EXHIBIT 3
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT, dated as of April 30, 2000 (this
"Agreement"), is between Reliastar Financial Corp., a Delaware corporation
("Issuer") and ING America Insurance Holdings, Inc., a Delaware corporation
("Grantee").
RECITALS
A. The Merger Agreement. Prior to the entry into this Agreement and
prior to the grant of the Option, Issuer, ING Groep N.V., Grantee, and SHP
Acquisition Corp., a wholly-owned subsidiary of Grantee ("Merger Sub") have
entered into an Agreement and Plan of Merger, dated as of the date of this
Agreement (the "Merger Agreement"; capitalized terms used but not defined herein
shall have the meanings set forth in the Merger Agreement), pursuant to which
Grantee and Issuer intend to effect a merger of Merger Sub with and into Issuer
(the "Merger").
B. The Stock Option Agreement. As an inducement and condition to
Grantee's and Merger Sub's willingness to enter into the Merger Agreement, and
in consideration thereof, the board of directors of Issuer has approved the
grant to Grantee of the Option pursuant to this Agreement and the acquisition of
Shares by Grantee pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth in this Agreement and in the Merger
Agreement, the parties agree as follows:
1. The Option. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms of this
Agreement, up to 8,873,630 fully paid and nonassessable Shares at a price per
share in cash equal to $54.00 (the "Option Price"); provided, however, that in
no event shall the number of shares for which the Option is exercisable exceed
9.9% of the Shares issued and outstanding at the time of exercise (without
giving effect to the Shares issued or issuable under the Option) (the "Maximum
Applicable Percentage"). The number of Shares purchasable upon exercise of the
Option and the Option Price are subject to adjustment as set forth in this
Agreement.
(b) In the event that any additional Shares are issued or otherwise
become outstanding after the date of this Agreement (other than pursuant to an
event described in Section 7 of this Agreement), the aggregate number of Shares
purchasable upon exercise of the Option (inclusive of Shares, if any, previously
purchased upon exercise of the Option) shall automatically be increased (without
any further action on the part of Issuer
or Grantee being necessary) so that, after such issuance, it equals the
Maximum Applicable Percentage. Any such increase shall not affect the Option
Price.
2. Exercise; Closing. (a) Conditions to Exercise; Termination. Grantee
or any other person that shall become a holder of all or a part of the Option in
accordance with the terms of this Agreement (each such person being referred to
in this Agreement as the "Holder") may exercise the Option, in whole or in part,
by delivering a written notice thereof as provided in Section 2(d) at any time
following the occurrence of a Triggering Event unless prior to such Triggering
Event the Effective Time shall have occurred. If no notice pursuant to the
preceding sentence has been delivered prior thereto, the Option shall terminate
upon either (I) the occurrence of the Effective Time or (ii) the close of
business on the earlier of (x) the day 180 days after the date that Grantee
becomes entitled to receive the Termination Fee under Section 8.5(b) of the
Merger Agreement (or if, at the expiration of such 180 days, the Option cannot
be exercised by reason of any applicable judgment, decree, order, law or
regulation, 10 business days after such impediment to exercise shall have been
removed) and (y) the date that Grantee is no longer potentially entitled to
receive the Termination Fee under Section 8.5(b) of the Merger Agreement for a
reason other than that Grantee has already received the Termination Fee.
(b) Triggering Event. A "Triggering Event" shall have occurred if the
Merger Agreement is terminated and Grantee thereby becomes entitled to receive
the Termination Fee pursuant to Section 8.5(b) of the Merger Agreement.
(c) Notice of Triggering Event by Issuer. Issuer shall notify Grantee
promptly in writing of the occurrence of any Triggering Event, it being
understood that the giving of such notice by Issuer shall not be a condition to
the right of the Holder to exercise the Option.
