for and represent the right to receive any of the
following:
(i) a fraction of a duly authorized, validly
issued, fully paid and nonassessable share of common stock
of Purchaser (together with the attached Series A Junior
Participating Preferred Stock Purchase Rights, the
"Purchaser Common Stock"), par value $0.50 per share (the
"Common Stock Consideration"), calculated by dividing (x)
$27.50 by (y) the Average Closing Price, rounded to four
decimal places (such fraction being referred to herein as
the "Exchange Ratio"). As used herein, the "Average Closing
Price" shall mean the average of the closing prices (or, if
the Purchaser Common Stock should not trade on any Trading
Day (as hereinafter defined), the average of the high bid
and low asked prices therefor on such day), regular way, per
share of Purchaser Common Stock as reported on the New York
Stock Exchange Composite Tape during the ten consecutive
Trading Days ending on (and including) the fifth Trading Day
prior to the Effective Time,
(ii) a fraction of a duly authorized, validly
issued, fully paid and nonassessable share of 7% Convertible
Preferred Stock of Purchaser (the "Purchaser Convertible
Preferred Stock"; the Purchaser Common Stock and the
Purchaser Convertible Preferred Stock, collectively,
"Purchaser Stock"), par value $1.50 per share (the
"Convertible Preferred Stock Consideration"; the Common
Stock Consideration and the Convertible Preferred Stock
Consideration, collectively, "Stock Consideration"), equal
to the Exchange Ratio as calculated in accordance with
Section 3.1(c)(i) above, which Purchaser Convertible
Preferred Stock shall have such terms and provisions as set
forth in the Statement of Resolution Establishing a Series
of Shares (the "Certificate of Designation") attached hereto
as Exhibit A, with such immaterial changes as the parties
hereto shall agree, or
(iii) $27.50 in cash (the "Cash Price"),
without any interest thereon (the "Cash Consideration"; the
Common Stock Consideration, the Convertible Preferred Stock
Consideration and the Cash Consideration, collectively, the
"Merger Consideration"),
in each case as the holder thereof shall have elected or be
deemed to have elected, in accordance with and subject to the
limitations set forth in Section 3.2 hereof. All shares of
Company Common Stock converted or exchanged into Merger
Consideration shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist,
and each certificate previously evidencing any such shares of
Company Common Stock shall thereafter represent the right to
receive, upon the surrender of such certificate in accordance
with the provisions of Section 3.5, only the applicable Merger
Consideration. The holders of such certificates previously
evidencing such shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock except
as otherwise provided herein or by law.
Section 3.2 Allocation of Merger Consideration;
Election Procedures. (a) Certain Definitions. As used in this
Agreement:
(i) "Elected Convertible Preferred Stock
Percentage" means the percentage determined by dividing (A)
the number of Convertible Preferred Stock Election Shares of
a record holder of Company Common Stock by (B) the total
number of shares of Company Common Stock owned by such
record holder;
(ii) "Full Distribution Shareholder" means a
record holder of Company Common Stock whose Elected
Convertible Preferred Stock Percentage is equal to or less
than 50%;
(iii) "Unguaranteed Distribution
Shareholder" means a record holder of Company Common Stock
whose Elected Convertible Preferred Stock Percentage is
greater than 50%;
(iv) "Convertible Preferred Stock Election
Amount" means the aggregate number of shares of Company
Common Stock in respect of which Convertible Preferred Stock
Elections have been made;
(v) "Convertible Preferred Stock
Overelection Shares" means the number of Convertible
Preferred Stock Election Shares of a record holder of
Company Common Stock which were not converted into
Convertible Preferred Stock Consideration pursuant to
Section 3.2(f)(ii)(A);
(vi) "Convertible Preferred Stock
Overelection Percentage" means the quotient obtained by
dividing (A) 50% of the aggregate number of shares of
Company Common Stock issued and outstanding immediately
prior to the Merger less the aggregate amount of Convertible
Preferred Stock Election Shares converted to Convertible
Preferred Stock Consideration for all Full Distribution
Shareholders pursuant to Section 3.2(f)(i) and for all
Unguaranteed Distribution Shareholders pursuant to Section
3.2(f)(ii)(A) by (B) the aggregate number of Convertible
Preferred Stock Overelection Shares;
(vii) "Unconverted Convertible Preferred
Stock Election Shares" means the Convertible Preferred Stock
Election Shares of a record holder of Company Common Stock
which were not converted into Convertible Preferred Stock
Consideration pursuant to Section 3.2(f)(i) or Section
3.2(f)(ii);
(viii) "Maximum Cash Consideration" means
the Cash Price multiplied by 50% of the aggregate number of
shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger;
(ix) "Cash Available for Election" means the
Maximum Cash Consideration less the sum of (A) the aggregate
amount of cash paid in lieu of fractional interests in
accordance with Section 3.3 and (B) the product of (i) the
number of Dissenting Shares which are not to be treated as
Non-Election Shares pursuant to Section 3.4, if any, and
(ii) the Cash Price; provided, however, that if the Company
fails to deliver prior to the Closing executed
representation letters from one or more persons owning 5% or
more of the outstanding shares of Company Stock as
contemplated by Section 7.9 hereof, then the Cash Available
for Election shall be reduced by the sum of (i) the product
of (A) 50% of the aggregate number of shares of Company
Stock owned by such holder or holders multiplied by (B)
$27.50 and (ii) such additional amount, if any, as is
necessary, so that the tax opinions referred to in Sections
8.2(b) and 8.3(b) may be rendered, but in no event shall
such additional amount exceed the amount specified in clause
(i) of this proviso;
(x) "Guaranteed Cash Percentage" means the
quotient obtained by dividing Cash Available for Election by
the product of (A) the Cash Price and (B) the aggregate
number of shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time of the
Merger;
(xi) "Elected Cash Percentage" means the
percentage determined by dividing (A) the number of Cash
Election Shares (as hereinafter defined) of a record holder
of Company Common Stock by (B) the total number of shares of
Company Common Stock owned by such record holder;
(xii) "Full Pay Shareholder" means a record
holder of Company Common Stock whose Elected Cash Percentage
is equal to or less than the Guaranteed Cash Percentage;
(xiii) "Unguaranteed Pay Shareholder" means
a record holder of Company Common Stock whose Elected Cash
Percentage is greater than the Guaranteed Cash Percentage;
(xiv) "Cash Election Amount" means the
product of the aggregate number of Cash Election Shares and
the Cash Price;
(xv) "Cash Overelection Shares" means the
number of Cash Election Shares of a record holder of Company
Common Stock which were not converted into Cash
Consideration pursuant to Section 3.2(g)(ii)(A);
(xvi) "Cash Overelection Percentage" means
the quotient obtained by dividing (A) the Cash Available for
Election less the aggregate amount of Cash Consideration
paid to all Full Pay Shareholders pursuant to Section
3.2(g)(i) and to all Unguaranteed Pay Shareholders pursuant
to Section 3.2(g)(ii)(A) by (B) the product of the Cash
Price and the aggregate number of Cash Overelection Shares;
and
(xvii) "Unconverted Cash Election Shares"
means the Cash Election Shares of a record holder of Company
Common Stock which were not converted into Cash
Consideration pursuant to Section 3.2(g)(i) or Section
3.2(g)(ii).
(b) Allocation. Notwithstanding anything in this
Agreement to the contrary, the aggregate amount of Cash
Consideration to be provided to holders of Company Common Stock
shall not exceed the Cash Available for Election and no more than
50% of the aggregate number of shares of Company Common Stock
issued and outstanding immediately prior to the Merger shall be
converted into Purchaser Convertible Preferred Stock.
(c) Election. Subject to allocation and
proration in accordance with the provisions of this Section 3.2,
each record holder of shares of Company Common Stock (other than
Dissenting Shares, if any, which are not to be treated as Non-
Election Shares pursuant to Section 3.4 and shares to be
cancelled in accordance with Section 3.1(a)) issued and
outstanding immediately prior to the Election Deadline (as
hereinafter defined) shall be entitled to submit a request
specifying the portion of such record holder's shares of Company
Common Stock which such record holder desires to have converted
into (i) Common Stock Consideration (a "Common Stock Election"),
(ii) Convertible Preferred Stock Consideration (a "Convertible
Preferred Stock Election"; a Common Stock Election and a
Convertible Preferred Stock Election, collectively, a "Stock
Election") and/or (iii) Cash Consideration (a "Cash Election"),
or to indicate that such record holder has no preference as to
the receipt of Common Stock Consideration, Convertible Preferred
Stock Consideration or Cash Consideration for such shares (a
"Non-Election"). Each record holder making a Convertible
Preferred Stock Election shall also be entitled to submit a
request specifying the portion of such holder's Unconverted
Convertible Preferred Stock Election Shares, if any, such record
holder desires to have converted into Cash Consideration and/or
Common Stock Consideration and each record holder making a Cash
Election shall be entitled to submit a request specifying the
portion of such holder's Unconverted Cash Election Shares, if
any, such record holder desires to have converted into Common
Stock Consideration and/or Convertible Preferred Stock
Consideration. Shares of Company Common Stock as to which a Cash
Election is made, including Unconverted Convertible Preferred
Stock Election Shares which a record holder has requested be
converted into Cash Consideration, are referred to herein as
"Cash Election Shares". Shares of Purchaser Convertible
Preferred Stock as to which a Convertible Preferred Stock
Election is made, including Unconverted Cash Election Shares
which a record holder has requested be converted into Convertible
Preferred Stock Consideration, are referred to herein as
"Convertible Preferred Stock Election Shares". Shares of Company
Common Stock in respect of which a Non-Election is made
(including shares in respect of which such an election is deemed
to have been made pursuant to this Section 3.2 and Section 3.4)
(collectively, "Non-Election Shares") shall be deemed to be
shares in respect of which a Common Stock Election has been made.
(d) Procedure for Elections. Elections pursuant
to Section 3.2(c) shall be made on a form to be mutually agreed
upon by Purchaser and the Company (a "Form of Election") and to
be provided by the Exchange Agent (as defined in Section 3.5) for
that purpose to holders of record of Company Common Stock,
together with appropriate transmittal materials, at the time of
mailing to holders of record of Company Common Stock of the Proxy
Statement/Prospectus in connection with the Company Special
Meeting referred to in Section 2.1. Elections shall be made by
mailing to the Exchange Agent a duly completed Form of Election.
To be effective, a Form of Election must be (i) properly
completed, signed and submitted to the Exchange Agent at its
designated office, by 5:00 p.m., on the business day that is two
Trading Days (as hereinafter defined) prior to the Closing Date
(which date shall be publicly announced by Purchaser as soon as
practicable but in no event less than five Trading Days prior to
the Closing Date) (the "Election Deadline") and (ii) accompanied
by the certificates representing the shares of Company Common
Stock as to which the election is being made (or by an
appropriate guarantee of delivery of such certificates by a
commercial bank or trust company in the United States or a member
of a registered national security exchange or of the National
Association of Securities Dealers, Inc., provided such
certificates are in fact delivered to the Exchange Agent within
eight Trading Days after the date of execution of such guarantee
of delivery). The Company shall make, or cause the Exchange
Agent to make, a Form of Election available to all persons who
become holders of record of Company Common Stock between the date
of mailing described in the first sentence of this Section 3.2(d)
and the Election Deadline. The Company shall determine, in its
sole and absolute discretion, which authority it may delegate in
whole or in part to the Exchange Agent, whether Forms of Election
have been properly completed, signed and submitted or revoked.
The decision of the Company (or the Exchange Agent, as the case
may be) in such matters shall be conclusive and binding. Neither
the Company nor the Exchange Agent will be under any obligation
to notify any person of any defect in a Form of Election
submitted to the Exchange Agent. A holder of shares of Company
Common Stock that does not submit an effective Form of Election
prior to the Election Deadline shall be deemed to have made a
Non-Election. As used in this Agreement, "Trading Day" means a
day on which the New York Stock Exchange is open for trading.
(e) Revocation of Election; Return of
Certificates. An election may be revoked, but only by written
notice received by the Exchange Agent prior to the Election
Deadline. Any certificate(s) representing shares of Company
Common Stock which have been submitted to the Exchange Agent in
connection with an election shall be returned without charge to
the holder thereof in the event such election is revoked as
aforesaid and such holder requests in writing the return of such
certificate(s). Upon any such revocation, unless a duly
completed Election Form is thereafter submitted in accordance
with Section 3.2(d) with respect to such shares, such shares
shall be deemed Non-Election Shares. In the event that this
Agreement is terminated pursuant to the provisions hereof and any
shares of Company Common Stock have been transmitted to the
Exchange Agent pursuant to the provisions hereof, such shares
shall be returned as promptly as practicable without charge to
the person submitting the same.
(f) Proration of Convertible Preferred Stock
Election Shares. In the event that the Convertible Preferred
Stock Election Amount exceeds 50% of the aggregate number of
shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time of the Merger, the Convertible
Preferred Stock Election Shares shall be converted into the right
to receive Convertible Preferred Stock Consideration and/or other
Merger Consideration in the following manner:
(i) the Exchange Agent shall distribute to
each Full Distribution Shareholder, Convertible Preferred
Stock Consideration for each of the Convertible Preferred
Stock Election Shares of such party;
(ii) the Exchange Agent shall distribute to
each Unguaranteed Distribution Shareholder, Convertible
Preferred Stock Consideration
(A) for that number of Convertible
Preferred Stock Election Shares equal to 50% of the
number of shares of Company Common Stock owned by such
record holder, and
(B) for that number of Convertible
Preferred Stock Election Shares equal to the product of
the number of Convertible Preferred Stock Election
Shares owned by such shareholder which were not
converted into Convertible Preferred Stock
Consideration pursuant to Section 3.2(f)(ii)(A) and the
Convertible Preferred Stock Overelection Percentage;
and
(iii) all Unconverted Convertible Preferred
Stock Election Shares will be converted into such other
Merger Consideration as each record holder of such shares
directs, subject to the provisions of this Section 3.2, and
in the absence of such direction, such shares shall be
treated as Non-Election Shares.
(g) Proration of Cash Election Shares. In the
event that the Cash Election Amount exceeds the Cash Available
for Election, the Cash Election Shares shall be converted into
the right to receive Cash Consideration and/or other Merger
Consideration in the following manner:
(i) the Exchange Agent shall distribute to
each Full Pay Shareholder, Cash Consideration for each of
the Cash Election Shares of such party;
(ii) the Exchange Agent shall distribute to
each Unguaranteed Pay Shareholder, Cash Consideration
(A) for that number of Cash Election
Shares equal to the product of the number of shares of
Company Common Stock owned by such record holder and
the Guaranteed Cash Percentage, and
(B) for that number of Cash Election
Shares equal to the product of the number of Cash
Election Shares which were not converted into Cash
Consideration pursuant to Section 3.2(g)(ii)(A) and the
Cash Overelection Percentage; and
(iii) all Unconverted Cash Election Shares
will be converted into such other Merger Consideration as
each record holder of such shares directs, subject to the
provisions of this Section 3.2, and in the absence of such
direction, such shares shall be treated as Non-Election
Shares.
(h) Computations. The Exchange Agent, in
consultation with the Company and Purchaser, shall make all
computations to give effect to this Section 3.2, which
computations, in the event of a dispute between the Company and
Purchaser, shall be conclusive and binding.
(i) Order of Proration; No Proration.
(i) In the event both proration of
Convertible Preferred Stock Election Shares and Cash
Election Shares is necessary, the Convertible Preferred
Stock Election Shares shall be prorated first.
(ii) In the event that the Cash Available
for Election exceeds the Cash Election Amount, all Cash
Election Shares shall be converted into the right to receive
Cash Consideration.
(iii) In the event that the Convertible
Preferred Stock Election Amount is less than 50% of the
aggregate number of shares of Company Common Stock issued
and outstanding immediately prior to the Effective Time of
the Merger, all Convertible Preferred Stock Election Shares
shall be converted into the right to receive Convertible
Preferred Stock Consideration (and cash in lieu of
fractional interests in accordance with Section 3.3).
(iv) All Common Stock Election Shares shall
be converted into the right to receive Common Stock
Consideration (and cash in lieu of fractional interests in
accordance with Section 3.3).
Section 3.3 Fractional Interests. No certificates or
scrip representing fractional shares of Purchaser Stock shall be
issued in connection with the Merger, and such fractional
interests will not entitle the owner thereof to any rights of a
shareholder of Purchaser. In lieu of a fractional interest in a
share of Purchaser Stock, each holder of shares of Company Common
Stock exchanged pursuant to Section 3.1(c) who would otherwise
have been entitled to receive a fraction of a share of Purchaser
Stock shall receive cash (without interest) in an amount equal to
the product of such fractional interest multiplied by the Average
Closing Price.
Section 3.4 Dissenting Shares. Notwithstanding
anything in this Agreement to the contrary, no share of Company
Voting Stock, the holder of which shall have complied with the
provisions of Section 607.1320 of the FBCA as to dissenter's
rights (a "Dissenting Share"), shall be deemed converted into and
to represent the right to receive Merger Consideration hereunder,
and the holders of Dissenting Shares, if any, shall be entitled
to payment, solely from the Surviving Corporation, of the
appraised value of such Dissenting Shares to the extent permitted
by and in accordance with the provisions of Section 607.1320 of
the FBCA; provided, however, that (i) if any holder of Dissenting
Shares shall, under the circumstances permitted by the FBCA,
subsequently deliver a written withdrawal of his or her demand
for appraisal of such Dissenting Shares, or (ii) if any holder
fails to establish his or her entitlement to rights to payment as
provided in such Section 607.1320, or (iii) if neither any holder
of Dissenting Shares nor the Surviving Corporation has filed a
petition demanding a determination of the value of all Dissenting
Shares within the time provided in such Section 607.1320, such
holder or holders (as the case may be) shall forfeit such right
to payment for such Dissenting Shares pursuant to such Section
607.1320 and each such share shall not be considered a Dissenting
Share but shall thereupon be treated as a Non-Election Share for
purposes of Section 3.2. The Company shall give Purchaser (i)
prompt notice of any written demands for appraisal of any Company
Common Stock, attempted withdrawals of such demands, and any
other instruments received by Company relating to shareholders'
rights of appraisal and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for
appraisal under the FBCA. The Company shall not, except with the
prior written consent of Purchaser, voluntarily make any payment
with respect to any demands for appraisals of Company Common
Stock, offer to settle or settle any such demands or approve any
withdrawal of any such demands.
Section 3.5 Exchange of Certificates. (a) As soon as
practicable after the execution and delivery of this Agreement
and, in any event, not less than five Trading Days prior to the
mailing of the Proxy Statement/Prospectus to holders of Company
Common Stock, Purchaser shall designate a bank or trust company
(or such other person or persons as shall be reasonably
acceptable to Purchaser and Company) to act as exchange agent
(the "Exchange Agent") in effecting the exchange of certificates
that, prior to the Effective Time, represented shares of Company
Common Stock (the "Certificates") for Merger Consideration
pursuant to Section 3.1(a) hereof (and cash in lieu of fractional
interests in accordance with Section 3.3). Upon the surrender of
each such Certificate representing shares of Company Common
Stock, the Exchange Agent shall pay the holder of such
Certificate the applicable Merger Consideration (and cash in lieu
of fractional interests in accordance with Section 3.3), and such
Certificate shall forthwith be cancelled. Until so surrendered
and exchanged, each such Certificate that prior to the Effective
Time represented shares of Company Common Stock (other than
Certificates representing Dissenting Shares which are not to be
treated as Non-Election Shares pursuant to Section 3.2 or shares
of Company Common Stock to be cancelled in accordance with
Section 3.1(a)) shall represent solely the right to receive
Merger Consideration (and cash in lieu of fractional interests in
accordance with Section 3.3). No interest shall be paid or
accrue on Merger Consideration.
(b) As of or as promptly as practicable after the
Effective Time, Purchaser shall deposit or cause to be deposited
in trust with the Exchange Agent, for the benefit of the holders
of shares of Company Common Stock, for exchange in accordance
with this Article III, the aggregate Merger Consideration.
(c) The cash portion of the aggregate Merger
Consideration shall be invested by the Exchange Agent, as
directed by and for the benefit of the Surviving Corporation,
provided that such investments shall be limited to direct
obligations of the United States of America, obligations for
which the full faith and credit of the United States of America
is pledged to provide for the payment of principal and interest,
commercial paper rated of the highest quality by Xxxxx'x
Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings
Group, a division of XxXxxx-Xxxx, Inc. ("S&P"), and certificates
of deposit issued by a commercial bank whose long-term debt
obligations are rated at least A2 by Moody's or at least A by
S&P, in each case having a maturity not in excess of one year.
(d) As promptly as practicable following the date
which is six months after the Effective Time, the Exchange Agent
shall deliver to the Surviving Corporation all cash, shares of
Purchaser Stock, Certificates and other documents in its
possession relating to the transactions described in this
Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate may surrender such
Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws and, in
the case of Dissenting Shares, subject to applicable law) receive
in exchange therefor the applicable Merger Consideration (and
cash in lieu of fractional interest in accordance with Section
3.3), without any interest thereon.
(e) After the Effective Time, there shall be no
transfers on the stock transfer books of the Surviving
Corporation of any shares of Company Common Stock. If, after the
Effective Time, Certificates formerly representing shares of
Company Common Stock are presented to the Surviving Corporation
or the Exchange Agent, they shall be cancelled and (subject to
applicable abandoned property, escheat and similar laws and, in
the case of Dissenting Shares, subject to applicable law)
exchanged for Merger Consideration (and cash in lieu of
fractional interests in accordance with Section 3.3), as provided
in this Article III.
(f) No dividends or other distributions declared
or made after the Effective Time with respect to shares of
Purchaser Stock shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Purchaser Stock such
holder is entitled to receive, and no cash payment in lieu of
fractional interests shall be paid pursuant to Section 3.3, in
each case, until the holder of such Certificate shall surrender
such Certificate, in accordance with the provisions of this
Agreement.
(g) The Exchange Agent or Purchaser shall be
entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Company
Common Stock such amounts as the Exchange Agent, Purchaser or the
Surviving Corporation, as the case may be, is required to deduct
and withhold with respect to such payment under the Code or any
provision of state, local or foreign tax law. Any amounts so
withheld shall be treated for all purposes of this Agreement as
having been paid to the holder of the Company Common Stock in
respect of which such deduction and withholding was made.
Section 3.6 No Liability. Neither Purchaser, the
Company nor the Surviving Corporation shall be liable to any
holder of shares of Company Common Stock for any Merger
Consideration in respect of such shares (or dividends or
distributions with respect thereto) delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law. In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by Purchaser, the posting by
such person of a bond in customary form and amount as indemnity
against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the Merger
Consideration (and cash in lieu of fractional interests in
accordance with Section 3.3), without any interest or other
payments thereon, upon due surrender of and deliverable in
respect of such Certificate pursuant to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SUB
Purchaser represents and warrants to the Company as
follows:
Section 4.1 Organization. Each of Purchaser and Sub
is a corporation duly organized, validly existing and in good
standing under the laws of the States of Texas and Missouri,
respectively, with the corporate power and authority and all
necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being
conducted or presently proposed to be conducted. Sub is duly
licensed or authorized as an insurance company in the State of
Missouri and in each other jurisdiction where it is required to
be licensed or authorized. Each of Purchaser and Sub is duly
qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its
properties owned or held under lease or the nature of its
activities make such qualification necessary, except where the
failure to be so qualified would not individually or in the
aggregate have a material adverse effect on the business, assets,
liabilities, results of operations or financial condition of
Purchaser, Sub and the Purchaser Subsidiaries (as hereinafter
defined), taken as a whole (a "Purchaser Material Adverse
Effect").
