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EXHIBIT 4.2
[STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY LETTERHEAD]
May 18, 2001
The Phoenix Companies, Inc.
One American Row
Hartford, Connecticut 06102-5056
Standstill Agreement
Ladies and Gentlemen:
The undersigned State Farm Mutual Automobile Insurance Company ("State
Farm"), a mutual insurance company organized under the laws of the State of
Illinois (together with all its current and future affiliates, "Investor"), has
expressed an interest in purchasing shares of the common stock, par value $.01
per share ("Common Stock"), of The Phoenix Companies, Inc., a corporation
organized under the laws of the State of Delaware (the "Company"), in the
initial public offering of the Company (the "Offering").
State Farm and the Company are entering into this letter agreement (this
"Agreement"), for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, to define certain aspects of the future
relationship between Investor and the Company.
As used herein, the term the "Shares" shall mean any shares of Common Stock
at any time owned by Investor, directly or indirectly, whether acquired in the
Offering or otherwise.
1. Restrictions on Purchases. Investor Agrees that if it does not purchase
Common Stock in the Offering, until the second anniversary of the closing of the
Offering (the "Closing") it will not, without the Company's prior written
consent (the granting of which shall be at the Company's sole discretion),
acquire, announce an intention to acquire, offer or propose to acquire, or agree
to acquire, directly or indirectly, by purchase or otherwise (including by
beginning to exercise control over a person or entity it did not previously
control), beneficial ownership of any Voting Securities (as defined below), or
direct or indirect rights to options to acquire (through purchase, exchange,
conversion or otherwise) any Voting Securities.
HOME OFFICE: BLOOMINGTON, ILLINOIS 81710-0001
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2. Restrictions on Transfers. Investor agrees that, prior to the second
anniversary of the Closing, it will not, directly or indirectly, sell, transfer
or otherwise dispose of any interest in any Shares without the Company's prior
written consent (the granting of which shall be at the Company's sole
discretion); provided, that Investor may transfer Shares (i) to any affiliate of
Investor that enters into a standstill agreement with the Company containing
terms and conditions substantially equivalent to those in this Agreement and
(ii) pursuant to any tender offer or exchange offer which is recommended by the
Board of Directors of the Company (the "Board"). From the second anniversary of
the Closing and during the remaining term of this Agreement, Investor may sell,
transfer or otherwise dispose of any interest in the Shares; provided, that such
sale, transfer or disposition, unless it is made pursuant to a tender or
exchange offer to the Company's stockholders, is not knowingly made to any
person or "group" (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), acquiring all of the
Shares in the acquisition or that would, after giving effect to its acquisition
of such Shares, beneficially own or have the right to acquire more than 4.9% of
the Voting Securities (as defined below) then outstanding, unless such person or
group has entered into a standstill agreement with the Company containing terms
and conditions substantially equivalent to those in this Agreement (it being
understood that Investor has no duty to inquire as to the beneficial ownership
of any such person or group when Investor sells the Shares in a transaction on
the New York Stock Exchange or any other exchange on which the Shares are listed
at the time).
As used herein, the term "Voting Securities" shall mean securities of the
Company, including the Shares, with the power to vote with respect to the
election of directors generally, including any securities that are convertible
or exchangeable for Voting Securities, it being understood that the number of
Voting Securities outstanding as of any time of determination shall be
determined as though all such securities, whether or not in the money, had been
converted or exchanged, in accordance with their terms, into or for Voting
Securities immediately prior to the time of determination.