(d) Notice of Exercise by Grantee. If a Holder shall be entitled to and
wishes to exercise the Option, it shall send to Issuer a written notice (the
date of which is referred to in this Agreement as the "Notice Date") specifying
(i) the total number of shares that the Holder will purchase pursuant to such
exercise and (ii) a place and date (a "Closing Date") not earlier than three
business days nor later than 60 business days from the Notice Date for the
closing of such purchase (a "Closing"); provided, that if a filing is required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), or any other notice, report, filing or approval is required with
respect to any Governmental Entity in connection with such purchase, (x) the
Holder or Issuer, as required, promptly after the giving of such notice shall
file the required notice, report, filing or application for approval and shall
expeditiously process the same and (y) the period of time referred to in clause
(ii) above shall commence on the date on which the Holder furnishes to Issuer a
supplemental written notice setting forth the Closing Date,
-2-
which notice shall be furnished as promptly as practicable after all required
notification, reporting or filing periods shall have expired or been terminated,
all required approvals shall have been obtained and all requisite waiting
periods shall have passed. Each of the Holder and the Issuer agrees to use its
reasonable best efforts to cooperate with and provide information to Issuer or
Holder, as the case may be, for the purpose of any required notice, report,
filing or application for approval.
(e) Payment of Purchase Price. At each Closing, the Holder shall pay to
Issuer the aggregate purchase price for the Shares purchased pursuant to the
exercise of the Option in immediately available funds by a wire transfer to a
bank account designated by Issuer; provided, that failure or refusal of Issuer
to designate such a bank account shall not preclude the Holder from exercising
the Option, in whole or in part.
(f) Delivery of Common Stock. At such Closing, simultaneously with the
payment of the purchase price by the Holder, Issuer shall deliver to the Holder
a certificate or certificates representing the number of Shares purchased by the
Holder, which Shares shall be free and clear of all liens, charges, encumbrances
or security interests ("Liens") and, if the Option shall be exercised in part
only, a new Option evidencing the rights of the Holder to purchase the balance
(as adjusted pursuant to Section 1(b)) of the Shares then purchasable under this
Agreement.
(g) Restrictive Legend. Certificates for Shares delivered at a Closing
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to resale restrictions arising under the Securities Act of
1933, as amended."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the Holder shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission, or a written opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act of 1933, as amended (the "Securities
Act"). In addition, such certificates shall bear any other legend as may be
required by applicable law.
(h) Ownership of Record; Tender of Purchase Price; Expenses. Upon the
giving by the Holder to Issuer of a written notice of exercise referred to in
Section 2(d) and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed to be the holder of record of the
Shares issuable upon such exercise, notwithstanding that the stock transfer
books of Issuer shall then be closed or that certificates representing such
Shares shall not have been delivered to the Holder. Issuer
-3-
shall pay all expenses, and any and all United States federal, state and local
taxes and other charges that may be payable in connection with the
preparation, issue and delivery of stock certificates under this Section 2 in
the name of the Holder or its assignee, transferee or designee.
3. Covenants of Issuer. In addition to its other agreements and
covenants in this Agreement, Issuer agrees:
(a) Shares Reserved for Issuance. It will maintain, free from
preemptive rights, sufficient authorized but unissued or treasury Shares to
issue the appropriate number of Shares pursuant to the terms of this Agreement
so that the Option may be fully exercised without additional authorization of
Shares after giving effect to all other options, warrants, convertible
securities and other rights of third parties to purchase Shares from Issuer.
(b) No Avoidance. It will not avoid or seek to avoid (whether by
charter amendment or through reorganization, consolidation, merger, issuance of
rights, dissolution or sale of assets, or by any other voluntary act) the
observance or performance of any of the covenants, agreements or conditions to
be observed or performed under this Agreement by Issuer.
(c) Further Assurances. Promptly after the date of this Agreement it
will take all actions as may from time to time be required (including (i)
complying with all applicable premerger notification, reporting and waiting
period requirements under the HSR Act and (ii) in the event that prior notice,
report, filing or approval with respect to any Governmental Entity is necessary
under any applicable foreign or United States federal, state or local law before
the Option may be exercised, cooperating fully with the Holder in preparing and
processing the required applications or notices) in order to permit each Holder
to exercise the Option and purchase Shares pursuant to such exercise and to take
all action necessary to protect the rights of the Holder against dilution.