Section 4.2 Capitalization. As of August 31, 1995:
(i) the authorized capital stock of Purchaser consists of
300,000,000 shares of Purchaser Common Stock and 60,000,000
shares of Preferred Stock, par value $1.50 per share of Purchaser
("Purchaser Preferred Stock"), (ii) 204,894,131 shares of
Purchaser Common Stock, and no shares of Purchaser Preferred
Stock, were issued and outstanding and (iii) stock options to
acquire 2,843,228 shares of Purchaser Common Stock (the
"Purchaser Stock Options") were outstanding under all stock
option plans of Purchaser. All of the issued and outstanding
shares of capital stock of Purchaser are validly issued, fully
paid and nonassessable and free of preemptive rights. All of the
shares of Purchaser Stock reserved for issuance in exchange for
shares of Company Common Stock at the Effective Time in
accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable and free
of preemptive rights. Since August 31, 1995 to the date hereof,
no shares of Purchaser's capital stock have been issued, except
Purchaser Common Stock issued pursuant to stock option or other
employee benefit plans. Except for (i) outstanding stock
options, (ii) 4,500,000 shares of 6% Convertible Monthly Income
Preferred Securities, Series A, of American General Delaware,
L.L.C., (iii) the Series A Junior Participating Preferred Stock
Purchase Rights attached to the Purchaser Common Stock and (iv)
other miscellaneous options relating to 100,000 shares of
Purchaser Common Stock, as of the date of this Agreement, there
are no options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or commitments
obligating Purchaser to issue, transfer, sell, redeem, repurchase
or otherwise acquire any shares of its capital stock.
Section 4.3 Sub and Purchaser Subsidiaries. (a) The
authorized capital stock of Sub consists of 250,000 shares of
Common Stock, par value $100.00 per share. As of the date
hereof, 141,041 shares of Common Stock of Sub are issued and
outstanding and are owned by Purchaser.
(b) Each subsidiary of Purchaser, other than Sub
(collectively, the "Purchaser Subsidiaries"), is a corporation
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the
corporate power and authority and all necessary government
approvals to own, lease and operate its properties and to carry
on its business as now being conducted, except where the failure
to be so organized, existing and in good standing or to have such
power and authority or necessary governmental approvals would not
individually or in the aggregate have a Purchaser Material
Adverse Effect. Each Purchaser Subsidiary is duly qualified or
licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification
or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing
would not individually or in the aggregate have a Purchaser
Material Adverse Effect. Schedule 4.3(b) attached hereto sets
forth the name of each of the Purchaser Subsidiaries that is as
of the date hereof a significant subsidiary as such term is
defined in Rule 1-02 of Regulation S-X under the Exchange Act
(collectively, the "Purchaser Significant Subsidiaries").
(c) Schedule 4.3(c) attached hereto sets forth
the name of each of the Purchaser Significant Subsidiaries that
is as of the date hereof an insurance company (collectively, the
"Purchaser Insurance Subsidiaries"). Each of the Purchaser
Insurance Subsidiaries is (i) duly licensed or authorized as an
insurance company in its jurisdiction of incorporation and (ii)
duly licensed or authorized as an insurance company in each other
jurisdiction where it is required to be so licensed or
authorized.
(d) Purchaser is, directly or indirectly, the
record and beneficial owner of all of the outstanding shares of
capital stock of Sub and of each of the Purchaser Significant
Subsidiaries, there are no proxies with respect to any such
shares, and no equity securities of Sub or of any Purchaser
Significant Subsidiary are or may become required to be issued by
reason of any options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable or
exercisable for, shares of any capital stock of Sub or of any
Purchaser Significant Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which Purchaser or
any Purchaser Significant Subsidiary is or may be bound to issue,
redeem, purchase or sell additional shares of capital stock of
Sub or of any Purchaser Significant Subsidiary or securities
convertible into or exchangeable or exercisable for any such
shares. All of such shares so owned by Purchaser are validly
issued, fully paid and nonassessable and are owned by it free and
clear of Encumbrances (as hereinafter defined) securing
obligations not reflected in the Purchaser SEC Reports.
Section 4.4 Authority Relative to this Agreement.
Each of Purchaser and Sub has the corporate power and authority
to enter into this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this
Agreement by Purchaser and Sub and the consummation by Purchaser
and Sub of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Purchaser and Sub and by
Purchaser as the sole shareholder of Sub by written consent, and
no other corporate proceedings on the part of Purchaser or Sub
are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Purchaser and Sub and (assuming
this Agreement constitutes a valid and binding obligation of the
Company) constitutes a valid and binding agreement of each of
Purchaser and Sub, enforceable against Purchaser and Sub in
accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally from time to time in effect and to
general equitable principles.
Section 4.5 Consents and Approvals; No Violations.
Except (a) for applicable requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
the Securities Act, the Exchange Act, state or foreign laws
relating to takeovers, state securities or blue sky laws, state
insurance laws and the regulations promulgated thereunder, the
filing of the Articles of Merger as required by the FBCA and The
General and Business Corporation Law of Missouri and the filing
of the Certificate of Designation as required by Section 7.11
(collectively, the "Governmental Requirements"), or (b) where the
failure to make any filing with, or to obtain any permit,
authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency,
commission, division, department, public body or other authority
(a "Government Entity") would not prevent or delay the
consummation of the Merger, or otherwise prevent Purchaser or Sub
from performing their respective obligations under this
Agreement, and would not individually or in the aggregate have a
Purchaser Material Adverse Effect, no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity is
necessary for the execution, delivery and performance of this
Agreement by Purchaser and Sub and the consummation of the
transactions contemplated by this Agreement. Neither the
execution, delivery or performance of this Agreement by Purchaser
or Sub, nor the consummation by Purchaser or Sub of the
transactions contemplated hereby, nor compliance by Purchaser or
Sub with any of the provisions hereof, will (i) conflict with or
result in any breach of any provisions of the Articles of
Incorporation or By-Laws of Purchaser and Sub or the Articles or
Certificate of Incorporation, as the case may be, or By-Laws of
any of the Purchaser Subsidiaries, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of
termination, cancellation, acceleration, vesting, payment,
exercise, suspension or revocation) under, any of the terms,
conditions or provisions of any note, bond, mortgage, deed of
trust, security interest, indenture, license, contract,
agreement, plan or other instrument or obligation to which
Purchaser, Sub or any of the Purchaser Subsidiaries is a party or
by which any of them or any of their properties or assets may be
bound or affected, (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Purchaser, Sub,
any Purchaser Subsidiary or any of their properties or assets,
(iv) result in the creation or imposition of any Encumbrance on
any asset of Purchaser, Sub or any Purchaser Subsidiary, or (v)
cause the suspension or revocation of any permit, license,
governmental authorization, consent or approval necessary for
Purchaser, Sub or any of the Purchaser Subsidiaries to conduct
its business as currently conducted, except in the case of
clauses (ii), (iii), (iv) and (v) for violations, breaches,
defaults, terminations, cancellations, accelerations, creations,
impositions, suspensions or revocations which would not
individually or in the aggregate have a Purchaser Material
Adverse Effect.
Section 4.6 Purchaser SEC Reports. Purchaser has
delivered to the Company true and complete copies of each Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Current
Report on Form 8-K, Proxy Statement, Schedule 13D filed with
respect to Purchaser, Form S-4, and the prospectus included in
any other registration statement as presently in effect and as
last amended, pursuant to which Purchaser has registered equity
securities for sale in underwritten offerings (including any
amendments thereto), filed by Purchaser with the SEC since
January 1, 1992 through the date hereof (collectively, the
"Purchaser SEC Reports"). As of the respective dates such
Purchaser SEC Reports were filed or, if any such Purchaser SEC
Reports were amended, as of the date such amendment was filed,
each of the Purchaser SEC Reports (i) complied in all material
respects with all applicable requirements of the Securities Act
and the Exchange Act, and the rules and regulations promulgated
thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. Each of (i) the audited consolidated
financial statements of Purchaser (including any related notes
and schedules) included (or incorporated by reference) in its
Annual Report on Form 10-K for the fiscal year ended December 31,
1994 and (ii) the unaudited consolidated interim financial
statements of Purchaser (including any related notes and
schedules) included (or incorporated by reference) in its
Quarterly Report on Form 10-Q for the quarter ended June 30,
1995, fairly present, in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis
(except as may be indicated in the notes thereto), the
consolidated financial position of Purchaser and the Purchaser
Subsidiaries as of the dates thereof and the consolidated results
of their operations and changes in their financial position for
the periods then ended (subject to normal year-end adjustments in
the case of any unaudited interim financial statements).
Section 4.7 Statutory Financial Statements. The
Annual Statements and Quarterly Statements of the Purchaser
Insurance Subsidiaries, as filed with the departments of
insurance for all applicable domiciliary states for the years
ended December 31, 1993 and December 31, 1994 (the "Annual
Statutory Statements of Purchaser") and the quarters ended March
31, 1994, June 30, 1994, March 31, 1995 and June 30, 1995
(collectively, the "March 31 and June 30 Statutory Statements of
Purchaser"), respectively, together with all exhibits and
schedules thereto (all Annual Statutory Statements of Purchaser
and all March 31 and June 30 Statutory Statements of Purchaser,
together with all exhibits and schedules thereto, referred to in
this Section 4.7 are hereinafter referred to as the "Statutory
Financial Statements of Purchaser"), have been prepared in
accordance with the accounting practices prescribed or permitted
by the departments of insurance for all applicable domiciliary
states for purposes of financial reporting to the state's
insurance regulators ("State Statutory Accounting Principles"),
and such accounting practices have been applied on a basis
consistent with State Statutory Accounting Principles throughout
the periods involved, except as expressly set forth in the notes,
exhibits or schedules thereto, and the Statutory Financial
Statements of Purchaser present fairly in all material respects
the financial position and the results of operations for the
Purchaser Insurance Subsidiaries as of the dates and for the
periods therein in accordance with State Statutory Accounting
Principles. Purchaser has delivered to the Company true and
complete copies of the Annual Statutory Statements of Purchaser
and the March 31 and June 30 Statutory Statements of Purchaser.
Section 4.8 Absence of Certain Changes. Since June
30, 1995, there has been no event or condition which has had (or
is reasonably likely to result in) a Purchaser Material Adverse
Effect, and Purchaser and the Purchaser Significant Subsidiaries
have in all material respects conducted their businesses in the
ordinary course consistent with past practices and have not taken
any action which, if taken after the date hereof, would violate
Section 6.2 hereof.
Section 4.9 Litigation. Except as disclosed in the
Purchaser SEC Reports, there is no suit, action, proceeding or
investigation (whether at law or equity, before or by any
federal, state or foreign court, tribunal, commission, board,
agency or instrumentality, or before any arbitrator) pending or,
to the best knowledge of Purchaser, threatened against or
affecting Purchaser, Sub or any of the Purchaser Subsidiaries,
the outcome of which, in the reasonable judgment of Purchaser, is
likely individually or in the aggregate to have a Purchaser
Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding
against Purchaser, Sub or any of the Purchaser Subsidiaries
having, or which, insofar as can reasonably be foreseen, in the
future may have, a Purchaser Material Adverse Effect.
Section 4.10 Absence of Undisclosed Liabilities.
Except for liabilities or obligations which are accrued or
reserved against in Purchaser's financial statements (or
reflected in the notes thereto) included in the Purchaser SEC
Reports or which were incurred after June 30, 1995 in the
ordinary course of business and consistent with past practices or
in connection with the transactions contemplated by this
Agreement or liabilities incurred in connection with acquisitions
made after June 30, 1995, Purchaser and the Purchaser
Subsidiaries do not have any material liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected in a consolidated balance sheet
(or reflected in the notes thereto) of Purchaser.
Section 4.11 No Default. Neither Purchaser, Sub nor
any of the Purchaser Subsidiaries is in violation or breach of,
or default under (and no event has occurred which with notice or
the lapse of time or both would constitute a violation or breach
of, or default under) any term, condition or provision of (a) its
Articles or Certificate of Incorporation, as the case may be, or
By-Laws, (b) any note, bond, mortgage, deed of trust, security
interest, indenture, license, agreement, plan, contract, lease,
commitment or other instrument or obligation to which Purchaser,
Sub or any of the Purchaser Subsidiaries is a party or by which
they or any of their properties or assets may be bound or
affected, (c) any order, writ, injunction, decree, statute, rule
or regulation applicable to Purchaser, Sub or any of the
Purchaser Subsidiaries or any of their properties or assets, or
(d) any permit, license, governmental authorization, consent or
approval necessary for Purchaser, Sub or any of the Purchaser
Subsidiaries to conduct their respective businesses as currently
conducted, except in the case of clauses (b), (c) and (d) above
for violations, breaches or defaults which would not individually
or in the aggregate have a Purchaser Material Adverse Effect.
Section 4.12 Taxes. (a) Except as set forth in the
Purchaser SEC Reports:
(i) Purchaser and the Purchaser Subsidiaries
have (i) duly filed (or there has been filed on their
behalf) with the appropriate governmental authorities all
material Tax Returns (as hereinafter defined) required to be
filed by them on or prior to the date hereof, and (ii) duly
paid in full or made provision in accordance with GAAP (or
there has been paid or provision has been made on their
behalf) for the payment of all material Taxes (as
hereinafter defined) for all periods ending through the date
hereof;
(ii) no federal, state, local or foreign
audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes
or Tax Returns of Purchaser or the Purchaser Subsidiaries
wherein an adverse determination or ruling in any one such
proceeding or in all such proceedings in the aggregate could
have a Purchaser Material Adverse Effect;
(iii) the Internal Revenue Service has
completed examinations of the consolidated federal income
Tax Returns of Purchaser for all periods through and
including December 31, 1985. Except as set forth in the
Purchaser SEC Reports, all issues have been settled with
respect to such examinations. The Internal Revenue Service
is examining as of the date hereof the consolidated federal
income Tax Returns of Purchaser for the years 1986 through
1988; and
(iv) neither Purchaser nor the Purchaser
Subsidiaries is a party to any material tax sharing
agreement or arrangement with any entity not included in
Purchaser's consolidated financial statements most recently
filed by Purchaser with the SEC.
(b) "Taxes" shall mean all federal, state, local
and foreign taxes, and other assessments of a similar nature
(whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto.
"Tax Returns" shall mean all federal, state, local and foreign
tax returns, declarations, statements, reports, schedules, forms
and information returns and any amended Tax Returns relating to
Taxes.
Section 4.13 Title to Property. Except as set forth
in the Purchaser SEC Reports, each of Purchaser and the Purchaser
Subsidiaries (i) has good and valid title to all of its
properties, assets and other rights that do not constitute real
property, free and clear of all Encumbrances, except for such
Encumbrances that do not, individually or in the aggregate, have
a Purchaser Material Adverse Effect, and (ii) owns, has valid
leasehold interests in or valid contractual rights to use, all of
the assets, tangible and intangible, used by, or necessary for
the conduct of, its business except where the failure to have
such valid leasehold interests or such valid contractual rights
do not, individually or in the aggregate, have a Purchaser
Material Adverse Effect.
Section 4.14 Insurance Practices; Permit and Insurance
Licenses. (a) The business of Purchaser and each of the
Purchaser Subsidiaries is being conducted in compliance, in all
material respects, with all applicable laws, including, without
limitation, all insurance laws, ordinances, rules, regulations,
decrees and orders of any Governmental Entity, and all material
notices, reports, documents and other information required to be
filed thereunder within the last three years were properly filed
in all material respects and were in compliance in all material
respects with such laws.
(b) Purchaser, and each of the Purchaser
Insurance Subsidiaries, has all permits and insurance licenses
the use and exercise of which are necessary for the conduct of
its business as now conducted, other than such permits and
insurance licenses the absence of which would not, individually
or in the aggregate, be reasonably expected to have a Purchaser
Material Adverse Effect. The business of Purchaser and each of
the Purchaser Insurance Subsidiaries has been and is being
conducted in compliance, in all material respects, with all such
permits and insurance licenses. To the best knowledge of
Purchaser, all such permits and insurance licenses are in full
force and effect, and there is no proceeding or investigation
pending or threatened which would reasonably be expected to lead
to the revocation, amendment, failure to renew, limitation,
suspension or restriction of any such permit or insurance
license.
Section 4.15 Regulatory Filings. Purchaser and the
Purchaser Subsidiaries have filed all reports, statements,
documents, registrations, filings or submissions required to be
filed by any of them with any Governmental Entity, except where
the failure to file, in the aggregate, would not have a Purchaser
Material Adverse Effect; and, to the best knowledge of Purchaser,
all such reports, statements, documents, registrations, filings
or submissions were in all material respects true, complete and
accurate when filed.
Section 4.16 Investments. (a) The Statutory Financial
Statements of Purchaser set forth a list, which list is accurate
and complete in all material respects, of all securities,
mortgages and other investments (collectively, the "Purchaser
Investments") owned by the Purchaser Insurance Subsidiaries as of
December 31, 1994, together with the cost basis book or amortized
value, as the case may be, as of December 31, 1994. All
transactions in Purchaser Investments by each of the Purchaser
Insurance Subsidiaries from January 1, 1995 to the date hereof
have complied in all material respects with the investment
policies of such Purchaser Insurance Subsidiary and all
applicable insurance laws and regulations.
(b) Except as set forth in the Statutory Financial
Statements of Purchaser, the Purchaser Insurance Subsidiaries
have good and marketable title to the Purchaser Investments
listed in the Statutory Financial Statements of Purchaser or
acquired in the ordinary course of business since June 30, 1995,
other than with respect to those Purchaser Investments which have
been disposed of in the ordinary course of business or as
contemplated by this Agreement or redeemed in accordance with
their terms since such date and other than with respect to
statutory deposits which are subject to certain restrictions on
transfer.
(c) The information provided by Purchaser to the
Company indicating the aggregate amount by which the Purchaser
Investments have been written down from January 1, 1995 through
September 30, 1995 and the aggregate amount of Purchaser
Investments in default with respect to the payment of principal
or interest as of September 30, 1995, is true and correct in all
material respects.
Section 4.17 Reserves. The aggregate reserves of the
Purchaser Insurance Subsidiaries as recorded in the Statutory
Accounting Statements of Purchaser have been determined in
accordance with generally accepted actuarial principles
consistently applied (except as set forth therein). The
insurance reserving practices and policies of the Purchaser
Insurance Subsidiaries have not changed, in any material respect,
since December 31, 1994 and the results of the application of
such practices and policies are reflected in the Statutory
Accounting Statements of Purchaser. All reserves of the
Purchaser Insurance Subsidiaries set forth in the Statutory
Accounting Statements of Purchaser are, to the best knowledge of
Purchaser, fairly stated in accordance with sound actuarial
principles and meet the requirements of the insurance laws of the
applicable insurance authority, except where the failure to so
state such reserves or meet such requirements would not have a
Purchaser Material Adverse Effect.
Section 4.18 Ownership of Company Common Stock. As of
the date hereof, Purchaser and the Purchaser Subsidiaries (a) are
not beneficial owners (as defined in Rule 16d-1(a)(2) of the
Exchange Act) of more than 3,000 shares of Company Common Stock
and (b) have not purchased or otherwise acquired since January 1,
1994 more than 130,000 shares of Company Common Stock.
Section 4.19 Information in Proxy Statement/Prospectus
and Registration Statement. The Registration Statement (or any
amendment thereof or supplement thereto), at the date it becomes
effective and at the time of the Company Special Meeting, will
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading,
except that no representation is made by Purchaser with respect
to statements made therein based on information supplied by the
Company in writing for inclusion in the Registration Statement.
None of the information supplied by Purchaser for inclusion or
incorporation by reference in the Proxy Statement/Prospectus
will, at the date mailed to shareholders and at the time of the
Company Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading. The Registration Statement will comply in all
material respects with the provisions of the Securities Act and
the rules and regulations thereunder.
Section 4.20 Brokers. No person is entitled to any
brokerage, financial advisory, finder's or similar fee or
commission payable by Purchaser in connection with the
transactions contemplated by this Agreement based upon
arrangements made by and on behalf of Purchaser.
Section 4.21 Environmental Matters. (a) Except as
disclosed in the Purchaser SEC Reports, to the knowledge of
Purchaser, (i) each of Purchaser and the Purchaser Subsidiaries
is and has been in compliance in all respects with and, except
for ongoing compliance obligations, including current activities
to remove asbestos and future activities to remove asbestos, if
applicable, has no existing liabilities under, and (ii) there are
no written claims or notices by any person received by Purchaser
or any of the Purchaser Subsidiaries that any of Purchaser or the
Purchaser Subsidiaries has not been in compliance in all respects
with or has any existing liabilities under, all applicable laws,
rules, regulations, common law, ordinances, decrees, orders and
other binding legal requirements relating to pollution, the
preservation of the environment, and the exposure to materials in
the environment or the work place ("Environmental Laws") with
respect to property owned by Purchaser or any of the Purchaser
Subsidiaries, except for such non-compliance or liabilities that
would not be reasonably likely to have a Purchaser Material
Adverse Effect. Except as disclosed in the Purchaser SEC
Reports, neither Purchaser nor any of the Purchaser Subsidiaries
is subject to any decrees, orders, decisions of arbitrators or
judgments that impose requirements under Environmental Laws,
restrictions under Environmental Laws, liabilities under
Environmental Laws, or penalties for violations of Environmental
Laws or the aforementioned requirements or restrictions, except
where such requirements, restrictions, liabilities, or penalties
would not be reasonably likely to have a Purchaser Material
Adverse Effect.
(b) Except as disclosed in the Purchaser SEC
Reports, with respect to currently owned property and all
property formerly owned, leased or operated by Purchaser or any
of the Purchaser Subsidiaries, including foreclosure property, to
the knowledge of Purchaser, there are no past or present actions,
conditions or occurrences that could form the basis of any
outstanding claim under Environmental Laws against, or liability
under such laws of, Purchaser or any of the Purchaser
Subsidiaries, except for such claims or liabilities which in the
aggregate would not reasonably be expected to result in a
Purchaser Material Adverse Effect.
Section 4.22 Disclosure. No representation or
warranty by Purchaser or the Purchaser Subsidiaries in this
Agreement, and no statement contained in the Purchaser SEC
Reports and the Statutory Financial Statements of Purchaser,
contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was made, to make the
statements herein or therein not misleading. There is no fact
known to Purchaser which could reasonably be expected to have a
Purchaser Material Adverse Effect which has not been set forth in
the Purchaser SEC Reports, the Statutory Financial Statements of
Purchaser or in this Agreement.