3. Standstill Provisions. Investor agrees that, during the term of this
Agreement, without the Company's prior written consent (the granting of which
shall be at the Company's sole discretion), except as may be contemplated by the
terms of (i) the Shareholders Agreement expected to be entered into by the
parties hereto prior to the Closing or (ii) the Master Agreement, dated as of
March 30, 2001, between Insurance Placement Services, Inc. and Phoenix Home Life
Mutual Insurance Company, Investor will not:
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(a) acquire, announce an intention to acquire, offer or propose to acquire,
or agree to acquire, directly or indirectly (through purchase or otherwise,
including by beginning to exercise control over a person or entity Investor did
not previously control), beneficial ownership of any Voting Securities, or
direct or indirect rights to options to acquire (through purchase, exchange,
conversion or otherwise, including by beginning to exercise control over a
person or entity Investor did not previously control) any Voting Securities, if,
immediately after any such acquisition, Investor would beneficially own, in the
aggregate, Voting Securities representing more than 4.9% of the outstanding
Voting Securities (the Company acknowledges that prior to proceeding with any
share buyback or similar transaction that would result in Investor, through no
action of its own, exceeding such 4.9% limit, the Company will obtain the prior
approval of the New York Insurance Department);
(b) seek representation on the Board, the removal of any member of the
Board or a change in the composition or size of the Board;
(c) make any statement or proposal, whether written or oral, to the Board,
or to any director, officer or agent of the Company, or make any public
announcement or proposal whatsoever, with respect to a merger or other business
combination, sale or transfer of assets, recapitalization, dividend, share
repurchase, liquidation or other extraordinary corporate transaction involving
the Company or any other transaction which could result in a change of control
of the Company, solicit or encourage any other person to make any such statement
or proposal, or take any action which might require the Company to make a public
announcement regarding the possibility of any transaction referred to in this
paragraph (c) or any similar transaction, or advise, assist or encourage any
other persons in connection with the foregoing;
(d) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" (as such terms are defined in Rule 14a-1 under the
Exchange Act) to vote any Voting Securities, seek to advise, encourage or
influence any person or entity with respect to the voting of any Voting
Securities, initiate or propose any shareholder proposal or induce or attempt to
induce any other person to initiate any shareholder proposal, or execute any
written consent with respect to the Company;
(e) deposit any Voting Securities into a voting trust or subject any Voting
Securities to any arrangement or agreement with respect to the voting of any
Voting Securities other than this Agreement;
(f) form, join or in any way participate in a "group" (within the meaning
of Section 13(d)(3) of the Exchange Act) with respect to any Voting Securities,
other than a group of which Investor is a member as of the date hereof:
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(g) otherwise act, alone or in concert with others, to seek to exercise any
control or influence over the Company's management, the Board or the policies of
the Company;
(h) make a public request to the Company (or its directors, officers,
shareholders, employees or agents) to take any action in respect of the
foregoing matters; or
(i) disclose any intention, plan or arrangement inconsistent with the
foregoing.
Investor shall not direct or cause the direction, or attempt to direct or
cause the direction of, the management or policies of any of the Company,
Phoenix Life Insurance Company and any of their affiliates that are controlled
insurers, or otherwise exercise, or attempt to exercise, control over such
companies or such affiliates, whether directly or indirectly.
4. Additional Covenant. Investor hereby agrees that it will abide by the
provisions of Section 7312(v) of the New York Insurance Law (27 XxXxxxxx'x
Consolidated Laws of New York Section 7312(v)).
5. Specific Performance. Investor acknowledges that the Company would not
have an adequate remedy at law for money damages if any of Investor's covenants
or agreements in this Agreement were not performed in accordance with the terms
hereof, and Investor therefore agrees that the Company shall be entitled to
specific enforcement of such covenants or agreements and to injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity.
6. Legend. Each of the Company and Investor agrees that the certificates
for the Shares shall bear the following legend, which legend shall remain,
unless otherwise agreed in writing by the Company and Investor, until the
earlier of (a) the date the securities represented by such certificates are
transferred in accordance with the provisions of this Agreement and (b) the
termination of this Agreement pursuant to Section 11:
THESE SECURITIES ARE SUBJECT TO THE PROVISIONS OF A STANDSTILL
AGREEMENT DATED MAY 18, 2001, BY AND BETWEEN THE ISSUER AND STATE FARM
MUTUAL AUTOMOBILE INSURANCE COMPANY, AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE THEREWITH.