(d) Stock Exchange Listing. It will use its reasonable best efforts to
cause the Shares to be issued pursuant to the Option to be approved for listing
(to the extent they are not already listed) on the New York Stock Exchange
("NYSE") and on all other stock exchanges on which Shares of the Issuer are then
listed, subject to official notice of issuance.
4. Representations and Warranties of Issuer. Issuer represents and
warrants to Grantee as follows:
(a) Merger Agreement. Issuer hereby makes each of the
representations and warranties contained in Sections 5.1(a)(i), (b),
(c) (first
-4-
sentence), (d)(i), (d)(ii), (j), (p) and (q) of the Merger
Agreement as they relate to Issuer and this Agreement, as if such
representations were set forth in this Agreement.
(b) Shares Reserved for Issuance; Capital Stock. Issuer has taken
all necessary corporate action to authorize and reserve, free from
preemptive rights, and permit it to issue, at all times from the date
hereof until the obligation to deliver Shares upon the exercise of the
Option terminates, sufficient authorized but unissued or treasury
Shares so that the Option may be fully exercised without additional
authorization of Shares after giving effect to all other options,
warrants, convertible securities and other rights of third parties to
purchase Shares from Issuer, and all such Shares, upon issuance
pursuant to the Option, will be duly authorized, validly issued, fully
paid and nonassessable, and will be delivered free and clear of all
claims, Liens (other than those created by this Agreement) and not
subject to any preemptive rights.
5. Representations and Warranties of Grantee. Grantee represents and
warrants to Issuer that Grantee has all requisite corporate power and authority
and has taken all corporate action necessary in order to execute, deliver and
perform its obligations under and to consummate the transactions contemplated by
this Agreement. This Agreement has been duly and validly executed and delivered
by Grantee and constitutes a valid and binding agreement of Grantee enforceable
against Grantee in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
6. Exchange; Replacement. This Agreement and the Option granted by this
Agreement are exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of Shares
purchasable at such time under this Agreement, subject to corresponding
adjustments in the number of Shares purchasable upon exercise so that the
aggregate number of such Shares under all stock option agreements issued in
respect of this Agreement shall not exceed the Maximum Applicable Percentage.
Unless the context shall require otherwise, the terms "Agreement" and "Option"
as used in this Agreement include any stock option agreements and related
Options for which this Agreement (and the Option granted by this Agreement) may
be exchanged. Upon (i) receipt by Issuer of evidence reasonably satisfactory to
it of the loss, theft, destruction of this Agreement, or mutilation of this
Agreement, (ii) receipt by Issuer of reasonably satisfactory indemnification in
the case of loss, theft or destruction of this Agreement and (iii) surrender and
cancellation of this Agreement in the case of mutilation, Issuer will execute
and deliver a new Agreement of
-5-
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by any person other than the holder of the new Agreement.
7. Adjustments. In addition to the adjustment to the total number of
Shares purchasable upon exercise of the Option pursuant to Section 1(b), the
total number of Shares purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to time as follows:
(a) In the event of any change in the outstanding shares of Common
Stock by reason of stock dividends, stock splits, split-ups, mergers,
recapitalizations, reclassifications, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of
Shares purchasable upon exercise of the Option shall be appropriately
adjusted, and proper provision shall be made in the agreements
governing any such transaction, so that (i) any Holder shall receive
upon exercise of the Option the number and class of shares, other
securities, property or cash that such Holder would have received in
respect of the Shares purchasable upon exercise of the Option if the
Option had been exercised and such Shares had been issued to such
Holder immediately prior to such event or the record date therefor, as
applicable, and (ii) in the event any additional Shares are to be
issued or otherwise become outstanding as a result of any such change
(other than pursuant to an exercise of the Option), the number of
Shares purchasable upon exercise of the Option shall be increased so
that, after such issuance and together with Shares previously issued
pursuant to the exercise of the Option (as adjusted on account of any
of the foregoing changes in the Shares), the number of Shares so
purchasable equals the Maximum Applicable Percentage of the number of
Shares issued and outstanding immediately after the consummation of
such change.