Section 4.23 Investigation by Purchaser. Purchaser
has conducted its own independent review and analysis of the
businesses, assets, condition, operations and prospects of the
Company and the Company Subsidiaries (as hereinafter defined) and
acknowledges that Purchaser has been provided access to the
properties, premises and records of the Company and the Company
Subsidiaries for this purpose. In entering into this Agreement,
Purchaser has relied solely upon its own investigation and
analysis and the warranties contained herein, and Purchaser:
(a) acknowledges that none of the Company, the
Company Subsidiaries or any of their respective directors,
officers, employees, affiliates, agents or representatives makes
any representation or warranty, either express or implied, as to
the accuracy or completeness of any of the information provided
or made available to Purchaser or their agents or representatives
prior to the execution of this Agreement, and
(b) agrees, to the fullest extent permitted by
law, that none of the Company, the Company Subsidiaries or any of
their respective directors, officers, employees, affiliates,
agents or representatives shall have any liability or
responsibility whatsoever to Purchaser on any basis (including,
without limitation, in contract or tort, under federal or state
securities laws or otherwise) based upon any information provided
or made available, or statements made, to Purchaser prior to the
execution of this Agreement,
except that the foregoing limitations shall not apply to the
Company to the extent the Company makes the specific
representations and warranties set forth in Article V of this
Agreement and in the Company Disclosure Letter, but always
subject to the limitations and restrictions contained herein and
therein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Purchaser in a letter
delivered to it prior to the execution hereof (which letter
contains appropriate references to identify the representations
and warranties herein to which the information in such letter
relates) (the "Company Disclosure Letter"), the Company
represents and warrants to Purchaser as follows:
Section 5.1 Organization. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Florida and has the corporate
power and authority and all necessary governmental approvals to
own, lease and operate its properties and to carry on its
business as it is now being conducted or presently proposed to be
conducted. The Company is duly qualified as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held
under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so
qualified would not individually or in the aggregate have a
material adverse effect on the business, assets, liabilities,
results of operations or financial condition of the Company and
the Company Subsidiaries, taken as a whole (a "Company Material
Adverse Effect").
Section 5.2 Capitalization. As of September 1, 1995:
(i) the authorized capital stock of the Company consisted of
7,500,000 shares of Company Voting Stock, 15,000,000 shares of
Company Non-Voting Stock and 20,000,000 shares of Preferred
Stock, par value $.10 per share (the "Company Preferred Stock")
and (ii) 5,692,083 shares of Company Voting Stock, 7,472,417
shares of Company Non-Voting Stock and no shares of Company
Preferred Stock were issued and outstanding. All of the issued
and outstanding shares of Company Voting Stock and Company Non-
Voting Stock are validly issued, fully paid and nonassessable and
free of preemptive rights. Except as set forth above or as
specified in Section 5.2 of the Company Disclosure Letter, as of
the date of this Agreement there are no shares of capital stock
of the Company issued or outstanding or any options, warrants,
subscriptions, calls, rights, convertible securities or other
agreements or commitments obligating the Company to issue,
transfer, sell, redeem, repurchase or otherwise acquire any
shares of its capital stock.
Section 5.3 Company Subsidiaries. (a) Section 5.3(a)
of the Company Disclosure Letter sets forth the name of each
subsidiary of the Company (collectively, the "Company
Subsidiaries") and the state or jurisdiction of its
incorporation. Each Company Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the corporate
power and authority and all necessary government approvals to
own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be
so organized, existing and in good standing or to have such power
and authority or necessary governmental approvals would not
individually or in the aggregate have a Company Material Adverse
Effect. Each Company Subsidiary is duly qualified or licensed
and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be
so duly qualified or licensed and in good standing would not
individually or in the aggregate have a Company Material Adverse
Effect.
(b) Section 5.3(b) of the Company Disclosure
Letter sets forth the name of each of the Company Subsidiaries
that is an insurance company (collectively, the "Company
Insurance Subsidiaries"). Except as disclosed in Section 5.3(b)
of the Company Disclosure Letter, each of the Company Insurance
Subsidiaries is (i) duly licensed or authorized as an insurance
company in its jurisdiction of incorporation and (ii) duly
licensed or authorized as an insurance company in each other
jurisdiction where it is required to be so licensed or
authorized.
(c) Except as set forth in Section 5.3(c) of the
Company Disclosure Letter, the Company is, directly or
indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each of the Company
Subsidiaries, there are no proxies with respect to any such
shares, and no equity securities of any Company Subsidiary are or
may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights
convertible into or exchangeable or exercisable for, shares of
any capital stock of any Company Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which
the Company or any Company Subsidiary is or may be bound to
issue, redeem, purchase or sell additional shares of capital
stock of any Company Subsidiary or securities convertible into or
exchangeable or exercisable for any such shares. Except as set
forth in Section 5.3(c) of the Company Disclosure Letter, all of
such shares so owned by the Company are validly issued, fully
paid and nonassessable and are owned by it free and clear of any
Encumbrances, restraints on alienation, or any other restrictions
with respect to the transferability or assignability thereof
(other than restrictions on transfer imposed by federal or state
securities laws).
(d) Except for the Company Subsidiaries and as
set forth in the Statutory Financial Statements of the Company
(as hereinafter defined) or in Section 5.3(d) of the Company
Disclosure Letter, the Company does not directly or indirectly
own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture
or other business association or entity that directly or
indirectly conducts any activity which is material to the
Company.
Section 5.4 Authority Relative to this Agreement. (a)
The Company has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by the Company's
Board of Directors, and no other corporate proceedings on the
part of the Company, other than obtaining shareholder approval
pursuant to Section 2.1 hereto, are necessary to authorize this
Agreement or the transactions contemplated hereby. Subject to
the foregoing, this Agreement has been duly and validly executed
and delivered by the Company and (assuming this Agreement
constitutes a valid and binding obligation of Purchaser and Sub)
constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally
from time to time in effect and to general equitable principles.
(b) The Company's Board of Directors has (i)
taken sufficient action, pursuant to paragraph 2(i) of the
Shareholder Agreement dated as of January 29, 1990, to approve
the offer of Purchaser to enter into the transactions
contemplated by this Agreement with the Company and (ii) waived
the Company's right, pursuant to Section 7.2 of the Company's
Articles of Incorporation, to purchase, or assign the right to
purchase, the shares of Company Voting Stock to be sold,
assigned, transferred or otherwise disposed of by any holder
thereof hereunder.
Section 5.5 Consents and Approvals; No Violations.
Except (a) for the Governmental Requirements, or (b) where the
failure to make any filing with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity
would not prevent or delay the consummation of the Merger, or
otherwise prevent the Company from performing its obligations
under this Agreement, and would not individually or in the
aggregate have a Company Material Adverse Effect, no filing with,
and no permit, authorization, consent or approval of, any
Governmental Entity is necessary for the execution, delivery and
performance of this Agreement by the Company and the consummation
of the transactions contemplated by this Agreement. Except as
set forth in Section 5.5 of the Company Disclosure Letter,
neither the execution, delivery or performance of this Agreement
by the Company, nor the consummation by the Company of the
transactions contemplated hereby, nor compliance by the Company
with any of the provisions hereof, will (i) conflict with or
result in any breach of any provisions of the Articles of
Incorporation or By-Laws of the Company or the Certificate or
Articles of Incorporation, as the case may be, or By-Laws of any
of the Company Subsidiaries, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination,
cancellation, vesting, payment, exercise, acceleration,
suspension or revocation) under, any of the terms, conditions or
provisions of any note, bond, mortgage, deed of trust, security
interest, indenture, license, contract, agreement, plan or other
instrument or obligation to which the Company or any of the
Company Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound or affected, (iii)
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company, any of the Company
Subsidiaries or any of their properties or assets, (iv) result in
the creation or imposition of any Encumbrance on any asset of the
Company or any Company Subsidiary or (v) cause the suspension or
revocation of any permit, license, governmental authorization,
consent or approval necessary for the Company or any of the
Company Subsidiaries to conduct its business as currently
conducted, except in the case of clauses (ii), (iii), (iv) and
(v) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions
or revocations which would not individually or in the aggregate
have a Company Material Adverse Effect.
Section 5.6 Company SEC Reports. The Company has
delivered to Purchaser true and complete copies of each
registration statement, report and proxy or information statement
(including exhibits and any amendments thereto) filed by the
Company with the SEC since January 1, 1992 through the date
hereof (collectively, the "Company SEC Reports"). As of the
respective dates the Company SEC Reports were filed or, if any
such Company SEC Reports were amended, as of the date such
amendment was filed, each of the Company SEC Reports (i) complied
in all material respects with all applicable requirements of the
Securities Act and Exchange Act, and the rules and regulations
promulgated thereunder and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. Each of (i) the audited
consolidated financial statements of the Company (including any
related notes and schedules) included (or incorporated by
reference) in its Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 and (ii) the unaudited consolidated
interim financial statements for the Company (including any
related notes and schedules) included (or incorporated by
reference) in its Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, fairly present, in conformity with GAAP
applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of the
Company and the Company Subsidiaries as of the dates thereof and
the consolidated results of their operations and changes in their
financial position for the periods then ended (subject to normal
year-end adjustments in the case of any unaudited interim
financial statements).
Section 5.7 Statutory Financial Statements. The
Annual Statements and Quarterly Statements of the Company
Insurance Subsidiaries, as filed with the Florida Department of
Insurance for the years ended December 31, 1993 and December 31,
1994 (the "Annual Statutory Statements of the Company") and the
quarters ended March 31, 1994, June 30, 1994, March 31, 1995 and
June 30, 1995 (collectively, the "March 31 and June 30 Statutory
Statements of the Company"), respectively, together with all
exhibits and schedules thereto (all Annual Statutory Statements
of the Company and all March 31 and June 30 Statutory Statements
of the Company, together with all exhibits and schedules thereto,
referred to in this Section 5.7 are hereinafter referred to as
the "Statutory Financial Statements of the Company"), have been
prepared in accordance with the accounting practices prescribed
or permitted by the Florida Department of Insurance for purposes
of financial reporting to the state's insurance regulators
("Florida Statutory Accounting Principles"), and such accounting
practices have been applied on a basis consistent with Florida
Statutory Accounting Principles throughout the periods involved,
except as expressly set forth in the notes, exhibits or schedules
thereto, and the Statutory Financial Statements of the Company
present fairly in all material respects the financial position
and the results of operations for the Company Insurance
Subsidiaries as of the dates and for the periods therein in
accordance with Florida Statutory Accounting Principles. The
Company has delivered to Purchaser true and complete copies of
the Annual Statutory Statements of the Company and the March 31
and June 30 Statutory Statements of the Company.
Section 5.8 Absence of Certain Changes. Since June
30, 1995, there has been no event or condition which has had (or
is reasonably likely to result in) a Company Material Adverse
Effect, and except as set forth in Section 5.8 of the Company
Disclosure Letter, the Company and the Company Subsidiaries have
in all material respects conducted their businesses in the
ordinary course consistent with past practices and have not taken
any action which, if taken after the date hereof, would violate
Section 6.1 hereof.
Section 5.9 Litigation. Except as disclosed in the
Company SEC Reports or as set forth in Section 5.9 of the Company
Disclosure Letter, there is no suit, action, proceeding or
investigation (whether at law or equity, before or by any
federal, state or foreign court, tribunal, commission, board,
agency or instrumentality, or before any arbitrator) pending or,
to the best knowledge of the Company, threatened against or
affecting the Company or any of the Company Subsidiaries, the
outcome of which, in the reasonable judgment of the Company, is
likely individually or in the aggregate to have a Company
Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding
against the Company or any of the Company Subsidiaries having, or
which, insofar as can reasonably be foreseen, in the future may
have, a Company Material Adverse Effect.
Section 5.10 Absence of Undisclosed Liabilities.
Except for liabilities or obligations which are accrued or
reserved against in the Company's financial statements (or
reflected in the notes thereto) included in the Company SEC
Reports or disclosed in Section 5.10 of the Company Disclosure
Letter or which were incurred after June 30, 1995 in the ordinary
course of business and consistent with past practices or in
connection with the transactions contemplated by this Agreement,
the Company and the Company Subsidiaries do not have any material
liabilities or obligations (whether absolute, accrued, contingent
or otherwise) of a nature required by GAAP to be reflected in a
consolidated balance sheet (or reflected in the notes thereto) of
the Company.
Section 5.11 No Default. Except as set forth in
Section 5.11 of the Company Disclosure Letter, neither the
Company nor any of the Company Subsidiaries is in violation or
breach of, or default under (and no event has occurred which with
notice or the lapse of time or both would constitute a violation
or breach of, or a default under) any term, condition or
provision of (a) its Articles or Certificate of Incorporation, as
the case may be, or By-Laws, (b) any note, bond, mortgage, deed
of trust, security interest, indenture, license, agreement, plan,
contract, lease, commitment or other instrument or obligation to
which the Company or any of the Company Subsidiaries is a party
or by which they or any of their properties or assets may be
bound or affected, (c) any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of
the Company Subsidiaries or any of their properties or assets, or
(d) any permit, license, governmental authorization, consent or
approval necessary for the Company or any of the Company
Subsidiaries to conduct their respective businesses as currently
conducted, except in the case of clauses (b), (c) and (d) above
for breaches, defaults or violations which would not individually
or in the aggregate have a Company Material Adverse Effect.
Section 5.12 Taxes. Except as set forth in Section
5.12 of the Company Disclosure Letter:
(a) the Company and the Company Subsidiaries
have (i) duly filed (or there has been filed on their
behalf) with the appropriate governmental authorities all
material Tax Returns required to be filed by them on or
prior to the date hereof, and (ii) duly paid in full or made
provision in accordance with GAAP (or there has been paid or
provision has been made on their behalf) for the payment of
all material Taxes for all periods ending through the date
hereof;
(b) no federal, state, local or foreign
audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes
or Tax Returns of the Company or the Company Subsidiaries
wherein an adverse determination or ruling in any one such
proceeding or in all such proceedings in the aggregate could
have a Company Material Adverse Effect;
(c) The federal income Tax Returns of the
Company and the Company Subsidiaries have been examined by
the Internal Revenue Service (or the applicable statutes of
limitation for the assessment of federal income Taxes for
such periods have expired) for all periods through and
including December 31, 1990, and no material deficiencies
were asserted as a result of such examinations that have not
been resolved and fully paid. Neither the Company nor any
of the Company Subsidiaries has granted any requests,
agreements, consents or waivers to extend the statutory
period of limitations applicable to the assessment of any
Taxes with respect to any Tax Returns of the Company or any
of the Company Subsidiaries; and
(d) neither the Company nor the Company
Subsidiaries is a party to any material tax sharing, tax
indemnity or other agreement or arrangement.
Section 5.13 Title to Property. (a) Except as set
forth in Section 5.13(a) of the Company Disclosure Letter, each
of the Company and the Company Subsidiaries (i) has good and
valid title to all of its properties, assets and other rights
that do not constitute real property, free and clear of all
Encumbrances, except for such Encumbrances that do not,
individually or in the aggregate, have a Company Material Adverse
Effect, and (ii) owns, has valid leasehold interests in or valid
contractual rights to use, all of the assets, tangible and
intangible, used by, or necessary for the conduct of, its
business, except where the failure to have such valid leasehold
interests or such valid contractual rights do not, individually
or in the aggregate, have a Company Material Adverse Effect.
(b) Except as set forth in Section 5.13(b) of the
Company Disclosure Letter, each of the Company and the Company
Subsidiaries:
(i) owns and has good and marketable title
in fee simple to the real property owned by such party, free
and clear of all mortgages, pledges, liens, charges,
encumbrances, defects, security interests, claims, options
and restrictions of all kind ("Encumbrances"), except for
(A) minor imperfections of title, easements and rights of
way, none of which, individually or in the aggregate,
materially detracts from the value of or impairs the use of
the affected property or impairs the operations of the
Company or any of the Company Subsidiaries and (B) liens for
current taxes not yet due and payable ("Permitted Company
Liens");
(ii) is in peaceful and undisturbed
possession of the space and/or estate under each lease under
which it is a tenant, and there are no material defaults by
it as tenant thereunder; and
(iii) has good and valid rights of ingress
and egress to and from all the real property owned or leased
by such party from and to the public street systems for all
usual street, road and utility purposes.
Section 5.14 Insurance Practices; Permits and
Insurance Licenses. (a) The business of the Company and each of
the Company Subsidiaries is being conducted in compliance in all
material respects with all applicable laws, including, without
limitation, all insurance laws, ordinances, rules, regulations,
decrees and orders of any Governmental Entity, and all material
notices, reports, documents and other information required to be
filed thereunder within the last three years were properly filed
in all material respects and were in compliance in all material
respects with such laws.
(b) The Company, and each of the Company
Insurance Subsidiaries, has all permits and insurance licenses
the use and exercise of which are necessary for the conduct of
its business as now conducted, other than such permits and
insurance licenses the absence of which would not, individually
or in the aggregate, be reasonably expected to have a Company
Material Adverse Effect. The business of the Company and each of
the Company Insurance Subsidiaries has been and is being
conducted in compliance, in all material respects, with all such
permits and insurance licenses. To the best knowledge of the
Company, all such permits and insurance licenses are in full
force and effect, and there is no proceeding or investigation
pending or threatened which would reasonably be expected to lead
to the revocation, amendment, failure to renew, limitation,
suspension or restriction of any such permit or insurance
license.
Section 5.15 Regulatory Filings. The Company has made
available for inspection by Purchaser complete copies of all
material registrations, filings and submissions made since
January 1, 1992 by the Company or any of the Company Subsidiaries
with any Governmental Entity and any reports of examinations
issued since January 1, 1992 by any such Governmental Entity that
relate to the Company or any of the Company Subsidiaries. The
Company and the Company Subsidiaries have filed all reports,
statements, documents, registrations, filings or submissions
required to be filed by any of them with any Governmental Entity,
except where the failure to file, in the aggregate, would not
have a Company Material Adverse Effect; and, to the best
knowledge of the Company, all such reports, statements,
documents, registrations, filings or submissions were in all
material respects true, complete and accurate when filed.
Section 5.16 Investments. (a) The Statutory Financial
Statements of the Company set forth a list, which list is
accurate and complete in all material respects, of all
securities, mortgages and other investments (collectively, the
"Company Investments ) owned by the Company Insurance
Subsidiaries as of December 31, 1994, together with the cost
basis book or amortized value, as the case may be, as of December
31, 1994. Section 5.16(a) of the Company Disclosure Letter sets
forth a list, which list is accurate and complete in all material
respects, of all transactions in the Company Investments by each
Company Insurance Subsidiary from January 1, 1995 to September
30, 1995. All transactions in Company Investments by each of the
Company Insurance Subsidiaries from September 30, 1995 to the
date hereof have complied in all material respects with the
investment policies of such Company Insurance Subsidiary and all
applicable insurance laws and regulations.
(b) Except as set forth in the Statutory
Financial Statements of the Company, the Company Insurance
Subsidiaries have good and marketable title to the Company
Investments listed in the Statutory Financial Statements of the
Company or acquired in the ordinary course of business since June
30, 1995, other than with respect to those Company Investments
which have been disposed of in the ordinary course of business or
as contemplated by this Agreement or redeemed in accordance with
their terms since such date and other than Permitted Company
Liens or with respect to statutory deposits which are subject to
certain restrictions on transfer.
(c) Section 5.16(c) of the Company Disclosure
Letter identifies the Company Investments listed thereon which
have been written down on the June 30, 1995 Statutory Statement
of the Company, or to the best knowledge of the Company, are as
of September 30, 1995 in default in the payment of principal or
interest.
(d) Except as set forth in the Statutory
Financial Statements of the Company, there are no Encumbrances on
any of the Company Investments, other than Permitted Company
Liens and special deposits reflected in the Statutory Financial
Statements of the Company, and none of the Company Investments
consist of securities loaned to third parties.
Section 5.17 Reserves. The aggregate reserves of the
Company Insurance Subsidiaries as recorded in the Statutory
Accounting Statements of the Company have been determined in
accordance with generally accepted actuarial principles
consistently applied (except as set forth therein). Except as
disclosed in Section 5.17 of the Company Disclosure Letter, the
insurance reserving practices and policies of the Company
Insurance Subsidiaries have not changed, in any material respect,
since December 31, 1994 and the results of the application of
such practices and policies are reflected in the Statutory
Accounting Statements of the Company. All reserves of the
Company Insurance Subsidiaries set forth in the Statutory
Accounting Statements of the Company are, to the best knowledge
of the Company, fairly stated in accordance with sound actuarial
principles and meet the requirements of the insurance laws of the
applicable insurance authority, except where the failure to so
state such reserves or meet such requirements would not have a
Company Material Adverse Effect.
Section 5.18 Redemption of Company Common Stock.
Since January 1, 1995 the Company has not redeemed any shares of
Company Common Stock, except for exchanges of Company Voting
Stock for Company Non-Voting Stock on a share for share basis.
Section 5.19 Information in Proxy Statement/Prospectus
and Registration Statement. The Proxy Statement/Prospectus (or
any amendment thereof or supplement thereto), at the date mailed
to Company shareholders and at the time of the Company Special
Meeting, will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading,
except that no representation is made by the Company with respect
to statements made therein based on information supplied by
Purchaser in writing for inclusion in the Proxy
Statement/Prospectus. None of the information supplied by the
Company for inclusion or incorporation by reference in the
Registration Statement will, at the date it becomes effective and
at the time of the Company Special Meeting, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement/Prospectus
will comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
Section 5.20 Brokers. Except as set forth in Section
5.20 of the Company Disclosure Letter, no person is entitled to
any brokerage, financial advisory, finder's or similar fee or
commission payable by the Company in connection with the
transactions contemplated by this Agreement based upon
arrangements made by and on behalf of the Company.
Section 5.21 Employee Benefit Plans; ERISA. (a)
Section 5.21(a) of the Company Disclosure Letter sets forth a
list, which is complete and accurate in all material respects, of
each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, equity-based award, severance or
termination pay, hospitalization or other medical, accident,
disability, life or other insurance, supplemental unemployment
benefits, fringe and other welfare benefit, profit-sharing,
pension, or retirement plan, program, agreement or arrangement,
and each other employee benefit plan, program, agreement or
arrangement, that is sponsored, maintained or contributed to or
required to be contributed to by the Company or the Company
Subsidiaries or by any trade or business, whether or not
incorporated, that together with the Company would be deemed a
"single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or considered as being members of a controlled group
of corporations, under common control, or members of an
affiliated service group within the meaning of Subsections
414(b), (c), (m) or (o) of the Code or Section 4001(a)(14) of
ERISA (each such Subsidiary, trade, business or member an "ERISA
Affiliate"), in each case for the benefit of any employee or
terminated employee of the Company or any of the Company
Subsidiaries (the "Plans"). No ERISA Plan is a "multiemployer
pension plan," as defined in Section 3(37) of ERISA, nor is any
ERISA Plan a plan described in Section 4063(a) of ERISA.
(b) With respect to each Plan listed in Section
5.21(a) of the Company Disclosure Letter, to the extent
applicable, the Company has heretofore made available or has
caused to be made available to Purchaser true and complete copies
of each of the following documents:
(i) a copy of each written Plan;
(ii) a copy of the most recent annual
report on Form 5500 and actuarial report, if required under
ERISA, and to the extent they have been prepared by the
Company or its ERISA Affiliates, the most recent report
prepared with respect thereto in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 87,
Employer's Accounting for Pensions, SFAS No. 106, Employer's
Accounting for Post-Retirement Benefits other than Pensions,
or SFAS No. 112, Employer's Accounting for Post-Employment
Benefits, as the case may be;
(iii) a copy of the most recent Summary Plan
Description required unde ERISA with respect thereto;
(iv) if the Plan is funded through a trust
or any third party funding vehicle, a copy of the trust or
other funding agreement and the latest financial statements
thereof; and
(v) the most recent determination letter
received from the Internal Revenue Service with respect to
each Plan intended to qualify under Section 401 of the Code.
(c) No material liability under Title IV of ERISA
has been incurred by the Company or any ERISA Affiliate that has
not been satisfied in full, and to the knowledge of the Company,
no condition exists that presents a material risk to the Company
or any ERISA Affiliate of incurring a material liability under
such Title, other than liability for premiums due the Pension
Benefit Guaranty Corporation ("PBGC") (which premiums have been
paid when due).