7. Entire Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof. This Agreement may not be
amended nor any of its provisions waived except by a writing signed, in the case
of an
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amendment, by each party hereto and, in the case of a waiver, by the party
against whom the waiver is to be effective. No failure or delay by either party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof unless the other party is materially prejudiced thereby, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights and
remedies provided by law. At any time from and including the date of this
Agreement until the second anniversary of the Closing, Investor and the Company
shall not amend, directly or indirectly, any provision of this Agreement without
the prior approval of the New York Superintendent of Insurance. At any time from
and including the second anniversary of the Closing until the end of the term of
this Agreement, the Company shall notify the New York Insurance Department of
any amendment, direct or indirect, to any provision, and the termination, of
this Agreement. This Agreement is not assignable by either of the parties
without the prior written consent of the other, except that this Agreement may
be assigned by Investor to one or more of its affiliates to which Shares are
properly transferred in accordance with this Agreement; provided, that no such
assignment will relieve Investor of its obligations hereunder. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns and upon transferees of Voting
Securities who are affiliates of Investor.
8. SEVERABILITY. If any term, provision or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and restrictions of this
Agreement shall remain in full force and effect, unless such action would
substantially impair the benefits to either party of the remaining provisions
of this Agreement.
9. NOTICES. Any notices and other communications required to be given
pursuant to this Agreement shall be deemed to have been duly given or made as
of the date delivered or mailed if delivered personally, mailed by registered
or certified mail (postage prepaid, return receipt requested), or delivered by
facsimile or by telex, as follows:
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If to the Company:
The Phoenix Companies, Inc.
One American Row
Hartford, Connecticut 06102-5056
Attention: President
Xxxxxxxxx: (000) 000-0000
with a copy to:
The Phoenix Companies, Inc.
One American Row
Hartford, Connecticut 06102-5056
Attention: General Counsel
Facsimile: (000) 000-0000
If to Investor:
State Farm Insurance Companies
Xxx Xxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000-0001
Attention: Xxxxxxx Xxxxxxx
Facsimile: 000 000-0000
with a copy to:
State Farm Insurance Companies
Xxx Xxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000-0001
Attention: General Counsel
Facsimile: 000 000-0000
Investor shall notify the Company, and the Company shall notify the New
York Insurance Department, of any transfer of the Shares prior to the first
anniversary of the Closing or any transfer thereafter requiring the entering
into of a standstill agreement pursuant to the proviso to the second sentence
of Section 2. The Company shall notify the New York Insurance Department of any
consent requested or granted pursuant to Section 3.
10. Effectiveness of Agreement. This Agreement shall become effective only
upon the execution and delivery of this Agreement by the parties hereto.
11. Termination. This Agreement shall terminate upon the occurrence of
either of the following:
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(a) the written agreement of the Company and Investor to terminate this
Agreement; provided that any termination prior to the second anniversary of the
Closing shall not be effective without the approval of the New York
Superintendent of Insurance; or
(b) the fifth anniversary of the Closing.
12. Expenses. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense.
13. Governing Law, etc. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflict of law provisions thereof. This Agreement may be executed in one or
more counterparts, which together will constitute a single agreement.
14. Jurisdiction. The parties hereto agree that any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the transactions contemplated
hereby shall be brought in the United States District Court for the Southern
District of New York or, if such court shall not have jurisdiction over such
suit, any New York State court sitting in New York City, so long as such courts
shall have subject matter jurisdiction over such suit, action or proceeding, and
that any cause of action arising out of this Agreement shall be deemed to have
arisen from a transaction of business in the State of New York, and each of the
parties hereby irrevocably consents only with respect to such suits, actions or
proceedings to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection that may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum. Without limiting the
foregoing, each party agrees that service of process on such party by hand
delivery as provided in Section 9 shall be deemed effective service of process
on such party.
15. Waiver of Jury Trial. Each of the parties hereto irrevocably waives
any and all right to trial by jury in any legal proceeding arising out of or
related to this Agreement or the transactions contemplated hereby.
16. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
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If you are in agreement with the foregoing, please sign the accompanying
copy of this letter and return it to Investor, whereupon this Agreement shall
become a binding agreement between Investor and the Company.
Very truly yours,
State Farm Mutual Automobile
Insurance Company
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
Vice Chairman of the Board
and Treasurer
Accepted and agreed as of
the date first written above:
THE PHOENIX COMPANIES, INC.
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X.Xxxxx
Title: President/Chief Operating Officer