(b) Whenever the number of Shares purchasable upon exercise of the
Option is adjusted as provided in this Section 7, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which is equal to the number of Shares purchasable prior
to the adjustment and the denominator of which is equal to the number
of Shares purchasable after the adjustment.
8. Registration. (a) Upon the occurrence of a Triggering Event, Issuer
shall, at the request of Grantee delivered in the written notice of exercise of
the Option provided for in Section 2(d), as promptly as practicable prepare,
file and keep current a shelf registration statement under the Securities Act
covering any or all Shares issued and issuable pursuant to the Option and shall
use its best efforts to cause such registration statement to become effective
and remain current in order to permit the sale or other
-6-
disposition of any Shares issued upon total or partial exercise of the Option
("Option Shares") in accordance with any plan of disposition requested by
Grantee; provided, however, that Issuer may postpone filing a registration
statement relating to a registration request by Grantee under this Section 8 for
a period of time (not in excess of 30 days) if in its judgment such filing would
require the disclosure of material information that Issuer has a bona fide
business purpose for preserving as confidential. Issuer will use its best
efforts to cause such registration statement first to become effective as soon
as practicable and then to remain effective for one year from the day such
registration statement first becomes effective or until such earlier date as all
Shares registered shall have been sold by Grantee. In connection with any such
registration, Issuer and Grantee shall provide each other with representations,
warranties, indemnities and other agreements customarily given in connection
with such registrations. If requested by Grantee in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such Shares, but only to the extent of obligating Issuer in
respect of representations, warranties, indemnities, contribution and other
agreements customarily made by issuers in such underwriting agreements.
(b) In the event that Grantee so requests, the closing of the sale or
other disposition of the Shares or other securities pursuant to a registration
statement filed pursuant to Section 8(a) shall occur substantially
simultaneously with the exercise of the Option. Any registration statement
prepared and filed under this Section 8, and any sale covered thereby, shall be
at Issuer's expense, except for underwriting discounts or commissions and
brokers fees.
9. Repurchase of Option and/or Shares. (a) Repurchase; Repurchase
Price. Upon the occurrence of a Triggering Event, (i) at the request of a
Holder, delivered in writing within 180 days of such occurrence (or such later
period as provided in Section 2(d) with respect to any required notice or
application or in Section 10), Issuer shall repurchase the Option from the
Holder, in whole or in part, at a price (the "Option Repurchase Price") equal to
the number of Shares then purchasable upon exercise of the Option (or such
lesser number of Shares as may be designated in the Repurchase Notice)
multiplied by the amount by which the market/offer price exceeds the Option
Price and (ii) at the request of a Holder or any person who has been a Holder
(for purposes of this Section 9 only, each such person being referred to as a
"Holder"), delivered in writing within 180 days of such occurrence (or such
later period as provided in Section 2(d) with respect to any required notice or
application or in Section 10), Issuer shall repurchase such number of Option
Shares from such Holder as the Holder shall designate in the Repurchase Notice
at a price (the "Option Share Repurchase Price") equal to the number of Shares
designated multiplied by the market/offer price. The term "market/offer
price" shall mean the highest of (x) the highest price per Share at which an
Acquisition Proposal for Shares has been made, (y) the price per Share to be
paid by any third party pursuant to an agreement relating to an Acquisition
Proposal with Issuer and (z) the
-7-
highest trading price for Shares on the NYSE (or, if the Shares are not then
listed on the NYSE, any other national securities exchange or automated
quotation system on which the Shares are then listed or quoted) within the
120-day period immediately preceding the delivery of the Repurchase Notice. In
the event that an Acquisition Proposal is made for the Shares or an agreement is
entered into relating to an Acquisition Proposal involving consideration other
than cash, the value of the securities or other property issuable or deliverable
in exchange for the Shares shall (I) if such consideration is in securities and
such securities are listed on a national securities exchange, be determined to
be the highest trading price for such securities on such national securities
exchange within the 120-day period immediately preceding the delivery of the
Repurchase Notice or (II) if such consideration is not securities, or if in
securities and such securities are not traded on a national securities exchange,
be determined in good faith by a nationally recognized investment banking firm
selected by an investment banking firm designated by Grantee and an investment
banking firm designated by Issuer.