(d) With respect to each ERISA Plan which is
subject to Title IV of ERISA, the present value of accrued
benefits under such plan, based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report
prepared by such plan's actuary with respect to such plan, did
not exceed, as of its latest valuation date, the then current
value of the assets of such plan allocable to such accrued
benefits. No ERISA Plan or any trust established thereunder that
is subject to Section 302 of ERISA and Section 412 of the Code
has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each
ERISA Plan ended prior to the Effective Time; and all
contributions required to be made with respect thereto (whether
pursuant to the terms of any ERISA Plan or otherwise) on or prior
to the Effective Time have been timely made.
(e) Except as set forth in Section 5.21(e) of the
Company Disclosure Letter, none of the Company, any ERISA
Affiliate, any ERISA Plan, and, to knowledge of the Company, any
trust created thereunder and any trustee or administrator thereof
has engaged in a transaction in connection with which the Company
or any ERISA Affiliate, any ERISA Plan, any such trust, or any
trustee or administrator thereof, or any party dealing with any
ERISA Plan or any such trust could be subject to either a
material civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a material tax imposed pursuant to sections 4971,
4972, 4975, 4976, 4977, 4979 or 4980 of the Code.
(f) Except as set forth in Section 5.21(f) of the
Company Disclosure Letter, there is no matter pending (other than
routine qualification determination filings, copies of which have
been furnished to Purchaser, or will be promptly furnished to
Purchaser when made) with respect to any of the Plans before the
Internal Revenue Service, Department of Labor or PBGC.
(g) Each of the Company and its ERISA Affiliates
has complied in all material respects with the notice and
continuation requirements of Section 4980B of the Code and Part 6
of Subtitle B of Title I of ERISA.
(h) Except as set forth in Section 5.21(h) of the
Company Disclosure Letter, to the knowledge of the Company, each
Plan has been operated and administered in all material respects
in accordance with its terms and applicable law, including but
not limited to ERISA and the Code.
(i) Except as set forth in Section 5.21(i) of the
Company Disclosure Letter, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current
or former employee, director or officer of the Company or any of
the Company Subsidiaries to severance pay, unemployment
compensation or any other payment, except as expressly provided
in this Agreement or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such
employee, director or officer.
(j) Except as set forth in Section 5.21(j) of the
Company Disclosure Letter, there are no pending or, to the
knowledge of the Company, threatened or anticipated actions,
suits or claims by or on behalf of any Plan, by any employee or
beneficiary covered under any Plan, or otherwise involving any
such Plan (other than routine claims for benefits).
Section 5.22 Labor Relations; Employees. (a) Since
January 1, 1991, none of the employees of the Company or the
Company Subsidiaries are represented by any labor organization
and, to the knowledge of the Company, no union claims to
represent these employees have been made. To the knowledge of
the Company, there have been no union organizing activities with
respect to employees of the Company or the Company Subsidiaries
within the past five years. To the knowledge of the Company, the
Company and the Company Subsidiaries are not, and have not been,
engaged in any unfair labor practices as defined in the National
Labor Relations Act or similar applicable law, ordinance or
regulation, nor is there pending any unfair labor practice
charge.
(b) The Company and the Company Subsidiaries have
not during the past two years effectuated a "plant closing" or
"mass layoff" (as defined in the Worker Adjustment and Retraining
Notification Act) affecting any of their sites of employment or
one or more facilities or operating units within any site of
employment or facility, nor is any such action scheduled within
the 90-day period prior to the Effective Time.
(c) The Company and the Company Subsidiaries have
at all times during the preceding three (3) years, treated their
home service agents as employees for purposes of filings required
under applicable tax laws.
Section 5.23 Environmental Matters. (a) Except as
disclosed in Section 5.23 of the Company Disclosure Letter and in
any environmental report obtained by Purchaser in connection with
its due diligence review of the Company, to the knowledge of the
Company, (i) each of the Company and the Company Subsidiaries is
and has been in compliance in all respects with and, except for
ongoing compliance obligations, including current activities to
remove asbestos and future activities to remove asbestos, if
applicable, has no existing liabilities under, and (ii) there are
no written claims or notices by any person received by the
Company or any of the Company Subsidiaries that any of the
Company or the Company Subsidiaries has not been in compliance in
all respects with or has any existing liabilities under, all
applicable Environmental Laws with respect to property owned by
the Company or any of the Company Subsidiaries, except for such
non-compliance or liabilities that would not be reasonably likely
to have a Company Material Adverse Effect. Except as disclosed
in Section 5.23 of the Company Disclosure Letter, neither the
Company nor any of the Company Subsidiaries is subject to any
decrees, orders, decisions of arbitrators or judgments that
impose requirements under Environmental Laws, restrictions under
Environmental Laws, liabilities under Environmental Laws, or
penalties for violations of Environmental Laws or the
aforementioned requirements or restrictions, except where such
requirements, restrictions, liabilities, or penalties would not
be reasonably likely to have a Company Material Adverse Effect.
(b) Except as disclosed in Section 5.23 of the
Company Disclosure Letter and in any environmental report
obtained by Purchaser in connection with its due diligence review
of the Company, with respect to currently owned property and all
property formerly owned, leased or operated by the Company or any
of the Company Subsidiaries, including foreclosure property, to
the knowledge of the Company, there are no past or present
actions, conditions or occurrences that could form the basis of
any outstanding claim under Environmental Laws against, or
liability under such laws of, the Company or any of the Company
Subsidiaries, except for such claims or liabilities which in the
aggregate would not reasonably be expected to result in a Company
Material Adverse Effect.
Section 5.24 Related Party Transactions. Except for
the transactions described in Section 5.24 of the Company
Disclosure Letter, all transactions involving the Company or any
of the Company Subsidiaries that are required to be disclosed in
the Company SEC Reports in accordance with Item 404 of Regulation
S-K have been so disclosed, and to the knowledge of the Company,
since December 31, 1994, neither the Company nor any of the
Company Subsidiaries has entered into any transactions that would
be required to be disclosed in future public filings under the
Exchange Act pursuant to such Item which have not already been
disclosed in the Company SEC Reports filed prior to the date
hereof.
Section 5.25 Affiliates. Section 5.25 of the Company
Disclosure Letter identifies all persons who, to the knowledge of
the Company, may be deemed to be affiliates of the Company under
Rule 145 of the Securities Act, including, without limitation,
all directors and executive officers of the Company. The Company
shall use all reasonable efforts to obtain and deliver to
Purchaser prior to the Closing an executed letter agreement, in
such form as may be mutually agreed to by the parties, from each
of the persons identified on Section 5.25 of the Company
Disclosure Letter, acknowledging that such person is subject to
the provisions of Rule 145(d) promulgated under the Securities
Act.
Section 5.26 Opinion of Financial Advisor. The
Company has received a written opinion from Alex. Xxxxx & Sons
Incorporated ("Alex. Xxxxx"), dated as of the date hereof, to the
effect that the consideration to be received by the shareholders
of the Company pursuant to the Merger is fair to such
shareholders from a financial point of view.
Section 5.27 Derivatives. Section 5.27 of the Company
Disclosure Letter sets forth the statement of position, as of
September 30, 1995, of the Company and the Company Subsidiaries
with respect to obligations under any futures or option
contracts, swaps, xxxxxx or similar instruments ("Derivatives")
to which the Company or any of the Company Subsidiaries is a
party. Except as disclosed in Section 5.27 of the Company
Disclosure Letter, since September 30, 1995, neither the Company
nor any of the Company Subsidiaries has entered into agreements
relating to Derivatives.
Section 5.28 Contracts. (a) Section 5.28 of the
Company Disclosure Letter sets forth a list of contracts to which
the Company or any of the Company Subsidiaries is a party or by
which it is bound which:
(i) require the payment by or to the
Company or the Company Subsidiaries of amounts in excess of
$500,000 per annum, other than (X) reinsurance and
retrocession contracts, (Y) insurance contracts and (Z)
contracts with insurance agents ("Agent Contracts"), all of
which contracts referred to in clauses (X), (Y) and (Z) have
been entered into in the ordinary course of business;
(ii) are Agent Contracts for the top 50
insurance agents of the Company or any of the Company
Subsidiaries in terms of commission income earned during
calendar year 1995 through September 30, 1995 (setting forth
the names of such insurance agents);
(iii) are reinsurance or retrocession
contracts which require the payment of premiums by the
Company or the Company Subsidiaries of amounts in excess of
$500,000 per year;
(iv) contain covenants limiting the freedom
of the Company or any of the Company Subsidiaries to engage
in any line of business in any geographic area or to compete
with any person or entity or restricting the ability of the
Company Subsidiaries to acquire equity securities of any
person or entity;
(v) are employment or severance contracts
applicable to any employee of the Company or the Company
Subsidiaries, including without limitation contracts to
employ executive officers and other contracts with officers
or directors of the Company or any of the Company
Subsidiaries, other than Agent Contracts and any such
contract which by its terms is terminable by the Company or
any of the Company Subsidiaries on not more than 60 days'
notice without material liability; or
(vi) are other contracts (except those
referred to in clauses (X), (Y) and (Z) of subsection
5.28(a)(i) above) which were made in the ordinary course of
business and either involve an obligation on the part of the
Company or a Company Subsidiary of more than $500,000 per
annum or could result, upon the breach thereof, in damages
or losses of more than $500,000, other than consequential
damages or damages resulting from liabilities sounding in
tort (collectively, the "Company Contracts").
(b) With respect to each of the Company
Contracts, to the knowledge of the Company, except as disclosed
in Section 5.28 of the Company Disclosure Letter:
(i) such contract is (assuming due power
and authority of, and due execution and delivery by, the
other party or parties thereto) valid and binding upon each
party thereto and is in full force and effect;
(ii) there is no material default or claim
of material default thereunder and no event has occurred
which, with the passage of time or the giving of notice (or
both), would constitute a material default thereunder, or
would permit material modification, acceleration or
termination thereof; and
(iii) the consummation of the transactions
contemplated by this Agreement will not give rise to a right
of the other party or parties thereto to terminate such
contract or impose liability under the terms thereof on the
Company or any of the Company Subsidiaries; provided, that
this representation shall not be deemed to give assurances
regarding rights of termination based on any decrease in
insurance industry ratings of the Company or the Company
Subsidiaries resulting from the declaration and/or payment
of the extraordinary dividend.
Section 5.29 Disclosure. No representation or
warranty by the Company or the Company Subsidiaries in this
Agreement, including the Company Disclosure Letter, and no
statement contained in the Company SEC Reports and the Statutory
Financial Statements of the Company, contains or will contain any
untrue statement of a material fact or omits or will omit to
state any material fact necessary, in light of the circumstances
under which it was made, to make the statements herein or therein
not misleading. There is no fact known to Company which could
reasonably be expected to have a Company Material Adverse Effect
which has not been set forth in the Company SEC Reports, the
Statutory Financial Statements of the Company or in this
Agreement, including the Company Disclosure Letter.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending
the Merger. From the date hereof until the Effective Time,
unless Purchaser shall otherwise agree in writing, or except as
set forth in the Company Disclosure Letter or as otherwise
contemplated by this Agreement, the Company and the Company
Subsidiaries shall conduct their respective businesses in the
ordinary course consistent with past practice and shall use all
reasonable efforts to preserve intact their business
organizations and relationships with third parties (including but
not limited to their respective relationships with policyholders,
insureds, agents, underwriters, brokers and investment customers)
and to keep available the services of their present officers and
key employees, subject to the terms of this Agreement. Except as
set forth in the Company Disclosure Letter or as otherwise
provided in this Agreement, from the date hereof until the
Effective Time, without the prior written consent of Purchaser:
(a) the Company shall not adopt or propose any
change in its Articles of Incorporation or By-Laws;
(b) the Company shall not declare, set aside or
pay any dividend or other distribution with respect to any shares
of capital stock of the Company (except for regular quarterly
dividends in an amount no greater than $.06 per share), or split,
combine or reclassify any of the Company's capital stock, and the
Company and the Company Subsidiaries shall not repurchase, redeem
or otherwise acquire any shares of capital stock or other
securities of, or other ownership interests in, the Company;
(c) the Company shall not, and shall not permit
any Company 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;
(d) the Company shall not, and shall not permit
any Company Subsidiary to, sell, lease, license or otherwise
surrender, relinquish or dispose of (i) any material facility
owned or leased by the Company or any Company Subsidiary or (ii)
any assets or property which are material to the Company and the
Company Subsidiaries, taken as a whole, except pursuant to
existing contracts or commitments (the terms of which have been
disclosed to Purchaser prior to the date hereof), or in the
ordinary course of business consistent with past practice;
(e) the Company shall not, and shall not permit
any Company Subsidiary to, settle any material Audit, make or
change any material Tax election or file amended Tax Returns;
(f) the Company and the Company Subsidiaries
shall not issue any capital stock or other securities or enter
into any amendment of any material term of any outstanding
security of the Company, and the Company and the Company
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 Company 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;
(g) the Company shall not, and shall not permit
any Company Subsidiary to, grant any increase in the compensation
or benefits of directors, officers, employees, consultants or
agents of the Company or any Company Subsidiary; provided,
however, that increases in the ordinary course of business
consistent with past practice in the compensation of employees,
who are not directors, officers or agents, shall be permitted;
(h) the Company shall not, and shall not permit
any Company Subsidiary to, enter into or amend any employment
agreement or other employment arrangement with any employee of
the Company or any Company Subsidiary, except in the ordinary
course of business consistent with past practice;
(i) the Company shall not change any method of
accounting or accounting practice by the Company or any Company
Subsidiary, except for any such required change in GAAP or the
Florida Statutory Accounting Principles;
(j) The Company shall not, and shall not permit
any Company Subsidiary to, take any action that could, directly
or indirectly, cause the Merger to fail to qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Code;
(k) the Company shall not permit any Company
Insurance Subsidiary to conduct transactions in Company
Investments except in compliance with the investment policies of
such Company Insurance Subsidiary and all applicable insurance
laws and regulations;
(l) The Company shall not, and shall not permit
any Company Subsidiary to, enter into any agreement to purchase,
or to lease, for a term in excess of one year, any real property,
provided that the Company, or any Company 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 Company, in its capacity as a landlord, from renewing any
lease pursuant to an option granted prior to the date hereof;
(m) the Company shall not, and shall not permit
any Company Subsidiary to, agree or commit to do any of the
foregoing;
(n) except to the extent necessary to comply with
the requirements of applicable laws and regulations, the Company
shall not, and shall not permit any Company Subsidiary to, (i)
take, or agree or commit to take, any action that would make any
representation and warranty of the Company 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 the Company 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 8
not being satisfied; and
(o) release any third party from its obligations,
or grant any consent, under any existing standstill provision
relating to any Acquisition Proposal (as hereinafter defined) or
otherwise under any confidentiality or other agreement, or fail
to fully enforce any such agreement.
Section 6.2 Conduct of Business by Purchaser Pending
the Merger. From the date hereof until the Effective Time,
unless the Company shall otherwise agree in writing, or as
otherwise contemplated by this Agreement, Purchaser, Sub and the
Purchaser Subsidiaries shall conduct their respective businesses
in all material respects in the ordinary course consistent with
past practice and shall use all reasonable efforts to
substantially preserve intact their business organizations and
relationships with third parties (including but not limited to
their respective relationships with policyholders, insureds,
agents, underwriters, brokers and investment customers) and to
keep available the services of their present officers and key
employees, subject to the terms of this Agreement. Except as
otherwise provided in this Agreement, from the date hereof until
the Effective Time, without the prior written consent of the
Company:
(a) Purchaser shall not adopt or propose any
change in its Articles of Incorporation or By-Laws that would
have any adverse impact on the transactions contemplated by this
Agreement or which would amend or modify the terms or provisions
of the capital stock of Purchaser;
(b) Purchaser shall not declare, set aside or pay
any dividend or other distribution with respect to any shares of
capital stock of Purchaser (except for regular quarterly
dividends), or split, combine or reclassify the Purchaser Stock
without agreeing to an appropriate adjustment to the Exchange
Ratio;
(c) Purchaser shall not 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, if such
merger, consolidation or acquisition could reasonably be expected
to have a material impact on the ability of Purchaser to
consummate the transactions contemplated by this Agreement;
(d) Purchaser shall not issue any shares of
capital stock or other securities (except for issuances of shares
in the ordinary course pursuant to Purchaser Stock Options) in
connection with any transaction requiring shareholder approval
unless Purchaser first notifies the Company in writing (an
"Issuance Notice") of such transaction and provides the Company
with information to the reasonable satisfaction of the Company
with respect thereto. Thereafter, the Company shall have the
right, by giving written notice to Purchaser at any time prior to
5:30 p.m., New York City time, on the tenth Trading Day following
receipt of the Issuance Notice, to abandon the Merger and
terminate this Agreement;
(e) Purchaser and the Purchaser Subsidiaries
shall not (i) issue shares of any class or series of stock, or
any security convertible at the option of the holder thereof into
shares of any class or series of stock ranking senior to the
Purchaser Convertible Preferred Stock as to dividends or as to
the distribution of assets upon the liquidation of Purchaser or
(ii) amend, alter or repeal, whether by merger, consolidation or
otherwise, any of the provisions of Purchaser's Restated Articles
of Incorporation or any of the resolutions contained therein
which would materially and adversely affect any right,
preference, privilege or voting power of the Purchaser
Convertible Preferred Stock or of the holder thereof; provided,
however, that any such amendment, alteration or repeal that would
authorize, create or issue any additional shares of stock
(whether or not authorized as of the date hereof) ranking on a
parity with or junior to the Purchaser Convertible Preferred
Stock as to dividends or as to the distribution of assets upon
the liquidation of Purchaser, shall be deemed not to materially
and adversely affect the rights, preferences, privileges or
voting power of the Purchaser Convertible Preferred Stock;
(f) Purchaser shall not, and shall not permit any
Purchaser Subsidiary to, take any action that could, directly or
indirectly, cause the Merger to fail to qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Code;
(g) Purchaser shall not permit any Purchaser
Insurance Subsidiary to conduct transactions in Purchaser
Investments except in compliance with the investment policies of
such Purchaser Insurance Subsidiary and all applicable insurance
laws and regulations;
(h) Purchaser shall not, and shall not permit any
Purchaser Subsidiary to, purchase or otherwise acquire any shares
of Company Common Stock;
(i) Purchaser shall not, and shall not permit Sub
or any Purchaser Subsidiary to, agree or commit to do any of the
foregoing; and
(j) except to the extent necessary to comply with
the requirements of applicable laws and regulations, Purchaser
shall not, and shall not permit Sub or any Purchaser Subsidiary
to, (i) take, or agree or commit to take, any action that would
make any representation and warranty of Purchaser 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 Purchaser 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 8 not being
satisfied.
Section 6.3 Investment Restrictions. (a) From the
date hereof until the Effective Time, each of the Company and
each Company Subsidiary shall:
(i) invest available cash only in corporate bonds
(other than bonds issued by public utilities) rated no
higher than A1 nor lower than Baa3 by Xxxxx'x or no higher
than A+ nor lower than BBB - by S&P, with maturities of not
fewer than five nor more than ten years ("Permitted
Investments");
(ii) maintain amounts in short-term investments
equal to the dividend amounts specified in Section 7.10; and
(iii) cease making mortgage loans or purchasing
mortgage backed securities;
provided, however, that nothing in this Section 6.3(a) shall
require any Company Subsidiary to make any investment other than
in compliance with the investment policies of such Company
Subsidiary and all insurance laws and regulations applicable
thereto, or prohibit the Company from making investments,
mortgage loans or purchasing mortgage backed securities pursuant
to existing contracts or commitments (the terms of which have
been disclosed to Purchaser prior to the date hereof).
(b) The Company and each Company Subsidiary shall
neither purchase nor issue any put, call, straddle, hedge,
interest-rate swap or other similar option or derivative
contract, and the Company shall use all reasonable efforts to
sell, close-out or otherwise liquidate, in an orderly fashion,
any such options or derivatives which it owns.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. The Company and
Purchaser shall each afford to the other and to the other's
financial advisors, legal counsel, accountants, consultants,
financing sources, and other authorized representatives access
during normal business hours throughout the period prior to the
Effective Time to all of its books, records, properties, plants
and personnel and, during such period, each shall furnish as
promptly as practicable to the other (a) a copy of each report,
schedule and other document filed or received by it pursuant to
the requirements of federal securities laws, and (b) all other
information as such other party reasonably may request, provided
that neither party shall disclose to the other any competitively
sensitive information and no investigation pursuant to this
Section 7.1 shall affect any representations or warranties made
herein or the conditions to the obligations of the respective
parties to consummate the Merger. Each party shall continue to
abide by the terms of the confidentiality agreements between
Purchaser and the Company, dated April 26, 1995 and October 16,
1995 (collectively, the "Confidentiality Agreements").
Section 7.2 Acquisition Proposals. From the date
hereof until the termination hereof, the Company and the Company
Subsidiaries will not initiate, solicit or encourage (including
by way of furnishing information or assistance), or take any
other action to facilitate, any inquiries or the making of any
proposal relating to, or that may reasonably be expected to lead
to, any Acquisition Proposal, or enter into discussions or
negotiate with any person or entity in furtherance of such
inquiries or to obtain an Acquisition Proposal, or agree to or
endorse any Acquisition Proposal, or authorize or permit any of
the officers, directors or employees of the Company or any of the
Company Subsidiaries or any investment banker, financial advisor,
attorney, accountant or other representative retained by the
Company or any of the Company Subsidiaries to take any such
action, and the Company shall promptly notify Purchaser of all
relevant terms of any such inquiries and proposals received by
the Company or any of the Company Subsidiaries, or by any such
officer, director, investment banker, financial advisor,
attorney, accountant or other representative relating to any such
matters, and if such inquiry or proposal is in writing, the
Company shall promptly deliver or cause to be delivered to
Purchaser a copy of such inquiry or proposal; provided, however,
that nothing contained in this Section 7.2 shall prohibit the
Board of Directors of the Company from (i) furnishing information
to, or entering into discussions or negotiations with, any person
or entity in connection with an unsolicited bona fide proposal in
writing by such person or entity to acquire the Company pursuant
to a merger, consolidation, share exchange, business combination
or other similar transaction or to acquire a substantial portion
of the assets of the Company or any of the Company Subsidiaries,
if, and only to the extent that (A) the Board of Directors of the
Company, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such
action is necessary for such Board of Directors to comply with
its fiduciary duties to the Company's shareholders under
applicable law and (B) prior to furnishing such information to,
or entering into discussions or negotiations with, such person or
entity, the Company (x) provides written notice to Purchaser to
the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person or entity and (y)
enters into with such person or entity a confidentiality
agreement in reasonably customary form on terms not more
favorable to such person or entity than the terms contained in
the Confidentiality Agreement dated April 26, 1995, or (ii)
complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal. The term "Acquisition
Proposal" as used herein means any proposal to purchase or
acquire any equity securities or (except in the ordinary course
of business) assets of, or merge or combine with, the Company or
any of its subsidiaries. Immediately after the execution and
delivery of this Agreement, the Company will cease and terminate
any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any possible
Acquisition Proposal and shall send a written notice to each
party that it has had discussions with during the 30 days prior
to the date of this Agreement that the Board of Directors of the
Company no longer seeks the making of any Acquisition Proposal.
Section 7.3 Filings; Other Action. Subject to the
terms and conditions herein provided, as promptly as practicable,
the Company, Purchaser and Sub shall: (i) promptly make all
filings and submissions under the HSR Act and all filings
required by the insurance regulatory authorities in Florida and
in Missouri, and deliver notices and consents to jurisdiction to
state insurance departments, each as reasonably may be required
to be made in connection with this Agreement and the transactions
contemplated hereby, (ii) use all reasonable efforts to cooperate
with each other in (A) determining which filings are required to
be made prior to the Effective Time with, and which material
consents, approvals, permits, notices or authorizations are
required to be obtained prior to the Effective Time from,
governmental or regulatory authorities of the United States, the
several states or the District of Columbia, the Commonwealth of
Puerto Rico and foreign jurisdictions in connection with the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and (B) timely making all
such filings and timely seeking all such consents, approvals,
permits, notices or authorizations, and (iii) use all reasonable
efforts to take, or cause to be taken, all other action and do,
or cause to be done, all other things necessary or appropriate to
consummate the transactions contemplated by this Agreement as
soon as practicable. In connection with the foregoing, the
Company will provide Purchaser, and Purchaser will provide the
Company, with copies of correspondence, filings or communications
(or memoranda setting forth the substance thereof) between such
party or any of its representatives, on the one hand, and any
governmental agency or authority or members of their respective
staffs, on the other hand, with respect to this Agreement and the
transactions contemplated hereby. Each of Purchaser and the
Company acknowledge that certain actions may be necessary with
respect to the foregoing in making notifications and obtaining
clearances, consents, approvals, waivers or similar third party
actions which are material to the consummation of the
transactions contemplated hereby, and each of Purchaser and the
Company agree to take such action as is necessary to complete
such notifications and obtain such clearances, approvals, waivers
or third party actions, provided, however, that nothing in this
Section 7.3 or elsewhere in this Agreement shall require any
party hereto to incur expenses in connection with the
transactions contemplated hereby which are not reasonable under
the circumstances in relation to the size of the transaction
contemplated hereby or to require Purchaser, any Purchaser
Subsidiary, the Surviving Corporation, the Company or any Company
Subsidiary to hold separate or make any divestiture of a
significant asset or otherwise agree to any material restriction
on their operations (including restrictions on the ability of
Purchaser or any Purchaser Subsidiary to consolidate operations
of the Company and the Company Subsidiaries in Nashville,
Tennessee or to otherwise realize the expected benefits and cost
savings to be obtained from the Merger) in order to obtain any
waiver, consent or approval required by this Agreement.
Section 7.4 Public Announcements. Purchaser, on the
one hand, and the Company, on the other hand, agree that they
will not issue any press release or otherwise make any public
statement or respond to any press inquiry with respect to this
Agreement or the transactions contemplated hereby without the
prior approval of the other party (which approval will not be
unreasonably withheld), except as may be required by applicable
law.
Section 7.5 Employee Benefits. (a) From and after
the Effective Time, subject to applicable law and except as
contemplated hereby, Purchaser and the Purchaser Subsidiaries
will honor, in accordance with their terms, all employee benefit
plans, programs, agreements or arrangements of the Company and
the Company Subsidiaries in effect as of the date hereof (or as
modified in accordance with Section 6.1 hereof) (the "Company
Plans"); provided, however, that nothing herein shall preclude
any change effected on a prospective basis in any Company Plan
from and after the Effective Time. Purchaser and the Purchaser
Subsidiaries will provide benefits to employees of the Company
and the Company Subsidiaries who become employees of Purchaser
and the Purchaser Subsidiaries or continue after the Effective
Time as employees of the Company or the Company Subsidiaries
which will not, in the aggregate, be materially less favorable
than those provided to other similarly situated employees of
Purchaser, Sub and the Purchaser Subsidiaries from time to time;
provided, however, that Purchaser and the Purchaser Subsidiaries
shall be deemed to have satisfied the foregoing requirement if
benefits are provided to such employees that are no less
favorable than those provided to such employees by the Company
immediately prior to the Effective Time. With respect to the
employee benefit plans, programs, agreements or arrangements of
Purchaser and the Purchaser Subsidiaries in effect as of the date
hereof (or as modified in accordance with Section 6.2 hereof)
(the "Purchaser Plans"), Purchaser and the Surviving Corporation
shall grant all employees of the Company and the Company
Subsidiaries from and after the Effective Time credit for service
with the Company and the Company Subsidiaries, their affiliates
and predecessors prior to the Effective Time for all purposes,
other than the accrual of benefits, for which such service was
recognized by the Company and the Company Subsidiaries. To the
extent the Purchaser Plans provide medical or dental welfare
benefits after the Effective Time, such plans shall waive pre-
existing conditions and actively-at-work exclusions to the extent
such exclusions have been satisfied in similar Company Plans and
shall provide that any expenses incurred on or before the
Effective Time shall be taken into account under deductible,
coinsurance and maximum out-of-pocket provisions under such
Purchaser Plans.
(b) Purchaser agrees that it will cause the
Company to comply with the Workers Adjustment and Retraining
Notification Act, to the extent applicable to the Company and its
subsidiaries, in connection with actions taken after the
Effective Time.
Section 7.6 Stock Exchange Listing. Purchaser shall
as promptly as practicable prepare and submit to the New York
Stock Exchange a listing application covering the shares of
Purchaser Common Stock and Purchaser Convertible Preferred Stock
to be issued in connection with the Merger and this Agreement,
and shall use all reasonable efforts to obtain, prior to the
Effective Time, approval for the listing of such shares, subject
to official notice of issuance.
Section 7.7 Company Indemnification Provision.
Purchaser agrees that all rights to indemnification existing in
favor of the present or former directors, officers, employees,
fiduciaries and agents of the Company or any of the Company
Subsidiaries (collectively, the "Indemnified Parties") as
provided in the Company's Articles of Incorporation or By-Laws or
the certificate or articles of incorporation, by-laws or similar
organizational documents of any of the Company Subsidiaries as in
effect as of the date hereof or pursuant to the terms of any
indemnification agreements entered into between the Company and
any of the Indemnified Parties with respect to matters occurring
prior to the Effective Time shall survive the Merger and shall
continue in full force and effect (without modification or
amendment, except as required by applicable law or except to make
changes permitted by law that would enlarge the Indemnified
Parties' right of indemnification), to the fullest extent and for
the maximum term permitted by law, and shall be enforceable by
the Indemnified Parties against the Surviving Corporation. At
the Closing the Surviving Corporation shall expressly and
directly assume by written instrument all such obligations.
Purchaser shall cause to be maintained in effect for not less
than six years from the Effective Time the current policies of
the directors' and officers' liability insurance maintained by
the Company (provided that Purchaser may substitute therefor
policies of at least equivalent coverage containing terms and
conditions which are no less advantageous) with respect to
matters occurring prior to the Effective Time, provided that in
no event shall Purchaser or the Surviving Corporation be required
to expend to maintain or procure insurance coverage pursuant to
this Section 7.7 any amount per annum in excess of 200% of the
aggregate premiums paid in 1995 on an annualized basis for such
purpose. In the event the payment of such amount for any year is
insufficient to maintain such insurance or equivalent coverage
cannot otherwise be obtained, the Surviving Corporation shall
purchase as much insurance as may be purchased for the amount
indicated. The provisions of this Section 7.7 shall survive the
consummation of the Merger and expressly are intended to benefit
each of the Indemnified Parties.
Section 7.8 Comfort Letters. (a) Purchaser shall use
all reasonable efforts to cause Ernst & Young LLP, Purchaser's
independent accountants, to deliver to the Company a letter dated
as of the date of the Proxy Statement/Prospectus and addressed to
the Company, in form and substance reasonably satisfactory to the
Company, in connection with the procedures undertaken by them
with respect to the financial statements and other financial
information of Purchaser contained in the Registration Statement
and the other matters contemplated by AICPA Statement No. 72 and
customarily included in comfort letters relating to transactions
similar to the Merger.
(b) The Company shall use all reasonable efforts
to cause Ernst & Young LLP, the Company's independent
accountants, to deliver to Purchaser a letter dated as of the
date of the Proxy Statement/Prospectus and addressed to
Purchaser, in form and substance reasonably satisfactory to
Purchaser, in connection with the procedures undertaken by them
with respect to the financial statements and other financial
information of the Company and the Company Subsidiaries contained
in the Registration Statement and the other matters contemplated
by AICPA Statement No. 72 and customarily included in comfort
letters relating to transactions similar to the Merger.
Section 7.9 Tax Matters. The Company shall use all
reasonable efforts to deliver to Purchaser as soon as practicable
following the execution and delivery of this Agreement an
executed representation letter, substantially in the form of
Exhibit B attached hereto, from each person owning 5% or more of
the outstanding shares of Voting Common Stock or Non-Voting
Common Stock of the Company.
Section 7.10 Intercompany Dividends. On the date
immediately prior to the Closing Date, subject to compliance with
applicable law and the receipt of all necessary approvals, the
Company shall use all reasonable efforts to cause (i) Xxxxxx
Xxxxxxxxx Insurance Company to pay a $1.0 million dividend to The
Independent Life and Accident Insurance Company; (ii) Independent
Fire Insurance Company to pay a $4 million dividend to The
Independent Life and Accident Insurance Company and (iii) The
Independent Life and Accident Insurance Company to pay a $35
million dividend to the Company, each such dividend to be paid in
the form of a demand promissory note, or such other form as the
parties may mutually agree.
Section 7.11 Certificate of Designation of Purchaser
Convertible Preferred Stock. Prior to Closing, Purchaser (i)
shall cause to be filed with the Secretary of State of the State
of Texas, in accordance with Article 2.13 of the Texas Business
Corporation Act, the Certificate of Designation in the form of
Exhibit A attached hereto with such immaterial changes as the
parties may mutually agree (the "Certificate"), establishing and
designating the Purchaser Convertible Preferred Stock and fixing
and determining the designations, preferences, limitations and
relative rights thereof; (ii) shall insert in Section 2(a) of the
Certificate the Average Closing Price as the liquidation
preference; and (iii) shall insert in Section 1(a) of the
Certificate a number no less than the maximum number of shares of
Purchaser Convertible Preferred Stock issuable in the Merger as
the number of shares constituting the Purchaser Convertible
Preferred Stock Series.
Section 7.12 Additional Matters. Subject to the terms
and conditions herein provided, each of the parties hereto agrees
to use all reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by
this Agreement, including using all reasonable efforts to obtain
all necessary waivers, consents and approvals in connection with
the Governmental Requirements and to effect all necessary
registrations and filings. In case at any time after the
Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers
and/or directors of Purchaser, Sub and the Company shall take all
such necessary action.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to Each Party's Obligation to
Effect the Merger. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) any waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired
or been terminated, and no action shall have been instituted by
the Department of Justice or Federal Trade Commission challenging
or seeking to enjoin the consummation of this transaction, which
action shall have not been withdrawn or terminated;
(b) no statute, rule, regulation, executive
order, decree, ruling or preliminary or permanent injunction
shall have been enacted, entered, promulgated or enforced by any
federal or state court or governmental authority having
jurisdiction which prohibits, restrains, enjoins or restricts the
consummation of the Merger;
(c) each of the Company and Purchaser shall have
made such filings, and obtained such permits, authorizations,
consents, or approvals, required by the Governmental Requirements
to consummate the transactions contemplated hereby, and the
appropriate forms shall have been executed, filed and approved as
required by the corporate and insurance laws and regulations of
the states of Florida and Missouri;
(d) this Agreement and the Merger shall have
been adopted and approved by the requisite vote of the
shareholders of the Company in accordance with the applicable
provisions of the FBCA;
(e) the Registration Statement shall have become
effective under the Securities Act and shall not be the subject
of any stop order or proceedings seeking a stop order;
(f) the shares of Purchaser Common Stock issuable
to the Company's shareholders pursuant to this Agreement shall
have been authorized for listing on the New York Stock Exchange
upon official notice thereof; and
(g) Purchaser shall have used all reasonable
efforts to have the shares of Purchaser Convertible Preferred
Stock issuable to the Company's shareholders pursuant to this
Agreement authorized for listing on either the New York Stock
Exchange or the Nasdaq National Market.
Section 8.2 Conditions to Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the
Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following additional conditions:
(a) each of Purchaser and Sub shall have
performed in all material respects its obligations under this
Agreement required to be performed by it at or prior to the
Effective Time; the representations and warranties of Purchaser
and Sub contained in this Agreement which are qualified with
respect to materiality shall be true and correct in all respects,
and such representations and warranties that are not so qualified
shall be true and correct in all material respects, in each case
as of the date of this Agreement and at and as of the Effective
Time as if made at and as of such time (except to the extent such
representations and warranties specifically relate to an earlier
date, in which case as of such earlier date) except as
contemplated by this Agreement; and the Company shall have
received a certificate of the Chairman of the Board, the
President, an Executive Vice President, a Senior Vice President
or the Chief Financial Officer of Purchaser as to the
satisfaction of this condition;
(b) the Company shall have received an opinion
from Skadden, Arps, Slate, Xxxxxxx & Xxxx, special counsel to the
Company, dated the Effective Time, to the effect that, on the
basis of certain facts, representations and assumptions set forth
in such opinion which are consistent with the stated facts
existing at the Effective Time, the Merger will be treated for
Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, and that Purchaser, Sub
and the Company will each be a party to that reorganization
within the meaning of Section 368(b) of the Code. In rendering
the opinion described in the preceding sentence, such counsel may
require and rely upon representations contained in certificates
of officers of Purchaser, Sub and the Company and their
respective subsidiaries; and
(c) the Company shall have received a written
opinion from Alex. Xxxxx, dated as of the date of the Closing, to
the effect that the consideration to be received by the
shareholders of the Company pursuant to the Merger is fair to
such shareholders from a financial point of view.
Section 8.3 Conditions to Obligations of Purchaser and
Sub to Effect the Merger. The obligations of Purchaser and Sub
to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following additional
conditions:
(a) the Company shall have performed in all
material respects its obligations under this Agreement required
to be performed by it at or prior to the Effective Time; and the
representations and warranties of the Company contained in this
Agreement which are qualified with respect to materiality shall
be true and correct in all respects, and such representations and
warranties that are not so qualified shall be true and correct in
all material respects, in each case as of the date of this
Agreement and at and as of the Effective Time as if made at and
as of such time (except to the extent such representations and
warranties specifically relate to an earlier date, in which case
as of such earlier date), except as contemplated by the Company
Disclosure Letter or this Agreement; and Purchaser and Sub shall
have received a Certificate of the Chairman of the Board, the
President, an Executive Vice President, Senior Vice President or
the Chief Financial Officer of the Company as to the satisfaction
of this condition; and
(b) Purchaser shall have received an opinion
from Xxxxxx & Xxxxxx L.L.P., special counsel to Purchaser, dated
the Effective Time, to the effect that, on the basis of certain
facts, representations and assumptions set forth in such opinion
which are consistent with the stated facts existing at the
Effective Time, the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a)
of the Code, and that Purchaser, Sub and the Company will each be
a party to that reorganization within the meaning of Section
368(b) of the Code. In rendering the opinion described in the
preceding sentence, such counsel may require and rely upon
representations contained in certificates of officers of
Purchaser, Sub and the Company and their respective subsidiaries.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination by Mutual Consent. This
Agreement may be terminated at any time prior to the Effective
Time by mutual written agreement of Purchaser and the Company.
Section 9.2 Termination by Either Purchaser or the
Company. This Agreement may be terminated and the Merger may be
abandoned by action of the Board of Directors of either Purchaser
or the Company if (a) this Agreement and the Merger shall fail to
receive the requisite vote for approval and adoption by the
shareholders of the Company at the Company Special Meeting, (b)
the Merger shall not have been consummated before March 30, 1996;
provided, however, that this Agreement may be extended by written
notice of either Purchaser or the Company to a date not later
than June 30, 1996, if the Merger shall not have been consummated
as a direct result of the conditions in Section 8.1(a) or 8.1(c)
not having been satisfied by such date, or (c) a United States
federal or state court of competent jurisdiction or United States
federal or state governmental, regulatory or administrative
agency or commission shall have issued an order, decree or ruling
or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall
have become final and non-appealable; provided, that the party
seeking to terminate this Agreement pursuant to clause (b) shall
not be in material violation of any of its representations,
warranties or covenants set forth in this Agreement, and the
party seeking to terminate this Agreement pursuant to clause (c)
shall have used all reasonable efforts to remove such injunction,
order or decree.
Section 9.3 Termination by the Company. This
Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, before or after the
approval of the Merger and the adoption of this Agreement by the
shareholders of the Company referred to in Section 2.1, by action
of the Board of Directors of the Company, if (a) there has been a
breach by Purchaser or Sub of any representation or warranty
contained in this Agreement which would have or would be likely
to have a Purchaser Material Adverse Effect; (b) there has been a
material breach of any of the covenants or agreements set forth
in this Agreement on the part of Purchaser, which breach is not
curable or, if curable, is not cured within thirty (30) days
after written notice of such breach is given by the Company to
Purchaser; (c) prior to the Company Special Meeting, the Board of
Directors of the Company has (i) withdrawn, or modified or
changed in a manner adverse to Purchaser or Sub its approval or
recommendation of this Agreement or the Merger in order to
approve and permit the Company to execute a definitive agreement
relating to an Acquisition Proposal, and (ii) determined, based
on a written opinion of outside legal counsel to the Company,
that the failure to take such action as set forth in the
preceding clause (i) would result in a breach of the Board of
Directors' fiduciary duties under applicable law, provided,
however, that (A) the Board of Directors of the Company shall
have been advised in such written opinion of outside counsel that
notwithstanding a binding commitment to consummate an agreement
of the nature of this Agreement entered into in the proper
exercise of their applicable fiduciary duties, and
notwithstanding all concessions which may be offered by Purchaser
in negotiations entered into pursuant to clause (B) below, such
fiduciary duties would also require the directors to terminate
this Agreement as a result of such Acquisition Proposal, and (B)
prior to any such termination, the Company shall, and shall cause
its respective financial and legal advisors to, negotiate with
Purchaser to make such adjustments in the terms and conditions of
this Agreement as would enable the Company to proceed with the
transactions contemplated herein on such adjusted terms; (d) the
Average Closing Price shall be less than the Company's Walk Away
Threshold (as hereinafter defined); or (e) the Company shall have
elected to terminate this Agreement in accordance with Section
6.2(d).
The Company's Walk Away Threshold shall be computed as
follows:
(i) if the Average Reference Price (as hereinafter
defined) is equal to or more than $38.125, the Company's
Walk Away Threshold shall be $29;
(ii) if the Average Reference Price is less than
$38.125, the Company's Walk Away Threshold shall be the lesser of
(a) $29 or (b) $29 multiplied by the Adjustment Factor;
(iii) if the S&P Factor (as hereinafter defined)
is greater than 1, the Adjustment Factor shall be a fraction, the
numerator of which shall be the Average Reference Price and the
denominator of which shall be $38.125; and
(iv) if the S&P Factor is less than 1, the
Adjustment Factor shall be the sum of (i) the amount by which 1
exceeds the S&P Factor and (ii) a fraction, the numerator of
which shall be the Average Reference Price and the denominator of
which shall be $38.125.
As used herein, the "Average Reference Price" shall mean the
average of the closing prices (or if Purchaser Common Stock is
not traded on any of the five calendar days next succeeding
October 29, 1995, the arithmetic mean of the high bid and the low
asked prices therefor on such day), regular way, of Purchaser
Common Stock as reported on the New York Stock Exchange Composite
Tape on each of the five calendar days next succeeding October
29, 1995. As used herein, the "S&P Factor" shall be a fraction,
the numerator of which shall be the arithmetic mean of the
Standard & Poor's 500 Composite Stock Price Index at the close of
business on each of the five calendar days next succeeding
October 29, 1995 and the denominator of which shall be the
Standard & Poor's 500 Composite Stock Price Index at the close of
business on October 18, 1995.
Section 9.4 Termination by Purchaser. This Agreement
may be terminated and the Merger may be abandoned at any time
prior to the Effective Time by action of the Board of Directors
of Purchaser, if (a) there has been a breach by the Company of
any representation or warranty contained in this Agreement which
would have or would be likely to have a Company Material Adverse
Effect; (b) there has been a material breach of any of the
covenants or agreements set forth in this Agreement on the part
of the Company, which breach is not curable or, if curable, is
not cured within thirty (30) days after written notice of such
breach given by Purchaser to the Company; (c) the Board of
Directors of the Company shall have withdrawn, or modified or
changed in a manner adverse to Purchaser or Sub its approval or
recommendation of this Agreement or the Merger or shall have
recommended an Acquisition Proposal, or shall have executed an
agreement in principle (or similar agreement) or definitive
agreement providing for an Acquisition Proposal or other business
combination with a person or entity other than Purchaser or its
affiliates (or the Board of Directors of the Company resolves to
do any of the foregoing); or (d) the Average Closing Price shall
be less than the Purchaser's Walk Away Threshold. The
Purchaser's Walk Away Threshold shall be computed as follows:
(i) if the Average Reference Price is equal to or
more than $38.125, the Purchaser's Walk Away Threshold shall be
$31;
(ii) if the Average Reference Price is less than
$38.125, the Purchaser's Walk Away Threshold shall be the lesser
of (a) $31 or (b) $31 multiplied by the Adjustment Factor.
Section 9.5 Effect of Termination and Abandonment.
(a) In the event of termination of the Agreement and the
abandonment of the Merger pursuant to this Article IX, written
notice thereof shall as promptly as practicable be given to the
other parties to this Agreement and this Agreement shall
terminate and the transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto.
If this Agreement is terminated as provided herein: (i) except as
provided in Section 9.5(b), there shall be no liability or
obligation on the part of Purchaser, the Purchaser Subsidiaries,
the Company or the Company Subsidiaries or their respective
officers and directors, and all obligations of the parties shall
terminate, except for the obligations of the parties pursuant to
this Section 9.5, except for the provisions of Sections 4.20,
5.20, 7.4, 10.4, 10.5, 10.6 and 10.10, except for the obligations
of the parties set forth in the Confidentiality Agreements
referred to in Section 7.1 hereof (provided, however, that if
this Agreement is terminated pursuant to Section 9.3(c),
Purchaser shall no longer be bound by paragraph 9 of the
Confidentiality Agreement dated April 26, 1995) and except that a
party who is in material breach of its representations,
warranties, covenants or agreements set forth in this Agreement
shall be liable for damages occasioned by such breach, including
without limitation any expenses incurred by the other party in
connection with this Agreement and the transactions contemplated
hereby, and (ii) all filings, applications and other submissions
made pursuant to the transactions contemplated by this Agreement
shall, to the extent practicable, be withdrawn from the agency or
person to which made.
(b) Under the circumstances set forth in this Section
9.5(b), and only under these circumstances, the Company agrees to
make certain termination payments to Purchaser as follows:
(i) if an Acquisition Proposal which provides that the
Company's shareholders will receive in excess of $27.50 per share
is then outstanding and
(A) the Board of Directors of the Company
withdraws or modifies or changes in a manner adverse
to Purchaser or Sub its approval or recommendation of
this Agreement or the Merger in order to permit the
Company to execute a definitive agreement relating to
such Acquisition Proposal and the Company is unable to
sustain the burden of proving that at least one
condition to the consummation of the Merger (other
than the conditions referred to in Section 8.1(d),
Section 8.2(c) and Section 8.3(a)) has not been
satisfied and is unlikely to be satisfied by the
Closing Date, or
(B) this Agreement and the Merger shall fail to
receive the requisite vote for approval and adoption
by the shareholders of the Company at the Company
Special Meeting and the Company is unable to sustain
the burden of proving that at least one condition to
the consummation of the Merger (other than the
conditions referred to in Section 8.1(d), Section
8.2(c) and Section 8.3(a))has not been satisfied and
is unlikely to be satisfied by the Closing Date, or
(C) this Agreement and the Merger receives the
requisite vote for approval and adoption by the
shareholders of the Company at the Company Special
Meeting, but Alex. Xxxxx refuses or states that it
will refuse to deliver the fairness opinion, and the
Company is unable to sustain the burden of proving
that at least one condition to the consummation of the
Merger (other than the conditions referred to in
Section 8.2(c) and Section 8.3(a)) has not been
satisfied and is unlikely to be satisfied by the
Closing Date,
then the Company shall pay the Purchaser the sum of $14,000,000
in cash (the "Termination Payment").