(b) Method of Repurchase. A Holder may exercise its right to require
Issuer to repurchase the Option, in whole or in part, and/or any Option Shares
then owned by such Holder pursuant to this Section 9 by surrendering for such
purpose to Issuer, at its principal office, this Agreement or certificates for
Option Shares, as applicable, accompanied by a written notice or notices stating
that the Holder elects to require Issuer to repurchase the Option and/or such
Option Shares in accordance with the provisions of this Section 9 (each such
notice, a "Repurchase Notice"). As promptly as practicable, and in any event
within two business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of the Repurchase Notice relating
thereto, Issuer shall deliver or cause to be delivered to the Holder the
applicable Option Repurchase Price and/or the Option Share Repurchase Price. Any
Holder shall have the right to require that the repurchase of Option Shares
shall occur immediately after the exercise of all or part of the Option. In the
event that the Repurchase Notice shall request the repurchase of the Option in
part, Issuer shall deliver with the Option Repurchase Price a new Stock Option
Agreement evidencing the right of the Holder to purchase that number of shares
of Common Stock purchasable pursuant to the Option at the time of delivery of
the Repurchase Notice minus the number of Shares represented by that portion of
the Option then being repurchased.
(c) Effect of Statutory or Regulatory Restraints on Repurchase. To the
extent that, upon or following the delivery of a Repurchase Notice, Issuer is
prohibited under applicable law or regulation from repurchasing the Option (or
portion thereof) and/or any Option Shares subject to such Repurchase Notice (and
Issuer will undertake to use its reasonable best efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly as
practicable in order to accomplish such repurchase), Issuer shall immediately so
notify the Holder in writing and thereafter deliver or cause to be delivered,
from time to time, to the Holder the portion of the Option Repurchase Price
-8-
and the Option Share Repurchase Price that Issuer is no longer prohibited from
delivering, within two business days after the date on which it is no longer so
prohibited; provided, however, that upon notification by Issuer in writing of
such prohibition, the Holder may, within five days of receipt of such
notification from Issuer, revoke in writing its Repurchase Notice, whether in
whole or to the extent of the prohibition, whereupon, in the latter case, Issuer
shall promptly (i) deliver to the Holder that portion of the Option Repurchase
Price and/or the Option Share Repurchase Price that Issuer is not prohibited
from delivering; and (ii) deliver to the Holder, as appropriate, (A) with
respect to the Option, a new stock option agreement evidencing the right of the
Holder to purchase that number of Shares for which the surrendered stock option
agreement was exercisable at the time of delivery of the Repurchase Notice less
the number of shares as to which the Option Repurchase Price has theretofore
been delivered to the Holder, and/or (B) with respect to Option Shares, a
certificate for the Option Shares as to which the Option Share Repurchase Price
has not theretofore been delivered to the Holder. Notwithstanding anything to
the contrary in this Agreement, including, without limitation, the time
limitations on the exercise of the Option, the Holder may give notice of
exercise of the Option for 180 days after a notice of revocation has been issued
pursuant to this Section 9(c) and thereafter exercise the Option in accordance
with the applicable provisions of this Agreement.
(d) Acquisition Transactions. In addition to any other restrictions or
covenants, Issuer agrees that, in the event that a Holder delivers a Repurchase
Notice, Issuer shall not enter or agree to enter into an agreement or series of
agreements relating to a merger with or into or the consolidation with any other
person or entity, the sale of all or substantially all of the assets of Issuer
or any similar disposition unless the other party or parties to such agreement
or agreements agree to assume in writing Issuer's obligations under Section 9(a)
and, notwithstanding any notice of revocation delivered pursuant to the proviso
to Section 9(c), a Holder may require such other party or parties to perform
Issuer's obligations under Section 9(a) unless such party or parties are
prohibited by law or regulation from such performance, in which case such party
or parties shall be subject to the obligations of the Issuer under Section 9(c).
(e) Repurchase at the Option of the Issuer. (i) To the extent the
Grantee shall not have previously exercised its rights under Section 9(a), at
the request of the Issuer made at any time after the tenth day following a
Closing pursuant to Section 2 hereof and for a period ending 120 days after the
termination of the Option in accordance with Section 2 hereof (the "Call
Period"), the Issuer may repurchase from the Grantee, and the Grantee shall
sell, or cause to be sold, to the Issuer, all (but not less than all) of the
Option Shares acquired by the Grantee pursuant hereto and with respect to which
the Grantee has ownership at the time of such repurchase at a price per Option
Share equal to the greater of (A) the market/offer price and (B) the Option
Price per share in respect of the Option Shares so acquired (such price per
Option Share multiplied by the number of
-9-
Option Shares to be repurchased pursuant to this Section 9(e) being herein
called the "Call Consideration"). The date on which the Issuer exercises its
rights under this Section 9(e) is referred to as the "Call Date."
(ii) If the Issuer exercises its rights under this Section 9(e), the
Issuer shall, within ten business days pay the Call Consideration in immediately
available funds, and the Grantee shall surrender to the Issuer certificates
evidencing the Option Shares purchased hereunder, and the Grantee shall warrant
to the Issuer that, immediately prior to the repurchase thereof pursuant to this
Section 9(e), the Grantee had sole record and beneficial ownership of such
Option Shares and that such shares were then held free and clear of all Liens.
(iii) To the extent that the Grantee shall exercise the Option, the
Grantee shall, unless the Grantee shall exercise its rights under Section 9(a)
or the Issuer shall exercise the Call Right, retain sole ownership of the Option
Shares so acquired through the end of the Call Period.
10. Extension of Exercise Periods. The 180-day periods for exercise of
certain rights under Sections 2 and 9 shall be extended in each such case at
there quest of the Holder to the extent necessary to avoid liability by the
Holder under Section 16(b) of the Securities Exchange Act of 1934, as amended,
by reason of such exercise.
11. Assignment. Neither party may assign any of its rights or
obligations under this Agreement or the Option to any other person without the
express written consent of the other party except that Grantee may, without the
prior written consent of Issuer assign the Option, in whole or in part, to any
affiliate of Grantee. Any attempted assignment in contravention of the preceding
sentence shall be null and void.
12. Filings; Other Actions. Issuer and Grantee each will use its best
efforts to make all filings with, and to obtain consents of, all third parties
and governmental authorities necessary for the consummation of the transactions
contemplated by this Agreement.
13. Specific Performance. The parties acknowledge that damages would be
an inadequate remedy for a breach of this Agreement by either party and that the
obligations of the parties shall be specifically enforceable through injunctive
or other equitable relief.
14. Severability. If any term, provision, covenant, or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants, and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired, or invalidated. If for any reason such
-10-
court or regulatory agency determines that the Holder is not permitted to
acquire, or Issuer is not permitted to repurchase pursuant to Section 9, the
full number of Shares provided in Section 1(a) of this Agreement (as adjusted
pursuant to Sections 1(b) and 7 of this Agreement), it is the express intention
of Issuer to allow the Holder to acquire or to require Issuer to repurchase such
lesser number of Shares as may be permissible, without any amendment or
modification of this Agreement.
15. Notices. Notices, requests, instructions, or other documents to be
given under this Agreement shall be in writing and shall be deemed given (i)
three business days following sending by registered or certified mail, postage
prepaid, (ii) when sent, if sent by facsimile, provided that a copy of the fax
is promptly sent by U.S. mail, (iii) when delivered, if delivered personally to
the intended recipient, and (iv) one business day later, if sent by overnight
delivery via a national courier service, in each case at the respective
addresses of the parties set forth in the Merger Agreement.
16. Expenses. Except as otherwise expressly provided in this Agreement
or in the Merger Agreement, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement shall be paid
by the party incurring such expense, including fees and expenses of its own
financial consultants, investment bankers, accountants, and counsel.
17. Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties, both written and oral, between
the parties, with respect to the subject matter of this Agreement. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the parties and their respective successors and permitted assigns. Nothing in
this Agreement, is intended to confer upon any person or entity, other than the
parties to this Agreement, and their respective successors and permitted
assigns, any rights or remedies under this Agreement.