(ii) if an Acquisition Proposal which provides that
the Company's shareholders will receive in excess of $27.50 per
share is then outstanding and
(A) the Board of Directors of the Company
withdraws or modifies or changes in a manner adverse
to Purchaser or Sub its approval or recommendation of
this Agreement or the Merger in order to permit the
Company to execute a definitive agreement relating to
such Acquisition Proposal and the Company is able to
sustain the burden of proving that at least one
condition to the consummation of the Merger (other
than the conditions referred to in Section 8.1(d),
Section 8.2(c) and Section 8.3(a)) has not been
satisfied and is unlikely to be satisfied as of the
Closing Date, or
(B) this Agreement and the Merger shall fail to
receive the requisite vote for approval and adoption
by the shareholders of the Company at the Company
Special Meeting and the Company is able to sustain the
burden of proving that at least one condition to the
consummation of the Merger (other than the conditions
referred to in Section 8.1(d), Section 8.2(c) and
Section 8.3(a)) has not been satisfied and is unlikely
to be satisfied by the Closing Date, or
(C) this Agreement and the Merger receives the
requisite vote for approval and adoption by the
shareholders of the Company at the Company Special
Meeting, but Alex. Xxxxx refuses or states that it
will refuse to deliver the fairness opinion, and the
Company is able to sustain the burden of proving that
at least one condition to the consummation of the
Merger (other than the conditions referred to in
Section 8.2(c) and Section 8.3(a)) has not been
satisfied and is unlikely to be satisfied by the
Closing Date,
then the Company shall pay the Purchaser one-half the Termination
Payment.
(iii) if an Acquisition Proposal which provides that
the Company's shareholders will receive in excess of $27.50 per
share is not then outstanding and this Agreement and the Merger
shall fail to receive the requisite vote for approval and
adoption by the shareholders of the Company at the Company
Special Meeting and all other conditions to the consummation of
the Merger have been satisfied or are likely to be satisfied
(other than the conditions referred to in Section 8.1(d), Section
8.2(c) and Section 8.3(a)), then the Company shall reimburse
Purchaser for its out-of-pocket expenses, reasonably incurred in
connection with the Merger, such reimbursement not to exceed one-
third of the Termination Payment.
All such termination payments shall be made as
promptly as practicable but not later than three business days
after such termination, and such payments shall be made by wire
transfer of immediately available funds to an account designated
by Purchaser.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival of Representations, Warranties
and Agreements. No representations or warranties in this
Agreement or in any instrument delivered pursuant to this
Agreement, other than the representation and warranty contained
in Section 4.23, shall survive beyond the Effective Time. This
Section 10.1 shall not limit any covenant or agreement set forth
in this Agreement, which covenants and agreements shall survive
the Effective Time.
Section 10.2 Notices. All notices, claims, demands
and other communications hereunder shall be in writing and shall
be deemed given upon (a) confirmation of receipt of a facsimile
transmission, (b) confirmed delivery by a standard overnight
carrier or when delivered by hand or (c) the expiration of five
business days after the day when mailed by registered or
certified mail (postage prepaid, return receipt requested),
addressed to the respective parties at the following addresses
(or such other address for a party as shall be specified by like
notice):
(a) If to Purchaser or Sub, to:
American General Corporation
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
3300 First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
(b) If to the Company, to:
Independent Insurance Group, Inc.
Xxx Xxxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxxx, Esq.
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Section 10.3 Descriptive Headings. The headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
Section 10.4 Entire Agreement; Assignment. This
Agreement (including the Exhibits, Company Disclosure Letter and
other documents and instruments referred to herein) constitutes
the entire agreement and supersedes all other prior agreements
and understandings (other than those contained in the
Confidentiality Agreements, which are hereby incorporated by
reference herein), both written and oral, among the parties or
any of them, with respect to the subject matter hereof,
including, without limitation, any transaction between or among
the parties hereto. This Agreement shall not be assigned by
operation of law or otherwise, except that Sub may assign all of
its rights and obligations hereunder to any direct wholly-owned
subsidiary of Purchaser which shall then be substituted for Sub
for all purposes hereof; provided, however, that no such
assignment shall be made if such assignment would have a material
adverse effect on the Company, the Company's shareholders or the
likelihood that the transaction contemplated hereby would be
consummated.
Section 10.5 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Florida without giving effect to the provisions thereof
relating to conflicts of law.
Section 10.6 Expenses. Except as provided in Section
9.5, whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the
party incurring such expenses, except that those expenses
incurred in connection with printing and mailing the Proxy
Statement/Prospectus, as well as the filing fees relating to the
Registration Statement and the HSR Act, will be shared equally by
Purchaser and the Company.
Section 10.7 Amendment. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties hereto.
Section 10.8 Waiver. At any time prior to the
Effective Time, the parties hereto may (a) extend the time for
the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with
any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
Section 10.9 Counterparts; Effectiveness. This
Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original but all of which shall
constitute one and the same agreement. This Agreement shall
become effective when each party hereto shall have received
counterparts thereof signed by all of the other parties hereto.
Section 10.10 Severability; Validity; Parties in
Interest. If any provision of this Agreement, or the application
thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement, and the
application of such provision to other persons or circumstances,
shall not be affected thereby, and to such end, the provisions of
this Agreement are agreed to be severable. Nothing in this
Agreement, express or implied, is intended to confer upon any
person not a party to this Agreement any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
Section 10.11 Enforcement of Agreement. The parties
hereto agree that irreparable damage would occur in the event
that any provision of this Agreement was not performed in
accordance with its specific terms or was otherwise breached. It
is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in
any court of competent jurisdiction, this being in addition to
any other remedy to which they are entitled at law or in equity.
IN WITNESS WHEREOF, each of Purchaser, Sub and the
Company has caused this Agreement to be executed as of the date
first above written.
AMERICAN GENERAL CORPORATION
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
President
AGC LIFE INSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Senior Chairman of the Board
INDEPENDENT INSURANCE GROUP, INC.
By: /s/ Xxxxxxx X. Xxxx, Xx.
Xxxxxxx X. Xxxx, Xx.
Chairman of the Board of Directors
Chief Executive Officer
Exhibit A
AMERICAN GENERAL CORPORATION
STATEMENT OF RESOLUTION ESTABLISHING A SERIES OF SHARES
PROVIDING FOR THE ISSUANCE OF
7% CONVERTIBLE PREFERRED STOCK PURSUANT TO
ARTICLE 2.13 OF THE TEXAS BUSINESS CORPORATION ACT
Pursuant to the provisions of Article 2.13 of the
Texas Business Corporation Act, the undersigned
corporation submits the following statement for the
purpose of establishing and designating a series of
shares of its Preferred Stock and fixing and determining
the designations, preferences, limitations and relative
rights thereof:
1. The name of the corporation is American General
Corporation (the "Corporation").
2. The following resolutions, establishing and
designating a series of shares and fixing and determining
the designations, preferences, limitations and relative
rights thereof, was duly adopted by an authorized
committee of the Board of Directors of the Corporation on
______, 1995:
RESOLVED, that pursuant to Article Four of the
Restated Articles of Incorporation of the
Corporation, as amended, which authorizes the
issuance of three hundred sixty million
(360,000,000) shares, consisting of sixty
million (60,000,000) shares of Preferred Stock
of the par value of one dollar fifty cents
($1.50) per share (hereinafter referred to as
the "Preferred Stock"), and three hundred
million (300,000,000) shares of Common Stock of
the par value of fifty cents ($.50) per share
(hereinafter referred to as the "Common
Stock"), the Corporation hereby provides for
the issuance of a series of Preferred Stock,
designated as 7% Convertible Preferred Stock,
and hereby fixes the designations, preferences,
limitations and relative rights of the shares
of the 7% Convertible Preferred Stock, in
addition to those set forth in such Article
Four, which shall be as follows:
SECTION 1. DESIGNATION AND AMOUNT.
(a) The shares of this series of Preferred Stock
shall be designated as "7% Convertible Preferred Stock"
(the "7% Preferred Stock") and the number of shares
constituting such series shall be __,000,000, par value
$1.50 per share. The number of authorized shares of 7%
Preferred Stock may be reduced to a number not less than
the number of shares then issued by further resolution
duly adopted by the Board of Directors of the Corporation
or a duly authorized committee thereof and by the filing
of a certificate pursuant to the provisions of the Texas
Business Corporation Act stating that such reduction has
been so authorized. The shares of 7% Preferred Stock
shall rank on a parity with the Corporation's Series A
Cumulative Convertible Preferred Stock (the "Series A
Stock") in respect of the payment of dividends and the
distribution of assets upon Liquidation (as defined in
paragraph (a) of Section 5).
SECTION 2. DIVIDENDS.
(a) The holders of outstanding shares of 7%
Preferred Stock will be entitled to receive, subject to
the rights of holders of the Series A Stock and holders
of other classes or series of stock which may from time
to time be issued by the Corporation ranking on a parity
with the 7% Preferred Stock in respect of dividends, and
when, as and if declared by the Board of Directors out of
funds legally available therefor, cumulative preferential
cash dividends from the date of initial issuance at a
rate per annum of seven percent (7%) of the liquidation
preference of $_____ per share (equivalent to $_____ per
annum or $_____ per quarter for each share of 7%
Preferred Stock), payable quarterly in arrears on each
March 1, June 1, September 1 and December 1, respectively
(each such date being hereinafter referred to as a
"Preferred Dividend Payment Date"); provided, however,
that, with respect to any dividend period during which a
redemption occurs, the Corporation may, at its option,
declare accrued dividends on the shares of 7% Preferred
Stock to (but not including), and pay such accrued
dividends on, the date fixed for redemption, in which
case such dividends shall be payable to the holders of
shares of 7% Preferred Stock as of the record date for
such dividend payment and shall not be included in the
calculation of the related Call Price (as defined in
clause (ii) of paragraph (i) of Section 3). The first
dividend shall be for the period from the date of initial
issuance of 7% Preferred Stock to and including [the date
immediately preceding the first Preferred Dividend
Payment Date following the eleventh day after the
Effective Time under the Agreement and Plan of Merger],
1996 and will be paid on [such Preferred Dividend Payment
Date], 1996. If any Preferred Dividend Payment Date
shall not be a business day (as defined in clause (i) of
paragraph (i) of Section 3), then the Preferred Dividend
Payment Date shall be on the next succeeding day that is
a business day. Each such dividend will be payable to
holders of record as they appear on the books of the
Corporation or any transfer agent for the shares of 7%
Preferred Stock on such record dates, not less than 10
nor more than 50 days preceding the payment dates
thereof, as shall be fixed by the Board of Directors.
Dividends on the shares of 7% Preferred Stock shall
accrue on a daily basis (except as otherwise provided in
the last paragraph of Section 3(c) with respect to
Optional Conversion) commencing on and including the date
of initial issuance of 7% Preferred Stock, and accrued
dividends for each quarterly dividend period or portion
thereof shall accumulate, to the extent not paid, on the
Preferred Dividend Payment Date first following the
quarterly period or portion thereof for which they
accrue. Except as otherwise provided in Section 3(a) or
3(j)(2), accumulated unpaid dividends shall not bear
interest. Dividends on the shares of 7% Preferred Stock
shall accrue whether or not the Corporation has earnings,
whether or not there are funds legally available for the
payment of such dividends and whether or not such
dividends are declared. Dividends in arrears for any
past quarterly dividend periods may be declared and paid
at any time without reference to any regular Preferred
Dividend Payment Date to holders of record on such date,
not exceeding 50 days preceding the payment date thereof,
as shall be fixed by the Board of Directors. Dividends
(or cash amounts equal to accrued and unpaid dividends)
payable on the shares of 7% Preferred Stock for any
period shorter than a quarterly dividend period shall be
computed on the basis of a 360-day year of twelve 30-day
months. Dividends on the shares of 7% Preferred Stock
shall cease to accrue as of the close of business on the
earlier of (i) the day immediately prior to the Mandatory
Conversion Date, as defined in paragraph (a) of
Section 3, or (ii) the day immediately prior to their
earlier conversion or redemption.
(b) If full cumulative dividends on the 7%
Preferred Stock have not been declared and paid or
irrevocably set apart for payment when due, then, subject
to the next succeeding sentence, the Corporation shall
not (i) declare or pay any dividend on any Dividend Pari
Passu Security or Dividend Junior Security (each as
defined below) or (ii) redeem, purchase, retire or
otherwise acquire for consideration shares of any
Dividend Junior Security (or rights, options or warrants
to purchase such Dividend Junior Security), other than
(w) purchases or acquisitions of shares of any Dividend
Junior Security in connection with the satisfaction by
the Corporation or any of its majority-owned subsidiaries
of its obligations under any employee benefit plan or the
satisfaction by the Corporation of its obligations
pursuant to any put contract requiring the Corporation to
purchase any Dividend Junior Security, (x) as a result of
a reclassification of any Dividend Junior Security or the
exchange or conversion of one class or series of any
Dividend Junior Security for another class or series of
any Dividend Junior Security, (y) redemptions or
purchases of any Rights (as defined in Section 3(k)) or
the declaration and payment of a dividend or distribution
of similar share purchase rights in the future or (z) the
purchase of fractional interests in shares of any
Dividend Junior Security pursuant to the conversion or
exchange provisions of such Dividend Junior Security or
the security being converted or exchanged, (iii) redeem,
purchase, retire or otherwise acquire for consideration
any Dividend Pari Passu Security (or rights, options or
warrants to purchase such Dividend Pari Passu Security),
or (iv) permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation
could, pursuant to the foregoing, purchase or otherwise
acquire such shares at such time and in such manner. The
preceding sentence, however, shall not apply to, or
prohibit (i) dividends as a result of a reclassification
of Dividend Pari Passu Securities or Dividend Junior
Securities, (ii) dividends of any Rights, (iii) dividends
or distributions of similar share purchase rights in the
future, (iv) dividends or distributions in shares of
Common Stock or another class or series of capital stock
of the Corporation that is junior to the 7% Preferred
Stock as to the payment of dividends and the distribution
of assets upon liquidation, dissolution or winding-up of
the Corporation, or (v) dividends with respect to
Dividend Pari Passu Securities in accordance with the
following sentence. If full cumulative dividends have
not been paid upon the shares of 7% Preferred Stock and
any other class or series of Dividend Pari Passu
Securities, all dividends declared upon shares of 7%
Preferred Stock and any other such class or series of
Dividend Pari Passu Securities shall, if declared, be
declared pro rata so that the amount of cash dividends
declared per share on the 7% Preferred Stock and such
other class or series of Dividend Pari Passu Securities
shall in all cases bear to each other the same ratio that
accumulated and unpaid dividends per share on the shares
of 7% Preferred Stock and such other class or series of
Dividend Pari Passu Securities bear to each other.
The term "Dividend Pari Passu Security" means any
preference stock or preferred stock or other capital
stock of the Corporation and any guarantee entered into
by the Corporation in respect of any preference stock or
preferred stock of any affiliate of the Corporation
ranking pari passu with the 7% Preferred Stock as to the
payment of dividends. "Dividend Junior Security" means
Common Stock, Series A Junior Participating Preferred
Stock of the Corporation and any other class or series of
capital stock of the Corporation and any guarantee
entered into by the Corporation in respect of any
preference stock or preferred stock of any affiliate of
the Corporation ranking junior to the 7% Preferred Stock
as to the payment of dividends.
(c) Accruals of dividends on the 7% Preferred Stock
shall not bear interest, regardless of whether funds
shall be legally available for the declaration or payment
thereof.
SECTION 3. REDEMPTIONS OR CONVERSIONS.
(a) Mandatory Conversion on Mandatory Conversion
Date. Unless earlier called for redemption or converted
in accordance with the provisions hereof, on [the
Preferred Dividend Payment Date closest to the fifth
anniversary of the Effective Time of the Merger] or, if
such date is not a business day, the next succeeding day
that is a business day (the "Mandatory Conversion Date"),
each outstanding share of 7% Preferred Stock shall,
without additional notice to holders thereof, convert
automatically ("Mandatory Conversion") into:
(i) fully paid and non-assessable shares of
Common Stock at the Common Equivalent Rate (as
defined herein) in effect on the Mandatory
Conversion Date; plus
(ii) the right to receive an amount in cash
equal to all accrued and unpaid dividends on such
share of 7% Preferred Stock (other than previously
declared dividends payable to a holder of record as
of a prior date) to and including the day
immediately prior to the Mandatory Conversion Date,
whether or not earned or declared, out of funds
legally available therefor.
The "Common Equivalent Rate" shall initially be one
share of Common Stock for each share of 7% Preferred
Stock and shall be subject to adjustment as set forth in
paragraphs (d) and (e) of this Section 3.
If an amount equal to all accrued and unpaid
dividends on the shares of 7% Preferred Stock described
in clause (ii) above (the "Required Dividend Amount") is
not deposited with a bank or trust company in accordance
with Section 3(j)(2) on or prior to the Mandatory
Conversion Date (the amount, if any, by which the
Required Dividend Amount exceeds the amount so deposited
in respect of the Required Dividend Amount being herein
called the "Deposit Deficit"), the Corporation shall, out
of funds legally available therefor, as promptly as
practicable following the Mandatory Conversion Date,
deposit cash with a bank or trust company in accordance
with Section 3(j)(2) in an amount equal to the Deposit
Deficit plus an amount equal to interest at the rate of
7% per annum, compounded quarterly, on the Deposit
Deficit from time to time outstanding from and including
the Mandatory Conversion Date to but not including the
date the Deposit Deficit is reduced to zero; provided,
that so long as a Deposit Deficit is outstanding, no
class or series of stock thereafter issued by the
Corporation shall rank senior to the claims of the
holders of the shares of 7% Preferred Stock on the
Mandatory Conversion Date with regard to the Required
Dividend Amount and interest thereon as and to the extent
provided in the first proviso of the penultimate sentence
of Section 3(j)(2).
(b) Right to Call for Redemption. Shares of 7%
Preferred Stock are not redeemable by the Corporation
before [the date one year prior to the Mandatory
Conversion Date] (the "Initial Redemption Date"). At
any time and from time to time on or after that date
until and including the day immediately prior to the
Mandatory Conversion Date, the Corporation shall have the
right to call, in whole or in part, the outstanding
shares of 7% Preferred Stock for redemption (subject to
the notice provisions set forth in paragraph (j) of this
Section 3). On the redemption date, the Corporation
shall deliver to the holders thereof in exchange for each
such share called for redemption the greater of:
(i) a number of fully paid and non-assessable
shares of Common Stock determined by dividing the
Call Price (as defined in clause (ii) of
paragraph (i) of this Section 3) in effect on the
redemption date by the Current Market Price (as
defined in clause (v) of paragraph (d) of this
Section 3) per share of Common Stock determined as
of the second Trading Date (as defined in clause (v)
of paragraph (i) of this Section 3) immediately
preceding the Notice Date (as defined in clause (iv)
of paragraph (i) of this Section 3); or
(ii) 0.8264 of a share of Common Stock (subject
to adjustment in the same manner as the Optional
Conversion Rate (as defined in paragraph (c) of this
Section 3) is adjusted).
If fewer than all the outstanding shares of 7%
Preferred Stock are to be called for redemption, shares
to be redeemed shall be selected by the Corporation from
outstanding shares of 7% Preferred Stock by lot or pro
rata (as nearly as may be practicable without creating
fractional shares) or by any other method determined by
the Board of Directors of the Corporation in its sole
discretion to be equitable.
(c) Optional Conversion. Shares of 7% Preferred
Stock are convertible, at the option of the holders
thereof ("Optional Conversion"), at any time or from time
to time, before the Mandatory Conversion Date, unless
previously redeemed, into shares of Common Stock at a
rate of 0.8264 of a share of Common Stock for each share
of 7% Preferred Stock (the "Optional Conversion Rate"),
subject to adjustment as set forth in paragraphs (d) and
(e) of this Section 3. The right of Optional Conversion
of shares of 7% Preferred Stock called for redemption
shall terminate immediately before the close of business
on the day prior to any redemption date with respect to
such shares.
Optional Conversion of shares of 7% Preferred Stock
may be effected by delivering certificates evidencing
such shares of 7% Preferred Stock, together with written
notice of conversion and, if required by the Corporation,
a proper assignment of such certificates to the
Corporation or in blank (and, if applicable as provided
in the following paragraph, cash payment of an amount
equal to the dividends attributable to the current
quarterly dividend period payable on such shares), to the
office of the transfer agent for the shares of 7%
Preferred Stock or to any other office or agency
maintained by the Corporation for that purpose and
otherwise in accordance with Optional Conversion
procedures established by the Corporation. Each Optional
Conversion shall be deemed to have been effected
immediately before the close of business on the date on
which the foregoing requirements shall have been
satisfied. The Optional Conversion shall be at the
Optional Conversion Rate in effect at such time and on
such date.
Holders of shares of 7% Preferred Stock at the close
of business on a record date for any payment of declared
dividends shall be entitled to receive the dividend
payable on such shares of 7% Preferred Stock on the
corresponding dividend payment date notwithstanding the
Optional Conversion of such shares of 7% Preferred Stock
following such record date and on or prior to such
dividend payment date. However, shares of 7% Preferred
Stock surrendered for Optional Conversion after the close
of business on a record date for any payment of declared
dividends and before the opening of business on the next
succeeding dividend payment date must be accompanied by
payment in cash of an amount equal to the dividends
attributable to the current quarterly dividend period
payable on such shares on such next succeeding dividend
payment date minus the dividends, if any, payable on such
date on the number of shares of Common Stock issuable in
connection with such Optional Conversion of such shares
(unless such shares of 7% Preferred Stock are subject to
redemption on a redemption date between such record date
established for such dividend payment date and such
dividend payment date). Except as provided above, upon
any Optional Conversion of shares of 7% Preferred Stock,
the Corporation shall make no payment of or allowance for
unpaid dividends, whether or not in arrears, on such
shares of 7% Preferred Stock as to which Optional
Conversion has been effected or for previously declared
dividends or distributions on the shares of Common Stock
issued upon Optional Conversion.
(d) Common Equivalent Rate and Optional Conversion
Rate Adjustments. The Common Equivalent Rate and the
Optional Conversion Rate are each subject to adjustment
from time to time as provided below in this paragraph
(d). All adjustments to the Common Equivalent Rate and
the Optional Conversion Rate shall be calculated to the
nearest 1/100th of a share of Common Stock (with 5/1000
of a share being rounded to the next lower 1/100 of a
share).