18. Governing Law and Venue; Waiver of Jury Trial.
---------------------------------------------
(a) This Agreement shall be deemed to be made in and in all respects
shall be interpreted, construed and governed by and in accordance with Delaware
law without regard to the conflict of law principles thereof. The parties
irrevocably and unconditionally consent to submit to the exclusive jurisdiction
of the courts of the State of Delaware and of the United States of America
located in Wilmington, Delaware (the "Delaware Courts") for any litigation
arising out of or relating to this Agreement and the transactions contemplated
by this Agreement (and agree not to commence any litigation relating thereto
except in such Delaware Courts), waive any objection to the laying of venue of
any such litigation in the Delaware Courts and agree not to plead or claim in
any
-00-
Xxxxxxxx Xxxxx that such litigation brought therein has been brought in an
inconvenient forum.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 18.
19. Captions. The Section and paragraph captions in this Agreement are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions of this
Agreement.
20. Limitation on Profit. (a) Notwithstanding any other provision of
this Agreement, in no event shall the Grantee's Total Profit (as defined
herein)exceed in the aggregate $150 million (the "Maximum Amount") and, if it
otherwise would exceed such amount, the Grantee, at its sole election, shall
either: (i) reduce the number of Shares subject to this Option; (ii) deliver to
the Issuer for cancellation Option Shares previously purchased by Grantee; (iii)
pay cash to the Issuer; or (iv) any combination thereof, so that Grantee's
actually realized Total Profit shall not exceed the Maximum Amount taking into
account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Option
may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) which would
exceed the Maximum Amount and, if exercise of the Option otherwise would result
in the Notional Total Profit exceeding such amount, Grantee, at its discretion,
may (in addition to any of the actions specified in Section 20(a) above) (i)
reduce the number of Shares subject to the Option or (ii) increase the Option
Price for that number of Shares set forth in the exercise notice so that the
Notional Total Profit shall not exceed the Maximum Profit; provided, that
nothing in this
-12-
sentence shall restrict any exercise of the Option permitted hereby on any
subsequent date.
(c) As used in this Agreement, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) (x) the amount received by
Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof)
or any Option Shares pursuant to Section 9, less, in the case of any repurchase
of Option Shares, (y) the Grantee's purchase price for such Option Shares, as
the case may be plus (ii) (x) the net cash amounts received by Grantee pursuant
to the sale of Option Shares (or any other securities into which such Option
Shares are converted or exchanged) to any unaffiliated party, less (y) the
Grantee's purchase price of such Option Shares plus (iii) any Termination Fee
paid by the Issuer and received by the Grantee pursuant to Section 8.5(b) of the
Merger Agreement minus (iv) (x) the amounts of any cash previously paid by
Grantee to Issuer pursuant to this Section 20 plus the value of the Option
Shares (or other securities) previously delivered by Grantee to Issuer for
cancellation pursuant to this Section 20.
(d) As used in this Agreement, the term "Notional Total Profit" with
respect to any number of Shares as to which Grantee may propose to exercise this
Option shall be the Total Profit determined as of the date of such proposal
assuming that this Option were exercised on such date for such number of Shares
and assuming that such Shares, together with all other Option Shares held by
Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Shares as of the close of business on the preceding trading
day (less customary brokerage commissions).
(e) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall affect the ability of Grantee to receive, nor relieve
Issuer's obligation to pay, any Termination Fee provided for in Section 8.5(b)
of the Merger Agreement; provided that if and to the extent the Total Profit
received by Grantee would exceed the Maximum Profit following receipt of such
payment, Grantee shall be obligated to promptly comply with the terms of Section
20(a).
(f) For purposes of Section 20(a) and clause (iv) of Section 20(c), the
value of any Option Shares delivered by Grantee to Issuer shall be the
market/offer price of such Option Shares.
-13-
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by duly authorized officers of the parties as of the day and year first written
above.
RELIASTAR FINANCIAL CORP.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx
Senior Vice President
General Counsel and Secretary
ING AMERICA INSURANCE HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxxxx
Executive Vice President and
Chief Financial Officer
-14-