(i) If the Corporation shall either:
(1) pay a dividend or make a distribution
with respect to Common Stock in
shares of Common Stock,
(2) subdivide or split its outstanding
shares of Common Stock into a greater
number of shares,
(3) combine its outstanding shares of
Common Stock into a smaller number of
shares, or
(4) issue by reclassification of its
shares of Common Stock any shares of
common stock of the Corporation
then, in any such event, the Common Equivalent Rate
and the Optional Conversion Rate in effect
immediately prior thereto shall each be adjusted so
that the holder of a share of 7% Preferred Stock
shall be entitled to receive, on the conversion of
such share of 7% Preferred Stock, the number of
shares of Common Stock of the Corporation which such
holder would have owned or been entitled to receive
after the happening of any of the events described
above had such share of 7% Preferred Stock been
converted at the Common Equivalent Rate (in the case
of a Mandatory Conversion) or the Optional
Conversion Rate (in the case of an Optional
Conversion), as applicable, in effect immediately
prior to the happening of such event or the record
date therefor, whichever is earlier. Such
adjustment shall become effective immediately after
the close of business on the record date for
determination of stockholders entitled to receive
such dividend or distribution in the case of a
dividend or distribution and shall become effective
immediately after the effective time in case of a
subdivision, split, combination or reclassification.
Any shares of Common Stock issuable in payment of a
dividend or distribution shall be deemed to have
been issued immediately prior to the close of
business on the record date for such dividend or
distribution for purposes of calculating the number
of outstanding shares of Common Stock under clauses
(ii) and (iii) below.
(ii) Subject to Section 3(d)(xi), if the
Corporation shall issue rights (other than Rights)
or warrants to all holders of its Common Stock
entitling them (for a period not exceeding 45 days
from the date of such issuance) to subscribe for or
purchase shares of Common Stock at a price per share
(taking into account the consideration received for
the issuance of such right or warrant plus any
consideration to be received upon the exercise
thereof) less than the Current Market Price per
share of the Common Stock on the record date for the
determination of stockholders entitled to receive
such rights or warrants, then in each case the
Common Equivalent Rate and the Optional Conversion
Rate shall each be adjusted by multiplying (I) the
Common Equivalent Rate or the Optional Conversion
Rate, as applicable, in effect immediately prior
thereto by (II) a fraction, of which the numerator
shall be (A) the number of shares of Common Stock
outstanding on such record date, plus (B) the number
of additional shares of Common Stock offered for
subscription or purchase, and of which the
denominator shall be (A) the number of shares of
Common Stock outstanding on such record date, plus
(B) the number of additional shares of Common Stock
which the aggregate offering price of the total
number of shares so offered for subscription or
purchase would purchase at the Current Market Price
per share of the Common Stock on such record date
(determined by multiplying such total number of
shares by the exercise price of such rights or
warrants and dividing the product so obtained by
such Current Market Price). Shares of Common Stock
owned by or held for the account of the Corporation
or another company of which a majority of the shares
entitled to vote in the election of directors are
held, directly or indirectly, by the Corporation
shall not be deemed to be outstanding for purposes
of such computation. Such adjustment shall be made
successively whenever any such rights or warrants
are issued and shall become effective immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such rights or warrants. To the extent that
any rights or warrants referred to in this clause
(ii) expire unexercised, the Common Equivalent Rate
and the Optional Conversion Rate shall each be
readjusted to the Common Equivalent Rate and the
Optional Conversion Rate, respectively, which would
then be in effect had the adjustment made upon the
issuance of such rights or warrants been made upon
the basis of the issuance of only the number of
rights or warrants actually exercised.
(iii) If the Corporation shall pay a
dividend or make a distribution to all holders of
its Common Stock of evidences of its indebtedness or
other assets (including shares of capital stock of
the Corporation but excluding any Excluded Dividends
(as defined in this clause (iii)) and excluding any
distributions and dividends referred to in clause
(i) above), or shall distribute to all holders of
its Common Stock rights or warrants to subscribe for
or purchase securities of the Corporation or any of
its subsidiaries (other than those referred to in
clause (ii) above), the Common Equivalent Rate and
the Optional Conversion Rate shall each be adjusted
by multiplying (I) the Common Equivalent Rate or the
Optional Conversion Rate, as applicable, in effect
immediately prior to the date of such dividend or
distribution by (II) a fraction, of which the
numerator shall be the Current Market Price per
share of Common Stock on the date fixed for the
payment of such distribution (the Reference Date ),
and of which the denominator shall be such Current
Market Price per share of Common Stock less the fair
market value as of the Reference Date of the portion
of the assets or evidences of indebtedness so
distributed, or of such subscription rights or
warrants, applicable to one share of Common Stock.
Such adjustment shall become effective immediately
after the close of business on the record date for
the determination of stockholders entitled to
receive such dividend or distribution. "Excluded
Dividends" shall mean (1) any dividend or
distribution referred to in paragraphs (i)(1) or
(i)(4) of this Section 3(d), (2) any dividend,
distribution or issuance of rights or warrants
referred to in paragraph (ii) of this Section 3(d)
or of Rights, (3) any regular cash dividend on the
Common Stock that does not exceed the per share
amount of the immediately preceding regular cash
dividend on the Common Stock (as adjusted to
appropriately reflect any of the events referred to
in paragraph (i) of this Section 3(d)), and (4) in
the case of any other dividend or distribution (cash
or otherwise), that portion thereof which, when
combined with the per share fair market value of all
other dividends and distributions paid by the
Corporation on Common Stock during the 365-day
period ending on the date of declaration of such
dividend or distribution (as adjusted to
appropriately reflect any of the events referred to
in paragraph (i) of this Section 3(d) and excluding
dividends and distributions referred to in clauses
(1) and (2) and dividends and distributions, or
portions thereof, that resulted in an adjustment to
the Common Equivalent Rate and the Optional
Conversion Rate (or would have but for the
application of Section 3(d)(vii), 3(d)(x) or
3(d)(xi)), does not exceed 15% of the Current Market
Price per share of the Common Stock on the Trading
Date immediately preceding the date of declaration
of such dividend or distribution. The fair market
value of any dividend or distribution not paid in
cash shall be determined in good faith by the Board
of Directors of the Corporation, whose determination
shall be conclusive and described in a resolution of
the Board of Directors of the Corporation. For
purposes of this paragraph (iii), any dividend or
distribution that includes shares of Common Stock or
rights or warrants to subscribe for or purchase
shares of Common Stock shall be deemed instead to be
(1) a dividend or distribution of the evidences of
indebtedness, shares of capital stock of the
Corporation, cash or assets other than such shares
of Common Stock or such rights or warrants (making
any Common Equivalent Rate or Optional Conversion
Rate adjustment required by this paragraph (iii))
immediately followed by (2) a dividend or
distribution of such shares of Common Stock or such
rights or warrants (making any further Common
Equivalent Rate or Optional Conversion Rate
adjustment required by paragraphs (i) or (ii) of
this Section 3(d) and, in the case of rights or
warrants, subject to the last sentence of such
paragraph (ii)), except the Reference Date of such
dividend or distribution as defined in this
paragraph (iii) shall be substituted as "the record
date for determination of stockholders entitled to
receive such dividend or distribution," "the record
date for determination of stockholders entitled to
receive such rights or warrants", the record date
for such dividend or distribution and "such record
date within the meaning of paragraphs (i) and (ii)
of this Section 3(d).
(iv) Anything in this Section 3 to the contrary
notwithstanding, the Corporation shall be entitled
to make such upward adjustments in the Common
Equivalent Rate, the Optional Conversion Rate or the
Call Price, in addition to those required by this
Section 3, as the Corporation in its sole discretion
shall determine to be advisable, in order that any
stock dividends, subdivision or split of shares,
distribution of rights to purchase stock or
securities, or a distribution of securities
convertible into or exchangeable for stock (or any
transaction which could be treated as any of the
foregoing transactions pursuant to Section 305 of
the Internal Revenue Code of 1986, as amended)
hereafter made by the Corporation to its
stockholders shall not be taxable. If the
Corporation determines that such an adjustment to
the Common Equivalent Rate, the Optional Conversion
Rate or the Call Price should be made, an adjustment
shall be made effective as of such date as is
determined by the Board of Directors of the
Corporation. The Corporation from time to time may
make such upward adjustments in the Common
Equivalent Rate, the Optional Conversion Rate or the
Call Price, in addition to those required by this
Section 3, by any amount selected by the Corporation
for any period of time if the period is at least 20
days and the Board of Directors of the Corporation
shall have made a determination that such upward
adjustment would be in the best interest of the
Corporation. The determination of the Board of
Directors of the Corporation as to whether an
adjustment to the Common Equivalent Rate, the
Optional Conversion Rate or the Call Price should be
made pursuant to the foregoing provisions of this
clause (iv), and if so, as to what adjustment should
be made and when, shall be conclusive, final and
binding on the Corporation and all stockholders of
the Corporation.
(v) As used in this Section 3, the Current
Market Price per share of Common Stock on any date
of determination shall be the lesser of (A) the
average of the daily Closing Prices for the fifteen
consecutive Trading Dates ending on and including
the date of determination of the Current Market
Price, or (B) the Closing Price for the date of
determination of the Current Market Price; provided,
however, that, for the purposes of calculating the
Current Market Price in connection with any
redemption of the 7% Preferred Stock, if any
adjustment of the Common Equivalent Rate pursuant to
paragraph (d) or paragraph (e) of this Section 3 is
effective as of any date during the period beginning
on the first day of such fifteen-day period and
ending on the date on which shares of 7% Preferred
Stock are to be redeemed, then the Current Market
Price as determined pursuant to the foregoing will
be adjusted to the extent appropriate to reflect
such adjustment. If the Current Market Price is
adjusted pursuant to the immediately preceding
proviso as a result of the effectiveness of an
adjustment of the Common Equivalent Rate but the
event requiring an adjustment of the Common
Equivalent Rate does not occur prior to the
redemption of the 7% Preferred Stock, then the
Corporation may in its sole discretion elect to
defer the following until the occurrence of such
event:
(1) issuing to the holder of any shares
of 7% Preferred Stock surrendered for
redemption the additional shares of Common
Stock issuable upon such redemption over and
above the shares of Common Stock issuable upon
such redemption on the basis of the Current
Market Price prior to adjustment; and
(2) paying to such holder any amount in
cash in lieu of a fractional share of Common
Stock pursuant to paragraph (g) of this
Section 3.
(vi) Before taking any action that would cause
an adjustment to the Common Equivalent Rate or the
Optional Conversion Rate that would cause the
Corporation to issue shares of Common Stock for
consideration below the then par value (if any) of
the Common Stock upon conversion or redemption of
the 7% Preferred Stock, the Corporation shall take
any corporate action which may, in the opinion of
its counsel, be necessary in order that the
Corporation may validly and legally issue fully paid
and non-assessable shares of such Common Stock at
such adjusted Common Equivalent Rate or Optional
Conversion Rate.
(vii) No adjustment in the Common
Equivalent Rate or the Optional Conversion Rate
shall be required unless such adjustment would
require an increase or decrease of at least 1% in
such rate; provided, however, that any adjustments
which by reason of this clause (vii) are not
required to be (and are not) made shall be carried
forward and taken into account in any subsequent
adjustment.
(viii) In any case in which this Section
3(d) shall require that an adjustment in the Common
Equivalent Rate or the Optional Conversion Rate as a
result of any event become effective after the
close of business on a record date, and the date of
a conversion pursuant to paragraph (a) or (c) of
this Section 3 occurs after such record date but
before the occurrence of such event, the Corporation
may in its sole discretion elect to defer the
following until the occurrence of such event:
(1) issuing to the holder of any shares
of 7% Preferred Stock surrendered for
conversion the additional shares of Common
Stock issuable upon such conversion over and
above the shares of Common Stock issuable upon
such conversion on the basis of the Common
Equivalent Rate or the Optional Conversion
Rate, as applicable, prior to adjustment; and
(2) paying to such holder any amount in
cash in lieu of a fractional share of Common
Stock pursuant to paragraph (g) of this
Section 3.
(ix) Before redeeming any shares of 7%
Preferred Stock, the Corporation shall take any
corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation
may validly and legally issue fully paid and
nonassessable shares of Common Stock upon such
redemption.
(x) Notwithstanding the foregoing provisions
of this Section 3(d), no adjustment of the Common
Equivalent Rate or Optional Conversion Rate shall be
required to be made upon the issuance of any shares
of Common Stock pursuant to any present or future
plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation
and the investment of additional optional amounts in
shares of Common Stock under any such plan, or the
issuance of any shares of Common Stock or options or
rights to purchase such shares pursuant to any
present or future employee, officer, director,
consultant or agent benefit plan or program or
agreement of the Corporation or a subsidiary of the
Corporation or pursuant to any option, warrant,
right or exercisable, exchangeable or convertible
security outstanding as of the date the 7% Preferred
Stock was first designated pursuant to this
Statement of Resolution Establishing a Series of
Shares.
(xi) Notwithstanding any other provision of
this Section 3(d), the issuance or distribution of
Rights shall not be deemed to constitute an issuance
or a distribution or dividend of rights, warrants,
or other securities to which any of the adjustment
provisions described above applies.
(xii) In case the Corporation shall, by
dividend or otherwise, declare or make a
distribution on its Common Stock referred to in
Section 3(d)(iii) (including, without limitation,
dividends or distributions referred to in the last
sentence of Section 3(d)(iii) but excluding the
Excluded Dividends), the holder of each share of 7%
Preferred Stock, upon the conversion thereof
subsequent to the close of business on the date
fixed for the determination of shareholders entitled
to receive such distribution and prior to the
effectiveness of the Optional Conversion Rate
adjustment in respect of such distribution, shall
also be entitled to receive for each share of Common
Stock into which such share of 7% Preferred Stock is
converted, the portion of the shares of Common
Stock, rights, warrants, evidences of indebtedness,
shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock;
provided, however, that, at the election of the
Corporation (whose election shall be evidenced by a
resolution of the Board of Directors of the
Corporation or a committee thereof) with respect to
all holders so converting, the Corporation may, in
lieu of distributing to such holders any portion of
such distribution not consisting of cash or
securities of the Corporation, pay such holders an
amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of
Directors, whose determination shall be conclusive
and described in a resolution of the Board of
Directors of the Corporation or a committee
thereof). If any conversion of a share of 7%
Preferred Stock described in the immediately
preceding sentence occurs prior to the payment date
for a distribution to holders of Common Stock which
the holder of the share of 7% Preferred Stock so
converted is entitled to receive in accordance with
the immediately preceding sentence, the Corporation
may elect (such election to be evidenced by a
resolution of the Board of Directors of the
Corporation or a committee thereof) to distribute to
such holder a due xxxx for the shares of Common
Stock, rights, warrants, evidences of indebtedness,
shares of capital stock, cash or assets to which
such holder is so entitled, provided that such due
xxxx (y) meets any applicable requirements of the
principal national securities exchange or other
market on which the Common Stock is then traded, and
(z) requires payment or delivery of such shares of
Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or
assets no later than the date of payment or delivery
thereof to holders of shares of Common Stock
receiving such distribution.
(xiii) There shall be no adjustment of the
Common Equivalent Rate or Optional Conversion Rate
in case of the issuance of any capital stock (or
securities convertible into or exchangeable for
capital stock) of the Corporation or any other
distribution or event except as specifically
described in this Section 3. If any action would
require adjustment of the Common Equivalent Rate and
the Conversion Rate pursuant to more than one of the
provisions of this Section 3, only one adjustment
shall be made and such adjustment shall be the
amount of adjustment that has the highest absolute
value to the holders of the 7% Preferred Stock.
(e) Adjustment for Certain Mergers and Other
Transactions. In case of any consolidation or merger to
which the Corporation is a party (other than a
consolidation or merger in which the Corporation is the
surviving or continuing corporation and in which the
shares of Common Stock outstanding immediately before the
merger or consolidation remain unchanged), or in the case
of any sale or transfer to another corporation of the
property of the Corporation as an entirety or
substantially as an entirety, or in the case of a
statutory exchange of securities with another corporation
(other than in connection with a merger or acquisition),
each share of 7% Preferred Stock shall, after
consummation of such transaction, be subject to (i)
conversion at the option of the holder into the kind and
amount of securities, cash, or other property receivable
upon consummation of such transaction by a holder of the
number of shares of Common Stock into which such share of
7% Preferred Stock might have been converted immediately
before consummation of such transaction, (ii) conversion
on the Mandatory Conversion Date into the kind and amount
of securities, cash, or other property receivable upon
consummation of such transaction by a holder of the
number of shares of Common Stock into which such share of
7% Preferred Stock would have been converted if the
conversion on the Mandatory Conversion Date had occurred
immediately before the date of consummation of such
transaction, plus the right to receive cash in an amount
equal to all accrued and unpaid dividends on such share
of 7% Preferred Stock (other than previously declared
dividends payable to a holder of record as of a prior
date), and (iii) redemption on any redemption date on or
after the Initial Redemption Date in exchange for the
kind and amount of securities, cash, or other property
receivable upon consummation of such transaction by a
holder of the number of shares of Common Stock that would
have been issuable at the Call Price in effect on such
redemption date upon a redemption of such share of 7%
Preferred Stock immediately before consummation of such
transaction, assuming that, if the Notice Date for such
redemption is not before such transaction, the Notice
Date had been the date of such transaction; and assuming
in each case that such holder of shares of Common Stock
failed to exercise rights of election, if any, as to the
kind or amount of securities, cash, or other property
receivable upon consummation of such transaction
(provided that, if the kind or amount of securities,
cash, or other property receivable upon consummation of
such transaction is not the same for each non-electing
share, then the kind and amount of securities, cash, or
other property receivable upon consummation of such
transaction for each non-electing share shall be deemed
to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The kind and
amount of securities into or for which the shares of 7%
Preferred Stock shall be convertible or redeemable after
consummation of such transaction shall be subject to
adjustment as described in Section 3(d) following the
date of consummation of such transaction. The
Corporation may not become a party to any such
transaction unless the terms thereof are consistent with
the foregoing.
(f) Notice of Adjustments, Etc. Whenever the
Common Equivalent Rate and the Optional Conversion Rate
are adjusted as herein provided, the Corporation shall:
(i) forthwith compute the adjusted Common
Equivalent Rate and the adjusted Optional Conversion
Rate in accordance with this Section 3 and prepare a
certificate signed by the Chief Executive Officer,
the Chairman, the President, any Vice President or
the Treasurer of the Corporation setting forth the
adjusted Common Equivalent Rate and the adjusted
Optional Conversion Rate, the method of calculation
thereof in reasonable detail and the facts requiring
such adjustment and upon which such adjustment is
based and file such certificate forthwith with the
transfer agent or agents for the 7% Preferred Stock
and the Common Stock;
(ii) make a prompt public announcement stating
that the Common Equivalent Rate and the Optional
Conversion Rate have been adjusted and setting forth
the adjusted Common Equivalent Rate and the adjusted
Optional Conversion Rate; and
(iii) mail a notice stating that the Common
Equivalent Rate and the Optional Conversion Rate
have been adjusted, the facts requiring such
adjustment and upon which such adjustment is based
and setting forth the adjusted Common Equivalent
Rate and the adjusted Optional Conversion Rate to
the holders of record of the outstanding shares of
7% Preferred Stock at or prior to the time the
Corporation mails an interim statement to its
stockholders covering the quarter-yearly period
during which the facts requiring such adjustment
occurred, but in any event within 45 days of the end
of such quarter-yearly period.
In case, at any time while any of the shares of 7%
Preferred Stock are outstanding,
(i) the Corporation shall declare a dividend
(or any other distribution) on its Common Stock,
other than Excluded Dividends; or
(ii) the Corporation shall authorize the
issuance to all holders of its Common Stock of
rights or warrants to subscribe for or purchase
shares of its Common Stock or of any other
subscription rights or warrants; or
(iii) the Corporation shall authorize any
reclassification of its Common Stock (other than a
subdivision or combination thereof) or any
consolidation or merger to which the Corporation is
a party and for which approval of any stockholders
of the Corporation is required (except for a merger
of the Corporation into one of its subsidiaries
solely for the purpose of changing the corporate
domicile of the Corporation to another state of the
United States and in connection with which there is
no substantive change in the rights or privileges of
any securities of the Corporation other than changes
resulting from differences in the corporate statutes
of the state the Corporation was then domiciled in
and the new state of domicile), or the sale or
transfer of all or substantially all of the assets
of the Corporation;
then the Corporation shall cause to be filed at each
office or agency maintained for the purpose of conversion
of the shares of 7% Preferred Stock, and shall cause to
be mailed to the holders of record of the outstanding
shares of 7% Preferred Stock, at least 10 days (or such
shorter period, if any, as may be practicable in the case
of an action described in clause (iii)) before the date
hereinafter specified in clause (A) or (B) below (or the
earlier of the dates hereinafter specified, in the event
that more than one date is specified), a notice stating
(A) the date on which a record is to be taken for the
purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be
entitled to such dividend, distribution, rights or
warrants are to be determined, or (B) the date on which
any such reclassification, consolidation, merger, sale or
transfer is expected to become effective, and the date as
of which it is expected that holders of Common Stock of
record shall be entitled to exchange their Common Stock
for securities or other property (including cash), if
any, deliverable upon such reclassification,
consolidation, merger, sale or transfer. The failure to
give or receive the notice required by the preceding
sentence or any defect therein shall not affect the
legality or validity of any such dividend, distribution,
right or warrant or other action.
(g) No Fractional Shares. No fractional shares of
Common Stock shall be issued upon redemption or
conversion of any shares of the 7% Preferred Stock. In
lieu of any fractional share otherwise issuable in
respect of the aggregate number of shares of the 7%
Preferred Stock of any holder that are redeemed or
converted on any redemption date or upon Mandatory
Conversion or Optional Conversion, such holder shall be
entitled to receive an amount in cash (computed to the
nearest cent) equal to the same fraction of the (i)
Current Market Price of the Common Stock (determined as
of the second Trading Date immediately preceding the
Notice Date) in the case of redemption, or (ii) Closing
Price of the Common Stock determined (A) as of the fifth
Trading Date immediately preceding the Mandatory
Conversion Date, in the case of Mandatory Conversion, or
(B) as of the second Trading Date immediately preceding
the effective date of conversion, in the case of an
Optional Conversion by a holder. If more than one share
of 7% Preferred Stock shall be surrendered for conversion
or redemption at one time by or for the same holder, the
number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the
aggregate number of shares of the 7% Preferred Stock so
surrendered or redeemed.
(h) Cancellation. All shares of 7% Preferred Stock
which shall have been issued and reacquired in any manner
by the Corporation (including shares redeemed, shares
purchased and retired and shares converted into shares of
Common Stock or exchanged for shares of any other class
of stock) shall be retired and canceled and the Board of
Directors shall cause to be taken all action necessary to
restore such shares to the status of authorized but
unissued shares of Preferred Stock without designation as
to series or class, and such shares may thereafter be
issued, but not as shares of 7% Preferred Stock.
(i) Definitions. As used herein,
(i) the term "business day" shall mean any day
other than a Saturday, Sunday, or a day on which
banking institutions in the State of New York are
authorized or obligated by law or executive order to
close or a day which is or is declared a national or
New York holiday;
(ii) The "Call Price" of each share of 7%
Preferred Stock shall be the sum of (x) $[101.75% of
the liquidation preference] on and after the Initial
Redemption Date, to and including [the date
immediately preceding the next Preferred Dividend
Payment Date], 2000; $[101.17% of the liquidation
preference] on and after [the next Preferred
Dividend Payment Date], 2000, to and including [the
date immediately preceding the next Preferred
Dividend Payment Date], 2000; $[100.58% of the
liquidation preference] on and after [the next
Preferred Dividend Payment Date], 2000, to and
including [the date immediately preceding the next
Preferred Dividend Payment Date], 2000; and $[100%
of the liquidation preference] on and after [the
next Preferred Dividend Payment Date], 2000, to and
including [the date immediately preceding the
Mandatory Conversion Date]; and (y) all accrued and
unpaid dividends thereon to but not including the
date fixed for redemption (other than previously
declared dividends payable to a holder of record as
of a prior date);
(iii) the term "Closing Price" on any day
shall mean the closing sales price regular way on
such day or, in case no such sale takes place on
such day, the average of the reported closing bid
and asked quotations regular way, in each case on
the New York Stock Exchange, or, if the Common Stock
is not listed or admitted to trading on such
Exchange, on the principal national securities
exchange on which the Common Stock is listed or
admitted to trading, or, if not listed or admitted
to trading on any national securities exchange, the
average of the high bid and low asked quotations of
the Common Stock in the over-the-counter market on
the day in question as reported by the National
Quotation Bureau Incorporated, or a similarly
generally accepted reporting service, or, if no such
quotations are available, the fair market value of
the Common Stock as determined by any New York Stock
Exchange member firm selected from time to time by
the Board of Directors of the Corporation for that
purpose;
(iv) the term "Notice Date" with respect to any
notice given by the Corporation in connection with a
redemption of shares of 7% Preferred Stock shall be
the date on which first occurs either the public
announcement of such redemption or the commencement
of the mailing of such notice to the holders of the
shares of 7% Preferred Stock in accordance with
paragraph (j) of this Section 3;
(v) the term "Trading Date" shall mean a date
on which the New York Stock Exchange (or any
successor to such Exchange) is open for the
transaction of business.
(j) Procedures Regarding Redemption or Mandatory
Conversion.
(1) The Corporation will provide notice of any
redemption of shares of 7% Preferred Stock to
holders of record of the 7% Preferred Stock to be
redeemed not less than 15 nor more than 60 days
prior to the date fixed for such redemption. Such
notice shall be provided by mailing notice of such
redemption first class postage prepaid, to each
holder of record of the shares of 7% Preferred Stock
to be redeemed at such holder's address as it
appears on the stock register of the Corporation;
provided, however, that no failure to give such
notice nor any defect therein shall affect the
validity of the proceeding for the redemption of any
shares of 7% Preferred Stock to be redeemed except
as to the holder to which the Corporation has failed
to give said notice of redemption or except as to
the holder whose notice of redemption was defective.
A public announcement of any call for redemption
shall be made by the Corporation before, or at the
time of, the mailing of such notice of redemption.
Each such mailed notice shall state, as appropriate,
the following:
(i) the redemption date;
(ii) the number of shares of 7% Preferred Stock
to be redeemed and, if less than all the shares held
by any holder are to be redeemed, the number of such
shares to be redeemed;
(iii) the Call Price, the number of shares
of Common Stock per share of 7% Preferred Stock
deliverable upon redemption and the Current Market
Price used to calculate such number of shares of
Common Stock;
(iv) the place or places where certificates for
such shares are to be surrendered for redemption;
and
(v) that dividends on shares of 7% Preferred
Stock to be redeemed will cease to accrue on the day
immediately prior to the redemption date (except as
otherwise provided herein).
(2) The Corporation's obligation to deliver
shares of Common Stock and cash, if any, in
accordance with paragraphs (a) and (b) of this
Section 3 shall be deemed fulfilled if, on or before
a redemption date or the Mandatory Conversion Date,
the Corporation shall deposit, with a bank or trust
company having an office or agency and doing
business in the Borough of Manhattan in New York
City and having a capital and surplus of at least
$50,000,000, such shares of Common Stock and cash,
if any, as are required to be delivered by the
Corporation pursuant to this Section 3 upon the
occurrence of the related redemption or Mandatory
Conversion, in trust for the account of the holders
of the shares to be redeemed or converted (and so as
to be and continue to be available therefor), with
irrevocable instructions and authority to such bank
or trust company that such shares and funds be
delivered upon redemption or conversion of the
shares of 7% Preferred Stock so called for
redemption or subject to conversion. Any shares of
Common Stock and cash, if any, so deposited and
unclaimed by the holders of shares of 7% Preferred
Stock at the end of two years after such redemption
or conversion date (together with any interest
thereon not theretofore paid to the Corporation
which shall be allowed by the bank or trust company
with which such deposit was made) shall be paid by
such bank or trust company to the Corporation (or
its successor), after which the holder or holders of
such shares of 7% Preferred Stock so redeemed or
converted shall look only to the Corporation (or its
successor) for delivery of such shares of Common
Stock and cash, if any. Each holder of shares of 7%
Preferred Stock to be redeemed or converted shall
surrender the certificates evidencing such shares to
the Corporation at the place designated in the
notice of such redemption (or, in the case of a
conversion pursuant to paragraph (a) of this
Section 3, the principal executive offices of the
Corporation or at such other place as may be
designated by the Corporation (or its successor) in
a written notice mailed to the holders of record of
the 7% Preferred Stock) and shall thereupon be
entitled to receive certificates evidencing shares
of Common Stock and cash, if any, payable pursuant
to paragraph (a) or (b), as the case may be, of this
Section 3, following such surrender and following
the date of such redemption or conversion. In case
fewer than all the shares represented by any such
surrendered certificates are called for redemption,
a new certificate shall be issued at the expense of
the Corporation representing the unredeemed shares.
If (A) shares of 7% Preferred Stock are called for
redemption and, on the date fixed for redemption,
shares of Common Stock necessary for the redemption
shall have been deposited with a bank or trust
company as provided above or (B) shares of 7%
Preferred Stock have been converted pursuant to
paragraph (a) of this Section 3, then,
notwithstanding that the certificates evidencing any
shares of 7% Preferred Stock so called for
redemption or converted shall not have been
surrendered, the shares represented thereby so
called for redemption or converted shall be deemed
no longer outstanding and all rights with respect to
the shares so called for redemption or converted
shall forthwith cease and terminate, except for the
right of the holders to receive the shares of Common
Stock and cash, if any, payable pursuant to this
Section 3, without interest upon surrender of their
certificates therefor; provided, that if any cash
payable upon the surrender of certificates
evidencing shares of 7% Preferred Stock that have
been converted pursuant to paragraph (a) of this
Section 3 is not paid when due, the obligation to
pay such cash shall bear interest at the rate of 7%
per annum, compounded quarterly; and provided
further that holders of shares of 7% Preferred Stock
at the close of business on a record date for any
payment of dividends on shares of 7% Preferred Stock
shall be entitled to receive the dividends payable
on such shares on the corresponding dividend payment
date notwithstanding the redemption or conversion of
such shares following such record date and on or
before such corresponding dividend payment date.
Holders of shares of 7% Preferred Stock that are
redeemed or converted in a Mandatory Conversion
shall not be entitled to receive dividends declared
and paid on shares of Common Stock issuable on such
redemption or Mandatory Conversion, and such shares
of Common Stock shall not be entitled to vote, until
such shares of Common Stock are issued upon the
surrender of the certificates representing such
shares of 7% Preferred Stock and upon such surrender
such holders shall be entitled to receive such
dividends declared and paid on such shares of Common
Stock subsequent to the redemption date or Mandatory
Conversion Date, as applicable.
(k) Reservation of Shares and Rights. The
Corporation shall at all times reserve and keep
available, free from preemptive rights, out of authorized
but unissued shares of Common Stock, the maximum number
of shares of Common Stock into which all shares of 7%
Preferred Stock from time to time outstanding are
convertible pursuant to paragraph (a) or (c) of this
Section 3, but shares of Common Stock held in treasury of
the Corporation may, in its discretion, be delivered upon
any conversion of shares of 7% Preferred Stock. Whenever
the Corporation shall issue shares of Common Stock upon
conversion of 7% Preferred Stock, the Corporation shall
issue, together with each such share of Common Stock, one
right to purchase Series A Junior Participating Preferred
Stock of the Corporation (or other securities in lieu
thereof) pursuant to the Rights Agreement, dated as of
July 27, 1989, between the Corporation and First Chicago
Trust Company of New York, as amended, or any similar
rights issued to holders of Common Stock in addition
thereto or in replacement therefor (such rights, together
with any additional or replacement rights, being
collectively referred to as the "Rights"), whether or not
such Rights shall be exercisable at such time, but only
if such Rights are issued and outstanding and held by
other holders of Common Stock (or are evidenced by
outstanding share certificates representing Common Stock)
at such time and have not expired or been redeemed.
(l) Timing. The holders of shares of 7% Preferred
Stock at the close of business on a record date for the
payment of dividends shall be entitled to receive the
dividend payable on such shares on the corresponding
dividend payment date notwithstanding the redemption or
conversion thereof subsequent to such record date and on
or before such corresponding dividend payment date.
(m) Partial Redemption. In no event shall the
Corporation redeem less than all the outstanding shares
of 7% Preferred Stock pursuant to paragraph (b) of this
Section 3 unless full cumulative dividends shall have
been paid or declared and set apart for payment upon all
outstanding shares of 7% Preferred Stock for all past
dividend periods.
(n) Taxes. The Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of
Common Stock on the redemption or conversion of shares of
7% Preferred Stock pursuant to this Section 3; provided,
however, that the Corporation shall not be required to
pay any tax which may be payable in respect of any
registration of transfer involved in the issue or
delivery of shares of Common Stock in a name other than
that of the registered holder of the shares of 7%
Preferred Stock redeemed or converted or to be redeemed
or converted, and no such issue or delivery shall be made
unless and until the person requesting such issue has
paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that
such tax has been paid.
(o) Listing. The Corporation shall endeavor to
list the shares of Common Stock required to be delivered
upon redemption or conversion of the shares of 7%
Preferred Stock, prior to such delivery, upon each
national securities exchange, if any, upon which the
outstanding Common Stock is listed at the time of such
delivery.
(p) Multiple Shares Surrendered. If more than one
share shall be surrendered for redemption or conversion
at one time by the same holder, the number of full shares
of Common Stock issuable upon such redemption or
conversion thereof shall be computed on the basis of the
aggregate number of shares of 7% Preferred Stock so
surrendered.
(q) Compliance with Laws. Prior to the delivery of
any securities which the Corporation shall be obligated
to deliver upon redemption or conversion of the 7%
Preferred Stock, the Corporation shall endeavor to comply
with all federal and state laws and regulations
thereunder requiring the registration of such securities
with, or any approval of or consent to delivery thereof
by, any governmental authority.
(r) Survival of Certain Provisions. So long as a
Deposit Deficit is outstanding, the provisions contained
in Sections 3(a) and 3(j)(2) hereof regarding a Deposit
Deficit shall continue in full force and effect and shall
not thereafter be amended, notwithstanding that no shares
of 7% Preferred Stock remain outstanding.
SECTION 4. VOTING RIGHTS.
(a) Except as otherwise provided by paragraph (b)
or (c) of this Section 4 or as required by law, the
holders of shares of 7% Preferred Stock shall have 4/5 of
a vote in respect of each share of 7% Preferred Stock
held as to all matters voted upon by the stockholders of
the Corporation and shall vote together with the holders
of the Common Stock and together with the holders of any
other classes or series of stock who are entitled to vote
in such manner and not as a separate class.
(b) In the event that full cumulative dividends on
the 7% Preferred Stock are not paid for six consecutive
quarterly dividend periods, the number of directors of
the Corporation constituting the entire Board of
Directors shall be increased by two persons and the
holders of shares of the 7% Preferred Stock, voting
separately as a class together with the holders of shares
of all other series of capital stock of the Corporation
ranking pari passu with the 7% Preferred Stock as to the
payment of dividends and having the then present right to
elect one or more directors as a result of a dividend
arrearage but not then entitled to other separate voting
rights to elect one or more directors in the event of
such an arrearage (herein referred to as "Class Voting
Stock"), shall have the right to elect such directors to
fill such positions at any regular meeting of
shareholders or special meeting held in place thereof, or
at a special meeting of the holders of the 7% Preferred
Stock and such other Class Voting Stock called as
provided in paragraph (c) below. Whenever all arrearages
of dividends on the 7% Preferred Stock then outstanding
shall have been paid or declared and irrevocably set
apart for payment, then the right of the holders of
shares of the 7% Preferred Stock (and, subject to the
terms of such other Class Voting Stock, such other Class
Voting Stock) to elect such additional two directors
shall cease (but subject always to the same provisions
for the vesting of such voting rights in the case of any
similar future arrearages in dividends), and the terms of
office of all persons previously elected as directors by
the holders of shares of the 7% Preferred Stock and such
other Class Voting Stock shall forthwith terminate and
the number of the Board of Directors shall be reduced
accordingly.
(c) At any time after the voting power referred to
in paragraph (b) above, shall have been so vested in the
holders of shares of the 7% Preferred Stock, the
Secretary of the Corporation may, and upon the written
request of any holder or the holders of at least 10% of
the number of shares of 7% Preferred Stock then
outstanding (addressed to the Secretary at the principal
executive office of the Corporation) shall, call a
special meeting of the holders of shares of the 7%
Preferred Stock and all other Class Voting Stock for the
election of the two directors to be elected by them;
provided that the Secretary shall not be required to call
such special meeting if the request for such meeting is
received less than 45 calendar days before the date fixed
for the next ensuing annual meeting of shareholders.
Such call shall be made by notice similar to that
provided in the by-laws of the Corporation for a special
meeting of the shareholders or as required by law.
Subject to the foregoing provisions, if any such special
meeting required to be called as above provided shall not
be called by the Secretary within 20 calendar days after
receipt of an appropriate request, then any holder of
shares of 7% Preferred Stock may call such meeting, upon
the notice above provided, and for that purpose shall
have access to the stock books and records of the
Corporation. Except as otherwise provided by law, at any
such meeting, the holders of a majority of the number of
shares of 7% Preferred Stock and such other Class Voting
Stock then outstanding shall constitute a quorum for the
purpose of electing directors as contemplated in
paragraph (b) above. If at any such meeting or
adjournment thereof a quorum of such holders of 7%
Preferred Stock and such other Class Voting Stock shall
not be present, no election of directors by the 7%
Preferred Stock and such other Class Voting Stock shall
take place, and any such meeting may be adjourned from
time to time for periods not exceeding 30 calendar days
until a quorum of the 7% Preferred Stock and the Class
Voting Stock is present at such adjourned meeting.
Unless otherwise provided by law, directors to be elected
by the holders of shares of 7% Preferred Stock and such
other Class Voting Stock shall be elected by a plurality
of the votes cast by such holders at a meeting at which a
quorum is present. Notwithstanding the foregoing, the
absence of a quorum of the 7% Preferred Stock and such
other Class Voting Stock shall not prevent the voting of,
including the election of, directors by the holders of
Common Stock and other classes of capital stock at such
meeting.
(d) Any director who shall have been elected by
holders of shares of 7% Preferred Stock (or by the
holders of shares of 7% Preferred Stock, voting
separately as a class together with the holders of one or
more other series of Class Voting Stock), or any director
so elected as provided below, may be removed at any time
during a class voting period, either for or without
cause, by, and only by, the affirmative vote of the
holders of a majority of the number of shares of 7%
Preferred Stock then outstanding, voting separately as a
class together with the holders of all other series of
Class Voting Stock then outstanding, if any, given at a
special meeting of such shareholders called for the
purpose, and any vacancy thereby created may be filled
during such class voting period only by the holders of
shares of 7% Preferred Stock and the other series, if
any, of Class Voting Stock. In case any vacancy (other
than as provided in the preceding sentence) shall occur
among the directors elected by the holders of shares of
the Series A Preferred Stock (and such other Class Voting
Stock), a successor shall be elected by the Board of
Directors to serve until the next annual meeting of the
shareholders or special meeting held in place thereof
upon the nomination of the then remaining director
elected by the holders of the 7% Preferred Stock (and
such other Class Voting Stock) or the successor of such
remaining director.
(e) So long as any shares of 7% Preferred Stock
remain outstanding, the consent of the holders of at
least a majority of all such shares voting on such matter
(voting separately as a class) given in person or by
proxy, at any special or annual meeting called for such
purpose, or by written consent as permitted by law and
the Restated Articles of Incorporation and By-laws, shall
be necessary to permit, effect or validate any one or
more of the following:
(i) The amendment, alteration or repeal,
whether by merger, consolidation or otherwise, of
any of the provisions of the Restated Articles of
Incorporation or of the resolutions contained herein
which would materially and adversely affect any
right, preference, privilege or voting power of the
7% Preferred Stock or of the holders thereof,
provided, however, that any such amendment,
alteration or repeal that would authorize, create or
issue any additional shares of stock (whether or not
already authorized) ranking on a parity with or
junior to the 7% Preferred Stock as to dividends or
as to the distribution of assets upon Liquidation,
shall be deemed not to materially and adversely
affect such rights, preferences, privileges or
voting power.
(ii) The issuance of shares of any class or
series of stock, or any security convertible at the
option of the holder thereof into shares of any
class or series of stock, ranking senior to the 7%
Preferred Stock as to dividends or as to the
distribution of assets upon Liquidation.
(iii) The consummation of a merger or
consolidation of the Corporation with any other
corporation, unless each holder of shares of 7%
Preferred Stock immediately preceding such merger or
consolidation shall receive or continue to hold in
the surviving corporation the same number of shares,
with substantially the same rights and preferences
(except as contemplated by Section 3(e)), as
correspond to the shares of 7% Preferred Stock so
held.
The foregoing voting provisions set forth in this
paragraph (e) shall not apply if, at or prior to the time
when the act with respect to which such vote would
otherwise be required shall be effected, (1) all
outstanding shares of 7% Preferred Stock shall have been
redeemed or converted pursuant to paragraph (a), (b) or
(c) of Section 3 or (2) (y) all outstanding shares of 7%
Preferred Stock are scheduled to be redeemed or converted
pursuant to paragraph (a) or (b) of Section 3 within two
months, and (z) sufficient shares of the Common Stock and
cash, if any, necessary for such redemption or conversion
shall have been deposited with a bank or trust company in
accordance with Section 3(j)(2).
SECTION 5. LIQUIDATION RIGHTS.
(a) Subject to the rights of holders of Series A
Stock and holders of any class or series of stock which
the Corporation may in the future issue which ranks
senior to, or on a parity with, the 7% Preferred Stock in
respect of a distribution of assets upon the liquidation,
dissolution or winding-up of the affairs of the
Corporation, whether voluntary or involuntary (such
event, a "Liquidation"), the holders of shares of 7%
Preferred Stock shall be entitled to receive out of the
assets of the Corporation available for distribution to
stockholders, whether from capital, surplus or earnings,
before any distribution or payment is made to holders of
Common Stock of the Corporation or on any other class or
series of stock of the Corporation ranking junior as to
assets distributable upon Liquidation to the shares of 7%
Preferred Stock, liquidating distributions in the amount
of $_____ per share [the Average Closing Price as defined
in the Agreement and Plan of Merger], plus an amount
equal to all dividends accrued and unpaid thereon,
whether or not earned or declared (including dividends
accumulated and unpaid), to the date of Liquidation; but
such holders shall not be entitled to any further
payment. If, upon any Liquidation, the assets of the
Corporation or proceeds thereof distributable among the
holders of the shares of 7% Preferred Stock shall be
insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other class or
series of stock ranking on a parity with the 7% Preferred
Stock in respect of a distribution of assets upon
Liquidation, then such assets or proceeds thereof shall
be distributed among the holders of shares of 7%
Preferred Stock and any such other stock ratably in
accordance with the respective amounts which would be
payable on such shares of 7% Preferred Stock and any such
other stock if all amounts payable thereon were paid in
full. For the purposes hereof, neither the consolidation
or merger of the Corporation with one or more
corporations nor the sale, lease or transfer by the
Corporation of all or any part of its assets shall be
deemed a Liquidation.
(b) Subject to the rights of holders of shares of
any class or series of stock ranking on a parity with or
senior to the 7% Preferred Stock in respect of the
distribution of assets upon Liquidation, and after
payment shall have been made in full to the holders of 7%
Preferred Stock, as provided in this Section 5, but not
prior thereto, any other class or series of stock ranking
junior to the 7% Preferred Stock in respect of the
distribution of assets upon Liquidation shall, subject to
the respective terms and provisions (if any) applying
thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of
the 7% Preferred Stock shall not be entitled to share
therein.
(c) Written notice of any Liquidation, stating the
payment date or dates when and the place or places where
the amounts distributable in such circumstances shall be
payable, shall be given by first class mail, postage
prepaid, not less than 15 days (to the extent
practicable) prior to any payment date stated therein, to
the holders of record of the 7% Preferred Stock at their
respective addresses as the same shall appear on the
books of the Corporation or any transfer agent for the 7%
Preferred Stock.
SECTION 6. RECORD HOLDERS.
The Corporation and the transfer agent for the 7%
Preferred Stock may deem and treat the record holder of
any share of 7% Preferred Stock as the true and lawful
owner thereof for all purposes, and neither the
Corporation nor such transfer agent shall be affected by
any notice to the contrary.
IN WITNESS WHEREOF, this Statement of Resolution
Establishing a Series of shares has been made under the
hand of the undersigned, the ____________________ of the
Corporation, this _____ day of ______________, 199__.
AMERICAN GENERAL CORPORATION
By:----------------------------
Name:
Title:
Exhibit B
Independent Insurance Group, Inc.
Xxx Xxxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
American General Corporation
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Dear Sirs:
Reference is made to that certain Agreement and
Plan of Merger by and among American General Corporation
("Purchaser"), AGC Life Insurance Company and Independent
Insurance Group, Inc. (the "Company") dated as of October
19, 1995 (the "Agreement"). Capitalized terms used
herein and not otherwise defined herein shall have the
meaning ascribed to them in the Agreement.
The undersigned represents, warrants and
agrees, as of the date hereof and as of the Closing Date
as follows:
A. I have no plan, intention, or arrangement to
dispose of any of the Purchaser Stock that I
receive in the Merger.
B. I will not dispose of any of the Purchaser
Stock that I receive in the Merger within two
years of the Effective Time unless, prior to
such disposition, I deliver to Purchaser an
opinion of counsel reasonably satisfactory to
Purchaser that such disposition will not
violate the continuity of shareholder interest
requirement set forth in Treasury Regulation
SECTION 1.368-1 with respect to the Merger. For this
purpose, a disposition by gift, bequest, or
similar means will not be treated as a
disposition.
C. I will provide written notice to Purchaser, not
less than 30 days prior to the intended date of
disposition, specifying the number of shares of
Purchaser Stock that I propose to dispose.
The undersigned acknowledges that this letter
will be relied upon by Skadden, Arps, Slate, Xxxxxxx &
Xxxx and Xxxxxx & Xxxxxx L.L.P. in rendering their
opinions as to certain federal income tax consequences of
the Merger and that the receipt of this letter by
Purchaser has been a condition to Purchaser executing and
delivering the Agreement.
Very truly yours,
___________________
Schedule 4.3(b)
Purchaser Significant Subsidiaries
The Variable Annuity Life Insurance Company
American General Finance, Inc.
American General Finance Corporation
American General Life and Accident Insurance Company
American General Life Insurance Company
AGC Life Insurance Company
The Franklin Life Insurance Company
American Franklin Company
Schedule 4.3(c)
Purchaser Insurance Subsidiaries
The Variable Annuity Life Insurance Company
American General Life and Accident Insurance Company
American General Life Insurance Company
AGC Life Insurance Company
The Franklin Life Insurance Company
